COMMON STOCK

6 Months Ended

Jun. 30, 2020

COMMON STOCK:

The following shares were issued and outstanding for SJI:


			2020
Beginning Balance, January 1			92,394,155
New Issuances During the Period:
ATM Equity Offering			8,122,283
Stock-Based Compensation Plan			69,612
Ending Balance, June 30			100,586,050

The par value ($1.25 per share) of stock issued was recorded in Common Stock and the net excess over par value was recorded in Premium on Common Stock, which shows an increase on the condensed consolidated balance sheets from December 31, 2019 to June 30, 2020 primarily due to the issuance of shares under the ATM equity offering.

There were 2,339,139 shares of SJG's common stock (par value $2.50 per share) outstanding as of June 30, 2020. SJG did not issue any new shares during the period. SJIU owns all of the outstanding common stock of SJG.

ATM EQUITY OFFERING - In April 2020, SJI entered into an ATM Equity Offering Sales Agreement (the "Sales Agreement") to sell, from time to time, shares of the Company’s common stock, par value $1.25 per share, having an aggregate sale price up to $200.0 million, through an “at-the-market” equity offering program. Pursuant to the Sales Agreement, the shares of common stock were to be offered and sold through any of the named sales agents in negotiated transactions or transactions that are deemed to be “at-the-market” offerings. In June 2020, 8,122,283 shares were sold pursuant to the Sales Agreement at an average market price of approximately $24.62 for total net proceeds of $198.0 million after deducting commissions and other general & administrative expenses. These sales exhausted the shares that were available for sale under the Sales Agreement. The Company intends to use the net proceeds from this offering for general corporate purposes.

CONVERTIBLE UNITS - In 2018, SJI issued and sold 5,750,000 Equity Units, initially in the form of Corporate Units, which included 750,000 Corporate Units pursuant to the underwriters’ option. Each Corporate Unit has a stated amount of $50 and is comprised of (a) a purchase contract obligating the holder to purchase from the Company, and for the Company to sell to the holder for a price in cash of $50, on the purchase contract settlement date, or April 15, 2021, subject to earlier termination or settlement, a certain number of shares of common stock; and (b) a 1/20, or 5%, undivided beneficial ownership interest in $1,000 principal amount of SJI’s 2018 Series A 3.70% Remarketable Junior Subordinated Notes due 2031. SJI will pay the holder quarterly contract adjustment payments at a rate of 3.55% per year on the stated amount of $50 per Equity Unit, in respect of each purchase contract, subject to the Company's right to defer these payments. The net proceeds, after amortization of the underwriting discounts, are recorded as Long-Term Debt on the condensed consolidated balance sheets.

The convertible units consisted of the following (in thousands):


	June 30, 2020		December 31, 2019
Principal amount:
Principal (A)	$	287,500	$	287,500
Unamortized debt discount and issuance costs (A)	7,463		7,737
Net carrying amount	$	280,037	$	279,763
Carrying amount of the equity component (B)	$	—	$	—

(A) Included in the condensed consolidated balance sheets within Long-Term Debt.

(B) There is currently no equity portion.

During both the three months ended June 30, 2020 and 2019, the Company recognized approximately $0.1 million of amortization of debt discount and issuance costs prior to capitalization of interest, and $2.7 million of coupon interest expense, all of which was included in Interest Charges on the condensed consolidated statements of income (loss). During both the six months ended June 30, 2020 and 2019, the Company recognized approximately $0.3 million of amortization of debt discount and issuance costs prior to capitalization of interest, and $5.3 million, of coupon interest expense, all of which was included in Interest Charges on the condensed consolidated statements of income (loss). The effective interest rate was 4.0%.

SJI's EPS — SJI's Basic EPS is based on the weighted-average number of common shares outstanding. The incremental shares required for inclusion in the denominator for the diluted EPS calculation were 116,527 and 115,798 for the six months ended June 30, 2020 and 2019, respectively. For the three months ended June 30, 2020 and 2019, incremental shares of 121,976 and 100,012, respectively, were not included in the denominator for the diluted EPS calculation because they would have an antidilutive effect on EPS. These additional shares relate to SJI's restricted stock as discussed in Note 2, along with the impact of the Equity Units discussed above, accounted for under the treasury stock method.

DRP — SJI offers a DRP which allows participating shareholders to purchase shares of SJI common stock by automatic reinvestment of dividends or optional purchases. SJI currently purchases shares on the open market to fund share purchases by DRP participants, and as a result SJI did not raise any equity capital through the DRP in 2019 or the first six months of 2020. SJI does not intend to issue equity capital via the DRP during the remainder of 2020.

ADDITIONAL INVESTMENT BY SHAREHOLDER - SJG received a $9.5 million equity infusion from SJI during the three and six months ended June 30, 2020. There was no equity infusion during the three and six months ended June 30, 2019. Future equity contributions will occur on an as-needed basis.