UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30, 2017~~March 31, 2019

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

For the transition period from _________________ to______________________

Commission File Number 0-422

MIDDLESEX WATER COMPANY

(Exact name of registrant as specified in its charter)

New Jersey

(State of incorporation)

22-1114430

(IRS employer identification no.)

~~1500 Ronson Road,~~485C Route One South, Iselin, New Jersey 08830

(Address of principal executive offices, including zip code)

(732) 634-1500

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesþ No¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post files).

Yesþ No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated filer¨ Accelerated filerþ Non-accelerated filer¨

Smaller reporting company¨ 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes¨ Noþ

The number of shares outstanding of each of the registrant's classes of common stock, as of ~~October 31, 2017:~~April 30, 2019: Common Stock, No Par Value: ~~16,346,036~~16,468,462 shares outstanding.

INDEX


PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Statements of Income	1

	Condensed Consolidated Balance Sheets	2

	Condensed Consolidated Statements of Cash Flows	3

	Condensed Consolidated Statements of Capital Stock and Long-Term Debt	4

	Condensed Consolidated Statements of Common Stockholders’ Equity	5

	Notes to Unaudited Condensed Consolidated Financial Statements	56

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1415

Item 3.	Quantitative and Qualitative Disclosures of Market Risk	2221

Item 4.	Controls and Procedures	2321

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	2322

Item 1A.	Risk Factors	2322

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2322

Item 3.	Defaults upon Senior Securities	2322

Item 4.	Mine Safety Disclosures	2322

Item 5.	Other Information	2322

Item 6.	Exhibits	2422

SIGNATURES		2523

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

~~(In~~(In thousands except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2019			2018

Operating Revenues	$	36,174	$	37,794	$	99,319	$	101,098	$	30,698		$	31,177

Operating Expenses:
Operations and Maintenance		16,178		16,599		48,563		48,215		16,120			17,834
Depreciation		3,587		3,243		10,280		9,561		4,046			3,609
Other Taxes		3,603		3,796		10,327		10,537		3,504			3,384

Total Operating Expenses		23,368		23,638		69,170		68,313		23,670			24,827

Operating Income		12,806		14,156		30,149		32,785		7,028			6,350

Other Income (Expense):
Allowance for Funds Used During Construction		174		207		473		387		515			167
Other Income		43		400		69		449
Other Income (Expense), net										(57	)		297

Total Other Income, net		217		607		542		836		458			464

Interest Charges		1,493		1,427		3,965		3,841		1,200			1,138

Income before Income Taxes		11,530		13,336		26,726		29,780		6,286			5,676

Income Taxes		3,888		4,523		9,263		10,258		(266	)		1,182

Net Income		7,642		8,813		17,463		19,522		6,552			4,494

Preferred Stock Dividend Requirements		36		36		108		108		36			36

Earnings Applicable to Common Stock	$	7,606	$	8,777	$	17,355	$	19,414	$	6,516		$	4,458

Earnings per share of Common Stock:
Basic	$	0.47	$	0.54	$	1.06	$	1.19	$	0.40		$	0.27
Diluted	$	0.46	$	0.54	$	1.06	$	1.19	$	0.39		$	0.27

Average Number of
Common Shares Outstanding :
Average Number of Common Shares Outstanding:
Basic		16,340		16,284		16,324		16,262		16,428			16,354
Diluted		16,496		16,440		16,480		16,418		16,584			16,510

Cash Dividends Paid per Common Share	$	0.2113	$	0.1988	$	0.6338	$	0.5963	$	0.2400		$	0.2238

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

			September 30,		December 31,				March 31,		December 31,
ASSETS			2017		2016				2019		2018
UTILITY PLANT:		Water Production	$	149,881	$	146,914		Water Production	$	156,716	$	156,423
		Transmission and Distribution		449,323		430,880		Transmission and Distribution		515,017		512,202
		General		67,774		63,514		General		77,304		74,371
		Construction Work in Progress		21,752		12,196		Construction Work in Progress		40,346		32,878
		TOTAL		688,730		653,504		TOTAL		789,383		775,874
		Less Accumulated Depreciation		143,269		135,728		Less Accumulated Depreciation		160,777		157,387
		UTILITY PLANT - NET		545,461		517,776		UTILITY PLANT - NET		628,606		618,487

CURRENT ASSETS:		Cash and Cash Equivalents		2,701		3,879		Cash and Cash Equivalents		4,986		3,705
		Accounts Receivable, net		11,730		10,129		Accounts Receivable, net		9,982		11,762
		Unbilled Revenues		8,628		6,590		Unbilled Revenues		6,940		7,293
		Materials and Supplies (at average cost)		4,441		4,094		Materials and Supplies (at average cost)		5,479		5,411
		Prepayments		2,588		2,024		Prepayments		2,263		2,644
		TOTAL CURRENT ASSETS		30,088		26,716		TOTAL CURRENT ASSETS		29,650		30,815

AND OTHER ASSETS:		Preliminary Survey and Investigation Charges		3,832		2,365		Operating Lease Right-of-Use Asset		6,517		—
		Regulatory Assets		60,430		60,894
		Operations Contracts, Developer and Other Receivables		789		1,139		Preliminary Survey and Investigation Charges		5,359		5,254
		Restricted Cash		439		439		Regulatory Assets		98,826		99,236
		Non-utility Assets - Net		9,276		9,131		Restricted Cash		1,802		1,956
		Federal Income Tax Receivable		1,408		1,408		Non-utility Assets - Net		10,203		9,989
		Other		196		293		Other		2,010		2,093
		TOTAL DEFERRED CHARGES AND OTHER ASSETS		76,370		75,669		TOTAL DEFERRED CHARGES AND OTHER ASSETS		124,717		118,528
		TOTAL ASSETS	$	651,919	$	620,161		TOTAL ASSETS	$	782,973	$	767,830

CAPITALIZATION AND LIABILITIES	CAPITALIZATION AND LIABILITIES						CAPITALIZATION AND LIABILITIES
CAPITALIZATION:		Common Stock, No Par Value	$	154,626	$	153,045		Common Stock, No Par Value	$	160,142		157,354
		Retained Earnings		72,403		65,392		Retained Earnings		94,000		91,433
		TOTAL COMMON EQUITY		227,029		218,437		TOTAL COMMON EQUITY		254,142		248,787
		Preferred Stock		2,433		2,436		Preferred Stock		2,433		2,433
		Long-term Debt		135,806		134,538		Long-term Debt		158,422		152,851
		TOTAL CAPITALIZATION		365,268		355,411		TOTAL CAPITALIZATION		414,997		404,071

CURRENT		Current Portion of Long-term Debt		6,547		6,159		Current Portion of Long-term Debt		7,336		7,343
LIABILITIES:		Notes Payable		24,500		12,000		Notes Payable		49,500		48,500
		Accounts Payable		12,113		12,343		Accounts Payable		13,976		19,325
		Accrued Taxes		11,881		12,385		Accrued Taxes		17,466		14,230
		Accrued Interest		391		1,084		Accrued Interest		587		1,289
		Unearned Revenues and Advanced Service Fees		962		923		Unearned Revenues and Advanced Service Fees		1,025		1,036
		Other		2,618		2,162		Other		3,356		2,640
		TOTAL CURRENT LIABILITIES		59,012		47,056		TOTAL CURRENT LIABILITIES		93,246		94,363

COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)	COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)						COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)

DEFERRED CREDITS		Customer Advances for Construction		21,307		20,846		Customer Advances for Construction		22,616		22,572
AND OTHER LIABILITIES:		Accumulated Deferred Investment Tax Credits		694		753		Operating Lease Obligation		6,260		—
		Accumulated Deferred Income Taxes		80,250		72,072		Accumulated Deferred Income Taxes		47,869		47,270
		Employee Benefit Plans		33,544		36,139		Employee Benefit Plans		29,976		30,661
		Regulatory Liability - Cost of Utility Plant Removal		11,889		11,337		Regulatory Liabilities		76,217		79,112
		Other		1,348		1,443		Other		2,530		2,730
		TOTAL DEFERRED CREDITS AND OTHER LIABILITIES		149,032		142,590		TOTAL DEFERRED CREDITS AND OTHER LIABILITIES		185,468		182,345

CONTRIBUTIONS IN AID OF CONSTRUCTION	CONTRIBUTIONS IN AID OF CONSTRUCTION			78,607		75,104	CONTRIBUTIONS IN AID OF CONSTRUCTION			89,262		87,051
		TOTAL CAPITALIZATION AND LIABILITIES	$	651,919	$	620,161		TOTAL CAPITALIZATION AND LIABILITIES	$	782,973	$	767,830

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Nine Months Ended Septmber 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 17,463 $ 19,522
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 10,677 10,052
Provision for Deferred Income Taxes and Investment Tax Credits 8,394 5,382
Equity Portion of Allowance for Funds Used During Construction (AFUDC) (323 ) (261 )
Cash Surrender Value of Life Insurance (161 ) (89 )
Stock Compensation Expense 673 649
Changes in Assets and Liabilities:
Accounts Receivable (1,601 ) (3,213 )
Unbilled Revenues (2,038 ) (2,285 )
Materials and Supplies (347 ) (1,799 )
Prepayments (564 ) (778 )
Accounts Payable (230 ) 3,806
Accrued Taxes (504 ) 1,506
Accrued Interest (693 ) (703 )
Employee Benefit Plans (1,362 ) (1,169 )
Unearned Revenue & Advanced Service Fees 39 24
Other Assets and Liabilities (774 ) 16

NET CASH PROVIDED BY OPERATING ACTIVITIES 28,649 30,660
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures, Including AFUDC of $150 in 2017, $126 in 2016 (35,170 ) (34,146 )

NET CASH USED IN INVESTING ACTIVITIES (35,170 ) (34,146 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt (5,163 ) (4,917 )
Proceeds from Issuance of Long-term Debt 6,968 3,903
Net Short-term Bank Borrowings 12,500 10,600
Deferred Debt Issuance Expense (144 ) (158 )
Proceeds from Issuance of Common Stock 908 1,159
Payment of Common Dividends (10,344 ) (9,695 )
Payment of Preferred Dividends (108 ) (108 )
Construction Advances and Contributions-Net 726 686

NET CASH PROVIDED BY FINANCING ACTIVITIES 5,343 1,470
NET CHANGES IN CASH AND CASH EQUIVALENTS (1,178 ) (2,016 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,879 3,469
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,701 $ 1,453

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Utility Plant received as Construction Advances and Contributions $ 3,238 $ 1,217
Long-term Debt Deobligation $ — $ 476

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Year for:
Interest $ 4,775 $ 4,658
Interest Capitalized $ 150 $ 126
Income Taxes $ 1,462 $ 4,011

	Three Months Ended March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	6,552		$	4,494
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization		4,190			3,771
Provision for Deferred Income Taxes and Investment Tax Credits		(2,319	)		117
Equity Portion of Allowance for Funds Used During Construction (AFUDC)		(347	)		(115	)
Cash Surrender Value of Life Insurance		(123	)		(2	)
Stock Compensation Expense		229			173
Changes in Assets and Liabilities:
Accounts Receivable		1,780			815
Unbilled Revenues		353			7
Materials & Supplies		(68	)		(37	)
Prepayments		381			356
Accounts Payable		(5,349	)		(2,915	)
Accrued Taxes		3,236			3,185
Accrued Interest		(702	)		(591	)
Employee Benefit Plans		26			(588	)
Unearned Revenue & Advanced Service Fees		(11	)		15
Other Assets and Liabilities		(164	)		296

NET CASH PROVIDED BY OPERATING ACTIVITIES		7,664			8,981
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures, Including AFUDC of $168 in 2019, $52 in 2018		(12,324	)		(10,011	)

