8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934

Date of report (Date of earliest event reported):

January 30, 2020

EASTMAN CHEMICAL COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Delaware	1-12626	62-1539359
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

200 South Wilcox Drive
Kingsport	Tennessee	37662
(Address of Principal Executive Offices)		(Zip Code)

(423) 229-2000

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	EMN	New York Stock Exchange
1.50% Notes Due 2023	EMN23	New York Stock Exchange
1.875% Notes Due 2026	EMN26	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

EASTMAN CHEMICAL COMPANY - EMN 

Item 2.02 Results of Operations and Financial Condition

On January 30, 2020 the registrant publicly released its financial results for fourth quarter and full year 2019. The full text of the release is furnished as Exhibit 99.01 to this Current Report on Form 8-K, and is incorporated herein by reference. This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

EASTMAN CHEMICAL COMPANY - EMN 

Item 9.01 Financial Statements and Exhibits:

(d) Exhibits

The following exhibits are furnished pursuant to Item 9.01:

99.01 Public release by Eastman on January 30, 2020 of fourth quarter and full year 2019 financial results.

104 Cover Page Interactive Data File

EASTMAN CHEMICAL COMPANY - EMN 

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, hereunto duly authorized.

	Eastman Chemical Company
By:	/s/ Scott V. King
	Scott V. King
	Vice President, Corporate Controller and Chief Accounting Officer
	Date: January 30, 2020

EX-99.01

Exhibit 99.01

Eastman Announces Fourth-Quarter and Full-Year 2019 Financial Results

KINGSPORT, Tenn., Jan. 30, 2020 - Eastman Chemical Company (NYSE:EMN) announced its fourth-quarter and full-year 2019 financial results.

(In millions, except per share amounts)	4Q2019	4Q2018	FY2019	FY2018
Sales revenue	$2,205	$2,376	$9,273	$10,151
Earnings before interest and taxes ("EBIT")	62	135	1,120	1,552
Adjusted EBIT*	279	276	1,389	1,633
Earnings per diluted share	0.19	0.24	5.48	7.56
Adjusted earnings per diluted share*	1.42	1.39	7.13	8.20
Net cash provided by operating activities	671	740	1,504	1,543
Free cash flow*	554	593	1,079	1,080

*For non-core and unusual items (including related to the previously reported coal gasification incident) excluded from adjusted earnings and for adjusted provision for income taxes, calculation of free cash flow and of segment adjusted EBIT margins, and reconciliations to reported company and segment earnings and to cash provided by operating activities, see Tables 1, 3A, 3B, 4, 5A and 5B.

“We demonstrated resilience in the fourth quarter despite continued difficult global economic conditions impacting consumer discretionary markets such as transportation,” said Mark Costa, Board Chair and CEO. “Notwithstanding the challenging conditions, for the year, we continued to make strong progress growing new business revenue from innovation and market development initiatives, particularly in the Advanced Materials segment. In addition, with full-year free cash flow approaching $1.1 billion, we once again showed our capability to generate strong cash flow. Although we don’t expect global economic conditions to improve in the coming year, we remain confident in our strategy and the strength of our cash flow going forward.”

Segment Results 4Q 2019 versus 4Q 2018

Additives & Functional Products - Sales revenue decreased primarily due to lower selling prices, lower sales volume, and an unfavorable shift in foreign currency exchange rates. Lower selling prices were primarily due to lower raw material prices, including for care chemicals cost pass-through contracts, and also attributed to increased competitive pressure particularly in markets for certain animal nutrition products, tire additives, and adhesives resins. The lower sales volume was primarily attributed to weak end-market demand resulting from continuing global trade-related pressures, particularly in the transportation market, as well as weak demand in the agriculture market.

Reported EBIT included impairment charges in 2018 and 2019. Adjusted EBIT decreased primarily due to lower sales volume, an unfavorable shift in foreign currency exchange rates, and higher planned manufacturing site maintenance costs partially offset by lower raw material costs more than offsetting lower selling prices.

Advanced Materials - Sales revenue increased due to higher sales volume and more favorable product mix due to strong sales of premium products including Tritan™ copolyester, paint protection film, and Saflex™ acoustic and architectural interlayers. The higher sales volume and improved product mix was partially offset by modestly lower selling prices attributed to lower raw material prices.

Reported and adjusted EBIT increased due to higher sales volume and more favorable product mix as well as lower raw material costs more than offsetting lower selling prices.

