UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

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

Date of Report (Date of earliest event reported):    December 31, 2018

SOUTH JERSEY INDUSTRIES, INC.
(Exact name of registrant as specified in Charter)
New Jersey	1-6364	22-1901645	
(State or other jurisdiction
Of incorporation)	(Commission
File Number)	(IRS Employer
Identification No.)	

1 South Jersey Plaza, Folsom, NJ	 	08037	
(Address of principal executive offices)	 	(Zip Code)	

(609) 561-9000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Item 2.01	Completion of Acquisition or Disposition of Assets	

As previously announced, on June 27, 2018, South Jersey Industries, Inc., a New Jersey corporation (the “ Company ”), through its indirectly wholly-owned subsidiary, Marina Energy LLC, a New Jersey limited liability company (“ Marina ”), entered into a series of agreements whereby Marina will sell its portfolio of solar energy assets (the “ Transaction ”) to an entity managed by Goldman Sachs Asset Management (“ Buyer ”) for total consideration of approximately $350 million in cash.

As previously disclosed, the Company has been transferring ownership of these assets through multiple closings, as conditions precedent are met. Effective December 31, 2018, the Company closed on the disposition of additional solar sites across Maryland, New Jersey and Massachusetts with a total capacity of 49.2 megawatts. Total net consideration received for the sale of these divestitures is approximately $65.5 million in cash. This is in addition to the assets that were previously disposed of as of November 30, 2018, as set forth in Item 2.01 of the Company Current Report on Form 8-K, filed with the United States Securities and Exchange Commission on December 6, 2018, and which is incorporated herein by reference.

To date, the Company has closed on a total of $284.2 million in cash related to the projects that have already closed. There are remaining sites that have not closed due to outstanding conditions precedent. The Company and Buyer are seeking to resolve the open issues and close on these remaining projects, however, there is no assurance that all remaining projects will close as part of the Transaction.

The information provided in Exhibit 99.1 hereto is incorporated by reference into this Item 2.01.

Item 9.01	Financial Statements and Exhibits.	

(b) Pro forma financial information.

The unaudited pro forma consolidated financial information of the Company giving effect to the above Transaction, and the related notes thereto, have been derived from its historical consolidated financial statements and are attached hereto as Exhibit 99.1.

(d) Exhibits
Exhibit No.	 	Description	
99.1	 	Unaudited pro forma condensed consolidated financial statements and explanatory notes for the Company as of and for the nine months ended September 30, 2018, and for the years ended December 31, 2017.	

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: January 3, 2019	SOUTH JERSEY INDUSTRIES, INC.	
 	 	
 	By:	/s/ Kenneth A. Lynch	
 	 	Name: Kenneth A. Lynch	
 	 	Title: Senior Vice President, Chief Risk and Accounting Officer	

Exhibit 99.1

Unaudited Pro Forma Condensed Consolidated Financial Information

On June 27, 2018 (the “Effective Date”), South Jersey Industries, Inc. (“SJI” or the “Company”), a New Jersey corporation, through its indirectly wholly-owned subsidiary, Marina Energy LLC, a New Jersey limited liability company (“Marina”), entered into a series of agreements whereby Marina will sell its portfolio of solar energy assets (the “Transaction”) to an entity managed by Goldman Sachs Asset Management (the “Buyer”). As part of the Transaction, Marina has agreed to sell the 76 distributed solar energy projects located at 143 sites across New Jersey, Maryland, Massachusetts and Vermont with total capacity of approximately 204 megawatts (the “Projects”). Total consideration for the Transaction is approximately $350.0 million in cash, which consists of approximately $287.4 million for the sale of solar assets and approximately $62.6 million for the sale of certain Solar Renewable Energy Credits (“SRECs”).

To facilitate the Transaction, Marina and the Buyer entered into a Purchase Agreement, dated as of the Effective Date (the “Purchase Agreement”), pursuant to which Marina will sell the assets comprising the Projects or, in some cases, 100% of the equity interest of certain special purpose companies wholly-owned by Marina that own the assets comprising certain Projects, for an aggregate purchase price of approximately $287.4 million. The sale of individual projects will occur on a rolling basis as conditions precedent to each closing, including certain regulatory filings and receipt of consents to assignment of project contracts and permits, are satisfied. Depending on the timing of closing with respect to individual Projects, the individual purchase prices for those Projects may be adjusted to account for Project revenues retained by Marina during the period prior to such closings, with a maximum aggregate downward adjustment of approximately $5.4 million. The Purchase Agreement contains customary representations, warranties, covenants, and conditions precedent to closing of the sales. The majority of the Projects have satisfied all closing conditions on or before December 31, 2018.