NET CASH USED IN INVESTING ACTIVITIES		(12,324	)		(10,011	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt		(1,337	)		(1,141	)
Proceeds from Issuance of Long-term Debt		6,899			2,293
Net Short-term Bank Borrowings		1,000			(500	)
Deferred Debt Issuance Expense		—			(20	)
Common Stock Issuance Expense		(6	)		—
Proceeds from Issuance of Common Stock		2,559			286
Payment of Common Dividends		(3,943	)		(3,659	)
Payment of Preferred Dividends		(36	)		(36	)
Construction Advances and Contributions-Net		651			182

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		5,787			(2,595	)
NET CHANGES IN CASH AND CASH EQUIVALENTS		1,127			(3,625	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		5,661			6,397
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	6,788		$	2,772


SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Utility Plant received as Construction Advances and Contributions	$	1,605		$	284

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Year for:
Interest	$	2,297		$	1,833
Interest Capitalized	$	168		$	52
Income Taxes	$	815		$	—

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CAPITAL STOCK

AND LONG-TERM DEBT

(Unaudited)

(In thousands)

		September 30,			December 31,			March 31,			December 31,
		2017			2016			2019			2018
Common Stock, No Par Value	Common Stock, No Par Value
Shares Authorized -	40,000
Shares Outstanding -	2017 - 16,345; 2016 - 16,296	$	154,626		$	153,045
Shares Authorized - 40,000
Shares Outstanding - 2019 - 16,451; 2018 - 16,403								$	160,142		$	157,354

Retained Earnings	Retained Earnings		72,403			65,392			94,000			91,433
TOTAL COMMON EQUITY	TOTAL COMMON EQUITY	$	227,029		$	218,437		$	254,142		$	248,787

Cumulative Preferred Stock, No Par Value:	Cumulative Preferred Stock, No Par Value:
Shares Authorized - 126	Shares Authorized - 126
Shares Outstanding - 24
Shares Outstanding - 23
Convertible:	Convertible:
Shares Outstanding, $7.00 Series - 10	Shares Outstanding, $7.00 Series - 10	$	1,005		$	1,007			1,005			1,005
Shares Outstanding, $8.00 Series - 3	Shares Outstanding, $8.00 Series - 3		349			349			349			349
Nonredeemable:	Nonredeemable:
Shares Outstanding, $7.00 Series - 1	Shares Outstanding, $7.00 Series - 1		79			80			79			79
Shares Outstanding, $4.75 Series - 10	Shares Outstanding, $4.75 Series - 10		1,000			1,000			1,000			1,000
TOTAL PREFERRED STOCK	TOTAL PREFERRED STOCK	$	2,433		$	2,436		$	2,433		$	2,433

Long-term Debt:	Long-term Debt:
8.05%, Amortizing Secured Note, due December 20, 2021	8.05%, Amortizing Secured Note, due December 20, 2021	$	1,241		$	1,415		$	856		$	924
6.25%, Amortizing Secured Note, due May 19, 2028	6.25%, Amortizing Secured Note, due May 19, 2028		4,480			4,795			3,850			3,955
6.44%, Amortizing Secured Note, due August 25, 2030	6.44%, Amortizing Secured Note, due August 25, 2030		3,617			3,827			3,197			3,267
6.46%, Amortizing Secured Note, due September 19, 2031	6.46%, Amortizing Secured Note, due September 19, 2031		3,897			4,107			3,477			3,547
4.22%, State Revolving Trust Note, due December 31, 2022	4.22%, State Revolving Trust Note, due December 31, 2022		304			329			228			228
3.60%, State Revolving Trust Note, due May 1, 2025	3.60%, State Revolving Trust Note, due May 1, 2025		1,958			2,062			1,632			1,632
3.30% State Revolving Trust Note, due March 1, 2026	3.30% State Revolving Trust Note, due March 1, 2026		392			431			330			351
3.49%, State Revolving Trust Note, due January 25, 2027	3.49%, State Revolving Trust Note, due January 25, 2027		427			465			369			389
4.03%, State Revolving Trust Note, due December 1, 2026	4.03%, State Revolving Trust Note, due December 1, 2026		578			603			501			501
4.00% to 5.00%, State Revolving Trust Bond, due August 1, 2021	4.00% to 5.00%, State Revolving Trust Bond, due August 1, 2021		162			213			111			111
0.00%, State Revolving Fund Bond, due August 1, 2021	0.00%, State Revolving Fund Bond, due August 1, 2021		128			166			85			88
3.64%, State Revolving Trust Note, due July 1, 2028	3.64%, State Revolving Trust Note, due July 1, 2028		266			276			235			235
3.64%, State Revolving Trust Note, due January 1, 2028	3.64%, State Revolving Trust Note, due January 1, 2028		87			91			77			77
3.45%, State Revolving Trust Note, due August 1, 2031	3.45%, State Revolving Trust Note, due August 1, 2031		962			1,015			879			907
6.59%, Amortizing Secured Note, due April 20, 2029	6.59%, Amortizing Secured Note, due April 20, 2029		4,040			4,302			3,517			3,604
7.05%, Amortizing Secured Note, due January 20, 2030	7.05%, Amortizing Secured Note, due January 20, 2030		3,083			3,271			2,708			2,771
5.69%, Amortizing Secured Note, due January 20, 2030	5.69%, Amortizing Secured Note, due January 20, 2030		6,325			6,709			5,555			5,684
4.45%, Amortizing Secured Note, due April 20, 2040	4.45%, Amortizing Secured Note, due April 20, 2040		9,937			10,267			9,277			9,387
4.47%, Amortizing Secured Note, due April 20, 2040	4.47%, Amortizing Secured Note, due April 20, 2040		3,687			3,809			3,442			3,483
3.75%, State Revolving Trust Note, due July 1, 2031	3.75%, State Revolving Trust Note, due July 1, 2031		2,134			2,191			1,954			1,954
2.00%, State Revolving Trust Note, due February 1, 2036	2.00%, State Revolving Trust Note, due February 1, 2036		1,115			1,115			1,039			1,064
3.75%, State Revolving Trust Note, due November 30, 2030	3.75%, State Revolving Trust Note, due November 30, 2030		1,123			1,154			1,024			1,024
0.00% Construction Loans	0.00% Construction Loans		14,439			7,470			23,408			16,509
First Mortgage Bonds:	First Mortgage Bonds:
0.00%, Series X, due August 1, 2018			55			107
4.25% to 4.63%, Series Y, due August 1, 2018			61			122
0.00%, Series Z, due August 1, 2019	0.00%, Series Z, due August 1, 2019		224			336			113			113
5.25% to 5.75%, Series AA, due August 1, 2019	5.25% to 5.75%, Series AA, due August 1, 2019		300			440			155			155
0.00%, Series BB, due August 1, 2021	0.00%, Series BB, due August 1, 2021		482			603			354			362
4.00% to 5.00%, Series CC, due August 1, 2021	4.00% to 5.00%, Series CC, due August 1, 2021		636			779			489			489
0.00%, Series EE, due August 1, 2023	0.00%, Series EE, due August 1, 2023		2,296			2,713			1,819			1,876
3.00% to 5.50%, Series FF, due August 1, 2024	3.00% to 5.50%, Series FF, due August 1, 2024		3,495			3,690			2,980			2,980
0.00%, Series GG, due August 1, 2026	0.00%, Series GG, due August 1, 2026		813			903			710			723
4.00% to 5.00%, Series HH, due August 1, 2026	4.00% to 5.00%, Series HH, due August 1, 2026		880			960			795			795
0.00%, Series II, due August 1, 2024	0.00%, Series II, due August 1, 2024		610			700			506			520
3.40% to 5.00%, Series JJ, due August 1, 2027	3.40% to 5.00%, Series JJ, due August 1, 2027		750			824			671			671
0.00%, Series KK, due August 1, 2028	0.00%, Series KK, due August 1, 2028		988			1,078			880			898
5.00% to 5.50%, Series LL, due August 1, 2028	5.00% to 5.50%, Series LL, due August 1, 2028		1,095			1,175			1,010			1,010
0.00%, Series MM, due August 1, 2030	0.00%, Series MM, due August 1, 2030		1,237			1,337			1,103			1,137
3.00% to 4.375%, Series NN, due August 1, 2030	3.00% to 4.375%, Series NN, due August 1, 2030		1,505			1,590			1,415			1,415
0.00%, Series OO, due August 1, 2031	0.00%, Series OO, due August 1, 2031		2,107			2,258			1,906			1,956
2.00% to 5.00%, Series PP, due August 1, 2031	2.00% to 5.00%, Series PP, due August 1, 2031		740			780			700			700
5.00%, Series QQ, due October 1, 2023	5.00%, Series QQ, due October 1, 2023		9,915			9,915			9,915			9,915
3.80%, Series RR, due October 1, 2038	3.80%, Series RR, due October 1, 2038		22,500			22,500			22,500			22,500
4.25%, Series SS, due October 1, 2047	4.25%, Series SS, due October 1, 2047		23,000			23,000			23,000			23,000
0.00%, Series TT, due August 1, 2032	0.00%, Series TT, due August 1, 2032		2,258			2,408			2,057			2,107
3.00% to 3.25%, Series UU, due August 1, 2032	3.00% to 3.25%, Series UU, due August 1, 2032		845			890			800			800
0.00%, Series VV, due August 1, 2033	0.00%, Series VV, due August 1, 2033		2,290			2,433			2,100			2,147
3.00% to 5.00%, Series WW, due August 1, 2033	3.00% to 5.00%, Series WW, due August 1, 2033		830			865			795			795
0.00%, Series XX, due August 1, 2047									10,880			11,006
3.00% to 5.00%, Series YY, due August 1, 2047									3,860			3,860
0.00%, Series 2018A, due August 1, 2047									6,837			6,917
3.00%-5.00%, Series 2018B, due August 1, 2047									2,365			2,365
SUBTOTAL LONG-TERM DEBT	SUBTOTAL LONG-TERM DEBT		144,294			142,489			168,466			162,904
Add: Premium on Issuance of Long-term Debt	Add: Premium on Issuance of Long-term Debt		1,335			1,495			1,204			1,259
Less: Unamortized Debt Expense	Less: Unamortized Debt Expense		(3,276	)		(3,287	)		(3,912	)		(3,969	)
Less: Current Portion of Long-term Debt	Less: Current Portion of Long-term Debt		(6,547	)		(6,159	)		(7,336	)		(7,343	)
TOTAL LONG-TERM DEBT	TOTAL LONG-TERM DEBT	$	135,806		$	134,538		$	158,422		$	152,851

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands)

	Common			Common
	Stock			Stock		Retained
	Shares			Amount		Earnings			Total

For the Three Months Ended March 31, 2018
Balance at January 1, 2018		16,352		$	155,120	$	74,056		$	229,176
Net Income		—			—		4,494			4,494
Dividend Reinvestment & Common Stock Purchase Plan		8			286		—			286
Restricted Stock Award, Net - Employees		—			174		—			174
Shares Forefeited		(2	)		—		—			—
Cash Dividends on Common Stock		—			—		(3,659	)		(3,659	)
Cash Dividends on Preferred Stock		—			—		(36	)		(36	)
Balance at March 31, 2018		16,358		$	155,580	$	74,855		$	230,435

For the Three Months Ended March 31, 2019
Balance at January 1, 2019		16,403		$	157,354	$	91,433		$	248,787
Net Income		—			—		6,552			6,552
Dividend Reinvestment & Common Stock Purchase Plan		48			2,559		—			2,559
Restricted Stock Award, Net - Employees		—			229		—			229
Cash Dividends on Common Stock		—			—		(3,943	)		(3,943	)
Cash Dividends on Preferred Stock		—			—		(36	)		(36	)
Common Stock Expenses		—			—		(6	)		(6	)
Balance at March 31, 2019		16,451		$	160,142	$	94,000		$	254,142

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation and Recent Developments

Middlesex Water Company (Middlesex or the Company) is the parent company and sole shareholder of Tidewater Utilities, Inc. (Tidewater), Tidewater Environmental Services, Inc. (TESI), Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), Utility Service Affiliates, Inc. (USA), Utility Service Affiliates (Perth Amboy) Inc. (USA-PA), and Twin Lakes Utilities, Inc. (Twin Lakes). Southern Shores Water Company, LLC (Southern Shores) and White Marsh Environmental Systems, Inc. (White Marsh) are wholly-owned subsidiaries of Tidewater. The financial statements for Middlesex and its wholly-owned subsidiaries (the Company) are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated.

