Income Taxes

We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology (“EAETR”) in accordance with GAAP. The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision.

The determination of the EAETR is based upon a number of estimates, including the estimated annual pretax ordinary income in each tax jurisdiction in which we operate. The tax effects of discrete items are recognized in the tax provision in the quarter they occur in accordance with GAAP. Depending on various factors such as the item’s significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter can materially impact the reported effective tax rate. As a global enterprise, our tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors. As such, there can be significant volatility in interim tax provisions.

The below chart provides reconciliation between our reported effective tax rates and the EAETR.



	Three Months Ended June 30
	2015							2014
(in Millions)	Before Tax		Tax			Effective Tax Rate % Impact		Before Tax		Tax		Effective Tax Rate % Impact
Continuing operations	$	75.9	$	17.8		23.5	%	$	134.4	$	36.4	27.1	%

Discrete items:
Acquisition-related charges ⁽¹⁾	21.0		7.5					—		—
Currency remeasurement ⁽²⁾	17.7		6.7					12.4		0.7
Other discrete items	13.6		1.9					14.3		3.6
Tax only discrete items ⁽³⁾	—		(2.1		)			—		1.1
Total discrete items	$	52.3	$	14.0				$	26.7	$	5.4

Continuing operations, before discrete items	$	128.2	$	31.8				$	161.1	$	41.8
Estimated Annualized Effective Tax Rate (EAETR) ⁽⁴⁾						24.8	%					25.9	%



	Six Months Ended June 30
	2015								2014
(in Millions)	Before Tax			Tax			Effective Tax Rate % Impact		Before Tax		Tax		Effective Tax Rate % Impact
Continuing operations	$	(34.3	)	$	(31.3	)	91.3	%	$	266.0	$	71.0	26.7	%

Discrete items:
Acquisition-related charges ⁽¹⁾	211.7			77.8					—		—
Currency remeasurement ⁽²⁾	24.0			3.9					12.4		0.7
Other discrete items	35.4			9.2					27.3		7.8
Tax only discrete items ⁽³⁾	—			0.9					—		1.1
Total discrete items	$	271.1		$	91.8				$	39.7	$	9.6

Continuing operations, before discrete items	$	236.8		$	60.5				$	305.7	$	80.6
Estimated Annualized Effective Tax Rate (EAETR) ⁽⁴⁾							25.5	%					26.4	%

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(1)

Acquisition-related charges for the three and six months ended June 30, 2015 are primarily taxed at domestic tax rates resulting in a material tax benefit. The acquisition-related charges are comprised of legal and professional fees and gain/loss on hedging the purchase price associated with Cheminova, see Note 3 for more information. As noted in footnote (2), below, hedge gains or losses are treated discretely for tax purposes.


(2)	Represents transactions gains or losses on currency remeasurement, offset by the associated hedge gains or losses. Transaction gains or losses are considered non-taxable permanent items and their associated hedge gain or losses are treated discretely for tax purposes.


(3)	Includes the tax effect of currency remeasurement associated with our foreign statutory operations that in accordance with GAAP income tax accounting guidance shall be treated discretely for tax purposes.


(4)	Change in the EAETR period to period is primarily due to income mix between subsidiaries.