17. Income Taxes

Our anticipated annual effective tax rate of approximately 36.3% has been applied to our consolidated pre-tax loss for the six month period ended September 30, 2011. Our anticipated annual effective tax rate was different than the U.S. federal statutory rate primarily due to state taxes, a difference in rates between the US and foreign jurisdictions, and certain permanent differences, such as nondeductible compensation expenses.  For the six months ended September 30, 2010, the Company’s provision for income taxes reflects an effective tax rate of approximately 56.0%. The effective tax rate was higher than the U.S. statutory rate due to deferred taxes released when the outstanding Canadian debt facility was retired. For the three month periods ended September 30, 2011 and 2010, the Company recorded tax expense of $2,109 and $235 on pre-tax income (loss) of $5,923 and $(1,562), respectively. In the six month period ended September 30, 2011 and the five month period ended September 30, 2010, the Company recorded approximately $780 and $664 of income tax benefit on pre-tax losses of approximately $(1,932) and $(14,634), respectively.

For the period from April 1 through April 30, 2010 of the Predecessor, an income tax benefit of approximately $17,434 was recorded on a pre-tax loss of $17,701. In connection with the CHS Transactions, the Canadian debt facility was repaid releasing a deferred tax liability of $14,945. Without the benefit of the deferred tax reversal related to the Canadian debt facility, the benefit rate amounted to approximately 14.1%. This benefit rate was increased by foreign tax credits and exchange losses associated with repatriated earnings and decreased by the amount of sellers’ expense stemming from the CHS Transactions that is anticipated to be non-deductible.

As of September 30, 2011, we have established a long-term liability for uncertain tax positions in the amount of $1,307 and have recognized no material adjustments to the liability recorded as of March 31, 2011.  All of our unrecognized tax benefits at September 30, 2011 would affect our effective income tax rate if recognized, though the Company does not expect to recognize any tax benefits in the next twelve months.  The Company recognizes related accrued interest and penalties as income tax expense and has accrued $63 for the six months ending September 30, 2011, resulting in a cumulative total accrual of $124.

Tax years 2007 through 2010 generally remain open to examination by the major taxing jurisdictions to which we are subject.  The Company’s US federal income tax returns are under exam for the Predecessor’s tax years ending April 30, 2010 and March 31, 2010, and as of September 30, 2011 no adjustments have been proposed. The Company’s Canadian federal income tax returns are under exam for the Predecessor’s tax years ending March 31, 2008, 2009 and 2010. See Note 12, “Commitments and Contingencies”.