(Mark
One)
|
|
[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended March 31, 2013
|
|
OR
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from ______________ to ______________
|
Delaware
|
62-1539359
|
(State or other jurisdiction of
|
(I.R.S. employer
|
incorporation or organization)
|
identification no.)
|
|
|
200 South Wilcox Drive
|
|
Kingsport, Tennessee
|
37662
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
[X]
|
Accelerated filer
|
[ ]
|
Non-accelerated filer
|
[ ]
|
Smaller reporting company
|
[ ]
|
Class
|
Number of Shares Outstanding at March 31, 2013
|
Common Stock, par value $0.01 per share
|
154,844,956
|
ITEM
|
|
PAGE
|
|
||
|
|
|
|
||
|
||
|
||
|
||
|
|
|
|
|
|
|
|
|
|
|
First Three Months
|
||||||
(Dollars in millions, except per share amounts)
|
|
2013
|
|
2012
|
||||
Sales
|
|
$
|
2,307
|
|
|
$
|
1,821
|
|
Cost of sales
|
|
1,691
|
|
|
1,390
|
|
||
Gross profit
|
|
616
|
|
|
431
|
|
||
Selling, general and administrative expenses
|
|
171
|
|
|
126
|
|
||
Research and development expenses
|
|
49
|
|
|
41
|
|
||
Asset impairments and restructuring charges
|
|
3
|
|
|
—
|
|
||
Operating earnings
|
|
393
|
|
|
264
|
|
||
Net interest expense
|
|
47
|
|
|
19
|
|
||
Other charges (income), net
|
|
1
|
|
|
—
|
|
||
Earnings from continuing operations before income taxes
|
|
345
|
|
|
245
|
|
||
Provision for income taxes from continuing operations
|
|
97
|
|
|
85
|
|
||
Earnings from continuing operations
|
|
248
|
|
|
160
|
|
||
Loss from disposal of discontinued operations, net of tax
|
|
—
|
|
|
(1
|
)
|
||
Net earnings
|
|
$
|
248
|
|
|
$
|
159
|
|
Less: Net earnings attributable to noncontrolling interest
|
|
1
|
|
|
1
|
|
||
Net earnings attributable to Eastman
|
|
$
|
247
|
|
|
$
|
158
|
|
Amounts attributable to Eastman stockholders
|
|
|
|
|
||||
Earnings from continuing operations, net of tax
|
|
$
|
247
|
|
|
$
|
159
|
|
Loss from discontinued operations, net of tax
|
|
—
|
|
|
(1
|
)
|
||
Net earnings attributable to Eastman stockholders
|
|
$
|
247
|
|
|
$
|
158
|
|
Basic earnings per share attributable to Eastman
|
|
|
|
|
||||
Basic earnings per share attributable to Eastman
|
|
$
|
1.60
|
|
|
$
|
1.15
|
|
Diluted earnings per share attributable to Eastman
|
|
|
|
|
|
|
||
Earnings from continuing operations
|
|
$
|
1.57
|
|
|
$
|
1.13
|
|
Loss from discontinued operations
|
|
—
|
|
|
(0.01
|
)
|
||
Diluted earnings per share attributable to Eastman
|
|
$
|
1.57
|
|
|
$
|
1.12
|
|
|
|
First Three Months
|
||||||
(Dollars in millions, except per share amounts)
|
|
2013
|
|
2012
|
||||
Comprehensive Income
|
|
|
|
|
|
|
||
Net earnings including noncontrolling interest
|
|
$
|
248
|
|
|
$
|
159
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
||
Change in cumulative translation adjustment
|
|
(50
|
)
|
|
15
|
|
||
Defined benefit pension and other postretirement benefit plans:
|
|
|
|
|
|
|
||
Amortization of unrecognized prior service credits included in net periodic costs
|
|
(4
|
)
|
|
(5
|
)
|
||
Derivatives and hedging:
|
|
|
|
|
|
|
||
Unrealized gain during period
|
|
14
|
|
|
10
|
|
||
Reclassification adjustment for gains included in net income
|
|
2
|
|
|
(5
|
)
|
||
Total other comprehensive income (loss), net of tax
|
|
(38
|
)
|
|
15
|
|
||
Comprehensive income including noncontrolling interest
|
|
210
|
|
|
174
|
|
||
Comprehensive income attributable to noncontrolling interest
|
|
1
|
|
|
1
|
|
||
Comprehensive income attributable to Eastman
|
|
209
|
|
|
173
|
|
||
Retained Earnings
|
|
|
|
|
|
|
||
Retained earnings at beginning of period
|
|
$
|
3,038
|
|
|
$
|
2,760
|
|
Net earnings attributable to Eastman
|
|
247
|
|
|
158
|
|
||
Cash dividends declared
|
|
(46
|
)
|
|
(36
|
)
|
||
Retained earnings at end of period
|
|
$
|
3,239
|
|
|
$
|
2,882
|
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in millions, except per share amounts)
|
2013
|
|
2012
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
178
|
|
|
$
|
249
|
|
Trade receivables, net
|
990
|
|
|
846
|
|
||
Miscellaneous receivables
|
182
|
|
|
151
|
|
||
Inventories
|
1,301
|
|
|
1,260
|
|
||
Other current assets
|
86
|
|
|
88
|
|
||
Total current assets
|
2,737
|
|
|
2,594
|
|
||
Properties
|
|
|
|
|
|
||
Properties and equipment at cost
|
9,684
|
|
|
9,681
|
|
||
Less: Accumulated depreciation
|
5,530
|
|
|
5,500
|
|
||
Net properties
|
4,154
|
|
|
4,181
|
|
||
Goodwill
|
2,635
|
|
|
2,644
|
|
||
Intangible assets, net of accumulated amortization
|
1,842
|
|
|
1,849
|
|
||
Other noncurrent assets
|
319
|
|
|
351
|
|
||
Total assets
|
$
|
11,687
|
|
|
$
|
11,619
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Payables and other current liabilities
|
$
|
1,289
|
|
|
$
|
1,360
|
|
Borrowings due within one year
|
4
|
|
|
4
|
|
||
Total current liabilities
|
1,293
|
|
|
1,364
|
|
||
Long-term borrowings
|
4,779
|
|
|
4,779
|
|
||
Deferred income tax liabilities
|
104
|
|
|
91
|
|
||
Post-employment obligations
|
1,840
|
|
|
1,856
|
|
||
Other long-term liabilities
|
483
|
|
|
501
|
|
||
Total liabilities
|
8,499
|
|
|
8,591
|
|
||
Stockholders' equity
|
|
|
|
|
|
||
Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 214,741,633 and 213,406,523 for 2013 and 2012, respectively)
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
1,740
|
|
|
1,709
|
|
||
Retained earnings
|
3,239
|
|
|
3,038
|
|
||
Accumulated other comprehensive income
|
85
|
|
|
123
|
|
||
|
5,066
|
|
|
4,872
|
|
||
Less: Treasury stock at cost (59,957,162 shares for 2013 and 59,511,662 shares for 2012)
|
1,961
|
|
|
1,929
|
|
||
Total Eastman stockholders' equity
|
3,105
|
|
|
2,943
|
|
||
Noncontrolling interest
|
83
|
|
|
85
|
|
||
Total equity
|
$
|
3,188
|
|
|
$
|
3,028
|
|
Total liabilities and stockholders' equity
|
$
|
11,687
|
|
|
$
|
11,619
|
|
|
First Three Months
|
||||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net earnings including noncontrolling interest
|
$
|
248
|
|
|
$
|
159
|
|
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
110
|
|
|
69
|
|
||
Provision for deferred income taxes
|
26
|
|
|
13
|
|
||
Pension and other postretirement contributions (in excess of) less than expenses
|
(25
|
)
|
|
(27
|
)
|
||
Variable compensation (in excess of) less than expenses
|
(57
|
)
|
|
(71
|
)
|
||
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
|
|
|
|
|
|
||
(Increase) decrease in trade receivables
|
(155
|
)
|
|
(103
|
)
|
||
(Increase) decrease in inventories
|
(53
|
)
|
|
14
|
|
||
Increase (decrease) in trade payables
|
(27
|
)
|
|
(20
|
)
|
||
Other items, net
|
(62
|
)
|
|
(15
|
)
|
||
Net cash provided by operating activities
|
5
|
|
|
19
|
|
||
Cash flows from investing activities
|
|
|
|
|
|
||
Additions to properties and equipment
|
(87
|
)
|
|
(90
|
)
|
||
Proceeds from redemption of short-term time deposits
|
—
|
|
|
120
|
|
||
Proceeds from sale of assets and investments
|
5
|
|
|
6
|
|
||
Acquisitions and investments in joint ventures, net of cash acquired
|
—
|
|
|
(10
|
)
|
||
Additions to capitalized software
|
(1
|
)
|
|
(1
|
)
|
||
Other items, net
|
—
|
|
|
(35
|
)
|
||
Net cash used in investing activities
|
(83
|
)
|
|
(10
|
)
|
||
Cash flows from financing activities
|
|
|
|
|
|
||
Net increase (decrease) in commercial paper, credit facility, and other borrowings
|
200
|
|
|
(1
|
)
|
||
Proceeds from borrowings
|
—
|
|
|
5
|
|
||
Repayment of borrowings
|
(200
|
)
|
|
—
|
|
||
Dividends paid to stockholders
|
(1
|
)
|
|
(36
|
)
|
||
Treasury stock purchases
|
(32
|
)
|
|
—
|
|
||
Dividends paid to noncontrolling interest
|
(3
|
)
|
|
—
|
|
||
Proceeds from stock option exercises and other items, net
|
46
|
|
|
15
|
|
||
Net cash provided by (used in) financing activities
|
10
|
|
|
(17
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(3
|
)
|
|
—
|
|
||
Net change in cash and cash equivalents
|
(71
|
)
|
|
(8
|
)
|
||
Cash and cash equivalents at beginning of period
|
249
|
|
|
577
|
|
||
Cash and cash equivalents at end of period
|
$
|
178
|
|
|
$
|
569
|
|
ITEM
|
|
Page
|
|
|
|
1.
|
BASIS OF PRESENTATION
|
2.
|
ACQUISITIONS AND INVESTMENTS IN JOINT VENTURES
|
|
|
|||
(Dollars in millions)
|
Goodwill
|
|||
Additives & Functional Products
|
$
|
740
|
|
|
Advanced Materials
|
1,027
|
|
||
Specialty Fluids & Intermediates
|
463
|
|
||
Total
|
$
|
2,230
|
|
(Dollars in millions)
|
Fair Value
|
|
Weighted-Average Amortization Period (Years)
|
|||
Amortizable intangible assets
|
|
|
|
|||
Customer relationships
|
$
|
809
|
|
|
22
|
|
Developed technologies
|
440
|
|
|
13
|
||
Indefinite-lived intangible assets
|
|
|
|
|||
Trade names
|
542
|
|
|
|
||
Total
|
$
|
1,791
|
|
|
|
|
First Quarter
|
||
(Dollars in millions)
|
2012
|
||
Pro forma sales
|
$
|
2,319
|
|
Pro forma earnings from continuing operations
|
220
|
|
3.
|
INVENTORIES
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
At FIFO or average cost (approximates current cost)
|
|
|
|
||||
Finished goods
|
$
|
989
|
|
|
$
|
941
|
|
Work in process
|
301
|
|
|
288
|
|
||
Raw materials and supplies
|
517
|
|
|
536
|
|
||
Total inventories
|
1,807
|
|
|
1,765
|
|
||
LIFO Reserve
|
(506
|
)
|
|
(505
|
)
|
||
Total inventories
|
$
|
1,301
|
|
|
$
|
1,260
|
|
4.
