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 quarter 2014 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.