(Mark One) | ||||||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended | ||||||||
OR | ||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from ______________ to ______________ |
(State or other jurisdiction of | (I.R.S. Employer | |||||||
incorporation or organization) | Identification no.) | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
Class | Number of Shares Outstanding at September 30, 2022 | ||||
Common Stock, par value $0.01 per share |
ITEM | PAGE |
Third Quarter | First Nine Months | ||||||||||||||||||||||
(Dollars in millions, except per share amounts) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Research and development expenses | |||||||||||||||||||||||
Asset impairments and restructuring charges, net | |||||||||||||||||||||||
Other components of post-employment (benefit) cost, net | ( | ( | ( | ( | |||||||||||||||||||
Other (income) charges, net | ( | ( | |||||||||||||||||||||
Net (gain) loss on divested businesses | ( | ||||||||||||||||||||||
Earnings before interest and taxes | |||||||||||||||||||||||
Net interest expense | |||||||||||||||||||||||
Earnings before income taxes | |||||||||||||||||||||||
(Benefit from) provision for income taxes | ( | ( | |||||||||||||||||||||
Net earnings | |||||||||||||||||||||||
Less: Net earnings attributable to noncontrolling interest | |||||||||||||||||||||||
Net earnings attributable to Eastman | $ | $ | $ | $ | |||||||||||||||||||
Basic earnings per share attributable to Eastman | $ | $ | $ | $ | |||||||||||||||||||
Diluted earnings per share attributable to Eastman | $ | $ | $ | $ |
Comprehensive Income | |||||||||||||||||||||||
Net earnings including noncontrolling interest | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
Change in cumulative translation adjustment | ( | ||||||||||||||||||||||
Defined benefit pension and other postretirement benefit plans: | |||||||||||||||||||||||
Amortization of unrecognized prior service credits | ( | ( | ( | ( | |||||||||||||||||||
Derivatives and hedging: | |||||||||||||||||||||||
Unrealized gain (loss) during period | |||||||||||||||||||||||
Reclassification adjustment for (gains) losses included in net income, net | ( | ( | ( | ||||||||||||||||||||
Total other comprehensive income (loss), net of tax | ( | ||||||||||||||||||||||
Comprehensive income including noncontrolling interest | |||||||||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interest | |||||||||||||||||||||||
Comprehensive income attributable to Eastman | $ | $ | $ | $ | |||||||||||||||||||
Retained Earnings | |||||||||||||||||||||||
Retained earnings at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
Net earnings attributable to Eastman | |||||||||||||||||||||||
Cash dividends declared | ( | ( | ( | ( | |||||||||||||||||||
Retained earnings at end of period | $ | $ | $ | $ |
September 30, | December 31, | ||||||||||
(Dollars in millions, except per share amounts) | 2022 | 2021 | |||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Trade receivables, net of allowance for doubtful accounts | |||||||||||
Miscellaneous receivables | |||||||||||
Inventories | |||||||||||
Other current assets | |||||||||||
Assets held for sale | |||||||||||
Total current assets | |||||||||||
Properties | |||||||||||
Properties and equipment at cost | |||||||||||
Less: Accumulated depreciation | |||||||||||
Net properties | |||||||||||
Goodwill | |||||||||||
Intangible assets, net of accumulated amortization | |||||||||||
Other noncurrent assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities | |||||||||||
Payables and other current liabilities | $ | $ | |||||||||
Borrowings due within one year | |||||||||||
Liabilities held for sale | |||||||||||
Total current liabilities | |||||||||||
Long-term borrowings | |||||||||||
Deferred income tax liabilities | |||||||||||
Post-employment obligations | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Stockholders' equity | |||||||||||
Common stock ($ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income (loss) | ( | ( | |||||||||
Less: Treasury stock at cost ( | |||||||||||
Total Eastman stockholders' equity | |||||||||||
Noncontrolling interest | |||||||||||
Total equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ |
First Nine Months | |||||||||||
(Dollars in millions) | 2022 | 2021 | |||||||||
Operating activities | |||||||||||
Net earnings | $ | $ | |||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Mark-to-market pension and other postretirement benefit plans (gain) loss, net | ( | ||||||||||
Asset impairment charges | |||||||||||
Loss on sale of assets | |||||||||||
(Gain) loss on divested business | ( | ||||||||||
Benefit from deferred income taxes | ( | ( | |||||||||
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | |||||||||||
(Increase) decrease in trade receivables | ( | ( | |||||||||
(Increase) decrease in inventories | ( | ( | |||||||||
Increase (decrease) in trade payables | |||||||||||
Pension and other postretirement contributions (in excess of) less than expenses | ( | ( | |||||||||
Variable compensation (in excess of) less than expenses | ( | ||||||||||
Other items, net | |||||||||||
Net cash provided by operating activities | |||||||||||
Investing activities | |||||||||||
Additions to properties and equipment | ( | ( | |||||||||
Proceeds from sale of businesses | |||||||||||
Acquisitions, net of cash acquired | ( | ( | |||||||||
Additions to capitalized software | ( | ( | |||||||||
Other items, net | ( | ||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Financing activities | |||||||||||
Net increase (decrease) in commercial paper and other borrowings | ( | ||||||||||
Proceeds from borrowings | |||||||||||
Repayment of borrowings | ( | ||||||||||
Dividends paid to stockholders | ( | ( | |||||||||
Treasury stock purchases | ( | ( | |||||||||
Proceeds from stock option exercises and other items, net | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ( | |||||||||
Net change in cash and cash equivalents | |||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ |
Page | ||||||||
(Dollars in millions) | |||||
Assets divested | |||||
Trade receivables, net of allowance for doubtful accounts | $ | ||||
Inventories | |||||
Other assets | |||||
Properties, net of accumulated depreciation | |||||
Goodwill | |||||
Intangible assets, net of accumulated amortization | |||||
Assets divested | |||||
Liabilities divested | |||||
Payables and other liabilities | |||||
Post-employment obligations | |||||
Other liabilities | |||||
Liabilities divested | |||||
Disposal group, net | $ |
(Dollars in millions) | |||||
Assets divested | |||||
Trade receivables, net of allowance for doubtful accounts | $ | ||||
Inventories | |||||
Other assets | |||||
Properties, net of accumulated depreciation | |||||
Goodwill | |||||
Intangible assets, net of accumulated amortization | |||||
Assets divested | |||||
Liabilities divested | |||||
Payables and other liabilities | |||||
Deferred tax liability | |||||
Other liabilities | |||||
Liabilities divested | |||||
Disposal group, net | $ |
September 30, | December 31, | ||||||||||
(Dollars in millions) | 2022 | 2021 | |||||||||
Finished goods | $ | $ | |||||||||
Work in process | |||||||||||
Raw materials and supplies | |||||||||||
Total inventories at FIFO or average cost | |||||||||||
Less: LIFO reserve | |||||||||||
Total inventories | $ | $ |
September 30, | December 31, | ||||||||||
(Dollars in millions) | 2022 | 2021 | |||||||||
Trade creditors | $ | $ | |||||||||
Accrued payroll and variable compensation | |||||||||||
Accrued taxes | |||||||||||
Post-employment obligations | |||||||||||
Dividends payable to stockholders | |||||||||||
Other | |||||||||||
Total payables and other current liabilities | $ | $ |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||
(Benefit from) provision for income taxes and tax rate | $ | ( | ( | % | $ | ( | ( | % | $ | % | $ | % |
September 30, | December 31, | ||||||||||
(Dollars in millions) | 2022 | 2021 | |||||||||
Borrowings consisted of: | |||||||||||
3.6% notes due August 2022 | $ | $ | |||||||||
1.50% notes due May 2023 (1) | |||||||||||
7 1/4% debentures due January 2024 | |||||||||||
7 5/8% debentures due June 2024 | |||||||||||
3.80% notes due March 2025 | |||||||||||
1.875% notes due November 2026 (1) | |||||||||||
7.60% debentures due February 2027 | |||||||||||
4.5% notes due December 2028 | |||||||||||
4.8% notes due September 2042 | |||||||||||
4.65% notes due October 2044 | |||||||||||
2027 Term loan | |||||||||||
Commercial paper and short-term borrowings | |||||||||||
Total borrowings | |||||||||||
Less: Borrowings due within one year | |||||||||||
Long-term borrowings | $ | $ |
Notional Outstanding | September 30, 2022 | December 31, 2021 | |||||||||||||||
Derivatives designated as cash flow hedges: | |||||||||||||||||
Foreign Exchange Forward and Option Contracts (in millions) | |||||||||||||||||
EUR/USD (in EUR) | € | € | |||||||||||||||
Commodity Forward and Collar Contracts | |||||||||||||||||
Feedstock (in million barrels) | |||||||||||||||||
Energy (in million british thermal units) | |||||||||||||||||
Interest rate swaps for the future issuance of debt (in millions) | $ | ||||||||||||||||
Derivatives designated as fair value hedges: | |||||||||||||||||
Fixed-for-floating interest rate swaps (in millions) | $ | $ | |||||||||||||||
Derivatives designated as net investment hedges: | |||||||||||||||||
Cross-currency interest rate swaps (in millions) | |||||||||||||||||
EUR/USD (in EUR) | € | € | |||||||||||||||
Non-derivatives designated as net investment hedges: | |||||||||||||||||
Foreign Currency Net Investment Hedges (in millions) | |||||||||||||||||
EUR/USD (in EUR) | € | € |
The Financial Position and Fair Value Measurements of Hedging Instruments on a Gross Basis | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Derivative Type | Statements of Financial Position Classification | September 30, 2022 Level 2 | December 31, 2021 Level 2 | |||||||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||||||||||
Commodity contracts | Other current assets | $ | $ | |||||||||||||||||
Commodity contracts | Other noncurrent assets | |||||||||||||||||||
Foreign exchange contracts | Other current assets | |||||||||||||||||||
Foreign exchange contracts | Other noncurrent assets | |||||||||||||||||||
Forward starting interest rate swap contracts | Other current assets | |||||||||||||||||||
Derivatives designated as fair value hedges: | ||||||||||||||||||||
Fixed-for-floating interest rate swap | Other current assets | |||||||||||||||||||
Fixed-for-floating interest rate swap | Other noncurrent assets | |||||||||||||||||||
Derivatives designated as net investment hedges: | ||||||||||||||||||||
Cross-currency interest rate swaps | Other current assets | |||||||||||||||||||
Cross-currency interest rate swaps | Other noncurrent assets | |||||||||||||||||||
Total Derivative Assets | $ | $ | ||||||||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||||||||||
Commodity contracts | Payables and other current liabilities | $ | $ | |||||||||||||||||
Commodity contracts | Other long-term liabilities | |||||||||||||||||||
Foreign exchange contracts | Payables and other current liabilities | |||||||||||||||||||
Derivatives designated as fair value hedges: | ||||||||||||||||||||
Fixed-for-floating interest rate swap | Long-term borrowings | |||||||||||||||||||
Derivatives designated as net investment hedges: | ||||||||||||||||||||
Cross-currency interest rate swaps | Other long-term liabilities | |||||||||||||||||||
Total Derivative Liabilities | $ | $ | ||||||||||||||||||
Total Net Derivative Assets (Liabilities) | $ | $ |
(Dollars in millions) | Carrying amount of the hedged liabilities | Cumulative amount of fair value hedging loss adjustment included in the carrying amount of the hedged liability | ||||||||||||||||||||||||
Line item on the Unaudited Consolidated Statements of Financial Position in which the hedged item is included | September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Borrowings due within one year | $ | $ | $ | $ | ( | |||||||||||||||||||||
Long-term borrowings | ( |
Change in amount of after tax gain (loss) recognized in OCI on derivatives | Pre-tax amount of gain (loss) reclassified from OCI into earnings | |||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | Third Quarter | First Nine Months | Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
Hedging Relationships | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||
Derivatives in cash flow hedging relationships: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commodity contracts | $ | ( | $ | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