On October 12, 2018, SJI and the Buyer completed the first divestiture of certain Projects for which the required consents and permits were satisfied (the “First Tranche”). The First Tranche consisted of 50 sites across New Jersey, Massachusetts, and Vermont with total capacity of 31.4 megawatts. Total consideration (excluding transaction costs) associated with the First Tranche is approximately $66.8 million in cash. Of this total, $8.9 million was received in July 2018 related to the sale of certain SRECs. The First Tranche did not constitute a significant disposition for purposes of Item 2.01 of Form 8-K.

On October 31, 2018, SJI and the Buyer completed the second divestiture of certain Projects for which the required consents and permits were satisfied (the “Second Tranche”). The Second Tranche consisted of 15 sites across New Jersey and Vermont with total capacity of 34.9 megawatts. Total consideration (excluding transaction costs) in aggregate associated with the Second Tranche is approximately $68.1 million in cash. Of this total, $8.3 million was received in July 2018 related to the sales of certain SRECs. The Second Tranche did not constitute a significant disposition for purposes of Item 2.01 of Form 8-K.

On November 30, 2018, SJI and the Buyer completed the third divestiture of certain Projects for which the required consents and permits were satisfied (the “Third Tranche”). The Third Tranche consisted of 16 sites across Maryland, New Jersey, and Vermont with total capacity of 58.1 megawatts. Total consideration (excluding transaction costs) in aggregate associated with the Third Tranche is approximately $61.8 million in cash. Of this total, $16.9 million was received in July 2018 related to the sale of certain SRECs. In the aggregate, the First Tranche, Second Tranche, and Third Tranche constituted a significant disposition for purposes of Item 2.01 of Form 8-K, which was filed with the SEC on December 6, 2018.

On December 31, 2018, SJI and the Buyer completed the fourth divestiture of certain Projects for which the required consents and permits were satisfied (the “Fourth Tranche” and collectively with the First Tranche, Second Tranche and Third Tranche, “Q4 2018 Tranches”). The Fourth Tranche consisted of 27 sites across Maryland, New Jersey, and Massachusetts with total capacity of 49.2 megawatts. Total consideration (excluding transaction costs) in aggregate associated with the Q4 2018 Tranches is $284.2 million in cash. Approximately $87.5 million relates to the Fourth Tranche. Of this total, $22.0 million was received in July 2018 related to the sale of certain SRECs. In the aggregate, the Q4 2018 Tranches constituted a significant disposition for purposes of Item 2.01 of Form 8-K.

Divestiture of the Assets Sold

Because the Q4 2018 Tranches are considered a significant disposition for purposes of Item 2.01 of Form 8-K, the Company prepared the accompanying unaudited pro forma condensed consolidated financial statements in accordance with Article 11 of Regulation S-X. The Company determined that the Transaction does not qualify for discontinued operations accounting under financial statement presentation authoritative guidance.

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2018, is based on the historical financial statements of the Company as of September 30, 2018, after giving effect to the Q4 2018 Tranches as if they had occurred on September 30, 2018. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2018 and the year ended December 31, 2017, are based on the historical financial statements of the Company for such periods after giving effect to the Q4 2018 Tranches as if they had occurred on January 1, 2017. The pro forma adjustments are based on available information and certain assumptions that the Company believes are reasonable as of the date of this Current Report on Form 8-K. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial statements.

The preparation of the unaudited pro forma condensed consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States, or “GAAP” standards, which are subject to change and interpretation. These principles require the use of estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ materially from those estimates.

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 Q4 2018 Tranches actually occurred on the dates indicated, nor do they purport to project the results of operations or financial condition of the company for any future period or as of any future date. 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 and for the year ended December 31, 2017 and the related notes, included in the Company’s Annual Report on Form 10-K/A filed with the SEC on March 1, 2018;	

·	the unaudited consolidated financial statements of the Company as of and for the nine months ended September 30, 2018 and the related notes, included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 7, 2018.	

Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2018
(in thousands)
 	 	Historical
SJI	 	 	Pro Forma
Adjustments	 	 	 	Pro Forma	 	
 	 	 	 	 	 	 	 	 	 	 	
Assets	 	 	 	 	 	 	 	 	 	 	
Property, Plant and Equipment:	 	 	 	 	 	 	 	 	 	 	
Utility Plant, at original cost	 	$	4,200,565	 	 	$	-	 	 	 	$	4,200,565	 	
Accumulated Depreciation	 	 	(781,824	)	 	 	-	 	 	 	 	(781,824	)	
Nonutility Property and Equipment, net	 	 	111,362	 	 	 	-	 	 	 	 	111,362	 	
Property, Plant and Equipment — Net	 	 	3,530,103	 	 	 	-	 	 	 	 	3,530,103	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investments:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments	 	 	84,849	 	 	 	-	 	 	 	 	84,849	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current Assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and Cash Equivalents	 	 	3,314	 	 	 	-	 	 	 	 	3,314	 	
Restricted Cash	 	 	-	 	 	 	-	 	 	 	 	-	 	
Accounts Receivable, net	 	 	233,134	 	 	 	(2,947	)	(b)	 	 	230,187	 	
Natural Gas in Storage, average cost	 	 	84,373	 	 	 	-	 	 	 	 	84,373	 	
Materials and Supplies, average cost	 	 	4,574	 	 	 	-	 	 	 	 	4,574	 	
Assets Held for Sale	 	 	329,622	 	 	 	(270,775	)	(a)	 	 	58,847	 	
Other Prepayments and Current Assets	 	 	82,302	 	 	 	(436	)	(b)	 	 	81,866	 	
Total Current Assets	 	 	737,319	 	 	 	(274,158	)	 	 	 	463,161	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Regulatory and Other Noncurrent Assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Regulatory Assets	 	 	628,977	 	 	 	-	 	 	 	 	628,977	 	
Goodwill and Identifiable Intangible Assets	 	 	759,826	 	 	 	-	 	 	 	 	759,826	 	
Other	 	 	173,448	 	 	 	-	 	 	 	 	173,448	 	
Total Regulatory and Other Noncurrent Assets	 	 	1,562,251	 	 	 	-	 	 	 	 	1,562,251	 	
Total Assets	 	$	5,914,522	 	 	$	(274,158	)	 	 	$	5,640,364	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capitalization and Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Common Stock	 	$	106,883	 	 	$	-	 	 	 	$	106,883	 	
Premium on Common Stock	 	 	843,064	 	 	 	-	 	 	 	 	843,064	 	
Treasury Stock (at par)	 	 	(287	)	 	 	-	 	 	 	 	(287	)	
Accumulated Other Comprehensive Loss	 	 	(36,740	)	 	 	-	 	 	 	 	(36,740	)	
Retained Earnings	 	 	321,912	 	 	 	20,223	 	(d)	 	 	342,135	 	
Total Equity	 	 	1,234,832	 	 	 	20,223	 	 	 	 	1,255,055	 	
Long—Term Debt	 	 	1,281,000	 	 	 	-	 	 	 	 	1,281,000	 	
Total Capitalization	 	 	2,515,832	 	 	 	20,223	 	 	 	 	2,536,055	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current Liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Notes Payable	 	 	421,400	 	 	 	-	 	 	 	 	421,400	 	
Current Portion of Long—Term Debt	 	 	1,482,734	 	 	 	(277,340	)	(c)	 	 	1,205,394	 	
Accounts Payable	 	 	383,465	 	 	 	(2,617	)	(b)	 	 	380,848	 	
Other Current Liabilities	 	 	183,555	 	 	 	7,189	 	(b),(d)	 	 	190,744	 	
Total Current Liabilities	 	 	2,471,154	 	 	 	(272,768	)	 	 	 	2,198,386	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred Credits and Other Noncurrent Liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred Income Taxes – Net	 	 	85,840	 	 	 	(21,613	)	(b)	 	 	64,227	 	
Regulatory Liabilities	 	 	481,512	 	 	 	-	 	 	 	 	481,512	 	
Other	 	 	360,184	 	 	 	-	 	 	 	 	360,184	 	
Total Deferred Credits and Other Noncurrent Liabilities	 	 	927,536	 	 	 	(21,613	)	 	 	 	905,923	 	
Total Capitalization and Liabilities	 	$	5,914,522	 	 	$	(274,158	)	 	 	$	5,640,364	 	

Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Nine Months Ended September 30, 2018
(in thousands, except per share amounts)
 	 	Historical
SJI	 	 	Pro Forma
Adjustments	 	 	 	Pro Forma	 	
 	 	 	 	 	 	 	 	 	 	 	
