Middlesex Water (MSEX) 8-K Middlesex Water Company Reports

MIDDLESEX WATER COMPANY REPORTS

THIRD QUARTER 2008 FINANCIAL RESULTS

ISELIN, NJ, (November 6, 2008)   Middlesex Water Company (NASDAQ:MSEX) a provider of water, wastewater and related services in New Jersey and Delaware, today reported higher operating revenues and net income for the quarter ended September 30, 2008 over the same period in 2007.

Third Quarter Operating Results

Consolidated operating revenues for the three months ended September 30, 2008 increased $1.5 million, or 6.3%, from the same period in 2007.  Revenues in the Middlesex system in New Jersey rose $1.4 million as a result of a 9.1% base rate increase implemented in October 2007. Middlesex revenues decreased $0.3 million due to lower water consumption in 2008.  Revenues improved $0.3 million in the Tidewater system in Delaware, of which $0.2 million was the result of the cumulative 2.94% of Distribution System Improvement Charge rate increases that were in effect during the third quarter of 2008.

Delaware customer growth contributed $0.2 million to the overall revenue increase.  Fees charged for initial customer connections in the Tidewater system were $0.1 million lower in 2008 reflecting a slow-down in new residential and commercial development in Delaware.   Contract fees for managing the Perth Amboy water and wastewater systems were $0.1 million higher than the same period in 2007, due mostly to higher pass-through charges.  Revenues from non-regulated contract operations in Delaware increased $0.1 million due to growth in contract customers and increased sales of additional services.  All other operations accounted for $0.1 million of additional revenues.

Net income increased 13.4% from $4.2 million to $4.7 million.   Basic and diluted earnings per share were $0.35 for three months ended September 30, 2008, compared to $0.31 for the same period in 2007.

Operation and maintenance expenses for the three months ended September 30, 2008 increased $0.6 million or 5.1%.  Water production costs were $0.2 million higher in New Jersey due to higher costs for water, electric power, chemicals and disposal of residuals.  Maintenance costs decreased $0.1 million compared to the same period in 2007 due to a reduction in restoration and repair costs for the water service lines in the Middlesex system.  Operating costs for Tidewater Environmental Services Inc. increased $0.1 million due to an increased number of wastewater treatment facilities in operation in Delaware.  Administrative costs in Delaware also rose $0.1 million as we work to support the increased customer base in that service area.  All other expense categories increased $0.1 million.

Middlesex Water Company CEO, Dennis W. Doll, said “Despite the uncertainties in the current economic environment, we continue to execute our plans for profitable growth and enhanced shareholder value. The relatively predictable revenue stream inherent in our business, combined with our continued strong financing capability and growth opportunities, leaves us confident that our strategic plan remains appropriate. We continue to seek out opportunities and win business as reflected in our recent acquisition of a project in North Carolina.  Our 111-year old company has navigated tough markets in the past and we believe the financial discipline we have long embraced to prudently manage costs and analyze opportunities continues to be the appropriate path.”

Nine Month Operating Results

Operating revenues for the nine months ended September 30, 2008 increased $4.7 million or 7.2% from the same period in 2007. Operation and maintenance expenses increased $2.1 million or 6.1%. Net income increased $1.0 million or 11.3%. Diluted earnings per share were $0.75 and $0.68 for nine months ended September 30, 2008 and 2007, respectively.

Board Declares Quarterly Dividend

The Company’s Board of Directors approved an increase in the Company's quarterly cash dividend to $0.1775 from $0.1750.  The new dividend rate is payable December 1, 2008 to shareholders of record as of November 14, 2008. This dividend increase raises the annual dividend to $0.71 from $0.70 per share of common stock.

About Middlesex Water Company

Middlesex Water Company, organized in 1897, provides regulated and unregulated water and wastewater utility services in New Jersey and Delaware through various subsidiary companies. For additional information regarding Middlesex Water Company including information about the Company’s DRP Program, visit the Company’s Web site at www.middlesexwater.com or call (732) 634-1500.

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others,  our long-term strategy and expectations, the status of our acquisition program, the impact of our acquisitions, the impact of current and projected rate requests and the impact of our capital program on our environmental compliance. There are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements including: general economic business conditions, unfavorable weather conditions, the success of certain cost  containment initiatives, changes in regulations or regulatory treatment, availability and the cost of capital, the success of growth initiatives and other factors discussed in our filings with the Securities and Exchange Commission.