|
PAYABLES AND OTHER CURRENT LIABILITIES
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Trade creditors
|
$
|
687
|
|
|
$
|
723
|
|
Accrued payrolls, vacation, and variable-incentive compensation
|
96
|
|
|
171
|
|
||
Accrued taxes
|
112
|
|
|
76
|
|
||
Post-employment obligations
|
61
|
|
|
62
|
|
||
Interest payable
|
36
|
|
|
59
|
|
||
Environmental contingent liabilities, current portion
|
35
|
|
|
35
|
|
||
Other
|
262
|
|
|
234
|
|
||
Total payables and other current liabilities
|
$
|
1,289
|
|
|
$
|
1,360
|
|
5.
|
PROVISION FOR INCOME TAXES
|
|
First Quarter
|
||||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Provision for income taxes
|
$
|
97
|
|
|
$
|
85
|
|
Effective tax rate
|
28
|
%
|
|
35
|
%
|
(Dollars in millions)
|
December 31, 2012
|
||
Deferred tax assets
|
|
||
Post-employment obligations
|
$
|
715
|
|
Net operating loss carryforwards
|
630
|
|
|
Tax credit carryforwards
|
230
|
|
|
Environmental reserves
|
145
|
|
|
Other
|
82
|
|
|
Total deferred tax assets
|
1,802
|
|
|
Less valuation allowance
|
(215
|
)
|
|
Deferred tax assets less valuation allowance
|
$
|
1,587
|
|
Deferred tax liabilities
|
|
||
Depreciation
|
$
|
(951
|
)
|
Amortization
|
(666
|
)
|
|
Total deferred tax liabilities
|
$
|
(1,617
|
)
|
Net deferred tax liabilities
|
$
|
(30
|
)
|
As recorded in the Consolidated Statements of Financial Position:
|
|
||
Other current assets
|
$
|
34
|
|
Other noncurrent assets
|
30
|
|
|
Payables and other current liabilities
|
(3
|
)
|
|
Deferred income tax liabilities
|
(91
|
)
|
|
Net deferred tax liabilities
|
$
|
(30
|
)
|
6.
|
BORROWINGS
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Borrowings consisted of:
|
|
|
|
||||
3% debentures due 2015
|
$
|
250
|
|
|
$
|
250
|
|
2.4% notes due 2017
|
997
|
|
|
997
|
|
||
6.30% notes due 2018
|
173
|
|
|
174
|
|
||
5.5% notes due 2019
|
250
|
|
|
250
|
|
||
4.5% debentures due 2021
|
250
|
|
|
250
|
|
||
3.6% notes due 2022
|
894
|
|
|
893
|
|
||
7 1/4% debentures due 2024
|
243
|
|
|
243
|
|
||
7 5/8% debentures due 2024
|
54
|
|
|
54
|
|
||
7.60% debentures due 2027
|
222
|
|
|
222
|
|
||
4.8% notes due 2042
|
496
|
|
|
496
|
|
||
Credit facility borrowings
(1)
|
950
|
|
|
950
|
|
||
Other
|
4
|
|
|
4
|
|
||
Total borrowings
|
4,783
|
|
|
4,783
|
|
||
Borrowings due within one year
|
4
|
|
|
4
|
|
||
Long-term borrowings
|
$
|
4,779
|
|
|
$
|
4,779
|
|
|
|
|
|
Fair Value Measurements at March 31, 2013
|
||||||||||||||||
(Dollars in millions)
|
|
Recorded Amount March 31, 2013
|
|
Total Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||||
Long-term borrowings
|
|
$
|
4,779
|
|
|
$
|
5,145
|
|
|
$
|
4,195
|
|
|
$
|
950
|
|
|
$
|
—
|
|
|
|
|
|
Fair Value Measurements at December 31, 2012
|
||||||||||||||||
(Dollars in millions)
|
|
Recorded Amount December 31, 2012
|
|
Total Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||||
Long-term borrowings
|
|
$
|
4,779
|
|
|
$
|
5,165
|
|
|
$
|
4,215
|
|
|
$
|
950
|
|
|
$
|
—
|
|
7.
|
DERIVATIVES
|
(Dollars in millions)
|
|
|
|
Fair Value Measurements at March 31, 2013
|
||||||||||||
Description
|
|
March 31, 2013
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
Derivative Assets
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
58
|
|
|
$
|
—
|
|
Derivative Liabilities
|
|
(26
|
)
|
|
—
|
|
|
(14
|
)
|
|
(12
|
)
|
||||
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
44
|
|
|
$
|
(12
|
)
|
(Dollars in millions)
|
|
|
|
Fair Value Measurements at December 31, 2012
|
||||||||||||
Description
|
|
December 31, 2012
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
Derivative Assets
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
—
|
|
Derivative Liabilities
|
|
(24
|
)
|
|
—
|
|
|
(19
|
)
|
|
(5
|
)
|
||||
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
(5
|
)
|
|
|
Level 3 Assets (Liabilities)
|
||||||
(Dollars in millions)
|
|
Total
|
|
Commodity Contracts
|
||||
Beginning balance at January 1, 2013
|
|
$
|
(5
|
)
|
|
$
|
(5
|
)
|
Realized gain (loss) in sales revenue
|
|
(4
|
)
|
|
(4
|
)
|
||
Change in unrealized gain (loss)
|
|
(7
|
)
|
|
(7
|
)
|
||
Settlements
|
|
4
|
|
|
4
|
|
||
Transfers (out) in of Level 3
|
|
—
|
|
|
—
|
|
||
Ending balance at March 31, 2013
|
|
$
|
(12
|
)
|
|
$
|
(12
|
)
|
(Dollars in millions)
|
|
|
|
Fair Value Measurements Significant Other Observable Inputs
|
||||||
Derivative Assets
|
|
Statement of Financial Position Location
|
|
March 31, 2013
|
|
December 31, 2012
|
||||
Cash Flow Hedges
|
|
|
|
|
|
|
||||
Commodity contracts
|
|
Other current assets
|
|
$
|
9
|
|
|
$
|
7
|
|
Foreign exchange contracts
|
|
Other current assets
|
|
21
|
|
|
8
|
|
||
Foreign exchange contracts
|
|
Other noncurrent assets
|
|
28
|
|
|
13
|
|
||
|
|
|
|
$
|
58
|
|
|
$
|
28
|
|
(Dollars in millions)
|
|
|
|
Fair Value Measurements Significant Other Observable Inputs
|
||||||
Derivative Liabilities
|
|
Statement of Financial Position Location
|
|
March 31, 2013
|
|
December 31, 2012
|
||||
Cash Flow Hedges
|
|
|
|
|
|
|
||||
Commodity contracts
|
|
Payables and other current liabilities
|
|
$
|
16
|
|
|
$
|
13
|
|
Foreign exchange contracts
|
|
Payables and other current liabilities
|
|
3
|
|
|
8
|
|
||
Foreign exchange contracts
|
|
Other long-term liabilities
|
|
7
|
|
|
3
|
|
||
|
|
|
|
$
|
26
|
|
|
$
|
24
|
|
|
|
First Quarter
|
||||||||||||||||
(Dollars in millions)
|
|
Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion)
|
|
Location of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)
|
|
Pre-tax amount of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion)
|
||||||||||||
Derivatives' Cash Flow Hedging Relationships
|
|
March 31,
2013 |
|
March 31,
2012 |
|
March 31,
2013 |
|
March 31,
2012 |
||||||||||
Commodity contracts
|
|
$
|
(2
|
)
|
|
$
|
(7
|
)
|
|
Sales
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
Cost of sales
|
|
—
|
|
|
—
|
|
||||||
Foreign exchange contracts
|
|
17
|
|
|
(1
|
)
|
|
Sales
|
|
2
|
|
|
8
|
|
||||
Forward starting interest rate swap contracts
|
|
1
|
|
|
13
|
|
|
Net interest expense
|
|
(2
|
)
|
|
—
|
|
||||
|
|
$
|
16
|
|
|
$
|
5
|
|
|
|
|
$
|
(4
|
)
|
|
$
|
8
|
|
8.
|
RETIREMENT PLANS
|
|
First Quarter
|
||||||||||||||||||||||
|
Pension Plans
|
|
Postretirement Welfare Plans
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||||||
(Dollars in millions)
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
|
|
|
||||||||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
10
|
|
|
$
|
4
|
|
|
$
|
10
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Interest cost
|
22
|
|
|
7
|
|
|
18
|
|
|
3
|
|
|
11
|
|
|
11
|
|
||||||
Expected return on assets
|
(32
|
)
|
|
(9
|
)
|
|
(21
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
—
|
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service cost/(credit)
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||
Net periodic benefit cost
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
8
|
|
9.
|
COMMITMENTS
|
10.
|
ENVIRONMENTAL MATTERS
|
(Dollars in millions)
|
Environmental Remediation Liabilities
|
||
Balance at December 31, 2012
|
$
|
365
|
|
Net charges taken
|
—
|
|
|
Cash reductions
|
(9
|
)
|
|
Balance at March 31, 2013
|
$
|
356
|
|
(Dollars in millions)
|
March 31, 2013
|
|
December 31, 2012
|
||||
Environmental contingent liabilities, current
|
$
|
35
|
|
|
$
|
35
|
|
Environmental contingent liabilities, long-term
|
350
|
|
|
359
|
|
||
Total
|
$
|
385
|
|
|
$
|
394
|
|
11.
|
LEGAL MATTERS
|
12.
|
STOCKHOLDERS' EQUITY
|
(Dollars in millions)
|
Common Stock at Par Value
$
|
|
Paid-in Capital
$
|
|
Retained Earnings
$
|
|
Accumulated Other Comprehensive Income (Loss)
$
|
|
Treasury Stock at Cost
$
|
|
Total Stockholders' Equity Attributed to Eastman
$
|
|
Noncontrolling Interest $
|
|
Total Stockholders' Equity $
|
||||||||
Balance at December 31, 2012
|
2
|
|
|
1,709
|
|
|
3,038
|
|
|
123
|
|
|
(1,929
|
)
|
|
2,943
|
|
|
85
|
|
|
3,028
|
|
Net Earnings
|
—
|
|
|
—
|
|
|
247
|
|
|
—
|
|
|
—
|
|
|
247
|
|
|
1
|
|
|
248
|
|
Cash Dividends Declared
(1)
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
Other Comprehensive Income
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
(38
|
)
|
Share-Based Compensation Expense
(2)
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
Stock Option Exercises
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
Shares Issued for Business Combination
(3)
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
Other
(4)
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
Share Repurchase
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
(32
|
)
|
|
—
|
|
|
(32
|
)
|
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
Balance at March 31, 2013
|
2
|
|
|
1,740
|
|
|
3,239
|
|
|
85
|
|
|
(1,961
|
)
|
|
3,105
|
|
|
83
|
|
|
3,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes cash dividends declared, but unpaid.
|
(2)
|
Includes the fair value of share-based awards recognized for share-based compensation.
|
(3)
|
Proceeds of warrant exercises related to the Company's acquisition of Solutia.
|
(4)
|
Primarily tax benefits relating to the difference between the amounts deductible for federal income taxes over the amounts charged to income for book value purposes credited to paid-in capital and other items.
