EX-99.01 2 ex99_01.htm PRESS RELEASE AND CONFERENCE CALL TABLES ex99_01.htm

 

 
Eastman Announces First-Quarter 2011 Financial Results
 

KINGSPORT, Tenn., April 28, 2011 – Eastman Chemical Company (NYSE:EMN) today announced earnings from continuing operations of $2.52 per diluted share for first quarter 2011 versus $1.43 per diluted share for first quarter 2010.
 
"We continue to demonstrate that we have established a new level of earnings performance for the company," said Jim Rogers, chairman and CEO. "We grew volume year over year in every business segment and in every region of the world. Furthermore, we remain well positioned for future growth with our solid balance sheet, which was further strengthened by the cash from the sale of the PET business."
 
(In millions, except per share amounts)
  
1Q2011
  
1Q2010
         
Sales revenue
$
1,758
$
1,370
         
Earnings per diluted share from continuing operations
$
2.52
$
1.43
         
Net cash used in operating activities
$
(146)
$
(225)
         
Net cash used in operating activities excluding impact of adoption of amended accounting guidance*
$
(146)
$
(25)
*For reconciliations to reported company cash flows, see Table 4A in the accompanying first-quarter 2011 financial tables.

Sales revenue for first quarter 2011 was $1.8 billion, a 28 percent increase compared with first quarter 2010 due to higher sales volume and higher selling prices. The higher sales volume was attributed to strengthened end-use demand primarily in the packaging, transportation, and other markets and the positive impact of growth initiatives. The higher selling prices were in response to higher raw material and energy costs and were also attributed to strengthened demand, particularly in the U.S., and tight industry supply.
 
Operating earnings in first quarter 2011 increased to $284 million compared with operating earnings of $189 million in first quarter 2010. Operating earnings increased due to higher selling prices and higher sales volume, which more than offset higher raw material and energy costs. First-quarter 2010 operating earnings included $12 million in sales revenue from an acetyl license and were negatively impacted approximately $20 million by an outage at the company’s Longview, Texas, manufacturing facility.
 
Segment Results 1Q 2011 versus 1Q 2010

Coatings, Adhesives, Specialty Polymers and Inks – Sales revenue increased by 25 percent due to higher selling prices and higher sales volume. The increase in selling prices was in response to higher raw material and energy costs and also attributed to strengthened demand, particularly in the U.S., and tight industry supply. The higher sales volume was attributed primarily to strengthened end-use demand in the transportation, industrial, and packaging markets, particularly in the U.S. Operating earnings in first quarter 2011 increased to $98 million compared with operating earnings of $65 million in first quarter 2010. The increase was due to higher selling prices, higher sales volume, and the increased benefits from cracking propane to produce low-cost propylene, which more than offset higher raw material and energy costs. First-quarter 2010 operating earnings were negatively impacted approximately $8 million by an outage at the company’s Texas manufacturing facility.

Fibers – Sales revenue increased by 8 percent primarily due to higher sales volume. The higher sales volume was mainly due to increased utilization of the recently completed Korean acetate tow manufacturing facility. Operating earnings in first quarter 2011 increased to $81 million compared with $78 million in first quarter 2010 due to higher sales volume partially offset by higher raw material and energy costs.   

Performance Chemicals and Intermediates – Sales revenue increased by 44 percent due to higher sales volume and higher selling prices. The higher sales volume was primarily due to the restart of a previously idled cracking unit at the company’s Texas facility and growth in plasticizer product lines, which include the acquired Genovique Specialties plasticizer product lines. The higher selling prices were in response to higher raw material and energy costs and also attributed to strengthened demand in the U.S. and tight industry supply, particularly for olefin-derivative product lines. Operating earnings in first quarter 2011 increased to $88 million compared to $35 million in first quarter 2010. The increase was due primarily to higher selling prices, higher sales volume, and the increased benefits from cracking propane to produce low-cost propylene, which more than offset higher raw material and energy costs. First-quarter 2010 operating earnings included $12 million in sales revenue from an acetyl license and were negatively impacted approximately $10 million by an outage at the company’s Texas manufacturing facility.

Specialty Plastics – Sales revenue increased by 24 percent primarily due to increased selling prices and higher sales volume. The increased selling prices were in response to higher raw material and energy costs, particularly for paraxylene. The increase in sales volume was attributed to strengthened end-use demand for specialty packaging and consumer and durable goods, and the positive impact of growth initiatives for core copolyesters and Eastman Tritan™ copolyester product lines. Operating earnings in first quarter 2011 increased to $30 million compared with operating earnings of $19 million in first quarter 2010. The increase was due to higher sales volume and increased capacity utilization, particularly for the new Eastman Tritan™ copolyester resin manufacturing facility, which led to lower unit costs, and increased selling prices partially offset by higher raw material and energy costs.

