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The information in this preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities nor do they seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Filed Pursuant to Rule 424(b)(5)
Registration No. 333-211259

Subject to Completion
Preliminary Prospectus Supplement dated April 17, 2018

P R O S P E C T U S   S U P P L E M E N T

$325,000,000


SOUTH JERSEY INDUSTRIES, INC.
Common Stock

We are offering and selling $325.0 million of shares of our common stock, par value $1.25 per share in this offering. In addition, we expect to enter into a forward sale agreement with Bank of America, N.A., whom we refer to as the forward purchaser, with respect to $200.0 million of shares of our common stock. In connection with the forward sale agreement between us and the forward purchaser, the forward purchaser or its affiliate, whom we refer to in such capacity as the forward seller, is, at our request, borrowing from third parties and selling to the underwriters $200.0 million of shares of our common stock in connection with the forward sale agreement. If, in the forward seller’s commercially reasonable judgment, the forward seller is unable, after using commercially reasonable efforts, to borrow and deliver for sale on the anticipated closing date such number of shares of our common stock, or if the forward purchaser determines, in its commercially reasonable judgment, that it is either impracticable to do so or that the forward seller is unable to borrow, at a stock loan rate not greater than a specified amount, and deliver for sale on the anticipated closing date such number of shares of our common stock, then we will issue and sell to the underwriters a number of shares of our common stock equal to the number of shares of our common stock that the forward seller does not borrow and sell. We will not initially receive any proceeds from the sale of our common stock by the forward seller.

We expect to receive proceeds from the sale of $125.0 million of shares of our common stock offered and sold by us in this offering, but we will not initially receive any proceeds from the sale of $200.0 million of shares of our common stock offered and sold by the forward seller to the underwriters, except in certain circumstances described in this prospectus supplement. We expect to settle the forward sale agreement and receive proceeds, subject to certain adjustments, from the sale of those shares of our common stock assuming one or more future physical settlements of the forward sale agreement no later than approximately 12 months after the date of this prospectus supplement. We may settle the forward sale agreements entirely by the full physical delivery of shares of our common stock in exchange for cash proceeds, or we may elect cash settlement or net share settlement for all or a portion of our obligations under the forward sale agreement. If we elect to cash settle or net share settle the forward sale agreement, we may not receive any proceeds from the issuance of shares, and we will instead receive or pay cash (in the case of cash settlement) or receive or deliver shares of our common stock (in the case of net share settlement). See “Underwriting (Conflicts of Interest) —Forward Sale Agreement” for a description of the forward sale agreement.

Our common stock is listed on the New York Stock Exchange under the symbol “SJI”. The last reported sale price of our common stock on April 16, 2018 was $30.51 per share.

Concurrently with this offering of our common stock, we are offering, by means of a separate prospectus supplement, $250.0 million aggregate stated amount of our Equity Units (or $287.5 million aggregate stated amount of our Equity Units in total if the underwriters of that offering exercise in full their option to purchase additional Equity Units, solely to cover over-allotments). This offering of our common stock is not contingent on the concurrent offering of Equity Units and the concurrent offering of Equity Units is not contingent upon this offering of our common stock. See “Summary—Concurrent Offering” in this prospectus supplement.

 
Per Share
Total
Public Offering Price
$
    
 
$
   
 
Underwriting Discount
$
 
 
$
 
 
Proceeds to Us (before expenses)(1)
$
        
 
$
        
 
(1) We expect to receive estimated net proceeds, before expenses, of $    upon settlement of this offering of our common stock. Depending on the price of our common stock at the time of settlement of the forward sale agreement and the relevant settlement method, we may receive proceeds upon settlement of the forward sale agreement, which settlement must occur no later than approximately 12 months after the date of this prospectus supplement. For the purposes of calculating the aggregate net proceeds to us, we have assumed that the forward sale agreement is physically settled based on the initial forward sale price of $      (which is the public offering price less the underwriting discount shown above). The forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor equal to the overnight bank funding rate less a spread and will be decreased on each of certain dates specified in the forward sale agreement during the term of the forward sale agreement. The forward sale price will also be subject to decrease if the cost to the forward seller of borrowing the number of shares of our common stock underlying the forward sale agreement exceeds a specified amount. The actual proceeds, if any, will be calculated as described in this prospectus supplement. If the overnight bank funding rate is less than the spread on any day, the interest factor will result in a daily reduction of the forward sale price. As of the date of this prospectus supplement, the overnight bank funding rate was greater than the spread.

We have granted the underwriters an option to purchase up to an additional $48.75 million of shares of our common stock from us directly, exercisable within 30 days from the date of this prospectus supplement.

Investing in our common stock involves risks. See “Risk Factors” beginning on page S-14 of this prospectus supplement and on page 5 of the accompanying prospectus.

Neither the Securities and Exchange Commission (“SEC”) nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares on or about      , 2018.

Joint Book-Running Managers

BofA Merrill Lynch
Guggenheim Securities
Wells Fargo Securities

Co-Managers

TD Securities
J.P. Morgan
Morgan Stanley
PNC Capital Markets LLC

The date of this prospectus supplement is April   , 2018.

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Prospectus

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

We have not authorized anyone to provide any information other than that contained or incorporated by reference in this prospectus supplement or the accompanying prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you.

We are not, and the underwriters are not, making an offer to sell the common stock in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement and the accompanying prospectus and in the documents incorporated by reference herein and therein or that is contained in any free writing prospectus issued by us is accurate only as of their respective dates. Our business, financial condition, results of operation and prospects may have changed since those dates.

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About this Prospectus Supplement

We provide information to you about the common stock in two separate documents: (1) this prospectus supplement, which describes the specific terms of the common stock and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference in that prospectus and (2) the accompanying prospectus, which provides general information about securities we may offer from time to time, including securities other than the common stock being offered by this prospectus supplement. If information in this prospectus supplement is inconsistent with the accompanying prospectus, you should rely on this prospectus supplement.

It is important for you to read and consider all of the information contained in this prospectus supplement, the documents incorporated by reference herein and the accompanying prospectus in making your investment decision. You also should read and consider the information in the documents we have referred you to in “Where You Can Find Additional Information“ and “Incorporation by Reference“ in this prospectus supplement and the accompanying prospectus.

We include cross-references in this prospectus supplement and the accompanying prospectus to captions in these materials where you can find additional related discussions. The table of contents in this prospectus supplement provides the pages on which these captions are located.

Unless otherwise indicated or the context otherwise requires, references in this prospectus supplement to “SJI,” “the Company,” “we,” “us” and “our” refer to South Jersey Industries, Inc. and its subsidiaries.

All references in this prospectus supplement to the Annual Report on Form 10-K for the year ended December 31, 2017 refer to the Annual Report on Form 10-K, as filed with the SEC on February 26, 2018, as amended by Form 10-K/A, as filed with the SEC on March 1, 2018.

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Special Note Regarding
Forward-Looking Statements

This prospectus supplement, including information incorporated by reference, contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.

All statements other than statements of historical fact, including statements regarding guidance, industry prospects or future results of operations or financial position, are forward-looking. We use words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “goal,” “intend,” “objective,” “plan,” “project,” “seek,” “strategy,” “target,” “will” and similar expressions to identify forward-looking statements. These forward-looking statements are based on the beliefs and assumptions of management at the time that these disclosures were prepared and are inherently uncertain. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These risks and uncertainties include, but are not limited to the risks set forth under “Risk Factors” in this prospectus supplement and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, incorporated by reference herein, and our ability to realize the expected benefits, cost savings or other synergies from acquisitions, including the Acquisition of Elizabethtown Gas and Elkton Gas, on a timely basis or at all.

These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements, are described in greater detail under the heading “Risk Factors” in this prospectus supplement, under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017 and in our other SEC filings incorporated by reference into this prospectus supplement. While we believe these forward-looking statements to be reasonable, no assurance can be given that any goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements, which speak only as of the date they are made. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law, you are advised to consult any additional disclosures we make in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. See “Where You Can Find Additional Information.”

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Summary

The following summary should be read together with the information contained or incorporated by reference in other parts of this prospectus supplement and the accompanying prospectus. This summary highlights selected information from this prospectus supplement and the accompanying prospectus about our business and the offering of our common stock. For a more complete understanding of our Company and this offering, we encourage you to read this prospectus supplement and the accompanying prospectus, including the documents we incorporate by reference into the prospectus supplement and the prospectus, carefully to understand fully our common stock as well as other considerations that are important in deciding whether to invest in our common stock. You should pay special attention to the “Risk Factors” section beginning on page S-14 of this prospectus supplement, page 5 of the accompanying prospectus and the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2017, incorporated by reference herein, to determine whether an investment in our common stock is appropriate for you.

South Jersey Industries

South Jersey Industries, Inc. (“SJI”), a New Jersey corporation, was formed in 1969 for the purpose of owning and holding all of the outstanding common stock of South Jersey Gas Company, a public utility, and acquiring and developing non-utility lines of business. The Company’s Board of Directors has approved an amendment to its Certificate of Incorporation to change the Company’s name from South Jersey Industries, Inc. to “SJI, Inc.” The Company’s shareholders are scheduled to vote on the amendment to the Certificate of Incorporation to change the Company’s name at its Annual Meeting to be held on May 11, 2018. SJI currently provides a variety of energy-related products and services, primarily through the following wholly-owned subsidiaries:

South Jersey Gas Company (“SJG”)

SJG, a New Jersey corporation, is an operating public utility company engaged in the purchase, transmission and sale of natural gas for residential, commercial and industrial use. SJG also sells natural gas and pipeline transportation capacity (off-system sales) on a wholesale basis to various customers on the interstate pipeline system and transports natural gas purchased directly from producers or suppliers to their customers. SJG contributed approximately $72.6 million to SJI’s net income on a consolidated basis in 2017.

SJG’s service territory covers approximately 2,500 square miles in the southern part of New Jersey. It includes 115 municipalities throughout Atlantic, Cape May, Cumberland and Salem Counties and portions of Burlington, Camden and Gloucester Counties, with an estimated permanent population of 1.2 million. SJG benefits from its proximity to Philadelphia, Pennsylvania and Wilmington, Delaware on the western side of its service territory and the popular shore communities on the eastern side. Continuing expansion of SJG’s infrastructure throughout its seven-county region has fueled annual customer growth and creates opportunities for future extension into areas not yet served by natural gas.

South Jersey Energy Solutions, LLC (“SJES”)

South Jersey Energy Solutions, LLC (SJES), a direct subsidiary of SJI, is a holding company for all of SJI’s non-utility businesses. Within SJES, we group our nonutility operations into Energy Group and Energy Services. Energy Group includes wholesale energy, retail gas and other, and retail electric operations. Energy Services includes on-site energy production. The following businesses are wholly-owned subsidiaries of SJES:

Energy Group:

South Jersey Energy Company (“SJE”) provides services for the acquisition and transportation of natural gas and electricity for retail end users and markets total energy management services. SJE markets natural gas and electricity to commercial and industrial customers. SJE became active in the residential market for electricity beginning in March 2016 as a result of several municipal aggregation bids won in the second half of 2015. Most customers served by SJE are located within New Jersey, northwestern Pennsylvania and New England. In 2017, SJE contributed approximately $1.3 million to SJI’s net income on a consolidated basis.

South Jersey Resources Group, LLC (“SJRG”) markets natural gas storage, commodity and transportation assets along with fuel management services on a wholesale basis. Customers include energy marketers, electric and gas utilities, power plants and natural gas producers. SJRG’s marketing activities occur mainly in the mid-Atlantic, Appalachian and southern regions of the country.

