(Mark
One)
|
||
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the fiscal year ended
|
December 31, 2019
|
|
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 incorporation or organization)
|
(I.R.S. employer identification no.)
|
|
|
|
|
200 South Wilcox Drive
|
|
|
Kingsport
|
Tennessee
|
37662
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common Stock, par value $0.01 per share
|
|
EMN
|
|
New York Stock Exchange
|
1.50% Notes Due 2023
|
|
EMN23
|
|
New York Stock Exchange
|
1.875% Notes Due 2026
|
|
EMN26
|
|
New York Stock Exchange
|
ITEM
|
|
PAGE
|
5.
|
||
6.
|
||
7.
|
||
7A.
|
||
8.
|
||
9.
|
||
9A.
|
||
9B.
|
10.
|
||
11.
|
||
12.
|
||
13.
|
||
14.
|
ITEM 1. BUSINESS
|
CORPORATE OVERVIEW
|
•
|
Plastic waste feedstock procurement and commercial-scale operations of proprietary innovative chemical recycling carbon renewal technology which breaks down waste plastics into molecular building blocks (carbon monoxide and hydrogen) for feedstocks of acetyl manufacturing stream products.
|
•
|
Introduction of advanced circular recycling methanolysis technology to depolymerize waste plastics to re-create specialty monomers for use in manufacture of specialty copolyester products sold into a wide array of end markets.
|
•
|
Eastman CORE (trademark and patent pending), a differentiated analytics-based software platform that provides Eastman's high performance paint protection film and window film product customers and end-users with access to digital service to improve customer experience and accelerate category development.
|
•
|
Saflex™ E series, an enhanced acoustic interlayer product, is formulated to dampen sound, particularly in the high frequency range, and provides improved performance compared to traditional acoustic interlayers.
|
•
|
Tetrashield™ performance polyester resins based on proprietary monomer technology with improved performance and sustainability features for automotive coatings, industrial, and food packaging end-users.
|
•
|
Impera™ tire additives performance resins that enable tire manufacturers to improve the safety and handling of tires, balance tire performance and fuel economy needs, and achieve superior levels of tack for tire construction.
|
•
|
Naia™, a yarn product for the apparel market developed from Eastman's proprietary cellulose ester technology.
|
•
|
Regalite™ UltraPure Platform, a new class of tackifying hydrocarbon adhesives resins with enhanced features addressing hygiene end-use product consumer odor, volatile organic compounds and trace chemicals concerns.
|
•
|
health and wellness: Tritan™ copolyester, Tetrashield™ performance polyester resins, and Vestera™ cellulosic fiber;
|
•
|
natural resource efficiency: Saflex™ Q series advanced acoustic interlayers, Impera™ high performance resins for tires, and Treva™ proprietary engineering bioplastic;
|
•
|
emerging middle class: Saflex™ and head-up display ("HUD") acoustic interlayers, Regalite™ hydrocarbon resins, Naia™ cellulosic yarn, and Avra™ performance fibers;
|
•
|
feeding a growing population: Eastman organic acids, Enhanz™ feed additive, and Banguard™ crop protection; and
|
•
|
circular economy: carbon renewal and methanolysis chemical and plastics recycling technologies.
|
BUSINESS SEGMENTS
|
Product
|
Description
|
Principal
Competitors
|
Key Raw
Materials
|
End-Use Applications
|
Coatings and Inks Additives
|
||||
Polymers
cellulosics
Tetrashield™
polyesters
polyolefins
Additives and Solvents
Texanol™
Optifilm™
ketones
esters
glycol ethers
oxo alcohols
|
specialty coalescents, specialty solvents, and commodity solvents
paint additives and specialty polymers
|
BASF SE
Dow Inc.
Oxea
Celanese Corporation
Alternative Technologies
|
wood pulp
propane
propylene
|
building and construction (architectural coatings)
transportation (OEM) and refinish coatings
durable goods (wood, industrial coatings and applications)
consumables (graphic arts, inks, and packaging)
|
Adhesives Resins
|
||||
Piccotac™
Regalite™
Eastotac™
Eastoflex™
Aerafin™
|
hydrocarbon resins
and rosin resins
mainly for
hot-melt and
pressure sensitive
adhesives
|
Exxon Mobil Corporation
Kolon Industries, Inc.
Evonik Industries
|
C9 resin oil
piperylene
gum rosin
propylene
|
consumables (resins used in hygiene and packaging adhesives)
building and construction (resins for construction adhesives and interior flooring)
|
Tire Additives
|
||||
Crystex™
|
insoluble sulfur
rubber additive
|
Oriental Carbon & Chemicals Limited
Shikoku Chemicals Corporation
|
sulfur
naphthenic process oil
|
transportation (tire manufacturing)
other rubber products (such as hoses,
belts, seals, and footwear)
|
Santoflex™
|
antidegradant rubber additive
|
Jiangsu Sinorgchem Technology Co., Ltd.