|
(Dollars in millions)
|
Cumulative Translation Adjustment
|
|
Unrecognized Prior Service Credits for Benefit Plans
|
|
Unrealized Gains (Losses) on Derivative Instruments
|
|
Unrealized Losses on Investments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
Balance at December 31, 2011
|
$
|
64
|
|
|
$
|
78
|
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
138
|
|
Period change
|
41
|
|
|
(13
|
)
|
|
(43
|
)
|
|
—
|
|
|
(15
|
)
|
|||||
Balance at December 31, 2012
|
105
|
|
|
65
|
|
|
(46
|
)
|
|
(1
|
)
|
|
123
|
|
|||||
Period change
|
(50
|
)
|
|
(4
|
)
|
|
16
|
|
|
—
|
|
|
(38
|
)
|
|||||
Balance at March 31, 2013
|
$
|
55
|
|
|
$
|
61
|
|
|
$
|
(30
|
)
|
|
$
|
(1
|
)
|
|
$
|
85
|
|
|
First Quarter
|
||||||||||||||
|
2013
|
|
2012
|
||||||||||||
(Dollars in millions)
|
Before Tax
|
|
Net of Tax
|
|
Before Tax
|
|
Net of Tax
|
||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
Change in cumulative translation adjustment
|
$
|
(50
|
)
|
|
$
|
(50
|
)
|
|
$
|
16
|
|
|
$
|
15
|
|
Defined benefit pension and other postretirement benefit plans:
|
|
|
|
|
|
|
|
|
|||||||
Amortization of unrecognized prior service credits included in net periodic costs
(1)
|
(6
|
)
|
|
(4
|
)
|
|
(6
|
)
|
|
(5
|
)
|
||||
Derivatives and hedging:
|
|
|
|
|
|
|
|
|
|||||||
Unrealized gain during period
|
23
|
|
|
14
|
|
|
16
|
|
|
10
|
|
||||
Reclassification adjustment for gains (losses) included in net income
(2)
|
3
|
|
|
2
|
|
|
(8
|
)
|
|
(5
|
)
|
||||
Total other comprehensive income (loss)
|
$
|
(30
|
)
|
|
$
|
(38
|
)
|
|
$
|
18
|
|
|
$
|
15
|
|
(1)
|
Included in the calculation of net periodic benefit costs for pension and OPEB, see Note
8
, "Retirement Plans".
|
(2)
|
Gains and losses from derivatives and hedging are included in sales, cost of sales, and net interest expense.
|
13.
|
EARNINGS AND DIVIDENDS PER SHARE
|
|
First Quarter
|
||
|
2013
|
|
2012
|
Shares used for earnings per share calculation (in millions):
|
|
|
|
Basic
|
154.4
|
|
137.3
|
Diluted
|
156.7
|
|
140.7
|
14.
|
ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES
|
(Dollars in millions)
|
Balance at January 1, 2012
|
|
Provision/ Adjustments
|
|
Non-cash Reductions/ Adjustments
|
|
Cash Reductions
|
|
Balance at December 31, 2012
|
||||||||||
Non-cash charges
|
$
|
—
|
|
|
$
|
43
|
|
|
$
|
(43
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Severance costs
|
2
|
|
|
34
|
|
|
—
|
|
|
(32
|
)
|
|
4
|
|
|||||
Site closure and restructuring costs
|
—
|
|
|
43
|
|
|
(20
|
)
|
|
(2
|
)
|
|
21
|
|
|||||
Total
|
$
|
2
|
|
|
$
|
120
|
|
|
$
|
(63
|
)
|
|
$
|
(34
|
)
|
|
$
|
25
|
|
(Dollars in millions)
|
Balance at January 1, 2013
|
|
Provision/ Adjustments
|
|
Non-cash Reductions/ Adjustments
|
|
Cash Reductions
|
|
Balance at March 31, 2013
|
||||||||||
Non-cash charges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Severance costs
|
4
|
|
|
3
|
|
|
—
|
|
|
(2
|
)
|
|
5
|
|
|||||
Site closure and restructuring costs
|
21
|
|
|
—
|
|
|
(1
|
)
|
|
(3
|
)
|
|
17
|
|
|||||
Total
|
$
|
25
|
|
|
$
|
3
|
|
|
$
|
(1
|
)
|
|
$
|
(5
|
)
|
|
$
|
22
|
|
15.
|
SHARE-BASED COMPENSATION AWARDS
|
Assumptions
|
|
First Quarter 2013
|
|
|
|
Expected volatility rate
|
|
34.9%
|
Expected dividend yield
|
|
1.97%
|
Average risk-free interest rate
|
|
0.77%
|
Expected forfeiture rate
|
|
0.75%
|
Expected term years
|
|
5.0
|
16.
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
(Dollars in millions)
|
First Three Months
|
||||||
|
2013
|
|
2012
|
||||
Current assets
|
$
|
15
|
|
|
$
|
2
|
|
Other assets
|
(23
|
)
|
|
12
|
|
||
Current liabilities
|
(3
|
)
|
|
(3
|
)
|
||
Long-term liabilities and equity
|
(51
|
)
|
|
(26
|
)
|
||
Total
|
$
|
(62
|
)
|
|
$
|
(15
|
)
|
17.
|
SEGMENT INFORMATION
|
|
First Quarter
|
||||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Sales
|
|
|
|
||||
Additives & Functional Products
|
$
|
419
|
|
|
$
|
263
|
|
Adhesives & Plasticizers
|
345
|
|
|
374
|
|
||
Advanced Materials
|
584
|
|
|
292
|
|
||
Fibers
|
346
|
|
|
323
|
|
||
Specialty Fluids & Intermediates
|
607
|
|
|
569
|
|
||
Total Sales by Segment
|
2,301
|
|
|
1,821
|
|
||
Other
|
6
|
|
|
—
|
|
||
Total Sales
|
$
|
2,307
|
|
|
$
|
1,821
|
|
|
First Quarter
|
||||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Operating Earnings (Loss)
|
|
|
|
||||
Additives & Functional Products
|
$
|
98
|
|
|
$
|
56
|
|
Adhesives & Plasticizers
|
49
|
|
|
66
|
|
||
Advanced Materials
|
65
|
|
|
30
|
|
||
Fibers
|
114
|
|
|
101
|
|
||
Specialty Fluids & Intermediates
|
95
|
|
|
53
|
|
||
Total Operating Earnings by Segment
|
421
|
|
|
306
|
|
||
Other
(1)
|
|
|
|
|
|
||
Growth initiatives and businesses not allocated to segments
|
(21
|
)
|
|
(26
|
)
|
||
Pension and OPEB credits (costs) not allocated to operating segments
|
3
|
|
|
(7
|
)
|
||
Transaction, integration, and severance costs related to the acquisition of Solutia
|
(10
|
)
|
|
(9
|
)
|
||
Total Operating Earnings
|
$
|
393
|
|
|
$
|
264
|
|
(1)
|
Research and development, pension and OPEB, and other expenses not identifiable to an operating segment are not included in segment operating results for either of the periods presented and are shown as "other" operating earnings (loss).
|
|
March 31,
|
|
December 31,
|
||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Assets by Segment
(1)(2)
|
|
|
|
||||
Additives & Functional Products
|
$
|
2,944
|
|
|
$
|
2,892
|
|
Adhesives & Plasticizers
|
1,011
|
|
|
1,088
|
|
||
Advanced Materials
|
3,803
|
|
|
3,744
|
|
||
Fibers
|
943
|
|
|
937
|
|
||
Specialty Fluids & Intermediates
|
2,087
|
|
|
1,987
|
|
||
Total Assets by Segment
|
10,788
|
|
|
10,648
|
|
||
Corporate Assets
|
899
|
|
|
971
|
|
||
Total Assets
|
$
|
11,687
|
|
|
$
|
11,619
|
|
(1)
|
The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.
|
(2)
|
Goodwill for the July 2, 2012 Solutia acquisition has been preliminarily allocated to the operating segments. See Note
2
, "Acquisitions and Investments in Joint Ventures".
|
18.
|
RECENTLY ISSUED ACCOUNTING STANDARDS
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
ITEM
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
||||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Items impacting operating earnings:
|
|
|
|
||||
Transaction costs related to the acquisition of Solutia
|
$
|
—
|
|
|
$
|
9
|
|
Integration costs related to the acquisition of Solutia
|
7
|
|
|
—
|
|
||
Restructuring charges related to continued integration of Solutia
|
3
|
|
|
—
|
|
||
Items impacting earnings before income taxes:
|
|
|
|
||||
Financing costs related to the acquisition of Solutia
|
—
|
|
|
5
|
|
•
|
Selling, general, and administrative ("SG&A") and research and development ("R&D") expenses,
|
•
|
Operating earnings,
|
•
|
Other charges (income), net,
|
•
|
Earnings from continuing operations, and
|
•
|
Diluted earnings per share.
|
•
|
continuing the integration of Solutia, which was acquired on July 2, 2012 and which:
|
◦
|
broadens Eastman's global presence;
|
◦
|
establishes a combined platform with extensive organic growth opportunities through complementary technologies and business capabilities, and an overlap of key end markets; and
|
◦
|
expands Eastman's portfolio of sustainable products;
|
•
|
in the Fibers segment, nearing the expected completion during third quarter 2013 of construction of a new 30,000 metric ton acetate tow manufacturing facility in Hefei, China, a joint venture with China National Tobacco Corporation; and
|
•
|
in the Specialty Fluids & Intermediates segment, completing a debottlenecking project in its largest olefins cracking unit in Longview, Texas, which was operational in first quarter 2013 and will primarily produce more ethylene, and is expected to improve Eastman's olefin cost position.