The consolidated notes within the ~~2016~~2018 Annual Report on Form 10-K (the ~~2016~~2018 Form 10-K) are applicable to these financial statements and, in the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (including normal recurring accruals) to present fairly the financial position as of ~~September 30, 2017,~~March 31, 2019 and the results of operations ~~for the three and nine month periods ended September 30, 2017 and 2016~~ and cash flows for the ~~nine~~three month periods ended ~~September 30, 2017~~March 31, 2019 and ~~2016.~~2018. Information included in the Condensed Consolidated Balance Sheet as of December 31, ~~2016,~~2018, has been derived from the Company’s audited financial statements for the year ended December 31, ~~2016~~2018 included in the ~~2016~~2018 Form 10-K.

~~Recent~~Recently Adopted Accounting Guidance

~~Inventory~~Leases - ~~- In July 2015,~~On January 1, 2019, the Company adopted Financial Accounting Standards Board (FASB) issued guidance on simplifying the measurement of inventory. The new guidance replaces the current lower of cost or market test with a lower of cost or net realizable value test when cost is determined on a first-in, first-out or average cost basis. The guidance was effective January 1, 2017 and did not have a material impact on the Company’s financial statements.

~~Accounting for Share-Based Payments -~~In March 2016, the FASB issued guidance which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance was effective January 1, 2017 and did not have a material impact on the Company’s financial statements.

~~Revenue Recognition~~ - In May 2014, the FASB issued guidance related to revenue from contracts with customers. The update replaces most of the existing guidance with a single set of principles for recognizing revenue from contracts with customers. The FASB has deferred the effective date of these new revenue recognition standards by one year to January 1, 2018, at which time the Company will adopt this guidance using the modified retrospective method. The Company continues to assess the impact this standard will have on our financial statements by analyzing our inventory of contracts with customers, which consist primarily of regulated tariff-based sales and non-regulated operation and maintenance contracts for water and wastewater systems. Based on the Company’s on-going interpretation and analysis of this guidance, this update is not expected to have an impact on the Company’s regulated tariff-based sales and the impact on the Company’s non-regulated operation and maintenance contracts, if any, is not expected to be material. The Company’s non-regulated segment contributed approximately 12% and 6% of total revenues and net income, respectively, for the nine months ended September 30, 2017 and approximately 11% and 2% of total revenues and net income, respectively, for the year ended December 31, 2016. The Company’s assessment of this guidance is not final and subject to change pending the Company’s completion of its review of the guidance, including any new authoritative and interpretive guidance.

~~Index~~

~~Recognition and Measurement of Financial Assets and Financial Liabilities~~- In January 2016, the FASB issued guidance which (i) requires all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures and limited liability companies, to be carried at fair value through net income, (ii) requires an incremental recognition and disclosure requirement related to the presentation of fair value changes of financial liabilities for which the fair value option has been elected, (iii) amends several disclosure requirements, including the methods and significant assumptions used to estimate fair value or a description of the changes in the methods and assumptions used to estimate fair value, and (iv) requires disclosure of the fair value of financial assets and liabilities measured at amortized cost at the amount that would be received to sell the asset or paid to transfer the liability. The guidance is effective for fiscal years beginning after December 15, 2017 with early adoption permitted. The guidance is required to be applied retrospectively with a cumulative effect adjustment to retained earnings for initial application of the guidance at the date of adoption (modified retrospective method). The Company is currently assessing the impact of this standard on its consolidated financial statements and footnote disclosures, but does not expect that the adoption of this guidance to have a material impact on the Company’s financial statements.

~~Leases -~~~~In February 2016, the FASB issued guidance~~ related to leases which ~~will require~~required lessees to recognize a lease liability ~~(a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis)~~and a right-of-use asset (an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term). The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted.asset. The Company ~~is currently assessing~~elected the ~~impact~~optional transition method of ~~this~~adoption option to apply the requirements of the standard ~~on its consolidated financial statements~~in the period of adoption with no restatement of prior periods. The Company utilized the package of transition practical expedients provided by the new guidance, including carrying forward prior conclusions related to contracts that contain leases and ~~footnote disclosures, but, based on~~lease classification. The Company also utilized the ~~Company’s current leasing activity, does not expect that~~transition practical expedient permitting entities to forgo the evaluation of existing land easement arrangements to determine if they contain a lease. Land easement arrangements, or modifications to existing arrangements, entered into after adoption of this guidance will need to ~~have~~be evaluated to determine if they meet the definition of a ~~material impact on the Company’s financial statements.~~

~~Statement of Cash Flows -~~In August 2016, the FASB issued guidance which amends the previous guidance on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of this guidance is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. The guidance is effective January 1, 2018 with early adoption permitted.lease. The adoption of this guidance ~~is not expected to have~~resulted in the recording of a ~~material impact~~$6.7 million right-of-use asset, a $7.1 million lease liability and a $0.4 million regulatory asset on the Company’s ~~financial statements.~~

~~Restricted Cash -~~~~In November 2016, the FASB issued guidance related to the classification and presentation~~consolidated balance sheet as of restricted cash in the statement of cash flows, which requires entities to a) include restricted cash balances in its cash and cash-equivalent balances in the statement of cash flows and b) include a reconciliation of cash and cash-equivalents per the statement of financial position as compared to the statement of cash flows. Changes in restricted cash and restricted cash equivalents that result from transfers between cash, cash equivalents, and restricted cash and restricted cash equivalents will not be presented as cash flow activities in the statement of cash flows. In addition, an entity with a material balance of amounts described as restricted cash and restricted cash equivalents must disclose information about the nature of the restrictions. The guidance is effective January 1, ~~2018 with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.~~2019. For further discussion, see “Leases” inNote 7 – Commitments and Contingent Liabilities.

~~Employee Benefit Plans-Net Periodic Benefit Cost –~~In March 2017, the FASB issued guidance which requires entities to (1) disaggregate the current-service-cost component from the other components of net benefit cost and present it with other current compensation costs for related employees in the income statement and (2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, the ASU requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. The guidance is effective January 1, 2018. The Company is currently assessing the impact of this standard on its consolidated financial statements and footnote disclosures, but does not expect that the adoption of this guidance to have a material impact on the Company’s financial statements.

~~Index~~

There are no other new adopted or proposed accounting guidance that the Company is aware of that could have a material impact on the Company’s financial statements.

Note 2–Rate and Regulatory Matters

Middlesex –~~On October 10, 2017, Middlesex filed a petition with~~In December 2018, the New Jersey Board of Public Utilities (NJBPU) seeking permission to increase base water rates by approximately $15.3 million per year. The request was necessitated by capital infrastructure investments Middlesex has made, or has committed to make, to drinking water infrastructure since the last filing in New Jersey in 2015 as well as increased operations and maintenance costs. We cannot predict when and whether the NJBPU will ultimately approve, deny, or reduce the amount of the request. Under New Jersey statute, the NJPBU must render a decision within nine months of filing a petition.

~~On October 20, 2017, the NJBPU~~(the NJBPU) approved Middlesex’s petition to ~~reset~~establish its Purchased Water Adjustment Clause (PWAC) tariff rate to recover additional annual costs of ~~$1.2~~less than $0.1 million, primarily for the purchase of ~~untreated~~treated water from a non-affiliated water utility regulated by the ~~New Jersey Water Supply Authority.~~NJBPU. A PWAC is a rate mechanism that allows for ~~the~~ recovery of increased purchased water costs between base rate case filings. The PWAC is reset to zero once those increased costs are included in base rates. The ~~reset~~ PWAC tariff rate became effective on ~~November~~January 1, ~~2017.~~2019.

Tidewater -Effective ~~July~~January 1, ~~2017,~~2019, Tidewater reset its Delaware Public Service ~~Commission-approved~~Commission (the DEPSC) approved Distribution System Improvement Charge ~~(DSIC)~~ rate, which is expected to generate ~~$0.4~~revenues of approximately $0.2 million annually.

In February 2019, Tidewater received approval from the DEPSC to reduce its rates, effective March 1, 2019, to reflect the lower corporate income tax rate enacted by theTax Cuts and Jobs Act of 2017 (the Tax Act), resulting in an overall rate decrease of 3.35%, or $1.0 million of revenues, on an annual ~~revenues.~~basis. The DEPSC also approved a one-time credit of $0.7 million to customers’ accounts related to the lower corporate income tax rate.

Index

Pinelands -In March 2019, Pinelands Water and Pinelands Wastewater filed separate petitions with the NJBPU seeking permission to increase base rates by approximately $0.2 million and $0.5 million per year, respectively. These requests were necessitated by capital infrastructure investments both companies have made, or have committed to make, and increased operations and maintenance costs. We cannot predict whether the NJBPU will ultimately approve, deny, or reduce the amount of the requests. A ~~DSIC~~decision by the NJBPU in either matter is ~~a rate-mechanism that allows water utilities to recover investments~~not expected before the fourth quarter of ~~and generate a return on, qualifying capital improvements to their water distribution system made between base rate proceedings.~~2019.

Note 3 – Capitalization

Common Stock

-During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, there were ~~24,154~~47,649 common shares ($2.6 million) and 7,665 common shares (approximately ~~$0.9 million) and 35,350 common shares (approximately $1.2~~$0.3 million), respectively, issued under the Middlesex Water Company Investment Plan (the Investment Plan). On January 2, 2019, the Company began offering shares of its common stock for purchase at a 5% discount to participants in the Investment Plan. The discount offering will continue until 200,000 shares are purchased at the discounted price or December 30, 2019, whichever event occurs first. The discount applies to all common stock purchases made under the Investment Plan, whether by optional cash payment or by dividend reinvestment.

In March 2019, Middlesex filed a petition with the NJBPU seeking approval to issue and sell up to 1,500,000 shares of its common stock in one or more transactions through December 31, 2022. The sale of these additional shares of common stock is part of the Company’s comprehensive financing plan to fund its multi-year utility plant infrastructure investment program. As described below in “Long-term ~~Debt~~Debt”

~~In January 2017,~~, the NJBPU approved ~~Middlesex’s~~the New Jersey Economic Development Authority (NJEDA) debt funding component of the financing plan. We believe the NJBPU will approve the common stock offering request, as filed, during the second quarter of 2019.

Long-term Debt -Subject to ~~borrow up~~regulatory approval, the Company periodically issues long-term debt to ~~$37.0 million~~fund its investments in utility plant and other assets. To the extent possible, the Company finances qualifying capital projects under State Revolving Fund (SRF) loan programs in New Jersey and Delaware. These government programs provide financing at interest rates that are typically below rates available in the broader financial markets. A portion of the borrowings under the New Jersey ~~State Revolving Fund (SRF) program to fund~~SRF is interest-free. Under the construction of a large-diameter transmission pipeline from the Carl J. Olsen water treatment plant and interconnect with our distribution system. Middlesex currently expects to close on the SRF construction loan in the first quarter of 2018 with funding requisitions occurring primarily throughout 2018 and 2019.

Middlesex closed on a $9.5 million NJBPU approved SRF construction loan in August 2017. The proceeds will be used to fund the RENEW 2017 project. RENEW is an ongoing program to eliminate all unlined water distribution mains in the Middlesex system. Funding requisitions are expected to occur primarily throughout the remainder of 2017.