Operating Revenues:	 	 	 	 	 	 	 	 	 	 	
Utility	 	$	392,849	 	 	$	-	 	 	 	$	392,849	 	
Nonutility	 	 	658,906	 	 	 	(27,908	)	(e)	 	 	630,998	 	
Total Operating Revenues	 	 	1,051,755	 	 	 	(27,908	)	 	 	 	1,023,847	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of Sales – (Excluding depreciation)	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Utility	 	 	128,536	 	 	 	-	 	 	 	 	128,536	 	
— Nonutility	 	 	533,440	 	 	 	-	 	 	 	 	533,440	 	
Operations	 	 	179,464	 	 	 	(8,825	)	(f)	 	 	170,639	 	
Impairment Charges	 	 	99,233	 	 	 	(74,013	)	(g)	 	 	25,220	 	
Maintenance	 	 	22,276	 	 	 	(1,466	)	(h)	 	 	20,810	 	
Depreciation	 	 	71,783	 	 	 	(12,628	)	(i)	 	 	59,155	 	
Energy and Other Taxes	 	 	6,277	 	 	 	(542	)	(j)	 	 	5,735	 	
Total Operating Expenses	 	 	1,041,009	 	 	 	(97,474	)	 	 	 	943,535	 	
Operating Income	 	 	10,746	 	 	 	69,566	 	 	 	 	80,312	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Income and Expense	 	 	5,141	 	 	 	-	 	 	 	 	5,141	 	
Interest Charges	 	 	(60,067	)	 	 	2,297	 	(l)	 	 	(57,770	)	
Income Before Income Taxes	 	 	(44,180	)	 	 	71,863	 	 	 	 	27,683	 	
Income Taxes	 	 	12,206	 	 	 	(15,843	)	(m)	 	 	(3,637	)	
Equity in Earnings of Affiliates	 	 	3,845	 	 	 	-	 	 	 	 	3,845	 	
Income from Continuing Operations	 	$	(28,129	)	 	$	56,020	 	 	 	$	27,891	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic Earnings Per Common Share:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing Operations	 	$	(0.34	)	 	 	 	 	  	 	$	0.34	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Shares of Common Stock Outstanding – Basic	 	 	83,082	 	 	 	 	 	 	 	 	83,082	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Earnings Per Common Share:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing Operations	 	$	(0.34	)	 	 	 	 	  	 	$	0.34	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Shares of Common Stock Outstanding – Diluted	 	 	83,082	 	 	 	 	 	 	 	 	83,082	 	

Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 2017
(in thousands, except per share amounts)
 	 	Historical
SJI	 	 	Pro Forma
Adjustments	 	 	 	Pro Forma	 	
 	 	 	 	 	 	 	 	 	 	 	
Operating Revenues:	 	 	 	 	 	 	 	 	 	 	
Utility	 	$	512,482	 	 	$	-	 	 	 	$	512,482	 	
Nonutility	 	 	730,586	 	 	 	(54,636	)	(e)	 	 	675,950	 	
Total Operating Revenues	 	 	1,243,068	 	 	 	(54,636	)	 	 	 	1,188,432	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of Sales – (Excluding depreciation)	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Utility	 	 	199,660	 	 	 	-	 	 	 	 	199,660	 	
— Nonutility	 	 	646,567	 	 	 	-	 	 	 	 	646,567	 	
Operations	 	 	174,200	 	 	 	(3,920	)	(f)	 	 	170,280	 	
Impairment Charges	 	 	91,299	 	 	 	(68,594	)	(g)	 	 	22,705	 	
Maintenance	 	 	19,727	 	 	 	(2,039	)	(h)	 	 	17,688	 	
Depreciation	 	 	100,718	 	 	 	(33,543	)	(i)	 	 	67,175	 	
Energy and Other Taxes	 	 	6,487	 	 	 	(308	)	(j)	 	 	6,179	 	
Total Operating Expenses	 	 	1,238,658	 	 	 	(108,404	)	 	 	 	1,130,254	 	
Operating Income	 	 	4,410	 	 	 	53,768	 	 	 	 	58,178	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Income and Expense	 	 	15,474	 	 	 	(24	)	(k)	 	 	15,450	 	
Interest Charges	 	 	(54,019	)	 	 	-	 	 	 	 	(54,019	)	
(Loss) income Before Income Taxes	 	 	(34,135	)	 	 	53,744	 	 	 	 	19,609	 	
Income Taxes	 	 	24,937	 	 	 	(20,673	)	(m)	 	 	4,264	 	
Equity in Earnings of Affiliates	 	 	5,794	 	 	 	-	 	 	 	 	5,794	 	
(Loss) Income from Continuing Operations	 	$	(3,404	)	 	$	33,071	 	 	 	$	29,667	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic Earnings Per Common Share:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing Operations	 	$	(0.04	)	 	 	 	 	  	 	$	0.37	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Shares of Common Stock Outstanding – Basic	 	 	79,541	 	 	 	 	 	 	 	 	79,541	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted Earnings Per Common Share:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing Operations	 	$	(0.04	)	 	 	 	 	  	 	$	0.37	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Shares of Common Stock Outstanding – Diluted	 	 	79,541	 	 	 	 	 	 	 	 	79,541	 	

NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma condensed consolidated financial statements reflect the following adjustments:

Unaudited Pro Forma Condensed Consolidated Balance Sheet

“Historical SJI” – represents the historical condensed consolidated balance sheet of SJI as of September 30, 2018.

