10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

FORM 10-Q

(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2014
	OR
[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ______________ to ______________

Commission file number 1-12626

EASTMAN CHEMICAL COMPANY

(Exact name of registrant as specified in its charter)

Delaware	62-1539359
(State or other jurisdiction of	(I.R.S. employer
incorporation or organization)	identification no.)
200 South Wilcox Drive
Kingsport, Tennessee	37662
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (423) 229-2000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES [X]  NO  [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES [X]  NO  [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[X]		Accelerated filer	[  ]
Non-accelerated filer	[   ]	(Do not check if a smaller reporting company)	Smaller reporting company	[  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [  ]  NO  [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Number of Shares Outstanding at September 30, 2014
Common Stock, par value $0.01 per share	148,527,396

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PAGE 1 OF 61 TOTAL SEQUENTIALLY NUMBERED PAGES

EXHIBIT INDEX ON PAGE 59

1

TABLE OF CONTENTS

ITEM PAGE

PART I.  FINANCIAL INFORMATION

1.	Financial Statements
	Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings	3
	Unaudited Consolidated Statements of Financial Position	5
	Unaudited Consolidated Statements of Cash Flows	6
	Notes to the Unaudited Consolidated Financial Statements	7
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
3.	Quantitative and Qualitative Disclosures About Market Risk	56
4.	Controls and Procedures	56

PART II.  OTHER INFORMATION

1.	Legal Proceedings	57
1A.	Risk Factors	57
2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
6.	Exhibits	57

SIGNATURES

Signatures 58

EXHIBIT INDEX

Exhibit Index 59

2

UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS,

COMPREHENSIVE INCOME AND RETAINED EARNINGS

	Third Quarter					First Nine Months
(Dollars in millions, except per share amounts)	2014			2013		2014			2013
Sales	$	2,413		$	2,338	$	7,178		$	7,085
Cost of sales	1,777			1,649		5,290			5,103
Gross profit	636			689		1,888			1,982
Selling, general and administrative expenses	171			159		511			510
Research and development expenses	56			48		165			148
Asset impairments and restructuring charges (gains), net	71			3		77			24
Operating earnings	338			479		1,135			1,300
Net interest expense	45			44		132			137
Other charges (income), net	(5		)	1		(16		)	2
Earnings from continuing operations before income taxes	298			434		1,019			1,161
Provision for income taxes from continuing operations	86			125		281			338
Earnings from continuing operations	212			309		738			823
Earnings from discontinued operations, net of tax	—			—		2			—
Net earnings	$	212		$	309	$	740		$	823
Less: Net earnings attributable to noncontrolling interest	2			1		5			4
Net earnings attributable to Eastman	$	210		$	308	$	735		$	819
Amounts attributable to Eastman stockholders
Earnings from continuing operations, net of tax	$	210		$	308	$	733		$	819
Earnings from discontinued operations, net of tax	—			—		2			—
Net earnings attributable to Eastman stockholders	$	210		$	308	$	735		$	819
Basic earnings per share attributable to Eastman
Earnings from continuing operations	$	1.41		$	2.00	$	4.89		$	5.31
Earnings from discontinued operations	—			—		0.01			—
Basic earnings per share attributable to Eastman	$	1.41		$	2.00	$	4.90		$	5.31
Diluted earnings per share attributable to Eastman
Earnings from continuing operations	$	1.39		$	1.97	$	4.83		$	5.23
Earnings from discontinued operations	—			—		0.02			—
Diluted earnings per share attributable to Eastman	$	1.39		$	1.97	$	4.85		$	5.23

3

UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS,

COMPREHENSIVE INCOME AND RETAINED EARNINGS (continued)

	Third Quarter						First Nine Months
(Dollars in millions, except per share amounts)	2014			2013			2014			2013
Comprehensive Income
Net earnings including noncontrolling interest	$	212		$	309		$	740		$	823
Other comprehensive income (loss), net of tax
Change in cumulative translation adjustment	(127		)	45			(114		)	10
Defined benefit pension and other postretirement benefit plans:
Prior service credit arising during the period	—			29			—			29
Amortization of unrecognized prior service credits included in net periodic costs	(4		)	(4		)	(12		)	(11		)
Derivatives and hedging:
Unrealized (loss) gain during period	36			(13		)	42			(4		)
Reclassification adjustment for (losses) gains included in net income	—			—			(9		)	—
Total other comprehensive income (loss), net of tax	(95		)	57			(93		)	24
Comprehensive income including noncontrolling interest	117			366			647			847
Comprehensive income attributable to noncontrolling interest	2			1			5			4
Comprehensive income attributable to Eastman	$	115		$	365		$	642		$	843
Retained Earnings
Retained earnings at beginning of period	$	4,431		$	3,456		$	4,012		$	3,038
Net earnings attributable to Eastman	210			308			735			819
Cash dividends declared	(53		)	(46		)	(159		)	(139		)
Retained earnings at end of period	$	4,588		$	3,718		$	4,588		$	3,718

The accompanying notes are an integral part of these consolidated financial statements.

4

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	September 30,		December 31,
(Dollars in millions, except per share amounts)	2014		2013
Assets
Current assets
Cash and cash equivalents	$	212	$	237
Trade receivables, net	985		880
Miscellaneous receivables	141		208
Inventories	1,358		1,264
Other current assets	194		251
Total current assets	2,890		2,840
Properties
Properties and equipment at cost	10,230		9,958
Less:  Accumulated depreciation	5,878		5,668
Net properties	4,352		4,290
Goodwill	2,716		2,637
Intangible assets, net of accumulated amortization	1,808		1,761
Other noncurrent assets	369		317
Total assets	$	12,135	$	11,845
Liabilities and Stockholders' Equity
Current liabilities
Payables and other current liabilities	$	1,398	$	1,470
Total current liabilities	1,398		1,470
Long-term borrowings	4,563		4,254
Deferred income tax liabilities	573		496
Post-employment obligations	1,242		1,297
Other long-term liabilities	380		453
Total liabilities	8,156		7,970
Stockholders' equity
Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 216,136,911 and 215,131,237 for 2014 and 2013, respectively)	2		2
Additional paid-in capital	1,810		1,778
Retained earnings	4,588		4,012
Accumulated other comprehensive income	78		171
	6,478		5,963
Less: Treasury stock at cost (67,660,313 shares for 2014 and 62,714,861 shares for 2013)	2,577		2,167
Total Eastman stockholders' equity	3,901		3,796
Noncontrolling interest	78		79
Total equity	$	3,979	$	3,875
Total liabilities and stockholders' equity	$	12,135	$	11,845

The accompanying notes are an integral part of these consolidated financial statements.

5

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	First Nine Months
(Dollars in millions)	2014			2013
Cash flows from operating activities
Net earnings	$	740		$	823
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	328			326
Asset impairment charges	50			6
Gain on sale of assets	(5		)	—
Provision for deferred income taxes	58			118
Mark-to-market gain on pension and other postretirement benefit plans	—			(86		)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables	(118		)	(119		)
(Increase) decrease in inventories	(76		)	(14		)
Increase (decrease) in trade payables	(12		)	(67		)
Pension and other postretirement contributions (in excess of) less than expenses	(76		)	(120		)
Variable compensation (in excess of) less than expenses	(8		)	30
Other items, net	68			(103		)
Net cash provided by operating activities	949			794
Cash flows from investing activities
Additions to properties and equipment	(406		)	(312		)
Proceeds from sale of assets	13			6
Acquisitions, net of cash acquired	(325		)	—
Additions to capitalized software	(2		)	(2		)
Other items, net	2			—
Net cash used in investing activities	(718		)	(308		)
Cash flows from financing activities
Net (decrease) increase in commercial paper borrowings	(185		)	300
Proceeds from borrowings	615			150
Repayment of borrowings	(125		)	(805		)
Dividends paid to stockholders	(159		)	(94		)
Treasury stock purchases	(410		)	(113		)
Dividends paid to noncontrolling interest	(9		)	(10		)
Proceeds from stock option exercises and other items, net	22			55
Net cash used in financing activities	(251		)	(517		)
Effect of exchange rate changes on cash and cash equivalents	(5		)	4
Net change in cash and cash equivalents	(25		)	(27		)
Cash and cash equivalents at beginning of period	237			249
Cash and cash equivalents at end of period	$	212		$	222

The accompanying notes are an integral part of these consolidated financial statements.

6

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

ITEM		Page
Note 1.	Basis of Presentation	8
Note 2.	Acquisitions	8
Note 3.	Inventories	10
Note 4.	Payables and Other Current Liabilities	10
Note 5.	Provision for Income Taxes	10
Note 6.	Borrowings	11
Note 7.	Derivatives	12
Note 8.	Retirement Plans	17
Note 9.	Commitments	18
Note 10.	Environmental Matters	19
Note 11.	Legal Matters	20
Note 12.	Stockholders' Equity	20
Note 13.	Earnings and Dividends Per Share	22
Note 14.	Asset Impairments and Restructuring Charges (Gains), Net	22
Note 15.	Share-Based Compensation Awards	24
Note 16.	Supplemental Cash Flow Information	24
Note 17.	Segment Information	24
Note 18.	Recently Issued Accounting Standards	28

7

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company (the "Company" or "Eastman") in accordance and consistent with the accounting policies stated in the Company's 2013 Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K. The December 31, 2013 financial position data included herein was derived from the audited consolidated financial statements included in the 2013 Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). The unaudited consolidated financial statements are prepared in conformity with GAAP and of necessity include some amounts that are based upon management estimates and judgments.  Future actual results could differ from such current estimates.  The unaudited consolidated financial statements include assets, liabilities, sales revenue, and expenses of all majority-owned subsidiaries and joint ventures in which a controlling interest is maintained.  Eastman accounts for other joint ventures and investments where it exercises significant influence on the equity basis.  Intercompany transactions and balances are eliminated in consolidation.  Certain prior period data has been reclassified in the Consolidated Financial Statements and accompanying footnotes to conform to current period presentation.

In first nine months 2014, the Company recognized $2 million, net of tax, in earnings from discontinued operations from final settlement of commercial litigation related to the previously discontinued polyethylene terephthalate ("PET") business.

2. ACQUISITIONS

Knowlton Technologies, LLC

On August 6, 2014, the Company acquired Knowlton Technologies, LLC. ("Knowlton"), a leader in the design, accelerated prototyping, and manufacture of wet-laid nonwovens in filtration, friction, and custom designed composite webs, for a total cash purchase price of $42 million, prior to post-closing adjustments. The acquisition was accounted for as a business combination. The acquired Knowlton business is a developing business of the Eastman^TM microfiber technology platform, the financial results of which are not identifiable to an operating segment and are shown as "other" operating earnings (loss). Current assets consist primarily of $14 million in accounts receivable and inventory acquired. Management valued properties and equipment, totaling $18 million, using the cost approach supported where available by observable market data which includes consideration of obsolescence. Goodwill of $8 million, which represents the excess of the purchase price over the estimated fair value of net tangible and intangible assets acquired and liabilities assumed, is expected to be deductible for tax purposes. Acquired intangible assets of $6 million consist primarily of developed technologies with an amortization period of 15 years. Management valued intangible assets using the relief from royalty method, a form of the income approach supported by observable market data from peer chemical companies. Current liabilities of $4 million consist primarily of accounts payable. Values assigned are preliminary.

BP plc's Global Aviation Turbine Engine Oil Business

On June 2, 2014, the Company acquired BP plc's global aviation turbine engine oil business ("aviation turbine oil business") for a total cash purchase price of $283 million, prior to post-closing adjustments. The acquisition was accounted for as a business combination and is reported in the Specialty Fluids & Intermediates ("SFI") segment. In combination with Eastman's Skydrol^® aviation hydraulic fluids business, the acquired aviation turbine oil business enables Eastman to better supply the global aviation industry.

8

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The purchase price allocation for the aviation turbine oil business acquisition is preliminary as of September 30, 2014. The purchase price allocation remains open primarily for post-closing adjustments which may impact current assets and noncurrent assets. The Company expects to finalize the purchase price allocation in fourth quarter 2014. Adjustments to the June 30, 2014 preliminary purchase price allocation of the aviation turbine oil business acquisition during third quarter2014 are reflected in the Company's Consolidated Statements of Financial Position as of September 30, 2014 and are summarized in the table below. These adjustments are not material to the Company's financial position or results of operations for third quarter 2014. The following table summarizes the purchase price allocation for the aviation turbine oil business acquisition as of June 2, 2014, as previously reported at June 30, 2014, the net impact of adjustments during third quarter of 2014, and the resulting preliminary purchase price allocation for the aviation turbine oil business acquisition as of June 2, 2014 as reported at September 30, 2014:

(Dollars in millions)	As of June 2, 2014 Previously Reported		Increase (Decrease)			As of June 2, 2014 As Adjusted
Current assets	$	42	$	—		$	42
Machinery and equipment	11		(1		)	10
Goodwill	68		24			92
Intangible assets	162		(23		)	139
Total purchase price	$	283	$	—		$	283

Current assets consist primarily of inventory acquired. Machinery and equipment acquired included manufacturing operations in Linden, New Jersey and technology resources in Naperville, Illinois. Management valued machinery and equipment using the cost approach supported by published industry sources.

In connection with the purchase transaction, the Company recorded goodwill, which represents the excess of the purchase price over the estimated fair value of net tangible and intangible assets acquired and liabilities assumed.  All goodwill is expected to be deductible for tax purposes.

Intangible assets acquired included brands that are business-to-business in nature. Also acquired were customer relationships in the aviation industry. Management valued intangible assets using the relief from royalty and multi-period excess earnings methods, both forms of the income approach supported by observable market data for peer chemical companies.

Intangible Assets acquired on June 2, 2014
(Dollars in millions)	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets
Brands	$	74	30
Customer relationships	65		16
Total	$	139

In first nine months 2014, the Company recognized $3 million and $2 million in transaction and integration costs, respectively, related to the acquisition. Transaction and integration costs were expensed as incurred and are included in the "Selling, general and administrative expenses" line item in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. As required by purchase accounting, the acquired inventories were marked to fair value. Approximately 75 percent of these inventories were sold in third quarter 2014 resulting in a $6 million increase in cost of sales with all of these inventories sold in first nine months resulting in an $8 million increase in cost of sales in first nine months 2014.

Beginning in June 2014, the Company's consolidated results of operations included the results of the acquired aviation turbine oil business. Based on applicable accounting and reporting guidance, the acquisition is not material to the Company's consolidated financial statements; therefore, pro forma financial information has not been presented.

9

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

3. INVENTORIES

	September 30,			December 31,
(Dollars in millions)	2014			2013
At FIFO or average cost (approximates current cost)
Finished goods	$	1,070		$	976
Work in process	282			300
Raw materials and supplies	507			494
Total inventories	1,859			1,770
LIFO Reserve	(501		)	(506		)
Total inventories	$	1,358		$	1,264

Inventories valued on the LIFO method were approximately 60 percent of total inventories as of both September 30, 2014 and December 31, 2013.

4. PAYABLES AND OTHER CURRENT LIABILITIES

	September 30,		December 31,
(Dollars in millions)	2014		2013
Trade creditors	$	735	$	762
Accrued payrolls, vacation, and variable-incentive compensation	155		205
Accrued taxes	131		80
Post-employment obligations	58		59
Interest payable	44		46
Environmental contingent liabilities, current portion	40		40
Other	235		278
Total payables and other current liabilities	$	1,398	$	1,470

Included in "Other" are certain accruals for payroll deductions and employee benefits, dividends payable, the current portion of hedging liabilities, severance, and other payables and accruals.

5. PROVISION FOR INCOME TAXES

	Third Quarter						First Nine Months
(Dollars in millions)	2014			2013			2014			2013
Provision for income taxes from continuing operations	$	86		$	125		$	281		$	338
Effective tax rate	29		%	29		%	28		%	29		%

The third quarter and first nine months 2014 effective tax rates reflect benefit from the integration of Eastman and Solutia business operations and legal entity structures. The third quarter and first nine months2013 effective tax rates were impacted by a $14 million benefit primarily from adjustments to the tax provision to reflect the finalization of the 2012 consolidated U.S. Federal income tax return. The first nine months2013 effective tax rate also benefited from enactment of the American Taxpayer Relief Act of 2012 in January 2013, which resulted in a $10 million benefit primarily from a research and development ("R&D") tax credit. The tax credits expired at the end of 2013.

10

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. BORROWINGS

	September 30,		December 31,
(Dollars in millions)	2014		2013
Borrowings consisted of:
3% notes due 2015	$	250	$	250
2.4% notes due 2017	998		998
6.30% notes due 2018	170		171
5.5% notes due 2019	250		250
4.5% notes due 2021	250		250
3.6% notes due 2022	893		894
7 1/4% debentures due 2024	244		243
7 5/8% debentures due 2024	54		54
7.60% debentures due 2027	222		222
4.8% notes due 2042	497		497
4.65% notes due 2044	495		—
Credit facilities and commercial paper borrowings	240		425
Total borrowings	4,563		4,254
Borrowings due within one year	—		—
Long-term borrowings	$	4,563	$	4,254

On May 15, 2014, the Company issued 4.65% notes due 2044 in the principal amount of $500 million. Proceeds from the sale of the notes, net of approximately $10 million in transaction costs, were $490 million.

Credit Facility and Commercial Paper Borrowings

As of September 30, 2014, the Company has access to borrowings under a $1 billion revolving credit agreement (the "Credit Facility") expiring October 2018.  Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. At September 30, 2014 and December 31, 2013, the Company had no outstanding borrowings under the Credit Facility.

The Credit Facility provides liquidity support for commercial paper borrowings and general corporate purposes.  Accordingly, any outstanding commercial paper borrowings reduce capacity for borrowings available under the Credit Facility.  Given the expiration date of the Credit Facility, any commercial paper borrowings supported by the Credit Facility are classified as long-term borrowings because the Company has the ability and intent to refinance such borrowings on a long-term basis. At September 30, 2014 the Company's commercial paper borrowings were $240 million with a weighted average interest rate of 0.31 percent. At December 31, 2013 the Company's commercial paper borrowings were $425 million with a weighted average interest rate of 0.35 percent.

In August 2014, the Company amended a $250 million line of credit under its accounts receivable securitization agreement (the "A/R Facility"), extending the maturity to April 2017. The amended A/R Facility has terms substantially similar to the $250 million accounts receivable securitization agreement previously expiring April 2016. Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and the Company pays a fee to maintain availability of the A/R Facility.  At September 30, 2014 and December 31, 2013 the Company had no outstanding borrowings under the A/R Facility. During first quarter 2014, $125 million of the available amount under the A/R Facility was borrowed and then repaid during second quarter 2014.

The Credit Facility and the A/R Facility contain a number of customary covenants and events of default, including the maintenance of certain financial ratios. The Company was in compliance with all such covenants for all periods presented.  Total available borrowings under the Credit Facility and A/R Facility were $1.01 billion and $825 million as of September 30, 2014 and December 31, 2013, respectively. The Company would not violate applicable covenants for these periods if the total available amounts of the facilities had been borrowed.

11

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In connection with its entry into an Agreement and Plan of Merger to acquire Taminco Corporation ("Taminco"), in September 2014, the Company entered into an agreement with Citigroup Global Markets, Inc. which contains commitments for a $2.75 billion senior unsecured bridge term loan facility and sets out the principal terms of an uncommitted $1.0 billion senior unsecured term loan facility. This financing is intended to provide a portion of the funding necessary to complete the acquisition, including refinancing a portion of Taminco's outstanding debt. Depending on market conditions, the Company may seek to finance a portion of the funds to be used to complete the acquisition through the public offering of debt securities. Any commitments under the term loan facility, or proceeds from the sale of debt securities, will reduce the commitments under the bridge term loan facility on a dollar-for-dollar basis. The loan agreements were entered into on October 9, 2014 and were unfunded as of the date of filing of this Quarterly Report on Form 10-Q.

Fair Value of Borrowings

The Company has classified its long-term borrowings at September 30, 2014 and December 31, 2013 under the fair value hierarchy as defined in the accounting policies in Note 1, "Significant Accounting Policies" to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.  The fair value for fixed-rate borrowings is based on current market prices and is classified as Level 1.  The fair value for the Company's floating-rate borrowings, which relate to the A/R Facility and commercial paper, equals the carrying value and is classified as Level 2.

			Fair Value Measurements at September 30, 2014
(Dollars in millions)	Recorded Amount September 30, 2014		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-term borrowings	$	4,563	$	4,802	$	4,562	$	240	$	—

			Fair Value Measurements at December 31, 2013
(Dollars in millions)	Recorded Amount December 31, 2013		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-term borrowings	$	4,254	$	4,366	$	3,941	$	425	$	—

7. DERIVATIVES

Hedging Programs

The Company is exposed to market risk, such as changes in currency exchange rates, commodity prices, and interest rates.  The Company uses various derivative financial instruments when appropriate pursuant to the Company's hedging policies to mitigate these market risk factors and their effect on the cash flows of the underlying transactions.  Designation is performed on a specific exposure basis to support hedge accounting.  The changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the cash flows of the underlying exposures being hedged.  The Company does not hold or issue derivative financial instruments for trading purposes.

Beginning in third quarter 2014, the maximum period for which the Company hedges commodity prices using derivative financial instruments was increased from three to five years.

For further information on hedging programs, see Note 10, "Derivatives", to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

12

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Hedges

Fair value hedges are defined as derivative or non-derivative instruments designated as and used to hedge the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk.  For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings.  In 2014, the Company entered into interest rate swaps to hedge the interest rate risk on the 3.6% notes due 2022. As of September 30, 2014, the total notional amount of the Company's interest rate swaps was $500 million. As of December 31, 2013, the Company had no fair value hedges.

Cash Flow Hedges

Cash flow hedges are derivative instruments designated as and used to hedge the exposure to variability in expected future cash flows that is attributable to a particular risk.  For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income, net of income taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.  Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Total notional amounts (in millions, unless noted):		September 30, 2014	December 31, 2013
Foreign Exchange Forward and Option Contracts
	EUR/USD (in EUR)	€903	€954
	EUR/USD (in approximate USD equivalent)	$1,160	$1,320
	JPY/USD (in JPY)	¥5,700	¥8,300
	JPY/USD (in approximate USD equivalent)	$50	$80
Commodity Forward and Collar Contracts
	Contract ethylene sales (in thousand metric tons)	17	—
	Feedstock (in million barrels)	25	8
	Energy (in million british thermal units)	17	—
Interest rate swaps for the future issuance of debt		$100	—

Total notional for commodity hedging contracts increased significantly in 2014 as a result of the increase in tenor of the contracts and management's decision to increase the level of hedge coverage.

Fair Value Measurements

For additional information on fair value measurement, see Note 1, "Significant Accounting Policies" to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

The following chart shows the gross financial assets and liabilities valued on a recurring basis.

(Dollars in millions)				Fair Value Measurements at September 30, 2014
Description	September 30, 2014			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	102		$	—	$	101		$	1
Derivative Liabilities	(38		)	—		(38		)	—
	$	64		$	—	$	63		$	1

13

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)				Fair Value Measurements at December 31, 2013
Description	December 31, 2013			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	58		$	—	$	58		$	—
Derivative Liabilities	(46		)	—		(46		)	—
	$	12		$	—	$	12		$	—

The Company's derivative assets are currently classified as Level 2.  Level 2 fair value is based on estimates using standard pricing models.  These standard pricing models use inputs which are derived from or corroborated by observable market data such as interest rate yield curves and currency spot and forward rates.  The fair value of commodity contracts is derived using forward curves supplied by an industry recognized and unrelated third party.  In addition, on an ongoing basis, the Company tests a subset of its valuations against valuations received from the transaction's counterparty to validate the accuracy of its standard pricing models.  Counterparties to these derivative contracts are highly rated financial institutions which the Company believes carry only a minimal risk of nonperformance.

From time to time, the Company holds Level 3 assets for commodity hedges.  The fair values of Level 3 instruments are determined using pricing data similar to that used in Level 2 financial instruments described above, and reflect adjustments for less liquid markets or longer contractual terms.  Level 3 hedges typically will mature within one year or less.  The Company determines the fair value of Level 3 commodity forward contracts based on related inputs that are either readily available in public markets or can be derived from information available in publicly quoted markets, and which influence the actual forward price of the commodity.  Due to the fact that the forward price of the commodity itself is considered unobservable, the Company has categorized these forward contracts as Level 3.

The table below presents a rollforward of activity for these assets (liabilities) for the period ended September 30, 2014:

Fair Value Measurements Using Level 3 Inputs
Commodity Contracts	Third Quarter					First Nine Months
(Dollars in millions)	2014		2013			2014		2013
Balance at beginning of period	$	—	$	(7	)	$	—	$	(5	)
Realized gain (loss) in sales revenue	—		(3		)	—		(10		)
Change in unrealized gain (loss)	1		4			1		2
Settlements	—		3			—		10
Transfers (out) in of Level 3	—		—			—		—
Balance at end of period	$	1	$	(3	)	$	1	$	(3	)

The following chart shows the financial assets and liabilities valued on a recurring basis and their location in the Unaudited Consolidated Statements of Financial Position.  The Company had less than $1 million of nonqualifying derivatives or derivatives that are not designated as hedges recorded as of September 30, 2014 and December 31, 2013. All of the Company's derivative contracts are subject to master netting arrangements, or similar agreements, which provide for the option to settle contracts on a net basis when they settle on the same day and the same currency. In addition, these arrangements provide for a net settlement of all contracts with a given counterparty in the event that the arrangement is terminated due to the occurrence of default or a termination event. The Company has elected to present the derivative contracts on a gross basis in the Unaudited Consolidated Statements of Financial Position. Had the Company chosen to present the derivatives contracts on a net basis, the Company would have a derivative in a net asset position of $87 million and a derivative in a net liability position of $23 million as of September 30, 2014. The Company does not have any cash collateral due under such agreements.

14

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Derivatives Designated as Hedging Instruments

(Dollars in millions)		Fair Value Measurements Significant Other Observable Inputs
Derivative Assets	Statement of Financial Position Location	September 30, 2014		December 31, 2013
Cash Flow Hedges
Commodity contracts	Other current assets	$	9	$	20
Commodity contracts	Other noncurrent assets	1		7
Foreign exchange contracts	Other current assets	43		17
Foreign exchange contracts	Other noncurrent assets	49		14
		$	102	$	58

(Dollars in millions)		Fair Value Measurements Significant Other Observable Inputs
Derivative Liabilities	Statement of Financial Position Location	September 30, 2014		December 31, 2013
Fair Value Hedges
Interest rate swaps	Other long-term liabilities	$	3	$	—
Cash Flow Hedges
Commodity contracts	Payables and other current liabilities	10		—
Commodity contracts	Other long-term liabilities	15		—
Foreign exchange contracts	Payables and other current liabilities	9		21
Foreign exchange contracts	Other long-term liabilities	1		25
		$	38	$	46

Derivatives' Hedging Relationships

	Third Quarter
(Dollars in millions)	Location of Gain/(Loss) Recognized in Income on Derivatives	Amount of Gain/ (Loss) Recognized Income on Derivatives
Derivatives in Fair Value Hedging Relationships		September 30, 2014		September 30, 2013
Interest rate contracts	Net interest expense	$	2	$	—
		$	2	$	—

	First Nine Months
(Dollars in millions)	Location of Gain/(Loss) Recognized in Income on Derivatives	Amount of Gain/ (Loss) Recognized Income on Derivatives
Derivatives in Fair Value Hedging Relationships		September 30, 2014		September 30, 2013
Interest rate contracts	Net interest expense	$	3	$	—
		$	3	$	—

15

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Third Quarter
(Dollars in millions)	Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion)						Location of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)	Pre-tax amount of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)
Derivatives' Cash Flow Hedging Relationships	September 30, 2014			September 30, 2013				September 30, 2014			September 30, 2013
Commodity contracts	$	(22	)	$	8		Sales	$	—		$	(3	)
							Cost of Sales	(1		)	4
Foreign exchange contracts	57			(22		)	Sales	4			2
Forward starting interest rate swap contracts	1			1			Net interest expense	(2		)	(2		)
	$	36		$	(13	)		$	1		$	1
	First Nine Months
(Dollars in millions)	Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion)						Location of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)	Pre-tax amount of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)
Derivatives' Cash Flow Hedging Relationships	September 30, 2014			September 30, 2013				September 30, 2014			September 30, 2013
Commodity contracts	$	(27	)	$	4		Sales	$	—		$	(10	)
							Cost of sales	18			1
Foreign exchange contracts	59			(11		)	Sales	3			8
Forward starting interest rate swap contracts	1			3			Net interest expense	(6		)	(6		)
	$	33		$	(4	)		$	15		$	(7	)

"Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion)" declined for commodity contracts as a result of decreased propane prices and improved for foreign exchange contracts as a result of the lower EUR foreign exchange rate.

Hedging Summary

Monetized positions and mark-to-market gains and losses from raw materials and energy, currency, and certain interest rate hedges that were included in accumulated other comprehensive income before taxes totaled losses of approximately $8 million at September 30, 2014 and $80 million at September 30, 2013 with the decrease primarily a result of lower propane prices and EUR exchange rate.  If realized, $23 million net gains in third quarter 2014 will be reclassified into earnings during the next 12 months.  Ineffective portions of hedges are immediately recognized in cost of sales or other charges (income), net.  There were no material gains or losses related to the ineffective portion of hedges recognized in third quarter and first nine months2014 or third quarter and first nine months2013.

The gains or losses on nonqualifying derivatives or derivatives that are not designated as hedges are marked to market in the line item "Other charges (income), net" of the Unaudited Consolidated Statements of Earnings, and, in all periods presented, represent foreign exchange derivatives denominated in multiple currencies and are transacted and settled in the same quarter.  The Company recognized $1 million net gains during third quarter 2014 and $3 million net losses during third quarter2013 on nonqualifying derivatives.  The Company recognized approximately $4 million net gains and $4 million net losses on nonqualifying derivatives during first nine months2014 and 2013, respectively.

16

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. RETIREMENT PLANS

As described in more detail below, Eastman offers various postretirement benefits to its employees.

Defined Benefit Pension Plans and Other Postretirement Benefit Plans

Eastman maintains defined benefit pension plans that provide eligible employees with retirement benefits.  In addition, Eastman provides a subsidy for life insurance, health care, and dental benefits to eligible retirees hired prior to January 1, 2007, and a subsidy for health care and dental benefits to retirees' eligible survivors.  Costs recognized for these benefits are recorded using estimated amounts, which may change as actual costs derived for the year are determined.

For additional information regarding retirement plans, see Note 11, "Retirement Plans", to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

Components of net periodic benefit cost were as follows:

	Third Quarter
	Pension Plans												Other Postretirement Benefit Plans
	2014						2013						2014			2013
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit cost:
Service cost	$	11		$	4		$	11		$	3		$	2		$	2
Interest cost	24			7			22			7			11			11
Expected return on assets	(36		)	(9		)	(32		)	(9		)	(2		)	(1		)
Amortization of:
Prior service cost (credit)	(1		)	—			(1		)	—			(6		)	(6		)
Mark-to-market pension and other postretirement benefits gain (1)	—			—			—			—			—			(86		)
Net periodic benefit cost	$	(2	)	$	2		$	—		$	1		$	5		$	(80	)
	First Nine Months
	Pension Plans												Other Postretirement Benefit Plans
	2014						2013						2014			2013
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit cost:
Service cost	$	31		$	11		$	32		$	10		$	6		$	8
Interest cost	74			23			66			21			33			33
Expected return on assets	(107		)	(28		)	(96		)	(26		)	(5		)	(5		)
Amortization of:
Prior service cost (credit)	(3		)	—			(3		)	—			(18		)	(16		)
Mark-to-market pension and other postretirement benefits gain (1)	—			—			—			—			—			(86		)
Net periodic benefit cost	$	(5	)	$	6		$	(1	)	$	5		$	16		$	(66	)

⁽¹⁾  Mark-to-market gain in third quarter and first nine months 2013 due to the interim remeasurement of the Eastman other postretirement benefit plan obligation, triggered by a plan change in life insurance benefits in third quarter.

17

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In third quarter 2013, the Company changed life insurance benefits provided to future retirees by the Eastman other postretirement benefit plan which triggered an interim remeasurement of this other postretirement benefit plan obligation. The remeasurement resulted in a reduction in the accumulated postretirement benefit obligation of approximately $47 million which will be amortized as a prior service credit from Accumulated Other Comprehensive Income over 8 years. The remeasurement of the plan also resulted in a mark-to-market ("MTM") actuarial gain of $86 million in third quarter 2013. The actuarial gain was primarily due to a higher assumed discount rate of 4.72 percent in third quarter 2013 compared to 4.01 percent at December 31, 2012. The higher assumed discount rate is reflective of changes in global market conditions and interest rates on high-grade corporate bonds. For additional information concerning the Company's accounting methodology for pension and other postretirement actuarial gains and losses, see Note 1, "Significant Accounting Policies" in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

The Company contributed $47 million and $99 million to its U.S. defined benefit pension plans in first nine months2014 and 2013, respectively.

9. COMMITMENTS

Purchase Obligations and Lease Commitments

The Company had various purchase obligations at September 30, 2014 totaling $2.0 billion over a period of approximately 30 years for materials, supplies, and energy incident to the ordinary conduct of business.  The Company also had various lease commitments for property and equipment under cancelable, noncancelable, and month-to-month operating leases totaling $254 million over a period of approximately 45 years.  Of the total lease commitments, approximately 55 percent relate to real property, including office space, storage facilities, and land; approximately 35 percent relate to railcars; and approximately 10 percent relate to machinery and equipment, including computer and communications equipment and production equipment.