Chemical Intermediates - Sales revenue decreased across the segment primarily due to lower selling prices due to lower raw material prices and increased competitive activity.

Reported and adjusted EBIT decreased primarily due to increased planned manufacturing site maintenance costs.

Fibers - Sales revenue increased due to higher acetate tow sales volume attributed to the impact of the U.S.-China trade dispute on fourth-quarter 2018 business and increased sales of textiles products including from the acquired INACSA cellulosic yarn business.

Reported and adjusted EBIT increased slightly due to increased acetate tow sales volume.

Segment Results 2019 versus 2018

Additives & Functional Products - Sales revenue decreased primarily due to lower sales volume, lower selling prices, and an unfavorable shift in foreign currency exchange rates. The lower sales volume was primarily attributed to weaker end-market demand resulting from global trade-related pressures, particularly in transportation markets and other consumer discretionary end markets. Lower selling prices were primarily due to lower raw material prices, including for care chemicals due to cost pass-through contracts, and increased competitive pressure in markets for tire additives, animal nutrition products, and adhesives resins.

Reported EBIT included impairment charges in 2018 and 2019 and coal gasification incident insurance in excess of costs in 2018. Adjusted EBIT decreased primarily due to lower sales volume, less favorable product mix, and an unfavorable shift in foreign currency exchange rates. The unfavorable product mix was primarily due to lower sales of coatings additives products attributed to reduced automotive sales in China.

Advanced Materials - Sales revenue decreased due to slightly lower sales volume and an unfavorable shift in foreign currency exchange rates. Strong growth in our premium products, including paint protection film, Tritan™ copolyester, and Saflex™ acoustic and architectural interlayers, was offset by declines in other copolyester products and standard interlayers related to underlying market declines in transportation and consumer durable end markets.

Reported and adjusted EBIT increased primarily due to lower raw material costs and increased sales of certain premium products partially offset by lower sales volume and an unfavorable shift in foreign currency exchange rates.

Chemical Intermediates - Sales revenue decreased primarily due to lower selling prices across the segment attributed to lower raw material prices and increased competitive activity. Sales revenue was also negatively impacted by lower functional amines products sales volume attributed to weaker demand in agricultural end markets resulting from wet weather in North America and lower intermediates products sales volume attributed to increased competitive activity.

Reported EBIT included an impairment charge in 2019 and coal gasification incident insurance in excess of costs in 2018. Adjusted EBIT decreased primarily due to lower selling prices more than offsetting lower raw material costs and lower sales volume, which were partially offset by benefits from the recent modifications to olefins cracking units to allow use of refinery-grade propylene feedstock.

Fibers - Sales revenue decreased primarily due to lower acetate tow sales volume attributed to weakened market demand resulting from general market decline and customer buying patterns.

Reported EBIT included coal gasification incident insurance in excess of costs in 2018. Adjusted EBIT decreased primarily due to lower acetate tow sales volume.

Cash Flow

In 2019, cash from operating activities was $1.5 billion and free cash flow (cash from operating activities less net capital expenditures) was $1.1 billion. Priorities for uses of available cash include payment of the quarterly dividend, repayment of debt, funding targeted growth initiatives, and repurchasing shares. In 2019, the company returned $668 million to stockholders, with $343 million of dividends and $325 million of share repurchases. In addition, the company repaid $370 million of debt, with total borrowings reduced by $386 million including the impact of currency translation on the carrying value of euro-denominated borrowings. See Tables 5A, 5B, and 6.

2020 Outlook

Commenting on the outlook for full-year 2020, Costa said: “We enter 2020 in a period of significant uncertainty related to macro factors that are out of our control. In this environment, we are focused on what we can control, including growing new business revenue by leveraging our innovation-driven growth model, aggressive cost management, and disciplined capital allocation. We are currently assuming that slow growth continues in 2020 at levels similar to 2019, although with less inventory destocking. Taking all of this together, we expect 2020 adjusted earnings per share to be between $7.20 and $7.60 and free cash flow to be between $1.0 billion and $1.1 billion.”

The full-year 2020 projected earnings exclude any non-core, unusual or non-recurring items. Our 2020 financial results forecasts do not include non-core items (such as mark-to-market pension and other postretirement benefit gain or loss and asset impairments and restructuring charges) or any unusual or non-recurring items, and we accordingly are unable to reconcile projected full-year 2020 earnings excluding non-core and any unusual or non-recurring items to reported GAAP earnings without unreasonable efforts.