Forward starting interest rate and treasury lock swap contracts | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Non-derivatives in net investment hedging relationships (pre-tax): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment hedges | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Derivatives in net investment hedging relationships (pre-tax): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cross-currency interest rate swaps | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Cross-currency interest rate swaps excluded component | ( | ( | ( | ( | — | — | — | — |
Location and Amount of Gain or (Loss) Recognized in Earnings from Fair Value and Cash Flow Hedging Relationships | ||||||||||||||||||||||||||||||||||||||
Third Quarter | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||||||||
(Dollars in millions) | Sales | Cost of Sales | Net Interest Expense | Sales | Cost of Sales | Net Interest Expense | ||||||||||||||||||||||||||||||||
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
The effects of fair value and cash flow hedging: | ||||||||||||||||||||||||||||||||||||||
Gain or (loss) on fair value hedging relationships: | ||||||||||||||||||||||||||||||||||||||
Interest contracts (fixed-for-floating interest rate swaps): | ||||||||||||||||||||||||||||||||||||||
Hedged items | ||||||||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments | ( | |||||||||||||||||||||||||||||||||||||
Gain or (loss) on cash flow hedging relationships: | ||||||||||||||||||||||||||||||||||||||
Interest contracts (forward starting interest rate and treasury lock swap contracts): | ||||||||||||||||||||||||||||||||||||||
Amount reclassified from AOCI into earnings | ||||||||||||||||||||||||||||||||||||||
Commodity Contracts: | ||||||||||||||||||||||||||||||||||||||
Amount reclassified from AOCI into earnings | ||||||||||||||||||||||||||||||||||||||
Foreign Exchange Contracts: | ||||||||||||||||||||||||||||||||||||||
Amount reclassified from AOCI into earnings |
Location and Amount of Gain or (Loss) Recognized in Earnings from Fair Value and Cash Flow Hedging Relationships | ||||||||||||||||||||||||||||||||||||||
First Nine Months | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||||||||
(Dollars in millions) | Sales | Cost of Sales | Net Interest Expense | Sales | Cost of Sales | Net Interest Expense | ||||||||||||||||||||||||||||||||
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
The effects of fair value and cash flow hedging: | ||||||||||||||||||||||||||||||||||||||
Gain or (loss) on fair value hedging relationships: | ||||||||||||||||||||||||||||||||||||||
Interest contracts (fixed-for-floating interest rate swaps): | ||||||||||||||||||||||||||||||||||||||
Hedged items | ||||||||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments | ( | ( | ||||||||||||||||||||||||||||||||||||
Gain or (loss) on cash flow hedging relationships: | ||||||||||||||||||||||||||||||||||||||
Interest contracts (forward starting interest rate and treasury lock swap contracts): | ||||||||||||||||||||||||||||||||||||||
Amount reclassified from AOCI into earnings | ||||||||||||||||||||||||||||||||||||||
Commodity Contracts: | ||||||||||||||||||||||||||||||||||||||
Amount reclassified from AOCI into earnings | ||||||||||||||||||||||||||||||||||||||
Foreign Exchange Contracts: | ||||||||||||||||||||||||||||||||||||||
Amount reclassified from AOCI into earnings |
Third Quarter | |||||||||||||||||||||||||||||||||||
Pension Plans | Other Postretirement Benefit Plans | ||||||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
(Dollars in millions) | U.S. | Non-U.S. | U.S. | Non-U.S. | |||||||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Interest cost | |||||||||||||||||||||||||||||||||||
Expected return on assets | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||||
Prior service credit, net | ( | ( | ( | ||||||||||||||||||||||||||||||||
Net periodic benefit (credit) cost | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
First Nine Months | |||||||||||||||||||||||||||||||||||
Pension Plans | Other Postretirement Benefit Plans | ||||||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
(Dollars in millions) | U.S. | Non-U.S. | U.S. | Non-U.S. | |||||||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Interest cost | |||||||||||||||||||||||||||||||||||
Expected return on assets | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||||
Prior service credit, net | ( | ( | ( | ||||||||||||||||||||||||||||||||
Mark-to-market pension and other postretirement benefits (gain) loss (1) | ( | ||||||||||||||||||||||||||||||||||
Net periodic benefit (credit) cost | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( |
(Dollars in millions) | Operating Lease Liabilities | |||||||
Remainder of 2022 | $ | |||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 and beyond | ||||||||
Total lease payments | ||||||||
Less: amounts of lease payments representing interest | ||||||||
Present value of future lease payments | ||||||||
Less: current obligations under leases | ||||||||
Long-term lease obligations | $ |
Third Quarter | First Nine Months | ||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Lease costs: | |||||||||||||||||||||||
Operating lease costs | $ | $ | $ | $ | |||||||||||||||||||
Short-term lease costs | |||||||||||||||||||||||
Sublease income | ( | ( | ( | ( | |||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Other operating lease information: | |||||||||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | $ | $ | $ | |||||||||||||||||||
Right-to-use assets obtained in exchange for new lease liabilities | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average remaining lease term, in years | |||||||||||||||||||||||
Weighted-average discount rate | % | % |
(Dollars in millions) | September 30, 2022 | December 31, 2021 | |||||||||
Environmental contingencies, current | $ | $ | |||||||||
Environmental contingencies, long-term | |||||||||||
Total | $ | $ |
(Dollars in millions) | Environmental Remediation Liabilities | ||||
Balance at December 31, 2020 | $ | ||||
Changes in estimates recognized in earnings and other | |||||
Cash reductions | ( | ||||
Balance at December 31, 2021 | |||||
Changes in estimates recognized in earnings and other | |||||
Cash reductions | ( | ||||
Balance at September 30, 2022 | $ |
(Dollars in millions, except per share amount) | Common Stock at Par Value | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock at Cost | Total Eastman Stockholders' Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Net Earnings | |||||||||||||||||||||||||||||||||||||||||||||||
Cash Dividends Declared (1) ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Expense (2) | |||||||||||||||||||||||||||||||||||||||||||||||
Other | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Share Repurchase (3) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ |
(Dollars in millions, except per share amount) | Common Stock at Par Value | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock at Cost | Total Eastman Stockholders' Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Net Earnings | |||||||||||||||||||||||||||||||||||||||||||||||
Cash Dividends Declared (1) ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Expense (2) | |||||||||||||||||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||||||||||||||
Share Repurchase | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Distributions to Noncontrolling Interest | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amount) | Common Stock at Par Value | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock at Cost | Total Eastman Stockholders' Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Net Earnings | |||||||||||||||||||||||||||||||||||||||||||||||
Cash Dividends Declared (1) ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Expense (2) | |||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Exercises | |||||||||||||||||||||||||||||||||||||||||||||||
Other (3) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Share Repurchases (4) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amount) | Common Stock at Par Value | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock at Cost | Total Eastman Stockholders' Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Net Earnings | |||||||||||||||||||||||||||||||||||||||||||||||
Cash Dividends Declared (1) ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Expense (2) | |||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Exercises | |||||||||||||||||||||||||||||||||||||||||||||||
Other (3) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Share Repurchases | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Distributions to Noncontrolling Interest | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
(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, 2020 | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||
Period change | ( | ||||||||||||||||||||||||||||
Balance at December 31, 2021 | ( | ( | ( | ( | |||||||||||||||||||||||||
Period change | ( | ||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | ( | $ | $ | $ | ( | $ | ( |
Third Quarter | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
(Dollars in millions) | Before Tax | Net of Tax | Before Tax | Net of Tax | |||||||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Change in cumulative translation adjustment | $ | ( | $ | ( | $ | $ | |||||||||||||||||
Defined benefit pension and other postretirement benefit plans: | |||||||||||||||||||||||
Amortization of unrecognized prior service credits | ( | ( | ( | ( | |||||||||||||||||||
Derivatives and hedging: | |||||||||||||||||||||||
Unrealized gain (loss) during period | |||||||||||||||||||||||
Reclassification adjustment for (gains) losses included in net income, net | ( | ( | ( | ( | |||||||||||||||||||
Total other comprehensive income (loss) | $ | ( | $ | ( | $ | $ | |||||||||||||||||
First Nine Months | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
(Dollars in millions) | Before Tax | Net of Tax | Before Tax | Net of Tax | |||||||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Change in cumulative translation adjustment | $ | $ | $ | $ | |||||||||||||||||||
Defined benefit pension and other postretirement benefit plans: | |||||||||||||||||||||||
Amortization of unrecognized prior service credits | ( | ( | ( | ( | |||||||||||||||||||
Derivatives and hedging: | |||||||||||||||||||||||
Unrealized gain (loss) during period | |||||||||||||||||||||||
Reclassification adjustment for (gains) losses included in net income, net | ( | ( | |||||||||||||||||||||
Total other comprehensive income (loss) | $ | $ | $ | $ |
Third Quarter | First Nine Months | ||||||||||||||||||||||
(In millions, except per share amounts) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Numerator | |||||||||||||||||||||||
Earnings attributable to Eastman, net of tax | $ | $ | $ | $ | |||||||||||||||||||
Denominator | |||||||||||||||||||||||
Weighted average shares used for basic EPS | |||||||||||||||||||||||
Dilutive effect of stock options and other awards | |||||||||||||||||||||||
Weighted average shares used for diluted EPS | |||||||||||||||||||||||
(Calculated using whole dollars and shares) | |||||||||||||||||||||||
EPS | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ |
(Dollars in millions) | Third Quarter | First Nine Months | |||||||||||||||||||||
Tangible Asset Impairments | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Site optimizations | |||||||||||||||||||||||
Other - Tire additives (1) | $ | $ | $ | $ | |||||||||||||||||||
AM - Advanced interlayers (2) | |||||||||||||||||||||||
Loss (Gain) on Sale of Previously Impaired Assets | |||||||||||||||||||||||
Site optimizations | |||||||||||||||||||||||
Other - Tire additives (1) | ( | ||||||||||||||||||||||
AM - Advanced interlayers (2) | |||||||||||||||||||||||
AFP - Animal nutrition (3) | ( | ||||||||||||||||||||||
( | |||||||||||||||||||||||
Severance Charges | |||||||||||||||||||||||
Business improvement and cost reduction actions (4) | |||||||||||||||||||||||
Site optimizations | |||||||||||||||||||||||
AM - Performance films (5) | |||||||||||||||||||||||
AM - Advanced interlayers (2) | |||||||||||||||||||||||
Other Restructuring Costs | |||||||||||||||||||||||
CI & AFP - Singapore (6) | |||||||||||||||||||||||
Site optimizations | |||||||||||||||||||||||
AM - Advanced interlayers (2) | |||||||||||||||||||||||
AM - Performance films (5) | — | 2 | — | 2 | |||||||||||||||||||
Other - Tire additives (1) | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
(Dollars in millions) | Balance at January 1, 2022 | Provision/ Adjustments | Non-cash Reductions/ Additions | Cash Reductions | Balance at September 30, 2022 | ||||||||||||||||||||||||
Severance costs | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Other restructuring costs | ( | ||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ( | $ |
