Earnings per Share/Capital Stock

3 Months Ended

Mar. 31, 2020

In accordance with the accounting guidance for participating securities and earnings per share (“EPS”), Registrant uses the “two-class” method of computing EPS. The “two-class” method is an earnings allocation formula that determines EPS for each class of common stock and participating security. AWR has participating securities related to restricted stock units that earn dividend equivalents on an equal basis with AWR’s Common Shares, and that have been issued under AWR's stock incentive plans for employees and the non-employee directors stock plans. In applying the “two-class” method, undistributed earnings are allocated to both common shares and participating securities.

The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding used for calculating basic net income per share:



Basic:	For The Three Months Ended March 31,
(in thousands, except per share amounts)	2020		2019
Net income	$	14,072	$	12,852
Less: (a) Distributed earnings to common shareholders	11,242		10,113
Distributed earnings to participating securities	37		47
Undistributed earnings	2,793		2,692

(b) Undistributed earnings allocated to common shareholders	2,784		2,679
Undistributed earnings allocated to participating securities	9		13
Total income available to common shareholders, basic (a)+(b)	$	14,026	$	12,792

Weighted average Common Shares outstanding, basic	36,860		36,773
Basic earnings per Common Share	$	0.38	$	0.35

Diluted EPS is based upon the weighted average number of Common Shares, including both outstanding shares and shares potentially issuable in connection with stock options and restricted stock units granted under AWR’s stock incentive plans for employees and the non-employee directors stock plans, and net income. There were no options outstanding as of March 31, 2020 and there were 29,160 options outstanding as of March 31, 2019 under these plans. At March 31, 2020 and 2019, there were also 129,637 and 184,833 restricted stock units outstanding, respectively, including performance shares awarded to officers of the Registrant.

The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding for calculating diluted net income per share:



Diluted:	For The Three Months Ended March 31,
(in thousands, except per share amounts)	2020		2019
Common shareholders earnings, basic	$	14,026	$	12,792
Undistributed earnings for dilutive stock-based awards	9		13
Total common shareholders earnings, diluted	$	14,035	$	12,805

Weighted average common shares outstanding, basic	36,860		36,773
Stock-based compensation (1)	109		178
Weighted average common shares outstanding, diluted	36,969		36,951

Diluted earnings per Common Share	$	0.38	$	0.35

(1) In applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in the calculation of diluted EPS, 29,160 stock options at March 31, 2019, respectively, were deemed to be outstanding in accordance with accounting guidance on earnings per share. All of the 129,637 and 184,833 restricted stock units at March 31, 2020 and 2019, respectively, were included in the calculation of diluted EPS for the three months ended March 31, 2020 and 2019.

There were no stock options outstanding at March 31, 2020, and there were no stock options outstanding at March 31, 2019 that were anti-dilutive.

During the three months ended March 31, 2020 and 2019, AWR issued 37,157 and 37,376 common shares, for approximately $30,000 and $75,000, respectively, under Registrant’s stock incentive plans for employees.

During the three months ended March 31, 2020 and 2019, AWR paid $1.8 million and $1.6 million, respectively, to taxing authorities on employees' behalf for shares withheld related to net share settlements. During the three months ended March 31, 2020 and 2019, GSWC paid $1.6 million and $1.3 million, respectively, to taxing authorities on employees' behalf for shares withheld related to net share settlements. These payments are included in the stock-based compensation caption of the statements of equity.

During the three months ended March 31, 2020 and 2019, AWR paid quarterly dividends of approximately $11.2 million, or $0.305 per share, and $10.1 million, or $0.275 per share, respectively. During the three months ended March 31, 2020 and 2019, GSWC paid dividends of $11.3 million and $10.1 million, respectively, to AWR.