INCOME TAXES

For the three months ended March 31, 2015 and 2014, income tax expense totaled $24.7 million and $2.1 million, respectively. The Company's effective tax rate in the first quarter of 2015 was (1,546.9)% on pre-tax losses of $1.6 million, compared an effective tax rate of (54.9)% on pre-tax losses of $3.8 million in the first quarter of 2014. The higher effective tax rate for the three months ended March 31, 2015 was primarily due to the establishment of a $19.0 million valuation allowance on foreign tax credit carryovers as a result of the Arysta acquisition and losses that did not produce tax benefits having a greater impact in the current period than in the prior year period.

The assessment of the need for a valuation allowance requires management to make estimates and assumptions about future earnings, reversal of existing temporary differences and available tax planning strategies. As a result of the impact of the Arysta Acquisition, the Company believes it is more likely than not that the full value of the foreign tax credit carryovers will not be realizable. Consequently, a valuation allowance of $19.0 million was recorded discretely in the first quarter of 2015.

The amount of unrecognized tax benefits was $71.0 million and $27.7 million at March 31, 2015 and December 31, 2014, respectively, of which $39.8 million would reduce our effective tax rate if recognized. The increase was primarily due to the historical Arysta unrecognized tax benefits assumed.

Accrued interest and penalties related to unrecognized tax benefits were $9.4 million and $4.7 million at March 31, 2015 and December 31, 2014, respectively. The Company recognized interest and penalties of $0.3 million related to unrecognized tax benefits in the income tax provision for the three months ended March 31, 2015. The remainder of the increase was due to the historical Arysta interest and penalties assumed.

The unrecognized tax benefits could be reduced by $3.3 million over the next 12 months as a result of the lapse of statutes of limitations in various jurisdictions.

The Company is subject to U.S. Federal income tax as well as income tax in multiple state and foreign jurisdictions. The open tax years for major jurisdictions are as follows:



Major Jurisdictions	Open Years
Belgium	2008	through current
Brazil	2009	through current
China	2011	through current
France	2010	through current
Japan	2009	through current
Mexico	2009	through current
United Kingdom	2008	through current
United States	2011	through current

The Company is undergoing audits in the United Kingdom for the 2009 and 2011 tax years and received a notification requesting that the 2008 tax year remain open for one subsidiary. The Company is undergoing an audit in France for tax years 2010 through 2012 and in Mexico for tax year 2013. Finally, the Company has been notified by the tax authorities of their intent to initiate an audit in Belgium for tax years 2008 through 2013.