(Dollars in millions) | Balance at January 1, 2021 | Provision/ Adjustments | Non-cash Reductions/ Additions | Cash Reductions | Balance at December 31, 2021 | ||||||||||||||||||||||||
Non-cash charges | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Severance costs | ( | ( | |||||||||||||||||||||||||||
Other restructuring costs | ( | ( | |||||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ | ( | $ |
(Dollars in millions) | First Nine Months | ||||||||||
2022 | 2021 | ||||||||||
Other current assets | $ | $ | ( | ||||||||
Other noncurrent assets | ( | ||||||||||
Payables and other current liabilities | |||||||||||
Long-term liabilities and equity | |||||||||||
Total | $ | $ | |||||||||
(Dollars in millions) | Third Quarter | First Nine Months | |||||||||||||||||||||
Sales by Segment | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Additives & Functional Products | $ | $ | $ | $ | |||||||||||||||||||
Advanced Materials | |||||||||||||||||||||||
Chemical Intermediates | |||||||||||||||||||||||
Fibers | |||||||||||||||||||||||
Total Sales by Operating Segment | |||||||||||||||||||||||
Other (1) | |||||||||||||||||||||||
Total Sales | $ | $ | $ | $ |
(Dollars in millions) | Third Quarter | First Nine Months | |||||||||||||||||||||
Earnings (Loss) Before Interest and Taxes by Segment | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Additives & Functional Products | $ | $ | $ | $ | |||||||||||||||||||
Advanced Materials | |||||||||||||||||||||||
Chemical Intermediates | |||||||||||||||||||||||
Fibers | |||||||||||||||||||||||
Total Earnings Before Interest and Taxes by Operating Segment | |||||||||||||||||||||||
Other (1) | |||||||||||||||||||||||
Growth initiatives and businesses not allocated to operating segments | ( | ( | ( | ( | |||||||||||||||||||
Pension and other postretirement benefits income (expense), net not allocated to operating segments | |||||||||||||||||||||||
Asset impairments and restructuring charges, net | ( | ( | ( | ||||||||||||||||||||
Net gain (loss) on divested businesses and related transaction costs | ( | ( | ( | ( | |||||||||||||||||||
Steam line incident costs, net of insurance proceeds | ( | ||||||||||||||||||||||
Other income (charges), net not allocated to operating segments | ( | ( | ( | ||||||||||||||||||||
Total Earnings Before Interest and Taxes | $ | $ | $ | $ |
(Dollars in millions) | September 30, | December 31, | |||||||||
Assets by Segment (1) | 2022 | 2021 | |||||||||
Additives & Functional Products | $ | $ | |||||||||
Advanced Materials | |||||||||||
Chemical Intermediates | |||||||||||
Fibers | |||||||||||
Total Assets by Operating Segment | |||||||||||
Corporate & Other Assets | |||||||||||
Total Assets | $ | $ |
(Dollars in millions) | Third Quarter | First Nine Months | |||||||||||||||||||||
Sales by Customer Location | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
United States and Canada | $ | $ | $ | $ | |||||||||||||||||||
Europe, Middle East, and Africa | |||||||||||||||||||||||
Asia Pacific | |||||||||||||||||||||||
Latin America | |||||||||||||||||||||||
Total Sales | $ | $ | $ | $ |
Third Quarter | First Nine Months | ||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Non-core items impacting earnings before interest and taxes: | |||||||||||||||||||||||
Asset impairments and restructuring charges, net | $ | 2 | $ | 7 | $ | 23 | $ | 29 | |||||||||||||||
Mark-to-market pension and other postretirement benefits (gain) loss, net | — | — | (3) | — | |||||||||||||||||||
Environmental and other costs | — | — | 15 | — | |||||||||||||||||||
Net (gain) loss on divested businesses and related transaction costs | 7 | 68 | 8 | 563 | |||||||||||||||||||
Accelerated depreciation | — | — | — | 4 | |||||||||||||||||||
Unusual item impacting earnings before interest and taxes: | |||||||||||||||||||||||
Steam line incident costs, net of insurance proceeds | — | — | 42 | — | |||||||||||||||||||
Total non-core and unusual items impacting earnings before interest and taxes | 9 | 75 | 85 | 596 | |||||||||||||||||||
Less: Items impacting provision for income taxes: | |||||||||||||||||||||||
Tax effect of non-core and unusual items | 28 | 26 | (16) | 61 | |||||||||||||||||||
Adjustment from tax law changes | — | 15 | — | 15 | |||||||||||||||||||
Interim adjustment to tax provision | 32 | 47 | 16 | 29 | |||||||||||||||||||
Total items impacting provision for income taxes | 60 | 88 | — | 105 | |||||||||||||||||||
Total items impacting net earnings attributable to Eastman | $ | (51) | $ | (13) | $ | 85 | $ | 491 |
Third Quarter | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
(Dollars in millions, except EPS) | $ | EPS | $ | EPS | |||||||||||||||||||
Net earnings attributable to Eastman | $ | 301 | $ | 2.46 | $ | 351 | $ | 2.57 | |||||||||||||||
Total non-core and unusual items, net of tax | (19) | (0.15) | 34 | 0.23 | |||||||||||||||||||
Interim adjustment to tax provision | (32) | (0.26) | (47) | (0.34) | |||||||||||||||||||
Adjusted net earnings | $ | 250 | $ | 2.05 | $ | 338 | $ | 2.46 | |||||||||||||||
First Nine Months | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
(Dollars in millions, except EPS) | $ | EPS | $ | EPS | |||||||||||||||||||
Net earnings attributable to Eastman | $ | 792 | $ | 6.26 | $ | 479 | $ | 3.49 | |||||||||||||||
Total non-core and unusual items, net of tax | 101 | 0.81 | 520 | 3.76 | |||||||||||||||||||
Interim adjustment to tax provision | (16) | (0.13) | (29) | (0.20) | |||||||||||||||||||
Adjusted net earnings | $ | 877 | $ | 6.94 | $ | 970 | $ | 7.05 |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | |||||||||||||||||||||||||||||||||||||||
Sales | $ | 2,709 | $ | 2,720 | $ | (11) | — | % | $ | 8,207 | $ | 7,782 | $ | 425 | 5 | % | |||||||||||||||||||||||||||||||
Volume / product mix effect | (40) | (1) | % | 24 | — | % | |||||||||||||||||||||||||||||||||||||||||
Price effect | 378 | 14 | % | 1,214 | 15 | % | |||||||||||||||||||||||||||||||||||||||||
Exchange rate effect | (81) | (3) | % | (173) | (2) | % | |||||||||||||||||||||||||||||||||||||||||
Divested business effect (1) | (268) | (10) | % | (640) | (8) | % |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||||||||||||||
Gross profit | $ | 541 | $ | 662 | (18) | % | $ | 1,761 | $ | 1,941 | (9) | % | |||||||||||||||||||||||
Accelerated depreciation | — | — | — | 4 | |||||||||||||||||||||||||||||||
Steam line incident costs, net of insurance proceeds | — | — | 42 | — | |||||||||||||||||||||||||||||||
Gross profit excluding non-core and unusual items | $ | 541 | $ | 662 | (18) | % | $ | 1,803 | $ | 1,945 | (7) | % |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||||||||||||||
Selling, general and administrative expenses | $ | 173 | $ | 201 | (14) | % | $ | 554 | $ | 587 | (6) | % | |||||||||||||||||||||||
Transaction costs | (4) | (8) | (15) | (8) | |||||||||||||||||||||||||||||||
Selling, general and administrative expenses excluding non-core item | $ | 169 | $ | 193 | (12) | % | $ | 539 | $ | 579 | (7) | % |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||||||||||||||
Research and development expenses | $ | 68 | $ | 66 | 3 | % | $ | 200 | $ | 187 | 7 | % | |||||||||||||||||||||||
(Dollars in millions) | Third Quarter | First Nine Months | |||||||||||||||||||||
Tangible Asset Impairments | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Site optimizations | |||||||||||||||||||||||
Other - Tire additives | $ | — | $ | — | $ | — | $ | 4 | |||||||||||||||
AM - Advanced interlayers | — | — | — | 1 | |||||||||||||||||||
— | — | — | 5 | ||||||||||||||||||||
Loss (Gain) on Sale of Previously Impaired Assets | |||||||||||||||||||||||
Site optimizations | |||||||||||||||||||||||
Other - Tire additives | — | — | (1) | — | |||||||||||||||||||
AM - Advanced interlayers | — | — | 16 | — | |||||||||||||||||||
AFP - Animal nutrition | — | — | — | (1) | |||||||||||||||||||
— | — | 15 | (1) | ||||||||||||||||||||
Severance Charges | |||||||||||||||||||||||
Business improvement and cost reduction actions | — | — | 2 | — | |||||||||||||||||||
Site optimizations | |||||||||||||||||||||||
AM - Performance films | — | — | 1 | — | |||||||||||||||||||
AM - Advanced interlayers | — | — | — | 1 | |||||||||||||||||||
— | — | 3 | 1 | ||||||||||||||||||||
Other Restructuring Costs | |||||||||||||||||||||||
CI & AFP - Singapore | 1 | 3 | 3 | 16 | |||||||||||||||||||
Site optimizations | |||||||||||||||||||||||
AM - Advanced interlayers | 1 | 1 | 2 | 3 | |||||||||||||||||||
AM - Performance films | — | 2 | — | 2 | |||||||||||||||||||
Other - Tire additives | — | 1 | — | 3 | |||||||||||||||||||
2 | 7 | 5 | 24 | ||||||||||||||||||||
Total | $ | 2 | $ | 7 | $ | 23 | $ | 29 |
Third Quarter | First Nine Months | ||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Other components of post-employment (benefit) cost, net | $ | (30) | $ | (36) | $ | (95) | $ | (109) | |||||||||||||||
Mark-to-market pension and other postretirement benefit gain (loss), net | — | — | 3 | — | |||||||||||||||||||
Other components of post-employment (benefit) cost, net excluding non-core item | $ | (30) | $ | (36) | $ | (92) | $ | (109) |
Third Quarter | First Nine Months | ||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Foreign exchange transaction (gains) losses, net | $ | 7 | $ | 2 | $ | 15 | $ | 7 | |||||||||||||||
(Income) loss from equity investments and other investment (gains) losses, net | (2) | (3) | (17) | (12) | |||||||||||||||||||
Other, net | (4) | (5) | 5 | (6) | |||||||||||||||||||
Other (income) charges, net | $ | 1 | $ | (6) | $ | 3 | $ | (11) | |||||||||||||||
Environmental and other costs | — | — | (15) | — | |||||||||||||||||||
Other (income) charges, net excluding non-core items | $ | 1 | $ | (6) | $ | (12) | $ | (11) |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||||||||||||||
Earnings before interest and taxes | $ | 324 | $ | 370 | (12) | % | $ | 1,083 | $ | 703 | 54 | % | |||||||||||||||||||||||
Mark-to-market pension and other postretirement benefits (gain) loss, net | — | — | (3) | — | |||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | 2 | 7 | 23 | 29 | |||||||||||||||||||||||||||||||
Net (gain) loss on divested businesses and related transaction costs | 7 | 68 | 8 | 563 | |||||||||||||||||||||||||||||||
Accelerated depreciation | — | — | — | 4 | |||||||||||||||||||||||||||||||
Steam line incident costs, net of insurance proceeds | — | — | 42 | — | |||||||||||||||||||||||||||||||
Environmental and other costs | — | — | 15 | — | |||||||||||||||||||||||||||||||
Earnings before interest and taxes excluding non-core and unusual items | $ | 333 | $ | 445 | (25) | % | $ | 1,168 | $ | 1,299 | (10) | % |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||||||||||||||
Gross interest costs | $ | 47 | $ | 51 | (8) | % | $ | 143 | $ | 155 | (8) | % | |||||||||||||||||||||||
Less: Capitalized interest | 2 | 1 | 6 | 3 | |||||||||||||||||||||||||||||||
Interest expense | 45 | 50 | 137 | 152 | |||||||||||||||||||||||||||||||
Less: Interest income | 2 | 1 | 3 | 2 | |||||||||||||||||||||||||||||||
Net interest expense | $ | 43 | $ | 49 | (12) | % | $ | 134 | $ | 150 | (11) | % | |||||||||||||||||||||||
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||
(Benefit from) provision for income taxes and effective tax rate | $ | (20) | (7) | % | $ | (33) | (10) | % | $ | 155 | 16 | % | $ | 66 | 12 | % | |||||||||||||||||||||||||||||||
Tax provision for non-core and unusual items (1) | 28 | 26 | (16) | 61 | |||||||||||||||||||||||||||||||||||||||||||
Adjustment from tax law changes (2) | — | 15 | — | 15 | |||||||||||||||||||||||||||||||||||||||||||
Interim adjustment to tax provision (3) | 32 | 47 | 16 | 29 | |||||||||||||||||||||||||||||||||||||||||||
Adjusted provision for income taxes and effective tax rate | $ | 40 | 14 | % | $ | 55 | 14 | % | $ | 155 | 15 | % | $ | 171 | 15 | % |
First Nine Months (1) | |||||||||||
2022 | 2021 | ||||||||||
Effective tax rate | 16 | % | 12 | % | |||||||
Tax impact of current year non-core and unusual items (2) | (1) | % | 3 | % | |||||||
Changes in tax contingencies and valuation allowances | 1 | % | 1 | % | |||||||
Forecasted full year impact of expected tax events | (1) | % | (1) | % | |||||||
Forecasted full year adjusted effective tax rate | 15 | % | 15 | % |
Third Quarter | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
(Dollars in millions, except EPS) | $ | EPS | $ | EPS | |||||||||||||||||||
Net earnings and diluted earnings per share attributable to Eastman | $ | 301 | $ | 2.46 | $ | 351 | $ | 2.57 | |||||||||||||||
Non-core items, net of tax: (1) | |||||||||||||||||||||||
Asset impairments and restructuring charges, net | 2 | 0.01 | 5 | 0.04 | |||||||||||||||||||