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SJRG also conducts price risk management activities by entering into a variety of physical and financial transactions including forward contracts, swap agreements, option contracts and futures contracts. In 2017, SJRG had a net loss of approximately $23.5 million which reduced SJI’s net income on a consolidated basis by such amount.

South Jersey Exploration, LLC (“SJEX”) owns oil, gas and mineral rights in the Marcellus Shale region of Pennsylvania. SJEX is a wholly-owned subsidiary of SJES and is also considered part of SJI’s wholesale energy operations. In 2017, SJEX contributed approximately $0.2 million to SJI’s net income on a consolidated basis.

Energy Services:

Marina Energy, LLC (“Marina”) develops and operates on-site energy-related projects. Marina’s largest wholly-owned operating project provides cooling, heating and emergency power to the Borgata Hotel Casino & Spa in Atlantic City, New Jersey. Marina also owns numerous solar generation projects.

SJI Midstream, LLC (“Midstream”) owns a 20% equity investment in PennEast Pipeline Company, LLC, through which SJI, along with other investors, expect to construct an approximately 118-mile natural gas pipeline that will extend from Northeastern Pennsylvania into New Jersey. Construction is expected to begin in 2018 and is estimated to be completed in the second half of 2019. In 2017, Midstream contributed approximately $4.6 million to SJI’s net income on a consolidated basis.

Our Strategy

SJI’s primary strategic focus is our core utility business and the natural extensions of that business. This focus enables us to concentrate on business activities that match our core competencies. Our long-term goals are to: (1) Grow Economic Earnings to $160 million by 2020; (2) Improve the quality of earnings; (3) Maintain the strength of the balance sheet; and (4) Maintain a low-to-moderate risk profile. Going forward we expect to pursue business opportunities that fit this model and provide us with the opportunity to achieve our goals, including by increasing our regulated business mix. Our key strategic priorities are as follows:

Pursue high-quality earnings growth

SJI’s stated goal is to grow Economic Earnings to $160 million by 2020. The Company estimates its capital expenditures, inclusive of affiliate investments, will be approximately $1.2 billion over the next three years, of which approximately 98% is related to SJG and SJI Midstream. As a result of these investments, the Company expects net income from SJG and SJI Midstream to account for approximately 70–80% of SJI’s total net income by 2020.

Growth in our utility business, combined with our acquisition of the Elizabethtown Business (as discussed below under “Recent Developments”) is expected to accelerate a shift to a greater regulated business mix.

Growth in our existing utility business comes from both customer growth and utility infrastructure investment. Customers for SJG grew 1.6% for 2017 as SJG continues its focus on customer conversions. In 2017, the 6,108 consumers converting their homes and businesses from other heating fuels, such as electric, propane or oil, to natural gas represented approximately 71% of the total new customer acquisitions for the year. In comparison, conversions over the past five years averaged 5,480 annually. Customers in SJG’s service territory typically base their decisions to convert on comparisons of fuel costs, environmental considerations and efficiencies. Natural gas currently offers a significant price advantage relative to other forms of fuel for customers, in addition to efficiency and environmental advantages. SJG has begun a comprehensive partnership with the State of New Jersey’s Office of Clean Energy to educate consumers on energy efficiency and to promote the rebates and incentives available to natural gas users.

Continuing expansion of South Jersey Gas’s infrastructure throughout its seven-county region has also led to customer growth and created opportunities for future extension into areas not yet served by natural gas. At present, SJG serves approximately 71% of households within its territory with natural gas. SJG believes that the ongoing transition of southern New Jersey’s oceanfront communities from seasonal resorts to year-round economies will further contribute to SJG’s customer growth. We also expect building expansions in the medical, education and retail sectors within mainland communities to drive additional growth.

Investments in our utility business, which are expected to total more than $1 billion over the next five years, are supported by a constructive New Jersey regulatory environment. We expect our regulator, the New Jersey

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Board of Public Utilities (“BPU”), to continue to set rates and establish terms of service that allow SJG to obtain a fair and reasonable return on capital invested. Further, the BPU has put in place certain programs that incentivize prudent investments in our utility system. For example, in February 2013, the BPU approved the Accelerated Infrastructure Replacement Program (“AIRP”), a $141.2 million program to replace cast iron and unprotected bare steel mains and services over a four-year period. Additionally, the BPU issued an Order approving an extension of the AIRP for a five-year period (“AIRP II”), commencing October 1, 2016, with authorized investments of up to $302.5 million to continue replacing cast iron and unprotected bare steel mains and associated services. SJG earns a return on AIRP II investments as they are made and through annual base rate adjustments. Further, in August 2014, the BPU approved a Storm Hardening and Reliability Program (“SHARP”), a $103.5 million program to replace low-pressure distribution mains and services with high-pressure mains and services in coastal areas that are susceptible to flooding during major storms over a three-year period. In November 2017, SJG filed a petition with the BPU to continue its storm hardening program (“SHARP II”), proposing a three-year effort and total investment of $110.25 million. SJG earns a return on SHARP investments as they are made and through annual base rate adjustments.

In addition to SJG, we expect SJI Midstream to further support our goal of high quality, regulated earnings growth. Design, engineering and environmental assessments continue moving forward on a natural gas pipeline in Pennsylvania and New Jersey. We expect FERC-level returns from our $200 million investment in the PennEast Pipeline Project (“PennEast”). The pipeline is fully subscribed with 80% of capacity under 15-year agreements with multiple utility and energy affiliates of project sponsors. In September 2015, SJI Midstream, along with other partners in the project, submitted an application to FERC for a permit to proceed with PennEast’s construction. In January 2018, the Certificate of Public Convenience and Necessity was approved by the FERC. This authorizes PennEast, of which Midstream has a 20% equity interest, to construct, install, own, operate and maintain this pipeline. In February 2018, the New Jersey Department of Environmental Protection filed a motion to the FERC for reconsideration of this approval. We expect to make additional investments in similar midstream projects.

Disciplined approach to non-regulated business

Consistent with our long-term strategy of growing earnings and improving the quality thereof through a shift to a greater regulated business mix, we are seeking to reposition our non-utility business to deemphasize the on-site energy production business within the Energy Services group of SJES. That includes exploring potential dispositions of some or all of the on-site energy production assets, depending on market conditions.

On-site energy production includes a 204MW portfolio of solar generation assets located in New Jersey, Maryland, Massachusetts and Vermont and the Marina Thermal Plant Cogeneration Facility, which serves Atlantic City’s Borgata Hotel Casino & Spa through an existing long-term power purchase agreement. We also own four landfill gas electric generation facilities in in New Jersey.

Our wholesale gas marketing and fuel management business is expected to be an important source of future earnings and cash flow to SJI. Our wholesale gas marketing business has been a significant contributor to SJI’s earnings over the last two decades through the management of leased gas transportation and storage capacity in and around the Marcellus shale region. We continue to actively monitor and manage risk within our retail and wholesale commodity businesses through a matched book approach and active hedging program. We adhere to a well-defined risk management policy approved by our Board of Directors that includes volumetric and monetary limits as well as detailed activity tracking on a daily basis.

Our fuel management business, a niche supplier of fuel supply management services, acquires valuable pipeline capacity that allows us to match end users, many of which are merchant generators, with producers who are looking to find a long-term home for their supply. With a total of six contracts online at full capacity and an additional five contracts executed, we are positioned to serve at least 10 gas-fired generators by 2020. As such, this business is expected to demonstrate significant earnings growth over the next several years.

Maintain our commitment to a strong balance sheet

Our goal is to maintain a strong balance sheet and liquidity position in addition to solid investment grade credit ratings. We believe these afford us the financial flexibility necessary to take advantage of significant growth opportunities in our utility and regulated businesses. SJI’s average equity-to-capitalization ratio was approximately 47% and 48% as calculated for the four quarters of 2017 and 2016, respectively. SJG’s average

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equity-to-capitalization ratio was approximately 54% and 52% as calculated for the four quarters of 2017 and 2016, respectively. A strong balance sheet assists us in maintaining the financial flexibility necessary to address volatile economic and commodity markets while maintaining a low-to-moderate risk platform.

Recent Developments

On October 15, 2017, we entered into two separate definitive asset purchase agreements with Pivotal Utility Holdings, Inc. (“Pivotal”) to acquire (the “Acquisition”) the assets of New Jersey-based Elizabethtown Gas (the “Elizabethtown Business” or “ETG”) and Maryland-based Elkton Gas (the “Elkton Business”, and collectively with the Elizabethtown Business, the “Acquired Business”). Pursuant to the terms of the asset purchase agreements, the Company intends to acquire the Elizabethtown Business for an aggregate purchase price equal to $1.69 billion in cash, and the Elkton Business for an aggregate purchase price equal to $10 million in cash, in each case, subject to certain adjustments.

The Acquired Business consists of Elizabethtown Gas and Elkton Gas, two of seven natural gas distribution companies of The Southern Company, an energy company serving approximately 4.6 million natural gas utility customers. Elizabethtown Gas is a regulated natural gas utility that provides natural gas delivery service to approximately 292,000 residential, business and industrial natural gas customers in New Jersey through approximately 3.2 million miles of intrastate natural gas pipeline. In operation since 1855, the company serves parts of Union, Middlesex, Sussex, Warren, Hunterdon, Morris and Mercer counties. During the year ended December 31, 2017, Elizabethtown Gas reported unaudited total operating revenues, income before income tax and assets of approximately $304.7 million, $55.7 million, and $1.43 billion, respectively. Elkton Gas provides natural gas delivery service to approximately 6,000 residential and business natural gas customers in the greater Elkton area in northeastern Maryland through approximately 100,000 miles of intrastate natural gas pipeline.

During the year ended December 31, 2017, Elkton Gas reported unaudited total operating revenues, income before income tax and assets of approximately $7.3 million, $0.4 million, and $18.2 million, respectively.

Management expects to complete the Acquisition in mid-2018 subject to customary closing conditions, including regulatory approvals from the New Jersey Board of Public Utilities (“NJBPU”) and the Maryland Public Service Commission (“MPSC”). In addition, the transaction is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The NJBPU, MPSC or interveners in the approval proceedings, could seek to block or challenge the Acquisition or the NJBPU or MPSC could impose restrictions they deem necessary or desirable in the public interest as a condition to approving the Acquisition. The asset purchase agreements contain other customary closing conditions which may not be satisfied or waived or may take longer than anticipated to satisfy. The Acquisition may not be completed or may be approved subject to unfavorable regulatory conditions, which could adversely affect anticipated benefits or our business, financial condition, results of operations or stock price. See “Risk Factors—Risks Related to the Acquisition.”

The asset purchase agreements contain certain termination rights for both us and Pivotal, including the right to terminate if the Acquisition is not completed by October 15, 2018 (subject to extension to January 15, 2019, under certain circumstances related to fulfillment of the regulatory approval closing conditions).

In light of the Acquisition, the potential disposition of Energy Services group on-site energy production assets and our other plans to finance the purchase price as further described below, we expect that our credit rating may be lowered upon consummation of the Acquisition. However, we believe that we will continue to maintain a solid investment grade rating.

Concurrent Offering

This offering is part of a larger financing transaction to provide funds for the Acquisition. Concurrently with the offering of the common stock, we are offering $250.0 million aggregate stated amount of our equity units (the “Equity Units”). Each Equity Unit is comprised of a purchase contract issued by us to purchase shares of our common stock and a 1/20, or 5%, undivided beneficial ownership interest in $1,000 principal amount of our 2018 Series A      % remarketable junior subordinated notes due 2031. This offering of common stock is not contingent on the concurrent offering of Equity Units, and the concurrent offering of Equity Units is not contingent upon this offering of common stock.

