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. As our projections of ordinary income change throughout the year, the EAETR will change period-to-period. The tax effects of discrete items are recognized in the tax provision in the period 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 September 30
	2015								2014
(in Millions)	Before Tax			Tax			Effective Tax Rate % Impact		Before Tax		Tax		Effective Tax Rate % Impact
Continuing operations	$	(19.7	)	$	(25.1	)	127.4	%	$	57.3	$	3.6	6.3	%

Discrete items:
Acquisition-related charges ⁽¹⁾	—			—					36.5		11.4
Currency remeasurement ⁽²⁾	2.2			(2.1		)			5.2		2.9
Other discrete items ⁽³⁾	48.7			5.0					27.0		11.2
Tax only discrete items ⁽⁴⁾	—			19.0					—		5.1
Total discrete items	$	50.9		$	21.9				$	68.7	$	30.6

Continuing operations, before discrete items	$	31.2		$	(3.2	)			$	126.0	$	34.2
Quarterly effect of changes in the EAETR ⁽⁵⁾							(10.3	)%					27.1	%



	Nine Months Ended September 30
	2015								2014
(in Millions)	Before Tax			Tax			Effective Tax Rate % Impact		Before Tax		Tax		Effective Tax Rate % Impact
Continuing operations	$	(54.0	)	$	(56.4	)	104.4	%	$	323.3	$	74.6	23.1	%

Discrete items:
Acquisition-related charges ⁽¹⁾	211.7			77.8					36.5		11.4
Currency remeasurement ⁽²⁾	26.2			1.8					17.6		3.6
Other discrete items ⁽³⁾	84.1			14.2					54.3		19.0
Tax only discrete items ⁽⁴⁾	—			19.9					—		6.2
Total discrete items	$	322.0		$	113.7				$	108.4	$	40.2

Continuing operations, before discrete items	$	268.0		$	57.3				$	431.7	$	114.8
EAETR ⁽⁵⁾							21.4	%					26.6	%

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(1)

Due to the nature of acquisition-related charges incurred in the third quarter of 2015, these charges are not treated discretely in accordance with GAAP. As such the amounts differ from total acquisition-related charges as presented in Note 3. Acquisition-related charges for the nine months ended September 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 a loss incurred from hedging activity associated with the purchase price of 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 transaction 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)	Primarily represents restructuring activities.


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


(5)	See below "Explanation of changes in EAETR" for more information regarding the changes in the EAETR.

Explanation of changes in EAETR

Three months ended September 30, 2015 and 2014

The loss from continuing operations, primarily driven by changes in market conditions experienced by our FMC Agricultural Solutions segment in Brazil, significantly impacted the EAETR for the three months ended September 30, 2015. Further, projected fourth quarter losses in Brazil, coupled with a high statutory tax rate of 34 percent, are the primary drivers in the reduction of the EAETR as compared to the prior year quarter.

Nine months ended September 30, 2015 and 2014

The reduction in the EAETR for the nine months ended September 30, 2015 as compared to September 30, 2014 is primarily driven by changes in market conditions experienced by our FMC Agricultural Solutions segment in Brazil. As our Brazilian earnings are taxed at the statutory rate of 34 percent, which is among the highest of the jurisdictions in which we operate, the projected loss from operations creates a material tax benefit and results in an overall reduction to our EAETR year-over-year.