Net (gain) loss on divested businesses and related transaction costs | (21) | (0.16) | 44 | 0.30 | |||||||||||||||||||
Unusual item, net of tax: (1) | |||||||||||||||||||||||
Adjustment from tax law changes | — | — | (15) | (0.11) | |||||||||||||||||||
Interim adjustment to tax provision | (32) | (0.26) | (47) | (0.34) | |||||||||||||||||||
Adjusted net earnings and diluted earnings per share attributable to Eastman | $ | 250 | $ | 2.05 | $ | 338 | $ | 2.46 |
First Nine Months | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
(Dollars in millions, except EPS) | $ | EPS | $ | EPS | |||||||||||||||||||
Net earnings and diluted earnings per share attributable to Eastman | $ | 792 | $ | 6.26 | $ | 479 | $ | 3.49 | |||||||||||||||
Non-core items, net of tax: (1) | |||||||||||||||||||||||
Mark-to-market pension and other post-employment benefits (gain) loss, net | (3) | (0.02) | — | — | |||||||||||||||||||
Asset impairments and restructuring charges, net | 18 | 0.14 | 23 | 0.16 | |||||||||||||||||||
Net (gain) loss on divested businesses and related transaction costs | 43 | 0.35 | 509 | 3.69 | |||||||||||||||||||
Accelerated depreciation | — | — | 3 | 0.02 | |||||||||||||||||||
Environmental and other costs | 11 | 0.09 | — | — | |||||||||||||||||||
Unusual items, net of tax: (1) | |||||||||||||||||||||||
Steam line incident costs, net of insurance proceeds | 32 | 0.25 | — | — | |||||||||||||||||||
Adjustment from tax law changes | — | — | (15) | (0.11) | |||||||||||||||||||
Interim adjustment to tax provision | (16) | (0.13) | (29) | (0.20) | |||||||||||||||||||
Adjusted net earnings and diluted earnings per share attributable to Eastman | $ | 877 | $ | 6.94 | $ | 970 | $ | 7.05 |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Sales | $ | 820 | $ | 729 | $ | 91 | 12 | % | $ | 2,460 | $ | 1,993 | $ | 467 | 23 | % | |||||||||||||||||||||||||||||||
Volume / product mix effect | 9 | 1 | % | 143 | 7 | % | |||||||||||||||||||||||||||||||||||||||||
Price effect | 117 | 16 | % | 402 | 20 | % | |||||||||||||||||||||||||||||||||||||||||
Exchange rate effect | (35) | (5) | % | (78) | (4) | % | |||||||||||||||||||||||||||||||||||||||||
Earnings before interest and taxes | $ | 126 | $ | 130 | $ | (4) | (3) | % | $ | 419 | $ | 346 | $ | 73 | 21 | % | |||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | — | 1 | (1) | — | 3 | (3) | |||||||||||||||||||||||||||||||||||||||||
Earnings before interest and taxes excluding non-core item | 126 | 131 | (5) | (4) | % | 419 | 349 | 70 | 20 | % |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Sales | $ | 888 | $ | 770 | $ | 118 | 15 | % | $ | 2,471 | $ | 2,255 | $ | 216 | 10 | % | |||||||||||||||||||||||||||||||
Volume / product mix effect | 24 | 3 | % | (23) | (1) | % | |||||||||||||||||||||||||||||||||||||||||
Price effect | 123 | 16 | % | 293 | 13 | % | |||||||||||||||||||||||||||||||||||||||||
Exchange rate effect | (29) | (4) | % | (54) | (2) | % | |||||||||||||||||||||||||||||||||||||||||
Earnings before interest and taxes | $ | 131 | $ | 125 | $ | 6 | 5 | % | $ | 333 | $ | 421 | $ | (88) | (21) | % | |||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | 1 | 3 | (2) | 19 | 7 | 12 | |||||||||||||||||||||||||||||||||||||||||
Accelerated depreciation | — | — | — | — | 4 | (4) | |||||||||||||||||||||||||||||||||||||||||
Earnings before interest and taxes excluding non-core items | 132 | 128 | 4 | 3 | % | 352 | 432 | (80) | (19) | % |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Sales | $ | 751 | $ | 731 | $ | 20 | 3 | % | $ | 2,411 | $ | 2,072 | $ | 339 | 16 | % | |||||||||||||||||||||||||||||||
Volume / product mix effect | (68) | (9) | % | (66) | (3) | % | |||||||||||||||||||||||||||||||||||||||||
Price effect | 103 | 14 | % | 442 | 21 | % | |||||||||||||||||||||||||||||||||||||||||
Exchange rate effect | (15) | (2) | % | (37) | (2) | % | |||||||||||||||||||||||||||||||||||||||||
Earnings before interest and taxes | $ | 85 | $ | 130 | $ | (45) | (35) | % | $ | 373 | $ | 336 | $ | 37 | 11 | % | |||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | 1 | 2 | (1) | 3 | 13 | (10) | |||||||||||||||||||||||||||||||||||||||||
Earnings before interest and taxes excluding non-core items | 86 | 132 | (46) | (35) | % | 376 | 349 | 27 | 8 | % |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Sales | $ | 250 | $ | 222 | $ | 28 | 13 | % | $ | 705 | $ | 662 | $ | 43 | 6 | % | |||||||||||||||||||||||||||||||
Volume / product mix effect | (5) | (2) | % | (30) | (5) | % | |||||||||||||||||||||||||||||||||||||||||
Price effect | 35 | 16 | % | 77 | 12 | % | |||||||||||||||||||||||||||||||||||||||||
Exchange rate effect | (2) | (1) | % | (4) | (1) | % | |||||||||||||||||||||||||||||||||||||||||
Earnings before interest and taxes | $ | 21 | $ | 32 | $ | (11) | (34) | % | $ | 82 | $ | 114 | $ | (32) | (28) | % | |||||||||||||||||||||||||||||||
Third Quarter | First Nine Months | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||
Sales | $ | — | $ | 268 | $ | 160 | $ | 800 | |||||||||||||||
Earnings (loss) before interest and taxes | |||||||||||||||||||||||
Growth initiatives and businesses not allocated to operating segments | $ | (54) | $ | (4) | $ | (139) | $ | (21) | |||||||||||||||
Pension and other postretirement benefits income (expense), net not allocated to operating segments | 22 | 27 | 71 | 81 | |||||||||||||||||||
Asset impairments and restructuring charges, net | — | (1) | (1) | (6) | |||||||||||||||||||
Net gain (loss) on divested businesses and related transaction costs | (7) | (68) | (8) | (563) | |||||||||||||||||||
Steam line incident costs, net of insurance proceeds | — | — | (42) | — | |||||||||||||||||||
Other income (charges), net not allocated to operating segments | — | (1) | (5) | (5) | |||||||||||||||||||
Earnings (loss) before interest and taxes | $ | (39) | $ | (47) | $ | (124) | $ | (514) | |||||||||||||||
Asset impairments and restructuring charges, net | — | 1 | 1 | 6 | |||||||||||||||||||
Net (gain) loss on divested businesses and related transaction costs | 7 | 68 | 8 | 563 | |||||||||||||||||||
Steam line incident costs, net of insurance proceeds | — | — | 42 | — | |||||||||||||||||||
Environmental and other costs | — | — | 15 | — | |||||||||||||||||||
Mark-to-market pension and other postretirement benefits (gain) loss, net | — | — | (3) | — | |||||||||||||||||||
Earnings (loss) before interest and taxes excluding non-core and unusual items | (32) | 22 | (61) | 55 |
Sales Revenue | ||||||||||||||||||||||||||||||||||||||||||||
Third Quarter | First Nine Months | |||||||||||||||||||||||||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||
United States and Canada | $ | 1,202 | $ | 1,197 | $ | 5 | — | % | $ | 3,704 | $ | 3,398 | $ | 306 | 9 | % | ||||||||||||||||||||||||||||
Europe, Middle East, and Africa | 680 | 698 | (18) | (3) | % | 2,106 | 2,042 | 64 | 3 | % | ||||||||||||||||||||||||||||||||||
Asia Pacific | 662 | 658 | 4 | 1 | % | 1,912 | 1,877 | 35 | 2 | % | ||||||||||||||||||||||||||||||||||
Latin America | 165 | 167 | (2) | (1) | % | 485 | 465 | 20 | 4 | % | ||||||||||||||||||||||||||||||||||
Total Eastman Chemical Company | $ | 2,709 | $ | 2,720 | $ | (11) | — | % | $ | 8,207 | $ | 7,782 | $ | 425 | 5 | % |
First Nine Months | |||||||||||
(Dollars in millions) | 2022 | 2021 | |||||||||
Net cash provided by (used in) | |||||||||||
Operating activities | $ | 518 | $ | 1,189 | |||||||
Investing activities | 598 | (447) | |||||||||
Financing activities | (1,098) | (584) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (16) | (5) | |||||||||
Net change in cash and cash equivalents | 2 | 153 | |||||||||
Cash and cash equivalents at beginning of period | 459 | 564 | |||||||||
Cash and cash equivalents at end of period | $ | 461 | $ | 717 |
September 30, | December 31, | |||||||||||||
(Dollars in millions) | 2022 | 2021 | ||||||||||||
Total borrowings | $ | 5,065 | $ | 5,159 | ||||||||||
Less: Cash and cash equivalents | 461 | 459 | ||||||||||||
Net debt (1) | $ | 4,604 | $ | 4,700 | ||||||||||
Period | Total Number of Shares Purchased | Average Price Paid Per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plan or Program | Approximate Dollar Value that May Yet Be Purchased Under the Plan or Program | ||||||||||
July 1-31, 2022 | 1,212,732 | $ | 90.49 | 1,212,732 | $ | 2.115 | billion | |||||||
August 1-31, 2022 | 769,218 | $ | 97.50 | 769,218 | $ | 2.040 | billion | |||||||
September 1-30, 2022 | 857,925 | $ | 87.42 | 857,925 | $ | 1.965 | billion | |||||||
Total | 2,839,875 | $ | 91.46 | 2,839,875 |
EXHIBIT INDEX | ||||||||
Exhibit Number | Description | |||||||
3.01 | ||||||||
3.02 | ||||||||
31.01 * | ||||||||
31.02 * | ||||||||
32.01 * | ||||||||
32.02 * | ||||||||
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |||||||
101.SCH * | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL * | Inline XBRL Taxonomy Calculation Linkbase Document | |||||||
101.DEF * | Inline XBRL Definition Linkbase Document | |||||||
101.LAB * | Inline XBRL Taxonomy Label Linkbase Document | |||||||
101.PRE * | Inline XBRL Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
Eastman Chemical Company | |||||||||||
Date: | October 28, 2022 | By: | /s/ William T. McLain, Jr. | ||||||||
William T. McLain, Jr. | |||||||||||
Senior Vice President and Chief Financial Officer |
SIGNIFICANT ACCOUNTING POLICIES (Notes) |
9 Months Ended |
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Sep. 30, 2022 | |
Significant Accounting Policies [Abstract] | |
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] | SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company ("Eastman" or the "Company") in accordance and consistent with the accounting policies stated in the Company's 2021 Annual Report on Form 10-K, and should be read in conjunction with the consolidated financial statements in Part II, Item 8 of that report, with the exception of recently adopted accounting standards noted below. The December 31, 2021 financial position data included herein was derived from the consolidated financial statements included in the 2021 Annual Report on Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). In the opinion of management, the unaudited consolidated financial statements include all normal recurring adjustments necessary for the fair statement of the interim financial information in conformity with GAAP. These statements contain 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, revenues, and expenses of business ventures for which a controlling interest is determined. Eastman accounts for other joint ventures and investments where it exercises significant influence on the equity basis. During the first nine months 2022, the Company contributed $24 million in a new joint venture located in Kingsport, Tennessee, which will produce acetylated wood. The Company owns a 40 percent interest in the joint venture. Intercompany transactions and balances are eliminated in consolidation. Certain prior period data has been reclassified in the unaudited consolidated financial statements and accompanying footnotes to conform to current period presentation, including sales revenue, earnings before interest and taxes ("EBIT"), and assets related to the divested rubber additives product lines and related assets and technology and the divested adhesives resins business. See Note 17, "Segment and Regional Sales Information" for more information. Recently Adopted Accounting Standards Accounting Standards Update ("ASU") 2021-05 Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments: On January 1, 2022, Eastman adopted this update which is a part of the Financial Accounting Standards Board's ("FASB") post-implementation review of this Topic. The update provides that lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both: the lease would have been classified as a sales-type lease or a direct financing lease and the lessor would have otherwise recognized a day-one loss. The adoption does not have significant impact on the Company's financial statements and related disclosures. ASU 2021-10 Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance: On January 1, 2022, Eastman adopted prospectively this amendment which requires business entities that account for transactions with a government by applying a grant or contribution model by analogy (for example, a grant model within International Financial Reporting Standards) to provide annual disclosures about government assistance recorded during the period. The adoption does not have significant impact on the Company's financial statements and related disclosures. Accounting Standards Issued But Not Adopted as of September 30, 2022 ASU 2021-08 Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers: The FASB issued this update in October 2021, which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 Revenue from Contracts with Customers, as if it had originated the contracts. The update also provides certain practical expedients for acquirers and is applicable to all contract assets and liabilities within the scope of Topic 606. The expedients are as follows: "provides relief for contracts that have been previously modified before the acquisition date" and "relief for situations in which the acquirer does not have the appropriate data or expertise to analyze the historical periods in which the contract was entered into". This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those years. Early adoption is permitted, including adoption in an interim period. Adoption is on a prospective basis to business combinations occurring on or after the initial application and if adopted early, retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application. Management does not expect that changes required by the new standard will have a significant impact on the Company's financial statements and related disclosures. ASU 2022-01 Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method: The FASB issued this update in March 2022. This ASU clarifies the guidance in Accounting Standards Codification ("ASC") 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets. This ASU amends the guidance in ASU 2017-12 (released on August 28, 2017) that, among other things, established the "last-of-layer" method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the "portfolio layer" method and addresses feedback from stakeholders regarding its application. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those years. Management does not expect that changes required by the new standard will have a significant impact on the Company's financial statements and related disclosures. ASU 2022-02 Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures: The FASB issued this update in March 2022. This ASU updates the requirements for accounting for credit losses under ASC 326, eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310-40, and enhances creditors' disclosure requirements related to loan refinancings and restructurings for borrowers experiencing financial difficulty. This ASU also amends the guidance on "vintage disclosures" to require disclosure of gross write-offs by year of origination. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those years. Management does not expect that changes required by the new standard will have a significant impact on the Company's financial statements and related disclosures. ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions: The FASB issued this update in June 2022, which states that when measuring the fair value of an asset or a liability, a reporting entity should consider the characteristics of the asset or liability, including restrictions on the sale of the asset or liability, if a market participant also would take those characteristics into account. Key to that determination is the unit of account for the asset or liability being measured at fair value. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. Management does not expect that changes required by the new standard will have a significant impact on the Company's financial statements and related disclosures. ASU 2022-04 Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations: The FASB issued this update in September 2022, which requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program. Required disclosures include information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. Management is currently evaluating the impact on the Company's financial statements and related disclosures. Working Capital Management and Off Balance Sheet Arrangements The Company has an off balance sheet, uncommitted accounts receivable factoring program under which entire invoices may be sold, without recourse, to third-party financial institutions. Under these agreements, the Company sells the invoices at face value, less a transaction fee, which substantially equals the carrying value and fair value with no gain or loss recognized, and no credit loss exposure is retained. Available capacity under these agreements, which the Company uses as a routine source of working capital funding, is dependent on the level of accounts receivable eligible to be sold and the financial institutions' willingness to purchase such receivables. In addition, certain agreements also require that the Company continue to service, administer, and collect the sold accounts receivable at market rates. The total amounts sold under the program in third quarter 2022 and 2021 were $700 million and $252 million, respectively, and $1,839 million and $839 million in first nine months 2022 and 2021, respectively.
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Divestitures |
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Divestitures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Held for Sale | DIVESTITURES Rubber Additives Divestiture On November 1, 2021, the Company and certain of its subsidiaries completed the sale of its rubber additives (including Crystex™ insoluble sulfur and Santoflex™ antidegradants) and other product lines and related assets and technology of the global tire additives business ("rubber additives") of its Additives & Functional Products ("AFP") segment. The sale did not include the Eastman Impera™ and other performance resins product lines of the tire additives business. The Company is providing certain business transition and post-closing services to the buyer on agreed terms. The business was not reported as a discontinued operation because the sale did not have a major effect on the Company's operations and financial results. The total estimated consideration, after estimates of contingent consideration and post-closing adjustments and ongoing agreements through October 2027, was $687 million. The additional amount of consideration of up to $75 million is to be paid based on performance of divested rubber additives through December 2023. The divestiture resulted in a $552 million loss (including cumulative translation adjustment liquidation of $23 million and certain costs to sell of $ ). The major classes of divested assets and liabilities as of the date of the divestiture were as follows:
Separately, the Company recognized $4 million and $15 million of transaction costs for the divested business in first nine months 2022 and twelve months 2021, respectively. Transaction costs are expensed as incurred and are included in "Selling, general and administrative expenses" ("SG&A") in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. Adhesives Resins Divestiture On April 1, 2022, the Company and certain of its subsidiaries completed the sale of its adhesives resins business, which included hydrocarbon resins (including Eastman Impera™ tire resins), pure monomer resins, polyolefin polymers, rosins and dispersions, and oleochemical and fatty-acid based resins product lines ("adhesives resins"), of its AFP segment. The business was not reported as a discontinued operation because the sale did not have a major effect on the Company's operations and financial results. Included in the adhesives resins divestiture was the 50 percent interest in a joint venture that has a manufacturing facility in Nanjing, China, which produces Eastotac™ hydrocarbon tackifying resins for pressure-sensitive adhesives, caulks, and sealants. The total estimated consideration, after estimates of post-closing adjustments, was $957 million. The divestiture resulted in a $5 million gain (including cumulative translation adjustment liquidation of $10 million and certain costs to sell of $ ). The major classes of divested assets and liabilities as of the date of the divestiture were as follows:
The Company recognized $11 million and $3 million of transaction costs for the divested business in first nine months 2022 and twelve months 2021, respectively. Transaction costs are expensed as incurred and are included in SG&A in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.
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INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIES
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PAYABLES AND OTHER CURRENT LIABILITIES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PAYABLES AND OTHER CURRENT LIABILITIES | PAYABLES AND OTHER CURRENT LIABILITIES
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROVISION FOR INCOME TAXES | INCOME TAXES
Third quarter and first nine months 2022 provision for income taxes include a $32 million decrease related to the release of a state valuation allowance and a $16 million decrease from the finalization of prior year's income tax returns. Provision for income taxes was adjusted in third quarter 2022 to reflect finalization of the tax implications of the adhesives resins business divestiture, which, for first nine months 2022, is an increase of $38 million to the provision for income taxes. Third quarter and first nine months 2021 provision for income taxes included a $65 million decrease for income taxes as a result of decreases in unrecognized tax positions, a portion of which related to the 2017 Tax Cuts and Jobs Act. Additionally, first nine months 2021 included a $20 million decrease to the provision for income taxes from the revaluation of deferred tax liabilities as a result of the rubber additives divestiture. At September 30, 2022 and December 31, 2021, Eastman had $230 million and $200 million, respectively, in unrecognized tax benefits. At September 30, 2022, it is expected that, as a result of the resolution of federal, state, and foreign examinations and appeals, and the expiration of various statutes of limitation, the total amounts of unrecognized tax benefits could decrease by up to $15 million within the next 12 months.
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BORROWINGS |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BORROWINGS | BORROWINGS
(1)The carrying value of the euro-denominated 1.50% notes due May 2023 and 1.875% notes due November 2026 will fluctuate with changes in the euro to U.S. dollar exchange rate. The carrying value of these euro-denominated borrowings have been designated as non-derivative net investment hedges of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations. The Company repaid the 3.6% notes due August 2022, of which $550 million was repaid in second quarter 2022 primarily from proceeds from the 2027 Term Loan discussed below and $200 million was repaid in third quarter 2022 using available cash. There were no debt extinguishment costs associated with the repayment of this debt. Credit Facility, Term Loan, and Commercial Paper Borrowings The Company has access to a $1.50 billion revolving credit agreement (the "Credit Facility") expiring December 2026. 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. The Credit Facility includes sustainability-linked pricing terms, provides available liquidity for general corporate purposes, and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. At September 30, 2022 and December 31, 2021, the Company had no outstanding borrowings under the Credit Facility. At September 30, 2022, the Company's commercial paper borrowings were $355 million with a weighted average interest rate of 3.64 percent. At December 31, 2021, the Company had no outstanding commercial paper borrowings. In April 2022, the Company borrowed $500 million under a five-year term loan agreement (the "2027 Term Loan"). The 2027 Term Loan had a variable interest rate of 4.30 percent as of September 30, 2022. Borrowings under the 2027 Term Loan are subject to interest at varying spreads above quoted market rates. The Credit Facility and 2027 Term Loan contain customary covenants, including requirements to maintain certain financial ratios, that determine the events of default, amounts available, and terms of borrowings. The Company was in compliance with all applicable covenants at both September 30, 2022 and December 31, 2021. Fair Value of Borrowings Eastman has classified its total borrowings at September 30, 2022 and December 31, 2021 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 2021 Annual Report on Form 10-K. The fair value for fixed-rate debt securities is based on quoted market prices for the same or similar debt instruments and is classified as Level 2. The fair value for the Company's other borrowings, such as commercial paper and the 2027 Term Loan, equals the carrying value and is classified as Level 2. At September 30, 2022 and December 31, 2021, the fair values of total borrowings were $4.719 billion and $5.737 billion, respectively. The Company had no borrowings classified as Level 1 and Level 3 as of September 30, 2022 and December 31, 2021.