We also intend to issue $250.0 million in aggregate principal amount of new senior unsecured notes (the “Senior Unsecured Notes”), to borrow $530.0 million in aggregate principal amount of a new term loan facility

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(the “Term Facility”), to drawdown $71.4 million in aggregate principal amount from our existing syndicated revolving credit facility (the “Revolver”) and $314.9 million in aggregate principal amount from our bridge loan commitment (the “Bridge Loan”).

We intend to fund the Acquisition with the proceeds of this offering, the concurrent offering of the Equity Units, the issuance of the Senior Unsecured Notes, the borrowings under the Term Facility, the drawdown from the Revolver, the drawdown from the Bridge Loan and the potential disposition of Energy Services group on-site energy production assets. In connection with the asset purchase agreements, we have obtained a commitment from certain financial institutions for a bridge loan facility, which, may be used to fund a portion of the cash consideration payable in connection with the Acquisition and pay related fees and expenses in the event that this offering, the concurrent offering of the Equity Units, the issuance of the Senior Unsecured Notes, or the entry into the Term Facility are not completed or we do not pursue dispositions of Energy Services group on-site energy production assets. If we do not consummate the Acquisition, we will retain broad discretion to use all of the net proceeds from this offering for general corporate purposes.

General

Our principal executive offices are located at 1 South Jersey Plaza, Folsom, New Jersey 08037, and our telephone number at that address is (609) 561-9000.

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The Offering

The following summary contains basic information about this offering. This summary is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus supplement and the accompanying prospectus. For a more complete description of the shares of common stock, see “Description of Capital Stock” beginning on page 21 of the accompanying prospectus.

Issuer
South Jersey Industries, Inc., a New Jersey corporation
Common Stock Offered by Us
$125.0 million of shares of our common stock (or $173.75 million of shares of our common stock if the underwriters’ option to purchase $48.75 million of additional shares of our common stock is exercised in full.
Common Stock Offered by the Forward Seller
$200.0 million of shares of our common stock.
Shares of Our Common Stock to be Outstanding Immediately Following This Offering
83,737,523 shares of our common stock (or 85,335,360 shares of our common stock if the underwriters’ option to purchase additional shares of our common stock is exercised in full), which is based on an aggregate offering of $125.0 million of shares of our common stock at an assumed public offering price of $30.51 per share (the last reported sale price of our common stock on the NYSE on April 16, 2018).2
Shares of Our Common Stock to be Outstanding After Settlement of the Forward Sale Agreement Assuming Physical Settlement


90,292,751 shares of our common stock (or 91,890,587 shares of our common stock if the underwriters’ option to purchase additional shares of our common stock is exercised in full), which is based on an aggregate offering of $325.0 million of shares of our common stock at an assumed public offering price of $30.51 per share (the last reported sale price of our common stock on the NYSE on April 16, 2018).2
Use of Proceeds
We estimate that net proceeds that we receive from the sale of the common stock we are offering and selling, after deducting underwriting discounts and commissions, will be approximately $       million (or $      million if the underwriters exercise their option to purchase additional shares of our common stock in full). We will not initially receive any proceeds from the sale of the shares of our common stock offered by the forward seller pursuant to this prospectus supplement, unless an event occurs that requires us to sell our common stock to the underwriters in lieu of the forward seller selling our common stock to the underwriters. Assuming that the forward sale is physically settled, at an initial forward sale price of $    per share, we expect to receive net proceeds of approximately $    million, subject to the price adjustment and other provisions of the forward
2 Based on 79,640,506 of shares of our common stock outstanding as of April 16, 2018. Excludes (i) shares of our common stock that we may be required to sell to the underwriters in lieu of the forward seller selling our common stock to the underwriters; (ii) 216,642 shares of treasury stock; and (iii) 2,209,540 shares of common stock issuable upon the exercise of outstanding restricted stock awards or reserved for issuance pursuant to future grants of awards under our 2015 Omnibus Equity Compensation Plan.

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sale agreement, in the event of full physical settlement of the forward sale agreement, which settlement must occur within approximately 12 months of the date of this prospectus supplement. The forward sale price that we expect to receive upon physical settlement of the forward sale agreement will be subject to adjustment on a daily basis based on a floating interest rate factor equal to the overnight bank funding rate less a spread and will be decreased on each of certain dates specified in the forward sale agreement during the term of the forward sale agreement. The forward sale price will also be subject to decrease if the cost to the forward seller of borrowing the number of shares of our common stock underlying the forward sale agreement exceeds a specified amount. If the overnight bank funding rate is less than the spread on any day, the interest factor will result in a daily reduction of the forward sale price. As of the date of this prospectus supplement, the overnight bank funding rate was greater than the spread. See “Underwriting (Conflicts of Interest) —Forward Sale Agreement” for a description of the forward sale agreement.

We intend to use the net proceeds from this offering and any net proceeds that we receive upon settlement of the forward sale agreement, together with proceeds from the concurrent offering of Equity Units, proceeds from the offering of the Senior Unsecured Notes, the Term Facility and the sale of non-core assets, to fund the cash consideration payable in connection with the Acquisition and for capital expenditures primarily for regulated businesses, including infrastructure investments at our utility business. However, the consummation of this offering is not conditioned on the closing of the Acquisition or the concurrent Equity Units offering. If we do not consummate the Acquisition, we will retain broad discretion to use all of the net proceeds from this offering for general corporate purposes.

In addition, if an event occurs that requires us to sell our common stock to the underwriters in lieu of the forward seller selling our common stock to the underwriters, then we intend to use any net proceeds we receive from any such sales for the same purposes. See “Use of Proceeds.”

Listing
Our common stock is listed on the New York Stock Exchange under the symbol “SJI.”
Transfer Agent and Registrar for Our Common Stock
Broadridge Corporate Issuer Solutions, Inc.
Risk Factors
An investment in our common stock involves various risks, and prospective investors should carefully

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consider the matters discussed under the caption entitled “Risk Factors” beginning on page S-14 of this prospectus supplement and on page 5 of the accompanying prospectus.

Accounting Treatment
Before any issuance of shares of our common stock upon physical or net share settlement of the forward sale agreement, the forward sale agreement will be reflected in our diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of our common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares that would be issued upon physical or net share settlement of the forward sale agreement over the number of shares that could be purchased by us in the market (based on the average market price during the period) using the proceeds receivable upon settlement (based on the adjusted forward sale price at the end of the reporting period). Consequently, prior to physical or net share settlement of the forward sale agreement and subject to the occurrence of certain events, we anticipate there will be no dilutive effect on our earnings per share except during periods when the average market price of our common stock is above the per share adjusted forward sale price, which is initially $      (which is the public offering price of our common stock less the underwriting discount shown on the cover page of this prospectus supplement), subject to adjustment based on the overnight bank funding rate less a spread, and subject to decrease on each of certain dates specified in the forward sale agreement and if the cost to the forward seller of borrowing a number of shares of our common stock underlying the forward sale agreement exceeds a specified amount. However, if we decide to physically or net share settle the forward sale agreement, delivery of our common stock on any physical or net share settlement of the forward sale agreement will result in dilution to our earnings per share and return on equity.
Concurrent Offering
This offering is part of a larger financing transaction to provide funds for the Acquisition. Concurrently with the offering of the common stock, we are offering $250.0 million aggregate stated amount of our Equity Units. Each Equity Unit is comprised of a purchase contract issued by us to purchase shares of our common stock and a 1/20, or 5%, undivided beneficial ownership interest in $1,000 principal amount of our 2018 Series A           % remarketable junior subordinated notes due 2031. This offering of common stock is not contingent on the concurrent offering of Equity Units, and the concurrent offering of Equity Units is not contingent upon this offering of common stock.

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Conflicts of Interest
All of the proceeds of this offering (excluding proceeds paid to us (x) in respect of the shares of our common stock we are offering and selling in this offering, (y) with respect to any common shares that we sell to the underwriters in lieu of the forward seller selling our common shares to the underwriters and (z) in respect of shares of our common stock sold by us if the underwriters exercise their option to purchase additional shares of our common stock) will be paid to the forward purchaser. As a result, an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated will receive more than 5% of the net proceeds of this offering, not including underwriting compensation, thus creating a conflict of interest within the meaning of Rule 5121 (Public Offerings of Securities with Conflicts of Interest) of the Financial Industry Regulatory Authority, Inc. (“FINRA Rule 5121”). Accordingly, this offering is being conducted in compliance with FINRA Rule 5121. Merrill Lynch, Pierce, Fenner & Smith Incorporated will not confirm sales to discretionary accounts without the prior written approval of the customer. The appointment of a “qualified independent underwriter” is not necessary in connection with this offering because our common stock has a “bona fide public market” (as such terms are defined in FINRA Rule 5121).

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Summary Consolidated Financial Information

The following table sets forth selected consolidated financial information for us and unaudited pro forma condensed combined financial statements for us and the Elizabethtown Business. The summary consolidated financial data has been derived from our audited consolidated financial statements and related notes for the three years ended December 31, 2017, 2016 and 2015 contained in our Annual Report on Form 10-K for the year ended December 31, 2017, which is incorporated in this prospectus supplement by reference. The summary financial information should be read in conjunction with the consolidated financial statements described above and the related notes. The unaudited pro forma condensed combined financial statements are based upon the historical consolidated financial data of the Company and the Elizabethtown Business, after giving effect to the acquisition of the Elizabethtown Business by the Company as of December 31, 2017. The unaudited pro forma condensed combined financial statements should be read in conjunction with the financial statements presented in “Unaudited Pro Forma Condensed Combined Financial Data of the Company and the Elizabethtown Business” in this prospectus supplement and the related notes thereto.

Our historical and pro forma financial data may not be indicative of the results of operations or financial position to be expected in the future.

 
Historical South Jersey Industries, Inc.
Pro Forma
Combined
(In thousands except for per share data)
Year ended December 31,
Year ended
December 31,
2017
2016
2015
2017
Statements of consolidated income and statements of consolidated cash flows data:
 
 
 
Total operating revenues
$
1,243,068
 
$
1,036,500
 
$
959,568
 
$
1,547,815
 
Total operating expenses
 
1,238,658
 
 
847,224
 
 
802,674
 
 
1,454,028
 
Operating income
 
4,410
 
 
189,276
 
 
156,894
 
 
93,787
 
Income from continuing operations
 
(3,404
)
 
119,061
 
 
105,610
 
 
18,258
 
Net income
 
(3,490
)
 
118,810
 
 
105,107
 
 
18,172
 
Basic earnings per common share
 
(0.04
)
 
1.56
 
 
1.53
 
 
0.20
 
Diluted earnings per common share
 
(0.04
)
 
1.56
 
 
1.52
 
 
0.20
 
Capital expenditures
 
(272,965
)
 
(279,423
)
 
(343,883
)
 
(428,113
)
Consolidated operating data:
 
 
 
 
 
 
 
 
 
 
 
 
Economic Earnings(1)
$
98,065
 
$
102,842
 
$
98,974
 
$
115,628
 
Economic EPS per diluted share
$
1.23
 
$
1.34
 
$
1.44
 
$
1.27
 
(1) We define Economic Earnings as: Income from continuing operations, (a) less the change in unrealized gains and plus the change in unrealized losses on all derivative transactions; (b) less realized gains and plus realized losses on all commodity derivative transactions attributed to expected purchases of gas in storage to match the recognition of these gains and losses with the recognition of the related cost of the gas in storage in the period of withdrawal; (c) less the impact of transactions or contractual arrangements where the true economic impact will be realized in a future period; (d) as adjusted by the impact of a May 2017 jury verdict stemming from a pricing dispute with a gas supplier over costs, including interest charges and legal fees incurred; (e) as adjusted by the impact of a settlement of an outstanding legal claim stemming from a dispute related to a three-year capacity management contract with a counterparty, including legal fees incurred; (f) as adjusted by the impact of a favorable FERC decision over a tariff rate dispute with a counterparty, including interest earned; and (g) as adjusted for various costs related to the agreement to acquire the assets of Elizabethtown Gas and Elkton Gas. With respect to part (c) of the definition of Economic Earnings:
For the year ended December 31, 2017, Economic Earnings excludes an approximately $2.4 million pre-tax loss related to a new interest rate derivative and amendments made to an existing interest rate derivative linked to unrealized losses previously recorded in Accumulated Other Comprehensive Loss (“AOCL”). SJI reclassified this amount from AOCL to Interest Charges on the consolidated statements

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of income as a result of the prior hedged transactions being deemed probable of not occurring. Since the economic impact will not be realized until future periods, this amount is excluded from Economic Earnings. See Note 16 to the consolidated financial statements.