Contact:

Bernadette Sohler, Vice President – Corporate Affairs

Middlesex Water Company

1500 Ronson Road

Iselin, New Jersey  08830

(732) 638-7549

www.middlesexwater.com

 MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Operating Revenues	$	25,653		$	24,135		$	69,543		$	64,868
Operating Expenses:		12,574			11,961			36,401			34,310
Operations		11,579			10,915			33,299			31,250
Maintenance		995			1,046			3,102			3,060
Depreciation		1,987			1,887			5,872			5,607
Other Taxes		2,708			2,558			7,715			7,221
Total Operating Expenses		17,269			16,406			49,988			47,138
Operating Income		8,384			7,729			19,555			17,730
Other Income (Expense):
Allowance for Funds Used During Construction		180			168			445			421
Other Income		150			100			668			608
Other Expense		(12	)		(9	)		(169	)		(21	)
Total Other Income, net		318			259			944			1,008
Interest Charges		1,838			1,734			5,161			4,816
Income before Income Taxes		6,864			6,254			15,338			13,922
Income Taxes		2,149			2,096			5,054			4,680
Net Income		4,715			4,158			10,284			9,242
Preferred Stock Dividend Requirements		52			62			166			186
Earnings Applicable to Common Stock	$	4,663		$	4,096		$	10,118		$	9,056
Earnings per share of Common Stock:
Basic	$	0.35		$	0.31		$	0.76		$	0.69
Diluted	$	0.35		$	0.31		$	0.75		$	0.68
Average Number of
Common Shares Outstanding :
Basic		13,350			13,206			13,291			13,191
Diluted		13,617			13,537			13,601			13,522
Cash Dividends Paid per Common Share	$	0.1750		$	0.1725		$	0.5250		$	0.5175
See Notes to Condensed Consolidated Financial Statements.

 MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands except per share amounts)

	Three Months Ended September 30,						Difference						Nine Months Ended September 30,						Difference
	2008			2007			Dollars			%			2008			2007			Dollars			%
Operating Revenues	$	25,653		$	24,135		$	1,518			6.29	%	$	69,543		$	64,868		$	4,675			7.21	%
Operating Expenses:		12,574			11,961			613			5.12	%		36,401			34,310			2,091			6.09	%
Operations		11,579			10,915			664			6.08	%		33,299			31,250			2,049			6.56	%
Maintenance		995			1,046			(51	)		-4.88	%		3,102			3,060			42			1.37	%
Depreciation		1,987			1,887			100			5.30	%		5,872			5,607			265			4.73	%
Other Taxes		2,708			2,558			150			5.86	%		7,715			7,221			494			6.84	%
Total Operating Expenses		17,269			16,406			863			5.26	%		49,988			47,138			2,850			6.05	%
Operating Income		8,384			7,729			655			8.47	%		19,555			17,730			1,825			10.29	%
Other Income (Expense):
Allowance for Funds Used During Construction		180			168			12			7.14	%		445			421			24			5.70	%
Other Income		150			100			50			50.00	%		668			608			60			9.87	%
Other Expense		(12	)		(9	)		(3	)		33.33	%		(169	)		(21	)		(148	)		704.76	%
Total Other Income, net		318			259			59			22.78	%		944			1,008			(64	)		-6.35	%
Interest Charges		1,838			1,734			104			6.00	%		5,161			4,816			345			7.16	%
Income before Income Taxes		6,864			6,254			610			9.75	%		15,338			13,922			1,416			10.17	%
Income Taxes		2,149			2,096			53			2.53	%		5,054			4,680			374			7.99	%
Net Income		4,715			4,158			557			13.40	%		10,284			9,242			1,042			11.27	%
Preferred Stock Dividend Requirements		52			62			(10	)		-16.13	%		166			186			(20	)		-10.75	%
Earnings Applicable to Common Stock	$	4,663		$	4,096		$	567			13.84	%	$	10,118		$	9,056		$	1,062			11.73	%
Earnings per share of Common Stock:
Basic	$	0.35		$	0.31		$	0.039			12.61	%	$	0.76		$	0.69		$	0.075			10.88	%
Diluted	$	0.35		$	0.31		$	0.039			12.77	%	$	0.75		$	0.68		$	0.076			11.27	%
Average Number of
Common Shares Outstanding :
Basic		13,350			13,206			144			1.09	%		13,291			13,191			100			0.76	%
Diluted		13,617			13,537			80			0.59	%		13,601			13,522			79			0.58	%
Cash Dividends Paid per Common Share	$	0.1750		$	0.1725		$	0.0025			1.45	%	$	0.5250		$	0.5175		$	0.0075			1.45	%

See Notes to Condensed Consolidated Financial Statements.