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DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES | DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS Overview of Hedging Programs Eastman is exposed to market risks, such as changes in foreign currency exchange rates, commodity prices, and interest rates. To mitigate these market risks and their effects on the cash flows of the underlying transactions and investments in foreign subsidiaries, the Company uses various derivative and non-derivative financial instruments, when appropriate, in accordance with the Company's hedging strategy and policies. Designation is performed on a specific exposure basis to support hedge accounting. The Company does not enter into derivative transactions for speculative purposes. For further information on hedging programs, see Note 10, "Derivative and Non-Derivative Financial Instruments", to the consolidated financial statements in Part II, Item 8 of the Company's 2021 Annual Report on Form 10-K. 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 are attributable to a particular risk. The derivative instruments that are designated and qualify as a cash flow hedge are reported on the balance sheet at fair value and the changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the anticipated cash flows of the underlying exposures being hedged. The change in the hedge instrument is reported as a component of "Accumulated other comprehensive income (loss)" ("AOCI") on the Unaudited Consolidated Statements of Financial Position and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Cash flows from cash flow hedges are classified as operating activities in the Unaudited Consolidated Statements of Cash Flows. In third quarter 2022, the Company settled the notional amount of $75 million associated with the 2022 forward starting interest rate swap, resulting in a cash gain of $13 million which is included as part of operating activities in the Unaudited Consolidated Statements of Cash Flows. The recognized gain from cash flow hedges of $1 million is included within "Net interest expense" on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings and the unrecognized gain of $12 million from cash flow hedges is included in "Accumulated other comprehensive income" on the Unaudited Consolidated Statements of Financial Position. 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. The derivative instruments that are designated and qualify as fair value hedges are reported as "Long-term borrowings" on the Unaudited Consolidated Statements of Financial Position at fair value and the changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the anticipated fair value of the underlying exposures being hedged. The net of the change in the hedge instrument and item being hedged for qualifying fair value hedges is recognized in earnings in the same period or periods during which the hedged transaction affects earnings. Cash flows from fair value hedges are classified as operating activities in the Unaudited Consolidated Statements of Cash Flows. Net Investment Hedges Net investment hedges are defined as derivative or non-derivative instruments designated as and used to hedge the foreign currency exposure of the net investments in certain foreign operations. The net of the change in the hedge instrument and item being hedged for qualifying net investment hedges is reported as a component of the "Cumulative Translation Adjustment" ("CTA") within AOCI on the Unaudited Consolidated Statements of Financial Position. Cash flows from the CTA component are classified as operating activities in the Unaudited Consolidated Statements of Cash Flows. Recognition in earnings of amounts previously recognized in CTA is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation. In the event of a complete or substantially complete liquidation of the net investment, cash flows from net investment hedges are classified as investing activities in the Unaudited Consolidated Statements of Cash Flows. For derivative cross-currency interest rate swap net investment hedges, gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in CTA within AOCI and recognized in earnings through the periodic swap interest accruals. The cross-currency interest rate swaps designated as net investment hedges are included as part of "Other long-term liabilities", "Other noncurrent assets", "Payables and other current liabilities", or "Other current assets" on the Unaudited Consolidated Statements of Financial Position. Cash flows from excluded components are classified as operating activities in the Unaudited Consolidated Statements of Cash Flows. In second quarter 2022, the Company terminated fixed-to-fixed cross-currency swaps designated to hedge a portion of its net investment in a euro functional currency denominated subsidiary against foreign currency fluctuations. The notional amount terminated was €266 million ($320 million) which was scheduled to mature in August 2022. The termination resulted in a $40 million gain recognized in CTA. The related cash flows were classified as investing activities in the Unaudited Consolidated Statements of Cash Flows. Summary of Financial Position and Financial Performance of Hedging Instruments The following table presents the notional amounts outstanding at September 30, 2022 and December 31, 2021 associated with Eastman's hedging programs.
Fair Value Measurements All the Company's derivative assets and liabilities are currently classified as Level 2. Level 2 fair value is based on estimates using standard pricing models. These standard pricing models use inputs that 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 transaction counterparties to validate the accuracy of its standard pricing models. The Company had no derivatives classified as Level 3 as of September 30, 2022 and December 31, 2021. Counterparties to these derivative contracts are highly rated financial institutions which the Company believes carry minimal risk of nonperformance, and the Company diversifies its positions among such counterparties to reduce its exposure to counterparty risk and credit losses. The Company monitors the creditworthiness of its counterparties on an ongoing basis. The Company did not recognize a credit loss during third quarter and first nine months 2022 or 2021. All 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 in 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 does not have any cash collateral due under such agreements. The Company has elected to present derivative contracts on a gross basis on the Unaudited Consolidated Statements of Financial Position. The following table presents the financial assets and liabilities valued on a recurring and gross basis and includes where the financial assets and liabilities are on the Unaudited Consolidated Statements of Financial Position as of September 30, 2022 and December 31, 2021.
In addition to the fair value associated with derivative instruments designated as cash flow hedges, fair value hedges, and net investment hedges, the Company had non-derivative instruments designated as foreign currency net investment hedges with a carrying value of $1.2 billion at September 30, 2022 and $1.4 billion at December 31, 2021. The designated foreign currency-denominated borrowings are included as part of "Borrowings due within one year" and "Long-term borrowings" on the Unaudited Consolidated Statements of Financial Position. For additional fair value measurement information, see Note 1, "Significant Accounting Policies", and Note 10, "Derivative and Non-Derivative Financial Instruments", to the consolidated financial statements in Part II, Item 8 of the Company's 2021 Annual Report on Form 10-K. As of September 30, 2022 and December 31, 2021, the following amounts were included on the Unaudited Consolidated Statements of Financial Position related to cumulative basis adjustments for fair value hedges.
The following table presents the effect of the Company's hedging instruments on "Other comprehensive income (loss), net of tax" ("OCI") and financial performance for third quarter and first nine months 2022 and 2021.
The following table presents the effect of fair value and cash flow hedge accounting in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for third quarter 2022 and 2021.
The following table presents the effect of fair value and cash flow hedge accounting in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for first nine months 2022 and 2021.
The Company enters into foreign exchange derivatives denominated in multiple currencies which are transacted and settled in the same quarter. These derivatives are not designated as hedges due to the short-term nature and the gains or losses on these derivatives are marked-to-market in line item "Other (income) charges, net" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. As a result of these derivatives, the Company recognized a net loss of $5 million and $11 million during third quarter and first nine months 2022, respectively, and recognized a net gain of $5 million during both third quarter 2021 and first nine months 2021. Pre-tax monetized positions and mark-to-market gains and losses from raw materials and energy, currency, and certain interest rate hedges that were included in AOCI included net gains of $362 million and net losses of $7 million at September 30, 2022 and December 31, 2021, respectively. Gains in AOCI increased between December 31, 2021 and September 30, 2022 primarily as a result of an increase in euro to U.S. dollar exchange rates. If recognized, approximately $59 million in pre-tax gains, as of September 30, 2022, would be reclassified into earnings during the next 12 months.
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RETIREMENT PLANS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT PLANS | RETIREMENT PLANS 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 life insurance for eligible retirees hired prior to January 1, 2007. The Company provided a subsidy for pre-Medicare health care and dental benefits to eligible retirees hired prior to January 1, 2007 that ended on December 31, 2021. Company funding is also provided for eligible Medicare retirees hired prior to January 1, 2007 with a health reimbursement arrangement. Costs recognized for these benefits are estimated amounts, which may change as actual costs 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 2021 Annual Report on Form 10-K. Components of net periodic benefit (credit) cost were as follows:
(1) Also includes curtailment triggered by the sale of the adhesives resins business which is included in "Other components of post-employment (benefit) cost, net" on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. Subsequent to the adhesives resins divestiture, the Company retained pension liabilities of certain plan participants while the status of the participants changed in a Non-U.S. pension plan which triggered a curtailment and an interim mark-to-market ("MTM") remeasurement of the impacted Non-U.S. pension plan's assets and liabilities. First nine months 2022 includes a curtailment gain of $7 million and a MTM gain of $3 million. Settlements are triggered in a plan when distributions exceed the sum of service cost and interest cost of the respective plan. Lump sum payments from a U.S. pension plan resulted in a plan settlement in second quarter 2022. The settlement itself was not material, but it triggered an interim MTM remeasurement of the impacted U.S. pension plan's assets and liabilities. First nine months 2022 includes a $7 million MTM loss.
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LEASES AND OTHER COMMITMENTS |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments Disclosure [Text Block] | LEASES AND OTHER COMMITMENTS Leases There are two types of leases: financing and operating. Both types of leases have associated right-to-use assets and lease liabilities that are valued at the present value of the lease payments and recognized on the Unaudited Consolidated Statements of Financial Position. The discount rate used in the measurement of a right-to-use asset and lease liability is the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, the collateralized incremental borrowing rate is used. The Company elected the accounting policy not to apply the recognition and measurement requirements to short-term leases with a term of 12 months or less and do not include a bargain purchase option. The Company has operating leases, as a lessee, with customary terms that do not include: significant variable lease payments; significant reasonably certain extensions or options required to be included in the lease term; restrictions; or other covenants for real property, rolling stock, and machinery and equipment. Real property leases primarily consist of office space and rolling stock leases primarily for railcars and fleet vehicles. At September 30, 2022 and December 31, 2021, right-to-use assets for operating leases totaled $205 million and $216 million, respectively, and are included as part of "Other noncurrent assets" on the Unaudited Consolidated Statements of Financial Position. At both September 30, 2022 and December 31, 2021, the operating right-to-use assets include $3 million of assets previously classified as lease intangibles and $5 million of prepaid lease assets. Operating lease liabilities are included as part of "Payables and other current liabilities" and "Other long-term liabilities" on the Unaudited Consolidated Statements of Financial Position. As of September 30, 2022, financing leases were not material to the Company's financial statements. As of September 30, 2022, reconciliation of lease payments and operating lease liabilities is provided below:
The Company has operating leases, primarily leases for railcars, with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease that will expire beginning third quarter 2023. Residual guarantee payments that become probable and estimable are recognized as rent expense over the remaining life of the applicable lease. Management's current expectation is that the likelihood of material residual guarantee payments is remote. Lease costs during the period and other information is provided below:
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ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS |
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Accrual for Environmental Loss Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Matters | ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS Certain Eastman manufacturing facilities generate hazardous and nonhazardous wastes, of which the treatment, storage, transportation, and disposal 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 certain cleanup costs. In addition, the Company will incur costs for environmental remediation and closure and post-closure 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 2021 Annual Report on Form 10-K. The resolution of uncertainties related to environmental matters may have a material adverse effect on the Company's consolidated results of operations in the period recognized. However, because of the availability of legal defenses, the Company's preliminary assessment of actions that may be required, and the extended period of time that the obligations are expected to be satisfied, management does not believe that the Company's liability for these environmental matters, individually or in the aggregate, will have a material adverse effect on the Company's future overall financial position, results of operations, or cash flows. Environmental Remediation and Environmental Asset Retirement Obligations The Company's net environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is included as part of "Other noncurrent assets", "Payables and other current liabilities", and "Other long-term liabilities" on the Unaudited Consolidated Statements of Financial Position as follows:
Environmental Remediation Estimated future environmental expenditures for undiscounted remediation costs ranged from the best estimate or minimum of $246 million to the maximum of $461 million and from the best estimate or minimum of $253 million to the maximum of $473 million at September 30, 2022 and December 31, 2021, respectively. The best estimate or minimum estimated future environmental expenditures are considered to be probable and reasonably estimable and include the amounts recognized at both September 30, 2022 and December 31, 2021. Reserves for environmental remediation include liabilities expected to be paid within approximately 30 years. The amounts charged to pre-tax earnings for environmental remediation and related charges are recognized in "Cost of sales" and "Other (income) charges, net" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. Changes in the reserves for environmental remediation liabilities during first nine months 2022 and full year 2021 are summarized below:
Environmental Asset Retirement Obligations An asset retirement obligation is an obligation for the retirement of a tangible long-lived asset that is incurred upon the acquisition, construction, development, or normal operation of that long-lived asset. Environmental asset retirement obligations consist of primarily closure and post-closure costs. For sites that have environmental asset retirement obligations, the best estimate recognized to date for these environmental asset retirement obligation costs was $28 million at both September 30, 2022 and December 31, 2021. Non-Environmental Asset Retirement Obligations The Company has contractual asset retirement obligations not associated with environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily associated with the future closure of leased manufacturing assets in Pace, Florida and Oulu, Finland. These non-environmental asset retirement obligations were $50 million and $51 million at September 30, 2022 and December 31, 2021, respectively, and are included in "Other long-term liabilities" on the Unaudited Consolidated Statements of Financial Position.