For the year ended December 31, 2017, Economic Earnings excludes approximately $91.3 million of pre-tax charges related to several impairment charges recorded during the year, including impairments on solar generating facilities, landfill gas-to-energy (“LFGTE”) long-lived assets, LFGTE assets customer relationships, and goodwill (see Note 1 to the consolidated financial statements). The economic impact of these charges will not be realized until a future period. An impairment charge was also recorded in 2012 within Income from Continuing Operations on a separate solar generating facility which reduced its depreciable basis and recurring depreciation expense, and this was also excluded from Economic Earnings.
For the year ended December 31, 2017, Economic Earnings excludes approximately $11.4 million for the impact of one-time tax adjustments, most notably related to the Tax Cuts and Jobs Act (“Tax Reform”), which was signed into law in December 2017.
For the year ended December 31, 2015, Economic Earnings includes a pre-tax loss of $2.5 million from affiliated companies that was excluded from Economic Earnings for the year ended December 31, 2014. These adjustments are the result of a reserve for uncollectible accounts recorded by an Energenic subsidiary that owned and operated a central energy center and energy distribution system for a hotel, casino and entertainment complex in Atlantic City, New Jersey (see Note 7 to the consolidated financial statements). In 2014, this charge was excluded from Economic Earnings as the total economic impact of the proceedings had not been realized. During the second quarter of 2015, the Company, through its investment in Energenic, reduced the carrying value of the investment in this project. As such, this charge is included in Economic Earnings for the year ended December 31, 2015.

Economic Earnings is a significant performance metric used by our management to indicate the amount and timing of income from continuing operations that we expect to earn after taking into account the impact of derivative instruments on the related transactions, and transactions or contractual arrangements where the true economic impact will be realized primarily in a future period or was realized in a previous period. Specifically regarding derivatives, we believe that this financial measure indicates to investors the profitability of the entire derivative-related transaction and not just the portion that is subject to mark-to-market valuation under GAAP. We believe that considering only the change in market value on the derivative side of the transaction can produce a false sense as to the ultimate profitability of the total transaction as no change in value is reflected for the non-derivative portion of the transaction.

The following table presents a reconciliation of our income from continuing operations and earnings per share from continuing operations to Economic Earnings and Economic Earnings per share (in thousands, except per share data):

 
Historical South Jersey Industries, Inc.
Pro Forma
Combined
 
Year ended December 31,
Year ended
December 31,
 
2017
2016
2015
2017
(Loss) Income from Continuing Operations
$
(3,404
)
$
119,061
 
$
105,610
 
$
18,258
 
Minus/Plus:
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized Mark-to-Market Losses/(Gains) on Derivatives*
 
14,226
 
 
(27,550
)
 
(8,444
)
 
14,226
 
Realized Losses on Inventory Injection Hedges*
 
332
 
 
683
 
 
89
 
 
332
 
Net Loss from Affiliated Companies(A)*
 
 
 
 
 
(2,540
)
 
 
Unrealized Loss on Property, Plant and Equipment(B)
 
91,299
 
 
 
 
 
 
91,299
 
Net Losses from Legal Proceedings(C)
 
56,075
 
 
 
 
 
 
56,075
 
Acquisition Costs(D)
 
19,564
 
 
 
 
 
 
12,898
 
Other(E)*
 
2,227
 
 
(165
)
 
(165
)
 
2,227
 
Income Taxes(F)
 
(70,834
)
 
10,813
 
 
4,424
 
 
(68,267
)
Additional Tax Adjustments(G)
 
(11,420
)
 
 
 
 
 
(11,420
)

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Historical South Jersey Industries, Inc.
Pro Forma
Combined
 
Year ended December 31,
Year ended
December 31,
 
2017
2016
2015
2017
Economic Earnings
$
98,065
 
$
102,842
 
$
98,974
 
$
115,628
 
(Loss) Earnings per Share from Continuing Operations
$
(0.04
)
$
1.56
 
$
1.53
 
$
0.20
 
Minus/Plus:
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized Mark-to-Market Losses/(Gains) on Derivatives*
 
0.18
 
 
(0.36
)
 
(0.12
)
 
0.16
 
Realized Losses on Inventory Injection Hedges*
 
 
 
0.01
 
 
 
 
 
Net Loss from Affiliated Companies(A)*
 
 
 
 
 
(0.04
)
 
 
Unrealized Loss on Property, Plant and Equipment(B)
 
1.14
 
 
 
 
 
 
1.00
 
Net Losses from Legal Proceedings(C)
 
0.70
 
 
 
 
 
 
0.62
 
Acquisition Costs(D)
 
0.25
 
 
 
 
 
 
0.14
 
Other(E)*
 
0.03
 
 
 
 
 
 
0.02
 
Income Taxes(F)
 
(0.89
)
 
0.13
 
 
0.07
 
 
(0.75
)
Additional Tax Adjustments(G)
 
(0.14
)
 
 
 
 
 
(0.12
)
Economic Earnings per Share
$
1.23
 
$
1.34
 
$
1.44
 
$
1.27
 
* Certain reclassifications have been made to the prior period numbers in these tables to conform to the current period presentation. The 2015 numbers in these line items have been adjusted to be presented before income taxes.
(A) Resulting from a reserve for uncollectible accounts recorded by an Energenic subsidiary that owned and operated a central energy center and energy distribution system for a hotel, casino and entertainment complex in Atlantic City, New Jersey (see Note 7 to the consolidated financial statements). In 2014, this charge was excluded from Economic Earnings as the total economic impact of the proceedings had not been realized. During the second quarter 2015, the Company, through its investment in Energenic, reduced the carrying value of the investment in this project. As such, this charge is included in Economic Earnings in 2015.
(B) Represents several impairment charges recorded during the year, including impairments on solar generating facilities, landfill gas-to-energy long-lived assets, LFGTE assets customer relationships, and goodwill (see Note 1 to the consolidated financial statements). The economic impact of these charges will not be realized until a future period.
(C) Represents net losses from three separate legal proceedings: (a) $55.6 million of pre-tax charges, including interest and legal fees, resulting from a ruling in a legal proceeding related to a pricing dispute between SJI and a gas supplier that began in October 2014; (b) a $9.8 million pre-tax charge, including legal fees, resulting from a settlement with a counterparty over a dispute related to a three-year capacity management contract; and (c) a $9.3 million pre-tax gain resulting from a favorable FERC decision, including interest, over a tariff rate dispute with a counterparty, whereby SJI contended that the counterparty was overcharging for storage demand charges over a ten-year period. See Note 15 to the consolidated financial statements. Since these net losses relate to transactions that primarily occurred in prior periods, these net losses are excluded from Economic Earnings.
(D) For SJI Historical, this represents, costs incurred on the agreement to acquire the assets of Elizabethtown Gas and Elkton Gas (see Note 1 to the consolidated financial statements). Since the economic impact will not be realized until future periods, this amount is excluded from Economic Earnings. For Pro Forma Combined purposes, this represents specific costs incurred related to the financing of the acquisition not already excluded in the Pro Forma (Loss) Income from Continuing Operations amounts.
(E) Included in this amount are amendments made to an existing interest rate derivative linked to unrealized losses previously recorded in AOCL, which SJI reclassified from AOCL to Interest Charges on the consolidated statements of income as a result of the prior hedged transactions being deemed probable of not occurring. Since the economic impact will not be realized until future periods, this amount is excluded from Economic Earnings. Also included is additional depreciation expense within Economic Earnings on two solar generating facilities where an impairment charge was recorded in the past, which reduced the depreciable basis and recurring depreciation expense, and the related reduction in depreciation expense is being added back.
(F) Determined using a combined average statutory tax rate of approximately 39% for 2017 and 40% for 2016 and 2015.
(G) Represents one-time tax adjustments, most notably for Tax Reform, which was signed into law in December 2017.

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There is no difference between SJG’s GAAP net income and Economic Earnings.

 
Historical South Jersey Industries, Inc.
Pro Forma
Combined
 
As of December 31,
As of December 31,
(In thousands)
2017
2016
2017
Consolidated balance sheets data:
 
 
 
 
 
 
 
 
 
Total assets
$
3,865,086
 
$
3,730,567
 
$
5,876,918
 
Long-term debt
 
1,122,999
 
 
808,005
 
 
2,222,313
 
Total equity
 
1,192,409
 
 
1,289,240
 
 
1,452,988
 
 
Historical South Jersey Industries, Inc.
 
Year ended December 31,
 
2017
2016
2015
Operating Revenues:
 
 
 
 
 
 
Gas Utility Operations
$
517,254
 
$
461,055
 
$
534,290
 
Energy Group:
 
 
 
 
 
 
 
 
 
Wholesale Energy Operations
 
352,613
 
 
220,707
 
 
129,098
 
Retail Gas and Other Operations
 
111,048
 
 
92,371
 
 
87,198
 
Retail Electric Operations
 
179,534
 
 
182,540
 
 
150,049
 
Subtotal Energy Group
 
643,195
 
 
495,618
 
 
366,345
 
Energy Services:
 
 
 
 
 
 
 
 
 
On-Site Energy Production
 
99,517
 
 
94,375
 
 
63,665
 
Appliance Service Operations
 
6,488
 
 
7,898
 
 
11,186
 
Subtotal Energy Services
 
106,005
 
 
102,273
 
 
74,851
 
Corporate & Services
 
45,024
 
 
35,147
 
 
31,156
 
Subtotal
 
1,311,478
 
 
1,094,093
 
 
1,006,642
 
Intersegment Sales
 
(68,410
)
 
(57,593
)
 
(47,074
)
Total Operating Revenues
$
1,243,068
 
$
1,036,500
 
$
959,568
 

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Risk Factors

Investing in our common stock involves risks, including the risks described below that are specific to our business and our common stock. Before purchasing any shares of our common stock, you should carefully consider and evaluate all of the information included and incorporated by reference in this prospectus supplement and the accompanying prospectus, including those set forth under the caption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2017, which is incorporated by reference in this prospectus supplement, as well as the additional risks described below. We encourage you to read these risk factors in their entirety. Additional risks and uncertainties not currently known to us or those currently viewed by us to be immaterial may also materially and adversely affect us.

Risks Related to Our Business

SJI is a holding company and its assets consist primarily of investments in subsidiaries.

Should SJI’s subsidiaries be unable to pay dividends or make other payments to SJI for financial, regulatory, legal or other reasons, SJI’s ability to pay dividends on its common stock could be limited. SJI’s stock price could be adversely affected as a result.

SJI’s business activities, including those of SJG, are concentrated in southern New Jersey.

Changes in the economies of southern New Jersey and surrounding regions could negatively impact the growth opportunities available to SJI and the financial condition of the customers and prospects of SJI and SJG.

