COMMON STOCK

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

COMMON STOCK

COMMON STOCK:

The following shares were issued and outstanding for SJI:

	2022
Beginning Balance, January 1	117,340,493
New Issuances During the Period:
Settlement of Equity Forward Sale Agreement	4,996,062
Stock-Based Compensation Plan	128,238
Ending Balance, September 30	122,464,793

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.

There were 2,339,139 shares of SJG's common stock (par value $2.50 per share) outstanding as of September 30, 2022. SJG did not issue any new shares during the period. SJIU owns all of the outstanding common stock of SJG.

On March 22, 2021, SJI offered 10,250,000 shares of its common stock, par value $1.25 per share, at a public offering price of $22.25 per share, with 1,899,859 shares issued in March 2021. See Note 6 to the Consolidated Financial Statements in Item 8 of SJI's and SJG’s Annual Report on Form 10-K for the year ended December 31, 2021 for a description of this transaction and the additional issuances that occurred in 2021. On March 18, 2022, the remaining 4,996,062 forward shares were issued under the forward sale agreement for proceeds of $100.4 million, net of issuance fees that were not material. The forward price used to determine cash proceeds received by SJI was calculated based on the initial forward sale price, as adjusted for underwriting fees, interest rate adjustments as specified in the forward sale agreement and any dividends paid on our common stock during the forward period.

At the Effective Time of the Merger, SJI's common stock outstanding immediately before the Effective Time will be converted into the right to receive $36.00 in cash, without interest.

EQUITY AND CONVERTIBLE UNITS - See Note 6 to the Consolidated Financial Statements in Item 8 of SJI's and SJG’s Annual Report on Form 10-K for the year ended December 31, 2021 for a description of the issuances of equity units that occurred in March 2021.

Total interest recorded related to the equity units during the three and nine months ended September 30, 2022 was $0.2 million and $0.6 million, respectively, related to the contract adjustment liabilities to the holders of the equity units and is recorded within Interest Charges on the condensed consolidated statements of (loss)/income. The contract adjustment liabilities are recorded in Other Current and Noncurrent Liabilities on the condensed consolidated balance sheet and were $23.8 million and $17.5 million, respectively, as of September 30, 2022, and $23.8 million and $34.6 million, respectively, as of December 31, 2021.

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

	September 30, 2022		December 31, 2021
Principal amount:	2021 Series B Remarketable Junior Subordinated Notes due 2029
Principal (A)	$	335,000	$	335,000
Unamortized debt discount and issuance costs (A)	8,190		9,110
Net carrying amount	$	326,810	$	325,890
Carrying amount of the equity component (B)	$	—	$	—

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

(B) There is no equity portion as of September 30, 2022 and December 31, 2021 for these Notes.

During both the three months ended September 30, 2022 and 2021, the Company recognized $5.0 million of coupon interest expense, and during the nine months ended September 30, 2022 and 2021, the Company recognized $14.9 million and $12.8 million, respectively, of coupon interest expense, all of which was included in Interest Charges on the condensed consolidated statements of (loss)/income. During those periods, the amortization of debt discount and issuance costs was not material. As of September 30, 2022, the effective interest rate was 2.1% on these Notes.

SJI's EPS — SJI's basic EPS is based on the weighted-average number of common shares outstanding. SJI's diluted EPS includes consideration of the effect of SJI's restricted stock as discussed in Note 2, along with the impact of the Equity Units and Convertible Units discussed above, accounted for under the treasury stock method. For the nine months ended September 30, 2022 and 2021, the shares required for inclusion in the denominator for the diluted EPS calculation were 2,848,163 and 1,481,770, respectively. For the three months ended September 30, 2022 and 2021, shares of 3,345,989 and 1,469,623, respectively, were not included in the denominator for the diluted EPS calculation because they would have had an antidilutive effect on EPS.

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 the first nine months of 2022 or 2021.

RETAINED EARNINGS — The Utilities are limited by their regulatory authorities on the amount of cash dividends or other distributions they are able to transfer to their parent, specifically if such dividends or other distributions could impact their capital structure. In addition, SJG's First Mortgage Indentures contain a restriction regarding the amount of cash dividends or other distributions that they may pay. As of September 30, 2022, this loan restriction did not affect the amount that may be distributed from SJG's retained earnings.