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LEGAL MATTERS |
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Loss Contingency, Information about Litigation Matters [Abstract] | |
LEGAL MATTERS | LEGAL MATTERSFrom time to time, Eastman 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 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 position, results of operations, or cash flows. |
STOCKHOLDERS' EQUITY |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY Reconciliations of the changes in stockholders' equity for third quarter 2022 and 2021 are provided below:
(1)Cash dividends declared consists of cash dividends paid and dividends declared but unpaid. (2)Share-based compensation expense is based on the fair value of share-based awards. (3)Additional paid-in capital includes settlement of shares repurchased under the second quarter 2022 accelerated share repurchase program ("2022 ASR"). Reconciliations of the changes in stockholders' equity for first nine months 2022 and 2021 are provided below:
(1)Cash dividends declared consists of cash dividends paid and dividends declared but unpaid. (2)Share-based compensation expense is based on the fair value of share-based awards. (3)Additional paid-in capital includes value of shares withheld for employees' taxes on vesting of share-based compensation awards. (4)Additional paid-in capital includes the net premium of final settlements for treasury shares delivered in 2022 under the 2022 ASR and the fourth quarter 2021 accelerated share repurchase program ("2021 ASR"). Accumulated Other Comprehensive Income (Loss), Net of Tax
Amounts of other comprehensive income (loss) are presented net of applicable taxes. Eastman recognizes deferred income taxes on the CTA related to branch operations and income from other entities included in the Company's consolidated U.S. tax return. No deferred income taxes are recognized on the CTA of other subsidiaries outside the United States because the CTA is considered to be a component of indefinitely invested, unremitted earnings of these foreign subsidiaries. Components of other comprehensive income recognized in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects:
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EARNINGS AND DIVIDENDS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS AND DIVIDENDS PER SHARE The following table sets forth the computation of basic and diluted earnings per share ("EPS") which are calculated using the treasury stock method:
Shares underlying stock options of 1,342,328 and 327,782 for third quarter 2022 and 2021, respectively, and 1,342,328 and 150,781 for first nine months 2022 and 2021, respectively, were excluded from calculations of diluted EPS because the grant date exercise price of these options was greater than the average market price of the Company's common stock and the effect of including them in the calculation of diluted EPS would have been antidilutive. There were 2,839,875 and 9,505,944 share repurchases in third quarter and first nine months 2022, respectively, and 1,354,737 and 2,543,112 share repurchases in third quarter and first nine months 2021, respectively. The Company declared cash dividends of $0.76 and $0.69 per share for third quarter 2022 and 2021, respectively, and $2.28 and $2.07 per share for first nine months 2022 and 2021, respectively. In December 2021, the Company's Board of Directors authorized the additional repurchase of up to $2.5 billion of the Company's outstanding common stock at such times, in such amounts, and on such terms, as determined by management to be in the best interest of the Company and its stockholders (the "2021 authorization"). In second quarter 2022, the Company entered into the 2022 ASR to purchase $500 million of the Company's common stock under the board approved authorizations. In exchange for upfront payment totaling $500 million, the financial institutions committed to deliver shares during the 2022 ASR's purchase period, which was settled in third quarter 2022. The total number of shares ultimately delivered was determined at the end of the applicable purchase period based on the volume-weighted average price of the Company's stock during the term of the 2022 ASR, less a discount. As of September 30, 2022, all shares repurchased under the 2022 ASR have been delivered. Approximately 80 percent of the expected shares repurchased under the 2022 ASR were delivered in second quarter 2022, and a final settlement of 1,212,732 shares were delivered in third quarter 2022.
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ASSETS IMPAIRMENTS AND RESTRUCTURING |
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Restructuring Costs and Asset Impairment Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ASSET IMPAIRMENTS AND RESTRUCTURING | ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET
(1)Asset impairment charges, gain on sale of previously impaired assets, and site closure costs in "Other" from the previously reported closure of a tire additives manufacturing facility in Asia Pacific as part of ongoing site optimization. (2)Asset impairment charges, loss on transfer of previously impaired assets to a third party, severance costs, and site closure costs in the Advanced Materials ("AM") segment due to the previously reported closure of an advanced interlayers manufacturing facility in North America as part of ongoing site optimization. In addition, accelerated depreciation of $4 million was recognized in "Cost of sales" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in first nine months 2021 related to the closure of this facility. (3)Fixed asset impairments, net in the AFP segment from the previously reported closure of an animal nutrition manufacturing facility in Asia Pacific as part of ongoing site optimization. (4)Severance charges as part of business improvement which was reported in "Other". (5)Severance charges and site closure costs in the AM segment from the previously reported closure of a performance films manufacturing facility in North America as part of ongoing site optimization. (6)Site closure costs of $1 million and $3 million for third quarter and first nine months 2022, respectively, in the Chemical Intermediates ("CI") segment. Site closure costs in third quarter 2021 of $2 million and $1 million in the CI and AFP segments, respectively, and site closure costs, including contract termination fees, in first nine months 2021 of $13 million and $3 million in the CI and AFP segments, respectively, resulting from closure of the Singapore manufacturing site. Changes in Reserves The following table summarizes the changes in asset impairments and restructuring reserves in first nine months 2022 and full year 2021:
Substantially all severance costs remaining are expected to be applied to the reserves within one year.
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SHARE-BASED COMPENSATION AWARDS |
9 Months Ended |
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Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Payment Arrangement [Text Block] | SHARE-BASED COMPENSATION AWARDS The Company utilizes share-based awards under employee and non-employee director compensation programs. These share-based awards have included restricted and unrestricted stock, restricted stock units, stock options, and performance shares. In third quarter 2022 and 2021, $12 million and $20 million, respectively, of compensation expense before tax were recognized in SG&A in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards. The impact on third quarter 2022 and 2021 net earnings of $9 million and $15 million, respectively, is net of deferred tax expense related to share-based award compensation for each period. In first nine months 2022 and 2021, $54 million and $60 million, respectively, of compensation expense before tax was recognized in SG&A in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards. The impact on first nine months 2022 and 2021 net earnings of $41 million and $45 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 2021 Annual Report on Form 10-K.
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SUPPLEMENTAL CASH FLOW INFORMATION |
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION Included in the line item "Other items, net" of the "Operating activities" section of the Unaudited Consolidated Statements of Cash Flows are the following changes to Unaudited Consolidated Statements of Financial Position:
The above changes resulted primarily from accrued taxes, deferred taxes, environmental liabilities, monetized positions from raw material and energy, currency, and certain interest rate hedges, equity investment dividends, prepaid insurance, miscellaneous deferrals, value-added taxes, and other miscellaneous accruals.
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SEGMENT AND REGIONAL SALES INFORMATION |
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SEGMENT INFORMATION | SEGMENT AND REGIONAL SALES INFORMATION Eastman's products and operations are managed and reported in four operating segments: Additives & Functional Products ("AFP"), Advanced Materials ("AM"), Chemical Intermediates ("CI"), and Fibers. The economic factors that impact the nature, amount, timing, and uncertainty of revenue and cash flows vary among the Company's business operating segments and the geographical regions in which they operate. For disaggregation of revenue by major product lines and regions for each business operating segment, see Note 20, "Segment and Regional Sales Information", to the consolidated financial statements in Part II, Item 8 of the Company's 2021 Annual Report on Form 10-K. For additional financial information for each segment, see Part I, Item 1, "Business - Business Segments", in the Company's 2021 Annual Report on Form 10-K.
(1)"Other" includes sales revenue from the divested rubber additives and adhesives resins businesses previously part of the AFP segment.
(1)"Other" includes EBIT of $6 million in first nine months 2022 and loss before interest and taxes of $39 million and $488 million in third quarter and first nine months 2021, respectively, from the divested rubber additives and adhesives resins businesses previously part of the AFP segment.
(1)Segment assets include accounts receivable, inventory, fixed assets, goodwill, and intangible assets. As disclosed in Note 1, "Significant Accounting Policies", December 31, 2021 Assets by Segment have been recast from Note 20, "Segment and Regional Sales Information", to the Company's 2021 Annual Report on Form 10-K. Prior to the recast, December 31, 2021 assets reported for the AFP segment were revised from $4,643 million to $5,195 million, and assets reported for Corporate & Other Assets were revised from $2,540 million to $1,988 million. Total assets were not impacted by the misclassification.
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SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation (Policies) |
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Basis of Presentation [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company ("Eastman" or the "Company") in accordance and consistent with the accounting policies stated in the Company's 2021 Annual Report on Form 10-K, and should be read in conjunction with the consolidated financial statements in Part II, Item 8 of that report, with the exception of recently adopted accounting standards noted below. The December 31, 2021 financial position data included herein was derived from the consolidated financial statements included in the 2021 Annual Report on Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). In the opinion of management, the unaudited consolidated financial statements include all normal recurring adjustments necessary for the fair statement of the interim financial information in conformity with GAAP. These statements contain 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, revenues, and expenses of business ventures for which a controlling interest is determined. Eastman accounts for other joint ventures and investments where it exercises significant influence on the equity basis. During the first nine months 2022, the Company contributed $24 million in a new joint venture located in Kingsport, Tennessee, which will produce acetylated wood. The Company owns a 40 percent interest in the joint venture. Intercompany transactions and balances are eliminated in consolidation. Certain prior period data has been reclassified in the unaudited consolidated financial statements and accompanying footnotes to conform to current period presentation, including sales revenue, earnings before interest and taxes ("EBIT"), and assets related to the divested rubber additives product lines and related assets and technology and the divested adhesives resins business. See Note 17, "Segment and Regional Sales Information" for more information.
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New Accounting Pronouncements, Policy [Policy Text Block] | Recently Adopted Accounting Standards Accounting Standards Update ("ASU") 2021-05 Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments: On January 1, 2022, Eastman adopted this update which is a part of the Financial Accounting Standards Board's ("FASB") post-implementation review of this Topic. The update provides that lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both: the lease would have been classified as a sales-type lease or a direct financing lease and the lessor would have otherwise recognized a day-one loss. The adoption does not have significant impact on the Company's financial statements and related disclosures. ASU 2021-10 Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance: On January 1, 2022, Eastman adopted prospectively this amendment which requires business entities that account for transactions with a government by applying a grant or contribution model by analogy (for example, a grant model within International Financial Reporting Standards) to provide annual disclosures about government assistance recorded during the period. The adoption does not have significant impact on the Company's financial statements and related disclosures. Accounting Standards Issued But Not Adopted as of September 30, 2022 ASU 2021-08 Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers: The FASB issued this update in October 2021, which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 Revenue from Contracts with Customers, as if it had originated the contracts. The update also provides certain practical expedients for acquirers and is applicable to all contract assets and liabilities within the scope of Topic 606. The expedients are as follows: "provides relief for contracts that have been previously modified before the acquisition date" and "relief for situations in which the acquirer does not have the appropriate data or expertise to analyze the historical periods in which the contract was entered into". This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those years. Early adoption is permitted, including adoption in an interim period. Adoption is on a prospective basis to business combinations occurring on or after the initial application and if adopted early, retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application. Management does not expect that changes required by the new standard will have a significant impact on the Company's financial statements and related disclosures. ASU 2022-01 Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method: The FASB issued this update in March 2022. This ASU clarifies the guidance in Accounting Standards Codification ("ASC") 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets. This ASU amends the guidance in ASU 2017-12 (released on August 28, 2017) that, among other things, established the "last-of-layer" method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the "portfolio layer" method and addresses feedback from stakeholders regarding its application. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those years. Management does not expect that changes required by the new standard will have a significant impact on the Company's financial statements and related disclosures. ASU 2022-02 Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures: The FASB issued this update in March 2022. This ASU updates the requirements for accounting for credit losses under ASC 326, eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310-40, and enhances creditors' disclosure requirements related to loan refinancings and restructurings for borrowers experiencing financial difficulty. This ASU also amends the guidance on "vintage disclosures" to require disclosure of gross write-offs by year of origination. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those years. Management does not expect that changes required by the new standard will have a significant impact on the Company's financial statements and related disclosures. ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions: The FASB issued this update in June 2022, which states that when measuring the fair value of an asset or a liability, a reporting entity should consider the characteristics of the asset or liability, including restrictions on the sale of the asset or liability, if a market participant also would take those characteristics into account. Key to that determination is the unit of account for the asset or liability being measured at fair value. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. Management does not expect that changes required by the new standard will have a significant impact on the Company's financial statements and related disclosures. ASU 2022-04 Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations: The FASB issued this update in September 2022, which requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program. Required disclosures include information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. Management is currently evaluating the impact on the Company's financial statements and related disclosures.