Changes in the regulatory environment or unfavorable rate regulation at its utility may have an unfavorable impact on SJI’s and SJG’s financial performance or condition.

SJG is regulated by the New Jersey Board of Public Utilities (“BPU”) which has authority over many of the activities of the utility business including, but not limited to, the rates it charges to its customers, the amount and type of securities it can issue, the nature of investments it can make, the nature and quality of services it provides, safety standards and other matters. The extent to which the actions of regulatory commissions restrict or delay SJG’s ability to earn a reasonable rate of return on invested capital and/or fully recover operating costs may adversely affect SJI and SJG’s results of operations, financial condition and cash flows.

SJI and SJG may not be able to respond effectively to competition, which may negatively impact their financial performance or condition.

Regulatory initiatives may provide or enhance opportunities for competitors that could reduce utility income obtained from existing or prospective customers. Also, competitors in all of SJI’s business lines may be able to provide superior or less costly products or services based upon currently available or newly developed technologies.

Warm weather, high commodity costs, or customer conservation initiatives could result in reduced demand for some of SJI’s and SJG’s energy products and services.

SJG currently has a conservation incentive program clause that protects its revenues and gross margin against usage that is lower than a set level. Should this clause be terminated without replacement, lower customer energy utilization levels would likely reduce SJI’s and SJG’s net income. Further, during periods of warmer temperatures, demand and volatility in the natural gas market could decrease, which would negatively impact their financial results.

High natural gas prices could cause more of SJI’s and SJG’s receivables to be uncollectible.

Higher levels of uncollectibles from either residential or commercial customers would negatively impact SJI’s and SJG’s income and could result in higher working capital requirements.

SJI’s and SJG’s net income could decrease if it is required to incur additional costs to comply with new governmental safety, health or environmental legislation.

SJI and SJG are subject to extensive and changing federal, state and local laws and regulations that impact many aspects of its business; including the storage, transportation and distribution of natural gas, as well as the remediation of environmental contamination at former manufactured gas plant facilities.

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Climate change legislation could impact SJI’s and SJG’s financial performance and condition.

Climate change is receiving ever increasing attention from both scientists and legislators. The debate is ongoing as to the extent to which our climate is changing, the potential causes of this change and its future impacts. Some attribute global warming to increased levels of greenhouse gases, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. The outcome of federal and state actions to address global climate change could result in a variety of regulatory programs, including additional charges to fund energy efficiency activities or other regulatory actions. These actions could affect the demand for natural gas and electricity, result in increased costs to our business and impact the prices we charge our customers. Because natural gas is a fossil fuel with low carbon content, it is possible that future carbon constraints could create additional demands for natural gas, both for production of electricity and direct use in homes and businesses. Any adoption by federal or state governments mandating a substantial reduction in greenhouse gas emissions could have far-reaching and significant impacts on the energy industry. We cannot predict the potential impact of such laws or regulations on our future consolidated financial condition, results of operations or cash flows.

SJI’s wholesale commodity marketing and retail electric businesses are exposed to the risk that counterparties that owe money or energy to SJI will not be able to meet their obligations for operational or financial reasons.

SJI could be forced to buy or sell commodity at a loss as a result of such failure. Such a failure, if large enough, could also impact SJI’s liquidity.

Increasing interest rates would negatively impact the net income of SJI and SJG.

Several of SJI’s subsidiaries, including SJG, are capital intensive, resulting in the incurrence of significant amounts of debt financing. Some of the long-term debt of SJI and its subsidiaries is issued at fixed rates or has utilized interest rate swaps to mitigate changes in variable rates. However, long-term debt of SJI and SJG at variable rates, along with all variable rate short-term borrowings, are exposed to the impact of rising interest rates.

The inability to obtain capital, particularly short-term capital from commercial banks, could negatively impact the daily operations and financial performance of SJI and SJG.

SJI and SJG use short-term borrowings under committed credit facilities provided by commercial banks to supplement cash provided by operations, to support working capital needs, and to finance capital expenditures, as incurred. SJG also relies upon short-term borrowings issued under a commercial paper program supported by a committed bank credit facility to support working capital needs, and to finance capital expenditures, as incurred. If the customary sources of short-term capital were no longer available due to market conditions, SJI and its subsidiaries may not be able to meet their working capital and capital expenditure requirements and borrowing costs could increase.

A downgrade in either SJI’s or SJG’s credit ratings could negatively affect our ability to access adequate and cost-effective capital.

Our ability to obtain adequate and cost-effective capital depends to a significant degree on our credit ratings, which are greatly influenced by our financial condition and results of operations. If the rating agencies downgrade either SJI’s or SJG’s credit ratings, particularly below investment grade, our borrowing costs would increase. In addition, we would likely be required to pay higher interest rates in future financings and potential funding sources would likely decrease. To the extent that a decline in SJG’s credit rating has a negative effect on SJI, SJI could be required to provide additional support to certain counterparties.

Hedging activities of the Company designed to protect against commodity price or interest rate risk may cause fluctuations in reported financial results and SJI’s stock price could be adversely affected as a result.

Although SJI enters into various contracts to hedge the value of energy assets, liabilities, firm commitments or forecasted transactions, the timing of the recognition of gains or losses on these economic hedges in accordance with accounting principles generally accepted in the United States of America does not always match up with the gains or losses on the items being hedged. The difference in accounting can result in volatility in reported results, even though the expected profit margin is essentially unchanged from the dates the transactions were consummated.

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The inability to obtain natural gas or electricity from suppliers would negatively impact the financial performance of SJI and SJG.

Several of SJI’s subsidiaries, including SJG, have businesses based upon the ability to deliver natural gas or electricity to customers. Disruption in the production or transportation to SJI or SJG from its suppliers could prevent SJI or SJG from completing sales to its customers.

Transporting and storing natural gas involves numerous risks that may result in accidents and other operating risks and costs.

SJI’s and SJG’s gas distribution activities involve a variety of inherent hazards and operating risks, such as leaks, accidents, mechanical problems, natural disasters or terrorist activities which could cause substantial financial losses. In addition, these risks could result in loss of human life, significant damage to property, environmental pollution and impairment of operations, which in turn could lead to substantial losses. In accordance with customary industry practice, SJI and SJG maintain insurance against some, but not all, of these risks and losses. The occurrence of any of these events, even if fully covered by insurance, could adversely affect SJI’s or SJG’s financial position, results of operations and cash flows.

Adverse results in legal proceedings could be detrimental to the financial condition of SJI or SJG.

The outcomes of legal proceedings can be unpredictable and can result in adverse judgments.

Renewable energy projects at Marina receive significant benefit from regulatory incentives.

A significant portion of the expected return on investment of these renewable energy projects is dependent upon the future market for renewable energy credits (“RECs”). The benefits from RECs are produced during the entire life of the project. As a result, earnings from existing projects would be adversely affected without a liquid REC market. Therefore, these projects are exposed to the risk that favorable regulatory incentives expire or are adversely modified. A decrease in the future value of electricity and Solar RECs impacted by market conditions and/or legislative changes may negatively impact Marina’s return on its investments as well as lead to impairment of the respective assets.

Constraints in available pipeline capacity, particularly in the Marcellus Shale producing region, may negatively impact SJI’s financial performance.

Natural gas production and/or pipeline transportation disruptions in the Marcellus region, where SJI has natural gas receipt requirements, may cause temporary take-away constraints resulting in higher transportation costs and the sale of shale gas at a loss.

SJI’s and SJG’s business could be adversely impacted by strikes or work stoppages by its unionized employees.

The gas utility operations of SJG are dependent upon employees represented by unions and covered under collective bargaining agreements. A work stoppage could negatively impact operations, which could impact financial results as well as customer relationships.

The risk of terrorism may adversely affect the economy as well as SJI’s and SJG’s business.

An act of terror could result in disruptions of natural gas supplies and cause instability in the financial and capital markets. This could adversely impact SJI’s or SJG’s ability to deliver products or raise capital and could adversely impact its results of operations.

Failure to obtain proper approvals and property rights in the PennEast pipeline could hinder SJI’s equity investment in the project.

Construction, development and operation of energy investments, specifically the PennEast pipeline, are subject to federal and state regulatory oversight and require certain property rights from public and private property owners, as well as regulatory approvals, including environmental and other permits and licenses. SJI, as well as our joint venture partners in the PennEast pipeline, may be unable to obtain all such needed property rights, permits and licenses to successfully construct and develop the pipeline, and failing to do so could cause SJI’s equity investment in the project to become impaired. Such impairment could have a materially adverse effect on SJI’s financial condition and results of operations.

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Our business could be harmed by cybersecurity threats and related disruptions.

We rely extensively on information technology systems to process transactions, transmit and store information and manage our business. Disruption or failure of our information technology systems could shut down our facilities or otherwise harm our ability to safely deliver natural gas to our customers, serve our customers effectively, manage our assets, or otherwise materially disrupt our business. Cyber threats are constantly evolving, increasing the difficulty of detecting and successfully defending against them. SJI and SJG have experienced such attacks in the past; however, based on information currently available to SJI and SJG, none have had a material impact on our business, financial condition, results of operations or cash flows. In response, we have invested in expanded cybersecurity systems and procedures designed to safeguard the continuous and uninterrupted performance of our information technology systems and protect against unauthorized access. However, all information technology systems are potentially vulnerable to security threats, including hacking, viruses, other malicious software, and other unlawful attempts to disrupt or gain access to such systems. There is no guarantee that our cybersecurity systems and procedures will prevent or detect the unauthorized access by experienced computer programmers, hackers or others. An attack on or failure of our information technology systems could result in the unauthorized disclosure, theft, misuse or destruction of customer or employee data or business or confidential information, or disrupt the performance of our information technology systems. These events could expose us to potential liability, litigation, governmental inquiries, investigations or regulatory actions, harm our brand and reputation, diminish customer confidence, disrupt operations, and subject us to payment of fines or other penalties, legal claims by our clients and significant remediation costs.

Our stated long-term goals are based on various assumptions and beliefs that may not prove to be accurate, and we may not achieve our stated long-term goals by 2020 or at all.

Our current long-term goals are to (i) grow Economic Earnings to $160 million by 2020; (ii) improve the quality of our earnings; (iii) maintain the strength of our balance sheet; and (iv) maintain a low-to-moderate risk profile. The goal of $160 million does not include the expected financial impact of the acquisition of Elizabethtown Gas and Elkton Gas discussed below. Management established those goals in conjunction with our board of directors based upon a number of different internal and external factors that characterize and influence our current and expected future activities. For example, these long-term goals are based on certain assumptions regarding our participation in a current project to build an approximately 118-mile natural gas pipeline in Pennsylvania and New Jersey. However, construction on this project is not expected to begin until 2018 and is estimated to be completed in the second half of 2019, but may be subject to delay. As a result, no assurance can be given that this project will be completed on time or at all. Also, as noted below, the acquisition of Elizabethtown Gas and Gas is subject to many approvals, and no assurance can be given that the acquisition will be consummated, or, if consummated, that these two entities will perform as expected. Further, the economy of Southern New Jersey has remained depressed relative to other regions, which could cause increased customer delinquencies or otherwise negatively affect achievement of our long-term earnings goals. The 2017 New Jersey gubernatorial election resulted in a change in administration which could lead to unfavorable state and local regulatory changes that could delay approvals, require environmental remediation or capital or other expenditures or otherwise adversely affect our results of operations, financial condition or cash flows. Other factors, assumptions and beliefs of management and our board of directors on which our long-term goals were based may also prove to differ materially from actual future results. Accordingly, we may not achieve our stated long-term goals by 2020 or at all, or our stated long-term goals may be negatively revised as a result of less than expected progress toward achieving these goals, and you are therefore cautioned not to place undue reliance on these goals.

