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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-9186

WCI COMMUNITIES, INC.

24301 Walden Center Drive
Bonita Springs, Florida 34134
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (239) 947-2600

Securities registered pursuant to Section 12 (b) of the Act:

Securities registered pursuant to Section 12 (g) of the Act:
NONE
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). YES þ NO o

As of June 30, 2003, the aggregate market value of the Common Stock held by non-affiliates (all persons other than officers and directors of Registrant) of the Registrant was approximately $736,476,232.

As of February 23, 2004, there were 43,816,199 shares of Common Stock outstanding.

Documents Incorporated by Reference

Table of Contents

WCI COMMUNITIES, INC.
TABLE OF CONTENTS

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PART I

ITEM 1. BUSINESS

GENERAL

WCI Communities, Inc. (the Company or WCI), a Delaware corporation, is a fully integrated homebuilding and real estate services company with over 50 years of experience in the design, construction and operation of leisure-oriented, amenity-rich master-planned communities. When this report uses the words “we,” “us,” and “our,” these words refer to WCI Communities, Inc. and its subsidiaries, unless the context otherwise requires. Prior to August 31, 2001, the Company was a wholly owned subsidiary of Watermark Communities Inc. (Watermark). Watermark was formed in August 1998 to buy, manage, own, develop and sell real estate assets and amenity facilities. On August 31, 2001, Watermark was merged into the Company.

We offer a full complement of products and services to enhance our customers’ lifestyles and increase our recurring revenues. We design, sell and build single- and multi-family homes serving move-up, pre-retirement and retirement home buyers. We also design, sell and build luxury residential towers targeting affluent, leisure-oriented home purchasers. We have developed master-planned communities where residents enjoy lifestyle amenities like award-winning golf courses, country clubs, deep-water marinas, tennis and recreational facilities, luxury hotels, upscale shopping and a variety of restaurants. Our master-planned communities offer a wide range of residential products from moderately priced homes to higher priced semi-custom, single- and multi-family homes and luxury residential towers.

By serving as the master developer in our communities, and by retaining control of operations like amenities and real estate services, we believe we can ensure a high level of quality and generate greater long term returns. We acquire and develop the land in our communities, construct the residences, design, build and operate the amenities in many of our communities and otherwise control all aspects of the planning, design, development, construction and operation of our communities. We profit from the efficiencies created by our integrated delivery of all aspects of community development. We believe that this integrated approach reduces our risk and increases our profitability as it provides us with greater control over our costs and provides us with recurring amenities and real estate services revenues. We typically begin a master-planned community by purchasing undeveloped or partially developed real estate. We then construct infrastructure improvements and build amenities in accordance with our development permits. Following completion of these improvements and the building of the amenities, we build a full range of homes for sale to move-up, pre-retirement and retirement home buyers. In certain situations, we elect to sell parcels and lots to third party builders or end users.

Our master-planned communities are in Florida, a highly sought-after retirement and leisure-oriented home destination, and one of the nation’s fastest growing economies. Our communities are located in prime locations on Florida’s gulf coast in or near Marco Island, Naples, Ft. Myers, Sarasota, Tampa and Pensacola and on the East Coast in or near Miami, Ft. Lauderdale, Palm Beach and Palm Coast.

As of December 31, 2003, we have over 30 master-planned communities where we are building single- and multi-family homes or mid- and high-rise residential units or operating amenity facilities. We expect these master-planned communities to contain over 500 holes of golf, 1,100 marina slips and various country clubs, tennis and recreational facilities and other amenities. In total, we control over 13,700 acres of land, where we have approval under the state and local planning laws to develop up to approximately 28,000 future residences.

Since we market our products to move-up, pre-retirement and retirement leisure-oriented home purchasers, we expect to benefit from favorable demographic and economic trends, including the aging of the “baby-boom” generation, the growing inter-generational wealth transfer, and the increasing affluence of the pre-retirement and retirement-aged population.

Our principal business lines include single- and multi-family (traditional) homebuilding, mid- and high-rise (tower) homebuilding, amenity membership and operations and real estate services, each of which contributes to our profitability. See Note 3 to the consolidated financial statements for further information regarding our business segments for each of the three years ended December 31, 2003, 2002 and 2001.