|
|
First Quarter
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
Change
|
|||||
Sales
|
$
|
2,307
|
|
|
$
|
1,821
|
|
|
27
|
%
|
Volume effect
|
|
|
|
|
27
|
%
|
||||
Price effect
|
|
|
|
|
—
|
%
|
||||
Exchange rate effect
|
|
|
|
|
—
|
%
|
||||
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
Pro Forma Combined Sales
|
2,307
|
|
|
2,319
|
|
|
(1
|
)%
|
||
Volume effect
|
|
|
|
|
—
|
%
|
||||
Price effect
|
|
|
|
|
(1
|
)%
|
||||
Exchange rate effect
|
|
|
|
|
—
|
%
|
|
First Quarter
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
Change
|
|||||
Gross Profit
|
$
|
616
|
|
|
$
|
431
|
|
|
43
|
%
|
|
First Quarter
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
Change
|
|||||
Selling, General and Administrative Expenses
|
$
|
171
|
|
|
$
|
126
|
|
|
36
|
%
|
Research and Development Expenses
|
49
|
|
|
41
|
|
|
20
|
%
|
||
|
220
|
|
|
167
|
|
|
32
|
%
|
||
Transaction costs related to the acquisition of Solutia
|
—
|
|
|
(9
|
)
|
|
|
|
||
Integration costs related to the acquisition of Solutia
|
(7
|
)
|
|
—
|
|
|
|
|
||
Selling, General, and Administrative Expenses and Research and Development Expenses excluding items
|
$
|
213
|
|
|
$
|
158
|
|
|
35
|
%
|
|
First Quarter
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
Change
|
|||||
Operating earnings
|
$
|
393
|
|
|
$
|
264
|
|
|
49
|
%
|
Transaction costs related to the acquisition of Solutia
|
—
|
|
|
9
|
|
|
|
|
||
Integration costs related to the acquisition of Solutia
|
7
|
|
|
—
|
|
|
|
|
||
Restructuring charges related to continued integration of Solutia
|
3
|
|
|
—
|
|
|
|
|
||
Operating earnings excluding items
|
$
|
403
|
|
|
$
|
273
|
|
|
48
|
%
|
|
First Quarter
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
Change
|
|||||
Operating earnings
|
$
|
393
|
|
|
$
|
339
|
|
|
16
|
%
|
Transaction and integration costs related to the acquisition of Solutia
|
7
|
|
|
20
|
|
|
|
|
||
Asset impairments and restructuring charges
(1)
|
3
|
|
|
4
|
|
|
|
|
||
Operating earnings excluding items
|
$
|
403
|
|
|
$
|
363
|
|
|
11
|
%
|
|
First Quarter
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
Change
|
|||||
Gross interest costs
|
$
|
49
|
|
|
$
|
23
|
|
|
|
|
Less: Capitalized interest
|
1
|
|
|
2
|
|
|
|
|||
Interest expense
|
48
|
|
|
21
|
|
|
129
|
%
|
||
Interest income
|
1
|
|
|
2
|
|
|
|
|
||
Net interest expense
|
$
|
47
|
|
|
$
|
19
|
|
|
147
|
%
|
|
First Quarter
|
||||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Foreign exchange transaction (gains), losses
|
$
|
5
|
|
|
$
|
(1
|
)
|
Solutia financing costs
|
—
|
|
|
5
|
|
||
Investment (gains) losses, net
|
(2
|
)
|
|
(3
|
)
|
||
Other, net
|
(2
|
)
|
|
(1
|
)
|
||
Other charges (income), net
|
1
|
|
|
—
|
|
||
Solutia financing costs
|
—
|
|
|
(5
|
)
|
||
Other charges (income), net excluding Solutia financing costs
|
$
|
1
|
|
|
$
|
(5
|
)
|
|
First Quarter
|
||||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Provision for income taxes
|
$
|
97
|
|
|
$
|
85
|
|
Effective tax rate
|
28
|
%
|
|
35
|
%
|
|
First Quarter
|
||||||||||||||
|
2013
|
|
2012
|
||||||||||||
(Dollars in millions, except diluted EPS)
|
$
|
|
EPS
|
|
$
|
|
EPS
|
||||||||
Earnings from continuing operations attributable to Eastman
|
$
|
247
|
|
|
$
|
1.57
|
|
|
$
|
159
|
|
|
$
|
1.13
|
|
Solutia transaction and integration costs, net of tax
|
4
|
|
|
0.03
|
|
|
13
|
|
|
0.09
|
|
||||
Asset impairments and restructuring charges, net of tax
|
2
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
||||
Earnings from continuing operations excluding items, net of tax
|
$
|
253
|
|
|
$
|
1.62
|
|
|
$
|
172
|
|
|
$
|
1.22
|
|
|
First Quarter
|
||||||||||||||
|
2013
|
|
2012
|
||||||||||||
(Dollars in millions, except diluted EPS)
|
$
|
|
EPS
|
|
$
|
|
EPS
|
||||||||
Earnings from continuing operations attributable to Eastman
|
$
|
247
|
|
|
$
|
1.57
|
|
|
$
|
159
|
|
|
$
|
1.13
|
|
Gain from disposal of discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(0.01
|
)
|
||||
Net earnings
|
$
|
247
|
|
|
$
|
1.57
|
|
|
$
|
158
|
|
|
$
|
1.12
|
|
|
First Quarter
|
|||||||||||||
|
|
|
|
|
Change
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Sales
|
$
|
419
|
|
|
$
|
263
|
|
|
$
|
156
|
|
|
59
|
%
|
Volume effect
|
|
|
|
|
157
|
|
|
60
|
%
|
|||||
Price effect
|
|
|
|
|
(1
|
)
|
|
(1
|
)%
|
|||||
Exchange rate effect
|
|
|
|
|
—
|
|
|
—
|
%
|
|||||
|
|
|
|
|
|
|
|
|||||||
Operating earnings
|
98
|
|
|
56
|
|
|
42
|
|
|
75
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Pro forma combined sales
|
$
|
419
|
|
|
$
|
400
|
|
|
$
|
19
|
|
|
5
|
%
|
Volume effect
|
|
|
|
|
|
|
29
|
|
|
7
|
%
|
|||
Price effect
|
|
|
|
|
|
|
(9
|
)
|
|
(2
|
)%
|
|||
Exchange rate effect
|
|
|
|
|
|
|
(1
|
)
|
|
—
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Pro forma combined operating earnings
|
98
|
|
|
94
|
|
|
4
|
|
|
4
|
%
|
|
First Quarter
|
|||||||||||||
|
|
|
|
|
Change
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Sales
|
$
|
345
|
|
|
$
|
374
|
|
|
$
|
(29
|
)
|
|
(8
|
)%
|
Volume effect
|
|
|
|
|
(26
|
)
|
|
(7
|
)%
|
|||||
Price effect
|
|
|
|
|
—
|
|
|
—
|
%
|
|||||
Exchange rate effect
|
|
|
|
|
(3
|
)
|
|
(1
|
)%
|
|||||
|
|
|
|
|
|
|
|
|||||||
Operating earnings
|
49
|
|
|
66
|
|
|
(17
|
)
|
|
(26
|
)%
|
|
First Quarter
|
|||||||||||||
|
|
|
|
|
Change
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Sales
|
$
|
584
|
|
|
$
|
292
|
|
|
$
|
292
|
|
|
100
|
%
|
Volume effect
|
|
|
|
|
291
|
|
|
100
|
%
|
|||||
Price effect
|
|
|
|
|
3
|
|
|
1
|
%
|
|||||
Exchange rate effect
|
|
|
|
|
(2
|
)
|
|
(1
|
)%
|
|||||
|
|
|
|
|
|
|
|
|||||||
Operating earnings
|
65
|
|
|
30
|
|
|
35
|
|
|
117
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Pro forma combined sales
|
584
|
|
|
567
|
|
|
17
|
|
|
3
|
%
|
|||
Volume effect
|
|
|
|
|
|
|
19
|
|
|
3
|
%
|
|||
Price effect
|
|
|
|
|
|
|
—
|
|
|
—
|
%
|
|||
Exchange rate effect
|
|
|
|
|
|
|
(2
|
)
|
|
—
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Pro forma combined operating earnings
|
65
|
|
|
57
|
|
|
8
|
|
|
14
|
%
|
|||
Pro forma combined asset impairments and restructuring charges
|
—
|
|
|
4
|
|
|
|
|
|
|||||
Pro forma combined operating earnings excluding item
|
65
|
|
|
61
|
|
|
4
|
|
|
7
|
%
|
|
First Quarter
|
|||||||||||||
|
|
|
|
|
Change
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Sales
|
$
|
346
|
|
|
$
|
323
|
|
|
$
|
23
|
|
|
7
|
%
|
Volume effect
|
|
|
|
|
9
|
|
|
3
|
%
|
|||||
Price effect
|
|
|
|
|
14
|
|
|
4
|
%
|
|||||
Exchange rate effect
|
|
|
|
|
—
|
|
|
—
|
%
|
|||||
|
|
|
|
|
|
|
|
|||||||
Operating earnings
|
114
|
|
|
101
|
|
|
13
|
|
|
13
|
%
|
|
First Quarter
|
|||||||||||||
|
|
|
|
|
Change
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Sales
|
$
|
607
|
|
|
$
|
569
|
|
|
$
|
38
|
|
|
7
|
%
|
Volume effect
|
|
|
|
|
53
|
|
|
9
|
%
|
|||||
Price effect
|
|
|
|
|
(14
|
)
|
|
(2
|
)%
|
|||||
Exchange rate effect
|
|
|
|
|
(1
|
)
|
|
—
|
%
|
|||||
|
|
|
|
|
|
|
|
|||||||
Operating earnings
|
95
|
|
|
53
|
|
|
42
|
|
|
79
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Pro forma combined sales
|
607
|
|
|
642
|
|
|
(35
|
)
|
|
(5
|
)%
|
|||
Volume effect
|
|
|
|
|
|
|
(22
|
)
|
|
(3
|
)%
|
|||
Price effect
|
|
|
|
|
|
|
(12
|
)
|
|
(2
|
)%
|
|||
Exchange rate effect
|
|
|
|
|
|
|
(1
|
)
|
|
—
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Pro forma combined operating earnings
|
95
|
|
|
73
|
|
|
22
|
|
|
30
|
%
|
|
|
First Quarter
|
||||||
(Dollars in millions)
|
|
2013
|
|
2012
|
||||
|
|
|
|
|
||||
Sales
|
|
$
|
6
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Operating loss
|
|
|
|
|
||||
Growth initiatives and businesses not allocated to segments
|
|
$
|
(21
|
)
|
|
$
|
(26
|
)
|
Pension and OPEB costs not allocated to operating segments
|
|
3
|
|
|
(7
|
)
|
||
Transaction, integration, and restructuring costs related to the acquisition of Solutia
|
|
(10
|
)
|
|
(9
|
)
|
||
Operating loss before exclusions
|
|
(28
|
)
|
|
(42
|
)
|
||
Transaction and integration costs related to the acquisition of Solutia
|
|
7
|
|
|
9
|
|
||
Restructuring charges related to continued integration of Solutia
|
|
3
|
|
|
—
|
|
||
Operating loss excluding items
|
|
$
|
(18
|
)
|
|
$
|
(33
|
)
|
|
|
|
|
|
||||
|
|
|
|
|
||||
Pro forma combined sales
|
|
$
|
6
|
|
|
$
|
13
|
|
|
|
|
|
|
||||
Pro forma combined operating loss
|
|
|
|
|
||||
Growth initiatives and businesses not allocated to segments
|
|
$
|
(21
|
)
|
|
$
|
(25
|
)
|
Pension and OPEB costs not allocated to operating segments
|
|
3
|
|
|
(7
|
)
|
||
Transaction, integration, and restructuring costs related to the acquisition of Solutia
|
|
(10
|
)
|
|
(20
|
)
|
||
Pro forma combined operating loss before exclusions
|
|
(28
|
)
|
|
(52
|
)
|
||
Transaction and integration costs related to the acquisition of Solutia
|
|
7
|
|
|
20
|
|
||
Restructuring charges related to continued integration of Solutia
|
|
3
|
|
|
—
|
|
||
Pro forma combined operating loss
|
|
$
|
(18
|
)
|
|
$
|
(32
|
)
|
|
First Quarter
|
|
|
|
|
|
|
||||||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
Change
|
|
Volume Effect
|
|
Price Effect
|
|
Exchange
Rate
Effect
|
||||||||
United States and Canada
|
$
|
1,081
|
|
|
$
|
1,002
|
|
|
8
|
%
|
|
9
|
%
|
|
(1
|
)%
|
|
—
|
%
|
Asia Pacific
|
595
|
|
|
388
|
|
|
53
|
%
|
|
50
|
%
|
|
3
|
%
|
|
—
|
%
|
||
Europe, Middle East, and Africa
|
513
|
|
|
346
|
|
|
48
|
%
|
|
48
|
%
|
|
1
|
%
|
|
(1
|
)%
|
||
Latin America
|
118
|
|
|
85
|
|
|
39
|
%
|
|
38
|
%
|
|
1
|
%
|
|
—
|
%
|
||
|
$
|
2,307
|
|
|
$
|
1,821
|
|
|
27
|
%
|
|
27
|
%
|
|
—
|
%
|
|
—
|
%
|
|
First Quarter
|
|||||||||
(Dollars in millions)
|
2013
|
|
2012
|
|
Change
|
|||||
United States and Canada
|
$
|
1,081
|
|
|
$
|
1,132
|
|
|
(5
|
)%
|
Asia Pacific
|
595
|
|
|
537
|
|
|
11
|
%
|
||
Europe, Middle East, and Africa
|
513
|
|
|
528
|
|
|
(3
|
)%
|
||
Latin America
|
118
|
|
|
122
|
|
|
(3
|
)%
|
||
|
$
|
2,307
|
|
|
$
|
2,319
|
|
|
(1
|
)%
|
|
First Three Months
|
||||||
(Dollars in millions)
|
2013
|
|
2012
|
||||
Net cash provided by (used in)
|
|
|
|
||||
Operating activities
|
$
|
5
|
|
|
$
|
19
|
|
Investing activities
|
(83
|
)
|
|
(10
|
)
|
||
Financing activities
|
10
|
|
|
(17
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(3
|
)
|
|
—
|
|
||
Net change in cash and cash equivalents
|
(71
|
)
|
|
(8
|
)
|
||
Cash and cash equivalents at beginning of period
|
249
|
|
|
577
|
|
||
Cash and cash equivalents at end of period
|
$
|
178
|
|
|
$
|
569
|
|
(Dollars in millions)
|
Environmental Remediation Liabilities
|
||
Balance at December 31, 2012
|
$
|
365
|
|
Net charges taken
|
—
|
|
|
Cash reductions
|
(9
|
)
|
|
Balance at March 31, 2013
|
$
|
356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
cash generated by operating activities of between $1.2 billion and $1.4 billion;
|
•
|
capital spending to be approximately $525 million; and
|
•
|
its full year tax rate on reported earnings from continuing operations before income tax to be approximately 31 percent.