Guarantees

The Company has operating leases with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease as well as other guarantees.  Disclosures about each group of similar guarantees are provided below.

Residual Value Guarantees

The Company has operating leases with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease.  These residual value guarantees at September 30, 2014 totaled $121 million and consisted primarily of leases for railcars and company aircraft and will expire beginning in 2016.  Management believes, based on current facts and circumstances, that the likelihood of material residual guarantee payments is remote.

Other Guarantees

Guarantees and claims also arise during the ordinary course of business from relationships with joint venture partners, suppliers, customers, and other parties when the Company undertakes an obligation to guarantee the performance of others, if specified triggering events occur.  Non-performance under a contract could trigger an obligation of the Company.  The Company's current other guarantees include guarantees relating primarily to intellectual property, environmental matters, and other indemnifications and have arisen through the normal course of business.  The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these claims, if they were to occur.  These other guarantees have terms between 1 and 20 years with maximum potential future payments of $32 million in the aggregate, with none of these guarantees being individually significant to the Company's operating results, financial position, or liquidity.  Management's current expectation is that future payment or performance related to non-performance under other guarantees is remote.

18

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

10. ENVIRONMENTAL MATTERS

Certain Eastman manufacturing sites generate hazardous and nonhazardous wastes, the treatment, storage, transportation, and disposal of which are regulated by various governmental agencies.  In connection with the cleanup of various hazardous waste sites, the Company, along with many other entities, has been designated a potentially responsible party ("PRP") by the U.S. Environmental Protection Agency under the Comprehensive Environmental Response, Compensation and Liability Act, which potentially subjects PRPs to joint and several liability for such cleanup costs.  In addition, the Company will be required to incur costs for environmental remediation and closure and postclosure under the federal Resource Conservation and Recovery Act.  Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies" to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K. The Company's total reserve for environmental contingencies was $350 million and $368 million at September 30, 2014 and December 31, 2013, respectively.  At September 30, 2014 and December 31, 2013, this reserve included $10 million and $9 million, respectively, related to sites previously closed and impaired by Eastman and sites that have been divested by Eastman but for which the Company retains the environmental liability related to these sites.

Estimated future environmental expenditures for remediation costs ranged from the minimum or best estimate of $329 million to the maximum of $568 million and from the minimum or best estimate of $341 million to the maximum of $581 million at September 30, 2014 and December 31, 2013, respectively.  The maximum estimated future costs are considered to be reasonably possible and include the amounts accrued at both September 30, 2014 and December 31, 2013.  Although the resolution of uncertainties related to these environmental matters may have a material adverse effect on the Company's consolidated results of operations in the period recognized, because of the availability of legal defenses, the Company's preliminary assessment of actions that may be required, and if applicable, the expected sharing of costs, management does not believe that the Company's liability for these environmental matters, individually or in the aggregate, will be material to the Company's consolidated financial position or cash flows.  

For facilities that have environmental asset retirement obligations, the best estimate accrued to date over the facilities' estimated useful lives for these environmental asset retirement obligation costs was $21 million and $27 million at September 30, 2014 and December 31, 2013, respectively. 

Reserves for environmental remediation that management believes to be probable and estimable are recorded as current and long-term liabilities in the Unaudited Consolidated Statements of Financial Position. These reserves include liabilities expected to be paid out within 30 years. The amounts charged to pre-tax earnings for environmental remediation and related charges are included in cost of sales and other charges (income), net, and are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2013	$	341
Changes in estimates recorded to earnings	7
Cash reductions	(19		)
Balance at September 30, 2014	$	329

The Company's total environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is recorded in the Unaudited Consolidated Statements of Financial Position as follows:

(Dollars in millions)	September 30, 2014		December 31, 2013
Environmental contingent liabilities, current	$	40	$	40
Environmental contingent liabilities, long-term	310		328
Total	$	350	$	368

19

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

11. LEGAL MATTERS

General

From time to time, the Company and its operations are parties to, or targets of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which are being handled and defended in the ordinary course of business.  While the Company is unable to predict the outcome of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations, or cash flows.

12. STOCKHOLDERS' EQUITY

A reconciliation of the changes in stockholders' equity for first nine months 2014 is provided below:

(Dollars in millions)	Common Stock at Par Value $	Paid-in Capital $		Retained Earnings $		Accumulated Other Comprehensive Income (Loss) $		Treasury Stock at Cost $		Total Stockholders' Equity Attributed to Eastman $		Noncontrolling Interest $		Total Stockholders' Equity $
Balance at December 31, 2013	2	1,778		4,012		171		(2,167	)	3,796		79		3,875
Net Earnings	—	—		735		—		—		735		5		740
Cash Dividends Declared (1) ($1.05 per share)	—	—		(159	)	—		—		(159	)	—		(159	)
Other Comprehensive Income	—	—		—		(93	)	—		(93	)	—		(93	)
Share-Based Compensation Expense (2)	—	23		—		—		—		23		—		23
Stock Option Exercises	—	12		—		—		—		12		—		12
Other (3)	—	(3	)	—		—		—		(3	)	(2	)	(5	)
Share Repurchase	—	—		—		—		(410	)	(410	)	—		(410	)
Distributions to Noncontrolling Interest	—	—		—		—		—		—		(4	)	(4	)
Balance at September 30, 2014	2	1,810		4,588		78		(2,577	)	3,901		78		3,979

⁽¹⁾  Includes cash dividends paid and dividends declared, but unpaid.

⁽²⁾  Includes the fair value of equity share-based awards recognized for share-based compensation.

⁽³⁾  Paid in capital includes tax benefits/charges relating to the difference between the amounts deductible for federal income taxes over the amounts charged to income for book value purposes have been adjusted to paid-in capital and other items. Equity attributable to noncontrolling interest includes adjustments for currency revaluation.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

(Dollars in millions)	Cumulative Translation Adjustment			Benefit Plans Unrecognized Prior Service Credits			Unrealized Gains (Losses) on Derivative Instruments			Unrealized Losses on Investments			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2012	$	105		$	65		$	(46	)	$	(1	)	$	123
Period change	28			13			7			—			48
Balance at December 31, 2013	133			78			(39		)	(1		)	171
Period change	(114		)	(12		)	33			—			(93		)
Balance at September 30, 2014	$	19		$	66		$	(6	)	$	(1	)	$	78

20

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Amounts of other comprehensive income (loss) are presented net of applicable taxes.  The Company records deferred income taxes on the cumulative translation adjustment related to branch operations and other entities included in the Company's consolidated U.S. tax return.  No deferred income taxes are provided on the cumulative translation adjustment of subsidiaries outside the United States, as such cumulative translation adjustment is considered to be a component of indefinitely invested, unremitted earnings of these foreign subsidiaries.

Components of other comprehensive income recorded in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects:

	Third Quarter
	2014						2013
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(127	)	$	(127	)	$	43		$	45
Defined benefit pension and other postretirement benefit plans:
Prior service credit arising during the period	—			—			47			29
Amortization of unrecognized prior service credits included in net periodic costs (1)	(7		)	(4		)	(7		)	(4		)
Change in defined benefit pension and other postretirement benefit plans	(7		)	(4		)	40			25
Derivatives and hedging: (2)
Unrealized (loss) gain	58			36			(19		)	(13		)
Reclassification adjustment for (gain) loss included in net income	—			—			(2		)	—
Change in derivatives and hedging	58			36			(21		)	(13		)
Total other comprehensive income (loss)	$	(76	)	$	(95	)	$	62		$	57
	First Nine Months
	2014						2013
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(115	)	$	(114	)	$	8		$	10
Defined benefit pension and other postretirement benefit plans:
Prior service credit arising during the period	—			—			47			29
Amortization of unrecognized prior service credits included in net periodic costs (1)	(21		)	(12		)	(19		)	(11		)
Change in defined benefit pension and other postretirement benefit plans	(21		)	(12		)	28			18
Derivatives and hedging:(2)
Unrealized gain (loss) during period	67			42			(13		)	(4		)
Reclassification adjustment for (gain) loss included in net income	(14		)	(9		)	6			—
Change in derivatives and hedging	53			33			(7		)	(4		)
Total other comprehensive income (loss)	$	(83	)	$	(93	)	$	29		$	24

⁽¹⁾  Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans".

⁽²⁾  For additional information regarding the impact of reclassifications into earnings, refer to Note 7, "Derivatives".

21

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

13. EARNINGS AND DIVIDENDS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share ("EPS") from continuing operations:

	Third Quarter				First Nine Months
	2014		2013		2014		2013
(In millions, except per share amounts)
Numerator
Earnings attributable to Eastman stockholders:
Earnings from continuing operations, net of tax	$	210	$	308	$	733	$	819
Denominator
Weighted average shares used for basic EPS	148.7		154.0		149.8		154.3
Dilutive effect of stock options and other awards	1.6		2.4		1.7		2.4
Weighted average shares used for diluted EPS	150.3		156.4		151.5		156.7
EPS from continuing operations (1)
Basic	$	1.41	$	2.00	$	4.89	$	5.31
Diluted	$	1.39	$	1.97	$	4.83	$	5.23

⁽¹⁾  Earnings per share are calculated using whole dollars and shares.

In both third quarter and first nine months2014, common shares underlying options to purchase 210,143 shares of common stock were excluded from the shares treated as outstanding for computation of diluted earnings per share because the total market value of option exercises for these awards was less than the total cash proceeds that would be received for these exercises. Third quarter and first nine months2014 reflect the impact of share repurchases of 618,896 and 4,945,452 shares, respectively.

In third quarter2013, common shares underlying options to purchase 125,019 shares of common stock, were excluded from the shares treated as outstanding for computation of diluted earnings per share because the total market value of option exercises for these awards was less than the total cash proceeds that would be received for these exercises. In first nine months2013, there were no outstanding options to purchase shares of common stock excluded from the computation of diluted earnings per share. Third quarter and first nine months2013 reflect the impact of share repurchases of 463,418 and 1,579,118 shares, respectively.

The Company declared cash dividends of $0.35 and $0.30 per share in third quarter2014 and 2013, respectively, and $1.05 and $0.90 per share in first nine months2014 and 2013, respectively.

14. ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES (GAINS), NET

In third quarter and first nine months2014, there were net asset impairments and restructuring charges of $71 million and $77 million, respectively.

In third quarter and first nine months 2014, asset impairments of $18 million and restructuring charges, including severance, of $24 million were recognized in the Additives & Functional Products ("AFP") segment for costs of the planned closure of a Crystex^® R&D facility in France. This closure is subject to certain local legal and regulatory requirements.

As a result of the annual impairment testing of indefinite-lived intangible assets, in third quarter and first nine months 2014 the Company recognized an intangible asset impairment of $22 million in the AFP segment to adjust the carrying value of the Crystex^® tradename to the estimated fair value. This impairment resulted from a decrease in projected revenue since the tradename was acquired from Solutia in 2012. The estimated fair value was determined using an income approach, specifically the relief from royalty method.

22

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In addition, during third quarter and first nine months 2014, a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site resulted in a restructuring charge of $5 million to previously recognized asset impairments and restructuring charges.

During first nine months 2014, the Company recognized gains from the sales of previously impaired assets at the former Photovoltaics production facility in Germany and a former polymers production facility in China of $5 million and $2 million, respectively.

In first nine months 2014, charges included $8 million of asset impairments, including intangible assets, and $2 million of restructuring charges in the Advanced Materials ("AM") segment primarily due to the closure of a production facility in Taiwan for the Flexvue^® product line. First nine months 2014 also included $5 million of restructuring charges for severance associated with the continued integration of the acquired Solutia businesses.

In third quarter and first nine months2013, there were $3 million and $24 million, respectively, of net asset impairments and restructuring charges including $3 million and $9 million, respectively, of restructuring charges primarily for severance associated with the continued integration of the acquired Solutia businesses.

During first nine months2013, management decided to shut-down the Photovoltaics product line, including the primary production facility in Germany. This resulted in the Company recognizing asset impairments of $7 million and restructuring charges of $5 million including charges for severance. During first nine months2013, the Company also recognized severance charges of $6 million primarily for a voluntary separation plan for certain employees. In addition, during first nine months2013, a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site resulted in a reduction of $4 million to previously recognized asset impairments and restructuring charges.

Changes in Reserves for Asset Impairments, Restructuring Charges (Gains), and Severance Charges

The following table summarizes the changes in other asset impairments and restructuring charges and gains, the non-cash reductions attributable to asset impairments, and the cash reductions in shutdown reserves for severance costs and site closure costs paid for first nine months2014 and full year 2013:

(Dollars in millions)	Balance at January 1, 2014		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at September 30, 2014
Non-cash charges	$	—	$	50	$	(50	)	$	—		$	—
Severance costs	22		13		—			(19		)	16
Site closure and restructuring costs	14		14		(3		)	(5		)	20
Total	$	36	$	77	$	(53	)	$	(24	)	$	36

(Dollars in millions)	Balance at January 1, 2013		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at December 31, 2013
Non-cash charges	$	—	$	28	$	(28	)	$	—		$	—
Severance costs	4		27		2			(11		)	22
Site closure and restructuring costs	21		21		(16		)	(12		)	14
Total	$	25	$	76	$	(42	)	$	(23	)	$	36

Substantially all costs remaining for severance are expected to be applied to the reserves within one year.

23

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

15. SHARE-BASED COMPENSATION AWARDS

The Company utilizes share-based awards under employee and non-employee director compensation programs.  These share-based awards may include restricted and unrestricted stock, restricted stock units, stock options, and performance shares.  In third quarter2014 and 2013, $6 million and$8 million, respectively, of compensation expense before tax were recognized in selling, general and administrative expense in the Unaudited Consolidated Statements of Earnings for all share-based awards.The impact onthird quarter2014and2013net earnings of$4 million and $5 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

In first nine months2014 and 2013, $23 million and $27 million, respectively, of compensation expense before tax were recognized in selling, general and administrative expense in the Unaudited Consolidated Statements of Earnings for all share-based awards. The impact on first nine months2014 and 2013 net earnings of $14 million and $17 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

For additional information regarding share-based compensation plans and awards, see Note 18, "Share-Based Compensation Plans and Awards", to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

16. SUPPLEMENTAL CASH FLOW INFORMATION

Included in the line item "Other items, net" of the "Cash flows from operating activities" section of the Unaudited Consolidated Statements of Cash Flows are the following changes to Unaudited Consolidated Statement of Financial Position line items:

(Dollars in millions)	First Nine Months
	2014			2013
Other current assets	$	23		$	(1	)
Other noncurrent assets	25			20
Payables and other current liabilities	52			(24		)
Long-term liabilities and equity	(32		)	(98		)
Total	$	68		$	(103	)

These changes included monetized positions from raw material and energy, currency, and certain interest rate hedges, prepaid insurance, miscellaneous deferrals, accrued taxes, interest accruals, and environmental accruals.

17. SEGMENT INFORMATION

The Company's products and operations are currently managed and reported in five operating segments: Additives & Functional Products ("AFP"), Adhesives & Plasticizers ("A&P"), Advanced Materials ("AM"), Fibers, and Specialty Fluids & Intermediates ("SFI"). For additional information concerning the Company's segments' businesses and products, see Note 21, "Segment Information" to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

Included in third quarter and first nine months 2014 "other" was sales revenue from the acquired Knowlton business, part of the Eastman^TM microfibers technology platform. Included in third quarter and first nine months 2013 "other" sales revenue were the Perennial Wood™ growth initiative and the Photovoltaics product line acquired from Solutia in 2012. There was no sales revenue related to Perennial Wood™ included in third quarter or first nine months 2014 as a result of decisions made by management in 2013 not to continue its Perennial Wood^TM growth initiative.

24

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Third Quarter
(Dollars in millions)	2014		2013
Sales
Additives & Functional Products	$	458	$	445
Adhesives & Plasticizers	347		321
Advanced Materials	604		583
Fibers	346		363
Specialty Fluids & Intermediates	650		620
Total Sales by Segment	2,405		2,332
Other	8		6
Total Sales	$	2,413	$	2,338
	First Nine Months
(Dollars in millions)	2014		2013
Sales
Additives & Functional Products	$	1,333	$	1,294
Adhesives & Plasticizers	1,050		1,005
Advanced Materials	1,816		1,792
Fibers	1,086		1,072
Specialty Fluids & Intermediates	1,884		1,904
Total Sales by Segment	7,169		7,067
Other	9		18
Total Sales	$	7,178	$	7,085

25

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Third Quarter
(Dollars in millions)	2014			2013
Operating Earnings (Loss)
Additives & Functional Products (1)(2)(3)	$	37		$	111
Adhesives & Plasticizers	52			41
Advanced Materials (3)	76			69
Fibers	112			113
Specialty Fluids & Intermediates (4)	90			90
Total Operating Earnings by Segment	367			424
Other (5)
Growth initiatives and businesses not allocated to segments (6)	(18		)	(20		)
Pension and other postretirement benefit costs not allocated to operating segments (7)	3			87
Acquisition transaction, integration, and restructuring costs (8)(9)(10)	(14		)	(12		)
Total Operating Earnings	$	338		$	479

⁽¹⁾  Included in third quarter 2014 earnings are asset impairments and restructuring charges of $42 million for costs of the planned closure of a Crystex^® R&D facility in France. This closure is subject to certain local legal and regulatory requirements.

⁽²⁾  Included in third quarter 2014 earnings is a $22 million asset impairment of the Crystex^® tradename.

⁽³⁾  Included in third quarter 2014 earnings are asset impairments and restructuring charges of $1 million and $4 million in the AFP and AM segments, respectively, related to a change in estimate of certain costs of the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site.

⁽⁴⁾  As required by purchase accounting, acquired BP plc global aviation turbine engine oil business inventories were marked to fair value. Included in third quarter 2014 earnings are additional costs of these inventories. Approximately 75 percent, or $6 million, of these inventories were sold in third quarter 2014 resulting in an increase in cost of sales.

⁽⁵⁾  R&D, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating earnings (loss).

⁽⁶⁾  Businesses not allocated to segments in 2013 included the Perennial Wood™ growth initiative and Photovoltaics product line, both of which ceased production in the second half of 2013. Businesses not allocated to segments in 2014 include Eastman™ microfiber technology platform.

⁽⁷⁾  Included in third quarter 2013 earnings is a MTM other postretirement benefit plan gain of $86 million for a change in benefits. See Note 8, "Retirement Plans."

⁽⁸⁾  Included in third quarter 2014 earnings are transaction costs of $7 million for the pending acquisitions of Taminco and Commonwealth Laminating & Coating, and for the completed acquisition of the global aviation turbine engine oil business from BP plc.

⁽⁹⁾  Included in third quarter 2014 earnings are integration costs of $5 million for the acquired Solutia and global aviation turbine engine oil businesses. Included in third quarter 2013 earnings are integration costs of $9 million for the acquired Solutia businesses.

⁽¹⁰⁾  Included in third quarter 2014 earnings are restructuring charges of $2 million for severance associated with the continued integration of the acquired Solutia businesses. Included in third quarter 2013 earnings are restructuring charges of $3 million primarily for severance associated with the continued integration of the acquired Solutia businesses.

26

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	First Nine Months
(Dollars in millions)	2014			2013
Operating Earnings (Loss)
Additives & Functional Products (1)(2)(3)(4)(5)(6)	$	236		$	313
Adhesives & Plasticizers (6)	155			139
Advanced Materials (3)(5)(6)(7)	217			216
Fibers	352			343
Specialty Fluids & Intermediates (6)(8)	248			302
Total Operating Earnings by Segment	1,208			1,313
Other (9)
Growth initiatives and businesses not allocated to segments (10)(11)(12)	(46		)	(73		)
Pension and other postretirement benefit costs not allocated to operating segments (13)	9			93
Acquisition transaction, integration, and restructuring costs (14)(15)(16)	(36		)	(33		)
Total Operating Earnings	$	1,135		$	1,300

⁽¹⁾  Included in first nine months 2014 earnings are asset impairments and restructuring charges of $42 million for costs of the planned closure of a Crystex^® R&D facility in France. This closure is subject to certain local legal and regulatory requirements.

⁽²⁾  Included in first nine months 2014 earnings is a $22 million asset impairment of the Crystex^® tradename.

⁽³⁾  Included in first nine months 2014 earnings are asset impairments and restructuring charges of $1 million and $4 million in the AFP and AM segments, respectively, related to a change in estimate of certain costs of the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site.

⁽⁴⁾  Included in first nine months 2014 earnings is a $2 million gain on the sale of previously impaired assets at a former polymers production facility in China.

⁽⁵⁾  Included in first nine months 2013 earnings is a reduction in previous charges for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site, which is reported as reductions of $1 million and $3 million in the AFP and AM segments, respectively.

⁽⁶⁾  Included in first nine months 2013 earnings are restructuring charges of $2 million, $1 million, $2 million, and $1 million in the AFP, A&P, AM, and SFI segments, respectively, primarily for severance

⁽⁷⁾  Included in first nine months 2014 earnings are asset impairments and restructuring charges of $10 million primarily for the closure of a production facility in Taiwan for the Flexvue^® product line.

⁽⁸⁾  As required by purchase accounting, acquired BP plc's global aviation turbine engine oil business inventories were marked to fair value. Included in first nine months 2014 earnings are additional costs of these inventories. Approximately $8 million were sold in first nine months 2014 resulting in an increase in cost of sales.

⁽⁹⁾  R&D, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating earnings (loss).

⁽¹⁰⁾  Businesses not allocated to segments in 2013 included the Perennial Wood™ growth initiative and Photovoltaics product line, both of which ceased production in the second half of 2013. Businesses not allocated to segments in 2014 include Eastman™ microfiber technology platform.

⁽¹¹⁾  Included in first nine months 2014 earnings is a $5 million gain on sales of previously impaired assets at the former Photovoltaics production facility in Germany.

⁽¹²⁾  Included in first nine months 2013 earnings are asset impairments and restructuring charges of $13 million primarily for the closure of a production facility in Germany for the Photovoltaics product line.

⁽¹³⁾  Included in first nine months 2013 earnings is a MTM other postretirement benefit plan gain of $86 million for a change in benefits. See Note 8, "Retirement Plans."

⁽¹⁴⁾  Included in first nine months 2014 earnings are transaction costs of $10 million for the pending acquisition of Taminco and Commonwealth Laminating & Coating, and for the completed acquisition of the global aviation turbine engine oil business from BP plc.

⁽¹⁵⁾  Included in first nine months 2014 earnings are integration costs of $21 million for the acquired Solutia and the global aviation turbine engine oil businesses. Included in first nine months 2013 earnings are integration costs of $24 million for the acquired Solutia businesses.

⁽¹⁶⁾  Included in first nine months 2014 and 2013 earnings are restructuring charges of $5 million and $9 million, respectively, primarily for severance associated with the continued integration of the acquired Solutia businesses.

27

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	September 30,		December 31,
(Dollars in millions)	2014		2013
Assets by Segment (1)
Additives & Functional Products	$	2,963	$	2,940
Adhesives & Plasticizers	1,025		996
Advanced Materials	3,794		3,807
Fibers	986		974
Specialty Fluids & Intermediates	2,376		2,054
Total Assets by Segment	11,144		10,771
Corporate Assets	991		1,074
Total Assets	$	12,135	$	11,845

⁽¹⁾  The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

18. RECENTLY ISSUED ACCOUNTING STANDARDS

In April 2014, the Financial Accounting Standards Board ("FASB") issued amended accounting guidance for discontinued operations. The amendments improve the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represents strategic shifts that have (or will have) a major effect on any entity's operations and financial results. Examples of a strategic shift that has (or will have) a major effect on an entity's operations and financial results could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity. The amendments require an entity to present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the assets and liability sections, respectively, of the statement of financial position. In addition to enhanced disclosures for discontinued operations, disclosures are required for disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. This guidance is effective prospectively for reporting periods beginning on or after December 15, 2014. Early adoption is permitted, but only for disposals that have not been reported in financial statements previously issued or available for issuance. The Company has concluded that changes in its accounting required by this new guidance will not materially impact the Company's future accounting for any discontinued operations or its financial position or results of operations.

In May 2014, the FASB and International Accounting Standards Board jointly issued new principles-based accounting guidance for revenue recognition that will supersede virtually all existing revenue guidance. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve the core principle, the guidance establishes the following five steps: 1) identify the contract(s) with a customer, 2) identify the performance obligation in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also details the accounting treatment for costs to obtain or fulfill a contract. Lastly, disclosure requirements have been enhanced to provide sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently evaluating the impact on the Company's financial position or results of operations and related disclosures.

28

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM	Page
Critical Accounting Estimates	30
Non-GAAP Financial Measures	31
Overview	33
Results of Operations	35
Summary by Operating Segment	40
Summary by Customer Location	46
Liquidity, Capital Resources, and Other Financial Information	47
Recently Issued Accounting Standards	51
2014 Outlook	51
Forward-Looking Statements and Risk Factors	52

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is based upon the consolidated financial statements of Eastman Chemical Company ("Eastman" or the "Company"), which have been prepared in accordance with accounting principles generally accepted ("GAAP") in the United States, and should be read in conjunction with the Company's audited consolidated financial statements, including related notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's 2013 Annual Report on Form 10-K, and the Company's unaudited consolidated financial statements, including related notes, included elsewhere in this Quarterly Report on Form 10-Q. All references to earnings per share ("EPS") contained in this report are diluted earnings from continuing operations per share unless otherwise noted.

29

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING ESTIMATES

In preparing the consolidated financial statements in conformity with GAAP, the Company's management must make decisions which impact the reported amounts and the related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and assumptions on which to base estimates and judgments that affect the reported amounts of assets, liabilities, sales revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to allowances for doubtful accounts, impairment of long-lived assets, environmental costs, pension and other postretirement benefits, litigation and contingent liabilities, income taxes, and purchase accounting. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company's management believes the critical accounting estimates described in Part II, Item 7 of the Company's 2013 Annual Report on Form 10-K are the most important to the fair presentation of the Company's financial condition and results. These estimates require management's most significant judgments in the preparation of the Company's consolidated financial statements.

Impairment of Long-Lived Assets

The Company conducted its annual testing of goodwill and indefinite-lived intangible assets in third quarter of 2014, as described below.

Goodwill

The testing of goodwill is performed at the "reporting unit" level which the Company has determined to be its "components". Components are defined as one level below an operating segment, and in order to be a reporting unit, the component must 1) be a "business" as defined by applicable accounting standards (an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to the investors or other owners, member, or participants); 2) have discrete financial information available; and 3) be reviewed regularly by Company operating segment management. The Company aggregates certain components into reporting units based on economic similarities. During 2014 testing, the Company did not evaluate the components acquired from Solutia in 2012 for aggregation, instead testing each component as a separate reporting unit. However, management will continue to review further aggregation as those components continue to be integrated into Eastman.

The Company uses an income approach and applies a fair value methodology based on discounted cash flows in testing the carrying value of goodwill for each reporting unit. The key assumptions and estimates used in the Company's 2014 goodwill impairment testing included a long-term projection of revenues, expenses, and cash flows, the estimated discount rate, and the estimated tax rate. The Company believes these assumptions are consistent with those a hypothetical market participant would use given circumstances that were present at the time the estimates were made. However, actual results and amounts may be significantly different from the Company's estimates. In addition, the use of different estimates or assumptions could result in materially different determinations. If the estimated fair value of a reporting unit is determined to be less than the carrying value of the net assets of the reporting unit including goodwill, additional steps, including an allocation of the estimated fair value to the assets and liabilities of the reporting unit, would be necessary to determine the amount, if any, of goodwill impairment.

As a result of the tests performed during third quarter 2014, there was no impairment of the Company's goodwill. Fair values substantially exceeded the carrying values for each reporting unit tested, except for the specialty fluids reporting unit (a part of the Specialty Fluids and Intermediates ("SFI") operating segment) acquired from Solutia.

Goodwill of $524 million is allocated to the specialty fluids reporting unit, the fair value of which exceeded the carry value by 5 percent. Two of the most critical assumptions used in the calculation of the fair value of the specialty fluids reporting unit are the long-term growth rate and the discount rate. The Company performed a sensitivity analysis on both of those assumptions. The fair value was 7 percent less than the carrying value with a 1 percent decrease in the long-term growth rate and 10 percent less than the carrying value with a 1 percent increase in the discount rate.

30

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

In order to determine the discount rate, the Company uses a market perspective weighted average cost of capital ("WACC") approach. The WACC is calculated incorporating weighted average returns on debt and equity from market participants. Therefore, changes in the market, which are beyond the control of the Company, may have an impact on future calculations of estimated fair value.

Indefinite-lived Intangible Assets

The carrying value of indefinite-lived intangible assets is considered to be impaired when the fair value, as established by appraisal or based on discounted future cash flows of certain related products, is less than the respective carrying values.

Indefinite-lived intangible assets, consisting of various tradenames, are tested for potential impairment by comparing the estimated fair value to the carrying amount. The Company uses an income approach, specifically the relief from royalty method, to test indefinite-lived intangible assets. The estimated fair value of the tradenames is determined based on an assumed royalty rate savings, discounted by the calculated market participant WACC plus a 1 percent risk premium. The carrying value of indefinite-lived intangible assets is considered to be impaired when the estimated fair value is less than the carrying value of the trademarks.

As of July 1, 2014, the testing date, the Company had $567 million in indefinite-lived intangible assets. In third quarter 2014, the Company recognized an impairment of $22 million in the Additives & Functional Products ("AFP") segment to adjust the carrying value of the Crystex^® tradename to $135 million as a result of the decrease in projected revenues since the tradename was acquired from Solutia in 2012.

The Company will continue to monitor both goodwill and indefinite-lived intangible assets for any indication of triggering events which might require additional testing before the next required annual impairment test.

NON-GAAP FINANCIAL MEASURES

Company Use of Non-GAAP Financial Measures

In addition to evaluating the Company's financial condition, results of operations, liquidity and cash flows as reported in accordance with GAAP, Eastman management also evaluates Company and operating segment performance, and makes resource allocation and performance evaluation decisions, excluding the effect of transactions, costs, and losses or gains that do not directly arise from Eastman's normal, or "core", business and operations, or are otherwise of an unusual or non-recurring nature. These transactions, costs, and losses or gains relate to, among other things, cost reduction, growth and profitability improvement initiatives, and other events outside of core business operations (such as mark-to-market losses or gains for pension and other postretirement benefit plans, typically in the fourth quarter of each year and any other quarters in which an interim remeasurement is triggered). Because non-core or non-recurring transactions, costs, and losses or gains may materially affect the Company's, or any particular operating segment's, financial condition or results in a specific period in which they are recognized, Eastman believes it is appropriate to evaluate both the financial measures prepared and calculated in accordance with GAAP and the related non-GAAP financial measures excluding the effect on our results of these non-core or non-recurring items. In addition to using such measures to evaluate results in a specific period, management evaluates such non-GAAP measures, and believes that investors may also evaluate such measures, because such measures may provide more complete and consistent comparisons of the Company's, and its segments', operational performance on a period-over-period historical basis and, as a result, provide a better indication of expected future trends. Management discloses these non-GAAP measures, and the related reconciliations to the most comparable GAAP financial measures, because it believes investors use these metrics in evaluating longer term period-over-period performance, and to allow investors to better understand and evaluate the information used by management to assess the Company's, and its operating segments', performance, make resource allocation decisions and evaluate organizational and individual performance in determining certain performance-based compensation. Non-GAAP measures do not have definitions under GAAP, and may be defined differently by, and not be comparable to, similarly titled measures used by other companies. As a result, management cautions investors not to place undue reliance on any non-GAAP measure, but to consider such measures with the most directly comparable GAAP measure.

31

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Non-GAAP Measures in this Quarterly Report

The non-core or non-recurring items excluded by management in its evaluation of certain results in this Quarterly Report are:

• Costs resulting from the sale of acquired BP plc global aviation turbine engine oil business (the "aviation turbine oil business") inventories at fair value (as required by purchase accounting, these inventories were marked to fair value and sold in second quarter and third quarter 2014);

• Costs of integration of the acquired Solutia, aviation turbine engine oil business, and Knowlton Technologies, LLC ("Knowlton") businesses and acquisition transaction, and financing costs of the completed Knowlton and pending Taminco Corporation ("Taminco") and Commonwealth Laminating & Coating, Inc. ("CLC") acquisitions, which are non-core costs;

• Mark-to-market ("MTM") pension and other postretirement benefit plans gain due to an interim remeasurement of plan obligations triggered by a change in future retiree life insurance benefits. This actuarial gain was primarily due to higher than assumed discount rates reflective of changes in global market conditions and interest rates on high-grade corporate bonds and changes in other postretirement benefit plan obligations resulting from a plan amendment, and did not directly arise from Eastman's core business and operations; and

• Asset impairments and restructuring charges and gains, net, which, other than severance costs, are not cash transactions impacting profitability,

in each case for the periods and in the amounts in the table below.