HOMEBUILDING ACTIVITIES

We design, sell and build traditional homes serving primary, second and retirement home buyers. Our homes range from approximately 1,050 square feet to 8,000 square feet in living space and are priced from over $100,000 to over $5.0 million, with an average selling price per new order for the year ended December 31, 2003 of $428,000. We build most of these

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homes within our master-planned communities, where we create attractive amenities, often through affiliations with hotel operators and golf course designers, such as The Ritz-Carlton, The Hyatt, Raymond Floyd and Greg Norman. We believe that this approach increases the value of our homes and communities and helps us attract affluent purchasers. Additionally, we sometimes sell selected lots directly to buyers for the design and construction of large custom homes.

We also design, sell and build luxury residential towers targeted to affluent, leisure-oriented home purchasers. Residences available for sale in our towers range in size from approximately 1,100 square feet to 11,700 square feet in living space and are priced from over $200,000 to over $10.0 million. The average selling price per new order for a tower unit in 2003 was approximately $1.4 million. Our towers range in size from 6 to 30 stories and include 35 to 309 residences. Our sales contracts for these towers require non-refundable cash deposits, generally ranging from 10% to 30% of the purchase price, and we typically do not start construction of towers until there are sufficient pre-sales to cover the majority of the costs to construct the towers.

Traditional homes

Design. We employ an award-winning in-house design group comprised of experienced architects and computer-assisted design technicians. Our product design experience, along with our land planning expertise, has enhanced our ability to charge premiums for homes located on waterfront, conservation and golf course sites within our communities.

Sales. We maintain sales centers with community scale models and lifestyle and home demonstration displays. The sales centers are staffed with licensed professionals who are employees of WCI. We also maintain professionally decorated model homes, which demonstrate the benefits and features of our products and the community lifestyles. We maintain and carefully manage an inventory of homes that are available immediately or within a few months. For semi-custom and custom-built homes or homes selected from inventory at an early stage of construction, we offer customers a wide selection of standard options and upgrades to finish their homes. We also allow customization of the structural design in many of our product lines through our in-house design group. In addition, some of our larger communities offer design studios staffed with professional designers where the many options and upgrades available to purchasers of our products are displayed and demonstrated prior to incorporation into a home.

Construction. We typically act as the general contractor in the construction of our residences. Our employees provide purchasing and quality assurance for, and construction management of, the homes we build, while the material and labor components of our houses are provided by subcontractors. We generally contract for most of our materials and labor at fixed prices during the construction period of the home. This process allows us to mitigate the risks associated with increases in building materials and labor costs between the time construction begins and the time the home closes. We comply with local and state building codes, including Florida’s stringent hurricane and energy efficiency regulations. Depending upon the size and complexity of a home’s design, our construction time ranges from about 100 to 365 calendar days for our single-family homes and up to 240 calendar days for our multi-family homes.

Tower residences

Design. We commence the design and planning of towers by conducting extensive research relating to the market, customer base, product requirements, pricing and absorption. Our research effort is directed by dedicated project managers specializing in the development of towers. Based on the results of this research, we organize an experienced team of architects, engineers and specialty consultants under the leadership of the project manager to create the design of the tower. We also contract for the services of an experienced third party general contractor during the early stages of design to assist in design, engineering and the estimation of construction costs.

Sales. Once the design for a tower has been completed and its construction costs have been estimated, marketing of the residences commences. Brochures, scaled architectural models, walk-in kitchen and bathroom models and other marketing materials are used to assist sales associates in explaining and demonstrating the residences to be built.

Unless we elect to register a tower with the U.S. Department of Housing and Urban Development, Federal and Florida law generally require that condominiums be completed and delivered to a consumer within 24 months following a consumer’s execution of a purchase contract. To facilitate our sales process, we engage in a “reservation” selling process by which buyers select specific residences, sign a reservation agreement and pay a refundable deposit. Once a sufficient number of residences are “reserved” indicating substantial consumer acceptance, reservations are converted to contracts and the customer’s deposit becomes nonrefundable after a 15-day rescission period under Florida law.

Generally, construction is not commenced until a substantial number of units are under firm contracts. We will generally collect from each purchaser a deposit ranging from 10% to 30% of a residence purchase price to cover a portion of estimated construction costs. Under Florida law, a portion of the deposit representing 10% of the purchase price must be deposited into

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an escrow account, unless we have provided a letter of credit or surety bond. Any amount of the down payment in excess of this 10% may be used to fund construction. Once construction is completed, closings of sold residences usually occur within one month, at which time we are paid the balance of the purchase price for the residences sold. Over our 15 year history of building towers, approximately 1% to 2% of the contracts for which nonrefundable contract deposits were collected by us defaulted on the obligation to close the purchase of the tower unit; however, there can be no assurance that our cancellation or defaults will not increase in the future.