Middlesex closed on a $2.3 million NJBPU approved SRF construction loan in May 2017. The proceeds will be used to fund the upgrade of a booster station at one of its well fields. Funding requisitions are expected to occur through early 2018.

~~In November 2017, Middlesex is scheduled to close out three of its active~~ New Jersey SRF program, borrowers first enter into a construction ~~loans (booster station upgrade, RENEW 2015 and RENEW 2016 projects) by issuing first mortgage bonds designated as Series XX (approximately $11.1 million) and Series YY (approximately $3.7 million).~~loan agreement with the New Jersey Infrastructure Bank (NJIB) at a below market interest rate. The current interest rate on construction loan borrowings is zero percent (0%). When construction on the ~~Series XX bond~~qualifying project is substantially complete, NJIB will ~~be zero and~~coordinate the conversion of the construction loan into a long-term securitized loan with a portion of the principal balance having a stated interest rate onof zero percent (0%) and a portion of the ~~Series YY bond will be determined~~principal balance at a market interest rate at the time of closing using the credit rating of the State of New Jersey. The ~~final maturity date~~current term of the long-term loans offered through the NJIB is up to thirty years. The current portion of the principal balance having a stated interest rate of zero percent (0%) is 75% with the remaining portion of 25% having a market based interest rate. NJIB generally schedules its long-term debt financings in May and November.

In September 2018, the NJIB announced changes to the SRF program for ~~both bonds will be August 1, 2047.~~project funding priority ranking, the proportions of interest free loans and market interest rate loans and overall loan limits on interest free loan balances to investor-owned water utilities. These changes affect SRF projects for which the construction loan closes after September 2018. Under the new guidelines, the principal balance having a stated interest rate of zero percent (0%) is 25% of the loan balance with the remaining portion of 75% having a market based interest rate. This is limited to the first $10.0 million of the loan. Loan amounts above $10.0 million do not participate in the 0% rate program, but do participate at the market based interest rate.

Index

The only active project affected by the SRF program changes is the upgrade to the Company’s Carl J. Olsen water treatment plant (CJO Plant). In April 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program and borrow up to $55.0 million for the CJO Plant project. Although the CJO Plant project has met all the SRF Program requirements, the NJIB has been unable to commit to funding the construction loan.

In order to help ensure adherence to its comprehensive financing plan, Middlesex received approval from the NJBPU in February 2019 to issue and sell up to $140 million of First Mortgage Bonds through the NJEDA in one or more transactions through December 31, 2022.

In May 2018, Middlesex repaid its $9.5 million RENEW 2017 interest-free construction loan by issuing to the NJIB first mortgage bonds designated as Series 2018A ($7.1 million) and Series 2018B ($2.4 million). The interest rate on the Series 2018A bond is zero and the interest rate on the Series 2018B bond ranges between 3.0% and 5.0%. Through March 31, 2019, Middlesex has drawn a total of $8.2 million and expects to draw the remaining proceeds during the second quarter of 2019. The final maturity date for both bonds is August 1, 2047, with scheduled debt service payments over the life of the loans.

In April 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program to fund the construction of a large-diameter transmission pipeline from the CJO water treatment plant and interconnect with our distribution system. Middlesex closed on a $43.5 million NJIB interest-free construction loan in August 2018. Through March 31, 2019, Middlesex has drawn a total of $16.8 million and expects to draw down the remaining proceeds through the end of 2019.

In March 2018, the NJBPU approved Middlesex’s request to borrow up to $14.0 million under the NJIB program to fund the 2018 RENEW Program, which is an ongoing initiative to eliminate all unlined water distribution mains in the Middlesex system. Middlesex closed on an $8.7 million NJIB construction loan in September 2018. Through March 31, 2019, Middlesex has drawn a total of $6.6 million and expects to draw the remaining proceeds during the remainder of 2019. The NJIB has informed the Company that the RENEW 2018 interest-free construction loan is scheduled for the May 2019 long-term debt financing program.

In March 2018, the DEPSC approved Tidewater’s request to borrow up to $0.9 million under the Delaware SRF program to fund the replacement of an entire water distribution system of a small Delaware subdivision. Tidewater closed on the SRF loan in May 2018. In April 2019, Tidewater received approval from the DEPSC to increase the borrowing to $1.7 million based on revised project cost estimates. The closing on the additional $0.8 million is expected to occur in June 2019.

Fair Value of Financial Instruments

-The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments for which it is practicable to estimate that value. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade receivables, accounts payable and notes payable approximate their respective fair values due to the short-term maturities of these instruments. The fair value of First Mortgage and ~~SRF~~State Revolving Fund Bonds (collectively, the Bonds) issued by Middlesex is based on quoted market prices for similar issues. Under the fair value hierarchy, the fair value of cash and cash equivalents is classified as a Level 1 measurement and the fair value of notes payable and the Bonds in the table below are classified as Level 2 measurements. The carrying amount and fair value of the Bonds were as follows:

(In Thousands)
September 30, 2017 December 31, 2016
Carrying Fair Carrying Fair
Amount Value Amount Value
Bonds $ 80,203 $ 82,573 $ 82,786 $ 84,821

	March 31, 2019		December 31, 2018
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Bonds	$100,910	$103,247	$101,411	$102,789

Index

For other long-term debt for which there was no quoted market price and there is not an active trading market, it was not practicable to estimate their fair value (for details, including carrying value, interest rate and due date on these series of long-term debt, please refer to those series noted as “Amortizing Secured Note”, “State Revolving Trust Note” and “Construction Loans” on the Condensed Consolidated Statements of Capital Stock and Long-Term Debt). The carrying amount of these instruments was ~~$64.1~~$67.6 million and ~~$59.7~~$61.5 million at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, respectively. Customer advances for construction have carrying amounts of ~~$21.3 million and $20.8~~$22.6 million at ~~September 30, 2017~~both March 31, 2019 and December 31, ~~2016,~~2018, respectively. Their relative fair values cannot be accurately estimated since future refund payments depend on several variables, including new customer connections, customer consumption levels and future rate increases.

Note 4 – Earnings Per Share

Basic earnings per share (EPS) are computed on the basis of the weighted average number of shares outstanding during the period presented. Diluted EPS assumes the conversion of both the Convertible Preferred Stock $7.00 Series and the Convertible Preferred Stock $8.00 Series.

(In Thousands Except per Share Amounts)
Three Months Ended September 30,
2017 2016
Basic: Income Shares Income Shares
Net Income $ 7,642 16,340 $ 8,813 16,284
Preferred Dividend (36 ) (36 )
Earnings Applicable to Common Stock $ 7,606 16,340 $ 8,777 16,284

Basic EPS $ 0.47 $ 0.54

Diluted:
Earnings Applicable to Common Stock $ 7,606 16,340 $ 8,777 16,284
$7.00 Series Preferred Dividend 17 115 17 115
$8.00 Series Preferred Dividend 6 41 6 41
Adjusted Earnings Applicable to Common Stock $ 7,629 16,496 $ 8,800 16,440

Diluted EPS $ 0.46 $ 0.54

~~Index~~

	(In Thousands Except per Share Amounts)										(In Thousands Except per Share Amounts)
	Nine Months Ended September 30,										Three Months Ended March 31,
	2017					2016					2019					2018
Basic:	Income			Shares		Income			Shares		Income			Shares		Income			Shares
Net Income	$	17,463			16,324	$	19,522			16,262	$	6,552			16,428	$	4,494			16,354
Preferred Dividend		(108	)				(108	)				(36	)				(36	)
Earnings Applicable to Common Stock	$	17,355			16,324	$	19,414			16,262	$	6,516			16,428	$	4,458			16,354

Basic EPS	$	1.06				$	1.19				$	0.40				$	0.27

Diluted:
Earnings Applicable to Common Stock	$	17,355			16,324	$	19,414			16,262	$	6,516			16,428	$	4,458			16,354
$7.00 Series Preferred Dividend		50			115		50			115		17			115		17			115
$8.00 Series Preferred Dividend		18			41		18			41		6			41		6			41
Adjusted Earnings Applicable to Common Stock	$	17,423			16,480	$	19,482			16,418	$	6,539			16,584	$	4,481			16,510

Diluted EPS	$	1.06				$	1.19				$	0.39				$	0.27

Note 5 – Business Segment Data

The Company has identified two reportable segments. One is the regulated business of collecting, treating and distributing water on a retail and wholesale basis to residential, commercial, industrial and fire protection customers in parts of New Jersey, Delaware and Pennsylvania. This segment also includes regulated wastewater systems in New Jersey and Delaware. The Company is subject to regulations as to its rates, services and other matters by New Jersey, Delaware and Pennsylvania with respect to utility services within these states. The other segment is primarily comprised of non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. Inter-segment transactions relating to operational costs are treated as pass-through expenses. Finance charges on inter-segment loan activities are based on interest rates that are below what would normally be charged by a third party lender.

Index

	(In Thousands)												(In Thousands)
	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
Operations by Segments:	2017			2016			2017			2016			2019			2018
Revenues:
Regulated	$	32,252		$	33,989		$	88,023		$	89,797		$	27,898		$	27,206
Non – Regulated		4,142			3,949			11,755			11,685			2,925			4,100
Inter-segment Elimination		(220	)		(144	)		(459	)		(384	)		(125	)		(129	)
Consolidated Revenues	$	36,174		$	37,794		$	99,319		$	101,098		$	30,698		$	31,177

Operating Income:
Regulated	$	12,098		$	13,516		$	28,195		$	30,940		$	6,034		$	5,625
Non – Regulated		708			640			1,954			1,845			994			725
Consolidated Operating Income	$	12,806		$	14,156		$	30,149		$	32,785		$	7,028		$	6,350

Net Income:
Regulated	$	7,232		$	8,154		$	16,341		$	18,226		$	5,868		$	3,983
Non – Regulated		410			659			1,122			1,296			684			511
Consolidated Net Income	$	7,642		$	8,813		$	17,463		$	19,522		$	6,552		$	4,494

Capital Expenditures:
Regulated	$	13,998		$	14,011		$	35,157		$	33,961		$	12,293		$	9,978
Non – Regulated		7			24			13			185			31			33
Total Capital Expenditures	$	14,005		$	14,035		$	35,170		$	34,146		$	12,324		$	10,011


	As of			As of			As of			As of
	September 30,			December 31,			March 31,			December 31,
	2017			2016			2019			2018
Assets:
Regulated	$	654,248		$	619,915		$	780,317		$	764,749
Non – Regulated		6,772			6,245			9,087			8,994
Inter-segment Elimination		(9,101	)		(5,999	)		(6,431	)		(5,913	)
Consolidated Assets	$	651,919		$	620,161		$	782,973		$	767,830

Note 6 – Short-term Borrowings

As of ~~September 30, 2017,~~March 31, 2019, the Company ~~has established~~retains lines of credit aggregating ~~$92.0 million, an increase of $32.0 million since June 30, 2017.~~$100.0 million. At ~~September 30, 2017,~~March 31, 2019, the outstanding borrowings under these credit lines were ~~$24.5~~$49.5 million at a weighted average interest rate of ~~2.28%~~3.61%.

The weighted average daily amounts of borrowings outstanding under the Company’s credit lines and the weighted average interest rates on those amounts were ~~as follows:~~$50.0 million and $27.9 million at 3.64% and 2.74% for the three months ended March 31, 2019 and 2018, respectively.

~~Index~~

(In Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Average Daily Amounts Outstanding $ 21,055 $ 11,734 $ 16,447 $ 6,177
Weighted Average Interest Rates 2.28% 1.54% 2.07% 1.52%

The maturity dates for the ~~$24.5~~$49.5 million outstanding as of ~~September 30, 2017~~March 31, 2019 are ~~all~~ in ~~October 2017 and November 2017~~April 2019 through June 2019 and are extendable at the discretion of the Company.

Interest rates for short-term borrowings under the lines of credit are below the prime rate with no requirement for compensating balances.