Forward-Looking Statements

This news release includes forward-looking statements concerning current expectations and assumptions for future global economic, market, and business conditions; competitive position and acceptance of specialty products in key markets; mix of products sold; raw material and energy prices and costs, and other costs; and revenue, earnings, and cash flow for full-year 2020. Such expectations and assumptions are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations and assumptions expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company's public disclosures, including filings with the Securities and Exchange Commission (including the Form 10-Q filed for third quarter 2019 available, and the Form 10-K to be filed for 2019 and to be available) and Company press releases and pre-noticed public investor presentations available on the Eastman web site at www.eastman.com in the Investors, SEC filings section.

Conference Call and Webcast Information

Eastman will host a conference call with industry analysts on January 31, 2020 at 8:00 a.m. ET. To listen to the live webcast of the conference call and view the accompanying slides, go to investors.eastman.com, Events & Presentations. The slides to be discussed during the call and webcast will be available at investors.eastman.com at approximately 5:00 p.m. ET on January 30, 2020. To listen via telephone, the dial-in number is 323-994-2093, passcode number 2348789. A web replay, a replay in downloadable MP3 format, and the accompanying slides will be available at investors.eastman.com, Events & Presentations. A telephone replay will be available continuously from 11:00 a.m. ET, January 31, 2020 to 11:00 a.m. ET, February 10, 2020 at 888-203-1112 or 719-457-0820, passcode 2348789.

Founded in 1920, Eastman is a global advanced materials and specialty additives company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction, and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in more than 100 countries and had 2019 revenues of approximately $9.3 billion. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 14,500 people around the world. For more information, visit www.eastman.com.

# # #

Contacts:

Media:  Tracy Kilgore Addington

423-224-0498 / tracy@eastman.com

Investors:  Greg Riddle

212-835-1620 / griddle@eastman.com

FINANCIAL INFORMATION

January 30, 2020

For Eastman Chemical Company Fourth Quarter 2019 Financial Results Release

Table of Contents

Item		Page
Table 1	Statements of Earnings	1
Table 2A	Segment Sales Information	2
Table 2B	Sales Revenue Change	2
Table 2C	Sales by Customer Location	2
Table 3A	Segment, Other, and Company Non-GAAP Earnings (Loss) Before Interest and Taxes Reconciliations	3
Table 3B	Segment Non-GAAP Earnings (Loss) Before Interest and Taxes Margins	4
Table 4	Non-GAAP Earnings Before Interest and Taxes, Net Earnings, and Earnings Per Share Reconciliations	5
Table 5A	Statements of Cash Flows	7
Table 5B	Net Cash Provided By Operating Activities to Free Cash Flow Reconciliations	8
Table 6	Total Borrowings to Net Debt Reconciliations	8

Table 1 – Statements of Earnings
	Fourth Quarter						Twelve Months
(Dollars in millions, except per share amounts; unaudited)	2019			2018			2019		2018
Sales	$	2,205		$	2,376		$	9,273	$	10,151
Cost of sales(1)	1,708			1,910			7,039		7,672
Gross profit	497			466			2,234		2,479
Selling, general and administrative expenses	176			167			691		721
Research and development expenses	60			59			234		235
Asset impairments and restructuring charges, net	74			39			126		45
Other components of post-employment (benefit) cost, net (2)	122			69			60		(21		)
Other (income) charges, net (3)	3			(3		)	3		(53		)
Earnings before interest and taxes	62			135			1,120		1,552
Net interest expense	53			57			218		235
Early debt extinguishment costs	—			7			—		7
Earnings before income taxes	9			71			902		1,310
Provision for (benefit from) income taxes (4)	(18		)	36			140		226
Net earnings	27			35			762		1,084
Less: Net earnings attributable to noncontrolling interest	1			1			3		4
Net earnings attributable to Eastman	$	26		$	34		$	759	$	1,080
Basic earnings per share attributable to Eastman	$	0.19		$	0.25		$	5.52	$	7.65
Diluted earnings per share attributable to Eastman	$	0.19		$	0.24		$	5.48	$	7.56
Shares (in millions) outstanding at end of period	136.0			139.8			136.0		139.8
Shares (in millions) used for earnings per share calculation
Basic	135.9			139.8			137.4		141.2
Diluted	137.1			141.1			138.5		142.9

⁽¹⁾  Fourth quarter 2018 includes $3 million costs and twelve months 2018 includes $18 million income from business interruption insurance in excess of costs from the previously reported disruption, repairs, and reconstruction of the coal gasification facility and restart of operations resulting from the October 4, 2017 incident (the "coal gasification incident").