|
•
|
that the financial performance of the acquired business may be significantly worse than expected;
|
•
|
that significant additional indebtedness may constrain the Company's ability to access the credit and capital markets at attractive interest rates and favorable terms, which may negatively impact the Company's liquidity or ability to pursue certain growth initiatives;
|
•
|
that the Company may not be able to achieve the cost, revenue, tax, or other "synergies" expected from any acquisition, or that there may be delays in achieving any such synergies;
|
•
|
that the Company may be required to expend significant additional resources in order to integrate any acquired business into Eastman or that the integration efforts will not achieve the expected benefits;
|
•
|
lost sales and customer dues to customer dissatisfaction with any transaction;
|
•
|
loss of key employees from an acquired company; or
|
•
|
assumption of unexpected or unknown liabilities.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
PART II.
|
OTHER INFORMATION
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
Period
|
Total Number
of Shares
Purchased
(1)
|
|
Average Price Paid Per Share
(2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans
or Programs
(3)
|
|
Approximate Dollar
Value (in millions) that May Yet Be Purchased Under the Plans or Programs
(3)
|
||||||
January 1-31, 2013
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
98
|
|
February 1-28, 2013
|
140,000
|
|
|
$
|
72.53
|
|
|
140,000
|
|
|
$
|
88
|
|
March 1-31, 2013
|
305,500
|
|
|
$
|
70.81
|
|
|
305,500
|
|
|
$
|
66
|
|
Total
|
445,500
|
|
|
$
|
71.35
|
|
|
445,500
|
|
|
|
(1)
|
Shares repurchased under a Company announced repurchase plan.
|
(2)
|
Average price paid per share reflects the weighted average purchase price paid for share.
|
(3)
|
In February 2011, the Board of Directors authorized repurchase of up to $300 million of the Company's outstanding common stock at such times, in such amounts, and on such terms, as determined to be in the best interests of the Company. As of March 31, 2013, a total of 5,203,139 shares have been repurchased under this authorization for a total amount of $234 million. During first three months 2013, the Company repurchased 445,500 shares of common stock for a cost of $32 million under the current stock repurchase authorization. For additional information, see Note 12, "Stockholders' Equity", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
|
ITEM 6.
|
EXHIBITS
|
|
|
|
Eastman Chemical Company
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
April 30, 2013
|
By:
|
/s/ Curtis E. Espeland
|
|
|
|
Curtis E. Espeland
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
EXHIBIT INDEX
|
|
|
Exhibit Number
|
|
Description
|
|
Sequential Page Number
|
|
|
|
|
|
2.01
|
|
Agreement and Plan of Merger, dated January 26, 2012, by and among Eastman Chemical Company, Solutia Inc. and Eagle Merger Sub Corporation (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated January 26, 2012)
|
|
|
|
|
|
|
|
3.01
|
|
Amended and Restated Certificate of Incorporation of Eastman Chemical Company (incorporated herein by reference to Exhibit 3.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012)
|
|
|
|
|
|
|
|
3.02
|
|
Amended and Restated Bylaws of Eastman Chemical Company (incorporated herein by reference to Exhibit 3.02 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012)
|
|
|
|
|
|
|
|
4.01
|
|
Form of Eastman Chemical Company common stock certificate as amended February 1, 2001 (incorporated herein by reference to Exhibit 4.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001)
|
|
|
|
|
|
|
|
4.02
|
|
Indenture, dated as of January 10, 1994, between Eastman Chemical Company and The Bank of New York, as Trustee (the "Indenture") (incorporated herein by reference to Exhibit 4(a) to the Company's Current Report on Form 8-K dated January 10, 1994)
|
|
|
|
|
|
|
|
4.03
|
|
Indenture, dated as of June 5, 2012, between Eastman Chemical Company and Wells Fargo Bank, as Trustee (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated June 5, 2012)
|
|
|
|
|
|
|
|
4.04
|
|
Form of 7 1/4% Debentures due January 15, 2024 (incorporated herein by reference to Exhibit 4(d) to the Company's Current Report on Form 8-K dated January 10, 1994)
|
|
|
|
|
|
|
|
4.05
|
|
Officers' Certificate pursuant to Sections 201 and 301 of the Indenture (incorporated herein by reference to Exhibit 4(a) to the Company's Current Report on Form 8-K dated June 8, 1994)
|
|
|
|
|
|
|
|
4.06
|
|
Form of 7 5/8% Debentures due June 15, 2024 (incorporated herein by reference to Exhibit 4(b) to the Company's Current Report on Form 8-K dated June 8, 1994)
|
|
|
|
|
|
|
|
4.07
|
|
Form of 7.60% Debentures due February 1, 2027 (incorporated herein by reference to Exhibit 4.08 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996)
|
|
|
|
|
|
|
|
4.08
|
|
Officer's Certificate pursuant to Sections 201 and 301 of the Indenture related to 7.60% Debentures due February 1, 2027 (incorporated herein by reference to Exhibit 4.09 to the Company's Annual Report on Form 10-K for the year ended December 31, 2006)
|
|
|
|
|
|
|
|
4.09
|
|
Form of 5.500% Notes due 2019 (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated November 2, 2009)
|
|
|
|
|
|
|
|
4.10
|
|
Form of 6.30% Notes due 2018 (incorporated herein by reference to Exhibit 4.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003)
|
|
|
|
|
|
|
|
4.11
|
|
Form of 3% Note due 2015 (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated December 10, 2010)
|
|
|
|
|
|
|
|
4.12
|
|
Form of 4.5% Note due 2021 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated December 10, 2010)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT INDEX
|
|
|
Exhibit Number
|
|
Description
|
|
Sequential Page Number
|
|
|
|
|
|
4.13
|
|
Form of 2.4% Note due 2017 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated June 5, 2012)
|
|
|
|
|
|
|
|
4.14
|
|
Form of 3.6% Note due 2022 (incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K dated June 5, 2012)
|
|
|
|
|
|
|
|
4.15
|
|
Form of 4.8% Note due 2042 (incorporated herein by reference to Exhibit 4.4 to the Company's Current Report on Form 8-K dated June 5, 2012)
|
|
|
|
|
|
|
|
10.01
|
|
Forms of Award Notices for Stock Options and Stock Appreciation Rights Granted to Executive Officers on February 28, 2013 under the 2012 Omnibus Stock Compensation Plan
|
|
58-62
|
|
|
|
|
|
12.01
|
|
Statement re: Computation of Ratios of Earnings to Fixed Charges
|
|
63
|
|
|
|
|
|
31.01
|
|
Rule 13a – 14(a) Certification by James P. Rogers, Chief Executive Officer, for the quarter ended March 31, 2013
|
|
64
|
|
|
|
|
|
31.02
|
|
Rule 13a – 14(a) Certification by Curtis E. Espeland, Senior Vice President and Chief Financial Officer, for the quarter ended March 31, 2013
|
|
65
|
|
|
|
|
|
32.01
|
|
Section 1350 Certification by James P. Rogers, Chief Executive Officer, for the quarter ended March 31, 2013
|
|
66
|
|
|
|
|
|
32.02
|
|
Section 1350 Certification by Curtis E. Espeland, Senior Vice President and Chief Financial Officer, for the quarter ended March 31, 2013
|
|
67
|
|
|
|
|
|
99.01
|
|
2012 Databook
|
|
68
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Label Linkbase
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Presentation Linkbase Document
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Definition Linkbase Document
|
|
|
|
|
|
|
|
|
First Quarter
|
|||||
(Dollars in millions)
|
|
2013
|
|
2012
|
||
|
|
|
|
|
||
Earnings from continuing operations before income taxes
|
$
|
344
|
|
$
|
244
|
|
Add:
|
|
|
|
|
||
Interest expense
|
|
48
|
|
|
21
|
|
Appropriate portion of rental expense
(1)
|
|
6
|
|
|
4
|
|
Amortization of capitalized interest
|
|
2
|
|
|
2
|
|
Earnings as adjusted
|
$
|
400
|
|
$
|
271
|
|
|
|
|
|
|
||
Fixed charges:
|
|
|
|
|
||
Interest expense
|
$
|
48
|
|
$
|
21
|
|
Appropriate portion of rental expense
(1)
|
|
6
|
|
|
4
|
|
Capitalized interest
|
|
1
|
|
|
1
|
|
Total fixed charges
|
$
|
55
|
|
$
|
26
|
|
|
|
|
|
|
||
Ratio of earnings to fixed charges
|
|
7.3x
|
|
|
10.4x
|
|
|
|
|
|
|
(1)
|
For all periods presented, the interest component of rental expense is estimated to equal one-third of such expense.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Eastman Chemical Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Eastman Chemical Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
Eastman at a glance
|
3
|
|
|
|
|
Regions
|
4
|
|
|
|
|
Financial information
|
5
|
|
|
|
|
Product and raw material information
|
6
|
|
|
|
|
Selected annual capacities
|
7
|
|
|
|
|
Segment Information (2009 - 2012)
|
8
|
|
|
|
|
Exhibit A (Pro forma combined description)
|
12
|
|
|
|
|
Exhibit B (Notes to segment information)
|
13
|
|
|
|
|
Stockholder information
|
15
|
|
Additives & Functional Products
|
|
|
Key competitors
:
Specialty Materials
: Bayer AG, Styron LLC, Evonik Industries AG, Saudi Basic Industries Corporation, Mitsubishi Chemical Corporation, S.K. Chemical Industries, Sichuan Push Acetati Company Limited, Daicel Chemical Industries Ltd.
Interlayers
: Sekisui Chemical Co., Ltd., Kuraray Co., Ltd., DuPont
Performance Films
: 3M Company, Saint- Gobain S.A., Commonwealth Laminating & Coating, Inc., Garware Chemicals Limited
|
|||
2012 Sales Revenue:
|
$1,613 million
|
|
||||
2012 Operating Earnings:
|
395
|
million
|
|
|||
2012 Depreciation & Amortization Expense
|
93
|
million
|
|
|||
Key products
:
Solvents
: Coalescents, Ketones, Esters, Glycol Ethers, Alcohol Solvents
Polymers
: Cellulosic, Polyester, and Polyolefin-based Polymers
Insoluble Sulfur
: Marketed under the Crystex® brand
Antidegradants
: Marketed under the Santoflex® brand
|
|
|||||
|
Fibers
|
|
||||
|
2012 Sales Revenue:
|
$1,315 million
|
||||
Key markets & applications
:
Transportation
: Insoluble sulfur and antidegradants used in rubber tire manufacturing, polymers and solvents used in OEM and refinish coatings
Building & Construction
: Solvents used in architectural coatings
Durable Goods
: Polymers and solvents used in industrial coatings applications
|
|
2012 Operating Earnings:
|
388
|
million
|
||
|
2012 Depreciation & Amortization Expense
|
66
|
million
|
|||
|
Key products
:
Acetate Tow; Acetate Yarn; Acetyl Chemical Products
: Includes cellulose diacetate flake, acetylation-grade acetic acid, acetic anhydride, triacetin plasticizers
|
|||||
Key raw materials
: Propane, Propylene, Napthenic Process Oil, Methyl Isobutyl Ketone, Aniline, Nitrobenzene, Butyl Alcohol, Sulfur, Acetone, Ethane
|
|
|||||
|
Key markets & applications
:
Tobacco
: Cigarette filters
Consumables
: Apparel
Health & Wellness
: Medical Tape
|
|||||
Key competitors
: BASF SE, Dow, Oriental Carbon & Chemicals, Ltd., Shikoku Chemicals Corporation, Jiangsu Sinorgchem Technology Co. Ltd., Korea Kumho Petrochemical Co., Ltd., Lanxess AG
|
|
|||||
|
Key raw materials
: Wood Pulp, Methanol, High Sulfur Coal
|
|||||
|
Key competitors
:
Acetate Tow
: Celanese, Daicel, Mitsubishi Rayon, Solvay S.A.