Risks Related to the Acquisition

Our acquisition of Elizabethtown Gas and Elkton Gas may not be consummated, and if consummated, may not perform as expected.

We have entered into agreements to acquire the assets of New Jersey-based Elizabethtown Gas and Maryland-based Elkton Gas. Completion of the transaction is subject to a number of risks and uncertainties and we can provide no assurance that the various closing conditions to the acquisition agreement will be satisfied, including that the required governmental and other necessary approvals will be obtained. Although we have obtained a bridge commitment, subject to certain conditions, to fund the acquisition, our ability to raise the

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necessary funds to provide permanent financing through the issuance of equity or debt securities is subject to market conditions and other risks and uncertainties, and there can be no assurance that we will be able to raise the necessary funds on terms we consider favorable, or at all. The inability to complete the transaction, or to obtain permanent financing on terms that are favorable, or at all, could have a material adverse effect on our results of operations, financial condition and prospects. Historically, acquisitions have not been a part of our growth strategy. Although the acquired businesses have significant operating histories, we will have no history of owning and operating these businesses and limited or no experience operating in the territories served by these businesses. We can provide no assurance that the acquired businesses will perform as expected, that integration or other one-time costs will not be greater than expected, that we will not incur unforeseen obligations or liabilities or that the rate of return from such businesses will justify our decision to invest capital to acquire them.

We may experience difficulties in integrating the operations of Elizabethtown Gas and Elkton Gas into our business and in realizing the expected benefits of the proposed acquisition.

The success of the proposed acquisition of Elizabethtown Gas and Elkton Gas, if completed, will depend in part on our ability to realize the anticipated business opportunities from combining the operations of Elizabethtown Gas and Elkton Gas with our business in an efficient and effective manner. The integration process could take longer than anticipated and could result in the loss of key employees, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third parties, or our ability to achieve the anticipated benefits of the transaction, and could harm our financial performance. If we are unable to successfully or timely integrate the operations of Elizabethtown Gas and Elkton Gas with our business, we may incur unanticipated liabilities and be unable to realize the revenue growth, synergies and other anticipated benefits resulting from the proposed transaction, and our business, results of operations and financial condition could be materially and adversely affected.

Our acquisition of Elizabethtown Gas and Elkton Gas involves risks associated with acquisitions and integrated acquired assets, including the potential exposure to significant liabilities, and the intended benefits of the acquisition of Elizabethtown Gas and Elkton Gas may not be realized.

The acquisition of Elizabethtown Gas and Elkton Gas involves risks associated with acquisitions and integrating acquired assets into existing operations, including that:

our senior management’s attention may be diverted from the management of daily operations to the integration of the assets acquired in the acquisition of Elizabethtown Gas and Elkton Gas;
we could incur significant unknown and contingent liabilities for which we have limited or no contractual remedies or insurance coverage;
the assets to be acquired may not perform as well as we anticipate; and
unexpected costs, delays and challenges may arise in integrating the assets acquired in Acquisition into our existing operations.

Even if we successfully integrate the assets acquired in the Acquisition into our operations, it may not be possible to realize the full benefits we anticipate or we may not realize these benefits within the expected time frame. If we fail to realize the benefits we anticipate from the Acquisition, our business, results of operations and financial condition may be adversely affected.

We expect to issue securities pursuant to this offering and the concurrent offering of Equity Units, as well as the Senior Unsecured Notes, to provide permanent financing for the Acquisition in lieu of or to refund borrowings under a bridge loan facility, and, as a result, we are subject to market risks including market demand for our debt and equity securities. We are also seeking to consummate certain asset sales.

In connection with the asset purchase agreements, we have obtained a commitment from the underwriters for a bridge loan facility, which may be used to fund a portion of the cash consideration payable in connection with the Acquisition and pay related fees and expenses in the event that permanent financing is not completed at the time of the closing of the Acquisition. The permanent financing is anticipated to include the common stock and Equity Units, which will be sold in this offering and the concurrent offering, respectively, the Senior Unsecured Notes, the Term Facility and, depending on market conditions, may include other instruments.

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Although we and our advisers believe we have taken prudent steps to position SJI and its subsidiaries for successful capital raises, we cannot assure you as to the ultimate cost or availability of funds to complete the permanent financing.

Among other risks, the planned increase in our indebtedness may:

make it more difficult for us to repay or refinance our debts as they become due during adverse economic and industry conditions;
limit our flexibility to pursue other strategic opportunities or react to changes in our business and the industry in which we operate and, consequently, place us at a competitive disadvantage to competitors with less debt;
require an increased portion of our cash flows from operations to be used for debt service payments, thereby reducing the availability of cash flows to fund working capital, capital expenditures, dividend payments and other general corporate purposes;
result in a downgrade in the credit rating of our indebtedness, which could limit our ability to borrow additional funds or increase the interest rates applicable to our indebtedness;
result in higher interest expense in the event of increases in market interest rates for both long-term debt as well as short-term commercial paper, bank loans or borrowings under our line of credit at variable rates;
reduce the amount of credit available to support hedging activities; and
require that additional terms, conditions or covenants be placed on us.

Among other risks, the issuance of additional equity by SJI pursuant to the offering hereby may:

be dilutive to our existing shareholders and earnings per share;
impact our capital structure and cost of the capital;
be adversely impacted by movements in the overall equity markets or the utility or natural gas utility industry sectors of that market, which could impact the offering price of our new equity or necessitate the use of other equity or equity-like instruments such as preferred stock, convertible preferred shares, or convertible debt; and
impact our ability to make our current and future dividend payments.

In addition to securities offerings, we are also seeking to sell certain non-core assets of the Company. We are not party to definitive documentation with respect to any asset sales and cannot assure you that we will be able to consummate such sales or achieve the prices we are anticipating. If we raise less proceeds from the asset sales, we would need to incur additional debt under our bridge facility to finance the acquisition, which would increase our indebtedness and interest expense.

The summary unaudited pro forma financial information contained elsewhere in this prospectus supplement may not be representative of the combined results of SJI, Elizabethtown Gas and Elkton Gas after the consummation of the Acquisition, and accordingly, you have limited financial information on which to evaluate the integrated companies.

The summary unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have actually occurred had the acquisition of the Elizabethtown Business been completed at or as of the dates indicated, nor is it indicative of our future operating results or financial position. The summary unaudited pro forma financial information does not reflect future events that may occur after the closing of the Acquisition, including the potential realization of operating cost savings or costs related to the planned integration of Elizabethtown Gas and Elkton Gas, and does not consider potential impacts of current market conditions on revenues or expenses. The summary unaudited pro forma financial information presented in this prospectus supplement is based in part on certain assumptions regarding the acquisition of the Elizabethtown Business that we believe are reasonable under the circumstances. We cannot assure you that our assumptions will prove to be accurate over time. In addition, the pro forma financial statements do not reflect the results of Elkton Gas as we do not have audited financial statements for that business.

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We will be subject to business uncertainties while the Acquisition is pending.

The preparation required to complete the Acquisition may place a significant burden on management and internal resources. The additional demands on management and any difficulties encountered in completing the Acquisition, including the transition and integration process, could adversely affect our financial results.

Failure to complete the Acquisition could negatively affect our stock price as well as our future business and financial results.

If the Acquisition is not completed, we will be subject to a number of risks, including:

we must pay costs related to the Acquisition, including legal, accounting, financial advisory, filing and printing costs, whether the Acquisition is completed or not;
we could be subject to litigation related to the failure to complete the Acquisition or other factors, which litigation may adversely affect our business, financial results and stock price; and
if we complete the offering of our common stock contemplated by this prospectus supplement, we would be subject to significant earnings per share dilution if we do not find other attractive investment opportunities or undertake other means reduce our overall shares outstanding.

The Acquisition may not achieve its intended results, including anticipated investment oppurtunities and earnings growth.

Although we expect that the Acquisition will result in various benefits, including expanding our gas utility rate and customer bases, providing investment opportunities through infrastructure development and enhancing our regulatory relationships within the local communities served, we cannot assure you regarding when or the extent to which we will be able to realize these or other benefits. Achieving the anticipated benefits, is subject to a number of uncertainties, including whether the businesses acquired can be operated in the manner we intend and whether our costs to finance the Acquisition will be consistent with our expectations. Events outside of our control, including but not limited to regulatory changes or developments, could also adversely affect our ability to realize the anticipated benefits from the Acquisition. Thus the integration of the Elizabethtown Gas and Elkton Gas businesses, respectively may be unpredictable, subject to delays or changed circumstances, and we cannot assure you that the acquired businesses will perform in accordance with our expectations or that our expectations with respect to improving our business risk profile, leveraging existing regulatory relationships or achieving earnings growth as a result of the Acquisition will be achieved. In addition, our anticipated costs to achieve the integration of the acquired businesses may differ significantly from our current estimates. The integration may place an additional burden on our management and internal resources, and the diversion of management’s attention during the integration process could have an adverse effect on our business, financial condition and expected operating results.

Risks Related to the Offering and our Common Stock

Provisions in our governing documents and New Jersey law may delay or prevent an acquisition of us, which could decrease the value of our shares.

Our Certificate of Incorporation, Bylaws, and New Jersey law contain provisions that may make it difficult for a third party to acquire us without the consent of our Board of Directors. These include provisions allowing our Board of Directors to increase the size of the Board of Directors and appoint new directors to fill the resulting vacancies, as well as provisions prohibiting shareholders from nominating directors or bringing other business before an annual meeting without complying with specific advance notice requirements. In addition, our Certificate of Incorporation restricts mergers, asset dispositions and securities transactions between us and any holder of 5% or more of our outstanding capital stock. New Jersey law also imposes restrictions on mergers and other business combinations between us and any holder of 10% or more of the voting power of our outstanding voting stock. Our Board of Directors has the right to issue preferred stock without shareholder approval, which our Board of Directors could use to effect a rights plan or “poison pill” that could dilute the stock ownership of a potential hostile acquirer. These provisions may have the effect of delaying, discouraging or preventing an unsolicited acquisition of us, even when a majority of our shareholders might consider such a transaction desirable. See “Description of Capital Stock” in the accompanying prospectus.

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The market price of our common stock may fluctuate significantly, and shares of our common stock may trade at prices below the price at which you purchased them.

The market price of our common stock following this offering may fluctuate significantly as a result of many factors, including, but not limited to:

energy prices or expected energy prices;
environmental costs, liabilities or initiatives;
regulatory changes;
weather and seasonal fluctuations in demand for natural gas and electricity;
adverse outcomes from litigation or government, regulatory or internal investigations;
changes in financial estimates and recommendations by securities analysts;
operating and stock price performance of other companies that investors may deem comparable;
changes in our credit rating;
quarterly or other periodic variations in operating results;
sales of stock by insiders;
general economic conditions;
natural disasters, terrorist attacks and pandemics; and
limitations on our ability to repurchase our common stock.

Broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, shares of our common stock may trade at prices significantly below the price at which you purchased them. In addition, security holders often institute class action litigation following periods of volatility in the price of a company’s securities. If the market value of our common stock experiences adverse fluctuations and we become a party to this type of litigation, regardless of the outcome, we could incur substantial legal costs and our management’s attention could be diverted from the operation of our business, causing our business to be adversely affected.

Future sales of our shares of common stock or preference stock could adversely affect the market price of our common stock.

Future sales of substantial amounts of our common stock in the public market following this offering, whether by us or our existing shareholders, or the perception that such sales could occur, may adversely affect the market price of our common stock, which could decline significantly. Sales by our existing shareholders might also make it more difficult for us to raise equity capital by selling new common stock at a time and price that we deem appropriate. We may also raise capital by issuing preference stock that has dividend, voting, liquidation or other rights and preferences that are senior to our common stock. The preference stock may also be convertible into shares of our common stock, which may dilute the value of our common stock. Our board has the authority to issue preference stock without seeking shareholder approval. See “Description of Capital Stock” in the accompanying prospectus.