Cash Flow
 
Eastman used $146 million in cash from operating activities during first quarter 2011, including a $100 million contribution to the U.S. defined benefit pension plan. Working capital increased by $270 million primarily due to increased sales revenue. First-quarter 2011 cash flows also included the receipt of approximately $615 million from the sale of the PET business of the Performance Polymers segment which is reflected in cash flows from investing activities. During first quarter 2011, share repurchases totaled $74 million.

Outlook

Commenting on the outlook for second quarter and full year 2011, Rogers said:  "We began the year with a very strong first quarter, driven mainly by volume growth throughout the company and higher selling prices. We expect the momentum from the first quarter will continue into the second quarter and for the full year. As a result, we expect second quarter 2011 earnings per share to be slightly higher than first quarter 2011 and full year 2011 earnings per share to be slightly higher than $9. Key variables include whether inflationary pressures negatively impact global demand and the volatility of raw material and energy costs, particularly the spread between prices for propane and propylene."
 
Eastman will host a conference call with industry analysts on April 29 at 8:00 a.m. EDT. To listen to the live webcast of the conference call and view the accompanying slides, go to www.investors.eastman.com, Events & Presentations. To listen via telephone, the dial-in number is 913-312-1230, passcode number 2415544.  A web replay, a replay in downloadable MP3 format, and the accompanying slides will be available at www.investors.eastman.com, Events & Presentations.  A telephone replay will be available continuously from 11:00 a.m. EDT, April 29, to 11:00 a.m. EDT, May 9, at (888) 203-1112 or (719) 457-0820, passcode 2415544.
 
Eastman’s chemicals, fibers and plastics are used as key ingredients in products that people use every day.  Approximately 10,000 Eastman employees around the world blend technical expertise and innovation to deliver practical solutions.  The company is committed to finding sustainable business opportunities within the diverse markets it serves.  A global company headquartered in Kingsport, Tenn., USA, Eastman had 2010 sales of $6 billion.  For more information, visit www.eastman.com.
 
Forward Looking Statements: This news release includes forward-looking statements concerning current expectations for global economic recovery, demand, and inflation; sales volumes and prices; raw material and energy costs, including for propane and propylene; and earnings per share for second quarter and full-year 2011. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company's filings with the Securities and Exchange Commission, including the Form 10-K filed for 2010 available, and the Form 10-Q to be filed for first quarter 2011 and to be available, on the Eastman web site at www.eastman.com in the Investors, SEC filings section.
 
# # #
 
Contacts:
 
Media:  Tracy Broadwater
423-224-0498 / tkbroadwater@eastman.com
 
Investors:  Greg Riddle
212-835-1620 / griddle@eastman.com


 
 
 

 
 
 

 EASTMAN CHEMICAL COMPANY – EMN
April 28, 2011
 
5:00 PM EDT
   

FINANCIAL INFORMATION
April 28, 2011
For use in the Eastman Chemical Company Conference Call
at 8:00 AM (EDT), April 29, 2011.
 
 
 
Table of Contents

Item
  
Page
     
Statements of Earnings
1
     
Segment Sales Information
2
     
Sales Revenue Change
2
     
Sales by Region
2
     
Sales Revenue Change by Region
2
     
Operating Earnings by Segment
3
     
Statements of Cash Flows
4
     
Total Cash and Cash Equivalents and Short-Term Time Deposits
4
     
Net Cash Provided By (Used In) Operating Activities Reconciliation and Free Cash Flow
5
     
Selected Balance Sheet Items
5

The Company completed the sale of the polyethylene terephthalate ("PET") business, related assets at the Columbia, South Carolina, site, and technology of its Performance Polymers segment on January 31, 2011.  The PET business, assets, and technology sold were substantially all of the Performance Polymers segment.  Performance Polymers segment operating results are presented as discontinued operations for all periods presented and are therefore not included in results from continuing operations under accounting principles generally accepted in the United States.

