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Dividend Limitations
12 Months Ended
Dec. 31, 2012
Dividend Limitations  
Dividend Limitations

Note 7 — Dividend Limitations

 

GSWC is subject to contractual restrictions on its ability to pay dividends. GSWC’s maximum ability to pay dividends is restricted by certain Note Agreements to the sum of $21.0 million plus 100% of consolidated net income from various dates plus the aggregate net cash proceeds received from capital stock offerings or other instruments convertible into capital stock from various dates. Under the most restrictive of the Note Agreements, $352.6 million was available to pay dividends to AWR as of December 31, 2012. GSWC is also prohibited from paying dividends if, after giving effect to the dividend, its total indebtedness to capitalization ratio (as defined) would be more than 0.6667 to 1. Dividends in the amount of $10.2 million, $20.0 million and $19.6 million were paid to AWR by GSWC during the years ended December 31, 2012, 2011 and 2010, respectively.  ASUS paid its first dividend of $6.7 million to AWR in 2012.

 

The ability of AWR, ASUS and GSWC to pay dividends is also restricted by California law. Effective January 1, 2012, California revised the legal standards applicable to a California corporation seeking to distribute dividends.  Under the revised law, AWR, GSWC and ASUS are each permitted to distribute dividends to its shareholders so long as the Board of Directors determines, in good faith, that either: (i) the value of the corporation’s assets equals or exceeds the sum of its total liabilities immediately after the dividend, or (ii) its retained earnings equals or exceeds the amount of the distribution.   Under the least restrictive of the California tests, approximately $205.3 million was available to pay dividends to AWR’s common shareholders at December 31, 2012. Approximately $184.8 million was available for GSWC to pay dividends to AWR at December 31, 2012. Approximately $17.4 million was available for ASUS to pay dividends to AWR at December 31, 2012.