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1500 Ronson
Road P.O. Box 1500 Iselin, New Jersey 08830-0452 Tel. (732) 634-1500 Fax (732) 638-7515 NASDAQ Stock Market Symbol: MSEX www.middlesexwater.com |
August 6,
2008
Mr.
William H. Thompson
Branch
Chief
United
States Securities and Exchange Commission
450 Fifth
Street, N.W.
Washington,
D.C. 20549
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Re:
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Middlesex
Water Company
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Annual
Report on Form 10K
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For
the Year Ended December 31, 2007
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File
No.: 0-422
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Filed March 10,
2008
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Dear Mr.
Thompson:
This letter responds to your comment
letter dated July 29, 2008 and provides supplemental information with respect
thereto.
Please note that the bold headings and
numbered comments below correspond to your July 29, 2008 comment
letter.
FORM 10-K FOR THE PERIOD
ENDED DECEMBER 31, 2007
Item 8. Financial
Statements and Supplementary Data, page 27
Consolidated Statements of
Income, page 30
Comment
1:
Registrant
has relied on the last sentence of paragraph 15 of SFAS 71 as guidance for
reporting AFUDC as an item of other income. The Registrant believes
that reporting AFUDC in one section of the income statement as other income
provides the financial statement user with a transparent view of the total
impact this non-operating utility industry specific item has on net income. In
addition, the Registrant does disclose separately interest capitalized and the
equity portion of AFUDC on the face of the Consolidated Statements of Cash
Flows, page 31, and the accounting policy for AFUDC in Note 1(f) of the Notes to
Consolidated Financial Statements, page 35.
Quality Water
Service Since 1987
William
H. Thompson
Page
2
August 6,
2008
Note 3. Income
Taxes, page 39
Comment
2:
Registrant
believes the following language contained in the last paragraph of Note 3 on
page 39 of the 2007 Form 10-K discloses the information called for in paragraph
20 of FIN 48:
“In the
event that there are interest and penalties associated with income tax
adjustments, these amounts would be reported under interest expense and other
expense, respectively.”
In
addition, the Registrant has no unrecognized tax benefits to disclose as a
result of tax positions taken during a prior period. In future
filings, the Registrant will disclose whether it has or does not have
unrecognized tax benefits.
Note 6 – Capitalization,
page 42
Comment
3:
Restrictions
associated with retained earnings available for dividend distributions lapsed
with the refunding of the Company’s Series R First Mortgage Bond in
2002. The Registrant will update its risk factors and notes to the
consolidated financial statements disclosure for its dividend distribution
restrictions in future Form 10-K filings. There are no dividend restrictions due
to net income.
Comment
4:
The
Registrant’s consolidated subsidiaries are not restricted from transferring
funds to the Registrant in the form of loans, advances or dividends under debt
agreements or state regulations in the jurisdictions it operates
in.
Item 9A. Controls
and Procedures, page 51
Comment
5:
William
H. Thompson
Page
3
August 6,
2008
Registrant
confirms that there were no changes in internal control over financial reporting
during the last fiscal quarter ended December 31, 2007 that materially affected
or are reasonably likely to materially affect internal control over financial
reporting. Registrant will include this disclosure in all future
filings.
Signatures, page
56
Included
in the chief financial officer’s responsibilities is that of principal
accounting officer. Each capacity in which the officer signs the report will be
disclosed in subsequent filings.
The
company is responsible for the adequacy and accuracy of the disclosure in the
filing; staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action with respect to
the filing; and the company may not assert staff comments as a
defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
Unrelated
to the receipt of this SEC comment letter and Registrant’s response to it,
the Registrant notes that it intends to file today an amended Form 10-Q for
the quarterly period ended March 31, 2008 to restate the balance sheet and
statement of capital stock and long-term debt for the misclassification of $15.0
million long-term debt scheduled to mature in less than twelve months, namely
February 1, 2009.
Thank you
for your time and consideration.
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Sincerely,
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/s/
A. Bruce O’Connor
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A.
Bruce O’Connor
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Vice
President and Chief Financial
Officer
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