Construction. We hire experienced and bonded third party general contractors specializing in the construction of towers to construct these buildings. Typically, we negotiate a guaranteed maximum price with these contractors for the construction and delivery of completed towers. By hiring experienced general contractors to construct our towers, we mitigate many of the risks associated with construction. As the developer of the towers that we build, we manage the entire process from planning to closing of completed residences and turnover of the condominium association to residents.

Financing. A construction loan is generally available from a commercial lender when the value of sales contracts on a project is sufficient to cover a substantial portion of the cost of the project’s construction. We then generally seek a construction loan commitment to cover remaining construction costs, based on the number of residences sold at the time of the commitment. To the extent that we sell additional residences during the course of construction, subsequent deposits may also be utilized to fund construction, resulting in a lower amount outstanding under the construction loan than originally committed. We have developed a revolving construction loan structure with banks to finance multiple tower projects in a single construction loan facility.

AMENITIES DEVELOPMENT AND OPERATION

General. Our amenities, like championship golf courses with clubhouses, fitness, tennis and recreational facilities, guest lodging, marinas and a variety of restaurants, is central to our mission to deliver high quality residential lifestyles. To ensure that the amenities in our communities are designed, constructed and operated at a level of quality consistent with the residences that we build, we have established an amenities development and operations group.

Ownership. Amenities at our communities are owned by either community residents or non-residents in equity membership programs, unaffiliated third parties, or retained by us. As we plan the development of new communities, the ownership of the amenities is structured to cater to the preferences and expectations of community residents.

In communities offering higher-priced homes, all or a select group of residents or non-residents own the golf and other amenities assets on an equity membership basis. The conveyance of amenities assets to residents is accomplished through an equity subscription and sales process at an established price.

Due to the high costs of entry at equity clubs, we have found that in communities offering homes at lower price points, residents often prefer non-equity membership programs, which require lower initiation fees. Under a non-equity membership program, ownership and operation of the amenities are retained by us. Since residents’ preferences change over time, we may choose to sell the ownership and operation of the amenities to a resident group on an equity basis, or to an unaffiliated third party.

An alternative to non-equity membership programs, bundled home and amenities membership structures allow home buyers in moderately priced communities to receive club memberships bundled with their home purchase. In these cases, the amenities are owned and operated by the community homeowners association.

Operation. In communities with bundled or equity ownership structures, we typically enter into an operating agreement with the association or club entity which holds title to the facilities. The operating agreements generally provide that we will continue to control, manage and operate the amenities’ facilities until substantially all of the homes in the community, in the case of bundled ownership, or all of the equity ownership interests, in the case of equity ownership, have been sold. Generally, during the development and start-up phase we fund losses until a sufficient number of memberships have been sold to achieve a breakeven or profit, upon which we will retain the profits.

REAL ESTATE SERVICES

Realty brokerage

In June 1999, we entered into a six-year franchise agreement with Prudential Real Estates Affiliates, Inc. This agreement, as subsequently amended, allows us to provide exclusive residential brokerage services as Prudential Florida WCI Realty in six geographic areas across eight counties in Florida and commercial brokerage services in Naples. The exclusive franchise

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areas are in Lee, Collier, Palm Beach and portions of Broward, Charlotte, Hillsborough, Manatee, and Dade Counties. To maintain this exclusive arrangement we must substantially grow our market share in each of these exclusive areas during the six-year franchise period. As consideration under the agreement, we pay Prudential a royalty based on gross commission revenue on a monthly basis. Additionally, through a separate subsidiary, we provide new home and certain resale brokerage services. At December 31, 2003, our realty brokerage operations had 30 offices and approximately 1,300 sales agents.

Title insurance

We provide title insurance and closing services through a subsidiary which underwrites its policies on behalf of large national title insurers and derives its revenues from commissions on title insurance premiums and closing services provided to our customers, third party residential closings and commercial closings.

Mortgage banking

We provide residential mortgage banking services to our buyers, as well as third party purchasers through our subsidiary, Financial Resources Group, Inc. (FRG). FRG originates home mortgages which are subsequently sold to mortgage investors. Generally these mortgages are sold at prices established in commitments obtained from mortgage investors prior to the time the mortgages are originated. The mortgages are primarily funded through a bank warehouse facility.