Non - GAAP Financial Measures -- Excluded Non-Core or Non-Recurring Items

	Third Quarter					First Nine Months
(Dollars in millions)	2014		2013			2014		2013
Non-core or non-recurring items impacting operating earnings:
Additional costs of acquired inventories	$	6	$	—		$	8	$	—
Acquisition transaction costs	7		—			10		—
Acquisition integration costs	5		9			21		24
Mark-to-market pension and other postretirement benefits gain	—		(86		)	—		(86		)
Asset impairments and restructuring charges, net	71		3			77		24
Non-core or non-recurring items impacting earnings before income taxes:
Taminco acquisition financing costs	3		—			3		—

This MD&A includes the effect of the foregoing on the following financial measures:

• Gross profit,

• Selling, general, and administrative ("SG&A") expenses,

• Research and development ("R&D") expenses,

• Operating earnings,

• Other charges (income), net,

• Earnings from continuing operations, and

• Diluted earnings per share.

These non-GAAP financial measures, and the accompanying reconciliations of the non-GAAP financial measures to the most comparable GAAP measures, are presented in "Overview", "Results of Operations", and "Summary by Operating Segment" in this MD&A.

32

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Other Non-GAAP Financial Measures

Alternative Non-GAAP Cash Flow Measures

In addition to the non-GAAP measures presented in this Quarterly Report and other periodic reports, from time to time management evaluates and discloses to investors and securities analysts the non-GAAP measure cash provided by operating activities excluding certain non-core or non-recurring items ("cash provided by operating activities, as adjusted") when analyzing, among other things, business performance, liquidity and financial position, and performance-based compensation.  Eastman management uses this non-GAAP measure in conjunction with the GAAP measure cash provided by operating activities because it believes it is a more appropriate metric to evaluate the cash flows from Eastman's core operations that are available to grow the business and create stockholder value, and because it allows for a more consistent period-over-period presentation of such amounts.  In its evaluation, Eastman management generally excludes the impact of certain non-core activities and decisions of management because such activities and decisions are not considered core, ongoing components of operations and the decisions to undertake or not to undertake such activities may be made irrespective of the cash generated from operations.  From time to time, management discloses this non-GAAP measure and the related reconciliation to investors and securities analysts to allow them to better understand and evaluate the information used by management in its decision making processes and because management believes investors and securities analysts use similar measures to assess Company performance, liquidity, and financial position over multiple periods and to compare these with other companies.

Similarly, from time to time, Eastman may disclose to investors and securities analysts one or both of alternative non-GAAP measures of "free cash flow", which management defines as (i) cash provided by operating activities, as adjusted, described above, less the amounts of capital expenditures and dividends, and (ii) cash provided by operating activities, as adjusted, described above, less the amount of capital expenditures. Management believes such items are generally funded from available cash and, as such, should be considered in determining free cash flow.  Eastman management believes these are appropriate metrics to use to evaluate the Company's overall ability to generate cash to fund future operations, inorganic growth opportunities, and to meet the Company's debt repayment obligations.  Management believes these metrics are useful to investors and securities analysts in order to provide them with information similar to that used by management in evaluating potential future cash available for various initiatives and because management believes investors and securities analysts often use a similar measure of free cash flow to compare the results, and value, of comparable companies.

Alternative Non-GAAP Earnings Measures

From time to time, Eastman may disclose to investors and securities analysts the non-GAAP earnings measures "Adjusted EBITDA" and "Return on Invested Capital" (or "ROIC"). Management defines "Adjusted EBITDA" as "EBITDA" (net earnings or net earnings per share before interest, taxes, depreciation and amortization) adjusted to exclude the same non-core and non-recurring items as are excluded from the Company's other non-GAAP earnings measures for the same periods. "EBITDA Margin" is Adjusted EBITDA divided by the GAAP measure sales revenue in the Company's income statement for the same periods. Management defines "ROIC" as net income plus interest expense after tax divided by average total borrowings plus average stockholders' equity for the periods presented, each derived from the GAAP measures in the Company's financial statements for the periods presented. Management believes that Adjusted EBITDA and ROIC are useful as supplemental measures in evaluating the performance of and returns from Eastman's operating businesses, and understands that investors and securities analysts often use similar measures of Adjusted EBITDA and ROIC to compare the results, returns, and value, of the Company with those of other companies.

OVERVIEW

Eastman's portfolio of specialty businesses holds leading market positions and manufactures products that enhance performance in a variety of end markets such as transportation, building and construction, and consumables. Management believes that despite ongoing economic uncertainty, the Company's key end markets have generally benefited from modest global economic growth during 2014. Eastman management believes that the Company's global market and manufacturing presence, and vertically integrated manufacturing streams, combined with global trends such as energy efficiency, a rising middle class in emerging economies, and increased health and wellness will continue to support the Company's achievement of its growth objectives in the long term.

33

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The Company generated sales revenue of $2.4 billion and $2.3 billion in third quarter2014 and 2013, respectively. Sales revenue increased $75 million in third quarter 2014 primarily due to higher sales volume of $57 million in the Adhesives & Plasticizers ("A&P") and Advanced Materials ("AM") segments and $46 million of higher selling prices in the SFI, Fibers, and AFP segments, partially offset by $29 million of lower sales volume in the Fibers segment.

The Company generated sales revenue of $7.2 billion and $7.1 billion in first nine months2014 and 2013, respectively. Sales revenue increased $93 million in first nine months2014 primarily due to higher sales volume of $88 million in the A&P and AFP segments, higher selling prices of $14 million in the AFP segment, partially offset by $28 million of lower selling prices in the A&P segment.

Operating earnings were $338 million in third quarter2014 compared with $479 million in third quarter2013.  Excluding the non-core or non-recurring items referenced in "Non-GAAP Financial Measures", operating earnings in third quarter2014 and 2013 were $427 million and $405 million, respectively, primarily due to $22 million of higher earnings in the AM and A&P segments.

Operating earnings were $1.1 billion in first nine months2014 compared with $1.3 billion in first nine months2013. Excluding the non-core or non-recurring items referenced in "Non-GAAP Financial Measures", operating earnings in both first nine months2014 and 2013 were $1.3 billion.

As described in more detail in "Results of Operations", earnings from continuing operations and diluted earnings per share attributable to Eastman were as follows:

	Third Quarter
	2014				2013
(Dollars in millions, except diluted EPS)	$		EPS		$		EPS
Earnings from continuing operations, net of tax	$	210	$	1.39	$	308	$	1.97
Earnings from continuing operations excluding non-core or non-recurring items, net of tax (1)	$	284	$	1.89	$	263	$	1.68
	First Nine Months
	2014				2013
(Dollars in millions, except diluted EPS)	$		EPS		$		EPS
Earnings from continuing operations, net of tax	$	733	$	4.83	$	819	$	5.23
Earnings from continuing operations excluding non-core or non-recurring items, net of tax (1)	$	822	$	5.43	$	798	$	5.09

⁽¹⁾  Excludes the non-core or non-recurring items referenced in "Non-GAAP Financial Measures".

The Company generated $949 million in cash from operating activities in first nine months2014 compared with cash provided by operating activities of $794 million in first nine months2013.  The increase in cash from operating activities was primarily due to lower tax payments and timing of pension funding.

In 2014, the Company made progress on both inorganic (external growth through joint venture and acquisition) and organic (internal growth) growth initiatives including:

• entering into a definitive agreement with Taminco on September 11, 2014 under which Eastman will acquire Taminco, a global specialty chemical company. Under the terms of the agreement, Taminco stockholders will receive $26.00 in cash for each share of Taminco common stock. The total transaction value is $2.8 billion, including net assumed debt of $1 billion. The acquisition will be funded with available cash and debt financing. The transaction is expected to be completed by the end of 2014. The acquisition of Taminco is expected to:

◦ strengthen Eastman's presence in attractive niche-end markets benefiting from megatrends;

◦ leverage a world-class technology platform underpinned by a common business model;

◦ provide synergy opportunities; and

◦ enhance growth prospects.

34

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

• in the AFP segment:

◦ deciding to proceed with the expansion of the Crystex^® insoluble sulfur rubber additive manufacturing facility in Kuantan, Malaysia, expected to be operational in the first half of 2017, and deciding to close a Crystex^® R&D facility in France, both to decrease Crystex^® costs.

• in the A&P segment:

◦ completing the capacity expansion of its Eastman 168™ non-phthalate plasticizers at its manufacturing facility in Texas City, Texas in second quarter 2014.

• in the AM segment:

◦ continuing the expansion of Eastman Tritan^TM copolyester capacity at the Kingsport, Tennessee manufacturing facility which is expected to be operational by the end of 2014 to meet expected demand for Eastman Tritan^TM copolyester;

◦ beginning an additional expansion of the of Eastman Tritan^TM copolyester capacity at the Kingsport, Tennessee manufacturing facility in fourth quarter 2014 which is expected to be operational in early 2017; and

◦ entering into a definitive agreement to acquire CLC, a specialty films business. The acquisition is expected to be completed by the end of 2014.

• in the SFI segment:

◦ continuing a Therminol^® heat transfer fluid capacity expansion in Newport, Wales, which is expected to be operational in the first half of 2015 to support expected demand in the industrial chemicals and processing market; and

◦ completing the acquisition of the aviation turbine oil business from BP plc. In combination with Eastman's Skydrol^® aviation hydraulic fluids business, the acquired aviation turbine oil business enables Eastman to better supply the global aviation industry.

RESULTS OF OPERATIONS

	Third Quarter						First Nine Months
(Dollars in millions)	2014		2013		Change		2014		2013		Change
Sales	$	2,413	$	2,338	3	%	$	7,178	$	7,085	1	%
Volume effect					2	%					—	%
Price effect					1	%					1	%
Exchange rate effect					—	%					—	%

	Third Quarter							First Nine Months
(Dollars in millions)	2014		2013			Change		2014		2013			Change
Gross Profit	$	636	$	689		(8	)%	$	1,888	$	1,982		(5	)%
Additional costs of acquired inventories	6		—					8		—
Mark-to-market pension and other postretirement benefits gain	—		(68		)			—		(68		)
Gross Profit excluding non-core or non-recurring items	$	642	$	621		3	%	$	1,896	$	1,914		(1	)%

Gross profit decreased by $53 million in third quarter2014 compared with third quarter2013. Gross profit in third quarter 2013 included a $68 million MTM gain triggered by an other postretirement benefit plan amendment. Excluding non-core or non-recurring items, gross profit increased by $21 million, primarily in the AM and A&P segments.

Gross profit decreased by $94 million in first nine months2014 compared with first nine months2013. Gross profit in first nine months 2013 included the $68 million MTM gain triggered by an other postretirement benefit plan amendment. Excluding non-core or non-recurring items, gross profit was relatively unchanged.

35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Gross profit in third quarter and first nine months2014 was negatively impacted $6 million and $8 million, respectively, by the sale of the acquired aviation turbine oil business inventories, which were marked to fair value as required by purchase accounting. For more information see Note 2, "Acquisitions", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

	Third Quarter								First Nine Months
(Dollars in millions)	2014			2013			Change		2014			2013			Change
Selling, General and Administrative Expenses	$	171		$	159		8	%	$	511		$	510		—	%
Acquisition transaction costs	(7		)	—					(10		)	—
Acquisition integration costs	(5		)	(9		)			(21		)	(24		)
Mark-to-market pension and other postretirement benefits gain	—			15					—			15
Selling, General, and Administrative Expenses excluding non-core or non-recurring items	$	159		$	165		(4	)%	$	480		$	501		(4	)%

SG&A expenses in third quarter2014 were higher compared to third quarter2013 primarily due to the MTM gain triggered by an other postretirement benefit plan amendment in third quarter 2013.

SG&A expenses in first nine months2014 were relatively unchanged compared to first nine months 2013.

Excluding non-core and non-recurring items, SG&A expenses in third quarter and first nine months2014 were lower compared to third quarter and first nine months2013 primarily due to Solutia acquisition cost reduction synergies.

	Third Quarter						First Nine Months
(Dollars in millions)	2014		2013		Change		2014		2013		Change
Research and Development Expenses	$	56	$	48	17	%	$	165	$	148	11	%
Mark-to-market pension and other postretirement benefits gain	—		3				—		3
Research and Development Expenses excluding non-core or non-recurring items	$	56	$	51	10	%	$	165	$	151	9	%

R&D expenses were higher in third quarter2014 compared to third quarter2013 primarily due to increased R&D for growth initiatives in the AFP segment and the third quarter 2013 MTM gain triggered by an other postretirement benefit plan amendment. R&D expenses were higher in first nine months2014 compared to first nine months2013 primarily due to increased R&D for growth initiatives in the AFP and AM segments and the first nine months 2013 MTM gain triggered by an other postretirement benefit plan amendment.

Asset Impairments and Restructuring Charges (Gains), Net

In third quarter and first nine months2014, there were net asset impairments and restructuring charges of $71 million and $77 million, respectively.

In third quarter and first nine months 2014, asset impairments of $18 million and restructuring charges, including severance, of $24 million were recognized in the AFP segment for the closure of a Crystex^® R&D facility in France.

As a result of the annual impairment testing of indefinite-lived intangible assets, in third quarter and first nine months 2014 the Company recognized an intangible asset impairment of $22 million in the AFP segment to adjust the carrying value of the Crystex^® tradename to $135 million. This impairment resulted from a decrease in projected revenues since the tradename was acquired from Solutia in 2012. The estimated fair value was determined using an income approach, specifically the relief from royalty method.

36

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

In addition, during third quarter and first nine months 2014, a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site resulted in a restructuring charge of $5 million to previously recognized asset impairments and restructuring charges.

During first nine months 2014, the Company recognized gains from the sales of previously impaired assets at the former Photovoltaics production facility in Germany and a former polymers production facility in China of $5 million and $2 million, respectively.

In first nine months 2014, charges included $8 million of asset impairments, including intangible assets, and $2 million of restructuring charges in the AM segment primarily due to the closure of a production facility in Taiwan for the Flexvue^® product line. First nine months 2014 also included $5 million of restructuring charges for severance associated with the continued integration of the acquired Solutia businesses.

In third quarter and first nine months2013, there were net asset impairments and restructuring charges of $3 million and $24 million, respectively, including $3 million and $9 million, respectively, of restructuring charges primarily for severance associated with the continued integration of the acquired Solutia businesses.

During first nine months2013, management decided to shut-down the Photovoltaics product line, including the primary production facility in Germany. This resulted in the Company recognizing asset impairments of $7 million and restructuring charges of $5 million including charges for severance. During first nine months2013, the Company also recognized severance charges of $6 million primarily for a voluntary separation plan for certain employees. In addition, during first nine months2013, a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site resulted in a reduction of $4 million to previously recognized asset impairments and restructuring charges.

For more information regarding asset impairments and restructuring charges and gains see Note 14, "Asset Impairments and Restructuring Charges (Gains), Net", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Operating Earnings

	Third Quarter							First Nine Months
(Dollars in millions)	2014		2013			Change		2014		2013			Change
Operating earnings	$	338	$	479		(29	)%	$	1,135	$	1,300		(13	)%
Additional costs of acquired inventories	6		—					8		—
Acquisition transaction costs	7		—					10		—
Acquisition integration costs	5		9					21		24
Mark-to-market pension and other postretirement benefits gain	—		(86		)			—		(86		)
Asset impairments and restructuring charges (gains), net	71		3					77		24
Operating earnings excluding non-core or non-recurring items	$	427	$	405		5	%	$	1,251	$	1,262		(1	)%

37

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Net Interest Expense

	Third Quarter						First Nine Months
(Dollars in millions)	2014		2013		Change		2014		2013		Change
Gross interest costs	$	51	$	48			$	148	$	144
Less:  Capitalized interest	1		2				5		3
Interest expense	50		46		9	%	143		141		1	%
Interest income	5		2				11		4
Net interest expense	$	45	$	44	2	%	$	132	$	137	(4	)%

Net interest expense increased$1 million in third quarter2014 compared to third quarter2013, primarily due to the new $500 million principal amount notes issued in May 2014 partially offset by reduction in 2013 of the amount outstanding under the five-year term loan (the "Term Loan") used to finance part of the Solutia acquisition. Net interest expense decreased$5 million in first nine months2014 compared to first nine months2013, primarily due to reduction in 2013 of the amount outstanding under the Term Loan.

Other Charges (Income), Net

	Third Quarter						First Nine Months
(Dollars in millions)	2014			2013			2014			2013
Foreign exchange transaction (gains) losses, net	$	(6	)	$	3		$	(6	)	$	7
Financing costs related to the acquisition of Taminco	3			—			3			—
(Income) loss from equity investments and other investment (gains) losses, net	(2		)	(2		)	(7		)	(5		)
Other, net	—			—			(6		)	—
Other charges (income), net	$	(5	)	$	1		$	(16	)	$	2
Financing costs related to the acquisition of Taminco	(3		)	—			(3		)	—
Other charges (income), net excluding financing costs related to the acquisition of Taminco	$	(8	)	$	1		$	(19	)	$	2

Included in other charges (income), net are gains or losses on foreign exchange transactions, equity investments, business venture investments, non-operating assets, and certain litigation costs and earnings. Third quarter and first nine months 2014 included Taminco acquisition financing costs. Financing costs recognized in "Other charges (income), net" during 2014 were primarily Taminco acquisition borrowing fees.

38

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Provision for Income Taxes

	Third Quarter						First Nine Months
(Dollars in millions)	2014			2013			2014			2013
	$			$			$			$
Provision for income taxes, as reported	$	86		$	125		$	281		$	338
Effective tax rate	29		%	29		%	28		%	29		%

The third quarter and first nine months 2014 effective tax rates reflect benefit from the integration of Eastman and Solutia business operations and legal entity structures. The third quarter and first nine months 2013 effective tax rates were impacted by a $14 million benefit primarily from adjustments to the tax provision to reflect the finalization of the 2012 consolidated U.S. Federal income tax return. The first nine months2013 effective tax rate also benefited from enactment of the American Taxpayer Relief Act of 2012 in January 2013, which resulted in a $10 million benefit primarily from an R&D tax credit. The tax credits expired at the end of 2013.

The Company expects its full year tax rate on reported earnings to be approximately 28 percent, excluding non-core or non-recurring items.

Earnings from Continuing Operations and Diluted Earnings per Share

	Third Quarter
	2014				2013
(Dollars in millions, except diluted EPS)	$		EPS		$			EPS
Earnings from continuing operations, net of tax	$	210	$	1.39	$	308		$	1.97
Additional costs of acquired inventories, net of tax	4		0.02		—			—
Acquisition transaction, integration, and financing costs, net of tax	10		0.06		6			0.04
Mark-to-market pension and other postretirement benefits gain, net of tax	—		—		(53		)	(0.34		)
Asset impairments and restructuring charges (gains), net of tax	60		0.42		2			0.01
Earnings from continuing operations excluding non-core or non-recurring items, net of tax	$	284	$	1.89	$	263		$	1.68
	First Nine Months
	2014				2013
(Dollars in millions, except diluted EPS)	$		EPS		$			EPS
Earnings from continuing operations, net of tax	$	733	$	4.83	$	819		$	5.23
Additional costs of acquired inventories, net of tax	5		0.03		—			—
Acquisition transaction, integration, and financing costs, net of tax	21		0.14		16			0.10
Mark-to-market pension and other postretirement benefits gain, net of tax	—		—		(53		)	(0.34		)
Asset impairments and restructuring charges (gains), net of tax	63		0.43		16			0.10
Earnings from continuing operations excluding non-core or non-recurring items, net of tax	$	822	$	5.43	$	798		$	5.09

Third quarter and first nine months2014 diluted shares outstanding were less than third quarter and first nine months 2013 primarily due to an increased number of shares repurchased in first nine months 2014.

39

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Net Earnings and Diluted Earnings per Share

	Third Quarter
	2014				2013
(Dollars in millions, except diluted EPS)	$		EPS		$		EPS
Net earnings	$	210	$	1.39	$	308	$	1.97
	First Nine Months
	2014				2013
(Dollars in millions, except diluted EPS)	$		EPS		$		EPS
Earnings from continuing operations, net of tax	$	733	$	4.83	$	819	$	5.23
Earnings from discontinued operations, net of tax	2		0.02		—		—
Net earnings	$	735	$	4.85	$	819	$	5.23

In first nine months 2014, the Company recognized $2 million, net of tax, in earnings from discontinued operations from final settlement of commercial litigation related to the previously discontinued polyethylene terephthalate ("PET") business.

SUMMARY BY OPERATING SEGMENT

Eastman has five reporting segments: Additives & Functional Products ("AFP"), Adhesives & Plasticizers ("A&P"), Advanced Materials ("AM"), Fibers, and Specialty Fluids & Intermediates ("SFI"). For additional information concerning the Company's segments' businesses and products, see Note 21, "Segment Information" to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

Additives & Functional Products Segment

	Third Quarter									First Nine Months
					Change									Change
(Dollars in millions)	2014		2013		$			%		2014		2013		$			%
Sales	$	458	$	445	$	13		3	%	$	1,333	$	1,294	$	39		3	%
Volume effect					4			1	%					22			2	%
Price effect					9			2	%					14			1	%
Exchange rate effect					—			—	%					3			—	%
Operating earnings	37		111		(74		)	(67	)%	236		313		(77		)	(25	)%
Asset impairments and restructuring charges (gains), net	65		—							63		1
Operating earnings excluding non-core or non-recurring items	102		111		(9		)	(8	)%	299		314		(15		)	(5	)%

Sales revenue in third quarter2014 increased compared to third quarter2013 primarily due to higher coatings product lines selling prices and higher sales volume attributed to strengthened demand in key end markets. The increase was partially offset by lower Crystex^® insoluble sulfur rubber additive sales volume, primarily attributed to weakened demand in Asia Pacific and Latin America.

Sales revenue in first nine months2014 increased compared to first nine months2013 primarily due to higher sales volume and higher selling prices for coatings product lines. 

40

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Operating earnings in third quarter2014 decreased compared to third quarter2013. Operating earnings in third quarter 2014 included $42 million of asset impairments and restructuring charges for the closure of a Crystex^® R&D facility in France and a $22 million intangible asset impairment of the Crystex^® tradename. The impairment of the Crystex^® tradename is a result of a decrease in projected revenue since the tradename was acquired from Solutia in 2012. Excluding non-core or non-recurring items in third quarter 2014, operating earnings decreased in third quarter2014 compared to third quarter2013. The decrease was due to $5 million primarily in development costs of next generation Crystex^® insoluble sulfur technology and higher raw material and energy costs, particularly for propane, offsetting higher selling prices primarily for coatings product lines by $4 million.

Operating earnings in first nine months2014 decreased compared to first nine months2013. Excluding non-core or non-recurring items, operating earnings decreased in first nine months 2014 compared to first nine months 2013. The decrease was primarily due to higher raw material and energy costs, particularly for propane in the first half of 2014, offsetting higher selling prices for coatings product lines by $18 million and $10 million primarily in development costs of next generation Crystex^® insoluble sulfur technology. The decrease was partially offset by $10 million of higher sales volume.

The Company continues to make progress in the refinement and enhancement of its technology for the manufacture of Crystex^® insoluble sulfur in order to improve its cost position and introduce a higher performance product into the tires industry market. The Company has decided to proceed with incorporating this technology into a capacity expansion at the Kuantan, Malaysia manufacturing facility to capitalize on expected high industrial growth rates in the Asia Pacific region. This expansion is expected to be operational in the first half of 2017.

Adhesives & Plasticizers Segment

	Third Quarter									First Nine Months
					Change									Change
(Dollars in millions)	2014		2013		$			%		2014		2013		$			%
Sales	$	347	$	321	$	26		8	%	$	1,050	$	1,005	$	45		4	%
Volume effect					29			9	%					66			6	%
Price effect					(5		)	(2	)%					(28		)	(3	)%
Exchange rate effect					2			1	%					7			1	%
Operating earnings	52		41		11			27	%	155		139		16			12	%
Asset impairments and restructuring charges	—		—							—		1
Operating earnings excluding non-core or non-recurring item	52		41		11			27	%	155		140		15			11	%

Sales revenue in third quarter2014 increased compared to third quarter2013 primarily due to higher sales volume in both adhesives resins and plasticizers product lines more than offsetting lower plasticizers selling prices. Higher sales volume for adhesives resins product lines was primarily attributed to stronger end-market demand, particularly for packaging and hygiene. Higher sales volume for plasticizers product lines was primarily attributed to the substitution of phthalate plasticizers with Eastman non-phthalate plasticizers and strengthened demand in the building and construction end-market, particularly in North America. Lower selling prices for plasticizers product lines were primarily attributed to continued competitive pressures resulting from weakened demand in Asia Pacific and Europe.

41

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Sales revenue in first nine months2014 increased compared to first nine months2013 primarily due to higher sales volume more than offsetting lower selling prices. Higher sales volume for adhesives resins product lines was mostly attributed to stronger end-market demand, particularly for packaging and hygiene. Higher sales volume for plasticizers product lines was primarily attributed to the substitution of phthalate plasticizers with Eastman non-phthalate plasticizers. Lower selling prices for plasticizers product lines were primarily attributed to continued competitive pressures resulting from weakened demand in Asia Pacific and Europe. Lower selling prices for adhesives resins product lines were primarily due to continued competitive pressure resulting from greater industry supply attributed to increased availability of key raw materials and additional competitor capacity in the first half of 2014.

Operating earnings increased in third quarter2014 primarily due to $5 million of higher sales volume and $4 million of higher capacity utilization that resulted in lower unit costs, primarily in the adhesives resins product lines.

Operating earnings increased in first nine months2014 primarily due to $22 million of lower operating costs including the benefit of higher capacity utilization that resulted in lower unit costs and targeted cost reductions and $19 million of higher sales volume, more than offsetting $30 million of lower selling prices and slightly higher raw material and energy costs.

Expansion of Eastman 168™ non-phthalate plasticizers' capacity at the manufacturing facility in Texas City, Texas was completed in second quarter 2014.

In 2012, the Company announced a joint venture to build a hydrogenated hydrocarbon resin plant in Nanjing, China.  The venture will be equally owned by Eastman and Sinopec Yangzi Petrochemical Company Limited. The Company and Sinopec Yangzi Petrochemical Company Limited continue to evaluate the timing of this project depending upon market conditions for hydrogenated hydrocarbon resins. The facility is expected to produce 50,000 metric tons of the A&P segment's Regalite™ hydrogenated hydrocarbon resins upon completion, increasing Eastman's total capacity for hydrogenated resins by 50 percent, making Eastman the largest global supplier of hydrogenated hydrocarbon resins, and supporting expected demand growth for its products in hygiene and packaging applications.

Advanced Materials Segment

	Third Quarter									First Nine Months
					Change										Change
(Dollars in millions)	2014		2013		$			%		2014		2013			$			%
Sales	$	604	$	583	$	21		4	%	$	1,816	$	1,792		$	24		1	%
Volume effect					28			5	%						33			2	%
Price effect					(6		)	(1	)%						(14		)	(1	)%
Exchange rate effect					(1		)	—	%						5			—	%
Operating earnings	76		69		7			10	%	217		216			1			—	%
Asset impairments and restructuring charges (gains), net	4		—							14		(1		)
Operating earnings excluding non-core or non-recurring items	80		69		11			16	%	231		215			16			7	%

Sales revenue in third quarter2014 increased compared to third quarter2013 primarily due to higher sales volume of premium products, including Eastman Tritan™ copolyester, Eastman Visualize™ Material, interlayers with acoustic properties, and V-Kool^® window film. The increased sales volume is primarily due to continued market adoption of premium products.

Sales revenue in first nine months2014 increased compared to first nine months2013 as higher sales volume for Eastman Tritan™ copolyester and interlayers with acoustic properties was partially offset by lower sales volume for Flexvue^® coated films.

42

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Excluding non-core or non-recurring items, operating earnings in third quarter2014 increased compared to third quarter2013 due to higher sales volume and improved product mix. Operating earnings in third quarter 2014 included asset impairment charges of $4 million, related to a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site.

Operating earnings in first nine months2014 increased compared to first nine months2013. Operating earnings in first nine months2014 included asset impairments and restructuring charges of $10 million primarily for the closure of a production facility in Taiwan for the Flexvue^® product line and $4 million of asset impairments related to a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site. Excluding non-core or non-recurring items, operating earnings increased in first nine months2014 compared to first nine months2013 primarily due to $35 million of higher sales volume in specialty plastics product lines and interlayers with acoustic properties, partially offsetting $12 million of lower sales volume for performance films product lines.

The Company expects to complete the current expansion of Eastman Tritan^TM copolyester capacity at its Kingsport, Tennessee manufacturing facility by the end of 2014. An additional expansion of Eastman Tritan^TM copolyester capacity began in fourth quarter 2014 and is expected to be operational in early 2017.

The Company is also progressing on enhancements and innovations to improve its cost position in its polyvinyl butyral ("PVB") resin technology supporting growth in the transportation and building and construction markets in the Asia Pacific region. The Company continues to evaluate timing of a capacity expansion at the Kuantan, Malaysia PVB manufacturing facility.

In March 2014, the Company entered into a definitive agreement to acquire CLC, a specialty films business. The acquisition is expected to be completed by the end of 2014.

Fibers Segment

	Third Quarter									First Nine Months
					Change									Change
(Dollars in millions)	2014		2013		$			%		2014		2013		$			%
Sales	$	346	$	363	$	(17	)	(5	)%	$	1,086	$	1,072	$	14		1	%
Volume effect					(29		)	(8	)%					(31		)	(3	)%
Price effect					11			3	%					42			4	%
Exchange rate effect					1			—	%					3			—	%
Operating earnings	112		113		(1		)	(1	)%	352		343		9			3	%

Sales revenue in third quarter2014 decreased compared to third quarter2013 primarily due to lower acetate tow sales volume, partially offset by higher selling prices and increased sales of acetate flake to Eastman's China acetate tow joint venture. The lower acetate tow sales volume was attributed to additional industry capacity including Eastman's China acetate tow joint venture, relatively unchanged demand in China resulting in a reduction of imports, and customer buying patterns.

Sales revenue in first nine months2014 increased compared to first nine months2013 primarily due to higher acetate flake sales volume to Eastman's China acetate tow joint venture and higher selling prices more than offsetting lower acetate tow sales volume. The lower acetate tow sales volume was attributed to additional industry capacity including Eastman's China acetate tow joint venture, relatively unchanged demand in China resulting in a reduction of imports, and customer buying patterns.

Operating earnings in third quarter2014 were relatively unchanged compared to third quarter2013 as higher selling prices and lower raw material and energy costs of $20 million were offset by $21 million of lower acetate tow sales volume and related lower capacity utilization resulting in higher unit costs.

43

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Operating earnings in first nine months2014 increased compared to first nine months2013 primarily due to higher selling prices and lower raw material and energy costs of $54 million more than offsetting $39 million of lower acetate tow sales volume and related lower capacity utilization resulting in higher unit costs.

Results from the China acetate tow joint venture are reported as an equity investment in "Other (income) charges, net" within the Unaudited Consolidated Statements of Earnings.

Specialty Fluids & Intermediates Segment

	Third Quarter								First Nine Months
					Change								Change
(Dollars in millions)	2014		2013		$		%		2014		2013		$			%
Sales	$	650	$	620	$	30	5	%	$	1,884	$	1,904	$	(20	)	(1	)%
Volume effect					3		1	%					(72		)	(4	)%
Price effect					26		4	%					50			3	%
Exchange rate effect					1		—	%					2			—	%
Operating earnings	90		90		—		—	%	248		302		(54		)	(18	)%
Additional costs of acquired inventories	6		—						8		—
Asset impairments and restructuring charges, net	—		—						—		1
Operating earnings excluding non-core or non-recurring items	96		90		6		7	%	256		303		(47		)	(16	)%

Sales revenue in third quarter2014 increased compared to third quarter2013 mainly due to higher selling prices in intermediates product lines, primarily attributed to decreased industry supply in multiple intermediates product markets, partially offset by lower selling prices for heat transfer fluids. Sales volume increased slightly due to acquired aviation turbine oil products sales in third quarter 2014 mostly offset by lower intermediates product lines and heat transfer fluids sales volume.

Sales revenue in first nine months2014 decreased compared to first nine months2013 due to lower sales volume in specialty fluids partially offset by higher sales volume of the acquired aviation turbine oil product lines. In addition, sales volume declined due to the impact of the first quarter weather-related outage at the Longview, Texas site and the second quarter unplanned shutdown at the Kingsport site. Sales revenue was also negatively impacted by lower sales volume for olefin-based intermediates product lines resulting from increased use of intermediates in the manufacture of higher-value downstream derivatives in other segments. The sales revenue decrease was partially offset by higher selling prices and higher sales volume for acetyl-based product lines.

Operating earnings in third quarter 2014 included $6 million of additional costs of the acquired aviation turbine oil business inventories. Excluding non-core or non-recurring items, operating earnings increased in third quarter2014 primarily due to higher selling prices for intermediates product lines exceeding higher raw material and energy costs by $8 million and $7 million of sales volume of the acquired aviation turbine oil products partially offset by $5 million of lower heat transfer fluids sales revenue.

Operating earnings in first nine months2014 included $8 million of additional costs of the acquired aviation turbine oil business inventories. Excluding non-core or non-recurring items, operating earnings decreased in first nine months2014 primarily due to higher raw material and energy costs, particularly for propane in the first half of the year, exceeding higher selling prices by $22 million and $17 million from lower sales volume and related lower capacity utilization resulting in higher unit costs.

The Therminol^® heat transfer fluid capacity expansion in Newport, Wales is expected to be operational in the first half 2015 to support expected demand in the industrial chemicals and processing market.