Index

Note 7 – Commitments and Contingent Liabilities

Water Supply

- Middlesex has an agreement with the New Jersey Water Supply Authority (NJWSA) for the purchase of untreated water through November 30, 2023, which provides for an average purchase of 27.0 million gallons a day (mgd). Pricing is set annually by the NJWSA through a public rate making process. The agreement has provisions for additional pricing in the event Middlesex overdrafts or exceeds certain monthly and annual thresholds.

Middlesex also has an agreement with a non-affiliated regulated water utility for the purchase of treated water. This agreement, which expires February 27, 2021, provides for the minimum purchase of 3.0 mgd of treated water with provisions for additional purchases.

Tidewater contracts with the City of Dover, Delaware to purchase 15.0 million gallons of treated water annually.

Purchased water costs are shown below:

	(In Thousands)								(In Thousands)
	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2017		2016		2017		2016		2019		2018

Treated	$	791	$	804	$	2,365	$	2,360	$	770	$	888
Untreated		673		675		1,905		1,911		861		930
Total Costs	$	1,464	$	1,479	$	4,270	$	4,271	$	1,631	$	1,818

~~Contract Operations -~~USA-PA operates the City of Perth Amboy, New Jersey’s (Perth Amboy) water and wastewater systems under a 20-year agreement, which expires in December 2018. In connection with the agreement with Perth Amboy, USA-PA entered into a concurrent subcontract with a wastewater operating company for the operation and maintenance of the Perth Amboy wastewater collection system. The subcontract provides for the sharing of certain fixed and variable fees and operating expenses.

Guarantees~~Guarantees~~ -As part of an agreement with the County of Monmouth, New Jersey (County), Middlesex serves as guarantor of the performance of Applied Water Management, Inc. (AWM), an unaffiliated wastewater ~~treatment~~ contractor, to operate a County-owned leachate pretreatment facility at the Monmouth County Reclamation Center in Tinton Falls, New Jersey. The performance guaranty is effective through 2028 unless another guarantor, acceptable to the County, replaces Middlesex before such date. Under agreements with AWM and Natural Systems Utilities, LLC (NSU), the parent company of AWM, Middlesex earns a fee for providing the performance guaranty. In addition, Middlesex may provide operational support to the facility, as needed, and AWM and NSU, serving as guarantor to Middlesex with respect to the performance of AWM, ~~agree to indemnify~~have indemnified Middlesex against any claims that may arise under the Middlesex guaranty to the County.

~~Index~~

If requested to perform under the guaranty to the County and, if AWM and NSU, as guarantor to Middlesex, do not fulfill their obligations to indemnify Middlesex against any claims that may arise under the Middlesex guaranty to the County, Middlesex would be required to fulfill the remaining operational commitment of AWM. As of both ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, the liability recognized in Other Non-Current Liabilities on the balance sheet for the guaranty is approximately ~~$0.1~~$1.5 million.

Index

Leases-The Company determines if an arrangement is a lease at inception. Generally, a lease agreement exists if the Company determines that the arrangement gives the Company control over the use of an identified asset and obtains substantially all of the benefits from the identified asset.

~~Construction~~

The Company ~~expects~~has entered into an operating lease of office space for administrative purposes, expiring in 2030. The Company has not entered into any finance leases. The exercise of a lease renewal option for the Company’s administrative offices is solely at the discretion of the Company.

The right-of-use (ROU) asset recorded represents the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company’s operating lease does not provide an implicit discount rate and as such the Company used an estimated incremental borrowing rate (4.03%) based on the information available at commencement date in determining the present value of lease payments.

Given the impacts of accounting for regulated operations, and the resulting recognition of expense at the amounts recovered in customer rates, expenditures for operating leases are consistent with lease expense and were $0.1 million and less than $0.1 million for the three months ended March 31, 2019 and 2018, respectively.

Information related to operating lease ROU assets and lease liabilities is as follows:

	(In Millions)
	March 31, 2019
ROU Asset at Lease Inception	$	7.3
Accumulated Amortization		(0.8	)
Current ROU Asset	$	6.5

The Company’s future minimum operating lease commitments as of March 31, 2019 are as follows:

	(In Millions)
	March 31, 2019
2019	$	0.5
2020		0.8
2021		0.8
2022		0.8
2023		0.8
Thereafter		5.3
Total Lease Payments	$	9.0
Imputed Interest		(2.1	)
Present Value of Lease Payments		6.9
Less Current Portion*		(0.6	)
Non-Current Lease Liability	$	6.3

*Included in Other Current Liabilities

Construction - The Company has forecasted to spend approximately ~~$52~~$112 million for its construction program in ~~2017.~~2019. The ~~actual~~Company has entered into several contractual construction agreements that, in the aggregate, obligate it to expend an estimated $17 million in the future. The timing and amount of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain projects.

Litigation

- The Company is a defendant in lawsuits in the normal course of business. We believe the resolution of pending claims and legal proceedings will not have a material adverse effect on the Company’s consolidated financial statements.

Change in Control Agreements

- The Company has Change in Control Agreements with certain of its officers that provide compensation and benefits in the event of termination of employment in connection with a change in control of the Company.

Note 8 – Employee Benefit Plans

Pension Benefits

- The Company’s Pension Plan covers all active employees hired prior to April 1, 2007. Employees hired after March 31, 2007 are not eligible to participate in this plan, but do participate in a defined contribution plan that provides anfor a potential annual contribution in an amount that is at the discretion of the ~~Company, based upon a percentage of the participants’ compensation.~~Company. In order to be eligible for a contribution, the participant must be employed by the Company on December 31st of the year to which the contribution relates. For each of the three month periods ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, the Company made Pension Plan cash contributions of ~~$1.0 million. For each of the nine month periods ended September 30, 2017 and 2016, the Company made Pension Plan cash contributions of $2.5~~$0.5 million. The Company expects to make Pension Plan cash contributions of approximately ~~$0.8~~$3.1 million over the remainder of the current year. The Company also maintains an unfunded supplemental retirement benefit plan for certain active and retired Company officers and currently pays ~~$0.3~~$0.4 million in annual benefits to the retired participants.

Other Postretirement Benefits-

The Company’s retirement plan other than pensions (Other Benefits Plan) covers substantially all of its current retired employees. Employees hired after March 31, 2007 are not eligible to participate in this plan. Coverage includes healthcare and life insurance. For each of the three month periods ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, the Company made Other Benefits Plan cash contributions of $0.2 ~~million. For each of the nine month periods ended September 30, 2017 and 2016, the Company made Other Benefits Plan cash contributions of $0.7~~ million. The Company expects to make Other Benefits Plan cash contributions of approximately ~~$0.9~~$1.2 million over the remainder of the current year.

Index

The following tables set forth information relating to the Company’s periodic costs for its employee retirement benefit plans:

	(In Thousands)												(In Thousands)
	Pension Benefits						Other Benefits						Pension Benefits						Other Benefits
	Three Months Ended September 30,												Three Months Ended March 31,
	2017			2016			2017			2016			2019			2018			2019			2018

Service Cost	$	600		$	577		$	272		$	275		$	543		$	607		$	210		$	284
Interest Cost		786			761			491			488			857			765			496			474
Expected Return on Assets		(1,122	)		(1,004	)		(601	)		(558	)		(1,173	)		(1,218	)		(613	)		(637	)
Amortization of Unrecognized Losses		391			357			445			443			404			415			330			447
Amortization of Unrecognized Prior Service Cost (Credit)		—			—			(432	)		(432	)
Net Periodic Benefit Cost	$	655		$	691		$	175		$	216
Amortization of Unrecognized Prior Service Credit														—			—			—			(402	)
Net Periodic Benefit Cost*													$	631		$	569		$	423		$	166

*Service cost is included in Operations and Maintenance expense on Consolidated Statements of Income; all other amounts are included in Other Income/Expense, net.

(In Thousands)
Pension Benefits Other Benefits
Nine Months Ended September 30,
2017 2016 2017 2016

Service Cost $ 1,799 $ 1,731 $ 817 $ 824
Interest Cost 2,357 2,284 1,473 1,464
Expected Return on Assets (3,367 ) (3,011 ) (1,804 ) (1,674 )
Amortization of Unrecognized Losses 1,174 1,070 1,336 1,330
Amortization of Unrecognized Prior Service Cost (Credit) — — (1,296 ) (1,296 )
Net Periodic Benefit Cost $ 1,963 $ 2,074 $ 526 $ 648

Note 9 – Revenue Recognition from Contracts with Customers
The Company’s revenues are primarily generated from regulated tariff-based sales of water and wastewater services and non-regulated operation and maintenance contracts for services on water and wastewater systems owned by others. Revenue from contracts with customers is recognized when control of a promised good or service is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.
The Company’s regulated revenue from contracts with customers is derived from tariff-based sales that result from the obligation to provide water and wastewater services to residential, industrial, commercial, fire-protection and wholesale customers. The Company’s residential customers are billed quarterly while most of the Company’s industrial, commercial, fire-protection and wholesale customers are billed monthly. Payments by customers are due between 15 and 30 days after the invoice date. The Company recognizes revenue as the water and wastewater services are delivered, to customers as well as records unbilled revenues estimated from the last meter reading date to the end of the accounting period utilizing factors such as historical customer data, regional weather indicators and general economic conditions in its service territories. Unearned Revenues and Advance Service Fees include fixed service charge billings in advance of service provided to Tidewater customers and are recognized as service is provided.
Non-regulated service contract revenues consist of base service fees, as well as fees for additional billable services provided to customers, are billed monthly and are due within 30 days after the invoice date. The Company considers the amounts billed to represent the value of these services provided to customers. Certain of these contracts continue through 2022 and thus contain remaining performance obligations for which the Company expects to recognize revenue in the future. These contracts also contain termination provisions.
Substantially all operating revenues and accounts receivable are from contracts with customers. The Company records an allowance for doubtful accounts based on historical write-offs combined with an evaluation of current economic conditions within its service territories.
The Company’s contracts do not contain any significant financing components.
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Index
The Company’s operating revenues are comprised of the following:
(In Thousands)
Three Months Ended March 31,
2019 2018
Regulated Tariff Sales
Residential $ 15,980 $ 15,623
Commercial 3,309 3,109
Industrial 2,198 2,312
Fire Protection 3,013 2,888
Wholesale 3,339 3,212
Non-Regulated Contract Operations 2,824 3,999
Total Revenue from Contracts with Customers $ 30,663 $ 31,143
Other Regulated Revenues 58 62
Other Non-Regulated Revenues 102 101
Inter-segment Elimination (125 ) (129 )
Total Revenue $ 30,698 $ 31,177
Note 10 – Income Taxes

As part of its 2014 Federal income tax return, the Company adopted the final Internal Revenue Service (IRS) tangible property regulations ~~pertaining to~~and changed its accounting method for the tax ~~deductibility~~treatment of ~~costs~~expenditures that ~~qualify~~qualified as ~~repairs on tangible property.~~deductible repairs. The adoption resulted in a net reduction of $17.6 million in taxes previously remitted to the IRS, for which the Company has already sought and received ~~refunds pertaining to~~the tax ~~years 2012 through 2014~~refunds. A reserve provision against refunded taxes of $2.3 million was recorded in ~~accordance with~~2015 at the time of filing its change in accounting method based on a possible challenge by the IRS ~~regulations. Subsequently, the~~during an audit examination. The Company’s 2014 federal income tax return was subsequently selected for examination by the ~~IRS. It is unknown at this time whether~~IRS in 2016. In 2018, the ~~results~~Company received information from the IRS regarding certain aspects of ~~this examination will result in any changes~~the its adopted accounting method used to calculate qualifying tangible property repair cost deductions and increased its reserve provision to $4.1 million. During the ~~filed Federal~~first quarter of 2019, the Company agreed to certain modifications of its accounting method for expenditures that qualify as deductible repairs and the IRS concluded its audit of the Company’s 2014 federal income tax return. The modifications also impacted the Company’s filed 2015, 2016 and 2017 federal income tax returns. The Company paid $0.8 million in income taxes in connection with the conclusion of the 2014 and 2015 tax years. The IRS is currently examining the 2016 and 2017 tax years to determine the impact of the modifications on those tax years. The Company reduced its income tax reserve provision to $3.1 million as of March 31, 2019. Pending completion of the 2016 and 2017 examinations, the final tax liability could be different than the recorded reserve provision. For the three months ended March 31, 2019, the Company reduced its potential interest expense liability to $0.3 million as a result of the closing of the 2014 and 2015 tax years and the revised income tax reserve provision.
1314
Index
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of Middlesex Water Company (Middlesex or the Company) included elsewhere herein and with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2018.
Forward-Looking Statements
Certain statements contained in this periodic report and in the documents incorporated by reference constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The Company intends that these statements be covered by the safe harbors created under those laws.  They include, but are not limited to statements as to:

- expected financial condition, performance, prospects and earnings of the Company;
- strategic plans for growth;
- the amount and timing of rate increases and other regulatory matters, including the recovery of certain costs recorded as regulatory assets;
- the Company’s expected liquidity needs during the upcoming fiscal year and beyond and the sources and availability of funds to meet its liquidity needs;
- expected customer rates, consumption volumes, service fees, revenues, margins, expenses and operating results;
- financial projections;
- the expected amount of cash contributions to fund the Company’s retirement benefit plans, anticipated discount rates and rates of return on retirement benefit plan assets;
- the ability of the Company to pay dividends;
- the Company’s compliance with environmental laws and regulations and estimations of the materiality of any related costs;
- the safety and reliability of the Company’s equipment, facilities and operations;
- ~~the Company’s plans to renew municipal franchises and consents in the territories it serves;~~
- trends; and
- the availability and quality of our water supply.
These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from anticipated results and outcomes include, but are not limited to:

- effects of general economic conditions;
- ~~increases in~~ competition for growth in non-franchised markets to be potentially served by the Company;
- ability of the Company to adequately control selected operating expenses which are necessary to maintain safe and proper utility services, and which may be beyond the Company’s control;
- availability of adequate supplies of water;
- ability to maintain compliance with all regulatory requirements with respect to water and wastewater treatment, distribution and collection;
- actions taken by government regulators, including decisions on rate increase requests;
- ability to meet new or modified water and wastewater quality standards;
- weather variations and other natural phenomena impacting utility operations;
- financial and operating risks associated with acquisitions and/or privatizations;
- acts of war or terrorism;
- changes in the pace of residential housing development;
- availability and cost of capital resources; and
- other factors discussed elsewhere in this quarterly report.

Many of these factors are beyond the Company’s ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements, which only speak to the Company’s understanding as of the
14
~~Index~~
date of this report. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

15
Index
For an additional discussion of factors that may affect the Company’s business and results of operations, see Item 1A. - Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2018.

Overview

Middlesex Water Company (Middlesex) has operated as a water utility in New Jersey since 1897, in Delaware through our wholly-owned subsidiary, Tidewater Utilities, Inc. (Tidewater), since 1992 and in Pennsylvania through our wholly-owned subsidiary, Twin Lakes Utilities, Inc. (Twin Lakes), since 2009. We are in the business of collecting, treating and distributing water for domestic, commercial, municipal, industrial and fire protection purposes. We also operate two New Jersey municipal water and wastewater systems under contract and provide regulated wastewater services in New Jersey and Delaware through four of our other subsidiaries. We are regulated as to rates charged to customers for water and wastewater services, as to the quality of water service we provide and as to certain other matters in New Jersey, Delaware and Pennsylvania. Only our Utility Service Affiliates, Inc. (USA), Utility Service Affiliates (Perth Amboy), Inc. (USA-PA) and White Marsh Environmental Services, Inc. (White Marsh) subsidiaries are not regulated utilities.

Our New Jersey water utility system (the Middlesex System) provides water services to approximately 61,000 retail customers, primarily in central New Jersey. The Middlesex System also provides water service under contract to municipalities in central New Jersey with a total population of approximately 219,000. Our Bayview subsidiary provides water services in Downe Township, New Jersey. Our other New Jersey subsidiaries, Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), provide water and wastewater services to approximately 2,500 ~~residents~~customers in Southampton Township, New Jersey.

~~In partnership with our~~Our Delaware subsidiaries, Tidewater and Southern Shores Water Company, LLC (Southern Shores), provide water services to approximately 47,000 retail customers in New Castle, Kent and Sussex Counties, Delaware. Tidewater’s subsidiary, White Marsh, services approximately 4,000 customers in Delaware and Maryland through various operations and maintenance contracts.
Our Tidewater Environmental Services, Inc. (TESI) subsidiary provides wastewater services to approximately 3,600 residential retail customers in Sussex Counties, Delaware.
USA-PA ~~we operate~~operates the water ~~supply system~~ and wastewater ~~system~~systems for the City of Perth Amboy, New ~~Jersey.~~Jersey (Perth Amboy) under a 10-year operations and maintenance contract expiring in 2028. In addition to performing day-to day operations, USA-PA is also responsible for emergency responses and management of capital projects funded by Perth Amboy. USA-PA does not manage the billing, collections and customer service functions of Perth Amboy.

USA operates the Borough of Avalon, New Jersey’s (Avalon) water utility, sewer utility and storm water system under a ten-year operations and maintenance contract expiring in 2022. In addition to performing day to day operations, USA is responsible for billing, collections, customer service, emergency responses and management of capital projects funded by Avalon. Under a marketing agreement with HomeServe USA (HomeServe), USA offers residential customers in New Jersey and Delaware a menu of water and wastewater related home maintenance programs. HomeServe is a leading national provider of such home maintenance service programs. USA receives a service fee for the billing, cash collection and other administrative matters associated with HomeServe’s service contracts. ~~The agreement expires in 2021.~~ USA also provides unregulated water and wastewater services under contract with several New Jersey municipalities.

Our Delaware subsidiaries, Tidewater and Southern Shores Water Company, LLC, provide water services to approximately 44,000 retail customers in New Castle, Kent and Sussex Counties, Delaware. Tidewater’s subsidiary, White Marsh, services approximately 4,000 customers in Kent and Sussex Counties through various operations and maintenance contracts.16
Index
~~Our Tidewater Environmental Services, Inc. subsidiary provides wastewater services to approximately 3,500 residential retail customers in Sussex County, Delaware.~~
Our Pennsylvania subsidiary, Twin Lakes, provides water services to approximately 120 retail customers in the Township of Shohola, Pike County, Pennsylvania.

15
~~Index~~
The majority of our revenue is generated from retail and contract water services to customers in our service areas. We record water service revenue as such service is rendered and include estimates for amounts unbilled at the end of the period for services provided after the last billing cycle. Fixed service charges are billed in advance by our subsidiary, Tidewater, and are recognized in revenue as the service is provided.
Our ability to increase operating income and net income is based significantly on four factors: weather, adequate and timely rate relief, effective cost management, and customer growth. These factors are evident in the discussions below which compare our results of operations with the prior period.
Recent Developments

Capital Construction Program -The Company’s multi-year capital construction program ~~involves~~encompasses numerous projects designed to upgrade and replace utility infrastructure as well as enhance the integrity and reliability of ~~system~~ assets to better serve the current and future generations of water and wastewater customers. The Company plans to invest approximately ~~$106~~$112 million ~~through 2018~~in 2019 in connection with this plan for projects that include, but are not limited to;
· Construction of a 4.6 mile water transmission pipeline to provide critical resiliency and redundancy ~~capability~~ to the Company’s water transmission system in New Jersey;
· Replacement of ~~five~~four miles of water mains including service lines, valves, fire hydrants and meters in ~~the Borough of South Plainfield,~~Carteret, New Jersey;
· Enhanced treatment process at the Company’s largest water plant in Edison, New Jersey, to mitigate the formation of disinfection by-products that can develop during treatment;
· ~~Additional elevated storage tanks~~Construction of a new wastewater treatment plant to ~~supplement water supply during emergencies~~serve current and ~~peak usage periods;~~
· ~~Upgrades to water interconnections with neighboring utilities for greater resiliency~~future customers in and ~~emergency response capability;~~around the Town of Milton, Delaware;
· Relocation of water meters from inside customers’ premises to exterior meter pits to allow quicker access by crews in emergencies, enhanced customer safety and convenience and reduced unmetered water; and
· Additional standby emergency power generation.

~~Middlesex-~~Pinelands Files for Rate Increases - ~~On October 10, 2017, Middlesex~~In March 2019, Pinelands Water and Pinelands Wastewater filed ~~a petition~~separate petitions with the New Jersey Board of Public Utilities ~~(NJBPU)~~(the NJBPU) seeking permission to increase base ~~water~~ rates by approximately ~~$15.3~~$0.2 million and $0.5 million per ~~year. The request was~~year, respectively. These requests were necessitated by capital infrastructure investments ~~Middlesex has~~both companies have made, or ~~has~~have committed to make, ~~to drinking water infrastructure since the last filing in New Jersey in 2015, as well as~~and increased operations and maintenance costs. We cannot predict ~~when and~~ whether the NJBPU will ultimately approve, deny, or reduce the amount of the ~~request. Under New Jersey statute, the NJPBU must render a~~requests. A decision ~~within nine months of filing a petition.~~
~~On October 20, 2017,~~by the NJBPU ~~approved Middlesex’s petition to reset its Purchased Water Adjustment Clause (PWAC) tariff rate to recover additional annual costs~~in either matter is not expected before the fourth quarter of $1.2 million for the purchase of untreated water from the New Jersey Water Supply Authority. A PWAC is a rate mechanism that allows for the recovery of increased purchased water costs between base rate case filings. The PWAC is reset to zero once those increased costs are included in base rates. The reset PWAC tariff rate became effective on November 1, 2017.2019.

~~Tidewater Distribution System Improvement Charge (DSIC)~~Common Stock Offering -~~Effective July 1, 2017, Tidewater reset~~In March 2019, Middlesex filed a petition with the NJBPU seeking approval to issue and sell up to 1,500,000 shares of its ~~Delaware Public Service Commission-approved DSIC rate, which~~common stock in one or more transactions through December 31, 2022. The sale of these additional shares of common stock is ~~expected~~part of the Company’s comprehensive financing plan to ~~generate $0.4 million~~fund its multi-year utility plant infrastructure investment plan. We believe the NJBPU will approve the common stock offering request, as filed, during the second quarter of annual revenues. A DSIC is a rate-mechanism that allows water utilities to recover investments of, and generate a return on, qualifying capital improvements to the water distribution system made between base rate proceedings.2019.
16
~~Index~~

Outlook

~~Favorable~~Our ability to increase operating income and net income is based significantly on four factors: weather, adequate and timely rate relief, effective cost management and customer growth (which are evident in comparison discussions in the Results of Operations section below). Revenues in 2019 are expected to be favorably impacted by the full year effect of Middlesex’s April 2018 base water rate increase. Weather patterns experienced in 2017 and 2018, which ~~impact outdoor water use,~~resulted in lower customer demand, may reoccur in 2019. Actuarially-determined non-service retirement benefit plan costs are expected to increase in 2019. As operating costs are anticipated to increase in 2019 in a variety of categories, we continue to implement plans to further streamline operations and ~~additional sales to neighboring municipal water utilities due to emergency conditions experienced by those entities in 2015~~further reduce, and ~~2016, and which contributed to overall~~mitigate increases in, operating ~~revenues during those periods, have not reoccurred to-date in 2017.~~costs. Changes in customer water usage habits, as well as increases in capital expenditures and operating costs, are significant factors in determining the timing and extent of rate increase ~~requests (see discussion of the Middlesex base water rate increase request above under “~~~~Recent Developments~~~~”). We continue to execute plans to further streamline operations and further reduce, and mitigate increases in, operating costs.~~requests.