Property management

We provide management services to our master-planned community developments and oversee the business affairs of condominium, homeowners’ associations and community master associations encompassing over 14,000 residences throughout Florida. The services provided by our management companies include accounting, security, common area maintenance and insurance policy administration.

We provide privacy services to gated master community associations throughout Florida. Privacy services include 24 hour gate monitoring at each community as well as privacy patrol in several of the communities. The privacy company derives revenues primarily through hourly billing to the community associations and through monthly maintenance and servicing fees.

Development services

Our development services business derives fee-based income from the supervision, including serving as the general contractor, of major commercial and residential projects. For a nominal increase in overhead, this business allows us to leverage the expertise we have gained directing large-scale real estate projects.

We provide various services for the property owner during both the design and construction phases of a project. We manage, coordinate and supervise each step in the development process. During the design phase, we consult on all project aspects from obtaining zoning approvals, to selection of the design team, to managing the design process. We then develop project budgets and schedules and assist in selecting the general contractor. During construction, we act as the owner’s representative to oversee the general contractor.

PARCEL SALES

We leverage our expertise and experience in master planning by strategically selling parcels at premium prices within our communities for construction of products we do not choose to build. This enables us to create a more well-rounded community by selling parcels to developers who will construct residential, commercial, industrial and rental properties, which we ordinarily do not develop. We sometimes sell selected lots directly to buyers for the design and construction of large custom homes.

OTHER INVESTMENTS

We selectively enter into business relationships through the form of partnerships and joint ventures with unrelated parties. These partnerships and joint ventures are utilized to acquire, develop, market and operate homebuilding, timeshare, amenities, and real estate services projects. As of December 31, 2003, we participate in seven real estate joint ventures. For further information on the accounting for investments in joint ventures see Note 2 “New Accounting Pronouncements” in the audited consolidated financial statements, appearing elsewhere in this report. We may be required to make additional cash contributions to the partnerships pursuant to agreements. As of December 31, 2003, none of our partnerships had debt balances.

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The joint ventures include the following:

Pelican Isle Yacht Club Limited Partnership. Our investment includes a 49% interest in a partnership that owns memberships in and operates the Pelican Isle Yacht Club located in the Pelican Isle community in Naples, Florida.

Walden Woods Business Center Ltd. We are a 50% partner in a limited partnership, which was formed to develop a 550-acre mixed-use industrial park in Plant City, Florida.

Tiburon Golf Ventures Limited Partnership. We own a 51% interest in the partnership which was formed with an affiliate of Host Marriott Corporation in 1998 to construct and operate a 36-hole, Greg Norman-designed golf course and clubhouse in our Tiburon Naples community.

Norman Estates at Tiburon Limited Partnership. The partnership was formed in 1998 for the purpose of constructing and developing a community that consists of 27 villas. We hold a combined 50% partnership interest in the venture. The last home closed in March 2003.

Pelican Landing Golf Resort Ventures Limited Partnership. The partnership was formed with Hyatt Equities, LLC in 1998 to develop and operate a 27-hole golf course. The first 18-holes and clubhouse began operations in 2001. We retain a 51% interest in the venture.

Pelican Landing Timeshare Ventures Limited Partnership. We own a 51% limited partnership interest in the venture, which was formed with an affiliate of the Hyatt Hotels Corporation during 1998 to develop up to 339 upscale timeshare residences on 32 acres within the resort golf course owned by Pelican Landing Golf Resort Ventures Limited Partnership. The first phase of the project is currently nearing completion.

Bighorn Development Limited Partnership. We have a 50% Class B limited partnership interest in Bighorn Development, L.P., which owns two-thirds of Bighorn Development L.L.C., the owner and developer of Bighorn, an exclusive community located in Palm Desert, California.

MARKETING

Targeting move-up, pre-retirement, retirement and affluent second home buyers, we develop and execute award-winning, multi-media marketing plans for our homes and communities. We employ an experienced staff of copywriters, creative art directors and graphic designers who are responsible for the design and development of most of our marketing materials and advertising messages, including newspaper and magazine print, direct mail and billboards.