44

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

In 2012, the Company entered into an agreement with Enterprise Products Partners L.P. to purchase propylene from a planned propane dehydrogenation plant expected to be operational in 2016, which is expected to further improve the Company's competitive cost position compared to purchasing olefins in the North American market. Prior to completion of the plant, the Company continues to benefit from a propylene market contract improving its cost position for purchased propylene. The Company continues to actively pursue options with third parties for monetizing the Company's excess ethylene capacity while retaining its cost-advantaged integrated position to propylene.

The Company is also actively pursuing licensing opportunities for acetyls, oxo derivatives, and mono ethylene glycol, including the development, in conjunction with a third party, of advanced proprietary technology for the production of mono ethylene glycol from synthesis gas-based feedstocks.

On June 2, 2014, the Company acquired the aviation turbine oil business. In combination with Eastman's Skydrol^® aviation hydraulic fluids business, the acquired aviation turbine oil business enables Eastman to better supply the global aviation industry. Beginning in June, the Company's consolidated results of operations included the results of the acquired aviation turbine oil business.

Other

	Third Quarter						First Nine Months
(Dollars in millions)	2014			2013			2014			2013
Sales	$	8		$	6		$	9		$	18
Operating loss
Growth initiatives and businesses not allocated to segments	$	(18	)	$	(20	)	$	(46	)	$	(73	)
Pension and other postretirement benefit income (expense) not allocated to operating segments	3			87			9			93
Acquisition transaction, integration, and restructuring costs	(14		)	(12		)	(36		)	(33		)
Operating loss before exclusions	(29		)	55			(73		)	(13		)
Acquisition transaction costs	7			—			10			—
Acquisition integration costs	5			9			21			24
Mark-to-market pension and other postretirement benefits gain	—			(86		)	—			(86		)
Asset impairments and restructuring charges (gains), net	2			3			—			22
Operating loss excluding non-core or non-recurring items	$	(15	)	$	(19	)	$	(42	)	$	(53	)

Sales revenue and costs related to growth initiatives, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results for any of the periods presented and are shown as "other" sales revenue and "other" operating earnings (loss) when applicable. Third quarter and first nine months2014 include revenues from the acquired Knowlton business, part of the Eastman^TM microfibers technology platform. Due to decisions made by management in 2013 not to continue its Perennial Wood^TM growth initiative and to shut-down the Photovoltaics product line there were no related sales revenues or costs in third quarter or first nine months2014.  For more information, see Note 17, "Segment Information", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Included in third quarter and first nine months2014 operating losses are transaction costs of $7 million and $10 million, respectively, for the pending acquisitions of Taminco and CLC, and the completed acquisition of the aviation turbine engine oil business. Included in third quarter and first nine months2014 operating losses are integration costs of $5 million and $21 million, respectively, for the acquired Solutia, aviation turbine oil, and Knowlton businesses. Included in third quarter and first nine months2014 operating losses are $2 million and $5 million, respectively for severance related to the continued integration of Solutia. Included in first nine months2014 is a $5 million gain for sales of previously impaired assets at the former Photovoltaics production facility in Germany.

45

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Included in third quarter and first nine months2013 operating losses are Solutia integration costs of $9 million and $24 million, respectively. First nine months2013 operating losses also included $13 million of asset impairments and restructuring charges primarily for the closure of a production facility in Germany for the Photovoltaics product line. In third quarter and first nine months2013, there were $3 million and $9 million, respectively, of restructuring charges primarily for severance associated with the continued integration of Solutia. For more information, see Note 14, "Asset Impairments and Restructuring Charges (Gains), Net", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In third quarter and first nine months2013, pension income (expense) and gain (loss) not allocated to operating segments included an $86 million MTM gain due to the interim remeasurement of the Eastman other postretirement benefit plan obligation which was triggered by a plan change in life insurance benefits. The actuarial gain was primarily due to a higher assumed discount rate in third quarter 2013 compared to December 31, 2012 reflective of changes in global market conditions and interest rates on high-grade corporate bonds. For more information, see Note 8, "Retirement Plans", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Excluding non-core or non-recurring items, the lower operating losses in first nine months2014 were primarily due to decisions made by management in 2013 not to continue its Perennial Wood™ growth initiative and to shut-down the Photovoltaics product line, including the primary production facility in Germany.

The Company continues to explore and invest in growth initiatives at a corporate level that are aligned with macro trends in sustainability, consumerism, and energy efficiency through high performance materials, advanced cellulosics, and environmentally-friendly chemistry.  One of these initiatives is Eastman^TM microfiber technology platform.

SUMMARY BY CUSTOMER LOCATION

	Sales Revenue
	Third Quarter
(Dollars in millions)	2014		2013		Change
United States and Canada	$	1,131	$	1,069	6	%
Asia Pacific	631		658		(4	)%
Europe, Middle East, and Africa	520		481		8	%
Latin America	131		130		1	%
	$	2,413	$	2,338	3	%

Sales revenue in United States and Canada increased in third quarter2014 compared to third quarter2013 primarily due to higher sales revenue in the SFI segment, particularly in intermediates product lines, and higher sales revenue in the A&P segment, primarily due to higher sales volume in both plasticizers and adhesives resins product lines.

Sales revenue in Asia Pacific decreased in third quarter2014 compared to third quarter2013 primarily due to lower sales revenue in the Fibers segment, particularly for acetate tow, and lower sales revenue in the SFI segment, particularly for olefin-based intermediates product lines, partially offset by higher sales revenue in the AM segment, primarily for specialty plastics product lines.

Sales revenue in Europe, Middle East, and Africa increased in third quarter2014 compared to third quarter2013 primarily due to higher sales revenue in the Fibers segment, particularly for acetate tow, and higher sales revenue in the A&P segment, particularly for higher sales volume in adhesive resins product lines.

Sales revenue in Latin America increased slightly in third quarter2014 compared to third quarter2013 primarily due to higher sales revenue in the SFI and Fibers segments, partially offset by lower sales revenue in the A&P segment.

46

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

	Sales Revenue
	First Nine Months
(Dollars in millions)	2014		2013		Change
United States and Canada	$	3,342	$	3,271	2	%
Asia Pacific	1,886		1,935		(3	)%
Europe, Middle East, and Africa	1,578		1,503		5	%
Latin America	372		376		(1	)%
	$	7,178	$	7,085	1	%

Sales revenue in United States and Canada increased in first nine months2014 compared to first nine months2013 primarily due to higher sales revenue in the SFI, AFP, and A&P segments, partially offset by lower sales revenue in the AM segment.

Sales revenue in Asia Pacific decreased in first nine months2014 compared to first nine months2013 primarily due to lower sales revenue in the SFI segment, particularly for olefin-based intermediates product lines, and lower sales revenue in the Fibers segment, primarily for acetate tow, partially offset by higher sales revenue in the AM segment, primarily in specialty plastics product lines.

Sales revenue in Europe, Middle East, and Africa increased in first nine months2014 compared to first nine months2013 primarily due to higher sales revenue in the A&P segment, particularly in adhesives resins product lines, and higher sales revenue in the Fibers segment, primarily for acetate tow, and higher sales revenue in the AFP segment.

Sales revenue in Latin America decreased in first nine months2014 compared to first nine months2013 primarily due to lower sales revenue in the A&P, AFP, and SFI segments, partially offset by higher sales revenue in the AM and Fibers segments.

With a substantial portion of sales to customers outside the United States, Eastman is subject to the risks associated with operating in international markets.  To mitigate its exchange rate risks, the Company frequently seeks to negotiate payment terms in U.S. dollars or euros.  In addition, where it deems such actions advisable, the Company engages in foreign currency hedging transactions and requires letters of credit and prepayment for shipments where its assessment of individual customer and country risks indicates their use is appropriate.  For additional information concerning these practices, see Note 10, "Derivatives", to the consolidated financial statements in Part II, Item 8 and Part II, Item 7A "Qualitative and Quantitative Disclosures About Market Risk" of the Company's 2013 Annual Report on Form 10-K and "Forward-Looking Statements and Risk Factors" of this Quarterly Report on Form 10-Q.

LIQUIDITY, CAPITAL RESOURCES, AND OTHER FINANCIAL INFORMATION

Cash and Cash Flows

	First Nine Months
(Dollars in millions)	2014			2013
Net cash provided by (used in)
Operating activities	$	949		$	794
Investing activities	(718		)	(308		)
Financing activities	(251		)	(517		)
Effect of exchange rate changes on cash and cash equivalents	(5		)	4
Net change in cash and cash equivalents	(25		)	(27		)
Cash and cash equivalents at beginning of period	237			249
Cash and cash equivalents at end of period	$	212		$	222

Cash provided by operating activities was $949 million in first nine months2014 compared with cash provided by operating activities of $794 million in first nine months2013.  The increase in cash from operating activities was primarily due to lower tax payments and timing of pension funding.

47

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Cash used in investing activities increased $410 million in first nine months2014 compared with first nine months2013. The increase was primarily due to cash used for the acquisitions of the aviation turbine oil business and Knowlton in first nine months2014. Cash used for additions to properties and equipment was $406 million in first nine months 2014 and $312 million in first nine months 2013.

Cash used in financing activities was $251 million in first nine months2014 compared with $517 million used in first nine months2013.  During first nine months 2014, the Company had net proceeds of $490 million from the issuance of new debt and repaid $185 million of commercial paper borrowings. During first nine months2013, the Company had net proceeds of $300 million from commercial paper borrowings and $150 million from its accounts receivable securitization facility (the "A/R Facility"), and repaid $800 million of borrowings under the Term Loan. Share repurchases totaled $410 million in first nine months 2014 compared with $113 million in first nine months 2013. Dividend payments were $159 million in first nine months 2014 and $94 million in first nine months 2013. The fourth quarter 2012 dividend of $45 million was paid in December 2012 rather than January 2013.

In 2014, the Company expects capital expenditures of approximately $575 million and funding of its U.S. defined benefit pension plans of $120 million.  The priorities for uses of available cash in 2014 are funding growth initiatives and returning cash to stockholders by dividend payments and stock repurchases.

Liquidity and Capital Resources

The Company had access to the sources of liquidity described below.

In October 2014, the Company entered into a $1.25 billion revolving credit agreement (the "Credit Facility") expiring October 2019.  The Credit Facility amends and extends, and has terms substantially similar to, the $1 billion revolving credit agreement entered into in October 2013 (the "Prior Credit Facility").  Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. At September 30, 2014 and December 31, 2013, the Company had no outstanding borrowings under the Credit Facility.

The Credit Facility provides liquidity support for commercial paper borrowings and general corporate purposes.  Accordingly, any outstanding commercial paper borrowings reduce capacity for borrowings available under the Credit Facility.  Given the expiration date of the Credit Facility, any commercial paper borrowings supported by the Credit Facility are classified as long-term borrowings because the Company has the ability and intent to refinance such borrowings on a long-term basis. At September 30, 2014 the Company's commercial paper borrowings were $240 million with a weighted average interest rate of 0.31 percent. At December 31, 2013 the Company's commercial paper borrowings were $425 million with a weighted average interest rate of 0.35 percent.

In August 2014, the Company amended a $250 million line of credit under its A/R Facility, extending the maturity to April 2017.  The amended A/R Facility has terms substantially similar to the $250 million accounts receivable securitization agreement previously expiring April 2016.  Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and the Company pays a fee to maintain availability of the A/R Facility.  At September 30, 2014 and December 31, 2013 the Company had no outstanding borrowings under the A/R Facility. During first quarter 2014, $125 million of the available amount under the A/R Facility was borrowed and then repaid during second quarter 2014.

The Credit Facility and the A/R Facility contain a number of customary covenants and events of default, including the maintenance of certain financial ratios. The Company was in compliance with all such covenants for all periods presented.  Total available borrowings under the Credit Facility and A/R Facility were $1.01 billion and $825 million as of September 30, 2014 and December 31, 2013, respectively. The Company would not violate applicable covenants for these periods if the total available amounts of the facilities had been borrowed.

48

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

On October 9, 2014, Eastman entered into a $1.0 billion five-year Term Loan Agreement (the "Term Loan Agreement") and a $1.75 billion Senior Bridge Loan Credit Agreement (the "Bridge Loan Agreement"). Eastman intends to use financing from the Term Loan Agreement and, in certain circumstances, the Bridge Loan Agreement, to pay, in part, for the pending acquisition of Taminco and a portion of the fees and expenses related to the acquisition, which may include the repayment of certain outstanding borrowings of Taminco. In addition, Eastman expects to offer new public debt securities prior to or following the completion of the acquisition. The commitments of the lenders under the Bridge Loan Agreement will be reduced on a dollar-for-dollar basis by any proceeds Eastman receives from any offering of debt securities. Each of the Term Loan Agreement and the Bridge Loan Agreement contains certain customary representations, warranties and covenants, including maintenance of certain financial ratios. The Company has been in compliance with all such covenants since October 9, 2014.

In first nine months2014, the Company made $47 million in contributions to its U.S. defined benefit pension plans. In 2014, the Company expects U.S. defined benefit pension plan funding of $120 million, of which approximately $47 million is the minimum required cash contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.  Excess contributions are periodically made by management in order to keep the plans' funded status above 80 percent under the funding provisions of the Pension Protection Act to avoid partial benefit restrictions on accelerated forms of payment. The Company's U.S. defined benefit pension plans are not currently under any benefit restrictions.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments.  An analysis of trends including the aging of accounts receivable and days sales outstanding is performed on a regular basis in order to ensure appropriate adjustments are made to the allowance for doubtful accounts in a timely manner.  No significant variances were identified in the trend analysis performed for third quarter2014 compared to third quarter 2013.  The Company believes, based on historical results and its regular analysis, the likelihood of write-offs having a material impact on financial results is remote.

Cash flows from operations, cash and cash equivalents, and the other sources of liquidity described above are expected to be available and sufficient to meet foreseeable cash requirements.  However, the Company's cash flows from operations can be affected by numerous factors including risks associated with global operations, raw material availability and cost, demand for and pricing of Eastman's products, capacity utilization, and other factors described under "Forward-Looking Statements and Risk Factors" below.  Eastman management believes maintaining a financial profile consistent with an investment grade credit rating is important to its long-term strategic and financial flexibility.

Capital Expenditures

Capital expenditures were $406 million and $312 million in first nine months2014 and 2013, respectively.  The expenditures in first nine months2014 were primarily for improvements to plants, purchases of equipment, and organic growth initiatives particularly in the SFI and AM segments.  The expenditures in first nine months 2013 were primarily for improvements to plants, purchases of equipment, and organic growth initiatives particularly in the SFI and AM segments. The Company expects that 2014 capital spending will be approximately $575 million, including capital investment that will modernize and expand the Kingsport, Tennessee site, and a Therminol^® heat transfer fluid capacity expansion in Newport, Wales.

Environmental Matters

Certain Eastman manufacturing sites generate hazardous and nonhazardous wastes, the treatment, storage, transportation, and disposal of which are regulated by various governmental agencies.  In connection with the cleanup of various hazardous waste sites, the Company, along with many other entities, has been designated a potentially responsible party ("PRP"), by the U.S. Environmental Protection Agency under the Comprehensive Environmental Response, Compensation and Liability Act, which potentially subjects PRPs to joint and several liability for such cleanup costs.  In addition, the Company will be required to incur costs for environmental remediation and closure and postclosure under the federal Resource Conservation and Recovery Act.  Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K. The Company's total reserve for environmental contingencies was $350 million and $368 million at September 30, 2014 and December 31, 2013, respectively.  At September 30, 2014 and December 31, 2013, this reserve included $10 million and $9 million, respectively, related to sites previously closed and impaired by Eastman and sites that have been divested by Eastman but for which the Company retains the environmental liability related to these sites.

49

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Estimated future environmental expenditures for remediation costs ranged from the minimum or best estimate of $329 million to the maximum of $568 million and from the minimum or best estimate of $341 million to the maximum of $581 million at September 30, 2014 and December 31, 2013, respectively.  The maximum estimated future costs are considered to be reasonably possible and are inclusive of the amounts accrued at both September 30, 2014 and December 31, 2013.  Although the resolution of uncertainties related to these environmental matters may have a material adverse effect on the Company's consolidated results of operations in the period recognized, because of the availability of legal defenses, the Company's preliminary assessment of actions that may be required, and if applicable, the expected sharing of costs, management does not believe that the Company's liability for these environmental matters, individually or in the aggregate, will be material to the Company's consolidated financial position or cash flows.  

The best estimate accrued to date over the facilities' estimated useful lives for asset retirement obligation costs was $21 million and $27 million at September 30, 2014 and December 31, 2013, respectively.  

Reserves for environmental remediation that management believes to be probable and estimable are recorded as current and long-term liabilities in the Unaudited Consolidated Statements of Financial Position. These reserves include liabilities expected to be paid out within 30 years. Changes in the reserves for environmental remediation liabilities during first nine months2014 including net charges taken, which are included in cost of goods sold, and cash reductions are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2013	$	341
Net charges taken	7
Cash reductions	(19		)
Balance at September 30, 2014	$	329

Other Commitments

At September 30, 2014, the Company's obligations under notes and debentures and credit facilities totaled $4.6 billion to be paid over a period of approximately 30 years.  See Note 6, "Borrowings", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The Company had various purchase obligations at September 30, 2014 totaling $2.0 billionover a period of approximately 30 years for materials, supplies, and energy incident to the ordinary conduct of business.  The Company also had various lease commitments for property and equipment under cancelable, noncancelable, and month-to-month operating leases totaling approximately $254 million over a period of approximately 45 years.  Of the total lease commitments, approximately 55 percent relate to real property, including office space, storage facilities, and land; approximately 35 percent relate to railcars; and approximately 10 percent relate to machinery and equipment, including computer and communications equipment and production equipment.

In addition, the Company had other liabilities at September 30, 2014, totaling $1.8 billion related primarily to pension, retiree medical, other postretirement obligations, and environmental reserves.

As of September 30, 2014, there have been no material changes to the Company's commitments at December 31, 2013. See Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Company's 2013 Annual Report on Form 10-K.

Off Balance Sheet and Other Financing Arrangements

If certain operating leases are terminated by the Company, it has guaranteed a portion of the residual value loss, if any, incurred by the lessors in disposing of the related assets.  For information on the Company's residual value guarantees, see Note 9, "Commitments", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

50

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Guarantees and claims also arise during the ordinary course of business from relationships with joint venture partners, suppliers, customers, and other parties when the Company undertakes an obligation to guarantee the performance of others, if specified triggering events occur.  Non-performance under a contract could trigger an obligation of the Company.  The Company's current other guarantees include guarantees relating primarily to intellectual property, environmental matters, and other indemnifications and have arisen through the normal course of business.  The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these claims, if they were to occur.  These other guarantees have terms between 1 and 20 years with maximum potential future payments of $32 million in the aggregate, with none of these guarantees being individually significant to the Company's operating results, financial position, or liquidity.  The Company's current expectation is that future payment or performance related to non-performance under other guarantees is considered remote.

Treasury Stock

In February 2011, the Company's Board of Directors authorized repurchase of up to $300 million of the Company's outstanding common stock.  The Company completed the $300 million of repurchases in August 2013, acquiring a total of 6,141,999 shares.

In May 2013, the Company's Board of Directors authorized repurchase of up to $300 million of the Company's outstanding common stock.  The Company completed the $300 million of repurchases in March 2014, acquiring a total of 3,840,949 shares.

In February 2014, the Company's Board of Directors authorized repurchase of up to an additional $1 billion of the Company's outstanding common stock at such times, in such amounts, and on such terms, as determined to be in the best interests of the Company. As of September 30, 2014, a total of 2,933,029 shares have been repurchased under this authorization for a total amount of $250 million.

During first nine months2014, the Company repurchased 4,945,452 shares of common stock for a cost of approximately $410 million.

Dividends

The Company declared cash dividends of $0.35 and $0.30 per share in third quarter2014 and 2013, respectively, and $1.05 and $0.90 per share in first nine months2014 and 2013, respectively.

RECENTLY ISSUED ACCOUNTING STANDARDS

For information regarding the impact of recently issued accounting standards, see Note 18 "Recently Issued Accounting Standards", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

2014 OUTLOOK    

Eastman is focused on achieving consistent earnings growth through a market-driven approach that takes advantage of the Company's existing technology platforms, global marketing and manufacturing presence, leading positions in end markets, and vertically integrated manufacturing streams. This focus is supported by the Company's geographic and end-market diversity as it serves global markets, including emerging economies with above average growth rates, and offers both original equipment manufacturing and after-market products in a variety of end markets, such as transportation, building and construction, and consumables.

The Company expects its fourth quarter 2014 revenue growth will approximate global GDP growth.

51

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The Company expects that market prices for commodity products and raw material and energy costs will continue to be volatile, and the Company will continue to use pricing and hedging strategies to mitigate this volatility.

For 2014, the Company also expects:

• operating results to benefit from capacity expansions and improved product mix;

• cash generated by operating activities of approximately $1.4 billion;

• capital spending to be approximately $575 million;

• to fund growth initiatives, dividend payments, and stock repurchases; and

• its full year tax rate on reported earnings before income tax to be approximately 28 percent, excluding non-core or non-recurring items.

Based on the foregoing expectations, the strength of the Company's differentiated portfolio of businesses, and expected costs of a planned maintenance shutdown of an olefins cracking unit at the Longview, Texas site in fourth quarter, the Company expects full year 2014 earnings per share to approach $7.00 per share. Non-core or non-recurring costs, charges, losses, or gains are excluded from the earnings per share projection.

See "Forward-Looking Statements and Risk Factors" below.

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

Certain statements made in this Quarterly Report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements are all statements, other than statements of historical fact, that may be made by us from time to time. In some cases, you can identify forward-looking statements by terminology such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would," and similar expressions or expressions of the negative of these terms. Forward-looking statements may relate to, among other things, such matters as planned and expected capacity increases and utilization; anticipated capital spending; expected depreciation and amortization; environmental matters; pending and future legal proceedings; exposure to, and effects of hedging of, raw material and energy costs, foreign currencies and interest rates; global and regional economic, political, and business conditions; competition; growth opportunities; supply and demand, volume, price, cost, margin and sales; earnings, cash flow, dividends and other expected financial results and conditions; expectations, strategies, and plans for individual assets and products, businesses, and segments as well as for the whole of Eastman; cash requirements and uses of available cash; financing plans and activities; pension expenses and funding; credit ratings; anticipated and other future restructuring, acquisition, divestiture, and consolidation activities; cost reduction and control efforts and targets; the timing and costs of, and benefits from, the integration of, and expected business and financial performance of, acquired businesses; strategic initiatives and development, production, commercialization and acceptance of new products, services and technologies and related costs; asset, business and product portfolio changes; and expected tax rates and net interest costs.

Forward-looking statements are based upon certain underlying assumptions as of the date such statements were made. Such assumptions are based upon internal estimates and other analyses of current market conditions and trends, management expectations, plans, and strategies, economic conditions, and other factors. Forward-looking statements and the assumptions underlying them are necessarily subject to risks and uncertainties inherent in projecting future conditions and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions and expectations proves to be inaccurate or is unrealized. In addition to the factors described elsewhere in this Quarterly Report, the following are the most significant known factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

The Company cautions you not to place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report. Additional factors not presently known to the Company, or that the Company does not currently believe to be material, may also cause actual results to differ materially from expectations. Except as may be required by law, the Company undertakes no obligation to update or alter these forward-looking statements, whether as a result of new information, future events, or otherwise.

52

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Uncertain conditions in the global economy and the financial markets could negatively impact the Company.

Uncertain conditions in the global economy and global capital markets may adversely affect the Company's results of operations, financial condition, and cash flows. The Company's business and operating results were affected by the impact of the most recent global recession, including the credit market crisis, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, and other challenges that affected the global economy. If the global economy or financial markets again deteriorate or experience significant new disruptions, the Company's results of operations, financial condition, and cash flows could be materially adversely affected; in addition the Company's ability to access the credit and capital markets under attractive rates and terms could be constrained, which may negatively impact the Company's liquidity or ability to pursue certain growth initiatives.

Volatility in costs for strategic raw material and energy commodities or disruption in the supply of these commodities could adversely affect our financial results.

The Company is reliant on certain strategic raw material and energy commodities for its operations and utilizes risk management tools, including hedging, as appropriate, to mitigate short-term market fluctuations in raw material and energy costs. These risk mitigation measures cannot eliminate all exposure to market fluctuations. In addition, natural disasters, plant interruptions, changes in laws or regulations, war or other outbreak of hostilities or terrorism, and breakdown or degradation of transportation infrastructure used for delivery of strategic raw material and energy commodities, could adversely impact both the cost and availability of these commodities.

The Company's business is subject to operating risks common to chemical manufacturing businesses, any of which could disrupt manufacturing operations or related infrastructure and adversely affect results of operations.

As a global specialty chemicals manufacturing company, our business is subject to operating risks common to chemical manufacturing, storage, handling, and transportation. Significant limitation on the Company's ability to manufacture products due to disruption of manufacturing operations or related infrastructure could have a material adverse effect on the Company's sales revenue, costs, results of operations, and financial condition. Disruptions could occur due to internal factors such as computer or equipment malfunction (accidental or intentional), operator error, or process failures; or external factors such as computer or equipment malfunction at third-party service providers, natural disasters, pandemic illness, changes in laws or regulations, war or other outbreak of hostilities or terrorism, cyber attacks, or breakdown or degradation of transportation infrastructure used for delivery of supplies to the Company or for delivery of products to customers. The Company has in the past experienced cyber attacks and breaches of its computer information systems, and although none of these has had a material adverse effect on the Company's operations, no assurances can be provided that any future disruptions due to these, or other, circumstances will not have a material effect on operations. Such disruptions could result in an unplanned event that could be significant in scale and could negatively impact operations, neighbors, and the environment, and could have a negative impact on the Company's results of operations.

Loss or financial weakness of any of the Company's largest customers could adversely affect our financial results.

Although the Company has an extensive customer base; loss of, or material financial weakness of, certain of our largest customers could adversely affect the Company's financial condition and results of operations until such business is replaced. No assurances can be made that the Company would be able to regain or replace any lost customers.

53

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Growth initiatives may not achieve desired business or financial objectives and may require a significant use of resources in excess of those estimated or budgeted for such initiatives.

The Company continues to identify and pursue growth opportunities through both internal (or "organic") development and acquisitions and joint ventures to diversify and extend the portfolio of our businesses. These growth opportunities include development and commercialization or licensing of innovative new products and technologies and related employee leadership, expertise, and skill development and retention, expansion into new markets and geographic regions, and alliances, ventures, and acquisitions that complement and extend the Company's portfolio of businesses and capabilities. There can be no assurance that such innovation, development and commercialization or licensing efforts, investments, or acquisitions and alliances (including integration of acquired businesses) will result in financially successful commercialization of products, or acceptance by existing or new customers, or successful entry into new markets or otherwise achieve their underlying strategic business objectives or that they will be beneficial to the Company's results of operations. There also can be no assurance regarding the timing of completion of proposed acquisitions or licensing, expected benefits of proposed acquisitions or licensing, completion of integration plans, and synergies therefrom. There also can be no assurance that capital projects for growth efforts can be completed within the time or at the costs projected due, among other things, to demand for and availability of construction materials and labor and obtaining regulatory approvals and operating permits and reaching agreement on terms of key agreements and arrangements with potential suppliers and customers. Any such delays or cost overruns or the inability to obtain such approvals or to reach such agreements on acceptable terms could negatively affect the returns from any proposed or current investments and projects.

Significant acquisitions expose the Company to risks and uncertainties, the occurrence of any of which could materially adversely affect the Company's business, financial condition, and results of operations.

While acquisitions have been and continue to be a part of the Company's growth strategy, acquisition of large companies (such as the acquisition of Solutia and the pending acquisition of Taminco) subjects the Company to a number of risks and uncertainties, the occurrence of any of which could have a material adverse effect on Eastman. These include, but are not limited to the possibility that the financial performance of the acquired business may be significantly worse than expected; that significant additional indebtedness may constrain the Company's ability to access the credit and capital markets at attractive interest rates and favorable terms, which may negatively impact the Company's liquidity or ability to pursue certain growth initiatives; that the Company may not be able to achieve the cost, revenue, tax, or other "synergies" expected from any acquisition, or that there may be delays in achieving any such synergies; and that the Company may be required to expend significant additional resources in order to integrate any acquired business into Eastman or that the integration efforts will not achieve the expected benefits.

Legislative or regulatory actions could increase the Company's future compliance costs.

The Company and its facilities and businesses are subject to complex, health, safety and environmental laws and regulations, which require and will continue to require significant expenditures to remain in compliance with such laws and regulations. The Company's accruals for such costs and associated liabilities are subject to changes in estimates on which the accruals are based. For example, any amount accrued for environmental matters reflects the Company's assumptions about remediation requirements at the contaminated site, the nature of the remedy, the outcome of discussions with regulatory agencies and other potentially responsible parties at multi-party sites, and the number and financial viability of other potentially responsible parties. Changes in the estimates on which the accruals are based, unanticipated government enforcement action, or changes in health, safety, environmental, chemical control regulations, and testing requirements could result in higher costs. Specifically, pending and proposed U.S. Federal legislation and regulation increase the likelihood that the Company's manufacturing sites will in the future be impacted by regulation of greenhouse gas emissions and energy policy, which legislation and regulation, if enacted, may result in capital expenditures, increases in costs for raw materials and energy, limitations on raw material and energy source and supply choices, and other direct compliance costs.

54

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

In addition to the foregoing most significant known risk factors to the Company, there may be other factors, not currently known to the Company, which could, in the future, materially adversely affect the Company, its business, financial condition, or results of operations. The foregoing discussion of the most significant risk factors to the Company does not necessarily present them in order of importance. This disclosure, including that under "Outlook" and other forward-looking statements and related disclosures made by the Company in this Quarterly Report and elsewhere from time to time, represents management's best judgment as of the date the information is given. The Company does not undertake responsibility for updating any of such information, whether as a result of new information, future events, or otherwise, except as required by law. Investors are advised, however, to consult any further public Company disclosures (such as in filings with the Securities and Exchange Commission or in Company press releases) on related subjects.

55

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential negative impact of adverse changes in prices or rates on a firm’s net income. Eastman Chemical Company ("Eastman" or the "Company") has exposure to various market risks from changes in the prices of various commodities, interest rates, and foreign currency exchange rates. In an effort to manage these risks, the Company enters into derivative contracts which are governed by policies, procedures, and internal processes set forth by its Board.

The Company determines its exposures to market risk by utilizing sensitivity analyses, which measure the potential losses in fair value resulting from one or more selected hypothetical changes in interest rates, foreign currency exchange rates, or commodity prices. For more information regarding exposures, refer to Part II, Item 7A of the Company's 2013 Annual Report on Form 10-K.

For purposes of calculating the market risks associated with the fair value of interest-rate-sensitive instruments, the Company uses a one hundred basis point shift in interest rates.  At September 30, 2014 and December 31, 2013, the market risk associated with the fair value of interest-rate-sensitive instruments, assuming a one hundred basis point change in interest rates was approximately $352 million and $274 million, respectively, on long-term borrowings with the increase primarily attributed to the second quarter 2014 issuance of new 4.65% bonds maturing 2044. In addition, the market risk associated with interest rate swaps hedging the interest rate risk on the 3.6% bonds maturing 2022 and interest rate swaps for the future issuance of debt was $28 million at September 30, 2014. There were no interest rate swaps at December 31, 2013.

At September 30, 2014, the market risk associated with certain cash flows denominated in certain foreign currencies assuming a 10 percent adverse move in the U.S. dollar relative to these foreign currencies was approximately $116 million, with an additional $12 million exposure for each additional one percentage point adverse change in those foreign currency rates.  At December 31, 2013, the market risk associated with certain cash flows denominated in certain foreign currencies assuming a 10 percent adverse move in the U.S. dollar relative to these foreign currencies was approximately $137 million, with an additional $14 million exposure for each additional one percentage point adverse change in those foreign currency rates.  Since the Company utilizes currency-sensitive derivative instruments for hedging anticipated foreign currency transactions, a loss in fair value from those instruments is generally offset by an increase in the value of the underlying anticipated transactions.

At September 30, 2014, the market risk associated with derivative contracts for feedstocks and natural gas, assuming an instantaneous parallel shift in the underlying commodity price of 10 percent, was $84 million with an additional $9 million exposure for each one percentage point move in closing price thereafter.  At December 31, 2013, the market risk associated with these derivative contracts, assuming an instantaneous parallel shift in the underlying commodity price of 10 percent, was $30 million, with less than an additional $3 million exposure for each one percentage point move in closing price thereafter. The increase in market risk in September 2014 compared to December 2013 was due to a significantly larger commodity derivative portfolio at September 30, 2013.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures.  Based on that evaluation, the CEO and CFO have concluded that as of September 30, 2014, the Company's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed was accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company's internal control over financial reporting that occurred during the third quarter of 2014 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

56

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

General

From time to time, Eastman Chemical Company ("Eastman" or the "Company") and its operations are parties to, or targets of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which are being handled and defended in the ordinary course of business. While the Company is unable to predict the outcome of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters (including those described below) will have a material adverse effect on its overall financial condition, results of operations, or cash flows.