Acetate Yarn
: Industrias del Acetato de Celulosa S.A., UAB Korelita, Mitsubishi Rayon
|
|||||
Adhesives & Plasticizers
|
|
|
||||
2012 Sales Revenue:
|
$1,432 million
|
|
Specialty Fluids & Intermediates
|
|
||
2012 Operating Earnings:
|
263
|
million
|
|
2012 Sales Revenue:
|
$2,473 million
|
|
2012 Depreciation & Amortization Expense
|
46
|
million
|
|
2012 Operating Earnings:
|
359
|
million
|
Key products:
Resins:
Hydrogenated Hydrocarbon Resins (Regalite™
,
Eastotac™), Non-Hydrogenated Hydrocarbon Resins (Kristalex™, Plastolyn™), Rosins, Polyolefins
Plasticizers:
Primary Non-Phthalate Plasticizers (Eastman 168™, Eastman™ DOA), Niche Non-Phthalate Plasticizers (Benzoflex™, Eastman TXIB™, Admex™, Eastman™ DBT)
|
|
2012 Depreciation & Amortization Expense
|
82
|
million
|
||
|
Key products
:
Specialty Fluids
: Heat transfer fluids marketed under the Therminol® brand, aviation hydraulic fluids marketed under the Skydrol® brand
Chemical Intermediates
: Acetic Anhydride, oxo alcohols and derivatives, acetyl derivatives
Other Intermediates
: Lower-margin intermediates produced to achieve high capacity utilization (includes low-margin grades of acetic acid, oxo alcohols, ethylene, and polymer intermediates)
|
|||||
|
||||||
|
||||||
Key markets & applications:
Consumables:
Resins used in hygiene and packaging adhesives
Building & Construction:
Non-phthalate plasticizers used in interior surfaces, resins for construction adhesives and interior flooring
Durable Goods:
Packaging adhesives for appliances
|
|
|||||
|
Key markets & applications:
Industrial Chemicals & Processing:
Heat transfer fluids for chemical processes, olefin & acetyl-based intermediates serving a wide range of industrial processing needs
Building & Construction:
Intermediates for paint/coating applications, construction chemicals, building materials
|
|||||
|
||||||
Key raw materials:
Propane, C9 Resin Oil, Piperylene, Propylene, Gum Rosin, Toluene
|
|
|||||
|
Key raw materials
: Propane, Ethane, Propylene, Paraxylene, Metaxylene, Benzene
|
|||||
Key competitors:
BASF SE, LG Chem, Ltd., Exxon Mobil Corp.
|
|
|||||
Advanced Materials
|
|
|
Key competitors:
BASF SE, Celanese, Dow
,
Exxon Mobil Corp
.
|
|||
2012 Sales Revenue:
|
$2,254 million
|
|
|
|
||
2012 Operating Earnings:
|
210
|
million
|
|
Eastman Chemical Company
|
||
2012 Depreciation & Amortization Expense
|
144
|
million
|
|
2012 Sales Revenue by end-market
|
||
Key products
:
Specialty Materials
: Specialty Copolyesters (including Eastman Tritan™), Cellulose Esters, Cellulosics
Interlayers
: Adhesive interlayers used in the production of laminated safetly glass and primarily marketed under the SAFLEX® and BUTVAR® brand names
Performance Films
: Aftermarket window film products including the LLumar® and V-Kool® brands
|
|
Transportation
|
16
|
%
|
||
|
Building & Construction
|
16
|
%
|
|||
|
Consumables
|
15
|
%
|
|||
|
Tobacco
|
13
|
%
|
|||
Key markets & applications:
Transportation:
Interlayers for auto- motive safety glass, automotive after-market window film, cellulose es- ters used in automotive performance additives
Consumables:
Specialty copolyesters used in specialty packaging (e.g. medical and electronic component trays), consumer packaging, personal care and cosmetics packaging, in-store fixtures and displays
Building & Construction:
PVB for architectural interlayers, residential and commercial window films
|
|
Industrial Chemicals & Processing
|
11
|
%
|
||
|
Durable Goods
|
8
|
%
|
|||
|
Health & Wellness
|
7
|
%
|
|||
|
Other
|
6
|
%
|
|||
|
Energy, Fuels & Water
|
4
|
%
|
|||
Key raw materials:
Paraxylene, Polyvinyl Alcohol, Ethylene Glycol, Cellulose, Polyethylene Terephthalate Film, 2-EH, Vinyl Acetate Mono- mer
,
Butyraldehyde, Ethanol
|
|
Electronics
|
2
|
%
|
||
|
Agriculture
|
2
|
%
|
Sales revenue by region
|
|||||||||
(Dollars in millons)
|
|||||||||
|
|
|
|
||||||
Year
|
2012
|
2011
|
2010
|
||||||
United States and Canada
|
$
|
4,264
|
|
$
|
4,364
|
|
$
|
3,468
|
|
Asia Pacific
|
2,396
|
|
2,315
|
|
2,023
|
|
|||
Europe, Middle East, and Africa
|
1,968
|
|
2,119
|
|
1,855
|
|
|||
Latin America
|
492
|
|
477
|
|
446
|
|
|||
|
|
|
|
||||||
Eastman Chemical Company
|
$
|
9,120
|
|
$
|
9,275
|
|
$
|
7,792
|
|
|
2012
Capacities
|
|
2011
Capacities
|
2010
Capacities
|
||||||||
|
(in millions)
|
(in millions)
|
(in millions)
|
|||||||||
|
lbs
|
kgs
|
lbs
|
kgs
|
lbs
|
kgs
|
||||||
Acetyl Chemicals
|
|
|
|
|
|
|
||||||
Acetic Acid
|
611
|
|
277
|
|
611
|
|
277
|
|
654
|
|
297
|
|
Acetic Anhydride
|
1,631
|
|
740
|
|
1,631
|
|
740
|
|
1,638
|
|
743
|
|
Methanol
|
475
|
|
215
|
|
475
|
|
215
|
|
475
|
|
215
|
|
|
|
|
|
|
|
|
||||||
Ethylene
|
|
|
|
|
|
|
||||||
Ethylene
|
1,310
|
|
594
|
|
1,310
|
|
594
|
|
1,010
|
|
458
|
|
|
|
|
|
|
|
|
||||||
Ethylene Derivatives
|
|
|
|
|
|
|
||||||
Acetaldehyde
|
404
|
|
183
|
|
404
|
|
183
|
|
404
|
|
183
|
|
Ethylene Glycol
|
220
|
|
100
|
|
220
|
|
100
|
|
222
|
|
101
|
|
|
|
|
|
|
|
|
||||||
Propylene
|
|
|
|
|
|
|
||||||
Propylene
|
567
|
|
257
|
|
567
|
|
257
|
|
392
|
|
178
|
|
|
|
|
|
|
|
|
||||||
Oxo Products
|
|
|
|
|
|
|
||||||
Oxo Aldehydes
|
2,100
|
|
953
|
|
2,013
|
|
913
|
|
1,921
|
|
871
|
|
Oxo Alcohols
|
1,106
|
|
502
|
|
1,077
|
|
489
|
|
1,073
|
|
487
|
|
Plasticizers
|
771
|
|
350
|
|
654
|
|
297
|
|
475
|
|
216
|
|
|
|
|
|
|
|
|
||||||
Fibers
|
|
|
|
|
|
|
||||||
Acetate Tow
|
463
|
|
210
|
|
463
|
|
210
|
|
463
|
|
210
|
|
(Dollars in millions)
|
1st Qtr
|
2nd Qtr
|
3rd Qtr
|
4th Qtr
|
Year
|
||||||||||
Additives & Functional Products
Sales
|
$
|
400
|
|
$
|
423
|
|
$
|
406
|
|
$
|
384
|
|
$
|
1,613
|
|
Operating earnings
|
94
|
|
107
|
|
105
|
|
72
|
|
378
|
|
|||||
Asset impairments and restructuring charges, net
(1)(2)(3)
|
—
|
|
—
|
|
—
|
|
17
|
|
17
|
|
|||||
Operating earnings excluding item
|
94
|
|
107
|
|
105
|
|
89
|
|
395
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
93
|
|
|||||||||
Adhesives & Plasticizers
Sales
|
$
|
374
|
|
$
|
372
|
|
$
|
348
|
|
$
|
338
|
|
$
|
1,432
|
|
Operating earnings
|
66
|
|
72
|
|
73
|
|
49
|
|
260
|
|
|||||
Asset impairments and restructuring charges, net
(1)
|
—
|
|
—
|
|
—
|
|
3
|
|
3
|
|
|||||
Operating earnings excluding item
|
66
|
|
72
|
|
73
|
|
52
|
|
263
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
46
|
|
|||||||||
Advanced Materials
Sales
|
$
|
567
|
|
$
|
600
|
|
$
|
559
|
|
$
|
528
|
|
$
|
2,254
|
|
Operating earnings
|
57
|
|
62
|
|
57
|
|
—
|
|
176
|
|
|||||
Asset impairments and restructuring charges, net
(1)(2)(4)
|
4
|
|
1
|
|
—
|
|
29
|
|
34
|
|
|||||
Operating earnings excluding item
|
61
|
|
63
|
|
57
|
|
29
|
|
210
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
144
|
|
|||||||||
Fibers
Sales
|
$
|
323
|
|
$
|
318
|
|
$
|
349
|
|
$
|
325
|
|
$
|
1,315
|
|
Operating earnings
|
101
|
|
96
|
|
98
|
|
90
|
|
385
|
|
|||||
Asset impairments and restructuring charges, net
(1)
|
—
|
|
—
|
|
—
|
|
3
|
|
3
|
|
|||||
Operating earnings excluding item
|
101
|
|
96
|
|
98
|
|
93
|
|
388
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
66
|
|
|||||||||
Specialty Fluids & Intermediates
Sales
|
$
|
642
|
|
$
|
649
|
|
$
|
592
|
|
$
|
590
|
|
$
|
2,473
|
|
Operating earnings
|
73
|
|
97
|
|
96
|
|
84
|
|
350
|
|
|||||
Asset impairments and restructuring charges, net
(1)(2)
|
—
|
|
—
|
|
—
|
|
9
|
|
9
|
|
|||||
Operating earnings excluding item
|
73
|
|
97
|
|
96
|
|
93
|
|
359
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
82
|
|
|||||||||
Other
(5)
Sales
|
$
|
13
|
|
$
|
11
|
|
$
|
5
|
|
$
|
4
|
|
$
|
33
|
|
Operating loss
|
|
|
|
|
|
||||||||||
Growth initiatives and businesses not allocated to segments
|
(25
|
)
|
(26
|
)
|
(36
|
)
|
(48
|
)
|
(135
|
)
|
|||||
Pension and OPEB gain (loss) not allocated to operating segments
|
(7
|
)
|
(6
|
)
|
(5
|
)
|
(276
|
)
|
(294
|
)
|
|||||
Operating loss before exclusions
|
(32
|
)
|
(32
|
)
|
(41
|
)
|
(324
|
)
|
(429
|
)
|
|||||
Mark-to-market pension and other postretirement benefits losses (gains), net
(6)
|
—
|
|
—
|
|
—
|
|
276
|
|
276
|
|
|||||
Asset impairments and restructuring charges, net
(1)(7)
|
—
|
|
—
|
|
9
|
|
18
|
|
27
|
|
|||||
Operating loss excluding items
|
(32
|
)
|
(32
|
)
|
(32
|
)
|
(30
|
)
|
(126
|
)
|
|||||
Depreciation and amortization expense
|
|
|
|
|
7
|
|
|||||||||
Eastman Chemical Company
Sales
|
$
|
2,319
|
|
$
|
2,373
|
|
$
|
2,259
|
|
$
|
2,169
|
|
$
|
9,120
|
|
Operating earnings (loss)
|
359
|
|
402
|
|
388
|
|
(29
|
)
|
1,120
|
|
|||||
Mark-to-market pension and other postretirement benefits losses (gains), net
(6)
|
—
|
|
—
|
|
—
|
|
276
|
|
276
|
|
|||||
Asset impairments and restructuring charges, net
(1)(2)(3)(4)(7)
|
4
|
|
1
|
|
9
|
|
79
|
|
93
|
|
|||||
Operating earnings excluding items
|
363
|
|
403
|
|
397
|
|
326
|
|
1,489
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
438
|
|
(Dollars in millions)
|
1st Qtr
|
2nd Qtr
|
3rd Qtr
|
4th Qtr
|
Year
|
||||||||||
Additives & Functional Products
Sales
|
$
|
429
|
|
$
|
437
|
|
$
|
412
|
|
$
|
399
|
|
$
|
1,677
|
|
Operating earnings
|
125
|
|
105
|
|
84
|
|
68
|
|
382
|
|
|||||
Other operating income
(1)
|
(17
|
)
|
—
|
|
—
|
|
—
|
|
(17
|
)
|
|||||
Operating earnings excluding item
|
108
|
|
105
|
|
84
|
|
68
|
|
365
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
95
|
|
|||||||||
Adhesives & Plasticizers
Sales
|
$
|
