Equity and Earnings Per Share

On April 14, 2014, the Company announced that its Board of Directors declared a stock dividend of 1.5 shares of common stock for each 1 share of common stock to shareholders of record as of April 24, 2014, payable on May 1, 2014. The stock dividend resulted in adjusted stock ownership of 2.5 times the number of shares of each stockholder’s pre-dividend stock ownership.

On April 7, 2014, the Company issued 233,788 shares of stock (giving effect of the 1.5:1 stock dividend) as a part of the ATC acquisition. On June 25, 2014, the Company issued an additional 172,450 shares of stock as a part of the asset acquisition of Kecy. The terms of acquisitions require these shares to be held in escrow for a period of 12 months for ATC and 18 months for Kecy after closing to satisfy certain working capital adjustments and/or indemnification obligations. If, after that date, the Company has met these fiscal obligations, the seller will be paid the balance of the purchase price in cash, with the stock released from escrow and placed into treasury. As the common stock is mandatorily redeemable, the balances owing under the escrow arrangements were reclassified from equity to accrued liabilities. In addition, under the terms of the ATC escrow arrangement, the number of shares the Company issued and placed in escrow had a value of 125% of the amount that would be paid in cash.

The Company issued common shares to two of its minority interest subscribers in exchange for all of their membership interest in the Company’s FloMet and General Flange & Fittings subsidiaries. The issuance of common stock took place in the first quarter of fiscal year 2014. The 0.60% interest in FloMet owned was exchanged for 66,612 shares of common stock of the Company for an acquisition price of $2.043 per share (giving effect of the 1.5:1 stock dividend). The 10% interest in General Flange & Fittings was exchanged for 82,410 shares of common stock of the Company for an acquisition price of $2.119 per share (giving effect of the 1.5:1 stock dividend).

On September 25, 2013, a promissory note representing a loan from FloMet to its former president, Mr. Robert Marten, was terminated and the $272 thousand remaining principal of the promissory note owed to the Company by Mr. Marten was canceled.

The Company issued an equity grant of 363,640 (giving effect of the 1.5:1 stock dividend) shares of common stock to Mr. Jason Young, as inducement for Mr. Young to accept reappointment as Chief Executive Officer. This grant was valued $701 thousand and was recorded within “Selling, general and administrative costs” on the Consolidated Statement of Operations.

The Company terminated the vesting provisions on restricted stock from a former executive totaling $77 thousand and received payment of $195 thousand from this executive for the buyout of vesting provision on restricted stock.

The Company’s Board of Directors authorized the repurchase of up to $250,000 of the Company’s common stock on October 9, 2013. The stock repurchase program does not obligate ARC to acquire any particular amount of stock. It also does not have an expiration date and may be limited or terminated at any time without notice. On December 26, 2013, ARC repurchased 8,401 shares as treasury stock for a total of $92 thousand and accounted for these shares using the cost method. The shares held as treasury stock did not receive the 1.5:1 stock dividend, thus the number of shares issued were adjusted to reflect this.

Earnings Per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding and dilutive potential common shares for the period. In connection with the acquisitions of ATC and Kecy, the Company issued a total of 406,238 shares, which were placed in escrow to satisfy certain working capital adjustments and/or indemnification obligations. To the extent the escrow has not been drawn upon, the escrow shares will be replaced by cash and paid to the seller. As these shares are not expected to be released, these shares have been excluded from the basic and diluted share computations. As of June 30, 2014 and 2013, the Company had no outstanding stock options, therefore there was no computation of effect of dilutive securities.

The following table represents a reconciliation of the shares used to calculate basic and diluted earnings per share for the respective periods indicated (in thousands, except per share amounts):



	For the Years Ended
	June 30, 2014					June 30, 2013
	Net income available to common stockholders		Weighted average shares	Per share earnings		Net income (loss) available to common stockholders			Weighted average shares	Per share earnings (loss)
Basic and diluted EPS:
Net income from continuing operations	$	4,516	14,590	$	0.31	$	3,313		13,743	$	0.24
Net loss from discontinued operations	—		—	—		(274		)	13,743	(0.02		)
Basic and diluted earnings per share	$	4,516	14,590	$	0.31	$	3,039		13,743	$	0.22