Solutia Legacy Torts Claims Litigation

Pursuant to an Amended and Restated Settlement Agreement effective February 28, 2008 between Solutia Inc. ("Solutia") and Monsanto Company ("Monsanto") in connection with Solutia's emergence from Chapter 11 bankruptcy proceedings (the "Monsanto Settlement Agreement"), Monsanto is responsible to defend and indemnify Solutia against any Legacy Tort Claims (as defined in the Monsanto Settlement Agreement) and Solutia agreed to retain responsibility for certain tort claims, if any, that may arise from Solutia's conduct after its spinoff from Pharmacia Corporation ("Pharmacia") (f/k/a Monsanto), which occurred on September 1, 1997. Solutia, which became a wholly owned subsidiary of Eastman on July 2, 2012 upon the Company's acquisition of Solutia, has been named as a defendant in several such proceedings, and has submitted the matters to Monsanto as Legacy Tort Claims. To the extent these matters are not within the meaning of Legacy Tort Claims, Solutia could potentially be liable thereunder. In connection with the completion of its acquisition of Solutia, Eastman guaranteed the obligations of Solutia and Eastman was added as an indemnified party under the Monsanto Settlement Agreement.

ITEM 1A. RISK FACTORS

For identification and discussion of the most significant risks applicable to the Company and its business, see "Forward-Looking Statements and Risk Factors" in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2 of this Quarterly Report on Form 10-Q.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Purchases of Equity Securities by the Issuer

Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3)	Approximate Dollar Value (in millions) that May Yet Be Purchased Under the Plans or Programs (3)
July 1 - 31, 2014	137,856	$	87.09	137,856	$	788
August 1 - 31, 2014	481,040	$	79.27	481,040	$	750
September 1 - 30, 2014	—	$	—	—	$	750
Total	618,896	$	81.01	618,896

⁽¹⁾  All shares were repurchased under a Company announced repurchase plan.

⁽²⁾  Average price paid per share reflects the weighted average purchase price paid for shares.

⁽³⁾  In February 2014, the Board of Directors authorized repurchase of up to an additional $1 billion of the Company's outstanding common stock. As of September 30, 2014, a total of 2,933,029 shares have been repurchased under this authorization for a total amount of $250 million. During first nine months2014, the Company repurchased 4,945,452 shares of common stock for a cost of approximately $410 million. For additional information, see Note 12, "Stockholders' Equity", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 6. EXHIBITS

Exhibits filed as part of this report are listed in the Exhibit Index appearing on page 59.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Eastman Chemical Company
Date:	November 4, 2014	By:	/s/ Curtis E. Espeland
			Curtis E. Espeland
			Executive Vice President and Chief Financial Officer

58

	EXHIBIT INDEX
Exhibit Number	Description	Sequential Page Number
2.01	Agreement and Plan of Merger, dated September 11, 2014 , by and among Eastman Chemical Company, Stella Merger Corp., and Taminco Corporation (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated September 11, 2014)
3.01	Amended and Restated Certificate of Incorporation of Eastman Chemical Company (incorporated herein by reference to Exhibit 3.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012)
3.02	Amended and Restated Bylaws of Eastman Chemical Company (incorporated herein by reference to Exhibit 3.02 to the Company's Annual Report on Form 10-K for the year ended December 31, 2013)
4.01	Form of Eastman Chemical Company common stock certificate as amended February 1, 2001 (incorporated herein by reference to Exhibit 4.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001)
4.02	Indenture, dated as of January 10, 1994, between Eastman Chemical Company and The Bank of New York, as Trustee (the "Indenture") (incorporated herein by reference to Exhibit 4(a) to the Company's Current Report on Form 8-K dated January 10, 1994)
4.03	Indenture, dated as of June 5, 2012, between Eastman Chemical Company and Wells Fargo Bank, as Trustee (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated June 5, 2012)
4.04	Form of 7 1/4% Debentures due January 15, 2024 (incorporated herein by reference to Exhibit 4(d) to the Company's Current Report on Form 8-K dated January 10, 1994)
4.05	Officers' Certificate pursuant to Sections 201 and 301 of the Indenture related to 7 5/8% Debentures due 2024 (incorporated herein by reference to Exhibit 4(a) to the Company's Current Report on Form 8-K dated June 8, 1994)
4.06	Form of 7 5/8% Debentures due June 15, 2024 (incorporated herein by reference to Exhibit 4(b) to the Company's Current Report on Form 8-K dated June 8, 1994)
4.07	Form of 7.60% Debentures due February 1, 2027 (incorporated herein by reference to Exhibit 4.08 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996)
4.08	Officer's Certificate pursuant to Sections 201 and 301 of the Indenture related to 7.60% Debentures due February 1, 2027 (incorporated herein by reference to Exhibit 4.09 to the Company's Annual Report on Form 10-K for the year ended December 31, 2006)
4.09	Form of 5.500% Notes due 2019 (incorporated  herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated November 2, 2009)
4.10	Form of 6.30% Notes due 2018 (incorporated herein by reference to Exhibit 4.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003)
4.11	Form of 3% Note due 2015 (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated December 10, 2010)
4.12	Form of 4.5% Note due 2021 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated December 10, 2010)

59

	EXHIBIT INDEX
Exhibit Number	Description	Sequential Page Number
4.13	Form of 2.4% Note due 2017 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated June 5, 2012)
4.14	Form of 3.6% Note due 2022 (incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K dated June 5, 2012)
4.15	Form of 4.8% Note due 2042 (incorporated herein by reference to Exhibit 4.4 to the Company's Current Report on Form 8-K dated June 5, 2012)
4.16	Form of 4.65% Note due 2044 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated May 15, 2014)
10.01	Amendment to $250,000,000 Accounts Receivable Securitization agreement dated July 9, 2008 (amended February 18, 2009, July 8, 2009, July 7, 2010, January 31, 2011, July 6, 2011, April 30, 2012, August 1, 2013, and August 29, 2014), between the Company and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as agent. (incorporated herein by reference to Exhibit 4.09 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, Exhibit 4.10 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, Exhibit 4.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 2010, Exhibit 4.10 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, Exhibit 10.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, and Exhibit 10.01 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2013 )	62
10.02	Five-Year Senior Term Loan Credit Agreement, dated as of October 9, 2014, by and among Eastman Chemical Company, the initial lenders named therein, Citibank, N. A., as administrative agent, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arrangers, Bank of America, N.A., as documentation agent, and JPMorgan Chase Bank, N.A., as syndication agent (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 9, 2014)
10.03	Senior Bridge Term Loan Credit Agreement, dated as of October 9, 2014, by and among Eastman Chemical Company, the initial lenders named therein, Citibank, N. A., as administrative agent, Citigroup Global Markets Inc., as sole lead arranger, Bank of America, N.A., as documentation agent, and JPMorgan Chase Bank, N.A., as syndication agent (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated October 9, 2014)
10.04	Amendment to Amended and Restated Five-Year Credit Agreement, dated as of October 31, 2013, (amended December 20, 2013 and October 9, 2014), among Eastman Chemical Company, the initial lenders named therein, and Citibank N.A., as administrative agent, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as joint lead arrangers (incorporated herein by reference to Exhibit 10.01 to the Company's Current Report on Form 8-K dated October 31, 2013, Exhibit 10.30 to the Company's Annual Report on Form 10-K for the year ended December 31, 2013, and Exhibit 10.3 to the Company's Current Report on Form 8-K dated October 9, 2014 )
12.01	Statement re: Computation of Ratios of Earnings to Fixed Charges	67
31.01	Rule 13a – 14(a) Certification by Mark J. Costa, Chief Executive Officer, for the quarter ended September 30, 2014	68
31.02	Rule 13a – 14(a) Certification by Curtis E. Espeland, Executive Vice President and Chief Financial Officer, for the quarter ended September 30, 2014	69
32.01	Section 1350 Certification by Mark J. Costa, Chief Executive Officer, for the quarter ended September 30, 2014	70

60

	EXHIBIT INDEX
Exhibit Number	Description	Sequential Page Number
32.02	Section 1350 Certification by Curtis E. Espeland, Executive Vice President and Chief Financial Officer, for the quarter ended September 30, 2014	71
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

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EX-10.01

Exhibit 10.01

AMENDMENT NO. 10 TO AMENDED AND RESTATED

RECEIVABLES PURCHASE AGREEMENT

This Amendment (this “Amendment”), effective as of August 29, 2014, is entered into by and among:

(a)    Eastman Chemical Financial Corporation, a Delaware corporation, as Seller and as initial Servicer (“ECFC”), and

(b)    The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, formerly known as The Bank of Tokyo-Mitsubishi, Ltd., New York Branch, individually as a Victory Liquidity Bank (“BTMU”), as Victory Agent (the “Victory Agent”) and as administrative agent (the “Administrative Agent”),

with respect to the Amended and Restated Receivables Purchase Agreement dated as of July 9, 2008 by and among the parties hereto (as heretofore amended, the “Existing Agreement” which, as amended hereby, is hereinafter referred to as the “Agreement”).

Unless defined elsewhere herein, capitalized terms used in this Amendment shall have the meanings assigned to such terms in the Existing Agreement.

W I T N E S S E T H :

WHEREAS, effective on the date hereof, the parties to the Existing Agreement desire to amend certain provisions of the Existing Agreement and extend the Liquidity Termination Date;

WHEREAS, effective on the date hereof, BTMU extends its Commitment under the Existing Agreement; and

WHEREAS, the parties are willing to agree to such modification on the terms and subject to the conditions set forth in this Amendment;

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto hereby agree as follows:

1.Amendments to Existing Agreement.

(a)    The definition of “Liquidity Termination Date” in Exhibit I to the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“Liquidity Termination Date” means April 28, 2017.

(b)     The definition of “Concentration Limit” in Exhibit I to the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“Concentration Limit” means, in each case without duplication:

(a)     for all Receivables that require payment (i) within 66-90 days after the original invoice date therefor, an amount equal to 5% of the aggregate Outstanding Balance of all Eligible Receivables at such time, and (ii) within 91-120 days after the original invoice date therefor, an amount equal to 5% of the aggregate Outstanding Balance of all Eligible Receivables at such time;

(b)    for any Obligor and its Affiliates considered as if they were one and the same Obligor, at any time, in relation to the aggregate Outstanding Balance of Receivables owed by any such single Obligor and its Affiliates (if any), the applicable concentration limit determined according to the following table, based on the short term unsecured debt ratings currently assigned to such Obligor by S&P and Moody’s (or in the absence thereof, the equivalent long term unsecured senior debt ratings):

62

Exhibit 10.01

Short-Term S&P Rating	Long-Term S&P Rating	Short-Term Moody’s Rating	Long-Term Moody’s Rating	Allowable % of Net Eligible Receivables (“Concentration Limit”)
A-1+	AAA	P-1	Aaa	10%
A-1	AA+, AA, AA- or A+	P-1	Aa1, Aa2, Aa3 or A1	8%
A-2	A, A- or BBB+	P-2	A2, A3 or Baa1	6.25%
A-3	BBB or BBB-	P-3	Baa2 or Baa3	4.15%
Below A-3 or Not Rated by either S&P or Moody’s	Below BBB- or Not Rated by either S&P or Moody’s	Below P-3 or Not Rated by either S&P or Moody’s	Below Baa3 or Not Rated by either S&P or Moody’s	2.5%; provided that up to two such Obligors may exceed 2.5% (but in no event exceed 3.1%) so long as (i) each other such Obligor is less than 2.5% and (ii) the sum of the percentages for the five Obligors within this category with the highest percentages (including any Obligor(s) with a percentage in excess of 2.5%) shall not exceed 12.5%.

; provided, however, that (a) if any Obligor has a split rating, the applicable rating will be the lower of the two, (b) if any Obligor is not rated by either S&P or Moody’s, the applicable Concentration Limit shall be the one set forth in the last line of the table above, and (c) upon Seller’s request from time to time, the Agents may agree to a higher percentage of Eligible Receivables for a particular Obligor and its Affiliates (each such higher percentage, a “Special Concentration Limit”), it being understood that any Special Concentration Limit may require consent of the rating agencies that rate the Conduits’ Commercial Paper, may be conditioned upon an increase in the Required Reserve Factor Floor, and/or may be cancelled by the Administrative Agent at the request of either Co-Agent upon not less than five (5) Business Days’ written notice from the Agents to the Seller Parties; and

(c)    for all Receivables the Obligor of which, if a natural person, is not a resident of the United States or, if a corporation or other business organization, is either not organized under the laws of the United States or any political subdivision thereof or does not have its chief executive office in the United States, an amount equal to 5% of the aggregate Outstanding Balance of all Eligible Receivables at such time.

(c)    clause (2) of the definition of “Eligible Receivable” in Exhibit I to the Existing Agreement is hereby deleted and replaced as follows:

(2)    a Receivable the Obligor of which (a) is not an Affiliate of any of the parties hereto, (b) is not a government or a governmental subdivision or agency, and (c) is not a Sanctioned Person,

(d)    clause (5) of the definition of “Eligible Receivable” in Exhibit I to the Existing Agreement is hereby deleted and replaced as follows:

(5)    subject to the limitations set forth in clause (a) of the definition of “Concentration Limit,” a Receivable which arises under a Contract that requires payment within 120 days after the original invoice date therefor and has not had its payment terms extended,

63

Exhibit 10.01

2. Representations and Warranties. In order to induce the other parties to agree to this Amendment, ECFC hereby represents and warrants that (a) after giving effect to the amendments set forth in Section 1 above, the representations and warranties set forth in Section 5.1 of the Existing Agreement are true and correct in all material respects on and as of the date hereof, and (b) no event has occurred and is continuing that constitutes a Servicer Default or Potential Servicer Default.

3. Conditions Precedent. This Amendment will become effective as of the date first above written upon (a) payment by Seller to the Victory Agent of all amounts payable under the “Amendment Fee Letter” entered into on the date hereof in connection herewith, (b) receipt by the Administrative Agent of counterparts of this Amendment, duly executed by each of the parties hereto, and (c) payment of BTMU’s reasonable out of pocket expenses in connection with the preparation of this Amendment and related documents.

4. CHOICE OF LAW.THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW) WITHOUT REGARD TO ANY CONFLICT OF LAW PRINCIPLES.

5. WAIVER OF JURY TRIAL.EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AMENDMENT OR THE AGREEMENT.

6. Binding Effect. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy). A facsimile or .pdf copy of a signed counterpart hereof shall have the same force and effect as an original.

7. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

<Signature pages follow>

64

Exhibit 10.01

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers or signatories as of the date hereof.

EASTMAN CHEMICAL FINANCIAL CORPORATION,

as Seller and Initial Servicer

By:

Name:

Title:

65

Exhibit 10.01

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

NEW YORK BRANCH, as a Victory Liquidity Bank

By:

Name:

Title:

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

NEW YORK BRANCH, as Victory Agent and Administrative Agent

By:

Name:

Title:

66

EX-12.01

EXHIBIT 12.01

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Computation of Ratios of Earnings to Fixed Charges

		Third Quarter				First Nine Months
(Dollars in millions)		2014		2013		2014		2013
Earnings from continuing operations before income taxes	$	296	$	433	$	1,014	$	1,157
Add:
Interest expense		50		46		143		141
Appropriate portion of rental expense (1)		5		6		16		19
Amortization of capitalized interest		1		2		5		5
Earnings as adjusted	$	352	$	487	$	1,178	$	1,322
Fixed charges:
Interest expense	$	50	$	46	$	143	$	141
Appropriate portion of rental expense (1)		5		6		16		19
Capitalized interest		1		1		5		3
Total fixed charges	$	56	$	53	$	164	$	163
Ratio of earnings to fixed charges		6.3x		9.2x		7.2x		8.1x

⁽¹⁾  For all periods presented, the interest component of rental expense is estimated to equal one-third of such expense.

67

EX-31.01

Exhibit 31.01

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Rule 13a - 14(a)/15d - 14(a) Certifications

I, Mark J. Costa, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eastman Chemical Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

Date:  November 4, 2014

/s/ Mark J. Costa

Mark J. Costa

Chief Executive Officer

68

EX-31.02

Exhibit 31.02

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Rule 13a - 14(a)/15d - 14(a) Certifications

I, Curtis E. Espeland, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eastman Chemical Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

Date:  November 4, 2014

/s/ Curtis E. Espeland                                  

Curtis E. Espeland

Executive Vice President and Chief Financial Officer

69

EX-32.01

Exhibit 32.01

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Section 1350 Certifications

In connection with the Quarterly Report of Eastman Chemical Company (the "Company") on Form 10-Q for the period ending September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

A signed original of this written statement required by Section 906 has been provided to Eastman Chemical Company and will be retained by Eastman Chemical Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date:   November 4, 2014

/s/ Mark J. Costa

Mark J. Costa

Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.

70

EX-32.02

Exhibit 32.02

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Section 1350 Certifications

In connection with the Quarterly Report of Eastman Chemical Company (the "Company") on Form 10-Q for the period ending September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

A signed original of this written statement required by Section 906 has been provided to Eastman Chemical Company and will be retained by Eastman Chemical Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date:  November 4, 2014

/s/ Curtis E. Espeland               

Curtis E. Espeland

Executive Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.

71

XML

ACQUISITIONS ACQUISITIONS (Details) (USD $) In Millions, unless otherwise specified			3 Months Ended				3 Months Ended	9 Months Ended		3 Months Ended		3 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Knowlton [Member]	Sep. 30, 2014 Knowlton [Member] Technology-Based Intangible Assets [Member]	Jun. 02, 2014 Knowlton [Member] Scenario, Actual [Member]	Jun. 02, 2014 Knowlton [Member] Scenario, Actual [Member] Technology-Based Intangible Assets [Member]	Sep. 30, 2014 BP plc [Member]	Sep. 30, 2014 BP plc [Member]	Jun. 02, 2014 BP plc [Member]	Sep. 30, 2014 BP plc [Member] Marketing-Related Intangible Assets [Member]	Jun. 02, 2014 BP plc [Member] Marketing-Related Intangible Assets [Member]	Sep. 30, 2014 BP plc [Member] Customer Relationships [Member]	Jun. 02, 2014 BP plc [Member] Customer Relationships [Member]	Jun. 02, 2014 BP plc [Member] Scenario, Previously Reported [Member]	Jun. 02, 2014 BP plc [Member] Scenario, Adjustment [Member]	Jun. 02, 2014 BP plc [Member] Scenario, Actual [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Business Combination, Consideration Transferred			$ 42				$ 283
Assets Acquired and Liabilities Assumed, Net [Abstract]
Current Assets					14									42	0	42
Machinery and Equipment					18									11	(1)	10
Goodwill	2,716	2,637			8									68	24	92
Intangible assets						6					74		65	162	(23)	139
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net														283	0	283
Liabilities					4
Weighted Average Amortization Period				15 years						30 years		16 years
Acquisition Transaction, Integration, and Other Costs [Abstract]
Business Acquisition, Transaction Costs									3
Integration Costs								2
Business Combinations, Additional Costs Of Acquired Inventory, Net							$ 6	$ 8

XML

STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 1 (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended			12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014		Sep. 30, 2013	Dec. 31, 2013
Stockholders' Equity Note [Abstract]
Dividends, Per Share	$ 0.35	$ 0.30	$ 1.05		$ 0.90
Statement [Line Items]
Stockholders' Equity Attributable to Parent	$ 3,901		$ 3,901			$ 3,796
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	3,979		3,979			3,875
Net Income (Loss) Attributable to Parent	210	308	735		819
Net Income (Loss), attributable to noncontrolling interest	2	1	5		4
Net earnings including noncontrolling interest	212	309	740		823
Dividends, Common Stock, Cash	(53)	(46)	(159)	[1]	(139)
Other Comprehensive Income (Loss), Net of Tax	(95)	57	(93)		24	48
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			23	[2]
Stock Issued During Period, Value, Stock Options Exercised			12
Stockholders' Equity, Other			(5)	[3]
Share Repurchase			(410)
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders			(4)
Common Stock [Member]
Statement [Line Items]
Stockholders' Equity Attributable to Parent	2		2			2
Net Income (Loss) Attributable to Parent			0
Dividends, Common Stock, Cash			0
Other Comprehensive Income (Loss), Net of Tax			0
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			0
Stock Issued During Period, Value, Stock Options Exercised			0
Stockholders' Equity, Other			0
Share Repurchase			0
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders			0
Additional Paid-in Capital [Member]
Statement [Line Items]
Stockholders' Equity Attributable to Parent	1,810		1,810			1,778
Net Income (Loss) Attributable to Parent			0
Dividends, Common Stock, Cash			0
Other Comprehensive Income (Loss), Net of Tax			0
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			23	[2]
Stock Issued During Period, Value, Stock Options Exercised			12
Stockholders' Equity, Other			(3)	[3]
Share Repurchase			0
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders			0
Retained Earnings [Member]
Statement [Line Items]
Stockholders' Equity Attributable to Parent	4,588		4,588			4,012
Net Income (Loss) Attributable to Parent			735
Dividends, Common Stock, Cash			(159)	[1]
Other Comprehensive Income (Loss), Net of Tax			0
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			0
Stock Issued During Period, Value, Stock Options Exercised			0
Stockholders' Equity, Other			0
Share Repurchase			0
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders			0
Accumulated Other Comprehensive Income (Loss) [Member]
Statement [Line Items]
Stockholders' Equity Attributable to Parent	78		78			171
Net Income (Loss) Attributable to Parent			0
Dividends, Common Stock, Cash			0
Other Comprehensive Income (Loss), Net of Tax			(93)
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			0
Stock Issued During Period, Value, Stock Options Exercised			0
Stockholders' Equity, Other			0
Share Repurchase			0
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders			0
Treasury Stock [Member]
Statement [Line Items]
Stockholders' Equity Attributable to Parent	(2,577)		(2,577)			(2,167)
Net Income (Loss) Attributable to Parent			0
Dividends, Common Stock, Cash			0
Other Comprehensive Income (Loss), Net of Tax			0
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			0
Stock Issued During Period, Value, Stock Options Exercised			0
Stockholders' Equity, Other			0
Share Repurchase			(410)
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders			0
Parent [Member]
Statement [Line Items]
Stockholders' Equity Attributable to Parent	3,901		3,901			3,796
Net Income (Loss) Attributable to Parent			735
Dividends, Common Stock, Cash			(159)	[1]
Other Comprehensive Income (Loss), Net of Tax			(93)
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			23	[2]
Stock Issued During Period, Value, Stock Options Exercised			12
Stockholders' Equity, Other			(3)	[3]
Share Repurchase			(410)
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders			0
Noncontrolling Interest [Member]
Statement [Line Items]
Stockholders' Equity Attributable to Parent	78		78			79
Dividends, Common Stock, Cash			0
Other Comprehensive Income (Loss), Net of Tax			0
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			0
Stock Issued During Period, Value, Stock Options Exercised			0
Stockholders' Equity, Other			(2)	[3]
Share Repurchase			0
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders			$ (4)

[1] Includes cash dividends paid and dividends declared, but unpaid.

[2] Includes the fair value of equity share-based awards recognized for share-based compensation.

[3] Paid in capital includes tax benefits/charges relating to the difference between the amounts deductible for federal income taxes over the amounts charged to income for book value purposes have been adjusted to paid-in capital and other items. Equity attributable to noncontrolling interest includes adjustments for currency revaluation.

XML

DERIVATIVES Part 3 (Details) (Commodity Contract [Member], USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Commodity Contract [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation Calculation [Roll Forward]
Balance at beginning of period	$ 0	$ (7)	$ 0	$ (5)
Realized gain (loss) in sales revenue	0	(3)	0	(10)
Change in unrealized gain (loss)	1	4	1	2
Settlements	0	3	0	10
Transfers (out) in of Level 3	0	0	0	0
Balance at end of period	$ 1	$ (3)	$ 1	$ (3)

XML

STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 2 AOCI (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				9 Months Ended				12 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013		Dec. 31, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	$ 19				$ 19				$ 133	$ 105
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax	66				66				78	65
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax	(6)				(6)				(39)	(46)
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	(1)				(1)				(1)	(1)
Accumulated Other Comprehensive Income (Loss), Net of Tax	78				78				171	123
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	(127)		45		(114)		10		28
Amortization of unrecognized prior service credits included in net periodic costs	(4)	[1]	(4)	[1]	(12)	[1]	(11)	[1]	13
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax	36		(13)		33		(4)		7
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax, Portion Attributable to Parent					0				0
Total other comprehensive income (loss), net of tax	$ (95)		$ 57		$ (93)		$ 24		$ 48

[1] Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans".

XML

DERIVATIVES Part 1 (Details) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014 Designated as Hedging Instrument [Member] Fair Value Hedging [Member] Interest Rate Swap [Member] USD ($)	Sep. 30, 2014 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Commodity Contract [Member] Raw Materials [Member] bbl	Dec. 31, 2013 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Commodity Contract [Member] Raw Materials [Member] bbl	Sep. 30, 2014 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Commodity Contract [Member] Energy Related Derivative [Member] MMBTU	Dec. 31, 2013 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Commodity Contract [Member] Energy Related Derivative [Member] MMBTU	Sep. 30, 2014 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Commodity Contract [Member] Contract ethylene sales contracts [Member] T	Dec. 31, 2013 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Commodity Contract [Member] Contract ethylene sales contracts [Member] t	Sep. 30, 2014 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Foreign Exchange Contract [Member] Euro Member Countries, Euro USD ($)	Sep. 30, 2014 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Foreign Exchange Contract [Member] Euro Member Countries, Euro EUR (€)	Dec. 31, 2013 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Foreign Exchange Contract [Member] Euro Member Countries, Euro USD ($)	Dec. 31, 2013 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Foreign Exchange Contract [Member] Euro Member Countries, Euro EUR (€)	Sep. 30, 2014 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Foreign Exchange Contract [Member] Japan, Yen USD ($)	Sep. 30, 2014 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Foreign Exchange Contract [Member] Japan, Yen JPY (¥)	Dec. 31, 2013 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Foreign Exchange Contract [Member] Japan, Yen USD ($)	Dec. 31, 2013 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Foreign Exchange Contract [Member] Japan, Yen JPY (¥)	Sep. 30, 2014 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Interest Rate Swap [Member]	Dec. 31, 2013 Designated as Hedging Instrument [Member] Cash Flow Hedging [Member] Interest Rate Swap [Member]
Hedging Programs [Abstract]
Objectives for Using Derivative Instruments	The Company is exposed to market risk, such as changes in currency exchange rates, commodity prices, and interest rates.  The Company uses various derivative financial instruments when appropriate pursuant to the Company's hedging policies to mitigate these market risk factors and their effect on the cash flows of the underlying transactions.  Designation is performed on a specific exposure basis to support hedge accounting.  The changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the cash flows of the underlying exposures being hedged.  The Company does not hold or issue derivative financial instruments for trading purposes.
Derivative [Line Items]
Derivative, Notional Amount		$ 500							$ 1,160	€ 903	$ 1,320	€ 954	$ 50	¥ 5,700	$ 80	¥ 8,300
Derivative, Nonmonetary Notional Amount			25,000,000	8,000,000	17,000,000	0	17,000	0									100,000,000	0

XML

STOCKHOLDERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

Reconciliation of the changes in stockholders' equity

A reconciliation of the changes in stockholders' equity for first nine months 2014 is provided below:

(Dollars in millions)	Common Stock at Par Value $	Paid-in Capital $		Retained Earnings $		Accumulated Other Comprehensive Income (Loss) $		Treasury Stock at Cost $		Total Stockholders' Equity Attributed to Eastman $		Noncontrolling Interest $		Total Stockholders' Equity $
Balance at December 31, 2013	2	1,778		4,012		171		(2,167	)	3,796		79		3,875
Net Earnings	—	—		735		—		—		735		5		740
Cash Dividends Declared (1) ($1.05 per share)	—	—		(159	)	—		—		(159	)	—		(159	)
Other Comprehensive Income	—	—		—		(93	)	—		(93	)	—		(93	)
Share-Based Compensation Expense (2)	—	23		—		—		—		23		—		23
Stock Option Exercises	—	12		—		—		—		12		—		12
Other (3)	—	(3	)	—		—		—		(3	)	(2	)	(5	)
Share Repurchase	—	—		—		—		(410	)	(410	)	—		(410	)
Distributions to Noncontrolling Interest	—	—		—		—		—		—		(4	)	(4	)
Balance at September 30, 2014	2	1,810		4,588		78		(2,577	)	3,901		78		3,979

Accumulated Other Comprehensive Income (Loss)

(Dollars in millions)	Cumulative Translation Adjustment			Benefit Plans Unrecognized Prior Service Credits			Unrealized Gains (Losses) on Derivative Instruments			Unrealized Losses on Investments			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2012	$	105		$	65		$	(46	)	$	(1	)	$	123
Period change	28			13			7			—			48
Balance at December 31, 2013	133			78			(39		)	(1		)	171
Period change	(114		)	(12		)	33			—			(93		)
Balance at September 30, 2014	$	19		$	66		$	(6	)	$	(1	)	$	78

Schedule of components of comprehensive income (loss) before tax and net of tax effects

Components of other comprehensive income recorded in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects:

	Third Quarter
	2014						2013
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(127	)	$	(127	)	$	43		$	45
Defined benefit pension and other postretirement benefit plans:
Prior service credit arising during the period	—			—			47			29
Amortization of unrecognized prior service credits included in net periodic costs (1)	(7		)	(4		)	(7		)	(4		)
Change in defined benefit pension and other postretirement benefit plans	(7		)	(4		)	40			25
Derivatives and hedging: (2)
Unrealized (loss) gain	58			36			(19		)	(13		)
Reclassification adjustment for (gain) loss included in net income	—			—			(2		)	—
Change in derivatives and hedging	58			36			(21		)	(13		)
Total other comprehensive income (loss)	$	(76	)	$	(95	)	$	62		$	57
	First Nine Months
	2014						2013
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(115	)	$	(114	)	$	8		$	10
Defined benefit pension and other postretirement benefit plans:
Prior service credit arising during the period	—			—			47			29
Amortization of unrecognized prior service credits included in net periodic costs (1)	(21		)	(12		)	(19		)	(11		)
Change in defined benefit pension and other postretirement benefit plans	(21		)	(12		)	28			18
Derivatives and hedging:(2)
Unrealized gain (loss) during period	67			42			(13		)	(4		)
Reclassification adjustment for (gain) loss included in net income	(14		)	(9		)	6			—
Change in derivatives and hedging	53			33			(7		)	(4		)
Total other comprehensive income (loss)	$	(83	)	$	(93	)	$	29		$	24

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EARNINGS AND DIVIDENDS PER SHARE (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Earnings Per Share [Abstract]
Earnings from continuing operations, net of tax	$ 210		$ 308		$ 733		$ 819
Shares used for earnings per share calculation, Basic (in shares)	148,700,000		154,000,000		149,800,000		154,300,000
Weighted Average Number Diluted Shares Outstanding Adjustment	1,600,000		2,400,000		1,700,000		2,400,000
Shares used for earnings per share calculation, Diluted (in shares)	150,300,000		156,400,000		151,500,000		156,700,000
Earnings Per Share, Diluted	$ 1.39		$ 1.97		$ 4.85		$ 5.23
Net Income (Loss) Attributable to Parent	$ 210		$ 308		$ 735		$ 819
Income (Loss) from Continuing Operations, Per Basic Share	$ 1.41	[1]	$ 2.00	[1]	$ 4.89	[1]	$ 5.31	[1]
Income (Loss) from Continuing Operations, Per Diluted Share	$ 1.39	[1]	$ 1.97	[1]	$ 4.83	[1]	$ 5.23	[1]
Underlying options excluded from the computation of diluted earnings per share (in shares)	210,143		125,019		210,143
Shares repurchased (in shares)	618,896		463,418		4,945,452		1,579,118
Cash dividends declared (per share)	$ 0.35		$ 0.30		$ 1.05		$ 0.90

[1] Earnings per share are calculated using whole dollars and shares.