We believe our proprietary marketing systems and the depth of experience of our marketing group create an increased number of selling opportunities for us and has generally enhanced our marketing presence and brand recognition. Our marketing program reaches prospective purchasers, locally, nationally and internationally through advertisements placed in demographic specific periodicals and other media. Our internet website displays a comprehensive review of each of our communities including locations, promotions, amenities, calendars of activities, lifestyle testimonials, product floor plans, elevations and views of most of the homes we build. The advertisements and website include response mechanisms, such as a coupon, automatic e-mail or toll-free number, by which a prospective purchaser may request additional information about our housing products. When a prospective purchaser responds to one of our advertisements or our website, purchaser-specific information is entered into our database creating a personalized customer record, which is used to record every interaction we have with this prospective purchaser.

As a prospective purchaser’s interest in our products and communities evolves, we individualize our marketing program by tailoring direct mail, regular e-mail and telephone follow-up that will apprise the prospective purchaser of relevant activities, developments and products being offered. Our targeted marketing allows us to develop a relationship with prospective purchasers, tending to predispose them toward visits to our communities during their home shopping or vacation trips to Florida.

We believe that our relationship and database marketing results in the efficient use of expenditures. The relative success and productivity of each of our marketing programs is measured to determine which programs yield the most qualified leads, prospects and customers per dollar spent. The results of these measurements are the primary determining factors for where future marketing expenditures will be directed. In addition, our database is a source of ongoing customer research, which influences our homebuilding design and the type and price range of the amenities to be integrated within our master-planned communities.

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OUR COMMUNITIES

Our expertise in development and in-depth market knowledge enables us to successfully identify attractive land acquisition opportunities, typically in highly sought-after Florida coastal markets, efficiently manage the development and maximize the land value.

While we believe that long-term demographic trends, including the aging of the “baby-boom” generation, the increase in the number of affluent households, and the strength of Florida’s population, employment and income growth, will drive and support our growth, we are currently exploring additional geographical areas for expansion.

As of December 31, 2003, our communities are located in eleven Florida counties including Collier County and Lee County on the west coast near Marco Island, Naples and Ft. Myers; Hillsborough County near Tampa; Sarasota County and Manatee County on the west coast near Sarasota; Escambia County on the west coast near Pensacola; Dade County, Broward County, Martin County and Palm Beach County on the east coast encompassing much of Miami, Ft. Lauderdale, Boca Raton and West Palm Beach; and Flagler County on the east coast between St. Augustine and Daytona Beach. The following table sets forth summary information about our communities, including remaining acres, remaining entitled units and remaining number of tower sites.

Our communities
As of December 31, 2003

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EMPLOYEES

At December 31, 2003, we had approximately 2,900 employees. We have no unionized employees and believe that our relationship with our employees is good.

SEASONALITY

We have historically experienced, and in the future expect to continue to experience, seasonal variability in revenue, profit and cash flow. Factors expected to contribute to this variability include: the timing of the introduction and start of construction of new towers; the timing of tower residence sales; the timing of closings of homes, lots and parcels; our ability to continue to acquire land and options on land on acceptable terms; the timing of receipt of regulatory approvals for development and construction; the condition of the real estate market and general economic conditions in Florida; the prevailing interest rates and the availability of financing, both for us and for the purchasers of our homes; and the cost and availability of materials and labor.

Our historical financial performance is not necessarily a meaningful indicator of future results and, in particular, we expect financial results to vary from project to project and from quarter to quarter. Our revenue may therefore fluctuate significantly on a quarterly basis, and we believe that quarter-to-quarter comparisons of our results should not be relied upon as an indication of future performance.

COMPETITION

The homebuilding industry and real estate development is highly competitive. In each of our business components, we compete against numerous developers and others in the real estate business in and near the areas where our communities are located. We, therefore, may be competing for investment opportunities, financing, available land, raw materials and skilled labor with entities that possess greater financial, marketing and other resources. Competition generally may increase the bargaining power of property owners seeking to sell, and industry competition may be increased by future consolidation in the real estate development industry.

REGULATORY AND ENVIRONMENTAL MATTERS

Our operations are subject to Federal, state and local laws and regulations. In particular, development of property in Florida is subject to comprehensive Federal and State environmental legislation. This regulatory framework, in general, encompasses areas like traffic considerations, availability of municipal services, use of natural resources, impact of growth, utility services, conformity with local and regional plans, together with a number of other safety and health regulations. Permits and approvals mandated by regulation for development of any magnitude are often numerous, significantly time-consuming and onerous to obtain, and not guaranteed. Such permits, once expired, may or may not be renewed and development for which the permit is required may not be completed if such renewal is not granted. These requirements have a direct bearing on our ability to further develop communities in Florida. Our mortgage activities and title insurance agencies must also comply with various Federal and State laws, consumer credit rules and regulations and other rules and regulations unique to such activities. Although we believe that our operations are in full compliance in all material respects with applicable Federal, State and local requirements, our growth and development opportunities in Florida may be limited and more costly as a result of legislative, regulatory or municipal requirements.