The market price of our common stock may be affected by coverage by securities analysts.

The trading of our common stock is influenced by the reports and research that industry or securities analysts publish about us or our business. If analysts stop covering us, or if too few analysts cover us, the market price of our common stock could decrease. If one or more of the analysts who cover us downgrade our stock, the market price of our common stock also could decrease. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume of our common stock to decline.

We may not be able to continue paying a regular dividend and the failure to do so could adversely affect the market price of our common stock.

Our ability to continue paying regular dividends is based on many factors, including the success of our operations, the level of demand for natural gas and electricity, energy prices, changes in utility, environmental

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and other regulations and our liquidity needs, which may vary substantially from our estimates. Many of these factors are beyond our control and a change in any of these factors could affect our ability to pay or maintain payment of dividends. In addition, terms of our revolving credit facilities limit our ability to pay dividends to shareholders. Any additional debt we incur may contain similar restrictions, and the resulting increase in our level of indebtedness may limit our ability to pay dividends under our existing revolving credit facilities. Our failure to continue paying regular dividends could adversely affect the market price of our common stock.

Non-U.S. holders may be subject to U.S. federal income tax on gain realized on the sale or disposition of shares of our common stock.

Because of our overall mix of assets, it is possible that we are or will become a “United States real property holding corporation” (which we refer to as “USRPHC”) for United States federal income tax purposes. If we are or if we become a USRPHC, so long as our common stock is regularly traded on an established securities market, such stock will be treated as a United States real property interest (“USRPI”) only with respect to a non-U.S. holder that actually or constructively holds more than five percent of such class of stock at any time during the shorter of the five-year period preceding the date of disposition or the holder’s holding period for such stock. No assurance can be given that our common stock will remain regularly traded in the future. If our stock is treated as a USRPI, a non-U.S. holder would be subject to regular United States federal income tax with respect to any gain on such stock in the same manner as a taxable U.S. holder. In addition, the purchaser of the stock would be required to withhold and remit to the IRS 15% of the purchase price unless an exception applies. A non-U.S. holder also would be required to file a U.S. federal income tax return for any taxable year in which it realizes a gain from the disposition of our common stock that is subject to U.S. federal income tax.

Non-U.S. holders should consult their tax advisors concerning the consequences of disposing of shares of our common stock.

The common stock is equity and is subordinate to our existing and future indebtedness and preferred stock.

Shares of the common stock are equity interests in SJI and do not constitute indebtedness. As such, shares of the common stock will rank junior to all indebtedness and other non-equity claims on SJI with respect to assets available to satisfy claims on SJI, including in a liquidation of SJI. Additionally, our Board of Directors is authorized to issue series of preferred stock without any action on the part of shareholders of our common stock. Holders of our common stock are subject to the prior dividend, liquidation preferences, terms of redemption, conversion rights and voting rights, if any, of any holders of our preferred stock or depositary shares representing such preferred stock then outstanding.

Risks related to the forward sale agreement

Settlement provisions contained in the forward sale agreement subject us to certain risks.

The forward purchaser will have the right to accelerate the forward sale agreement and require us to physically settle the forward sale agreement on a date specified by the forward purchaser if:

in its good faith, commercially reasonable judgment, (i) it or its affiliate is unable to hedge its exposure under the forward sale agreement because of the lack of sufficient shares of common stock being made available for borrowing by lenders, or (ii) it or its affiliate would incur a stock loan cost of more than a specified amount;
we declare any dividend or distribution on our common stock payable in (i) cash in excess of a specified amount (other than extraordinary dividends), (ii) securities of another company, or (iii) any other type of securities (other than our common stock), rights, warrants or other assets for payment at less than the prevailing market price, as determined by the forward purchaser;
certain ownership thresholds applicable to the forward purchaser are exceeded;
an event is announced that, if consummated, would result in certain mergers and tender offers, our nationalization, certain changes in law or a delisting of our common stock (each as more fully described in the forward sale agreement); or

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certain other events of default or termination events occur, including, among other things, any material misrepresentation made in connection with entering into the forward sale agreement (each as more fully described in the forward sale agreement).

The forward purchaser’s decision to exercise its right to require us to settle the forward sale agreement will be made irrespective of our interests, including our need for capital. In such cases, we could be required to issue and deliver shares of our common stock under the terms of the physical settlement provisions of the forward sale agreement irrespective of our capital needs, which would result in dilution to our earnings per share and return on equity. In addition, upon certain events of bankruptcy, insolvency, or reorganization relating to us, the forward sale agreement will terminate without further liability of either party. Following any such termination, we would not issue any shares of our common stock and we would not receive any proceeds pursuant to the forward sale agreement.

The forward sale agreement provides for settlement on a settlement date or dates to be specified at our discretion within approximately 12 months from the date of this prospectus supplement.

The forward sale agreement will be physically settled, unless we elect cash or net share settlement under the forward sale agreement. If we decide to physically or net share settle the forward sale agreement, delivery of shares of our common stock on any physical or net share settlement of the forward sale agreement will result in dilution to our earnings per share and return on equity. If we elect cash or net share settlement for all or a portion of the shares of our common stock included in the forward sale agreement, we would expect the forward purchaser or one of its affiliates to purchase a number of shares of our common stock equal to the portion for which we elect cash or net share settlement, as the case may be, in order to cover its obligation to return the shares of our common stock it had borrowed in connection with sales of our common stock under this prospectus supplement (in the case of any net share settlement, taking into consideration any shares of our common stock that we are required to deliver or entitled to receive upon such net share settlement). If the market value of our common stock at the time of such purchase (determined as set forth in the forward sale agreement) is above the forward sale price at that time, we would pay or deliver, as the case may be, to the forward purchaser under the forward sale agreement, an amount in cash, or a number of shares of our common stock with a market value (determined as set forth in the forward sale agreement), equal to the difference. Any such difference could be significant. See “Underwriting (Conflicts of Interest)—Forward Sale Agreement” for information on the forward sale agreement.

In addition, the purchase of shares of our common stock by the forward purchaser or its affiliate to unwind the forward purchaser’s hedge position could cause the price of our common stock to increase over time, thereby increasing the amount of cash or the number of shares of our common stock that we would owe to the forward purchaser upon a cash settlement or net share settlement, as the case may be, of the forward sale agreement, or decreasing the amount of cash or the number of shares of our common stock that the forward purchaser owes us upon cash settlement or net share settlement, as the case may be, of the forward settlement agreement.

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Use of Proceeds

We estimate that the net proceeds that we receive from the sale of the common stock we are offering and selling, after deducting the underwriting discount and commissions, will be approximately $    million (or $     million if the underwriters exercise their option to purchase additional shares of our common stock in full). We will not initially receive any proceeds from the sale of our common stock offered by the forward seller pursuant to this prospectus supplement, unless an event occurs that requires us to sell our common stock to the underwriters in lieu of the forward seller selling our common stock to the underwriters, in which case we intend to use all net proceeds we receive from any such sales to finance the Acquisition and, pending closing of the Acquisition or if the Closing does not occur, for capital expenditures primarily for regulated businesses, including infrastructure investments at our utility business. At an initial forward sale price of $    per share, we expect to receive net proceeds of approximately $     million, subject to the price adjustment and other provisions of the forward sale agreement, in the event of full physical settlement of the forward sale agreement, which settlement must occur within approximately 12 months of the date of this prospectus supplement. For purposes of calculating the proceeds to us upon settlement of the forward sale agreement, we have assumed that the forward sale agreement is physically settled based upon the initial forward sale price of $     (which is the public offering price of our common stock less the underwriting discount shown on the cover page of this prospectus supplement) on the effective date of the forward sale agreement, which will be         , 2018. The actual proceeds from the forward sale are subject to the final settlement of the forward sale agreement. The forward sale price that we expect to receive upon physical settlement of the forward sale agreement will be subject to adjustment on a daily basis based on a floating interest rate factor equal to the overnight bank funding rate less a spread and will be decreased on each of certain dates specified in the forward sale agreement during the term of the forward sale agreement. The forward sale price will also be subject to decrease if the cost to the forward seller of borrowing a number of shares of our common stock underlying the forward sale agreement exceeds a specified amount. If the overnight bank funding rate is less than the spread on any day, the interest factor will result in a daily reduction of the forward sale price. As of the date of this prospectus supplement, the overnight bank funding rate was greater than the spread. See “Underwriting (Conflicts of Interest) —Forward Sale Agreement” for a description of the forward sale agreement.

We intend to use the net proceeds from this offering and any net proceeds that we receive upon settlement of the forward sale agreement, together with cash on hand and proceeds from the concurrent offering of Equity Units, to fund a portion of the cash consideration payable in connection with the Acquisition and for capital expenditures primarily for regulated businesses, including infrastructure investments at our utility business. However, the consummation of this offering is not conditioned on the closing of the Acquisition or the concurrent Equity Units offering. If we do not consummate the Acquisition, we will retain broad discretion to use all of the net proceeds from this offering for general corporate purposes.

In addition, if an event occurs that requires us to sell our common stock to the underwriters in lieu of the forward seller selling our common stock to the underwriters, then we intend to use any net proceeds we receive from any such sales for the same purposes.

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Capitalization

The following table presents our capitalization on:

an actual basis as of December 31, 2017;
on an adjusted basis as of December 31, 2017 to give effect to this offering and concurrent Equity Units offering, assuming a public offering price of $30.51, which is the last reported sale price of our common stock on April 16, 2018 (assuming no exercise of the underwriters’ option to purchase additional shares of common stock for the concurrent common stock offering); and
as further adjusted as of December 31, 2017 to give effect to the Acquisition.

There have been no other significant adjustments to our capitalization since December 31, 2017. You should read the information below in conjunction with the section of this prospectus supplement entitled “Use of Proceeds,” the consolidated financial statements and related notes included herein and the other financial information incorporated by reference into this prospectus supplement or the accompanying prospectus.

December 31, 2017
(in thousands, except per share data)
Actual
As
Adjusted
As Further
Adjusted
Long-term debt
$
1,122,999
 
$
1,365,499
 
$
2,222,313
 
Shareholders’ equity(1):
 
 
 
 
 
 
 
 
 
Common stock, $1.25 par value per share; 120,000,000 shares authorized; 79,549,080 shares issued and outstanding, actual;
91,148,143 shares issued and outstanding, as adjusted.
 
99,436
 
 
113,945
 
 
113,945
 
Premium on common stock
 
709,658
 
 
983,123
 
 
983,123
 
Treasury stock (at par)
 
(271
)
 
(271
)
 
(271
)
Accumulated other comprehensive loss
 
(36,765
)
 
(36,765
)
 
(36,765
)
Retained earnings
 
420,351
 
 
420,351
 
 
392,956
 
Total equity
 
1,192,409
 
 
1,480,383
 
 
1,452,988
 
Total capitalization
$
2,315,408
 
$
2,845,882
 
$
3,675,301
 
(1) Unless otherwise indicated, the number of shares of our common stock presented in this prospectus supplement (i) assumes the underwriters will not exercise their option to purchase additional shares of common stock; (ii) excludes 216,642 shares of treasury stock; (iii) excludes 2,209,540 shares of common stock issuable upon the exercise of outstanding restricted stock awards or reserved for issuance pursuant to future grants of awards under our 2015 Omnibus Equity Compensation Plan and (iv) excludes any shares of common stock that will be issuable upon settlement of the purchase contracts comprising a part of the Equity Units.