 
 
  
 
EASTMAN CHEMICAL COMPANY – EMN
April 28, 2011
 
5:00 PM EDT
 
Page 1
 
 
   
First Quarter
(Dollars in millions, except per share amounts; unaudited)
  
2011
  
2010
         
Sales
$
1,758
$
1,370
Cost of sales
  
1,325
  
1,053
Gross profit
  
433
  
317
         
Selling, general and administrative expenses
  
113
  
95
Research and development expenses
  
36
  
33
Operating earnings
  
284
  
189
         
Net interest expense
  
19
  
25
Other charges (income), net
  
(6)
  
7
Earnings from continuing operations before income taxes
  
271
  
157
Provision for income taxes from continuing operations
  
89
  
52
Earnings from continuing operations
$
182
$
105
         
Earnings (loss) from discontinued operations, net of tax
  
8
  
(4)
Gain from disposal of discontinued operations, net of tax
  
30
  
--
Net earnings
$
220
$
101
         
Basic earnings per share
        
Earnings from continuing operations
$
2.57
$
1.45
Earnings (loss) from discontinued operations
  
0.54
  
(0.06)
Basic earnings per share
$
3.11
$
1.39
         
Diluted earnings per share
        
Earnings from continuing operations
$
2.52
$
1.43
Earnings (loss) from discontinued operations
  
0.52
  
(0.06)
Diluted earnings per share
$
3.04
$
1.37
         
Shares (in millions) outstanding at end of period
  
71.1
  
72.4
         
Shares (in millions) used for earnings per share calculation
        
Basic
  
70.7
  
72.2
Diluted
  
72.3
  
73.3
         

 
 
  

EASTMAN CHEMICAL COMPANY – EMN
April 28, 2011
 
5:00 PM EDT
 
Page 2
 
 TABLE 2A – SEGMENT SALES INFORMATION
 
   
First Quarter
(Dollars in millions, unaudited)
  
2011
  
2010
Sales by Segment
        
Coatings, Adhesives, Specialty Polymers, and Inks
$
467
$
373
Fibers
  
290
  
267
Performance Chemicals and Intermediates
  
694
  
482
Specialty Plastics
  
307
  
248
Total Eastman Chemical Company
$
1,758
$
1,370

TABLE 2B – SALES REVENUE CHANGE

 
First Quarter 2011 Compared to First Quarter 2010
(Unaudited)
    
Change in Sales Revenue Due To
 
Revenue
% Change
  
Volume Effect
  
Price Effect
  
Product
Mix
Effect
  
Exchange
Rate
Effect
                   
Coatings, Adhesives, Specialty Polymers, and Inks
25 %
  
12 %
  
15 %
  
(1) %
  
(1) %
Fibers
8 %
  
6 %
  
2 %
  
-- %
  
-- %
Performance Chemicals and Intermediates
44 %
  
32 %
  
16 %
  
(4) %
  
-- %
Specialty Plastics
24 %
  
9 %
  
14 %
  
2 %
  
(1) %
                   
Total Eastman Chemical Company
28 %
  
17 %
  
13 %
  
(1) %
  
(1) %
   

TABLE 2C – SALES BY REGION

   
First Quarter
(Dollars in millions, unaudited)
  
2011
  
2010
         
Sales by Region
        
United States and Canada
$
918
$
691
Asia Pacific
  
397
  
334
Europe, Middle East, and Africa
  
355
  
276
Latin America
  
88
  
69
Total Eastman Chemical Company
$
1,758
$
1,370

TABLE 2D – SALES REVENUE CHANGE BY REGION

 
First Quarter 2011 Compared to First Quarter 2010
     
Change in Sales Revenue Due To
(Unaudited)
Change
  
Volume Effect
  
Price Effect
  
Product
Mix Effect
  
Exchange
Rate
Effect
                   
United States and Canada
33 %
  
22 %
  
13 %
  
(2) %
  
-- %
Asia Pacific
19 %
  
7 %
  
10 %
  
1 %
  
1 %
Europe, Middle East, and Africa
29 %
  
20 %
  
13 %
  
-- %
  
(4) %
Latin America
28 %
  
17 %
  
15 %
  
(4) %
  
-- %
                   
Total Eastman Chemical Company
28 %
  
17 %
  
13 %
  
(1) %
  
(1) %
                   

 
 
  
 
EASTMAN CHEMICAL COMPANY – EMN
April 28, 2011
 
5:00 PM EDT
 
Page 3
 
 TABLE 3 – OPERATING EARNINGS BY SEGMENT
 
   
First Quarter
(Dollars in millions, unaudited)
  
2011
  
2010
Operating Earnings by Segment
        
         
Coatings, Adhesives, Specialty Polymers, and Inks
$
98
$
65
         
Fibers
  
81
  
78
         
Performance Chemicals and Intermediates
  
88
  
35
         
Specialty Plastics
  
30
  
19
         
Total Operating Earnings by Segment
 
297
  
197
         
Other (1)
  
(13)
  
(8)
         
Total Eastman Chemical Company
        
Total Operating Earnings
$
284
$
189
 
(1) Expenses not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating losses.