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ACQUISITIONS Assets Acquired and Liabilities Assumed (Tables) (BP plc [Member])

9 Months Ended

Sep. 30, 2014

BP plc [Member]

Business Acquisition [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

(Dollars in millions)	As of June 2, 2014 Previously Reported		Increase (Decrease)			As of June 2, 2014 As Adjusted
Current assets	$	42	$	—		$	42
Machinery and equipment	11		(1		)	10
Goodwill	68		24			92
Intangible assets	162		(23		)	139
Total purchase price	$	283	$	—		$	283

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DERIVATIVES Part 5 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Derivative Instruments, Gain (Loss) [Line Items]
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	$ 2	$ 0	$ 3	$ 0
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Unrealized Gains (Losses) on Derivative Instruments	36	(13)	33	(4)	7
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	1	1	15	(7)
Hedging Summary [Abstract]
Monetized positions and mark to market gain (loss) in accumulated other comprehensive income before tax	8	80	8	80
Price Risk Cash Flow Hedge Unrealized Gain (Loss) to be Reclassified During Next 12 Months	23		23
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	1	(3)	4	(4)
Commodity Contract [Member] | Cash Flow Hedging [Member]
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Unrealized Gains (Losses) on Derivative Instruments	(22)	8	(27)	4
Commodity Contract [Member] | Cash Flow Hedging [Member] | Cost of Sales [Member]
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	(1)	4	18	1
Commodity Contract [Member] | Cash Flow Hedging [Member] | Sales [Member]
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	0	(3)	0	(10)
Interest Rate Contract [Member] | Fair Value Hedging [Member] | Net Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	2	0	3	0
Foreign Exchange Contract [Member] | Cash Flow Hedging [Member]
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Unrealized Gains (Losses) on Derivative Instruments	57	(22)	59	(11)
Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | Sales [Member]
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	4	2	3	8
Forward Starting Interest Rate Swap [Member] | Cash Flow Hedging [Member]
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Unrealized Gains (Losses) on Derivative Instruments	1	1	1	3
Forward Starting Interest Rate Swap [Member] | Cash Flow Hedging [Member] | Net Interest Expense
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	$ (2)	$ (2)	$ (6)	$ (6)

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PROVISION FOR INCOME TAXES PROVISION FOR INCOME TAXES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Provision for income taxes from continuing operations	$ 86	$ 125	$ 281	$ 338
Effective tax rate	29.00%	29.00%	28.00%	29.00%
Effective Income Tax Rate Reconciliation, Tax Credit, Amount		14		14
Effective Income Tax Rate Reconciliation, Tax Credit, Research, Amount				$ 10

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Information Disclosure

	Third Quarter
(Dollars in millions)	2014		2013
Sales
Additives & Functional Products	$	458	$	445
Adhesives & Plasticizers	347		321
Advanced Materials	604		583
Fibers	346		363
Specialty Fluids & Intermediates	650		620
Total Sales by Segment	2,405		2,332
Other	8		6
Total Sales	$	2,413	$	2,338
	First Nine Months
(Dollars in millions)	2014		2013
Sales
Additives & Functional Products	$	1,333	$	1,294
Adhesives & Plasticizers	1,050		1,005
Advanced Materials	1,816		1,792
Fibers	1,086		1,072
Specialty Fluids & Intermediates	1,884		1,904
Total Sales by Segment	7,169		7,067
Other	9		18
Total Sales	$	7,178	$	7,085

	Third Quarter
(Dollars in millions)	2014			2013
Operating Earnings (Loss)
Additives & Functional Products (1)(2)(3)	$	37		$	111
Adhesives & Plasticizers	52			41
Advanced Materials (3)	76			69
Fibers	112			113
Specialty Fluids & Intermediates (4)	90			90
Total Operating Earnings by Segment	367			424
Other (5)
Growth initiatives and businesses not allocated to segments (6)	(18		)	(20		)
Pension and other postretirement benefit costs not allocated to operating segments (7)	3			87
Acquisition transaction, integration, and restructuring costs (8)(9)(10)	(14		)	(12		)
Total Operating Earnings	$	338		$	479

⁽¹⁾  Included in third quarter 2014 earnings are asset impairments and restructuring charges of $42 million for costs of the planned closure of a Crystex^® R&D facility in France. This closure is subject to certain local legal and regulatory requirements.

⁽²⁾  Included in third quarter 2014 earnings is a $22 million asset impairment of the Crystex^® tradename.

⁽³⁾  Included in third quarter 2014 earnings are asset impairments and restructuring charges of $1 million and $4 million in the AFP and AM segments, respectively, related to a change in estimate of certain costs of the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site.

⁽⁴⁾  As required by purchase accounting, acquired BP plc global aviation turbine engine oil business inventories were marked to fair value. Included in third quarter 2014 earnings are additional costs of these inventories. Approximately 75 percent, or $6 million, of these inventories were sold in third quarter 2014 resulting in an increase in cost of sales.

⁽⁵⁾  R&D, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating earnings (loss).

⁽⁶⁾  Businesses not allocated to segments in 2013 included the Perennial Wood™ growth initiative and Photovoltaics product line, both of which ceased production in the second half of 2013. Businesses not allocated to segments in 2014 include Eastman™ microfiber technology platform.

⁽⁷⁾  Included in third quarter 2013 earnings is a MTM other postretirement benefit plan gain of $86 million for a change in benefits. See Note 8, "Retirement Plans."

⁽⁸⁾  Included in third quarter 2014 earnings are transaction costs of $7 million for the pending acquisitions of Taminco and Commonwealth Laminating & Coating, and for the completed acquisition of the global aviation turbine engine oil business from BP plc.

⁽⁹⁾  Included in third quarter 2014 earnings are integration costs of $5 million for the acquired Solutia and global aviation turbine engine oil businesses. Included in third quarter 2013 earnings are integration costs of $9 million for the acquired Solutia businesses.

⁽¹⁰⁾  Included in third quarter 2014 earnings are restructuring charges of $2 million for severance associated with the continued integration of the acquired Solutia businesses. Included in third quarter 2013 earnings are restructuring charges of $3 million primarily for severance associated with the continued integration of the acquired Solutia businesses.

	First Nine Months
(Dollars in millions)	2014			2013
Operating Earnings (Loss)
Additives & Functional Products (1)(2)(3)(4)(5)(6)	$	236		$	313
Adhesives & Plasticizers (6)	155			139
Advanced Materials (3)(5)(6)(7)	217			216
Fibers	352			343
Specialty Fluids & Intermediates (6)(8)	248			302
Total Operating Earnings by Segment	1,208			1,313
Other (9)
Growth initiatives and businesses not allocated to segments (10)(11)(12)	(46		)	(73		)
Pension and other postretirement benefit costs not allocated to operating segments (13)	9			93
Acquisition transaction, integration, and restructuring costs (14)(15)(16)	(36		)	(33		)
Total Operating Earnings	$	1,135		$	1,300

⁽¹⁾  Included in first nine months 2014 earnings are asset impairments and restructuring charges of $42 million for costs of the planned closure of a Crystex^® R&D facility in France. This closure is subject to certain local legal and regulatory requirements.

⁽²⁾  Included in first nine months 2014 earnings is a $22 million asset impairment of the Crystex^® tradename.

⁽³⁾  Included in first nine months 2014 earnings are asset impairments and restructuring charges of $1 million and $4 million in the AFP and AM segments, respectively, related to a change in estimate of certain costs of the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site.

⁽⁴⁾  Included in first nine months 2014 earnings is a $2 million gain on the sale of previously impaired assets at a former polymers production facility in China.

⁽⁵⁾  Included in first nine months 2013 earnings is a reduction in previous charges for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site, which is reported as reductions of $1 million and $3 million in the AFP and AM segments, respectively.

⁽⁶⁾  Included in first nine months 2013 earnings are restructuring charges of $2 million, $1 million, $2 million, and $1 million in the AFP, A&P, AM, and SFI segments, respectively, primarily for severance

⁽⁷⁾  Included in first nine months 2014 earnings are asset impairments and restructuring charges of $10 million primarily for the closure of a production facility in Taiwan for the Flexvue^® product line.

⁽⁸⁾  As required by purchase accounting, acquired BP plc's global aviation turbine engine oil business inventories were marked to fair value. Included in first nine months 2014 earnings are additional costs of these inventories. Approximately $8 million were sold in first nine months 2014 resulting in an increase in cost of sales.

⁽⁹⁾  R&D, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating earnings (loss).

⁽¹⁰⁾  Businesses not allocated to segments in 2013 included the Perennial Wood™ growth initiative and Photovoltaics product line, both of which ceased production in the second half of 2013. Businesses not allocated to segments in 2014 include Eastman™ microfiber technology platform.

⁽¹¹⁾  Included in first nine months 2014 earnings is a $5 million gain on sales of previously impaired assets at the former Photovoltaics production facility in Germany.

⁽¹²⁾  Included in first nine months 2013 earnings are asset impairments and restructuring charges of $13 million primarily for the closure of a production facility in Germany for the Photovoltaics product line.

⁽¹³⁾  Included in first nine months 2013 earnings is a MTM other postretirement benefit plan gain of $86 million for a change in benefits. See Note 8, "Retirement Plans."

⁽¹⁴⁾  Included in first nine months 2014 earnings are transaction costs of $10 million for the pending acquisition of Taminco and Commonwealth Laminating & Coating, and for the completed acquisition of the global aviation turbine engine oil business from BP plc.

⁽¹⁵⁾  Included in first nine months 2014 earnings are integration costs of $21 million for the acquired Solutia and the global aviation turbine engine oil businesses. Included in first nine months 2013 earnings are integration costs of $24 million for the acquired Solutia businesses.

⁽¹⁶⁾  Included in first nine months 2014 and 2013 earnings are restructuring charges of $5 million and $9 million, respectively, primarily for severance associated with the continued integration of the acquired Solutia businesses.

	September 30,		December 31,
(Dollars in millions)	2014		2013
Assets by Segment (1)
Additives & Functional Products	$	2,963	$	2,940
Adhesives & Plasticizers	1,025		996
Advanced Materials	3,794		3,807
Fibers	986		974
Specialty Fluids & Intermediates	2,376		2,054
Total Assets by Segment	11,144		10,771
Corporate Assets	991		1,074
Total Assets	$	12,135	$	11,845

⁽¹⁾  The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

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COMMITMENTS (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Purchase obligations [Abstract]
Purchase Obligations	$ 2,000,000,000
Purchase Obligation Description	over a period of approximately 30 years for materials, supplies, and energy incident to the ordinary conduct of business.
Lease commitments [Abstract]
Operating Lease Commitments, Cancelable Noncancelable and Month-to-month	254,000,000
Percentage of Operating Lease Commitments related to real property (in hundredths)	55.00%
Percentage of Operating Lease Commitments related to railcars (in hundredths)	35.00%
Percentage of Operating Lease Commitments related to machinery and equipment (in hundredths)	10.00%
Guarantees [Abstract]
Operating Lease Residual Value Guarantees	121,000,000
Maximum potential future payment, other guarantees	$ 32,000,000
Guarantor Obligations, Term	These other guarantees have terms between 1 and 20 years

XML

SEGMENT INFORMATION (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013		Dec. 31, 2013
Segment Reporting Information [Line Items]
Increase (Decrease) in Other Current Assets					$ (23)		$ 1
Number of Operating Segments					5
Asset impairments and restructuring charges (gains), net	71		3		77		24
Sales [Abstract]
Sales	2,413		2,338		7,178		7,085
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	338		479		1,135		1,300
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	12,135	[1]			12,135	[1]			11,845	[1]
Operating Segments [Member]
Sales [Abstract]
Sales	2,405		2,332		7,169		7,067
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	367		424		1,208		1,313
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	11,144	[1]			11,144	[1]			10,771	[1]
Corporate and Other [Member]
Sales [Abstract]
Sales	8		6		9		18
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	991	[1]			991	[1]			1,074
Growth Initiatives and Businesses not Allocated to Segments [Member] | Corporate and Other [Member]
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	(18)	[2],[3]	(20)	[2],[3]	(46)	[4],[5],[6]	(73)	[4],[5],[7],[8]
Pension and OPEB Costs Not Allocated to Operating Segments [Member] | Corporate and Other [Member]
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	3	[3]	87	[3],[9]	9	[5]	93	[5],[7]
Transaction, Integration, and Restructuring Costs Related to Solutia Acquisition [Member] | Corporate and Other [Member]
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	(14)	[10],[11],[5]	(12)	[10],[3]	(36)	[12],[13],[14],[5]	(33)	[12],[13],[5]
Additives And Functional Products [Member] | Operating Segments [Member]
Sales [Abstract]
Sales	458		445		1,333		1,294
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	37	[15],[16],[17]	111		236	[18],[19],[20],[21]	313	[22],[23]
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	2,963	[1]			2,963	[1]			2,940	[1]
Adhesives And Plasticizers [Member] | Operating Segments [Member]
Sales [Abstract]
Sales	347		321		1,050		1,005
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	52		41		155		139	[22]
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	1,025	[1]			1,025	[1]			996	[1]
Advanced Materials [Member] | Operating Segments [Member]
Sales [Abstract]
Sales	604		583		1,816		1,792
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	76	[17]	69		217	[18],[24]	216	[22],[23]
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	3,794	[1]			3,794	[1]			3,807	[1]
Fibers [Member] | Operating Segments [Member]
Sales [Abstract]
Sales	346		363		1,086		1,072
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	112		113		352		343
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	986	[1]			986	[1]			974	[1]
Specialty Fluids And Intermediates [Member] | Operating Segments [Member]
Sales [Abstract]
Sales	650		620		1,884		1,904
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)	90	[25]	90		248	[26]	302	[22]
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	$ 2,376	[1]			$ 2,376	[1]			$ 2,054	[1]

[1] (1) The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and inta

[2] (6) Businesses not allocated to segments in 2013 included the Perennial Wood™ growth initiative and Photovoltaics product line, both of which ceased production in the second half of 2013. Businesses not allocated to segments in 2014 include Eastman™ microfiber technology platform.

[3] (9) R&D, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating earnings (loss).

[4] (10) Businesses not allocated to segments in 2013 included the Perennial Wood™ growth initiative and Photovoltaics product line, both of which ceased production in the second half of 2013. Businesses not allocated to segments in 2014 include Eastman™ microfiber technology platform.

[5] (5) R&D, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating earnings (loss).

[6] (11) Included in first nine months 2014 earnings is a $5 million gain on sales of previously impaired assets at the former Photovoltaics production facility in Germany.

[7] (13) Included in first nine months 2013 earnings is a MTM other postretirement benefit plan gain of $86 million for a change in benefits. See Note 8, "Retirement Plans."

[8] (12) Included in first nine months 2013 earnings are asset impairments and restructuring charges of $13 million primarily for the closure of a production facility in Germany for the Photovoltaics product line.

[9] (7) Included in third quarter 2013 earnings is a MTM other postretirement benefit plan gain of $86 million for a change in benefits. See Note 8, "Retirement Plans."

[10] (9) Included in third quarter 2014 earnings are integration costs of $5 million for the acquired Solutia and global aviation turbine engine oil businesses. Included in third quarter 2013 earnings are integration costs of $9 million for the acquired Solutia businesses.

[11] (8) Included in third quarter 2014 earnings are transaction costs of $7 million for the pending acquisitions of Taminco and Commonwealth Laminating & Coating, and for the completed acquisition of the global aviation turbine engine oil business from BP plc.

[12] (15) Included in first nine months 2014 earnings are integration costs of $21 million for the acquired Solutia and the global aviation turbine engine oil businesses. Included in first nine months 2013 earnings are integration costs of $24 million for the acquired Solutia businesses.

[13] Included in first nine months 2014 and 2013 earnings are restructuring charges of $5 million and $9 million, respectively, primarily for severance associated with the continued integration of the acquired Solu

[14] (14) Included in first nine months 2014 earnings are transaction costs of $10 million for the pending acquisition of Taminco and Commonwealth Laminating & Coating, and for the completed acquisition of the global aviation turbine engine oil business from BP plc.

[15] (1) Included in third quarter 2014 earnings are asset impairments and restructuring charges of $42 million for costs of the planned closure of a Crystex® R&D facility in France.

[16] (2) Included in third quarter 2014 earnings is a $22 million asset impairment of the Crystex® tradename.

[17] (3) Included in third quarter 2014 earnings are asset impairments and restructuring charges of $1 million and $4 million in the AFP and AM segments, respectively, related to a change in estimate of certain costs of the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site.

[18] (3) Included in first nine months 2014 earnings are asset impairments and restructuring charges of $1 million and $4 million in the AFP and AM segments, respectively, related to a change in estimate of certain costs of the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site.

[19] (2) Included in first nine months 2014 earnings is a $22 million asset impairment of the Crystex® tradename.

[20] (4) Included in first nine months 2014 earnings is a $2 million gain on the sale of previously impaired assets at a former polymers production facility in China.

[21] (1) Included in first nine months 2014 earnings are asset impairments and restructuring charges of $42 million for costs of the planned closure of a Crystex® R&D facility in France.

[22] (6) Included in first nine months 2013 earnings are restructuring charges of $2 million, $1 million, $2 million, and $1 million in the AFP, A&P, AM, and SFI segments, respectively, primarily for severance

[23] (5) Included in first nine months 2013 earnings is a reduction in previous charges for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site, which is reported as reductions of $1 million and $3 million in the AFP and AM segments, respectively.

[24] (7) Included in first nine months 2014 earnings are asset impairments and restructuring charges of $10 million primarily for the closure of a production facility in Taiwan for the Flexvue® product line.

[25] (4) As required by purchase accounting, acquired BP plc global aviation turbine engine oil business inventories were marked to fair value. Included in third quarter 2014 earnings are additional costs of these inventories. Approximately 75 percent, or $6 million, of these inventories were sold in third quarter 2014 resulting in an increase in cost of sales.

[26] (8) As required by purchase accounting, acquired BP plc's global aviation turbine engine oil business inventories were marked to fair value. Included in first nine months 2014 earnings are additional costs of these inventories. Approximately $8 million were sold in first nine months 2014 resulting in an increase in cost of sales.

XML

DERIVATIVES Part 2 (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset, Fair Value, Gross Asset	$ 102	$ 58
Derivative Liability, Fair Value, Gross Liability	(38)	(46)
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset, Fair Value, Gross Asset	102	58
Derivative Liability, Fair Value, Gross Liability	(38)	(46)
Derivative, Fair Value, Net	64	12
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset, Fair Value, Gross Asset	0	0
Derivative Liability, Fair Value, Gross Liability	0	0
Derivative, Fair Value, Net	0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset, Fair Value, Gross Asset	101	58
Derivative Liability, Fair Value, Gross Liability	(38)	(46)
Derivative, Fair Value, Net	63	12
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset, Fair Value, Gross Asset	1	0
Derivative Liability, Fair Value, Gross Liability	0	0
Derivative, Fair Value, Net	$ 1	$ 0

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PAYABLES AND OTHER CURRENT LIABILITIES

9 Months Ended

Sep. 30, 2014

Payables and Accruals [Abstract]

PAYABLES AND OTHER CURRENT LIABILITIES

PAYABLES AND OTHER CURRENT LIABILITIES

	September 30,		December 31,
(Dollars in millions)	2014		2013
Trade creditors	$	735	$	762
Accrued payrolls, vacation, and variable-incentive compensation	155		205
Accrued taxes	131		80
Post-employment obligations	58		59
Interest payable	44		46
Environmental contingent liabilities, current portion	40		40
Other	235		278
Total payables and other current liabilities	$	1,398	$	1,470

Included in "Other" are certain accruals for payroll deductions and employee benefits, dividends payable, the current portion of hedging liabilities, severance, and other payables and accruals.

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BORROWINGS Part 1 (Details) Schedule of Long-term Debt Instruments (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	May 15, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Borrowings due within one year	$ 0		$ 0
Long-term borrowings, net of current portion	4,563		4,254
3% debentures due 2015 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2015
Debt Instrument, Interest Rate, Stated Percentage	3.00%
Long-term Debt	250		250
2.4% notes due 2017 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2017
Debt Instrument, Interest Rate, Stated Percentage	2.40%
Long-term Debt	998		998
6.30% notes due 2018 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2018
Debt Instrument, Interest Rate, Stated Percentage	6.30%
Long-term Debt	170		171
5.5% notes due 2019 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2019
Debt Instrument, Interest Rate, Stated Percentage	5.50%
Long-term Debt	250		250
4.5% debentures due 2021 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2021
Debt Instrument, Interest Rate, Stated Percentage	4.50%
Long-term Debt	250		250
3.6% notes due 2022 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2022
Debt Instrument, Interest Rate, Stated Percentage	3.60%
Long-term Debt	893		894
7 1/4% debentures due 2024 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2024
Debt Instrument, Interest Rate, Stated Percentage	7.25%
Long-term Debt	244		243
7 5/8% debentures due 2024 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2024
Debt Instrument, Interest Rate, Stated Percentage	7.625%
Long-term Debt	54		54
7.60% debentures due 2027 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2027
Debt Instrument, Interest Rate, Stated Percentage	7.60%
Long-term Debt	222		222
4.8% notes due 2042 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2042
Debt Instrument, Interest Rate, Stated Percentage	4.80%
Long-term Debt	497		497
4.65% notes due 2044 [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date Year	2044
Debt Instrument, Interest Rate, Stated Percentage	4.65%
Long-term Debt	495		0
Debt Instrument, Face Amount		500
Debt Issuance Cost	10
Proceeds from Issuance of Debt	490
Credit Facility [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 240		$ 425

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BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Long-term Borrowings

	September 30,		December 31,
(Dollars in millions)	2014		2013
Borrowings consisted of:
3% notes due 2015	$	250	$	250
2.4% notes due 2017	998		998
6.30% notes due 2018	170		171
5.5% notes due 2019	250		250
4.5% notes due 2021	250		250
3.6% notes due 2022	893		894
7 1/4% debentures due 2024	244		243
7 5/8% debentures due 2024	54		54
7.60% debentures due 2027	222		222
4.8% notes due 2042	497		497
4.65% notes due 2044	495		—
Credit facilities and commercial paper borrowings	240		425
Total borrowings	4,563		4,254
Borrowings due within one year	—		—
Long-term borrowings	$	4,563	$	4,254

Fair Value of Borrowings

			Fair Value Measurements at September 30, 2014
(Dollars in millions)	Recorded Amount September 30, 2014		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-term borrowings	$	4,563	$	4,802	$	4,562	$	240	$	—

			Fair Value Measurements at December 31, 2013
(Dollars in millions)	Recorded Amount December 31, 2013		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-term borrowings	$	4,254	$	4,366	$	3,941	$	425	$	—

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PROVISION FOR INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	Third Quarter						First Nine Months
(Dollars in millions)	2014			2013			2014			2013
Provision for income taxes from continuing operations	$	86		$	125		$	281		$	338
Effective tax rate	29		%	29		%	28		%	29		%

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STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 3 OCI (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				9 Months Ended				12 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013		Dec. 31, 2013
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	$ (127)		$ 45		$ (114)		$ 10		$ 28
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Net Prior Service Cost (Credit) Arising During Period, Net of Tax	0		29		0		29
Other Comprehensive Income (Loss), Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service (Cost) Credit, Net of Tax	(4)	[1]	(4)	[1]	(12)	[1]	(11)	[1]	13
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax	(4)		25		(12)		18
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax	36		(13)		42		(4)
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Net of Tax	0		0		(9)		0
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax	36		(13)		33		(4)		7
Other Comprehensive Income (Loss), Net of Tax	(95)		57		(93)		24		48
Other Comprehensive Income (Loss), before Tax [Abstract]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax	(127)		43		(115)		8
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Net Prior Service Cost (Credit) Arising During Period, before Tax	0		47		0		47
Other Comprehensive (Income) Loss, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), before Tax	(7)	[1]	(7)	[1]	(21)	[1]	(19)	[1]
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Tax	(7)		40		(21)		28
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, before Tax	58		(19)		67		(13)
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax	0		(2)		(14)		6
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, before Tax	58		(21)		53		(7)
Other Comprehensive Income (Loss), before Tax	(76)		62		(83)		29
Increase (Decrease) in Other Current Assets					$ (23)		$ 1

[1] Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans".

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BORROWINGS Part 2 (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended		3 Months Ended		9 Months Ended			9 Months Ended
	Sep. 30, 2014 Line of Credit [Member]	Dec. 31, 2013 Line of Credit [Member]	Sep. 30, 2014 Line of Credit [Member]	Mar. 31, 2014 Line of Credit [Member]	Sep. 30, 2014 Line of Credit [Member]	Sep. 30, 2014 Commercial Paper [Member]	Dec. 31, 2013 Commercial Paper [Member]	Sep. 30, 2014 Revolving Credit Facility [Member]
Credit Facilities [Abstract]
Credit Facility, Description					the Company amended a $250 million line of credit under its accounts receivable securitization agreement (the "A/R Facility"), extending the maturity to April 2017. The amended A/R Facility has terms substantially similar to the $250 million accounts receivable securitization agreement previously expiring April 2016.			The Company has access to borrowings under a $1 billion revolving credit agreement (the "Credit Facility") expiring October 2018.
Credit Facility, Borrowing Capacity	$ 1,010	$ 825	$ 250		$ 250			$ 1,000
Credit Facility, Expiration					Apr. 30, 2017			Oct. 31, 2018
Proceeds from AR Facility				125
Repayments on AR Facility			125
Credit Facility Covenant Compliance	contain a number of customary covenants and events of default, including the maintenance of certain financial ratios. The Company was in compliance with all such covenants for all periods presented
Line of Credit Facility, Commitment Fee Description					Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and the Company pays a fee to maintain availability of the A/R Facility.			Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment.
Long-term Debt						$ 240	$ 425
Debt Instrument, Interest Rate, Stated Percentage						0.31%	0.35%

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DERIVATIVES (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block]

Total notional amounts (in millions, unless noted):		September 30, 2014	December 31, 2013
Foreign Exchange Forward and Option Contracts
	EUR/USD (in EUR)	€903	€954
	EUR/USD (in approximate USD equivalent)	$1,160	$1,320
	JPY/USD (in JPY)	¥5,700	¥8,300
	JPY/USD (in approximate USD equivalent)	$50	$80
Commodity Forward and Collar Contracts
	Contract ethylene sales (in thousand metric tons)	17	—
	Feedstock (in million barrels)	25	8
	Energy (in million british thermal units)	17	—
Interest rate swaps for the future issuance of debt		$100	—

Financial assets and liabilities valued on a recurring basis

The following chart shows the gross financial assets and liabilities valued on a recurring basis.

(Dollars in millions)				Fair Value Measurements at September 30, 2014
Description	September 30, 2014			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	102		$	—	$	101		$	1
Derivative Liabilities	(38		)	—		(38		)	—
	$	64		$	—	$	63		$	1

(Dollars in millions)				Fair Value Measurements at December 31, 2013
Description	December 31, 2013			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	58		$	—	$	58		$	—
Derivative Liabilities	(46		)	—		(46		)	—
	$	12		$	—	$	12		$	—

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The table below presents a rollforward of activity for these assets (liabilities) for the period ended September 30, 2014:

Fair Value Measurements Using Level 3 Inputs
Commodity Contracts	Third Quarter					First Nine Months
(Dollars in millions)	2014		2013			2014		2013
Balance at beginning of period	$	—	$	(7	)	$	—	$	(5	)
Realized gain (loss) in sales revenue	—		(3		)	—		(10		)
Change in unrealized gain (loss)	1		4			1		2
Settlements	—		3			—		10
Transfers (out) in of Level 3	—		—			—		—
Balance at end of period	$	1	$	(3	)	$	1	$	(3	)

Schedule of Derivative Financial Assets and Liabilities Based on Fair Value on Recurring Basis and Balance Sheet Location

Fair Value of Derivatives Designated as Hedging Instruments

(Dollars in millions)		Fair Value Measurements Significant Other Observable Inputs
Derivative Assets	Statement of Financial Position Location	September 30, 2014		December 31, 2013
Cash Flow Hedges
Commodity contracts	Other current assets	$	9	$	20
Commodity contracts	Other noncurrent assets	1		7
Foreign exchange contracts	Other current assets	43		17
Foreign exchange contracts	Other noncurrent assets	49		14
		$	102	$	58

(Dollars in millions)		Fair Value Measurements Significant Other Observable Inputs
Derivative Liabilities	Statement of Financial Position Location	September 30, 2014		December 31, 2013
Fair Value Hedges
Interest rate swaps	Other long-term liabilities	$	3	$	—
Cash Flow Hedges
Commodity contracts	Payables and other current liabilities	10		—
Commodity contracts	Other long-term liabilities	15		—
Foreign exchange contracts	Payables and other current liabilities	9		21
Foreign exchange contracts	Other long-term liabilities	1		25
		$	38	$	46

Derivative Instrument Gain Loss in Statement of Financial Performance

Derivatives' Hedging Relationships

	Third Quarter
(Dollars in millions)	Location of Gain/(Loss) Recognized in Income on Derivatives	Amount of Gain/ (Loss) Recognized Income on Derivatives
Derivatives in Fair Value Hedging Relationships		September 30, 2014		September 30, 2013
Interest rate contracts	Net interest expense	$	2	$	—
		$	2	$	—

	First Nine Months
(Dollars in millions)	Location of Gain/(Loss) Recognized in Income on Derivatives	Amount of Gain/ (Loss) Recognized Income on Derivatives
Derivatives in Fair Value Hedging Relationships		September 30, 2014		September 30, 2013
Interest rate contracts	Net interest expense	$	3	$	—
		$	3	$	—

	Third Quarter
(Dollars in millions)	Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion)						Location of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)	Pre-tax amount of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)
Derivatives' Cash Flow Hedging Relationships	September 30, 2014			September 30, 2013				September 30, 2014			September 30, 2013
Commodity contracts	$	(22	)	$	8		Sales	$	—		$	(3	)
							Cost of Sales	(1		)	4
Foreign exchange contracts	57			(22		)	Sales	4			2
Forward starting interest rate swap contracts	1			1			Net interest expense	(2		)	(2		)
	$	36		$	(13	)		$	1		$	1
	First Nine Months
(Dollars in millions)	Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion)						Location of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)	Pre-tax amount of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)
Derivatives' Cash Flow Hedging Relationships	September 30, 2014			September 30, 2013				September 30, 2014			September 30, 2013
Commodity contracts	$	(27	)	$	4		Sales	$	—		$	(10	)
							Cost of sales	18			1
Foreign exchange contracts	59			(11		)	Sales	3			8
Forward starting interest rate swap contracts	1			3			Net interest expense	(6		)	(6		)
	$	33		$	(4	)		$	15		$	(7	)

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RETIREMENT PLANS (Tables)

9 Months Ended

Sep. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Components of net periodic benefit cost

Components of net periodic benefit cost were as follows:

	Third Quarter
	Pension Plans												Other Postretirement Benefit Plans
	2014						2013						2014			2013
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit cost:
Service cost	$	11		$	4		$	11		$	3		$	2		$	2
Interest cost	24			7			22			7			11			11
Expected return on assets	(36		)	(9		)	(32		)	(9		)	(2		)	(1		)
Amortization of:
Prior service cost (credit)	(1		)	—			(1		)	—			(6		)	(6		)
Mark-to-market pension and other postretirement benefits gain (1)	—			—			—			—			—			(86		)
Net periodic benefit cost	$	(2	)	$	2		$	—		$	1		$	5		$	(80	)
	First Nine Months
	Pension Plans												Other Postretirement Benefit Plans
	2014						2013						2014			2013
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit cost:
Service cost	$	31		$	11		$	32		$	10		$	6		$	8
Interest cost	74			23			66			21			33			33
Expected return on assets	(107		)	(28		)	(96		)	(26		)	(5		)	(5		)
Amortization of:
Prior service cost (credit)	(3		)	—			(3		)	—			(18		)	(16		)
Mark-to-market pension and other postretirement benefits gain (1)	—			—			—			—			—			(86		)
Net periodic benefit cost	$	(5	)	$	6		$	(1	)	$	5		$	16		$	(66	)

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INVENTORIES

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

	September 30,			December 31,
(Dollars in millions)	2014			2013
At FIFO or average cost (approximates current cost)
Finished goods	$	1,070		$	976
Work in process	282			300
Raw materials and supplies	507			494
Total inventories	1,859			1,770
LIFO Reserve	(501		)	(506		)
Total inventories	$	1,358		$	1,264

Inventories valued on the LIFO method were approximately 60 percent of total inventories as of both September 30, 2014 and December 31, 2013.