⁽²⁾  Fourth quarter and twelve months 2019 and 2018 includes an annual mark-to-market pension and other postretirement benefit plans valuation loss. See Table 3Aand 4.

⁽³⁾  Twelve months 2018 includes a gain of $65 million from insurance for property damage from the coal gasification incident.

⁽⁴⁾  Twelve months 2019, fourth quarter 2018, and twelve months 2018 includes expense of $7 million, $24 million, and $20 million, respectively, decreasing the provisional net earnings increase previously recognized as a result of tax law changes.

1

Table 2A – Segment Sales Information
	Fourth Quarter				Twelve Months
(Dollars in millions, unaudited)	2019		2018		2019		2018
Sales by Segment
Additives & Functional Products	$	763	$	851	$	3,273	$	3,647
Advanced Materials	638		624		2,688		2,755
Chemical Intermediates	578		689		2,443		2,831
Fibers	226		212		869		918
Total Eastman Chemical Company	$	2,205	$	2,376	$	9,273	$	10,151

Table 2B – Sales Revenue Change
	Fourth Quarter 2019 Compared to Fourth Quarter 2018
			Change in Sales Revenue Due To
(Unaudited)	Revenue % Change		Volume / Product Mix Effect		Price Effect		Exchange Rate Effect
Additives & Functional Products	(10)	%	(3)	%	(6)	%	(1)	%
Advanced Materials	2	%	5	%	(2)	%	(1)	%
Chemical Intermediates	(16	)%	(1)	%	(15)	%	—	%
Fibers	7	%	8	%	(1)	%	—	%
Total Eastman Chemical Company	(7)	%	1	%	(7)	%	(1)	%
	Twelve Months 2019 Compared to Twelve Months 2018
			Change in Sales Revenue Due To
(Unaudited)	Revenue % Change		Volume / Product Mix Effect		Price Effect		Exchange Rate Effect
Additives & Functional Products	(10)	%	(5)	%	(3)	%	(2)	%
Advanced Materials	(2)	%	(1)	%	—	%	(1)	%
Chemical Intermediates	(14	)%	(4)	%	(9)	%	(1)	%
Fibers	(5)	%	(4)	%	(1)	%	—	%
Total Eastman Chemical Company	(9)	%	(4)	%	(4)	%	(1)	%

Table 2C – Sales by Customer Location
	Fourth Quarter				Twelve Months
(Dollars in millions, unaudited)	2019		2018		2019		2018
Sales by Customer Location
United States and Canada	$	924	$	1,012	$	3,885	$	4,303
Asia Pacific	549		558		2,278		2,504
Europe, Middle East, and Africa	595		655		2,544		2,756
Latin America	137		151		566		588
Total Eastman Chemical Company	$	2,205	$	2,376	$	9,273	$	10,151

2

Table 3A - Segment, Other, and Company Non-GAAP Earnings (Loss) Before Interest and Taxes Reconciliations (1)
	Fourth Quarter						Twelve Months
(Dollars in millions, unaudited)	2019			2018			2019			2018
Additives & Functional Products
Earnings before interest and taxes	$	59		$	85		$	496		$	639
Asset impairments and restructuring charges, net (2)(3)	50			38			54			38
Net coal gasification incident (insurance) costs	—			—			—			(6		)
Excluding non-core and unusual items	109			123			550			671
Advanced Materials
Earnings before interest and taxes	111			71			517			509
Asset impairments and restructuring charges, net (4)	1			1			1			1
Net coal gasification incident (insurance) costs	—			—			—			(9		)
Excluding unusual item	112			72			518			501
Chemical Intermediates
Earnings before interest and taxes	—			44			170			308
Asset impairments and restructuring charges, net (3)	22			—			22			—
Net coal gasification incident (insurance) costs	—			2			—			(30		)
Excluding unusual item	22			46			192			278
Fibers
Earnings before interest and taxes	50			47			194			257
Net coal gasification incident (insurance) costs	—			1			—			(38		)
Excluding unusual item	50			48			194			219
Other
Loss before interest and taxes	(158		)	(112		)	(257		)	(161		)
Mark-to-market pension and other postretirement benefit plans (gain) loss, net	143			99			143			99
Asset impairments and restructuring charges, net (4)	1			—			49			6
Costs resulting from tax law changes and outside-U.S. entity reorganizations	—			—			—			20
Excluding non-core and unusual items	(14		)	(13		)	(65		)	(36		)
Total Eastman Chemical Company
Earnings before interest and taxes	62			135			1,120			1,552
Mark-to-market pension and other postretirement benefit plans (gain) loss, net	143			99			143			99
Asset impairments and restructuring charges, net	74			39			126			45
Net coal gasification incident (insurance) costs	—			3			—			(83		)
Costs resulting from tax law changes and outside-U.S. entity reorganizations	—			—			—			20
Total earnings before interest and taxes excluding non-core and unusual items	$	279		$	276		$	1,389		$	1,633