340
|
|
$
|
371
|
|
$
|
349
|
|
$
|
321
|
|
$
|
1,381
|
|
Operating earnings
|
70
|
|
70
|
|
61
|
|
49
|
|
250
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
44
|
|
|||||||||
Advanced Materials
Sales
|
$
|
574
|
|
$
|
632
|
|
$
|
558
|
|
$
|
549
|
|
$
|
2,313
|
|
Operating earnings
|
69
|
|
82
|
|
63
|
|
37
|
|
251
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
135
|
|
|||||||||
Fibers
Sales
|
$
|
290
|
|
$
|
331
|
|
$
|
334
|
|
$
|
324
|
|
$
|
1,279
|
|
Operating earnings
|
86
|
|
97
|
|
98
|
|
84
|
|
365
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
68
|
|
|||||||||
Specialty Fluids & Intermediates
Sales
|
$
|
612
|
|
$
|
638
|
|
$
|
657
|
|
$
|
641
|
|
$
|
2,548
|
|
Operating earnings
|
76
|
|
79
|
|
69
|
|
47
|
|
271
|
|
|||||
Asset impairments and restructuring charges, net
(2)
|
—
|
|
—
|
|
7
|
|
—
|
|
7
|
|
|||||
Operating earnings excluding item
|
76
|
|
79
|
|
76
|
|
47
|
|
278
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
80
|
|
|||||||||
Other
(3)
Sales
|
$
|
21
|
|
$
|
20
|
|
$
|
20
|
|
$
|
16
|
|
$
|
77
|
|
Operating loss (earnings)
|
|
|
|
|
|
||||||||||
Growth initiatives and businesses not allocated to segments
|
(20
|
)
|
5
|
|
10
|
|
(24
|
)
|
(29
|
)
|
|||||
Pension and OPEB gain (loss) not allocated to operating segments
|
9
|
|
(5
|
)
|
(10
|
)
|
(230
|
)
|
(236
|
)
|
|||||
Operating loss before exclusions
|
(11
|
)
|
—
|
|
—
|
|
(254
|
)
|
(265
|
)
|
|||||
Mark-to-market pension and other postretirement benefits losses (gains), net
(4)
|
(15
|
)
|
—
|
|
—
|
|
224
|
|
209
|
|
|||||
Asset impairments and restructuring charges, net
(5)(6)(7)
|
12
|
|
(14
|
)
|
6
|
|
—
|
|
4
|
|
|||||
Other operating expense (income)
(8)
|
—
|
|
—
|
|
(29
|
)
|
—
|
|
(29
|
)
|
|||||
Operating loss excluding items
|
(14
|
)
|
(14
|
)
|
(23
|
)
|
(30
|
)
|
(81
|
)
|
|||||
Depreciation and amortization expense
|
|
|
|
|
7
|
|
|||||||||
Eastman Chemical Company
Sales
|
$
|
2,266
|
|
$
|
2,429
|
|
$
|
2,330
|
|
$
|
2,250
|
|
$
|
9,275
|
|
Operating earnings (loss)
|
415
|
|
433
|
|
375
|
|
31
|
|
1,254
|
|
|||||
Mark-to-market pension and other postretirement benefits losses (gains), net
(4)
|
(15
|
)
|
—
|
|
—
|
|
224
|
|
209
|
|
|||||
Asset impairments and restructuring charges, net
(2)(5)(6)(7)
|
12
|
|
(14
|
)
|
13
|
|
—
|
|
11
|
|
|||||
Other operating expense (income)
(1)(8)
|
(17
|
)
|
—
|
|
(29
|
)
|
—
|
|
(46
|
)
|
|||||
Operating earnings excluding items
|
395
|
|
419
|
|
359
|
|
225
|
|
1,428
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
429
|
|
(Dollars in millions)
|
1st Qtr
|
2nd Qtr
|
3rd Qtr
|
4th Qtr
|
Year
|
||||||||||
Additives & Functional Products
Sales
|
$
|
377
|
|
$
|
405
|
|
$
|
401
|
|
$
|
377
|
|
$
|
1,560
|
|
Operating earnings
|
81
|
|
106
|
|
104
|
|
70
|
|
361
|
|
|||||
Asset impairments and restructuring charges, net
(1)(2)
|
5
|
|
4
|
|
1
|
|
5
|
|
15
|
|
|||||
Other operating income
(3)
|
—
|
|
—
|
|
—
|
|
(5
|
)
|
(5
|
)
|
|||||
Operating earnings excluding items
|
86
|
|
110
|
|
105
|
|
70
|
|
371
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
90
|
|
|||||||||
Adhesives & Plasticizers
Sales
|
$
|
217
|
|
$
|
283
|
|
$
|
276
|
|
$
|
274
|
|
$
|
1,050
|
|
Operating earnings
|
34
|
|
50
|
|
55
|
|
43
|
|
182
|
|
|||||
Asset impairments and restructuring charges, net
(2)
|
—
|
|
3
|
|
—
|
|
2
|
|
5
|
|
|||||
Operating earnings excluding item
|
34
|
|
53
|
|
55
|
|
45
|
|
187
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
37
|
|
|||||||||
Advanced Materials
Sales
|
$
|
486
|
|
$
|
545
|
|
$
|
526
|
|
$
|
513
|
|
$
|
2,070
|
|
Operating earnings
|
52
|
|
56
|
|
57
|
|
38
|
|
203
|
|
|||||
Asset impairments and restructuring charges, net
(2)
|
1
|
|
—
|
|
—
|
|
5
|
|
6
|
|
|||||
Operating earnings excluding item
|
53
|
|
56
|
|
57
|
|
43
|
|
209
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
129
|
|
|||||||||
Fibers
Sales
|
$
|
267
|
|
$
|
274
|
|
$
|
301
|
|
$
|
300
|
|
$
|
1,142
|
|
Operating earnings
|
82
|
|
85
|
|
93
|
|
79
|
|
339
|
|
|||||
Asset impairments and restructuring charges, net
(2)
|
—
|
|
—
|
|
—
|
|
3
|
|
3
|
|
|||||
Operating earnings excluding item
|
82
|
|
85
|
|
93
|
|
82
|
|
342
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
61
|
|
|||||||||
Specialty Fluids & Intermediates
Sales
|
$
|
468
|
|
$
|
485
|
|
$
|
487
|
|
$
|
467
|
|
$
|
1,907
|
|
Operating earnings
|
42
|
|
65
|
|
67
|
|
40
|
|
214
|
|
|||||
Asset impairments and restructuring charges, net
(2)
|
—
|
|
—
|
|
—
|
|
4
|
|
4
|
|
|||||
Operating earnings excluding item
|
42
|
|
65
|
|
67
|
|
44
|
|
218
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
72
|
|
|||||||||
Other
Sales
|
$
|
4
|
|
$
|
12
|
|
$
|
26
|
|
$
|
21
|
|
$
|
63
|
|
Operating loss
|
|
|
|
|
|
||||||||||
Growth initiatives and businesses not allocated to segments
|
(14
|
)
|
(14
|
)
|
(10
|
)
|
(20
|
)
|
(58
|
)
|
|||||
Pension and OPEB gain (loss) not allocated to operating segments
|
(8
|
)
|
(10
|
)
|
(9
|
)
|
(15
|
)
|
(42
|
)
|
|||||
Operating loss before exclusions
|
(22
|
)
|
(24
|
)
|
(19
|
)
|
(35
|
)
|
(100
|
)
|
|||||
Mark-to-market pension and other postretirement benefits losses (gains), net
(5)
|
—
|
|
—
|
|
—
|
|
4
|
|
4
|
|
|||||
Asset impairments and restructuring charges, net
(2)(6)
|
1
|
|
1
|
|
—
|
|
10
|
|
12
|
|
|||||
Other operating income
(7)
|
—
|
|
—
|
|
5
|
|
—
|
|
5
|
|
|||||
Operating loss excluding items
|
(21
|
)
|
(23
|
)
|
(14
|
)
|
(21
|
)
|
(79
|
)
|
|||||
Depreciation and amortization expense
|
|
|
|
|
6
|
|
|||||||||
Eastman Chemical Company
Sales
|
$
|
1,819
|
|
$
|
2,004
|
|
$
|
2,017
|
|
$
|
1,952
|
|
$
|
7,792
|
|
Operating earnings (loss)
|
269
|
|
338
|
|
357
|
|
235
|
|
1,199
|
|
|||||
Mark-to-market pension and other postretirement benefits losses (gains), net
(5)
|
—
|
|
—
|
|
—
|
|
4
|
|
4
|
|
|||||
Asset impairments and restructuring charges, net
(1)(2)(6)
|
7
|
|
8
|
|
1
|
|
29
|
|
45
|
|
|||||
Other operating income
(3)(7)
|
—
|
|
—
|
|
5
|
|
(5
|
)
|
—
|
|
|||||
Operating earnings excluding items
|
276
|
|
346
|
|
363
|
|
263
|
|
1,248
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
395
|
|
(Dollars in millions)
|
1st Qtr
|
2nd Qtr
|
3rd Qtr
|
4th Qtr
|
Year
|
||||||||||
Additives & Functional Products
Sales
|
$
|
261
|
|
$
|
305
|
|
$
|
350
|
|
$
|
345
|
|
$
|
1,261
|
|
Operating earnings
|
17
|
|
64
|
|
100
|
|
101
|
|
282
|
|
|||||
Additional costs of acquired Solutia inventories
(1)
|
21
|
|
—
|
|
—
|
|
—
|
|
21
|
|
|||||
Asset impairments and restructuring charges, net
(2)(3)(4)(5)
|
6
|
|
(5
|
)
|
—
|
|
1
|
|
2
|
|
|||||
Other operating income
(6)
|
—
|
|
—
|
|
—
|
|
(4
|
)
|
(4
|
)
|
|||||
Operating earnings excluding items
|
44
|
|
59
|
|
100
|
|
98
|
|
301
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
87
|
|
|||||||||
Adhesives & Plasticizers
Sales
|
$
|
149
|
|
$
|
167
|
|
$
|
182
|
|
$
|
181
|
|
$
|
679
|
|
Operating earnings
|
2
|
|
18
|
|
34
|
|
30
|
|
84
|
|
|||||
Asset impairments and restructuring charges, net
(2)
|
4
|
|
(1
|
)
|
—
|
|
—
|
|
3
|
|
|||||
Operating earnings excluding item
|
6
|
|
17
|
|
34
|
|
30
|
|
87
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
37
|
|
|||||||||
Advanced Materials
Sales
|
$
|
324
|
|
$
|
401
|
|
$
|
435
|
|
$
|
464
|
|
$
|
1,624
|
|
Operating earnings
|
(62
|
)
|
34
|
|
48
|
|
37
|
|
57
|
|
|||||
Additional costs of acquired Solutia inventories
(1)
|
41
|
|
—
|
|
—
|
|
—
|
|
41
|
|
|||||
Asset impairments and restructuring charges, net
(2)(7)(8)
|
18
|
|
5
|
|
2
|
|
7
|
|
32
|
|
|||||
Operating earnings excluding items
|
(3
|
)
|
39
|
|
50
|
|
44
|
|
130
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
123
|
|
|||||||||
Fibers
Sales
|
$
|
259
|
|
$
|
263
|
|
$
|
257
|
|
$
|
253
|
|
$
|
1,032
|
|
Operating earnings
|
72
|
|
77
|
|
82
|
|
77
|
|
308
|
|
|||||
Asset impairments and restructuring charges, net
(2)
|
4
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|||||
Operating earnings excluding item
|
76
|
|
77
|
|
82
|
|
77
|
|
312
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
62
|
|
|||||||||
Specialty Fluids & Intermediates
Sales
|
$
|
302
|
|
$
|
323
|
|
$
|
378
|
|
$
|
396
|
|
$
|
1,399
|
|
Operating earnings
|
(18
|
)
|
16
|
|
36
|
|
28
|
|
62
|
|
|||||
Additional costs of acquired Solutia inventories
(1)
|
17
|
|
—
|
|
—
|
|
—
|
|
17
|
|
|||||
Asset impairments and restructuring charges, net
(2)
|
5
|
|
—
|
|
—
|
|
—
|
|
5
|
|
|||||
Operating earnings excluding items
|
4
|
|
16
|
|
36
|
|
28
|
|
84
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
71
|
|
|||||||||
Other
Sales
|
$
|
6
|
|
$
|
6
|
|
$
|
4
|
|
$
|
3
|
|
$
|
19
|
|
Operating loss
|
|
|
|
|
|
||||||||||
Growth initiatives and businesses not allocated to segments
|
(16
|
)
|
(11
|
)
|
(20
|
)
|
(199
|
)
|
(246
|
)
|
|||||
Pension and OPEB gain (loss) not allocated to operating segments
|
(17
|
)
|
(17
|
)
|
(17
|
)
|
(93
|
)
|
(144
|
)
|
|||||
Transaction, integration, and restructuring costs related to the acquisition of Solutia
|
(101
|
)
|
—
|
|
—
|
|
—
|
|
(101
|
)
|
|||||
Operating loss before exclusions
|
(134
|
)
|
(28
|
)
|
(37
|
)
|
(292
|
)
|
(491
|
)
|
|||||
Transaction, integration, and restructuring costs related to the acquisition of Solutia
|
69
|
|
—
|
|
—
|
|
—
|
|
69
|
|
|||||
Mark-to-market pension and other postretirement benefits losses (gains), net
(10)
|
—
|
|
—
|
|
8
|