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Off-Balance-Sheet Credit Exposure, Policy | Working Capital Management and Off Balance Sheet ArrangementsThe Company has an off balance sheet, uncommitted accounts receivable factoring program under which entire invoices may be sold, without recourse, to third-party financial institutions. Under these agreements, the Company sells the invoices at face value, less a transaction fee, which substantially equals the carrying value and fair value with no gain or loss recognized, and no credit loss exposure is retained. Available capacity under these agreements, which the Company uses as a routine source of working capital funding, is dependent on the level of accounts receivable eligible to be sold and the financial institutions' willingness to purchase such receivables. In addition, certain agreements also require that the Company continue to service, administer, and collect the sold accounts receivable at market rates. The total amounts sold under the program in third quarter 2022 and 2021 were $700 million and $252 million, respectively, and $1,839 million and $839 million in first nine months 2022 and 2021, respectively. |
Discontinued Operations and Disposal Groups (Tables) - USD ($) $ in Millions |
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Post-employment obligations | $ 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disposal Groups, Including Discontinued Operations | The major classes of divested assets and liabilities as of the date of the divestiture were as follows:
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Disposal Groups, Including Discontinued Operations | The major classes of divested assets and liabilities as of the date of the divestiture were as follows:
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INVENTORIES (Tables) |
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Schedule of inventories |
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Schedule of payables and other current liabilities |
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Long-term Borrowings |
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DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
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Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative basis adjustments for fair value hedges on balance sheet [Table Text Block] | As of September 30, 2022 and December 31, 2021, the following amounts were included on the Unaudited Consolidated Statements of Financial Position related to cumulative basis adjustments for fair value hedges.
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Derivative Instruments, Gain (Loss) [Table Text Block] | The following table presents the effect of fair value and cash flow hedge accounting in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for third quarter 2022 and 2021.
The following table presents the effect of fair value and cash flow hedge accounting in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for first nine months 2022 and 2021.
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Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] | The following table presents the notional amounts outstanding at September 30, 2022 and December 31, 2021 associated with Eastman's hedging programs.
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Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The following table presents the effect of the Company's hedging instruments on "Other comprehensive income (loss), net of tax" ("OCI") and financial performance for third quarter and first nine months 2022 and 2021.
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Financial assets and liabilities valued on a recurring basis | The following table presents the financial assets and liabilities valued on a recurring and gross basis and includes where the financial assets and liabilities are on the Unaudited Consolidated Statements of Financial Position as of September 30, 2022 and December 31, 2021.
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RETIREMENT PLANS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit cost | Components of net periodic benefit (credit) cost were as follows:
(1) Also includes curtailment triggered by the sale of the adhesives resins business which is included in "Other components of post-employment (benefit) cost, net" on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.
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LEASES AND OTHER COMMITMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | As of September 30, 2022, reconciliation of lease payments and operating lease liabilities is provided below:
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Lease, Cost [Table Text Block] | Lease costs during the period and other information is provided below:
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ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrual for Environmental Loss Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of environmental liabilities, current and non-current |
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Schedule of changes to environmental remediation liabilities | Changes in the reserves for environmental remediation liabilities during first nine months 2022 and full year 2021 are summarized below:
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STOCKHOLDERS' EQUITY (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the changes in stockholders' equity | Reconciliations of the changes in stockholders' equity for third quarter 2022 and 2021 are provided below:
(1)Cash dividends declared consists of cash dividends paid and dividends declared but unpaid. (2)Share-based compensation expense is based on the fair value of share-based awards. (3)Additional paid-in capital includes settlement of shares repurchased under the second quarter 2022 accelerated share repurchase program ("2022 ASR"). Reconciliations of the changes in stockholders' equity for first nine months 2022 and 2021 are provided below:
(1)Cash dividends declared consists of cash dividends paid and dividends declared but unpaid. (2)Share-based compensation expense is based on the fair value of share-based awards. (3)Additional paid-in capital includes value of shares withheld for employees' taxes on vesting of share-based compensation awards. (4)Additional paid-in capital includes the net premium of final settlements for treasury shares delivered in 2022 under the 2022 ASR and the fourth quarter 2021 accelerated share repurchase program ("2021 ASR").
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Accumulated Other Comprehensive Income (Loss) |
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Schedule of components of comprehensive income (loss) before tax and net of tax effects | Components of other comprehensive income recognized in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects:
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EARNINGS AND DIVIDENDS PER SHARE (Tables) |
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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") which are calculated using the treasury stock method:
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ASSETS IMPAIRMENTS AND RESTRUCTURING (Tables) |
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Restructuring Costs and Asset Impairment Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost [Table Text Block] | The following table summarizes the changes in asset impairments and restructuring reserves in first nine months 2022 and full year 2021:
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Restructuring and Related Costs [Table Text Block] |
(1)Asset impairment charges, gain on sale of previously impaired assets, and site closure costs in "Other" from the previously reported closure of a tire additives manufacturing facility in Asia Pacific as part of ongoing site optimization. (2)Asset impairment charges, loss on transfer of previously impaired assets to a third party, severance costs, and site closure costs in the Advanced Materials ("AM") segment due to the previously reported closure of an advanced interlayers manufacturing facility in North America as part of ongoing site optimization. In addition, accelerated depreciation of $4 million was recognized in "Cost of sales" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in first nine months 2021 related to the closure of this facility. (3)Fixed asset impairments, net in the AFP segment from the previously reported closure of an animal nutrition manufacturing facility in Asia Pacific as part of ongoing site optimization. (4)Severance charges as part of business improvement which was reported in "Other". (5)Severance charges and site closure costs in the AM segment from the previously reported closure of a performance films manufacturing facility in North America as part of ongoing site optimization. (6)Site closure costs of $1 million and $3 million for third quarter and first nine months 2022, respectively, in the Chemical Intermediates ("CI") segment. Site closure costs in third quarter 2021 of $2 million and $1 million in the CI and AFP segments, respectively, and site closure costs, including contract termination fees, in first nine months 2021 of $13 million and $3 million in the CI and AFP segments, respectively, resulting from closure of the Singapore manufacturing site.
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SUPPLEMENTAL CASH FLOW INFORMATION (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures | Included in the line item "Other items, net" of the "Operating activities" section of the Unaudited Consolidated Statements of Cash Flows are the following changes to Unaudited Consolidated Statements of Financial Position:
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SEGMENT AND REGIONAL SALES INFORMATION (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information Disclosure |
(1)"Other" includes sales revenue from the divested rubber additives and adhesives resins businesses previously part of the AFP segment.
(1)"Other" includes EBIT of $6 million in first nine months 2022 and loss before interest and taxes of $39 million and $488 million in third quarter and first nine months 2021, respectively, from the divested rubber additives and adhesives resins businesses previously part of the AFP segment.
(1)Segment assets include accounts receivable, inventory, fixed assets, goodwill, and intangible assets. As disclosed in Note 1, "Significant Accounting Policies", December 31, 2021 Assets by Segment have been recast from Note 20, "Segment and Regional Sales Information", to the Company's 2021 Annual Report on Form 10-K. Prior to the recast, December 31, 2021 assets reported for the AFP segment were revised from $4,643 million to $5,195 million, and assets reported for Corporate & Other Assets were revised from $2,540 million to $1,988 million. Total assets were not impacted by the misclassification.
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SIGNIFICANT ACCOUNTING POLICIES Recently Issued Accounting Standards (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Receivable Sold Under Factoring Arrangement | $ 700 | $ 252 | $ 1,839 | $ 839 |
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures | 24 | 24 | ||
Unrealized gain (loss) during period | $ 40 | $ 76 | $ 129 | $ 115 |
Accoya Joint Venture | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Equity Method Investment, Ownership Percentage | 40.00% | 40.00% |
INVENTORIES (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
At FIFO or average cost (approximates current cost) [Abstract] | ||
Finished goods | $ 1,311 | $ 1,007 |
Work in process | 330 | 273 |
Raw materials and supplies | 770 | 589 |
Total inventories at FIFO or average cost | 2,411 | 1,869 |
Less: LIFO reserve | 436 | 365 |
Total inventories | $ 1,975 | $ 1,504 |
Inventories valued on the LIFO method | 50.00% | 50.00% |
PAYABLES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Payables and Accruals [Abstract] | ||
Trade creditors | $ 1,407 | $ 1,228 |
Accrued payroll and variable compensation | 143 | 311 |
Accrued taxes | 140 | 138 |
Post-employment obligations | 65 | 70 |
Dividends payable to stockholders | 94 | 101 |
Other | 272 | 285 |
Total payables and other current liabilities | $ 2,121 | $ 2,133 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
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Income Tax Examination [Line Items] | |||||
(Benefit from) provision for income taxes | $ (20) | $ (33) | $ 155 | $ 66 | |
Effective Income Tax Rate Reconciliation, Percent | (7.00%) | (10.00%) | 16.00% | 12.00% | |
Unrecognized Tax Benefits | $ 230 | $ 230 | $ 200 | ||
Unrealized gain (loss) during period | 40 | $ 76 | 129 | $ 115 | |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | 32 | 32 | |||
Effective Income Tax Rate Reconciliation, Prior Year Income Taxes, Amount | 16 | 16 | |||
Effective Income Tax Rate Reconciliation, Disposition of Business, Amount | (38) | 20 | |||
Effective Income Tax Rate Reconciliation, Tax Cuts and Jobs Act, Amount | $ 65 | $ 65 | |||
Minimum [Member] | |||||
Income Tax Examination [Line Items] | |||||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 15 | $ 15 |
BORROWINGS Part 3 (Details) Fair Value - Fair Value, Recurring [Member] - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt Instrument, Fair Value Disclosure | $ 4,719 | $ 5,737 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt Instrument, Fair Value Disclosure | $ 0 | $ 0 |
STOCKHOLDERS' EQUITY Part 2 AOCI (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Cumulative Translation Adjustment | $ (233) | $ (233) | $ (237) | $ (293) | |||
Change in cumulative translation adjustment | (19) | $ 56 | $ 2 | 4 | $ 13 | ||
Benefit Plans Unrecognized Prior Service Credits | 38 | 38 | 59 | 87 | |||
Change in Benefit Plans Unrecognized Prior Service Credits | (28) | (21) | |||||
Unrealized Gains (Losses) on Derivative Instruments | 44 | 44 | (3) | (66) | |||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax | 63 | 47 | |||||
Unrealized Losses on Investments | (1) | (1) | (1) | (1) | |||
Change in Unrealized Losses on Investments | 0 | 0 | |||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (152) | (152) | $ (182) | $ (273) | |||
Other Comprehensive Income (Loss) | $ (9) | $ 91 | $ 48 | $ 30 | $ 88 |
STOCKHOLDERS' EQUITY Part 3 OCI (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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Other Comprehensive Income (Loss), before Tax [Abstract] | |||||
Change in cumulative translation adjustment, before tax | $ (19) | $ 2 | $ 4 | $ 13 | |
Amortization of unrecognized prior service credits | (8) | (10) | (28) | (29) | |
Unrealized gain (loss) during period | 40 | 76 | 129 | 115 | |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax | (19) | (6) | (67) | 13 | |
Total other comprehensive income (loss), before tax | (6) | 62 | 38 | 112 | |
Other comprehensive income (loss), net of tax: | |||||
Change in cumulative translation adjustment | (19) | $ 56 | 2 | 4 | 13 |
Amortization of unrecognized prior service credits | (6) | (7) | (21) | (21) | |
Unrealized gain (loss) during period | 30 | 57 | 97 | 86 | |
Reclassification adjustment for (gains) losses included in net income, net | (14) | (4) | (50) | 10 | |
Other Comprehensive Income (Loss) | $ (9) | $ 91 | $ 48 | $ 30 | $ 88 |
SHARE-BASED COMPENSATION AWARDS (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Share-Based Payment Arrangement [Abstract] | ||||
Share-based Payment Arrangement, Expense | $ 12 | $ 20 | $ 54 | $ 60 |
Share-based Payment Arrangement, Expense, after Tax | $ 9 | $ 15 | $ 41 | $ 45 |
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Supplemental Cash Flow Information [Abstract] | ||
Other current assets | $ 31 | $ (4) |
Other noncurrent assets | (68) | 25 |
Payables and other current liabilities | 45 | 221 |
Long-term liabilities and equity | 110 | 33 |
Total | $ 118 | $ 275 |
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