Organic residential customer growth for ~~2017, largely the result of new housing from developer activity in Delaware,~~2019 is expected to be consistent with that experienced in recent years.

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Index
Our strategy for profitable growth is focused on ~~five~~the following key areas:

· ~~Timely and adequate recovery of prudent investments in utility plant required to maintain appropriate utility services;~~
· ~~Operate municipal, commercial and industrial water and wastewater systems under contract;~~
· Prudent acquisitions of ~~investor-~~investor and municipally-owned water and wastewater utilities;
· ~~Invest in, and/or operate under contract, renewable energy~~Timely and ~~industrial~~adequate recovery of infrastructure investments and ~~commercial treatment projects that are complementary~~other costs to ~~the provision~~maintain service quality;
· Operation of municipal and industrial water and wastewater ~~services and related competencies;~~systems on a contract basis; and
· Invest in ~~other~~projects, products ~~services~~ and ~~opportunities~~services that complement our core water and wastewater competencies.

Operating Results by Segment

The discussion of the Company’s operating results is on a consolidated basis and includes significant factors by subsidiary. The Company has two operating segments, Regulated and Non-Regulated. The operations of the Regulated segment are subject to regulations promulgated by state public utility commissions as to rates and level of service. Rates and level of service in the Non-Regulated segment are subject to the terms of individually-negotiated and executed contracts with municipal, industrial and other clients. Both segments are subject to federal and state environmental, water and wastewater quality and other associated legal ~~contractual~~ and regulatory requirements.

The segments in the tables included below consist of the following companies: Regulated-Middlesex, Tidewater, Pinelands, Southern Shores, TESI and Twin Lakes; Non-Regulated-USA, USA-PA, and White Marsh.

17
~~Index~~
Results of Operations – Three Months Ended ~~September 30, 2017~~March 31, 2019

(In Thousands) (In Thousands)
Three Months Ended September 30, Three Months Ended March 31,
2017 2016 2019 2018
Regulated Non-
Regulated Total Regulated Non-
Regulated Total Regulated Non-
Regulated Total Regulated Non-
Regulated Total
Revenues $ 32,132 $ 4,042 $ 36,174 $ 33,946 $ 3,848 $ 37,794 $ 27,874 $ 2,824 $ 30,698 $ 27,178 $ 3,999 $ 31,177
Operations and maintenance expenses 12,980 3,198 16,178 13,527 3,072 16,599 14,417 1,703 16,120 14,708 3,126 17,834
Depreciation expense 3,540 47 3,587 3,194 49 3,243 3,986 60 4,046 3,564 45 3,609
Other taxes 3,513 90 3,603 3,709 87 3,796 3,437 67 3,504 3,281 103 3,384
Operating income 12,099 707 12,806 13,516 640 14,156 6,034 994 7,028 5,625 725 6,350

Other income, net 197 20 217 82 525 607 452 6 458 449 15 464
Interest expense 1,493 — 1,493 1,427 — 1,427 1,200 — 1,200 1,138 — 1,138
Income taxes 3,571 317 3,888 4,017 506 4,523 (582 ) 316 (266 ) 953 229 1,182
Net income $ 7,232 $ 410 $ 7,642 $ 8,154 $ 659 $ 8,813 $ 5,868 $ 684 $ 6,552 $ 3,983 $ 511 $ 4,494

Operating Revenues

Operating revenues for the three months ended ~~September 30, 2017~~March 31, 2019 decreased ~~$1.6~~$0.5 million from the same period in ~~2016 due~~2018. This decrease was related to the following factors:

· Middlesex System revenues ~~decreased $1.8~~increased $0.8 million due to ~~lower~~the following:
o Effective April 1, 2018, a NJBPU-approved base rate increase resulted in higher revenues of $1.0 million;
o Lower water ~~consumption across all classes~~usage from general meter service customers of customers largely as a result of weather patterns in the summer months in 2017 in addition to lower bulk water sales to neighboring municipal systems who experienced emergency conditions in the same period in 2016;$0.3 million;
o All other revenue categories increased $0.1 million;
· Tidewater System revenues ~~remained consistent~~decreased $0.1 million due to ~~additional residential customers,~~lower water demand offset by ~~lower water consumption, also largely a result of weather patterns in the summer months in 2017;~~additional customers; and
· ~~All other revenue categories increased $0.2 million.~~Non-regulated revenues decreased by $1.2 million primarily due to changes resulting from USA-PA’s new 10 year contract with Perth Amboy. Under the new contract, USA-PA is directly responsible for wastewater services, for which USA-PA is compensated. Under the original contract, for wastewater services, USA-PA utilized, and was compensated for, the costs of a sub-contractor (as such, there is corresponding decrease in operations and maintenance expense).

18
Index
Operation and Maintenance Expense

Operation and maintenance expenses for the three months ended ~~September 30, 2017~~March 31, 2019 decreased ~~$0.4~~$1.7 million from the same period in ~~2016,~~2018, primarily related to the following factors:

· ~~Lower retirement plan expenses of $0.7~~Under our new Perth Amboy operating contract, effective January 1, 2019, USA-PA no longer incurs sub-contractor fees for wastewater services, which resulted in a $1.4 million ~~due mostly to reimbursement of retiree healthcare insurance premiums;~~decrease in costs (there is a corresponding decrease in operating revenues);
· ~~Lower~~Milder winter weather resulted in lower water ~~production~~main break costs of $0.2 million in our Middlesex System, primarily due to weather-driven decreased water consumption, partially offset by a rate increase by the municipal wastewater utility that receives the water treatment residuals in the Middlesex System;
· ~~Higher main break repair activity in our Middlesex System in 2017 as compared to 2016 resulted in additional~~Variable production costs ~~of $0.3 million;~~
· ~~Higher labor costs of $0.1~~decreased $0.2 million ~~primarily~~ due to ~~higher average labor rates and additional personnel required to address increased regulatory requirements and other critical needs;~~lower customer demand; and
· All other operation and maintenance expense categories increased $0.1 million.

Depreciation

Depreciation expense for the three months ended ~~September 30, 2017~~March 31, 2019 increased ~~$0.3 million from the same period in 2016 due to a higher level of utility plant in service.~~
18
~~Index~~
~~Other Taxes~~
Other taxes for the three months ended September 30, 2017 decreased $0.2 million from the same period in 2016 due to lower revenue related taxes on decreased revenues in our Middlesex system partially offset by higher payroll taxes.
~~Other Income, net~~
~~Other Income, net for the three months ended September 30, 2017 decreased~~ $0.4 million from the same period in ~~2016, due primarily to the 2016 recognition by USA of previously deferred income associated with the 10-year marketing agreement with HomeServe.~~
~~Interest Charges~~
Interest charges for the three months ended September 30, 2017 increased $0.1 million from the same period in 2016 due to higher average short-term debt balances outstanding and higher average interest rates on short-term debt.
~~Income Taxes~~
~~Income taxes for the three months ended September 30, 2017 decreased $0.6 million from the same period in 2016, due to lower pre-tax income in 2017 as compared to 2016.~~
~~Net Income and Earnings Per Share~~
Net income for the three months ended September 30, 2017 decreased $1.2 million as compared with the same period in 2016. Basic earnings per share were $0.47 and $0.54 for the three months ended September 30, 2017 and 2016, respectively. Diluted earnings per share were $0.46 and $0.54 for the three months ended September 30, 2017 and 2016, respectively.
~~Results of Operations – Nine Months Ended September 30, 2017~~
(In Thousands)
Nine Months Ended September 30,
2017 2016
Regulated Non-
Regulated Total Regulated Non-
Regulated Total
Revenues $ 87,866 $ 11,453 $ 99,319 $ 89,712 $ 11,386 $ 101,098
Operations and maintenance expenses 39,476 9,087 48,563 39,075 9,140 48,215
Depreciation expense 10,136 144 10,280 9,420 141 9,561
Other taxes 10,059 268 10,327 10,277 260 10,537
  Operating income 28,195 1,954 30,149 30,940 1,845 32,785

Other income, net 492 50 542 317 519 836
Interest expense 3,965 — 3,965 3,841 — 3,841
Income taxes 8,381 882 9,263 9,190 1,068 10,258
  Net income $ 16,341 $ 1,122 $ 17,463 $ 18,226 $ 1,296 $ 19,522
19
~~Index~~
~~Operating Revenues~~
~~Operating revenues for the nine months ended September 30, 2017 decreased $1.8 million from the same period in 2016.~~
· Middlesex System revenues decreased $2.8 million due to lower water consumption across all classes of customers largely as a result of weather patterns in the spring and summer months in 2017 in addition to lower bulk water sales to neighboring municipal systems who experienced emergency conditions in the same period in 2016;
· Tidewater System revenues increased $0.9 million due to additional residential customers offset by lower water consumption, also largely a result of weather patterns in the spring and summer months in 2017; and
· ~~All other operating revenue categories increased $0.1 million.~~
~~Operation and Maintenance Expense~~
~~Operation and maintenance expenses for the nine months ended September 30, 2017 increased $0.3 million from the same period in 2016, primarily related to the following factors:~~
· ~~Higher labor costs of $0.6 million, primarily due to higher average labor rates and additional personnel required to address increased regulatory requirements and other critical needs;~~
· Higher water production costs of $0.5 million in our Middlesex System, primarily due to a rate increase by the municipal wastewater utility that receives the water treatment residuals in the Middlesex system and lower raw water quality;
· ~~Higher main break repair activity in our Middlesex System in 2017 as compared to 2016 resulted in higher costs of $0.5 million;~~
· ~~Lower retirement plan expenses of $0.8 million due mostly to reimbursement of retiree healthcare insurance premiums; and~~
· ~~Decreased liability insurance costs of $0.5 million, primarily due to prior policy year refunds; and~~
~~Depreciation~~
~~Depreciation expense for the nine months ended September 30, 2017 increased $0.7 million from the same period in 2016~~2018 due to a higher level of utility plant in service.

Other Taxes

Other taxes for the ~~nine~~three months ended ~~September 30, 2017 decreased $0.2~~March 31, 2019 increased $0.1 million from the same period in ~~2016~~2018 primarily due to ~~lower~~higher revenue related taxes on ~~decreased~~increased revenues in our Middlesex ~~system offset by higher payroll taxes.~~system.

Other Income, net

Other Income, net for the ~~nine~~three months ended ~~September 30, 2017 decreased $0.3 million from~~March 31, 2019 remained consistent with the same period in ~~2016~~2018 primarily due to ~~the 2016 recognition by USA of previously deferred income associated with the 10-year marketing agreement with HomeServe offset by~~ higher ~~AFUDC,~~Allowance for Funds Used During Construction resulting from a higher level of capital projects in ~~progress.~~progress offset by higher actuarially-determined postretirement benefit plan non-service expense.

Interest Charges

Interest charges for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 increased $0.1 million from the same period in ~~2016~~2018 due to higher average short-term debt ~~balances~~ outstanding ~~and higher average~~at increased interest rates ~~on short-term debt.~~in 2019 as compared to 2018.

20
~~Index~~
Income Taxes

Income taxes for the ~~nine~~three months ended ~~September, 2017~~March 31, 2019 decreased ~~$1.0~~$1.4 million from the same period in ~~2016,~~2018, primarily due to ~~lower pre-tax income~~the regulatory accounting treatment of tax benefits associated with the adoption of the tangible property regulations, which was approved in ~~2017 as compared to 2016.~~Middlesex’s 2018 base rate case decision.

Net Income and Earnings Per Share

Net income for the ~~nine~~three months ended ~~September 30, 2017 decreased~~March 31, 2019 increased $2.1 million as compared with the same period in ~~2016.~~2018. Basic ~~and diluted~~ earnings per share were ~~$1.06~~$0.40 and ~~$1.19~~$0.27 for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively. Diluted earnings per share were $0.39 and $0.27 for the three months ended March 31, 2019 and 2018, respectively.