Table 3A - Segment, Other, and Company Non-GAAP Earnings (Loss) Before Interest and Taxes Reconciliations(1)   (continued)
	Fourth Quarter				Twelve Months
(Dollars in millions, unaudited)	2019		2018		2019		2018
Company Non-GAAP Earnings Before Interest and Taxes Reconciliations by Line Items
Earnings before interest and taxes	$	62	$	135	$	1,120	$	1,552
Costs of sales	—		3		—		(18		)
Selling, general and administrative expenses	—		—		—		7
Asset impairments and restructuring charges, net	74		39		126		45
Other components of net periodic (benefit) cost	143		99		143		99
Other (income) charges, net	—		—		—		(52		)
Total earnings before interest and taxes excluding non-core and unusual items	$	279	$	276	$	1,389	$	1,633

⁽¹⁾  See "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Quarterly Report on Form 10-Q for third quarter 2019 for descriptions of first nine months 2019 non-core and unusual items. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Annual Report on Form 10-K for 2018 description of the 2018 non-core and unusual items.

⁽²⁾  Fourth quarter 2019 includes a $45 million goodwill impairment for the crop protection reporting unit resulting from annual impairment testing.

⁽³⁾  Fourth quarter 2019 includes charges of $5 million and $22 million in the Additives and Functional Products and Chemical Intermediates segments, respectively, for an asset impairment resulting from the decision to exit Singapore manufacturing site operations by the end of 2020.

⁽⁴⁾  Primarily severance and related restructuring costs.

3

Table 3B - Segment Non-GAAP Earnings (Loss) Before Interest and Taxes Margins(1)(2)
	Fourth Quarter										Twelve Months
(Dollars in millions, unaudited)	2019					2018					2019					2018
	Adjusted EBIT			Adjusted EBIT Margin		Adjusted EBIT			Adjusted EBIT Margin		Adjusted EBIT			Adjusted EBIT Margin		Adjusted EBIT			Adjusted EBIT Margin
Additives & Functional Products	$	109		14.3	%	$	123		14.5	%	$	550		16.8	%	$	671		18.4	%
Advanced Materials	112			17.6	%	72			11.5	%	518			19.3	%	501			18.2	%
Chemical Intermediates	22			3.8	%	46			6.7	%	192			7.9	%	278			9.8	%
Fibers	50			22.1	%	48			22.6	%	194			22.3	%	219			23.9	%
Total segment EBIT excluding non-core and unusual items	293			13.3	%	289			12.2	%	1,454			15.7	%	1,669			16.4	%
Other	(14		)			(13		)			(65		)			(36		)
Total EBIT excluding non-core and unusual items	$	279		12.7	%	$	276		11.6	%	$	1,389		15.0	%	$	1,633		16.1	%

⁽¹⁾  For identification of excluded non-core and unusual items and reconciliations to GAAP EBIT, see Table 3A.

⁽²⁾  Adjusted EBIT margin is non-GAAP EBIT divided by GAAP sales. See Table 2A for sales.

