Earnings per Share/Capital Stock

6 Months Ended

Jun. 30, 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 June 30,				For The Six Months Ended June 30,
(in thousands, except per share amounts)	2020		2019		2020		2019
Net income	$	25,612	$	26,784	$	39,684	$	39,636
Less: (a) Distributed earnings to common shareholders	11,250		10,119		22,492		20,232
Distributed earnings to participating securities	40		46		77		88
Undistributed earnings	14,322		16,619		17,115		19,316

(b) Undistributed earnings allocated to common shareholders	14,271		16,543		17,057		19,232
Undistributed earnings allocated to participating securities	51		76		58		84
Total income available to common shareholders, basic (a)+(b)	$	25,521	$	26,662	$	39,549	$	39,464

Weighted average Common Shares outstanding, basic	36,884		36,804		36,872		36,788
Basic earnings per Common Share	$	0.69	$	0.72	$	1.07	$	1.07

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 June 30, 2020 and there were 11,556 options outstanding as of June 30, 2019 under these plans. At June 30, 2020 and 2019, there were also 133,863 and 170,372 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 June 30,				For The Six Months Ended June 30,
(in thousands, except per share amounts)	2020		2019		2020		2019
Common shareholders earnings, basic	$	25,521	$	26,662	$	39,549	$	39,464
Undistributed earnings for dilutive stock-based awards	51		75		58		84
Total common shareholders earnings, diluted	$	25,572	$	26,737	$	39,607	$	39,548

Weighted average common shares outstanding, basic	36,884		36,804		36,872		36,788
Stock-based compensation (1)	116		159		113		154
Weighted average common shares outstanding, diluted	37,000		36,963		36,985		36,942

Diluted earnings per Common Share	$	0.69	$	0.72	$	1.07	$	1.07

(1) In applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in the calculation of diluted EPS, 11,556 stock options at June 30, 2019, respectively, were deemed to be outstanding in accordance with accounting guidance on earnings per share. All of the 133,863 and 170,372 restricted stock units at June 30, 2020 and 2019, respectively, were included in the calculation of diluted EPS for the three months ended June 30, 2020 and 2019.

There were no stock options outstanding at June 30, 2020, and there were no stock options outstanding at June 30, 2019 that were anti-dilutive.

During the six months ended June 30, 2020 and 2019, AWR issued 37,260 and 73,854 common shares, for approximately $30,000 and $366,000, respectively, under Registrant’s stock incentive plans for employees.

During the six months ended June 30, 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 six months ended June 30, 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 June 30, 2020 and 2019, AWR paid quarterly dividends of approximately $11.3 million, or $0.305 per share, and $10.1 million, or $0.275 per share, respectively. During the six months ended June 30, 2020 and 2019, AWR paid quarterly dividends of approximately $22.5 million, or $0.61 per share, and $20.2 million, or $0.550 per share, respectively.

During the three months ended June 30, 2020 and 2019, GSWC paid dividends of $11.3 million and $10.1 million, respectively, to AWR. During the six months ended June 30, 2020 and 2019, GSWC paid dividends of $22.5 million and $20.2 million, respectively, to AWR.