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Unaudited Pro Forma Condensed Combined Financial Data of the Company and the Elizabethtown Business

The unaudited pro forma condensed combined financial statements and the accompanying notes to the pro forma financial statements (the “pro forma financial statements”) present how the consolidated financial statements of the Company may have appeared had the Transactions (as defined below) occurred at earlier dates. The unaudited pro forma condensed combined statement of income for year ended December 31, 2017 combines the historical consolidated statement of income of the Company and the historical statement of income of the Elizabethtown Gas operating division (the “Elizabethtown Business” or “ETG”) of Pivotal Utility Holdings, Inc., after giving effect to the Transactions (as defined below) as if they had occurred on January 1, 2017, and after applying the assumptions, reclassifications and adjustments described in the accompanying notes. The unaudited pro forma condensed combined balance sheet combines the historical consolidated balance sheet of the Company and the historical balance sheet of the Elizabethtown Business as of December 31, 2017, after giving effect to the Transactions, as if they had occurred on December 31, 2017.

The following pro forma financial statements present the combination of the historical financial information of the Company and the Elizabethtown Business adjusted to give effect to the proposed acquisition of the Elizabethtown Business, by the Company pursuant to the terms and conditions of the Asset Purchase Agreement, dated as of October 15, 2017 (the “Purchase Agreement”), for an aggregate purchase price equal to $1.69 billion in cash, subject to certain adjustments for the net working capital of the Elizabethtown Business as set forth in the Purchase Agreement (the “ETG Acquisition”). For purposes of the preparation of this pro forma financial information we have made certain assumptions regarding the financing of the ETG Acquisition. It is not yet certain the precise financing that will be used, and we cannot assure you that our assumptions will be correct. We have assumed that we will finance the ETG Acquisition using cash on hand, net proceeds of $556.1 million from this offering of common stock (the “Common Stock Offering”) and the concurrent offering of Equity Units (the “Equity Unit Offering”) and through assumed borrowings, net of cash paid for fees of $2.4 million, of $530.0 million in aggregate principal amount of a new term loan facility (the “Term Facility”), $250.0 million in aggregate principal amount of new senior unsecured notes (the “Senior Unsecured Notes”), drawdowns of $71.4 million in aggregate principal amount from our existing syndicated revolving credit facility (the “Revolver”) and $314.9 million in aggregate principal amount from our bridge loan commitment (“Bridge Loan”, and together with the “Common Stock Offering,” “Equity Unit Offering,” “Term Facility,” “Senior Unsecured Notes,” and “Revolver”, the “Transactions”). To the extent we raise less proceeds than expected, we would utilize the Bridge Loan, which was entered into in conjunction with the ETG Acquisition. The pro forma financial statements do not reflect any potential asset dispositions.

The accompanying pro forma financial statements have been prepared in accordance with Article 11 of SEC Regulation S-X, and certain financial statement line items included in the Company’s and the Elizabethtown Business’s historical presentation have been condensed. The historical combined financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the Transactions, (2) factually supportable, and (3) with respect to the statement of income, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes to the pro forma financial statements. In addition, the pro forma financial statements were based on and should be read in conjunction with:

the audited consolidated financial statements of the Company as of December 31, 2017 and December 31, 2016 and for each of the three years in the period ended December 31, 2017 and the related notes, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, which are incorporated by reference in this prospectus supplement;
the audited financial statements of the Elizabethtown Business as of December 31, 2017 and December 31, 2016 and for each of the three years in the period ended December 31, 2017 and the related notes, which are included elsewhere in this prospectus supplement and included in the Company’s Amended Current Report on Form 8-K filed with the SEC on April 17, 2018.

The pro forma financial statements do not reflect the costs of any integration activities, possible or pending asset dispositions, the benefits that may result from realization of future cost savings from operating efficiencies or revenue synergies that may result from the Transactions. Further, the pro forma financial statements do not reflect the effect of any regulatory actions that may impact the Company’s or the Elizabethtown Business’s financial results when the Transactions are completed or the $10.0 million aggregate cash purchase of Elkton Gas operating division, which is considered to be immaterial for purposes of the pro forma financial statements.

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The pro forma financial statements are presented for informational purposes only and do not purport to represent what the results of operations or financial condition would have been had the Transactions actually occurred on the dates indicated, nor do they purport to project the results of operations or financial condition of the combined company for any future period or as of any future date. The pro forma financial statements have been prepared in advance of the close of the ETG Acquisition and related Transactions; the final amounts recorded upon the closing of the Transactions may differ materially from the information presented.

The unaudited pro forma condensed combined financial data has been prepared using the acquisition method of accounting under existing U.S. generally accepted accounting principles, or “GAAP” standards, which are subject to change and interpretation. The acquisition accounting is dependent upon certain valuations and other studies that have yet to progress to a stage where there is sufficient information for a definitive measurement. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial data. Differences between these preliminary estimates and the final acquisition accounting will occur and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial data and the combined company’s future results of operations and financial position.

[Remainder of Page Intentionally Left Blank]

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Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2017
(in thousands)

 
Historical
SJI
Historical
ETG
ETG
Acquisition
Adjustments
Financing
Adjustments
Pro Forma
 
(Note 3)
(Note 3)
(Note 4)
(Note 5)
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Utility Plant, at original cost
$
2,652,244
 
$
1,322,354
 
$
(44,949
) (i)
$
 
$
3,929,649
 
Accumulated Depreciation
 
(498,161
)
 
(267,019
)
 
19,637
(i) 
 
 
 
(745,543
)
Nonutility Property and Equipment, net
 
546,114
 
 
 
 
 
 
 
 
546,114
 
Property, Plant and Equipment — Net
 
2,700,197
 
 
1,055,335
 
 
(25,312
)
 
 
 
3,730,220
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
 
 
 
 
 
Total Investments
 
94,204
 
 
 
 
 
 
 
 
94,204
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
 
7,819
 
 
 
 
(1,720,000
)(a)
 
1,720,000
(a) 
 
7,819
 
Accounts Receivable, net
 
266,681
 
 
66,042
 
 
 
 
 
 
332,723
 
Natural Gas in Storage, average cost
 
48,513
 
 
20,913
 
 
 
 
 
 
69,426
 
Materials and Supplies, average cost
 
4,239
 
 
307
 
 
 
 
 
 
4,546
 
Other Prepayments and Current Assets
 
111,741
 
 
29,607
 
 
(21,544
) (h)
 
 
 
119,804
 
Total Current Assets
 
438,993
 
 
116,869
 
 
(1,741,544
)
 
1,720,000
 
 
534,318
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory and Other Noncurrent Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory Assets
 
469,224
 
 
131,590
 
 
 
 
 
 
600,814
 
Goodwill and Identifiable Intangible Assets
 
16,058
 
 
126,020
 
 
628,834
(b) 
 
 
 
770,912
 
Other
 
146,410
 
 
40
 
 
 
 
 
 
146,450
 
Total Regulatory and Other Noncurrent Assets
 
631,692
 
 
257,650
 
 
628,834
 
 
 
 
1,518,176
 
Total Assets
$
3,865,086
 
$
1,429,854
 
$
(1,138,022
)
$
1,720,000
 
$
5,876,918
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capitalization and Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
$
99,436
 
$
 
$
 
$
14,509
(c) 
$
113,945
 
Premium on Common Stock
 
709,658
 
 
166,377
 
 
(166,377
) (e)
 
273,465
(c),(d) 
 
983,123
 
Treasury Stock (at par)
 
(271
)
 
 
 
 
 
 
 
(271
)
Accumulated Other Comprehensive Loss
 
(36,765
)
 
 
 
 
 
 
 
(36,765
)
Retained Earnings
 
420,351
 
 
281,028
 
 
(311,028
) (e)
 
2,605
(c),(e)
 
392,956
 
Total Equity
 
1,192,409
 
 
447,405
 
 
(477,405
)
 
290,579
 
 
1,452,988
 
Long—Term Debt
 
1,122,999
 
 
447,825
 
 
(447,825
) (d)
 
1,099,314
(b)
 
2,222,313
 
Total Capitalization
 
2,315,408
 
 
895,230
 
 
(925,230
)
 
1,389,893
 
 
3,675,301
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Notes Payable
 
346,400
 
 
 
 
 
 
304,456
(e) 
 
650,856
 
Current Portion of Long—Term Debt
 
63,809
 
 
 
 
 
 
 
 
63,809
 
Accounts Payable
 
284,899
 
 
94,654
 
 
(81,903
) (c)
 
 
 
297,650
 
Other Current Liabilities
 
187,974
 
 
33,981
 
 
 
 
8,244
(d)
 
230,199
 
Total Current Liabilities
 
883,082
 
 
128,635
 
 
(81,903
)
 
312,700
 
 
1,242,514
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Credits and Other Noncurrent Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Income Taxes – Net
 
86,884
 
 
130,889
 
 
(130,889
) (h)
 
 
 
86,884
 
Regulatory Liabilities
 
287,105
 
 
121,497
 
 
 
 
 
 
408,602
 
Other
 
292,607
 
 
153,603
 
 
 
 
17,407
(d)
 
463,617
 
Total Deferred Credits and Other Noncurrent Liabilities
 
666,596
 
 
405,989
 
 
(130,889
)
 
17,407
 
 
959,103
 
Total Capitalization and Liabilities
$
3,865,086
 
$
1,429,854
 
$
(1,138,022
)
$
1,720,000
 
$
5,876,918
 

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Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 2017
(in thousands, except per share amounts)

 
Historical
SJI
Historical
ETG
ETG
Acquisition
Adjustments
Financing
Adjustments
Pro Forma
 
(Note 3)
(Note 3)
(Note 4)
(Note 5)
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Utility
$
512,482
 
$
 304,747
 
$
 
$
 
$
817,229
 
Nonutility
 
730,586
 
 
 
 
 
 
 
 
730,586
 
Total Operating Revenues
 
1,243,068
 
 
304,747
 
 
 
 
 
 
1,547,815
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Sales – (Excluding depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
— Utility
 
199,660
 
 
135,850
 
 
 
 
 
 
335,510
 
— Nonutility
 
646,567
 
 
 
 
 
 
 
 
646,567
 
Operations
 
174,200
 
 
58,326
 
 
(14,481
) (g)
 
 
 
218,045
 
Impairment Charges
 
91,299
 
 
 
 
 
 
 
 
91,299
 
Maintenance
 
19,727
 
 
8,248
 
 
 
 
 
 
27,975
 
Depreciation
 
100,718
 
 
27,163
 
 
(4,653
) (i)
 
 
 
123,228
 
Energy and Other Taxes
 
6,487
 
 
4,917
 
 
 
 
 
 
11,404
 
Total Operating Expenses
 
1,238,658
 
 
234,504
 
 
(19,134
)
 
 
 
1,454,028
 
Operating Income
 
4,410
 
 
70,243
 
 
19,134
 
 
 
 
93,787
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income and Expense
 
15,474
 
 
1,460
 
 
 
 
 
 
16,934
 
Interest Charges
 
(54,019
)
 
(15,960
)
 
16,097
(c),(d)
 
(54,995
)(f)
 
(108,877
)
(Loss) income Before Income Taxes
 
(34,135
)
 
55,743
 
 
35,231
 
 
(54,995
)
 
1,844
 
Income Taxes
 
24,937
 
 
(21,926
)
 
(13,564
) (f)
 
21,173
(g) 
 
10,620
 
Equity in Earnings of Affiliates
 
5,794
 
 
 
 
 
 
 
 
5,794
 
(Loss) Income from Continuing Operations
$
(3,404
)
$
33,817
 
$
21,667
 
$
(33,822
)
$
18,258
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B