Liquidity and Capital Resources

Operating Cash Flows

Cash flows from operations are largely based on four factors: weather, adequate and timely rate increases, effective cost management and growth. The effect of those factors on net income is discussed in “~~Results~~“Results of ~~Operations~~Operations.”

19
Index
For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, cash flows from operating activities decreased ~~$2.0~~$1.3 million to ~~$28.6~~$7.7 million. The decrease in cash flows from operating activities primarily resulted from ~~lower water sales and~~the timing of ~~vendor~~ payments ~~offset by lower income tax payments and a decreased level of inventory purchases as compared~~ to ~~2016.~~vendors. The ~~$28.6~~$7.7 million of net cash flow from operations enabled ~~the Company~~us to fund approximately 41% of utility plant expenditures internally for the period.

Investing Cash Flows

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, cash flows used in investing activities increased ~~$1.0~~$2.3 million to ~~$35.2~~$12.3 million. The increase in cash flows used in investing activities resulted from ~~higher~~increased utility plant ~~expenditures as compared to 2016.~~expenditures.

For further discussion on the Company’s future capital expenditures and expected funding sources, see “Capital Expenditures and Commitments” below.

Financing Cash Flows

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, cash flows from financing activities increased ~~$3.9~~$8.4 million to ~~$5.3 million as compared to 2016.~~$5.8 million. The majority of the increase in cash flows ~~from~~provided by financing activities ~~resulted from an~~is due to the net increase in short-term and long-term debt funding ~~partially offset by~~and increased ~~common stock dividend payments and lower~~ proceeds from ~~sales~~the issuance of common stock under the Middlesex Water Company Investment Plan (the ~~Dividend~~ Investment Plan).

Capital Expenditures and Commitments

To fund our capital program, we use internally generated funds, short-term and long-term debt borrowings, proceeds from sales of common stock under the ~~Dividend~~ Investment Plan and proceeds from sales offerings to the public of our common stock. See below for a more detailed discussion regarding the funding of our capital program.

The capital investment program for ~~2017~~2019 is currently estimated to be approximately ~~$52~~$112 million. Through ~~September 30, 2017,~~March 31, 2019, we have expended ~~$35.2~~$12 million and expect to incur approximately ~~$17~~$100 million for capital projects for the remainder of ~~2017.~~2019.

We currently project that we ~~will~~may expend approximately ~~$163~~$177 million for capital projects in ~~2018~~2020 and ~~2019.~~2021. The actual amount and timing of capital expenditures is dependent on ~~further~~project scheduling and refinement of engineering estimates ~~related to the timing and cost of specific~~for certain capital projects.

21
~~Index~~
To ~~fund~~pay for our capital program for the remainder of ~~2017,~~2019, we ~~intend to utilize:~~plan on utilizing:
· Internally generated funds;
· Proceeds from the ~~Dividend~~ Investment ~~Plan;~~Plan. which includes a 5% discount purchase program for 2019 (see discussion under “Common Stock” inNote 3 - Capitalization);
· ~~Requisitions~~Proceeds from ~~active loans under~~ the New Jersey and Delaware State Revolving Fund (SRF) ~~program (approximately $6 million depending on actual construction schedule)~~. ~~The~~ SRF ~~program provides~~programs provide low cost financing for projects that meet certain water quality and system improvement ~~benchmarks;~~benchmarks (see discussion under “Long-term Debt” inNote 3 - Capitalization);
· Proceeds from the issuance and sale of First Mortgage Bonds through the New Jersey Economic Development Authority (see discussion under “Long-term Debt” inNote 3 - Capitalization);
· Proceeds from a common stock offering (see discussion under “Common Stock Offering” inRecent Developments above); and
· Short-term borrowings, ~~as needed,~~if necessary, through ~~$92.0~~$100.0 million of ~~available~~active lines of credit with several financial institutions. As of ~~September 30, 2017,~~March 31, 2019, there remains ~~$67.5~~$51.5 million of available credit under these lines.

Recent Accounting Pronouncements – See Note 1 of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recent accounting ~~pronouncements.~~pronouncements and guidance.
20
Index

Item 3. Quantitative and Qualitative Disclosures of Market Risk

We are exposed to market risk associated with changes in interest rates and commodity prices. The Company is subject to the risk of fluctuating interest rates in the normal course of business. Our policy is to manage interest rates through the use of fixed rate long-term debt and, to a lesser extent, short-term debt. The Company’s interest rate risk related to existing fixed rate, long-term debt is not material due to the term of the majority of our First Mortgage Bonds, which have final maturity dates ranging from ~~2018~~2019 to 2047. Over the next twelve months, approximately ~~$6.5~~$7.3 million of the current portion of existing long-term debt instruments will mature. Applying a hypothetical ~~10%~~ change in the rate of interest charged by 10% on those borrowings, would not have a material effect on our earnings.

Our risks associated with commodity price increases for chemicals, electricity and other commodities are reduced through contractual arrangements and the ability to recover ~~market-based~~ price increases through ~~customers’~~ rates. Non-performance by these commodity suppliers could have a material adverse impact on our results of operations, financial position and cash flows.

We are exposed to credit risk for both our Regulated and Non-Regulated business segments. Our Regulated operations serve residential, commercial, industrial and municipal customers while our Non-Regulated operations engage in business activities with developers, government entities and other customers. Our primary credit risk is exposure to customer default on contractual obligations and the associated loss that may be incurred due to the non-payment of customer accounts receivable balances. Our credit risk is managed through established credit and collection policies which are in compliance with applicable regulatory requirements and involve monitoring of customer exposure and the use of credit risk mitigation measures such as letters of credit or prepayment arrangements. Our credit portfolio is diversified with no significant customer or industry concentrations. In addition, our Regulated businesses are generally able to recover all prudently incurred costs including uncollectible customer accounts receivable expenses and collection costs through rates.

The Company's retirement benefit plan assets are exposed to fluctuating market prices of debt and equity securities. Changes to the Company's retirement benefit plan ~~assets’ value~~asset values can impact the Company's retirement benefit plan expense, funded status and future minimum funding requirements. Our risk is ~~reduced through~~mitigated by our ability to recover retirement benefit plan costs through ~~rates.~~rates for regulated utility services charged to our customers.
22
~~Index~~

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities and Exchange Act of 1934 (the Exchange Act), an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was conducted by the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer. Based upon that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this Report. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding disclosure.

21
Index
PART II.  OTHER INFORMATION

Item 1. ~~Item 1.~~ Legal Proceedings

None.

Item 1A. ~~Item 1A.~~ Risk Factors

The information about risk factors does not differ materially from those set forth in Part I, Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

Item 2. ~~Item 2.~~ Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. ~~Item 3.~~ Defaults Upon Senior Securities

None.

Item 4. ~~Item 4.~~ Mine Safety Disclosures

Not applicable.

Item 5. ~~Item 5.~~ Other Information

None.

23
~~Index~~
Item 6. ~~Item 6.~~Exhibits
~~Exhibits~~
~~10.32(a)~~ ~~Amendment To and Extension of the Expiration Date of the Line of Credit included in the Amended and Restated Loan Agreement between registrant, registrant’s subsidiaries and PNC Bank, N.A.~~

~~10.33(a)~~31.1 ~~Amendment To and Extension of the Expiration Date of the Line of Credit included in the Amended and Restated Loan Agreement between registrant, registrant’s subsidiaries and Bank of America, N.A.~~
~~10.47~~ ~~Copy of Construction Loan Agreement (CFP 17-2) By and Between New Jersey Environmental Infrastructure Trust and Middlesex Water Company~~
~~31.1~~
Section 302 Certification by Dennis W. Doll pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.

31.2 Section 302 Certification by A. Bruce O’Connor pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.

32.1 Section 906 Certification by Dennis W. Doll pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.2 Section 906 Certification by A. Bruce O’Connor pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document

101.SCH XBRL Schema Document

101.CAL XBRL Calculation Linkbase Document

101.LAB XBRL Labels Linkbase Document

101.PRE XBRL Presentation Linkbase Document

101.DEF XBRL Definition Linkbase Document

2422
Index

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MIDDLESEX WATER COMPANY

By: /s/A. Bruce O’Connor
A. Bruce O’Connor
Senior Vice President, Treasurer and
Chief Financial Officer
~~(Principal~~(Principal Accounting Officer)

Date: May6, 2019
~~Date: November 2, 2017~~

	Nine Months Ended Septmber 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	17,463		$	19,522
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization		10,677			10,052
Provision for Deferred Income Taxes and Investment Tax Credits		8,394			5,382
Equity Portion of Allowance for Funds Used During Construction (AFUDC)		(323	)		(261	)
Cash Surrender Value of Life Insurance		(161	)		(89	)
Stock Compensation Expense		673			649
Changes in Assets and Liabilities:
Accounts Receivable		(1,601	)		(3,213	)
Unbilled Revenues		(2,038	)		(2,285	)
Materials and Supplies		(347	)		(1,799	)
Prepayments		(564	)		(778	)
Accounts Payable		(230	)		3,806
Accrued Taxes		(504	)		1,506
Accrued Interest		(693	)		(703	)
Employee Benefit Plans		(1,362	)		(1,169	)
Unearned Revenue & Advanced Service Fees		39			24
Other Assets and Liabilities		(774	)		16

NET CASH PROVIDED BY OPERATING ACTIVITIES		28,649			30,660
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures, Including AFUDC of $150 in 2017, $126 in 2016		(35,170	)		(34,146	)

NET CASH USED IN INVESTING ACTIVITIES		(35,170	)		(34,146	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt		(5,163	)		(4,917	)
Proceeds from Issuance of Long-term Debt		6,968			3,903
Net Short-term Bank Borrowings		12,500			10,600
Deferred Debt Issuance Expense		(144	)		(158	)
Proceeds from Issuance of Common Stock		908			1,159
Payment of Common Dividends		(10,344	)		(9,695	)
Payment of Preferred Dividends		(108	)		(108	)
Construction Advances and Contributions-Net		726			686

NET CASH PROVIDED BY FINANCING ACTIVITIES		5,343			1,470
NET CHANGES IN CASH AND CASH EQUIVALENTS		(1,178	)		(2,016	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		3,879			3,469
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,701		$	1,453


SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Utility Plant received as Construction Advances and Contributions	$	3,238		$	1,217
Long-term Debt Deobligation	$	—		$	476

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Year for:
Interest	$	4,775		$	4,658
Interest Capitalized	$	150		$	126
Income Taxes	$	1,462		$	4,011

	(In Thousands)
	September 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Bonds	$	80,203	$	82,573	$	82,786	$	84,821

	-	~~the Company’s plans to renew municipal franchises and consents in the territories it serves;~~
	-	trends; and

Item 6.	~~Item 6.~~Exhibits	~~Exhibits~~

~~10.32(a)~~	~~Amendment To and Extension of the Expiration Date of the Line of Credit included in the Amended and Restated Loan Agreement between registrant, registrant’s subsidiaries and PNC Bank, N.A.~~

~~10.33(a)~~31.1	~~Amendment To and Extension of the Expiration Date of the Line of Credit included in the Amended and Restated Loan Agreement between registrant, registrant’s subsidiaries and Bank of America, N.A.~~

~~10.47~~	~~Copy of Construction Loan Agreement (CFP 17-2) By and Between New Jersey Environmental Infrastructure Trust and Middlesex Water Company~~

~~31.1~~	Section 302 Certification by Dennis W. Doll pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.

	MIDDLESEX WATER COMPANY

	By:	/s/A. Bruce O’Connor
		A. Bruce O’Connor
		Senior Vice President, Treasurer and
		Chief Financial Officer
		~~(Principal~~(Principal Accounting Officer)