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Preferred Stock Subject to Mandatory Redemption
12 Months Ended
Aug. 31, 2013
Equity [Abstract]  
Preferred Stock Subject to Mandatory Redemption

Note 6 — Preferred Stock Subject to Mandatory Redemption

On April 7, 2010, the Company issued $40 million of Series A 15% cumulative non-voting, non-convertible preferred stock (“Series A Preferred Stock”) and 100,000 shares of Series B voting convertible preferred stock (“Series B Preferred Stock”) in a private placement to Zell Credit Opportunities Master Fund, L.P., an investment fund managed by Equity Group Investments, a private investment firm (the “Investor”). The Company has 1,000,000 shares of authorized preferred stock, $1.00 par value, of which no shares are issued and outstanding as of August 31, 2013.

The Company recorded the Series A Preferred Stock and the Series B Preferred Stock at their relative fair values at the time of issuance. The Series A Preferred Stock of $32.3 million was recorded as a long-term liability due to its mandatory redemption feature and the Series B Preferred Stock of $7.7 million was recorded as equity. The discount on the Series A Preferred Stock was amortized into income using the effective interest method over the contractual life of seven years. The holders of the Series A Preferred Stock were entitled to cash dividends of 6% on the sum of the outstanding Series A Preferred Stock plus accrued and unpaid dividends. In addition, dividends equal to 9% of the outstanding Series A Preferred Stock were accrued. Dividends on the Series A Preferred Stock and the discount accretion were recorded as interest expense in the consolidated statements of operations.

In fiscal 2012, the Company redeemed $48.9 million of its Series A Preferred Stock. The Company redeemed 100,000 shares at the original issue price of $40.0 million plus accrued dividends of $8.9 million. As a result of the early redemption, the Company recorded accelerated discount accretion of $5.5 million and amortization of issuance costs of $1.1 million as a loss on redemption in other non-operating income (expense). In addition, in fiscal 2012, the Investor converted its 100,000 shares of Series B Preferred Stock into 1,000,000 shares of the Company’s common stock.