 	(a)	To eliminate the Company’s divestiture of solar assets related to the Q4 2018 Tranches as of September 30, 2018, which were previously classified as held for sale.	

 	(b)	Reflects adjustments for assets purchased or liabilities assumed by the Buyer. The Buyer purchased or assumed accounts receivable, prepaid assets reflected within the Other Prepayments and Current Assets line item, accounts payable, accrued legal expenses and deferred rent reflected within the Other Current Liabilities line item, and deferred income taxes.	

 	(c)	Reflects total net proceeds from the sale of assets included in the Q4 2018 Tranches that were used to partially pay down the Company’s $475.0 million in aggregate principal amount of Floating Rate Senior Notes due 2019 on the one-year anniversary of the date of initial issuance, which at the Company’s option, bears interest at a variable base rate or a variable LIBOR (“Floating Rate Notes”).	

(In thousands)	 	For the Nine Months Ended
September 30, 2018	 	
 	 	 	 	
Purchase price of Projects included in Q4 2018 Tranches	 	$	228,122	 	
Purchase price of SRECs included in Q4 2018 Tranches	 	 	56,087	 	
Less: transaction costs	 	 	(6,869	)	
Total net proceeds	 	$	277,340	 	

 	(d)	To record the gain on sale of the Q4 2018 Tranches, net of tax effect, as illustrated in the table below. As the gain is directly attributable to the Transaction and is not expected to have a continuing impact on the Company’s operations, the estimated gain is only reflected on the unaudited pro forma condensed consolidated balance sheet. The income tax associated with the estimated gain has been included within the Other Current Liabilities line item.	

(In thousands)	 	For the Nine Months Ended
September 30, 2018	 	
 	 	 	 	
Net proceeds from Q4 2018 Tranches	 	$	277,340	 	
Less: cost basis of assets sold	 	 	(249,637	)	
Gain on sale, before tax	 	 	27,703	 	
Less: income tax payable	 	 	(7,480	)	
Net gain on sale of assets of the Q4 2018 Tranches	 	$	20,223	 	

Unaudited Pro Forma Condensed Consolidated Statements of Operations

“Historical SJI” – represents the historical condensed consolidated statements of operations of SJI for the nine months ended September 30, 2018 and the year ended December 31, 2017.

 	(e)	To eliminate the historical revenues of the assets sold within the Q4 2018 Tranches.	

 	(f)	To eliminate the historical direct operations cost of the assets sold within the Q4 2018 Tranches. No pro forma adjustment was made for historical indirect overhead costs that were allocated down to Marina.	

 	(g)	To eliminate the historical impairment expense recorded for each of the assets sold within the Q4 2018 Tranches.	

 	(h)	To eliminate the historical direct maintenance expense of the assets sold within the Q4 2018 Tranches. No pro forma adjustment was made for historical indirect maintenance expense that was allocated down to Marina.	

 	(i)	To eliminate the historical depreciation expense recorded of the assets sold within the Q4 2018 Tranches.	

 	(j)	To eliminate the historical energy and other tax expense recorded for the assets sold within the Q4 2018 Tranches. No pro forma adjustment was made for historical indirect energy and other tax expense that was allocated down to Marina.	

 	(k)	To eliminate historical other income and expense recorded for the assets sold within the Q4 2018 Tranches.	

 	(l)	To reflect the reduction of interest expense as a result of the partial pay down of the Floating Rate Notes using the net proceeds from the Q4 2018 Tranches for the nine months ended September 30, 2018.	

 	(m)	To eliminate the historical income tax expense of the assets sold within the Q4 2018 Tranches, as well as adjustments to record the income tax impacts of the pro forma adjustments using blended statutory tax rates of 27.0% and 38.5% for the nine months ended September 30, 2018 and for the year ended December 31, 2017, respectively. This rate does not reflect SJI’s effective tax rate, which includes other items and may be significantly different than the rates assumed for purposes of preparing these statements for a variety of reasons.