Our operating costs may also be affected by the cost of complying with existing or future environmental laws, ordinances and regulations, which require a current or previous owner or operator of real property to bear the costs of removal or remediation of hazardous or toxic substances on, under or in the property. Environmental site assessments conducted at our properties have not revealed any environmental liability or compliance concerns that we believe would have a material adverse effect on our business, assets, results of operations or liquidity, nor are we aware of any material environmental liability or concerns. Although we conduct environmental site assessments with respect to our own properties, there can be no assurance that the environmental assessments that we have undertaken have revealed all potential environmental liabilities, or that an environmental condition does not otherwise exist as to any one or more of our properties that could have a material adverse effect on our business, results of operations and financial condition.

AVAILABLE INFORMATION

The Company makes available free of charge on or through its Internet website (http://www.wcicommunities.com) the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13-(a) or 15-(d) of the Securities Exchange Act of 1934,

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as amended, as soon as reasonably practical after the Company electronically files such material with, or furnishes it to the Securities and Exchange Commission (SEC). These filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC at the SEC’s public reference room located at 450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The Company has adopted and will post in the Investor Relations section of its website the Company’s Corporate Governance Guidelines and charters for each of the Board’s standing committees prior to its Annual Shareholders Meeting.

ITEM 2. PROPERTIES

As of December 31, 2003, we own and use approximately 316,000 square feet of office and amenity space throughout Florida. In addition, we lease approximately 121,000 square feet of office space in Bonita Springs, which serves as our corporate headquarters, and approximately 305,000 square feet of office space in other locations throughout Florida, which serve our divisional homebuilding operations and as branch office space for our related real estate services businesses.

ITEM 3. LEGAL PROCEEDINGS

The Company and certain of its subsidiaries have been named as defendants in various claims, complaints and other legal actions arising in the normal course of business. In the opinion of management, the outcome of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company. However, it is possible that future results of operations for any particular quarterly or annual period could be materially affected by changes in the Company’s estimates and assumptions related to these proceeding, or due to the ultimate resolution of the litigation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the quarter ended December 31, 2003.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company’s common stock is traded on the New York Stock Exchange (Symbol: WCI).

The following table sets forth the high and low price of the shares of WCI common stock for the periods indicated as reported on the New York Stock Exchange.

The Company has not paid any cash dividends on its common stock to date and expects that, for the foreseeable future, it will not do so; rather it expects to follow a policy of retaining earnings in order to finance the continued development of its business.

The payment of dividends is within the discretion of the Company’s Board of Directors and any decision to pay dividends in the future will depend upon an evaluation of a number of factors, including the earnings, capital requirements, operating and

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financial condition of the Company, and any contractual limitations then in effect. In this regard, the indentures governing the Company’s outstanding senior subordinated notes contain restrictions on the amount of dividends the Company may pay on its common stock. In addition, the Company’s senior credit facility and senior subordinated notes require the maintenance of minimum consolidated stockholders’ equity, which restricts the amount of dividends the Company may pay.

As of February 23, 2004, there were approximately 98 record holders of the Company’s common stock.

Please refer to Item 12 of this report and Note 16 to the Company’s consolidated financial statements for a discussion of the shares of WCI common stock that may be issued under existing equity compensation plans, all of which have been approved by shareholders, and a description of the Company’s equity incentive plans and the types of grants, in addition to options, that may be made under the plans.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth our selected historical consolidated financial data for each of the five years in the period ended December 31, 2003. Balance sheet data as of December 31, 2003 and 2002 and statements of operations data for the years ended December 31, 2003, 2002 and 2001 have been derived from our audited consolidated financial statements which are included in Item 8 of this report. The following information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited historical consolidated financial statements, including the introductory paragraphs and related notes thereto, appearing in Items 7 and 8 of this report.

(1)

Debt excludes accounts payable and other liabilities (other than land repurchase liabilities) customer deposits, income taxes payable and community development district obligations.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Revenue recognition — Traditional Homebuilding. We recognize homebuilding revenues when homes close and title to and possession of the property is formally transferred to the buyer. The majority of our homebuilding revenues are received in cash within one or two days subsequent to closing. We include amounts in transit from title companies at the end of each reporting period in cash and cash equivalents. We either retain or refund to the home buyer deposits on canceled sales contracts, depending upon the provisions of the contracts.