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ENVIRONMENTAL MATTERS (Tables)

9 Months Ended

Sep. 30, 2014

Accrual for Environmental Loss Contingencies Disclosure [Abstract]

Schedule of changes to environmental remediation liabilities

The amounts charged to pre-tax earnings for environmental remediation and related charges are included in cost of sales and other charges (income), net, and are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2013	$	341
Changes in estimates recorded to earnings	7
Cash reductions	(19		)
Balance at September 30, 2014	$	329

Schedule of environmental remediation liabilities, current and non-current

The Company's total environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is recorded in the Unaudited Consolidated Statements of Financial Position as follows:

(Dollars in millions)	September 30, 2014		December 31, 2013
Environmental contingent liabilities, current	$	40	$	40
Environmental contingent liabilities, long-term	310		328
Total	$	350	$	368

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INVENTORIES (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
At FIFO or average cost (approximates current cost) [Abstract]
Finished goods	$ 1,070	$ 976
Work in process	282	300
Raw materials and supplies	507	494
Total inventories	1,859	1,770
LIFO Reserve	(501)	(506)
Total inventories	$ 1,358	$ 1,264
Inventories valued on the LIFO method (in hundredths)	60.00%	60.00%

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ENVIRONMENTAL MATTERS (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Site Contingency [Line Items]
Amount Accrued to Date for Environmental Contingent Liabilities	$ 350
Portion Of Environmental Reserve Related To Previously Closed, Impaired, And Divested Sites	10	9
Best Estimate Accrued to-date For Asset Retirement Obligation	21	27
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning of period	368
End of period	350
Accrual for Environmental Loss Contingencies, Balance Sheet Classification [Abstract]
Accrued Environmental Loss Contingencies, Current	40	40
Accrued Environmental Loss Contingencies, Noncurrent	310	328
Amount Accrued to Date for Environmental Contingent Liabilities	350
Accrual for Environmental Loss Contingencies, Significant Assumptions	Reserves for environmental remediation that management believes to be probable and estimable are recorded as current and long-term liabilities in the Unaudited Consolidated Statements of Financial Position. These reserves include liabilities expected to be paid out within 30 years.
Environmental Remediation [Member]
Site Contingency [Line Items]
Loss Contingency, Range of Possible Loss, Minimum	329	341
Loss Contingency, Range of Possible Loss, Maximum	568	581
Accrual for Environmental Loss Contingencies [Roll Forward]
Net charges taken	7
Cash reductions	$ (19)

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UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND RETAINED EARNINGS (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Income Statement [Abstract]
Sales	$ 2,413		$ 2,338		$ 7,178		$ 7,085
Cost of sales	1,777		1,649		5,290		5,103
Gross profit	636		689		1,888		1,982
Selling, general and administrative expenses	171		159		511		510
Research and development expenses	56		48		165		148
Asset impairments and restructuring charges (gains), net	71		3		77		24
Operating earnings	338		479		1,135		1,300
Net interest expense	45		44		132		137
Other charges (income), net	(5)		1		(16)		2
Earnings from continuing operations before income taxes	298		434		1,019		1,161
Provision for income taxes from continuing operations	86		125		281		338
Earnings from continuing operations	212		309		738		823
Earnings from discontinued operations, net of tax	0		0		2		0
Net earnings	212		309		740		823
Less: Net earnings attributable to noncontrolling interest	2		1		5		4
Net earnings attributable to Eastman	210		308		735		819
Amounts attributable to Eastman stockholders [Abstract]
Earnings from continuing operations, net of tax	210		308		733		819
Earnings from discontinued operations, net of tax	0		0		2		0
Net earnings attributable to Eastman	210		308		735		819
Basic earnings per share attributable to Eastman
Earnings from continuing operations	$ 1.41	[1]	$ 2.00	[1]	$ 4.89	[1]	$ 5.31	[1]
Earnings from discontinued operations	$ 0.00		$ 0.00		$ 0.01		$ 0.00
Basic earnings per share attributable to Eastman	$ 1.41		$ 2.00		$ 4.90		$ 5.31
Diluted earnings per share attributable to Eastman
Earnings from continuing operations	$ 1.39	[1]	$ 1.97	[1]	$ 4.83	[1]	$ 5.23	[1]
Earnings from discontinued operations	$ 0.00		$ 0.00		$ 0.02		$ 0.00
Diluted earnings per share attributable to Eastman	$ 1.39		$ 1.97		$ 4.85		$ 5.23
Comprehensive Income
Net earnings including noncontrolling interest	212		309		740		823
Other comprehensive income (loss), net of tax
Change in cumulative translation adjustment	(127)		45		(114)		10
Defined benefit pension and other postretirement benefit plans [Abstract]
Prior service credit arising during period	0		29		0		29
Amortization of unrecognized prior service credits included in net periodic costs	(4)	[2]	(4)	[2]	(12)	[2]	(11)	[2]
Derivatives and hedging [Abstract]
Unrealized (loss) gain during period	36		(13)		42		(4)
Reclassification adjustment for (losses) gains included in net income	0		0		(9)		0
Total other comprehensive income (loss), net of tax	(95)		57		(93)		24
Comprehensive income including noncontrolling interest	117		366		647		847
Less: Net earnings attributable to noncontrolling interest	2		1		5		4
Comprehensive income attributable to Eastman	115		365		642		843
Retained Earnings
Retained earnings at beginning of period	4,431		3,456		4,012		3,038
Net earnings attributable to Eastman	210		308		735		819
Cash dividends declared	(53)		(46)		(159)	[3]	(139)
Retained earnings at end of period	$ 4,588		$ 3,718		$ 4,588		$ 3,718

[1] Earnings per share are calculated using whole dollars and shares.

[2] Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans".

[3] Includes cash dividends paid and dividends declared, but unpaid.

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BORROWINGS Part 3 (Details) Fair Value (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term borrowings	$ 4,563	$ 4,254
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Borrowings, Fair Value	4,802	4,366
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Borrowings, Fair Value	4,562	3,941
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Borrowings, Fair Value	240	425
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Borrowings, Fair Value	$ 0	$ 0

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company (the "Company" or "Eastman") in accordance and consistent with the accounting policies stated in the Company's 2013 Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K. The December 31, 2013 financial position data included herein was derived from the audited consolidated financial statements included in the 2013 Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). The unaudited consolidated financial statements are prepared in conformity with GAAP and of necessity include some amounts that are based upon management estimates and judgments.  Future actual results could differ from such current estimates.  The unaudited consolidated financial statements include assets, liabilities, sales revenue, and expenses of all majority-owned subsidiaries and joint ventures in which a controlling interest is maintained.  Eastman accounts for other joint ventures and investments where it exercises significant influence on the equity basis.  Intercompany transactions and balances are eliminated in consolidation.  Certain prior period data has been reclassified in the Consolidated Financial Statements and accompanying footnotes to conform to current period presentation.

In first nine months 2014, the Company recognized $2 million, net of tax, in earnings from discontinued operations from final settlement of commercial litigation related to the previously discontinued polyethylene terephthalate ("PET") business.

Basis of Accounting, Policy [Policy Text Block]

The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company (the "Company" or "Eastman") in accordance and consistent with the accounting policies stated in the Company's 2013 Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K. The December 31, 2013 financial position data included herein was derived from the audited consolidated financial statements included in the 2013 Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). The unaudited consolidated financial statements are prepared in conformity with GAAP and of necessity include some amounts that are based upon management estimates and judgments.  Future actual results could differ from such current estimates.  The unaudited consolidated financial statements include assets, liabilities, sales revenue, and expenses of all majority-owned subsidiaries and joint ventures in which a controlling interest is maintained.  Eastman accounts for other joint ventures and investments where it exercises significant influence on the equity basis.  Intercompany transactions and balances are eliminated in consolidation.  Certain prior period data has been reclassified in the Consolidated Financial Statements and accompanying footnotes to conform to current period presentation.

Discontinued Operations, Policy [Policy Text Block]

In first nine months 2014, the Company recognized $2 million, net of tax, in earnings from discontinued operations from final settlement of commercial litigation related to the previously discontinued polyethylene terephthalate ("PET") business.

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SHARE-BASED COMPENSATION AWARDS (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 6	$ 8	$ 23	$ 27
Share-based compensation net of deferred tax expense	$ 4	$ 5	$ 14	$ 17

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ASSETS IMPAIRMENTS AND RESTRUCTURING CHARGES, NET (Tables)

9 Months Ended

Sep. 30, 2014

Restructuring Costs and Asset Impairment Charges [Abstract]

Changes to restructuring reserve and related activities

The following table summarizes the changes in other asset impairments and restructuring charges and gains, the non-cash reductions attributable to asset impairments, and the cash reductions in shutdown reserves for severance costs and site closure costs paid for first nine months2014 and full year 2013:

(Dollars in millions)	Balance at January 1, 2014		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at September 30, 2014
Non-cash charges	$	—	$	50	$	(50	)	$	—		$	—
Severance costs	22		13		—			(19		)	16
Site closure and restructuring costs	14		14		(3		)	(5		)	20
Total	$	36	$	77	$	(53	)	$	(24	)	$	36

(Dollars in millions)	Balance at January 1, 2013		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at December 31, 2013
Non-cash charges	$	—	$	28	$	(28	)	$	—		$	—
Severance costs	4		27		2			(11		)	22
Site closure and restructuring costs	21		21		(16		)	(12		)	14
Total	$	25	$	76	$	(42	)	$	(23	)	$	36

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company's products and operations are currently managed and reported in five operating segments: Additives & Functional Products ("AFP"), Adhesives & Plasticizers ("A&P"), Advanced Materials ("AM"), Fibers, and Specialty Fluids & Intermediates ("SFI"). For additional information concerning the Company's segments' businesses and products, see Note 21, "Segment Information" to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

Included in third quarter and first nine months 2014 "other" was sales revenue from the acquired Knowlton business, part of the Eastman^TM microfibers technology platform. Included in third quarter and first nine months 2013 "other" sales revenue were the Perennial Wood™ growth initiative and the Photovoltaics product line acquired from Solutia in 2012. There was no sales revenue related to Perennial Wood™ included in third quarter or first nine months 2014 as a result of decisions made by management in 2013 not to continue its Perennial Wood^TM growth initiative.

	Third Quarter
(Dollars in millions)	2014		2013
Sales
Additives & Functional Products	$	458	$	445
Adhesives & Plasticizers	347		321
Advanced Materials	604		583
Fibers	346		363
Specialty Fluids & Intermediates	650		620
Total Sales by Segment	2,405		2,332
Other	8		6
Total Sales	$	2,413	$	2,338
	First Nine Months
(Dollars in millions)	2014		2013
Sales
Additives & Functional Products	$	1,333	$	1,294
Adhesives & Plasticizers	1,050		1,005
Advanced Materials	1,816		1,792
Fibers	1,086		1,072
Specialty Fluids & Intermediates	1,884		1,904
Total Sales by Segment	7,169		7,067
Other	9		18
Total Sales	$	7,178	$	7,085

	Third Quarter
(Dollars in millions)	2014			2013
Operating Earnings (Loss)
Additives & Functional Products (1)(2)(3)	$	37		$	111
Adhesives & Plasticizers	52			41
Advanced Materials (3)	76			69
Fibers	112			113
Specialty Fluids & Intermediates (4)	90			90
Total Operating Earnings by Segment	367			424
Other (5)
Growth initiatives and businesses not allocated to segments (6)	(18		)	(20		)
Pension and other postretirement benefit costs not allocated to operating segments (7)	3			87
Acquisition transaction, integration, and restructuring costs (8)(9)(10)	(14		)	(12		)
Total Operating Earnings	$	338		$	479

⁽¹⁾  Included in third quarter 2014 earnings are asset impairments and restructuring charges of $42 million for costs of the planned closure of a Crystex^® R&D facility in France. This closure is subject to certain local legal and regulatory requirements.

⁽²⁾  Included in third quarter 2014 earnings is a $22 million asset impairment of the Crystex^® tradename.

⁽³⁾  Included in third quarter 2014 earnings are asset impairments and restructuring charges of $1 million and $4 million in the AFP and AM segments, respectively, related to a change in estimate of certain costs of the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site.

⁽⁴⁾  As required by purchase accounting, acquired BP plc global aviation turbine engine oil business inventories were marked to fair value. Included in third quarter 2014 earnings are additional costs of these inventories. Approximately 75 percent, or $6 million, of these inventories were sold in third quarter 2014 resulting in an increase in cost of sales.

⁽⁵⁾  R&D, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating earnings (loss).

⁽⁶⁾  Businesses not allocated to segments in 2013 included the Perennial Wood™ growth initiative and Photovoltaics product line, both of which ceased production in the second half of 2013. Businesses not allocated to segments in 2014 include Eastman™ microfiber technology platform.

⁽⁷⁾  Included in third quarter 2013 earnings is a MTM other postretirement benefit plan gain of $86 million for a change in benefits. See Note 8, "Retirement Plans."

⁽⁸⁾  Included in third quarter 2014 earnings are transaction costs of $7 million for the pending acquisitions of Taminco and Commonwealth Laminating & Coating, and for the completed acquisition of the global aviation turbine engine oil business from BP plc.

⁽⁹⁾  Included in third quarter 2014 earnings are integration costs of $5 million for the acquired Solutia and global aviation turbine engine oil businesses. Included in third quarter 2013 earnings are integration costs of $9 million for the acquired Solutia businesses.

⁽¹⁰⁾  Included in third quarter 2014 earnings are restructuring charges of $2 million for severance associated with the continued integration of the acquired Solutia businesses. Included in third quarter 2013 earnings are restructuring charges of $3 million primarily for severance associated with the continued integration of the acquired Solutia businesses.

	First Nine Months
(Dollars in millions)	2014			2013
Operating Earnings (Loss)
Additives & Functional Products (1)(2)(3)(4)(5)(6)	$	236		$	313
Adhesives & Plasticizers (6)	155			139
Advanced Materials (3)(5)(6)(7)	217			216
Fibers	352			343
Specialty Fluids & Intermediates (6)(8)	248			302
Total Operating Earnings by Segment	1,208			1,313
Other (9)
Growth initiatives and businesses not allocated to segments (10)(11)(12)	(46		)	(73		)
Pension and other postretirement benefit costs not allocated to operating segments (13)	9			93
Acquisition transaction, integration, and restructuring costs (14)(15)(16)	(36		)	(33		)
Total Operating Earnings	$	1,135		$	1,300

⁽¹⁾  Included in first nine months 2014 earnings are asset impairments and restructuring charges of $42 million for costs of the planned closure of a Crystex^® R&D facility in France. This closure is subject to certain local legal and regulatory requirements.

⁽²⁾  Included in first nine months 2014 earnings is a $22 million asset impairment of the Crystex^® tradename.

⁽³⁾  Included in first nine months 2014 earnings are asset impairments and restructuring charges of $1 million and $4 million in the AFP and AM segments, respectively, related to a change in estimate of certain costs of the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site.

⁽⁴⁾  Included in first nine months 2014 earnings is a $2 million gain on the sale of previously impaired assets at a former polymers production facility in China.

⁽⁵⁾  Included in first nine months 2013 earnings is a reduction in previous charges for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site, which is reported as reductions of $1 million and $3 million in the AFP and AM segments, respectively.

⁽⁶⁾  Included in first nine months 2013 earnings are restructuring charges of $2 million, $1 million, $2 million, and $1 million in the AFP, A&P, AM, and SFI segments, respectively, primarily for severance

⁽⁷⁾  Included in first nine months 2014 earnings are asset impairments and restructuring charges of $10 million primarily for the closure of a production facility in Taiwan for the Flexvue^® product line.

⁽⁸⁾  As required by purchase accounting, acquired BP plc's global aviation turbine engine oil business inventories were marked to fair value. Included in first nine months 2014 earnings are additional costs of these inventories. Approximately $8 million were sold in first nine months 2014 resulting in an increase in cost of sales.

⁽⁹⁾  R&D, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating earnings (loss).

⁽¹⁰⁾  Businesses not allocated to segments in 2013 included the Perennial Wood™ growth initiative and Photovoltaics product line, both of which ceased production in the second half of 2013. Businesses not allocated to segments in 2014 include Eastman™ microfiber technology platform.

⁽¹¹⁾  Included in first nine months 2014 earnings is a $5 million gain on sales of previously impaired assets at the former Photovoltaics production facility in Germany.

⁽¹²⁾  Included in first nine months 2013 earnings are asset impairments and restructuring charges of $13 million primarily for the closure of a production facility in Germany for the Photovoltaics product line.

⁽¹³⁾  Included in first nine months 2013 earnings is a MTM other postretirement benefit plan gain of $86 million for a change in benefits. See Note 8, "Retirement Plans."

⁽¹⁴⁾  Included in first nine months 2014 earnings are transaction costs of $10 million for the pending acquisition of Taminco and Commonwealth Laminating & Coating, and for the completed acquisition of the global aviation turbine engine oil business from BP plc.

⁽¹⁵⁾  Included in first nine months 2014 earnings are integration costs of $21 million for the acquired Solutia and the global aviation turbine engine oil businesses. Included in first nine months 2013 earnings are integration costs of $24 million for the acquired Solutia businesses.

⁽¹⁶⁾  Included in first nine months 2014 and 2013 earnings are restructuring charges of $5 million and $9 million, respectively, primarily for severance associated with the continued integration of the acquired Solutia businesses.

	September 30,		December 31,
(Dollars in millions)	2014		2013
Assets by Segment (1)
Additives & Functional Products	$	2,963	$	2,940
Adhesives & Plasticizers	1,025		996
Advanced Materials	3,794		3,807
Fibers	986		974
Specialty Fluids & Intermediates	2,376		2,054
Total Assets by Segment	11,144		10,771
Corporate Assets	991		1,074
Total Assets	$	12,135	$	11,845

⁽¹⁾  The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

9 Months Ended

Sep. 30, 2014

Supplemental Cash Flow Information [Abstract]

Schedule of Cash Flow, Supplemental Disclosures

Included in the line item "Other items, net" of the "Cash flows from operating activities" section of the Unaudited Consolidated Statements of Cash Flows are the following changes to Unaudited Consolidated Statement of Financial Position line items:

(Dollars in millions)	First Nine Months
	2014			2013
Other current assets	$	23		$	(1	)
Other noncurrent assets	25			20
Payables and other current liabilities	52			(24		)
Long-term liabilities and equity	(32		)	(98		)
Total	$	68		$	(103	)

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ACQUISITIONS ACQUISITIONS (Tables) (BP plc [Member])

9 Months Ended

Sep. 30, 2014

BP plc [Member]

Acquired Finite-Lived Intangible Assets [Line Items]

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

Intangible Assets acquired on June 2, 2014
(Dollars in millions)	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets
Brands	$	74	30
Customer relationships	65		16
Total	$	139

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ACQUISITIONS ACQUISITIONS

9 Months Ended

Sep. 30, 2014

Acquisitions [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

ACQUISITIONS

Knowlton Technologies, LLC

On August 6, 2014, the Company acquired Knowlton Technologies, LLC. ("Knowlton"), a leader in the design, accelerated prototyping, and manufacture of wet-laid nonwovens in filtration, friction, and custom designed composite webs, for a total cash purchase price of $42 million, prior to post-closing adjustments. The acquisition was accounted for as a business combination. The acquired Knowlton business is a developing business of the Eastman^TM microfiber technology platform, the financial results of which are not identifiable to an operating segment and are shown as "other" operating earnings (loss). Current assets consist primarily of $14 million in accounts receivable and inventory acquired. Management valued properties and equipment, totaling $18 million, using the cost approach supported where available by observable market data which includes consideration of obsolescence. Goodwill of $8 million, which represents the excess of the purchase price over the estimated fair value of net tangible and intangible assets acquired and liabilities assumed, is expected to be deductible for tax purposes. Acquired intangible assets of $6 million consist primarily of developed technologies with an amortization period of 15 years. Management valued intangible assets using the relief from royalty method, a form of the income approach supported by observable market data from peer chemical companies. Current liabilities of $4 million consist primarily of accounts payable. Values assigned are preliminary.

BP plc's Global Aviation Turbine Engine Oil Business

On June 2, 2014, the Company acquired BP plc's global aviation turbine engine oil business ("aviation turbine oil business") for a total cash purchase price of $283 million, prior to post-closing adjustments. The acquisition was accounted for as a business combination and is reported in the Specialty Fluids & Intermediates ("SFI") segment. In combination with Eastman's Skydrol^® aviation hydraulic fluids business, the acquired aviation turbine oil business enables Eastman to better supply the global aviation industry.

The purchase price allocation for the aviation turbine oil business acquisition is preliminary as of September 30, 2014. The purchase price allocation remains open primarily for post-closing adjustments which may impact current assets and noncurrent assets. The Company expects to finalize the purchase price allocation in fourth quarter 2014. Adjustments to the June 30, 2014 preliminary purchase price allocation of the aviation turbine oil business acquisition during third quarter2014 are reflected in the Company's Consolidated Statements of Financial Position as of September 30, 2014 and are summarized in the table below. These adjustments are not material to the Company's financial position or results of operations for third quarter 2014. The following table summarizes the purchase price allocation for the aviation turbine oil business acquisition as of June 2, 2014, as previously reported at June 30, 2014, the net impact of adjustments during third quarter of 2014, and the resulting preliminary purchase price allocation for the aviation turbine oil business acquisition as of June 2, 2014 as reported at September 30, 2014:

(Dollars in millions)	As of June 2, 2014 Previously Reported		Increase (Decrease)			As of June 2, 2014 As Adjusted
Current assets	$	42	$	—		$	42
Machinery and equipment	11		(1		)	10
Goodwill	68		24			92
Intangible assets	162		(23		)	139
Total purchase price	$	283	$	—		$	283

Current assets consist primarily of inventory acquired. Machinery and equipment acquired included manufacturing operations in Linden, New Jersey and technology resources in Naperville, Illinois. Management valued machinery and equipment using the cost approach supported by published industry sources.

In connection with the purchase transaction, the Company recorded goodwill, which represents the excess of the purchase price over the estimated fair value of net tangible and intangible assets acquired and liabilities assumed.  All goodwill is expected to be deductible for tax purposes.

Intangible assets acquired included brands that are business-to-business in nature. Also acquired were customer relationships in the aviation industry. Management valued intangible assets using the relief from royalty and multi-period excess earnings methods, both forms of the income approach supported by observable market data for peer chemical companies.

Intangible Assets acquired on June 2, 2014
(Dollars in millions)	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets
Brands	$	74	30
Customer relationships	65		16
Total	$	139

In first nine months 2014, the Company recognized $3 million and $2 million in transaction and integration costs, respectively, related to the acquisition. Transaction and integration costs were expensed as incurred and are included in the "Selling, general and administrative expenses" line item in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. As required by purchase accounting, the acquired inventories were marked to fair value. Approximately 75 percent of these inventories were sold in third quarter 2014 resulting in a $6 million increase in cost of sales with all of these inventories sold in first nine months resulting in an $8 million increase in cost of sales in first nine months 2014.

Beginning in June 2014, the Company's consolidated results of operations included the results of the acquired aviation turbine oil business. Based on applicable accounting and reporting guidance, the acquisition is not material to the Company's consolidated financial statements; therefore, pro forma financial information has not been presented.

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (USD $) In Millions, unless otherwise specified	Sep. 30, 2014		Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 212		$ 237
Trade receivables, net	985		880
Miscellaneous receivables	141		208
Inventories	1,358		1,264
Other current assets	194		251
Total current assets	2,890		2,840
Properties
Properties and equipment at cost	10,230		9,958
Less: Accumulated depreciation	5,878		5,668
Net properties	4,352		4,290
Goodwill	2,716		2,637
Intangible assets, net of accumulated amortizaton	1,808		1,761
Other noncurrent assets	369		317
Total assets	12,135	[1]	11,845	[1]
Current liabilities
Payables and other current liabilities	1,398		1,470
Borrowings due within one year	0		0
Total current liabilities	1,398		1,470
Long-term borrowings	4,563		4,254
Deferred income tax liabilities	573		496
Post-employment obligations	1,242		1,297
Other long-term liabilities	380		453
Total liabilities	8,156		7,970
Stockholders' equity
Common stock	2		2
Additional paid-in capital	1,810		1,778
Retained earnings	4,588		4,012
Accumulated other comprehensive income	78		171
Total stockholders' equity before treasury stock	6,478		5,963
Less: Treasury stock at cost	2,577		2,167
Total Eastman stockholders' equity	3,901		3,796
Noncontrolling interest	78		79
Total equity	3,979		3,875
Total liabilities and stockholders' equity	$ 12,135		$ 11,845

[1] (1) The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and inta

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

A reconciliation of the changes in stockholders' equity for first nine months 2014 is provided below:

(Dollars in millions)	Common Stock at Par Value $	Paid-in Capital $		Retained Earnings $		Accumulated Other Comprehensive Income (Loss) $		Treasury Stock at Cost $		Total Stockholders' Equity Attributed to Eastman $		Noncontrolling Interest $		Total Stockholders' Equity $
Balance at December 31, 2013	2	1,778		4,012		171		(2,167	)	3,796		79		3,875
Net Earnings	—	—		735		—		—		735		5		740
Cash Dividends Declared (1) ($1.05 per share)	—	—		(159	)	—		—		(159	)	—		(159	)
Other Comprehensive Income	—	—		—		(93	)	—		(93	)	—		(93	)
Share-Based Compensation Expense (2)	—	23		—		—		—		23		—		23
Stock Option Exercises	—	12		—		—		—		12		—		12
Other (3)	—	(3	)	—		—		—		(3	)	(2	)	(5	)
Share Repurchase	—	—		—		—		(410	)	(410	)	—		(410	)
Distributions to Noncontrolling Interest	—	—		—		—		—		—		(4	)	(4	)
Balance at September 30, 2014	2	1,810		4,588		78		(2,577	)	3,901		78		3,979

⁽¹⁾  Includes cash dividends paid and dividends declared, but unpaid.

⁽²⁾  Includes the fair value of equity share-based awards recognized for share-based compensation.

⁽³⁾  Paid in capital includes tax benefits/charges relating to the difference between the amounts deductible for federal income taxes over the amounts charged to income for book value purposes have been adjusted to paid-in capital and other items. Equity attributable to noncontrolling interest includes adjustments for currency revaluation.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

(Dollars in millions)	Cumulative Translation Adjustment			Benefit Plans Unrecognized Prior Service Credits			Unrealized Gains (Losses) on Derivative Instruments			Unrealized Losses on Investments			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2012	$	105		$	65		$	(46	)	$	(1	)	$	123
Period change	28			13			7			—			48
Balance at December 31, 2013	133			78			(39		)	(1		)	171
Period change	(114		)	(12		)	33			—			(93		)
Balance at September 30, 2014	$	19		$	66		$	(6	)	$	(1	)	$	78

Amounts of other comprehensive income (loss) are presented net of applicable taxes.  The Company records deferred income taxes on the cumulative translation adjustment related to branch operations and other entities included in the Company's consolidated U.S. tax return.  No deferred income taxes are provided on the cumulative translation adjustment of subsidiaries outside the United States, as such cumulative translation adjustment is considered to be a component of indefinitely invested, unremitted earnings of these foreign subsidiaries.

Components of other comprehensive income recorded in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects:

	Third Quarter
	2014						2013
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(127	)	$	(127	)	$	43		$	45
Defined benefit pension and other postretirement benefit plans:
Prior service credit arising during the period	—			—			47			29
Amortization of unrecognized prior service credits included in net periodic costs (1)	(7		)	(4		)	(7		)	(4		)
Change in defined benefit pension and other postretirement benefit plans	(7		)	(4		)	40			25
Derivatives and hedging: (2)
Unrealized (loss) gain	58			36			(19		)	(13		)
Reclassification adjustment for (gain) loss included in net income	—			—			(2		)	—
Change in derivatives and hedging	58			36			(21		)	(13		)
Total other comprehensive income (loss)	$	(76	)	$	(95	)	$	62		$	57
	First Nine Months
	2014						2013
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(115	)	$	(114	)	$	8		$	10
Defined benefit pension and other postretirement benefit plans:
Prior service credit arising during the period	—			—			47			29
Amortization of unrecognized prior service credits included in net periodic costs (1)	(21		)	(12		)	(19		)	(11		)
Change in defined benefit pension and other postretirement benefit plans	(21		)	(12		)	28			18
Derivatives and hedging:(2)
Unrealized gain (loss) during period	67			42			(13		)	(4		)
Reclassification adjustment for (gain) loss included in net income	(14		)	(9		)	6			—
Change in derivatives and hedging	53			33			(7		)	(4		)
Total other comprehensive income (loss)	$	(83	)	$	(93	)	$	29		$	24

⁽¹⁾  Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans".

⁽²⁾  For additional information regarding the impact of reclassifications into earnings, refer to Note 7, "Derivatives".

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Document and Entity Information (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	EASTMAN CHEMICAL CO
Entity Central Index Key	0000915389
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 10,613,223,568
Entity Common Stock, Shares Outstanding	148,527,396
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014

XML

EARNINGS AND DIVIDENDS PER SHARE

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

EARNINGS AND DIVIDENDS PER SHARE

EARNINGS AND DIVIDENDS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share ("EPS") from continuing operations:

	Third Quarter				First Nine Months
	2014		2013		2014		2013
(In millions, except per share amounts)
Numerator
Earnings attributable to Eastman stockholders:
Earnings from continuing operations, net of tax	$	210	$	308	$	733	$	819
Denominator
Weighted average shares used for basic EPS	148.7		154.0		149.8		154.3
Dilutive effect of stock options and other awards	1.6		2.4		1.7		2.4
Weighted average shares used for diluted EPS	150.3		156.4		151.5		156.7
EPS from continuing operations (1)
Basic	$	1.41	$	2.00	$	4.89	$	5.31
Diluted	$	1.39	$	1.97	$	4.83	$	5.23

⁽¹⁾  Earnings per share are calculated using whole dollars and shares.

In both third quarter and first nine months2014, common shares underlying options to purchase 210,143 shares of common stock were excluded from the shares treated as outstanding for computation of diluted earnings per share because the total market value of option exercises for these awards was less than the total cash proceeds that would be received for these exercises. Third quarter and first nine months2014 reflect the impact of share repurchases of 618,896 and 4,945,452 shares, respectively.

In third quarter2013, common shares underlying options to purchase 125,019 shares of common stock, were excluded from the shares treated as outstanding for computation of diluted earnings per share because the total market value of option exercises for these awards was less than the total cash proceeds that would be received for these exercises. In first nine months2013, there were no outstanding options to purchase shares of common stock excluded from the computation of diluted earnings per share. Third quarter and first nine months2013 reflect the impact of share repurchases of 463,418 and 1,579,118 shares, respectively.

The Company declared cash dividends of $0.35 and $0.30 per share in third quarter2014 and 2013, respectively, and $1.05 and $0.90 per share in first nine months2014 and 2013, respectively.

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Stockholders' equity
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	350,000,000	350,000,000
Common stock, shares issued (in shares)	216,136,911	215,131,237
Treasury stock at cost (in shares)	67,660,313	62,714,861

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DERIVATIVES

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

DERIVATIVES

Hedging Programs

The Company is exposed to market risk, such as changes in currency exchange rates, commodity prices, and interest rates.  The Company uses various derivative financial instruments when appropriate pursuant to the Company's hedging policies to mitigate these market risk factors and their effect on the cash flows of the underlying transactions.  Designation is performed on a specific exposure basis to support hedge accounting.  The changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the cash flows of the underlying exposures being hedged.  The Company does not hold or issue derivative financial instruments for trading purposes.

Beginning in third quarter 2014, the maximum period for which the Company hedges commodity prices using derivative financial instruments was increased from three to five years.

For further information on hedging programs, see Note 10, "Derivatives", to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

Fair Value Hedges

Fair value hedges are defined as derivative or non-derivative instruments designated as and used to hedge the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk.  For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings.  In 2014, the Company entered into interest rate swaps to hedge the interest rate risk on the 3.6% notes due 2022. As of September 30, 2014, the total notional amount of the Company's interest rate swaps was $500 million. As of December 31, 2013, the Company had no fair value hedges.

Cash Flow Hedges

Cash flow hedges are derivative instruments designated as and used to hedge the exposure to variability in expected future cash flows that is attributable to a particular risk.  For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income, net of income taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.  Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Total notional amounts (in millions, unless noted):		September 30, 2014	December 31, 2013
Foreign Exchange Forward and Option Contracts
	EUR/USD (in EUR)	€903	€954
	EUR/USD (in approximate USD equivalent)	$1,160	$1,320
	JPY/USD (in JPY)	¥5,700	¥8,300
	JPY/USD (in approximate USD equivalent)	$50	$80
Commodity Forward and Collar Contracts
	Contract ethylene sales (in thousand metric tons)	17	—
	Feedstock (in million barrels)	25	8
	Energy (in million british thermal units)	17	—
Interest rate swaps for the future issuance of debt		$100	—

Total notional for commodity hedging contracts increased significantly in 2014 as a result of the increase in tenor of the contracts and management's decision to increase the level of hedge coverage.

Fair Value Measurements

For additional information on fair value measurement, see Note 1, "Significant Accounting Policies" to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

The following chart shows the gross financial assets and liabilities valued on a recurring basis.

(Dollars in millions)				Fair Value Measurements at September 30, 2014
Description	September 30, 2014			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	102		$	—	$	101		$	1
Derivative Liabilities	(38		)	—		(38		)	—
	$	64		$	—	$	63		$	1

(Dollars in millions)				Fair Value Measurements at December 31, 2013
Description	December 31, 2013			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	58		$	—	$	58		$	—
Derivative Liabilities	(46		)	—		(46		)	—
	$	12		$	—	$	12		$	—

The Company's derivative assets are currently classified as Level 2.  Level 2 fair value is based on estimates using standard pricing models.  These standard pricing models use inputs which are derived from or corroborated by observable market data such as interest rate yield curves and currency spot and forward rates.  The fair value of commodity contracts is derived using forward curves supplied by an industry recognized and unrelated third party.  In addition, on an ongoing basis, the Company tests a subset of its valuations against valuations received from the transaction's counterparty to validate the accuracy of its standard pricing models.  Counterparties to these derivative contracts are highly rated financial institutions which the Company believes carry only a minimal risk of nonperformance.

From time to time, the Company holds Level 3 assets for commodity hedges.  The fair values of Level 3 instruments are determined using pricing data similar to that used in Level 2 financial instruments described above, and reflect adjustments for less liquid markets or longer contractual terms.  Level 3 hedges typically will mature within one year or less.  The Company determines the fair value of Level 3 commodity forward contracts based on related inputs that are either readily available in public markets or can be derived from information available in publicly quoted markets, and which influence the actual forward price of the commodity.  Due to the fact that the forward price of the commodity itself is considered unobservable, the Company has categorized these forward contracts as Level 3.

The table below presents a rollforward of activity for these assets (liabilities) for the period ended September 30, 2014:

Fair Value Measurements Using Level 3 Inputs
Commodity Contracts	Third Quarter					First Nine Months
(Dollars in millions)	2014		2013			2014		2013
Balance at beginning of period	$	—	$	(7	)	$	—	$	(5	)
Realized gain (loss) in sales revenue	—		(3		)	—		(10		)
Change in unrealized gain (loss)	1		4			1		2
Settlements	—		3			—		10
Transfers (out) in of Level 3	—		—			—		—
Balance at end of period	$	1	$	(3	)	$	1	$	(3	)

The following chart shows the financial assets and liabilities valued on a recurring basis and their location in the Unaudited Consolidated Statements of Financial Position.  The Company had less than $1 million of nonqualifying derivatives or derivatives that are not designated as hedges recorded as of September 30, 2014 and December 31, 2013. All of the Company's derivative contracts are subject to master netting arrangements, or similar agreements, which provide for the option to settle contracts on a net basis when they settle on the same day and the same currency. In addition, these arrangements provide for a net settlement of all contracts with a given counterparty in the event that the arrangement is terminated due to the occurrence of default or a termination event. The Company has elected to present the derivative contracts on a gross basis in the Unaudited Consolidated Statements of Financial Position. Had the Company chosen to present the derivatives contracts on a net basis, the Company would have a derivative in a net asset position of $87 million and a derivative in a net liability position of $23 million as of September 30, 2014. The Company does not have any cash collateral due under such agreements.