Kumho Petrochemical Co., Ltd.
Lanxess AG
|
nitrobenzene
aniline
methyl isobutyl
ketone
|
transportation (tire manufacturing)
other rubber products (such as hoses,
belts, seals, and footwear)
|
Impera™
|
performance resins
|
Cray Valley Hydrocarbon Specialty Chemicals
Exxon Mobil Corporation
Kolon Industries, Inc.
|
alpha methylstyrene
piperylene
styrene
|
transportation (tire manufacturing)
|
Product
|
Description
|
Principal
Competitors
|
Key Raw
Materials
|
End-Use Applications
|
Care Chemicals
|
||||
Alkylamine derivatives
Organic acids
and derivatives
Cellulose esters
|
amine derivative-based building blocks for production of flocculants
intermediates for surfactants
|
BASF SE
Dow Inc.
Huntsman Corporation
|
alkylamines
ammonia
alcohols
ethylene oxide
|
water treatment
personal and home care
pharmaceuticals
|
Specialty Fluids
|
||||
Therminol™
Turbo oils
Skydrol™
SkyKleen™
Marlotherm™
|
heat transfer and
aviation fluids
|
Dow Inc.
Exxon Mobil
Corporation
|
benzene
phosphorous
neo-polyol esters
|
industrial chemicals and processing (heat transfer fluids for chemical processes)
renewable energy
commercial aviation
|
Animal Nutrition
|
||||
Organic acids
and derivatives
Choline chloride
Enhanz™
|
organic acid-based solutions
|
BASF SE
Perstorp Holding AB
Luxi Chemical Group
Feicheng Acid
Chemicals
|
formic acid
ethylene oxide
propane
heavy fuel oil
|
gut health solutions
preservation
industrial applications
|
Crop Protection
|
||||
Alkylamine
derivatives
Banguard™
|
metam-based soil fumigants
thiram and ziram-based fungicides
plant growth regulator
|
Corteva, Inc.
Argo-Kanesho Co., Ltd.
Bayer AG
BASF SE
|
alkylamines
CS2
caustic soda
|
agriculture
crop protection
|
•
|
advanced growth and innovation of Regalite™ UltraPure hydrocarbon resin, a new class of clean tackifying hydrocarbon resins, through a capacity expansion at the Middelburg, Netherlands manufacturing site;
|
•
|
acquired the Marlotherm™ heat transfer assets in Marl, Germany and the related formulations, intellectual property, and customer contracts, as a targeted addition to the specialty fluids business;
|
•
|
advanced growth of Impera™ resins through capacity expansions for the production of performance resins for tires at both the Middelburg, Netherlands, and Jefferson, Pennsylvania, manufacturing sites to serve demand from tire manufacturers around the world for product solutions that enable improved safety, efficiency, and performance;
|
•
|
continued to enhance our ability to serve the global customer base in low volatile organic compound ("VOC") coatings and other markets by completing the final phase of a ketones capacity expansion at the Kingsport, Tennessee manufacturing site in fourth quarter 2019; and
|
•
|
responded to growing demand for purified water and sustainable waste water treatment across the globe with world scale production units for Dimethylaminoethanol ("DMAE"/"DMEA") in Europe (Belgium) and North America (Louisiana) and decided to expand capacity in China to respond to stricter regulation and rapidly growing demand in Asia (DMAE is used as a key component into flocculants that are critical for municipal and industrial water treatments).
|
Product
|
Description
|
Principal
Competitors
|
Key Raw
Materials
|
End-Use Applications
|
|
|
|
|
|
Specialty Plastics
|
||||
Tritan™
copolyester
Eastar™ copolyesters
Spectar™
copolyester
Embrace™
copolyester
Visualize™
Eastman Aspira™ family of resins
Treva™
|
standard copolyesters
premium copolyesters
cellulose esters
|
Covestro AG
Trinseo S.A.
Evonik Industries AG
Saudi Basic Industries Corporation
Mitsubishi Chemical Corporation
S.K. Chemical Industries
Sichuan Push Acetati Company Limited
Daicel Chemical Industries Ltd.
|
paraxylene
ethylene glycol
cellulose
purified terephthalic acid
|
consumables (consumer packaging,
cosmetics packaging, in-store
fixtures and displays)
durable goods (consumer housewares
and appliances)
health and wellness (medical)
electronics (displays)
|
Advanced Interlayers
|
||||
Saflex™
Saflex™ Q Series
Saflex™ ST
Saflex™ E Series
|
standard PVB
sheet
premium PVB
sheet
|
Sekisui Chemical Co.,
Ltd.
Kuraray Co., Ltd.