Revenue recognition — Tower Homebuilding. Revenue for tower residences under construction is recognized on the percentage-of-completion method. Revenue is recorded as a portion of the value of non-cancelable tower unit contracts when (1) construction is beyond a preliminary stage, (2) the buyer is committed to the extent of being unable to require a full refund except for non-delivery of the residence, (3) a substantial percentage of residences are under firm contracts, (4) sales prices are collectible and (5) costs can be reasonably estimated. Revenue recognized is calculated based upon the percentage of total costs incurred in relation to estimated total costs. The percentage-of-completion method is applied since we meet applicable requirements under SFAS 66, Accounting for Sales of Real Estate. Actual revenues and costs to complete building construction in the future could differ from our current estimates. If our estimates of tower revenues and development costs are significantly different from actual amounts, then our revenues, related cumulative profits and costs of sales may be revised in the period that estimates change.

Contracts receivable. Amounts due under tower sales contracts, to the extent recognized as revenue under the percentage-of-completion method, are recorded as contracts receivable. We review the collectibility of contracts receivable on a quarterly basis and provide for estimated losses due to potential customer defaults. Historically, approximately 1% to 2% of the contracts for which refundable contract deposits were collected by us defaulted on the obligation to close the purchase of the tower unit. Actual contract defaults may differ from our current estimates.

Real estate inventories and cost of sales. In accordance with SFAS 67, Accounting for Costs and Initial Rental Operations for Real Estate Projects, real estate inventories including land, common development costs and estimates for costs to complete, are allocated to each parcel or lot based on the estimated relative sales value of each parcel or lot, as compared to the sales value of the total project, while site specific development costs are allocated directly to the benefited land. We use the specific identification method for the purpose of accumulating costs associated with home and tower construction. We amortize all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) to cost of sales for homes closed based upon the relative sales values of homes expected to be closed in each project.

When a home is closed, we usually have not yet paid all incurred costs necessary to complete the home. Each month we record as a liability and as a charge to cost of sales the amount we have incurred, estimate to be incurred and expect to be paid related to completed homes that have been closed as of the end of that month. Actual costs to complete in the future could differ from our current estimated amounts.

Warranty costs. We establish warranty reserves for traditional and tower residences by charging cost of sales and crediting a warranty liability. The amounts charged are estimated by management to be adequate to cover expected warranty-related costs for materials and labor required under our warranty obligation periods. We provide our single- and multi-family home buyers with a one to three year limited warranty for all material and labor and a ten year warranty for certain structural defects. We provide our tower home buyers a one year warranty for the unit and three year warranty for common elements of the tower. Our warranty cost accruals are based upon our historical warranty cost experience in each market in which we

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operate and are adjusted as appropriate to reflect qualitative risks associated with the type of homes we build and the geographic areas in which we build them. Actual future warranty costs could differ from our currently estimated amounts.

Capitalized interest and real estate taxes. We capitalize interest, up to an amount not to exceed total interest incurred, and real estate taxes on parcels, lots, towers and amenity facilities (the “Projects”) while under active development. The capitalization period ends when the asset is substantially complete and ready for its intended use or sale. The amount of interest capitalized in an accounting period is determined by applying the Company’s weighted average annualized interest rate to the amount of accumulated expenditures related to the Projects under development during the period. For homebuilding projects, land sales and amenities conveyed through equity membership sales, capitalized interest and real estate taxes are apportioned on relative sales value and amortized to cost of sales, respectively, with each home closing, land sale or membership sold. For tower buildings, capitalized interest and real estate taxes are amortized to cost of sales under the percentage-of-completion method. For owned and operated assets, capitalized interest and real estate taxes are included in the base cost of the assets and depreciated. If the various underlying estimates related to interest capitalization and amortization are revised, then more or less interest and real estate taxes would be capitalized and/or amortized to cost of sales.

Community development district obligations. In connection with certain development activities, bond financing is utilized in many of our communities to construct on-site and off-site infrastructure improvements. Some bonds are repaid directly by us while other bonds only require us to pay non-ad valorem assessments related to lots not yet delivered to residents. We also guarantee district shortfalls under certain bond debt service agreements. In accordance with EITF, 91-10, Accounting for Special Assessments and Tax Increment Financing Entities, we annually estimate the amount of bond obligations that we may be required to fund in the future. If our estimates of the amount of bond obligations that we may be required to fund are significantly different from actual amounts funded, our real estate inventories and costs of sales may be revised on a prospective basis.