Fair Value of Derivatives Designated as Hedging Instruments

(Dollars in millions)		Fair Value Measurements Significant Other Observable Inputs
Derivative Assets	Statement of Financial Position Location	September 30, 2014		December 31, 2013
Cash Flow Hedges
Commodity contracts	Other current assets	$	9	$	20
Commodity contracts	Other noncurrent assets	1		7
Foreign exchange contracts	Other current assets	43		17
Foreign exchange contracts	Other noncurrent assets	49		14
		$	102	$	58

(Dollars in millions)		Fair Value Measurements Significant Other Observable Inputs
Derivative Liabilities	Statement of Financial Position Location	September 30, 2014		December 31, 2013
Fair Value Hedges
Interest rate swaps	Other long-term liabilities	$	3	$	—
Cash Flow Hedges
Commodity contracts	Payables and other current liabilities	10		—
Commodity contracts	Other long-term liabilities	15		—
Foreign exchange contracts	Payables and other current liabilities	9		21
Foreign exchange contracts	Other long-term liabilities	1		25
		$	38	$	46

Derivatives' Hedging Relationships

	Third Quarter
(Dollars in millions)	Location of Gain/(Loss) Recognized in Income on Derivatives	Amount of Gain/ (Loss) Recognized Income on Derivatives
Derivatives in Fair Value Hedging Relationships		September 30, 2014		September 30, 2013
Interest rate contracts	Net interest expense	$	2	$	—
		$	2	$	—

	First Nine Months
(Dollars in millions)	Location of Gain/(Loss) Recognized in Income on Derivatives	Amount of Gain/ (Loss) Recognized Income on Derivatives
Derivatives in Fair Value Hedging Relationships		September 30, 2014		September 30, 2013
Interest rate contracts	Net interest expense	$	3	$	—
		$	3	$	—

	Third Quarter
(Dollars in millions)	Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion)						Location of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)	Pre-tax amount of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)
Derivatives' Cash Flow Hedging Relationships	September 30, 2014			September 30, 2013				September 30, 2014			September 30, 2013
Commodity contracts	$	(22	)	$	8		Sales	$	—		$	(3	)
							Cost of Sales	(1		)	4
Foreign exchange contracts	57			(22		)	Sales	4			2
Forward starting interest rate swap contracts	1			1			Net interest expense	(2		)	(2		)
	$	36		$	(13	)		$	1		$	1
	First Nine Months
(Dollars in millions)	Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion)						Location of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)	Pre-tax amount of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)
Derivatives' Cash Flow Hedging Relationships	September 30, 2014			September 30, 2013				September 30, 2014			September 30, 2013
Commodity contracts	$	(27	)	$	4		Sales	$	—		$	(10	)
							Cost of sales	18			1
Foreign exchange contracts	59			(11		)	Sales	3			8
Forward starting interest rate swap contracts	1			3			Net interest expense	(6		)	(6		)
	$	33		$	(4	)		$	15		$	(7	)

"Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion)" declined for commodity contracts as a result of decreased propane prices and improved for foreign exchange contracts as a result of the lower EUR foreign exchange rate.

Hedging Summary

Monetized positions and mark-to-market gains and losses from raw materials and energy, currency, and certain interest rate hedges that were included in accumulated other comprehensive income before taxes totaled losses of approximately $8 million at September 30, 2014 and $80 million at September 30, 2013 with the decrease primarily a result of lower propane prices and EUR exchange rate.  If realized, $23 million net gains in third quarter 2014 will be reclassified into earnings during the next 12 months.  Ineffective portions of hedges are immediately recognized in cost of sales or other charges (income), net.  There were no material gains or losses related to the ineffective portion of hedges recognized in third quarter and first nine months2014 or third quarter and first nine months2013.

The gains or losses on nonqualifying derivatives or derivatives that are not designated as hedges are marked to market in the line item "Other charges (income), net" of the Unaudited Consolidated Statements of Earnings, and, in all periods presented, represent foreign exchange derivatives denominated in multiple currencies and are transacted and settled in the same quarter.  The Company recognized $1 million net gains during third quarter 2014 and $3 million net losses during third quarter2013 on nonqualifying derivatives.  The Company recognized approximately $4 million net gains and $4 million net losses on nonqualifying derivatives during first nine months2014 and 2013, respectively.

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BORROWINGS

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS

	September 30,		December 31,
(Dollars in millions)	2014		2013
Borrowings consisted of:
3% notes due 2015	$	250	$	250
2.4% notes due 2017	998		998
6.30% notes due 2018	170		171
5.5% notes due 2019	250		250
4.5% notes due 2021	250		250
3.6% notes due 2022	893		894
7 1/4% debentures due 2024	244		243
7 5/8% debentures due 2024	54		54
7.60% debentures due 2027	222		222
4.8% notes due 2042	497		497
4.65% notes due 2044	495		—
Credit facilities and commercial paper borrowings	240		425
Total borrowings	4,563		4,254
Borrowings due within one year	—		—
Long-term borrowings	$	4,563	$	4,254

On May 15, 2014, the Company issued 4.65% notes due 2044 in the principal amount of $500 million. Proceeds from the sale of the notes, net of approximately $10 million in transaction costs, were $490 million.

Credit Facility and Commercial Paper Borrowings

As of September 30, 2014, the Company has access to borrowings under a $1 billion revolving credit agreement (the "Credit Facility") expiring October 2018.  Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. At September 30, 2014 and December 31, 2013, the Company had no outstanding borrowings under the Credit Facility.

The Credit Facility provides liquidity support for commercial paper borrowings and general corporate purposes.  Accordingly, any outstanding commercial paper borrowings reduce capacity for borrowings available under the Credit Facility.  Given the expiration date of the Credit Facility, any commercial paper borrowings supported by the Credit Facility are classified as long-term borrowings because the Company has the ability and intent to refinance such borrowings on a long-term basis. At September 30, 2014 the Company's commercial paper borrowings were $240 million with a weighted average interest rate of 0.31 percent. At December 31, 2013 the Company's commercial paper borrowings were $425 million with a weighted average interest rate of 0.35 percent.

In August 2014, the Company amended a $250 million line of credit under its accounts receivable securitization agreement (the "A/R Facility"), extending the maturity to April 2017. The amended A/R Facility has terms substantially similar to the $250 million accounts receivable securitization agreement previously expiring April 2016. Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and the Company pays a fee to maintain availability of the A/R Facility.  At September 30, 2014 and December 31, 2013 the Company had no outstanding borrowings under the A/R Facility. During first quarter 2014, $125 million of the available amount under the A/R Facility was borrowed and then repaid during second quarter 2014.

The Credit Facility and the A/R Facility contain a number of customary covenants and events of default, including the maintenance of certain financial ratios. The Company was in compliance with all such covenants for all periods presented.  Total available borrowings under the Credit Facility and A/R Facility were $1.01 billion and $825 million as of September 30, 2014 and December 31, 2013, respectively. The Company would not violate applicable covenants for these periods if the total available amounts of the facilities had been borrowed.

In connection with its entry into an Agreement and Plan of Merger to acquire Taminco Corporation ("Taminco"), in September 2014, the Company entered into an agreement with Citigroup Global Markets, Inc. which contains commitments for a $2.75 billion senior unsecured bridge term loan facility and sets out the principal terms of an uncommitted $1.0 billion senior unsecured term loan facility. This financing is intended to provide a portion of the funding necessary to complete the acquisition, including refinancing a portion of Taminco's outstanding debt. Depending on market conditions, the Company may seek to finance a portion of the funds to be used to complete the acquisition through the public offering of debt securities. Any commitments under the term loan facility, or proceeds from the sale of debt securities, will reduce the commitments under the bridge term loan facility on a dollar-for-dollar basis. The loan agreements were entered into on October 9, 2014 and were unfunded as of the date of filing of this Quarterly Report on Form 10-Q.

Fair Value of Borrowings

The Company has classified its long-term borrowings at September 30, 2014 and December 31, 2013 under the fair value hierarchy as defined in the accounting policies in Note 1, "Significant Accounting Policies" to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.  The fair value for fixed-rate borrowings is based on current market prices and is classified as Level 1.  The fair value for the Company's floating-rate borrowings, which relate to the A/R Facility and commercial paper, equals the carrying value and is classified as Level 2.

			Fair Value Measurements at September 30, 2014
(Dollars in millions)	Recorded Amount September 30, 2014		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-term borrowings	$	4,563	$	4,802	$	4,562	$	240	$	—

			Fair Value Measurements at December 31, 2013
(Dollars in millions)	Recorded Amount December 31, 2013		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-term borrowings	$	4,254	$	4,366	$	3,941	$	425	$	—

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RECENTLY ISSUED ACCOUNTING STANDARDS

9 Months Ended

Sep. 30, 2014

Recently Issued Accounting Standards [Abstract]

Recently Issued Accounting Standards [Text Block]

RECENTLY ISSUED ACCOUNTING STANDARDS

In April 2014, the Financial Accounting Standards Board ("FASB") issued amended accounting guidance for discontinued operations. The amendments improve the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represents strategic shifts that have (or will have) a major effect on any entity's operations and financial results. Examples of a strategic shift that has (or will have) a major effect on an entity's operations and financial results could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity. The amendments require an entity to present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the assets and liability sections, respectively, of the statement of financial position. In addition to enhanced disclosures for discontinued operations, disclosures are required for disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. This guidance is effective prospectively for reporting periods beginning on or after December 15, 2014. Early adoption is permitted, but only for disposals that have not been reported in financial statements previously issued or available for issuance. The Company has concluded that changes in its accounting required by this new guidance will not materially impact the Company's future accounting for any discontinued operations or its financial position or results of operations.

In May 2014, the FASB and International Accounting Standards Board jointly issued new principles-based accounting guidance for revenue recognition that will supersede virtually all existing revenue guidance. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve the core principle, the guidance establishes the following five steps: 1) identify the contract(s) with a customer, 2) identify the performance obligation in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also details the accounting treatment for costs to obtain or fulfill a contract. Lastly, disclosure requirements have been enhanced to provide sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently evaluating the impact on the Company's financial position or results of operations and related disclosures.

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ASSETS IMPAIRMENTS AND RESTRUCTURING CHARGES (GAINS), NET

9 Months Ended

Sep. 30, 2014

Restructuring Costs and Asset Impairment Charges [Abstract]

ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES (GAINS), NET

ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES (GAINS), NET

In third quarter and first nine months2014, there were net asset impairments and restructuring charges of $71 million and $77 million, respectively.

In third quarter and first nine months 2014, asset impairments of $18 million and restructuring charges, including severance, of $24 million were recognized in the Additives & Functional Products ("AFP") segment for costs of the planned closure of a Crystex^® R&D facility in France. This closure is subject to certain local legal and regulatory requirements.

As a result of the annual impairment testing of indefinite-lived intangible assets, in third quarter and first nine months 2014 the Company recognized an intangible asset impairment of $22 million in the AFP segment to adjust the carrying value of the Crystex^® tradename to the estimated fair value. This impairment resulted from a decrease in projected revenue since the tradename was acquired from Solutia in 2012. The estimated fair value was determined using an income approach, specifically the relief from royalty method.

In addition, during third quarter and first nine months 2014, a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site resulted in a restructuring charge of $5 million to previously recognized asset impairments and restructuring charges.

During first nine months 2014, the Company recognized gains from the sales of previously impaired assets at the former Photovoltaics production facility in Germany and a former polymers production facility in China of $5 million and $2 million, respectively.

In first nine months 2014, charges included $8 million of asset impairments, including intangible assets, and $2 million of restructuring charges in the Advanced Materials ("AM") segment primarily due to the closure of a production facility in Taiwan for the Flexvue^® product line. First nine months 2014 also included $5 million of restructuring charges for severance associated with the continued integration of the acquired Solutia businesses.

In third quarter and first nine months2013, there were $3 million and $24 million, respectively, of net asset impairments and restructuring charges including $3 million and $9 million, respectively, of restructuring charges primarily for severance associated with the continued integration of the acquired Solutia businesses.

During first nine months2013, management decided to shut-down the Photovoltaics product line, including the primary production facility in Germany. This resulted in the Company recognizing asset impairments of $7 million and restructuring charges of $5 million including charges for severance. During first nine months2013, the Company also recognized severance charges of $6 million primarily for a voluntary separation plan for certain employees. In addition, during first nine months2013, a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the Sao Jose dos Campos, Brazil site resulted in a reduction of $4 million to previously recognized asset impairments and restructuring charges.

Changes in Reserves for Asset Impairments, Restructuring Charges (Gains), and Severance Charges

The following table summarizes the changes in other asset impairments and restructuring charges and gains, the non-cash reductions attributable to asset impairments, and the cash reductions in shutdown reserves for severance costs and site closure costs paid for first nine months2014 and full year 2013:

(Dollars in millions)	Balance at January 1, 2014		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at September 30, 2014
Non-cash charges	$	—	$	50	$	(50	)	$	—		$	—
Severance costs	22		13		—			(19		)	16
Site closure and restructuring costs	14		14		(3		)	(5		)	20
Total	$	36	$	77	$	(53	)	$	(24	)	$	36

(Dollars in millions)	Balance at January 1, 2013		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at December 31, 2013
Non-cash charges	$	—	$	28	$	(28	)	$	—		$	—
Severance costs	4		27		2			(11		)	22
Site closure and restructuring costs	21		21		(16		)	(12		)	14
Total	$	25	$	76	$	(42	)	$	(23	)	$	36

Substantially all costs remaining for severance are expected to be applied to the reserves within one year.

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ENVIRONMENTAL MATTERS

9 Months Ended

Sep. 30, 2014

Accrual for Environmental Loss Contingencies Disclosure [Abstract]

Environmental Matters

ENVIRONMENTAL MATTERS

Certain Eastman manufacturing sites generate hazardous and nonhazardous wastes, the treatment, storage, transportation, and disposal of which are regulated by various governmental agencies.  In connection with the cleanup of various hazardous waste sites, the Company, along with many other entities, has been designated a potentially responsible party ("PRP") by the U.S. Environmental Protection Agency under the Comprehensive Environmental Response, Compensation and Liability Act, which potentially subjects PRPs to joint and several liability for such cleanup costs.  In addition, the Company will be required to incur costs for environmental remediation and closure and postclosure under the federal Resource Conservation and Recovery Act.  Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies" to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K. The Company's total reserve for environmental contingencies was $350 million and $368 million at September 30, 2014 and December 31, 2013, respectively.  At September 30, 2014 and December 31, 2013, this reserve included $10 million and $9 million, respectively, related to sites previously closed and impaired by Eastman and sites that have been divested by Eastman but for which the Company retains the environmental liability related to these sites.

Estimated future environmental expenditures for remediation costs ranged from the minimum or best estimate of $329 million to the maximum of $568 million and from the minimum or best estimate of $341 million to the maximum of $581 million at September 30, 2014 and December 31, 2013, respectively.  The maximum estimated future costs are considered to be reasonably possible and include the amounts accrued at both September 30, 2014 and December 31, 2013.  Although the resolution of uncertainties related to these environmental matters may have a material adverse effect on the Company's consolidated results of operations in the period recognized, because of the availability of legal defenses, the Company's preliminary assessment of actions that may be required, and if applicable, the expected sharing of costs, management does not believe that the Company's liability for these environmental matters, individually or in the aggregate, will be material to the Company's consolidated financial position or cash flows.  

For facilities that have environmental asset retirement obligations, the best estimate accrued to date over the facilities' estimated useful lives for these environmental asset retirement obligation costs was $21 million and $27 million at September 30, 2014 and December 31, 2013, respectively. 

Reserves for environmental remediation that management believes to be probable and estimable are recorded as current and long-term liabilities in the Unaudited Consolidated Statements of Financial Position. These reserves include liabilities expected to be paid out within 30 years. The amounts charged to pre-tax earnings for environmental remediation and related charges are included in cost of sales and other charges (income), net, and are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2013	$	341
Changes in estimates recorded to earnings	7
Cash reductions	(19		)
Balance at September 30, 2014	$	329

The Company's total environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is recorded in the Unaudited Consolidated Statements of Financial Position as follows:

(Dollars in millions)	September 30, 2014		December 31, 2013
Environmental contingent liabilities, current	$	40	$	40
Environmental contingent liabilities, long-term	310		328
Total	$	350	$	368

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SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Supplemental Cash Flow Information [Abstract]
Current assets	$ 23	$ (1)
Other noncurrent assets	25	20
Current liabilities	52	(24)
Long-term liabilities and equity	(32)	(98)
Total	$ 68	$ (103)

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RETIREMENT PLANS

9 Months Ended

Sep. 30, 2014

Compensation and Retirement Disclosure [Abstract]

RETIREMENT PLANS

RETIREMENT PLANS

As described in more detail below, Eastman offers various postretirement benefits to its employees.

Defined Benefit Pension Plans and Other Postretirement Benefit Plans

Eastman maintains defined benefit pension plans that provide eligible employees with retirement benefits.  In addition, Eastman provides a subsidy for life insurance, health care, and dental benefits to eligible retirees hired prior to January 1, 2007, and a subsidy for health care and dental benefits to retirees' eligible survivors.  Costs recognized for these benefits are recorded using estimated amounts, which may change as actual costs derived for the year are determined.

For additional information regarding retirement plans, see Note 11, "Retirement Plans", to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

Components of net periodic benefit cost were as follows:

	Third Quarter
	Pension Plans												Other Postretirement Benefit Plans
	2014						2013						2014			2013
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit cost:
Service cost	$	11		$	4		$	11		$	3		$	2		$	2
Interest cost	24			7			22			7			11			11
Expected return on assets	(36		)	(9		)	(32		)	(9		)	(2		)	(1		)
Amortization of:
Prior service cost (credit)	(1		)	—			(1		)	—			(6		)	(6		)
Mark-to-market pension and other postretirement benefits gain (1)	—			—			—			—			—			(86		)
Net periodic benefit cost	$	(2	)	$	2		$	—		$	1		$	5		$	(80	)
	First Nine Months
	Pension Plans												Other Postretirement Benefit Plans
	2014						2013						2014			2013
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit cost:
Service cost	$	31		$	11		$	32		$	10		$	6		$	8
Interest cost	74			23			66			21			33			33
Expected return on assets	(107		)	(28		)	(96		)	(26		)	(5		)	(5		)
Amortization of:
Prior service cost (credit)	(3		)	—			(3		)	—			(18		)	(16		)
Mark-to-market pension and other postretirement benefits gain (1)	—			—			—			—			—			(86		)
Net periodic benefit cost	$	(5	)	$	6		$	(1	)	$	5		$	16		$	(66	)

⁽¹⁾  Mark-to-market gain in third quarter and first nine months 2013 due to the interim remeasurement of the Eastman other postretirement benefit plan obligation, triggered by a plan change in life insurance benefits in third quarter.

In third quarter 2013, the Company changed life insurance benefits provided to future retirees by the Eastman other postretirement benefit plan which triggered an interim remeasurement of this other postretirement benefit plan obligation. The remeasurement resulted in a reduction in the accumulated postretirement benefit obligation of approximately $47 million which will be amortized as a prior service credit from Accumulated Other Comprehensive Income over 8 years. The remeasurement of the plan also resulted in a mark-to-market ("MTM") actuarial gain of $86 million in third quarter 2013. The actuarial gain was primarily due to a higher assumed discount rate of 4.72 percent in third quarter 2013 compared to 4.01 percent at December 31, 2012. The higher assumed discount rate is reflective of changes in global market conditions and interest rates on high-grade corporate bonds. For additional information concerning the Company's accounting methodology for pension and other postretirement actuarial gains and losses, see Note 1, "Significant Accounting Policies" in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

The Company contributed $47 million and $99 million to its U.S. defined benefit pension plans in first nine months2014 and 2013, respectively.

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COMMITMENTS

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS

COMMITMENTS

Purchase Obligations and Lease Commitments

The Company had various purchase obligations at September 30, 2014 totaling $2.0 billion over a period of approximately 30 years for materials, supplies, and energy incident to the ordinary conduct of business.  The Company also had various lease commitments for property and equipment under cancelable, noncancelable, and month-to-month operating leases totaling $254 million over a period of approximately 45 years.  Of the total lease commitments, approximately 55 percent relate to real property, including office space, storage facilities, and land; approximately 35 percent relate to railcars; and approximately 10 percent relate to machinery and equipment, including computer and communications equipment and production equipment.

Guarantees

The Company has operating leases with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease as well as other guarantees.  Disclosures about each group of similar guarantees are provided below.

Residual Value Guarantees

The Company has operating leases with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease.  These residual value guarantees at September 30, 2014 totaled $121 million and consisted primarily of leases for railcars and company aircraft and will expire beginning in 2016.  Management believes, based on current facts and circumstances, that the likelihood of material residual guarantee payments is remote.

Other Guarantees

Guarantees and claims also arise during the ordinary course of business from relationships with joint venture partners, suppliers, customers, and other parties when the Company undertakes an obligation to guarantee the performance of others, if specified triggering events occur.  Non-performance under a contract could trigger an obligation of the Company.  The Company's current other guarantees include guarantees relating primarily to intellectual property, environmental matters, and other indemnifications and have arisen through the normal course of business.  The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these claims, if they were to occur.  These other guarantees have terms between 1 and 20 years with maximum potential future payments of $32 million in the aggregate, with none of these guarantees being individually significant to the Company's operating results, financial position, or liquidity.  Management's current expectation is that future payment or performance related to non-performance under other guarantees is remote.

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LEGAL MATTERS

9 Months Ended

Sep. 30, 2014

Loss Contingency, Information about Litigation Matters [Abstract]

LEGAL MATTERS

LEGAL MATTERS

General

From time to time, the Company and its operations are parties to, or targets of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which are being handled and defended in the ordinary course of business.  While the Company is unable to predict the outcome of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations, or cash flows.

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EARNINGS AND DIVIDENDS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings per share, basic and diluted

The following table sets forth the computation of basic and diluted earnings per share ("EPS") from continuing operations:

	Third Quarter				First Nine Months
	2014		2013		2014		2013
(In millions, except per share amounts)
Numerator
Earnings attributable to Eastman stockholders:
Earnings from continuing operations, net of tax	$	210	$	308	$	733	$	819
Denominator
Weighted average shares used for basic EPS	148.7		154.0		149.8		154.3
Dilutive effect of stock options and other awards	1.6		2.4		1.7		2.4
Weighted average shares used for diluted EPS	150.3		156.4		151.5		156.7
EPS from continuing operations (1)
Basic	$	1.41	$	2.00	$	4.89	$	5.31
Diluted	$	1.39	$	1.97	$	4.83	$	5.23

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RETIREMENT PLANS (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2014 United States Pension Plans of US Entity, Defined Benefit [Member]	Sep. 30, 2013 United States Pension Plans of US Entity, Defined Benefit [Member]	Sep. 30, 2014 United States Pension Plans of US Entity, Defined Benefit [Member]	Sep. 30, 2013 United States Pension Plans of US Entity, Defined Benefit [Member]	Sep. 30, 2014 Foreign Pension Plans, Defined Benefit [Member]	Sep. 30, 2013 Foreign Pension Plans, Defined Benefit [Member]	Sep. 30, 2014 Foreign Pension Plans, Defined Benefit [Member]	Sep. 30, 2013 Foreign Pension Plans, Defined Benefit [Member]	Sep. 30, 2014 Post Retirement Welfare Plans [Member]	Sep. 30, 2013 Post Retirement Welfare Plans [Member]	Sep. 30, 2014 Post Retirement Welfare Plans [Member]	Sep. 30, 2013 Post Retirement Welfare Plans [Member]
Components of net periodic benefit cost [Abstract]
Service cost				$ 11	$ 11	$ 31	$ 32	$ 4	$ 3	$ 11	$ 10	$ 2	$ 2	$ 6	$ 8
Interest cost				24	22	74	66	7	7	23	21	11	11	33	33
Expected return on assets				(36)	(32)	(107)	(96)	(9)	(9)	(28)	(26)	(2)	(1)	(5)	(5)
Amortization of prior service credit				(1)	(1)	(3)	(3)	0	0	0	0	(6)	(6)	(18)	(16)
Mark-to-market gain on pension and other postretirement benefit plans	0	(86)		0	0	0	0	0	0	0	0	0	(86)	0	(86)
Net periodic benefit cost				(2)	0	(5)	(1)	2	1	6	5	5	(80)	16	(66)
Amount of U.S. defined benefit penson plan funded by the company	$ 47	$ 99
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Amortization Period of Prior Service Credits		8
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate		4.72%	4.01%

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SUPPLEMENTAL CASH FLOW INFORMATION

9 Months Ended

Sep. 30, 2014

Supplemental Cash Flow Information [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

Included in the line item "Other items, net" of the "Cash flows from operating activities" section of the Unaudited Consolidated Statements of Cash Flows are the following changes to Unaudited Consolidated Statement of Financial Position line items:

(Dollars in millions)	First Nine Months
	2014			2013
Other current assets	$	23		$	(1	)
Other noncurrent assets	25			20
Payables and other current liabilities	52			(24		)
Long-term liabilities and equity	(32		)	(98		)
Total	$	68		$	(103	)

These changes included monetized positions from raw material and energy, currency, and certain interest rate hedges, prepaid insurance, miscellaneous deferrals, accrued taxes, interest accruals, and environmental accruals.

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INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Schedule of inventories

	September 30,			December 31,
(Dollars in millions)	2014			2013
At FIFO or average cost (approximates current cost)
Finished goods	$	1,070		$	976
Work in process	282			300
Raw materials and supplies	507			494
Total inventories	1,859			1,770
LIFO Reserve	(501		)	(506		)
Total inventories	$	1,358		$	1,264

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DERIVATIVES Part 4 (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Derivatives, Fair Value [Line Items]
Derivative Assets	$ 87
Derivative Liabilities	23
Derivative Assets [Abstract]
Derivative Asset, Fair Value, Gross Asset	102	58
Derivative Liabilities [Abstract]
Derivative Liability, Fair Value, Gross Liability	38	46
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Derivative Assets [Abstract]
Derivative Assets, Cash Flow Hedge, Fair Value	9	20
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member]
Derivative Assets [Abstract]
Derivative Assets, Cash Flow Hedge, Fair Value	1	7
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Derivative Liabilities [Abstract]
Derivative Liability, Cash Flow Hedge, Fair Value	10	0
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member]
Derivative Liabilities [Abstract]
Derivative Liability, Cash Flow Hedge, Fair Value	15	0
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Derivative Assets [Abstract]
Derivative Assets, Cash Flow Hedge, Fair Value	43	17
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member]
Derivative Assets [Abstract]
Derivative Assets, Cash Flow Hedge, Fair Value	49	14
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Derivative Liabilities [Abstract]
Derivative Liability, Cash Flow Hedge, Fair Value	9	21
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member]
Derivative Liabilities [Abstract]
Derivative Liability, Cash Flow Hedge, Fair Value	1	25
Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member]
Derivatives, Fair Value [Line Items]
Fair Value Hedge Liabilities	$ 3	$ 0

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PAYABLES AND OTHER CURRENT LIABILITIES (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Payables and Accruals [Abstract]
Trade creditors	$ 735	$ 762
Accrued payrolls, vacation, and variable-incentive compensation	155	205
Accrued taxes	131	80
Post-employment obligations	58	59
Interest payable	44	46
Environmental contingent liabilities, current portion	40	40
Other	235	278
Total payables and other current liabilities	$ 1,398	$ 1,470

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities
Net earnings	$ 740	$ 823
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	328	326
Asset impairment charges	50	6
Gain on sale of assets	(5)	0
Provision for deferred income taxes	58	118
Mark-to-market gain on pension and other postretirement benefit plans	0	(86)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables	(118)	(119)
(Increase) decrease in inventories	(76)	(14)
Increase (decrease) in trade payables	(12)	(67)
Pension and other postretirement contributions (in excess of) less than expenses	(76)	(120)
Variable compensation (in excess of) less than expenses	(8)	30
Other items, net	68	(103)
Net cash provided by operating activities	949	794
Cash flows from investing activities
Additions to properties and equipment	(406)	(312)
Proceeds from sales of assets	13	6
Acquisitions, net of cash acquired	(325)	0
Additions to capitalized software	(2)	(2)
Other items, net	2	0
Net cash used in investing activities	(718)	(308)
Cash flows from financing activities
Net (decrease) increase in commercial paper borrowings	(185)	300
Proceeds from borrowings	615	150
Repayment of borrowings	(125)	(805)
Dividends paid to stockholders	(159)	(94)
Treasury stock purchases	(410)	(113)
Dividends paid to noncontrolling interest	(9)	(10)
Proceeds from stock option exercises and other items, net	22	55
Net cash used in financing activities	(251)	(517)
Effect of exchange rate changes on cash and cash equivalents	(5)	4
Net change in cash and cash equivalents	(25)	(27)
Cash and cash equivalents at beginning of period	237	249
Cash and cash equivalents at end of period	$ 212	$ 222

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PROVISION FOR INCOME TAXES

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

PROVISION FOR INCOME TAXES

PROVISION FOR INCOME TAXES

	Third Quarter						First Nine Months
(Dollars in millions)	2014			2013			2014			2013
Provision for income taxes from continuing operations	$	86		$	125		$	281		$	338
Effective tax rate	29		%	29		%	28		%	29		%

The third quarter and first nine months 2014 effective tax rates reflect benefit from the integration of Eastman and Solutia business operations and legal entity structures. The third quarter and first nine months2013 effective tax rates were impacted by a $14 million benefit primarily from adjustments to the tax provision to reflect the finalization of the 2012 consolidated U.S. Federal income tax return. The first nine months2013 effective tax rate also benefited from enactment of the American Taxpayer Relief Act of 2012 in January 2013, which resulted in a $10 million benefit primarily from a research and development ("R&D") tax credit. The tax credits expired at the end of 2013.

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ASSETS IMPAIRMENTS AND RESTRUCTURING CHARGES, NET (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges			$ 50	$ 6
Asset impairments and restructuring charges (gains), net	71	3	77	24
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			36	25	25
Provision / Adjustments			77		76
Non-cash Reductions			(53)		(42)
Cash Reductions			(24)		(23)
Balance at End of Period	36		36		36
Non-Cash Charges [Member]
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			0	0	0
Provision / Adjustments			50		28
Non-cash Reductions			(50)		(28)
Cash Reductions			0		0
Balance at End of Period	0		0		0
Employee Severance [Member]
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			22	4	4
Provision / Adjustments			13		27
Non-cash Reductions			0		2
Cash Reductions			(19)		(11)
Balance at End of Period	16		16		22
Employee Severance [Member] | Solutia [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges		3	5	9
Facility Closing [Member]
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			14	21	21
Provision / Adjustments			14		21
Non-cash Reductions			(3)		(16)
Cash Reductions			(5)		(12)
Balance at End of Period	20		20		14
Additives And Functional Products [Member] | Trademarks and Trade Names [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges			22
Sete France Closure [Member] | Additives And Functional Products [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Asset impairments and restructuring charges (gains), net			24
Sete France Closure [Member] | Additives And Functional Products [Member] | Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges			18
Brazil Site Closure [Member]
Restructuring Cost and Reserve [Line Items]
Asset impairments and restructuring charges (gains), net	5			(4)
Germany Site Closure [Member]
Restructuring Cost and Reserve [Line Items]
Gain (Loss) on Disposition of Assets			5
Asset Impairment Charges				7
Germany Site Closure [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges				5
China Site Closure [Member]
Restructuring Cost and Reserve [Line Items]
Gain (Loss) on Disposition of Assets			2
Voluntary Separation Plan [Member]
Restructuring Cost and Reserve [Line Items]
Severance Charges				6
Tawain closure [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges			8
Tawain closure [Member] | Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges			$ 2

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PAYABLES AND OTHER CURRENT LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2014

Payables and Accruals [Abstract]

Schedule of payables and other current liabilities

	September 30,		December 31,
(Dollars in millions)	2014		2013
Trade creditors	$	735	$	762
Accrued payrolls, vacation, and variable-incentive compensation	155		205
Accrued taxes	131		80
Post-employment obligations	58		59
Interest payable	44		46
Environmental contingent liabilities, current portion	40		40
Other	235		278
Total payables and other current liabilities	$	1,398	$	1,470

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BASIS OF PRESENTATION Basis of Presentation (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accounting Policies [Abstract]
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent	$ 0	$ 0	$ 2	$ 0

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SHARE-BASED COMPENSATION AWARDS

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED COMPENSATION AWARDS

SHARE-BASED COMPENSATION AWARDS

The Company utilizes share-based awards under employee and non-employee director compensation programs.  These share-based awards may include restricted and unrestricted stock, restricted stock units, stock options, and performance shares.  In third quarter2014 and 2013, $6 million and$8 million, respectively, of compensation expense before tax were recognized in selling, general and administrative expense in the Unaudited Consolidated Statements of Earnings for all share-based awards.The impact onthird quarter2014and2013net earnings of$4 million and $5 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

In first nine months2014 and 2013, $23 million and $27 million, respectively, of compensation expense before tax were recognized in selling, general and administrative expense in the Unaudited Consolidated Statements of Earnings for all share-based awards. The impact on first nine months2014 and 2013 net earnings of $14 million and $17 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

For additional information regarding share-based compensation plans and awards, see Note 18, "Share-Based Compensation Plans and Awards", to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.