Earnings per Share/Capital Stock:

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 that have been issued under AWR's 2000 and 2008 employee plans and the 2003 and 2013 directors plan. 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)	2015		2014
Net income	$	12,149	$	11,021
Less: (a) Distributed earnings to common shareholders	8,138		7,846
Distributed earnings to participating securities	45		43
Undistributed earnings	3,966		3,132

(b) Undistributed earnings allocated to common shareholders	3,945		3,114
Undistributed earnings allocated to participating securities	21		18

Total income available to common shareholders, basic (a)+(b)	$	12,083	$	10,960

Weighted average Common Shares outstanding, basic	38,205		38,747

Basic earnings per Common Share	$	0.32	$	0.28

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 2000 and 2008 employee plans, and the 2003 and 2013 directors plans, and net income. At March 31, 2015 and 2014, there were 198,764 and 247,064 options outstanding, respectively, under these Plans. At March 31, 2015 and 2014, there were also 226,319 and 237,174 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)	2015		2014
Common shareholders earnings, basic	$	12,083	$	10,960
Undistributed earnings for dilutive stock-based awards	21		18
Total common shareholders earnings, diluted	$	12,104	$	10,978

Weighted average common shares outstanding, basic	38,205		38,747
Stock-based compensation (1)	203		197
Weighted average common shares outstanding, diluted	38,408		38,944

Diluted earnings per Common Share	$	0.32	$	0.28

(1) In applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in the calculation of diluted EPS, 198,764 and 247,064 stock options at March 31, 2015 and 2014, respectively, were deemed to be outstanding in accordance with accounting guidance on earnings per share. All of the 226,319 and 237,174 restricted stock units at March 31, 2015 and 2014, respectively, were included in the calculation of diluted EPS for the three months ended March 31, 2015 and 2014.

No stock options outstanding at March 31, 2015 had an exercise price greater than the average market price of AWR’s Common Shares for the three months ended March 31, 2015. There were no stock options outstanding at March 31, 2015 or 2014 that were anti-dilutive.

During the three months ended March 31, 2015 and 2014, AWR issued 47,422 and 57,249 common shares, for approximately $292,000 and $201,000, respectively, under Registrant’s Common Share Purchase and Dividend Reinvestment Plan (“DRP”), the 401(k) Plan, the 2000 and 2008 Stock Incentive Plans, and the 2003 and 2013 Non-Employee Directors Stock Plans.

On March 27, 2014, AWR's Board of Directors approved a stock repurchase program, authorizing AWR to repurchase up to 1.25 million shares of its Common Shares from time to time through June 30, 2016. Pursuant to this program, Registrant repurchased 356,769 Common Shares on the open market during the three months ended March 31, 2015. The repurchase of Common Shares is restricted by California law under the same standards which apply to dividend distributions.

During the three months ended March 31, 2015 and 2014, AWR paid quarterly dividends of approximately $8.2 million, or $0.213 per share, and $7.8 million, or $0.2025 per share, respectively.