Impairment of long-lived assets and long-lived assets to be disposed of. Real estate inventories considered held for sale including land intended for sale and completed tower residences and homes are carried at the lower of cost or fair value less costs to sell. Property and equipment are recorded at cost less accumulated depreciation and depreciated on the straight-line method over their estimated useful lives. Whenever events or circumstances indicate that the carrying value of property and equipment and real estate inventories considered held and used, including land and land improvements, investments in amenities and tower residences and homes under development may not be recoverable, we compare the carrying amount of the asset to the undiscounted expected future cash flows. If this comparison indicates that the asset is impaired, the amount of the impairment is calculated using discounted expected future cash flows. If our estimate of the future cash flows is significantly different from actual cash flows, we may prematurely impair the value of the asset, we may underestimate the value of the calculated impairment or we may fail to record an impairment.

Goodwill. Goodwill is not subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test consists of a comparison of the fair value of the goodwill to its carrying amount. If the carrying amount of the goodwill exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Several factors are used to evaluate goodwill, including management’s plans for future operations, recent operating results and estimated future revenues and costs. Due to the uncertainties associated with such estimates, our conclusion regarding goodwill impairment could change and result in a future goodwill impairment.

Litigation. The Company is involved in litigation incidental to its business, the disposition of which is expected to have no material effect on the Company’s financial position or results of operations. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in the Company’s estimates and assumptions related to these proceedings, or due to the ultimate resolution of the litigation.

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RESULTS OF OPERATIONS

Overview

(a)  Our gross margin includes overhead expenses directly associated with each line of business. See the consolidated statements of income for a reconciliation of gross margin to consolidated income before income taxes for each period.

Our principal business lines include single- and multi-family (traditional) homebuilding, mid- and high-rise (tower) homebuilding, amenity membership and operations and real estate services, each of which contributes to our revenue and profitability. In 2003, 85.6% and 90.2% of revenue and gross margin, respectively, were derived from our combined homebuilding operations.

For 2003, total revenues and net income increased 19.8% and .7%, respectively. The increases were driven primarily by our traditional and tower homebuilding and real estate services divisions. Although net income increased only slightly over 2002, gross margins increased 8.1% due primarily to increased contributions from the traditional homebuilding and real estate services divisions. Gross margins from tower homebuilding, amenities and land sales declined as compared to 2002. Overall, net income increased slightly due to the increase in gross margin offset by 19.2% increase in selling, general and administrative costs. During the fourth quarter of 2003, we settled an Internal Revenue Service examination of our tax returns for the years 1999-2001. As a result, we reduced our income tax expense by approximately $1.9 million.

In 2003, we increased revenue despite a challenging economic environment. The primary/move-up home buyer market was strong during 2003 in the traditional homebuilding division. The second home/luxury and affordable retirement markets continued to exhibit some weakness, which we believe was a result of an unpredictable stock market, geopolitical risks and an uncertain economic outlook. As we enter 2004, we expect increased revenues from all lines of business as demand for our products is expected to grow. Assuming the current economic environment continues, including increased consumer confidence, a stronger stock market and stable interest rates, we expect 2004 to produce moderately increased levels of earnings. If economic conditions deteriorate, interest rates increase significantly, the ability to obtain permits and approvals for land development is delayed or adverse legislation or regulations occurs, then it may be difficult to achieve earnings growth.

For 2002, total revenues and net income increased 10.4% and 2.5% over 2001, respectively. We achieved an increase in revenues and earnings driven primarily by a larger number and greater value of sold tower units under construction and higher margins and average selling price in our traditional homebuilding operations. As of January 2002, we adopted SFAS 142 and accordingly, no longer amortize goodwill. For the year ended December 31, 2001, amortization of goodwill was approximately $3.2 million.

In March 2002, we issued 7,935,000 shares of common stock in a public offering realizing approximately $138.2 million in net proceeds. Our operating results for 2002 and the issuance of common stock contributed to a 58.3% increase in shareholders’ equity to $663.5 million at December 31, 2002.

For 2002 and 2001, we recognized $3.3 million and $3.2 million, respectively, in expenses related to the write-off of unamortized debt issue costs associated with the early repayment of debt.

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Homebuilding

Traditional homebuilding