4

Table 4 – Non-GAAP Earnings Before Interest and Taxes, Net Earnings, and Earnings Per Share Reconciliations
	Fourth Quarter 2019
	Earnings Before Interest and Taxes		Earnings Before Income Taxes		Provision for Income Taxes			Effective Income Tax Rate		Net Earnings  Attributable to Eastman
(Dollars in millions, except per share amounts, unaudited)										After Tax			Per Diluted Share
As reported (GAAP)	$	62	$	9	$	(18	)	(237	)%	$	26		$	0.19
Non-Core or Unusual Items:(1)
Asset impairments and restructuring charges, net	74		74		—					74			0.53
Mark-to-market pension and other postretirement benefit plans loss, net	143		143		34					109			0.80
Interim adjustment to tax provision (2)	—		—		13					(13		)	(0.10		)
Non-GAAP (Excluding non-core and unusual items and with adjusted provision for income taxes)	$	279	$	226	$	29		13	%	$	196		$	1.42

	Fourth Quarter 2018
	Earnings Before Interest and Taxes		Earnings Before Income Taxes		Provision for Income Taxes			Effective Income Tax Rate		Net Earnings  Attributable to Eastman
(Dollars in millions, except per share amounts, unaudited)										After Tax		Per Diluted Share
As reported (GAAP)	$	135	$	71	$	36		51	%	$	34	$	0.24
Non-Core or Unusual Items:(1)
Asset impairments and restructuring charges, net	39		39		—					39		0.28
Mark-to-market pension and other postretirement benefit plans loss, net	99		99		24					75		0.53
Net costs resulting from coal gasification incident	3		3		1					2		0.02
Early debt extinguishment costs	—		7		1					6		0.04
Adjustments from tax law changes and outside-U.S. entity reorganizations	—		—		(24		)			24		0.17
Interim adjustment to tax provision (2)	—		—		(16		)			16		0.11
Non-GAAP (Excluding non-core and unusual items and with adjusted provision for income taxes)	$	276	$	219	$	22		11	%	$	196	$	1.39

⁽¹⁾  See Table 3A for description of fourth quarter 2019 and 2018 non-core and unusual items. Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

⁽²⁾  Fourth quarter 2019 and 2018 is a reconciliation of the adjustments made in interim quarters to reflect the previously forecasted full year effective tax rate.

5

Table 4 – Non-GAAP Earnings Before Interest and Taxes, Net Earnings, and Earnings Per Share Reconciliations (continued)
	Twelve Months 2019
	Earnings Before Interest and Taxes		Earnings Before Income Taxes		Provision for Income Taxes			Effective Income Tax Rate		Net Earnings  Attributable to Eastman
(Dollars in millions, except per share amounts, unaudited)										After Tax		Per Diluted Share
As reported (GAAP)	$	1,120	$	902	$	140		16	%	$	759	$	5.48
Non-Core or Unusual Items:(1)
Asset impairments and restructuring charges, net	126		126		13					113		0.81
Mark-to-market pension and other postretirement benefit plans loss, net	143		143		34					109		0.79
Adjustments from tax law changes and outside-U.S. entity reorganizations	—		—		(7		)			7		0.05
Non-GAAP (Excluding non-core and unusual items)	$	1,389	$	1,171	$	180		15	%	$	988	$	7.13

	Twelve Months 2018
	Earnings Before Interest and Taxes			Earnings Before Income Taxes			Provision for Income Taxes			Effective Income Tax Rate		Net Earnings  Attributable to Eastman
(Dollars in millions, except per share amounts, unaudited)												After Tax			Per Diluted Share
As reported (GAAP)	$	1,552		$	1,310		$	226		17	%	$	1,080		$	7.56
Non-Core or Unusual Items:(1)
Asset impairments and restructuring charges, net	45			45			2					43			0.30
Mark-to-market pension and other postretirement benefit plans loss, net	99			99			24					75			0.52
Coal gasification incident insurance in excess of costs	(83		)	(83		)	(16		)			(67		)	(0.47		)
Costs resulting from tax law changes and outside-U.S. entity reorganizations	20			20			5					15			0.11
Early debt extinguishment costs	—			7			1					6			0.04
Adjustments from tax law changes and outside-U.S. entity reorganizations	—			—			(20		)			20			0.14
Non-GAAP (Excluding non-core and unusual items)	$	1,633		$	1,398		$	222		16	%	$	1,172		$	8.20

⁽¹⁾  See Table 3A for description of 2019 and 2018 non-core and unusual items. Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