 
 
  



EASTMAN CHEMICAL COMPANY – EMN
April 28, 2011
 
5:00 PM EDT
 
Page 4
 
 TABLE 4 – STATEMENTS OF CASH FLOWS
 
   
First Three Months
(Dollars in millions, unaudited)
  
2011
  
2010
         
Cash flows from operating activities
        
Net earnings
$
220
$
101
         
Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:
        
Depreciation and amortization
  
68
  
69
Gain on sale of assets
  
(52)
  
--
Provision (benefit) for deferred income taxes
  
(52)
  
16
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
        
(Increase) decrease in trade receivables
  
(229)
  
(414)
(Increase) decrease in inventories
  
(49)
  
(58)
Increase (decrease) in trade payables
  
8
  
94
Increase (decrease) in liabilities for employee benefits and incentive pay
  
(184)
  
(45)
Other items, net
  
124
  
12
         
Net cash used in operating activities
  
(146)
  
(225)
         
Cash flows from investing activities
        
Additions to properties and equipment
  
(97)
  
(31)
Proceeds from sale of assets and investments
  
617
  
4
Additions to short-term time deposits
  
(200)
  
--
Acquisitions of and investments in joint ventures
  
--
  
(18)
Additions to capitalized software
  
(2)
  
(2)
Other items, net
  
(11)
  
--
         
Net cash provided by (used in) investing activities
  
 307
  
(47)
         
Cash flows from financing activities
        
Net increase in commercial paper, credit facility and other borrowings
  
1
  
2
Dividends paid to stockholders
  
(34)
  
(32)
Treasury stock purchases
  
(74)
  
(20)
Proceeds from stock option exercises and other items
  
70
  
12
         
Net cash used in financing activities
  
(37)
  
(38)
         
Effect of exchange rate changes on cash and cash equivalents
  
--
  
--
         
Net change in cash and cash equivalents
  
 124
  
(310)
         
Cash and cash equivalents at beginning of period
  
516
  
793
         
Cash and cash equivalents at end of period
$
 640
$
 483
         
 
 TABLE 4A – TOTAL CASH AND CASH EQUIVALENTS AND SHORT-TERM TIME DEPOSITS
 
   
First Three Months
(Dollars in millions, unaudited)
  
2011
  
2010
 
Cash and cash equivalents at end of period
$
640
$
483
Short-term time deposits
  
200
  
--
         
Total cash and cash equivalents and short-term time deposits
$
840
$
483

 
 
  


EASTMAN CHEMICAL COMPANY – EMN
April 28, 2011
 
5:00 PM EDT
 
Page 5
 
 TABLE 4B – NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES RECONCILIATION AND FREE CASH FLOW
 
   
First Quarter
(Dollars in millions, unaudited)
  
2011
  
2010
         
Net cash used in operating activities
$
(146)
$
(225)
Impact of adoption of amended accounting guidance (1)
  
--
  
200
Net cash used in operating activities excluding item
  
(146)
  
(25)
         
Additions to properties and equipment
  
(97)
  
(31)
Dividends paid to stockholders
  
(34)
  
(32)
         
Free Cash Flow
$
(277)
$
(88)

(1)  
First quarter 2010 cash from operating activities reflected the adoption of amended accounting guidance for transfers of financial assets which resulted in $200 million of receivables, which were previously accounted for as sold and removed from the balance sheet when transferred under the accounts receivable securitization program, being included on the first quarter balance sheet as trade receivables, net.  This increase in receivables reduced cash from operations by $200 million in first quarter 2010.
 
 TABLE 5 – SELECTED BALANCE SHEET ITEMS
 
   
March 31,
  
December 31,
(Dollars in millions)
  
2011
  
2010
   
(unaudited)
    
         
Current Assets
$
2,434
$
2,047
         
Net Properties and Equipment
  
2,886
  
3,219
         
Other Assets
  
689
  
720
         
Total Assets
$
6,009
$
5,986
         
Payables and Other Current Liabilities
$
1,048
$
1,064
         
Short-term Borrowings
  
7
  
6
         
Long-term Borrowings
  
1,596
  
1,598
         
Other Liabilities
  
1,541
  
1,691
         
Stockholders’ Equity
  
1,817
  
1,627
         
Total Liabilities and Stockholders’ Equity
$
6,009
$
5,986