|
81
|
|
89
|
|
|||||
Asset impairments and restructuring charges, net
(2)(11)(12)
|
39
|
|
—
|
|
8
|
|
188
|
|
235
|
|
|||||
Other operating loss
(13)
|
—
|
|
—
|
|
6
|
|
—
|
|
6
|
|
|||||
Operating loss excluding items
|
(26
|
)
|
(28
|
)
|
(15
|
)
|
(23
|
)
|
(92
|
)
|
|||||
Depreciation and amortization expense
|
|
|
|
|
4
|
|
|||||||||
Eastman Chemical Company
Sales
|
$
|
1,301
|
|
$
|
1,465
|
|
$
|
1,606
|
|
$
|
1,642
|
|
$
|
6,014
|
|
Operating earnings (loss)
|
(123
|
)
|
181
|
|
263
|
|
(19
|
)
|
302
|
|
|||||
Additional costs of acquired Solutia inventories
(1)
|
79
|
|
—
|
|
—
|
|
—
|
|
79
|
|
|||||
Transaction, integration, and restructuring costs related to the acquisition of Solutia
|
69
|
|
—
|
|
—
|
|
—
|
|
69
|
|
|||||
Mark-to-market pension and other postretirement benefits losses (gains), net
(10)
|
—
|
|
—
|
|
8
|
|
81
|
|
89
|
|
|||||
Asset impairments and restructuring charges, net
(1)(2)(3)(4)(5)(7)(8)(11)(12)
|
76
|
|
(1
|
)
|
10
|
|
196
|
|
281
|
|
|||||
Other operating loss (income)
(6)(13)
|
—
|
|
—
|
|
6
|
|
(4
|
)
|
2
|
|
|||||
Operating earnings excluding items
|
101
|
|
180
|
|
287
|
|
254
|
|
822
|
|
|||||
Depreciation and amortization expense
|
|
|
|
|
384
|
|
Year
|
|
Footnote
|
|
|
|
2012
|
1
|
Fourth quarter includes asset impairments and restructuring charges of $3 million, $3 million, $5 million, $3 million, and $6 million in the Additives & Functional Products, Adhesives & Plasticizers, Advanced Materials, Fibers, and Specialty Fluids & Intermediates segments, respectively, primarily due to a change in approach to address recently finalized boiler air emissions regulations.
|
|
2
|
Amounts include business exit costs and asset impairments of $8 million, $24 million, and $3 million in the Additives & Functional Products, Advanced Materials, and Specialty Fluids & Intermediates segments, respectively, for production businesses exited in Sao Jose dos Campos, Brazil in fourth quarter.
|
|
3
|
Amount includes asset impairments and restructuring charges of $6 million related to the closure of a production facility in China.
|
|
4
|
Amounts include acquisition related expenses on the Southwall Technologies Inc. acquisition.
|
|
5
|
Research and development, pension and OPEB, and other expenses not identifiable to an operating segment are not included in segment operating results for either of the periods presented and are shown as “other” operating earnings (loss).
|
|
6
|
Amounts are MTM losses (gains), net, for pension and OPEB plans actuarial adjustments.
|
|
7
|
Fourth quarter includes restructuring charges of $17 million for inventory costs in excess of recoverable value of certain discontinued Perennial Wood
TM
product lines and to accrue for losses on take-or-pay contracts with third parties. Third and fourth quarters include asset impairments and restructuring charges of $3 million and $1 million, respectively, for termination of the research and development activities for renewable chemicals. Third quarter also includes a charge of $6 million for the impairment of land retained from the terminated Beaumont, Texas industrial gasification project.
|
|
|
|
2011
|
1
|
Amount includes gains on certain other rubber chemicals divestitures.
|
|
2
|
Amount includes restructuring charges primarily for severance associated with the acquisition and integration of Sterling Chemicals, Inc.
|
|
3
|
Research and development, pension and OPEB, and other expenses not identifiable to an operating segment are not included in segment operating results for either of the periods presented and are shown as “other” operating earnings (loss).
|
|
4
|
MTM losses (gains), net, for pension and OPEB plans actuarial adjustments. First quarter 2011 included MTM gain of $15 million in due to the interim remeasurement of the OPEB plan obligation, triggered by the exit of employees associated with the sale of the PET business.
|
|
5
|
First quarter, second quarter, third quarter, and full year include $12 million, $1 million, $1 million, and $14 million, respectively, for severance, pension settlement and other charges related to the relocation of European regional headquarters.
|
|
6
|
Second quarter and full year include $15 million gain from the sale of the previously impaired methanol and ammonia assets related to the terminated Beaumont, Texas industrial gasification project.
|
|
7
|
Third quarter and full year include $3 million for severance and $2 million for share-based compensation costs on executive officer separation agreement.
|
|
8
|
Third quarter and full year include $29 million gain related to the sale of remaining 2% ownership interest in Ascend Performance Materials Holdings Inc.
|
|
|
|
Year
|
|
Footnote
|
|
|
|
2010
|
1
|
First, second, third, and fourth quarters reflect restructuring costs of $4 million, $4 million, $1 million, and $1 million, respectively, related to the closure of the Ruabon and Cologne facilities.
|
|
2
|
Includes charges for severance programs of: $1 million and $4 million in first and fourth quarters, respectively, in the Additives and Functional Products segment; $3 million and $2 million in second and fourth quarters, respectively, in the Adhesives and Plasticizers segment; $1 million and $5 million in first and fourth quarters, respectively, in the Advanced Materials segment; $3 million in fourth quarter in the Fibers segment; $4 million in fourth quarter in the Specialty Fluids and Intermediates segment; and $1 million, $1 million, and $2 million in first, second, and fourth quarters, respectively, in Other.
|
|
3
|
Includes gain on the sale of select assets of Perkalink.
|
|
4
|
Research and development, pension and OPEB, and other expenses not identifiable to an operating segment are not included in segment operating results for either of the periods presented and are shown as “other” operating earnings (loss).
|
|
5
|
Amounts include MTM losses (gains), net, for pension and OPEB plans actuarial adjustments.
|
|
6
|
Fourth quarter includes $8 million for intangible asset impairment charges resulting from an environmental regulatory change during the fourth quarter impacting the fair value of air emission credits remaining from the previously discontinued Beaumont, Texas, gasification project.
|
|
7
|
Includes loss on the sale of European Plastic Products business.
|
|
|
|
2009
|
1
|
As required by purchase accounting, the acquired Solutia inventories were marked to fair value. These inventories were sold in 2012 resulting in an increase in cost of sales, net of the LIFO impact for these inventories in third and fourth quarters 2012. For purposes of this pro forma combined financial information, the acquisition is presented as if the acquisition of Solutia had been consummated on January 1, 2009.
|
|
2
|
Includes charges and adjustments for corporate severance program of: charges of $5 million and $1 million in first and fourth quarters, respectively, and an adjustment of $1 million in second quarter in the Additives and Functional Products segment; a charge of $4 million in first quarter and an adjustment of $1 million in second quarter in the Adhesives and Plasticizers segment; charges of $14 million, $4 million, $2 million, and $4 million in first, second, third, and fourth quarters in the Advanced Materials segment; charges of $4 million in first quarter in the Fibers segment; a charge of $5 million in first quarter in the Specialty Fluids and Intermediates segment; and charges of $7 million, $2 million, and $9 million in first, second, and fourth quarters, respectively, in Other.
|
|
3
|
First quarter, second quarter, and fourth quarter include charges of $1 million, gains of $4 million, and charges of $1 million, respectively, related to the announced closure of the Ruabon facility.
|
|
4
|
Fourth quarter includes $2 million gain from the reversal of a reserve for previously divested businesses and product lines within the former Coatings, Adhesives, and Specialty Polymers and Inks segment.
|
|
5
|
Fourth quarter includes $1 million impairment of intangible assets related to the sale of the Thiurams business.
|
|
6
|
Reflects gain on the sale of the Thiurams business.
|
|
7
|
First quarter and second quarter include $4 million and $1 million, respectively, related to the announced closure of the SAFLEX
®
plastic interlayer production line at the Trenton facility.
|
|
8
|
Fourth quarter includes net charges of $3 million related to consolidation of certain European manufacturing and distribution sites.
|
|
9
|
Research and development, pension and OPEB, and other expenses not identifiable to an operating segment are not included in segment operating results for either of the periods presented and are shown as “other” operating earnings (loss).
|
|
10
|
Amounts include MTM losses (gains), net, for pension and OPEB plans actuarial adjustments.
|
|
11
|
Amounts include restructuring charges of $32 million primarily for severance related to the acquisition and integration of Solutia.
|
|
12
|
Fourth quarter includes $179 million for asset impairments related to the Company's previously announced discontinuance of its Beaumont, Texas industrial gasification project.
|
|
13
|
Third quarter includes loss on the sale of North America Plastic Products and related impairment of intangible assets.
|