6

Table 5A – Statements of Cash Flows
	Fourth Quarter						Twelve Months
(Dollars in millions, unaudited)	2019			2018			2019			2018
Operating activities
Net earnings (1)	$	27		$	35		$	762		$	1,084
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	149			153			611			604
Mark-to-market pension and other postretirement benefit plans (gain) loss, net	143			99			143			99
Asset impairment charges	72			39			72			39
Early debt extinguishment and other related costs	—			7			—			7
Gain from sale of assets and business	—			(4		)	—			(4		)
Gain from property insurance	—			—			—			(65		)
Provision for (benefit from) deferred income taxes (2)	25			(66		)	38			(51		)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables	220			245			170			16
(Increase) decrease in inventories	42			37			(80		)	(224		)
Increase (decrease) in trade payables	156			83			(27		)	90
Pension and other postretirement contributions (in excess of ) less than expenses	(22		)	(40		)	(119		)	(152		)
Variable compensation (in excess of) less than expenses	53			32			38			55
Other items, net	(194		)	120			(104		)	45
Net cash provided by operating activities	671			740			1,504			1,543
Investing activities
Additions to properties and equipment	(117		)	(147		)	(425		)	(528		)
Proceeds from property insurance (3)	—			—			—			65
Proceeds from sale of assets and business	—			5			—			5
Acquisitions, net of cash acquired	—			(3		)	(48		)	(3		)
Other items, net	(3		)	(3		)	(7		)	(2		)
Net cash used in investing activities	(120		)	(148		)	(480		)	(463		)
Financing activities
Net increase (decrease) in commercial paper and other borrowings	(219		)	(485		)	(70		)	(146		)
Proceeds from borrowings	125			1,114			460			1,604
Repayment of borrowings	(375		)	(1,081		)	(760		)	(1,774		)
Dividends paid to stockholders	(85		)	(78		)	(343		)	(318		)
Treasury stock purchases	—			(25		)	(325		)	(400		)
Other items, net	(2		)	(3		)	(5		)	(6		)
Net cash used in financing activities	(556		)	(558		)	(1,043		)	(1,040		)
Effect of exchange rate changes on cash and cash equivalents	2			(1		)	(3		)	(5		)
Net change in cash and cash equivalents	(3		)	33			(22		)	35
Cash and cash equivalents at beginning of period	207			193			226			191
Cash and cash equivalents at end of period	$	204		$	226		$	204		$	226

⁽¹⁾  Fourth quarter 2018 includes $3 million costs and twelve months 2018 includes $83 million income from business interruption and property damage insurance in excess of costs from the coal gasification incident.

⁽²⁾  Twelve months 2019, fourth quarter 2018, and twelve months 2018 includes impact from recent tax law changes.

⁽³⁾  Cash proceeds from insurance for coal gasification incident property damage.

7

Table 5B – Net Cash Provided By Operating Activities to Free Cash Flow Reconciliations
	Fourth Quarter						Twelve Months
(Dollars in millions, unaudited)	2019			2018			2019			2018
Net cash provided by operating activities	$	671		$	740		$	1,504		$	1,543
Capital expenditures
Additions to properties and equipment	(117		)	(147		)	(425		)	(528		)
Proceeds from property insurance (1)	—			—			—			65
Net capital expenditures	(117		)	(147		)	(425		)	(463		)
Free cash flow	$	554		$	593		$	1,079		$	1,080

⁽¹⁾  Cash proceeds from insurance for coal gasification incident property damage.

Table 6 – Total Borrowings to Net Debt Reconciliations
	December 31,		December 31,
(Dollars in millions, unaudited)	2019		2018
Total borrowings	$	5,782	$	6,168
Less: Cash and cash equivalents	204		226
Net debt	$	5,578	$	5,942

8

XML

Cover Page	Jan. 30, 2020
Entity Information [Line Items]
Document Type	8-K
Document Period End Date	Jan. 30, 2020
Entity Registrant Name	EASTMAN CHEMICAL CO
Entity Incorporation, State or Country Code	DE
Entity File Number	1-12626
Entity Tax Identification Number	62-1539359
Entity Address, Address Line One	200 South Wilcox Drive
Entity Address, City or Town	Kingsport
Entity Address, State or Province	TN
Entity Address, Postal Zip Code	37662
City Area Code	423
Local Phone Number	229-2000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000915389
Amendment Flag	false
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	EMN
Security Exchange Name	NYSE
Notes Due 2023
Entity Information [Line Items]
Title of 12(b) Security	1.50% Notes Due 2023
Trading Symbol	EMN23
Security Exchange Name	NYSE
1.875% notes due November 2026
Entity Information [Line Items]
Title of 12(b) Security	1.875% Notes Due 2026
Trading Symbol	EMN26
Security Exchange Name	NYSE