Kingboard (Fo Gang)
Specialty Resins
Limited
Chang Chun
Petrochemical Co.,
Ltd.
|
polyvinyl alcohol
vinyl acetate monomer
butyraldehyde
2-ethyl hexanol
ethanol
triethylene glycol
|
transportation (automotive safety glass,
automotive acoustic glass, and
HUD)
building and construction (PVB for
architectural interlayers)
|
Performance Films
|
||||
LLumar™
Flexvue™
SunTek™
V-KOOL™
Gila™
|
window film and protective film
products for
aftermarket
applied films
|
3M Company
Saint-Gobain S.A.
Beijing Kangde Xin
Composite Material
Co., Ltd. (KDX)
XPEL, Inc.
|
polyethylene terephthalate film
|
transportation (automotive after-
market window film and paint
protection film)
building and construction (residential
and commercial window films)
health and wellness (medical)
|
•
|
continued the growth of Tritan™ copolyester in the durable goods and health and wellness markets, supported by continued market and application development;
|
•
|
strengthened growth in automotive paint protection films in North America and China through an improved sales channel, marketing, and commercial execution strategies and capabilities;
|
•
|
finalized development and announced the launch of Eastman CORE (trademark and patent pending) next generation analytics-based software platform for automotive window and paint protection film products, enabling more efficient application and overall business management for dealers; and
|
•
|
developed and enhanced Eastman's sustainability capabilities and commercial opportunities, including strategic collaborations with third parties to secure a consistent source of recyclable copolyester feedstock and to innovate new sustainable specialty plastic solutions.
|
Product
|
Description
|
Principal
Competitors
|
Key Raw
Materials
|
End-Use Applications
|
|
|
|
|
|
Intermediates
|
||||
Oxo alcohols
and derivatives
Acetic acid and
derivatives
Acetic anhydride
Ethylene
Glycol ethers
Esters
|
Olefin derivatives, acetyl derivatives, ethylene, commodity solvents
|
Lyondell Bassell,
BASF SE
Dow Inc.
Oxea
BP plc
Celanese Corporation
Lonza
Ineos Group Holdings S.A.
Indorama Ventures Public Company Limited
|
propane
ethane
propylene
coal
natural gas
paraxylene
metaxylene
|
industrial chemicals and processing
building and construction (paint and coating applications, construction chemicals, building materials)
pharmaceuticals and agriculture
health and wellness
packaging
|
Plasticizers
|
||||
Eastman 168™
DOP
Benzoflex™
TXIB™
Effusion™
|
primary non-
phthalate and
phthalate
plasticizers
and a range of
niche non-
phthalate
plasticizers
|
BASF SE
Exxon Mobil Corporation
LG Chem, Ltd.
Emerald Performance Materials
|
propane
propylene
paraxylene
|
building and construction (non-phthalate
plasticizers used in interior surfaces)
consumables (food packaging, packaging
adhesives, and glove applications)
health and wellness (medical devices)
|
Functional Amines
|
||||
Alkylamines
|
methylamines
and salts
higher amines
and solvents
|
BASF SE
US Amines Limited
Oxea GmbH
|
methanol
ammonia
acetone
ethanol
butanol
|
agrochemicals
energy
consumables
water treatment
animal nutrition
industrial intermediates
|
Product
|
Description
|
Principal
Competitors
|
Key Raw
Materials
|
End-Use Applications
|
|
|
|
|
|
Acetate Tow
|
||||
Estron™
|
cellulose acetate tow
|
Celanese Corporation
Rhodia Acetow
Daicel Corporation
|
wood pulp
methanol
high sulfur coal
|
filtration media (primarily cigarette filters)
|
Acetyl Chemical Products
|
||||
Estrobond™
|
triacetin
cellulose acetate flake
acetic acid
acetic anhydride
|
Jiangsu Ruijia Chemistry Co., Ltd.
Polynt SpA
Daicel Corporation
Celanese Corporation
Rhodia Acetow
|
wood pulp
methanol
high sulfur coal
|
filtration media (primarily cigarette filters)
|
Acetate Yarn
|
||||
Estron™
Chromspun™
Naia™
|
natural (undyed) acetate yarn
solution dyed acetate yarn
|
UAB Dirbtinis Pluostas
Lenzing AG
ENKA International GmbH & Co. KG
|
wood pulp
methanol
high sulfur coal
|
consumables (apparel, home furnishings, and industrial fabrics)
health and wellness (medical tape)
|
Nonwovens
|
||||
Nonwovens
Vestera™
Celluosic Fiber
|
wetlaid nonwoven media
specialty and engineered papers
cellulose acetate fiber
|
Hollingsworth and Vose Company
Lydall, Inc.
BorgWarner Inc.
Lenzing AG
|
natural and synthetic fibers
inorganic and metallic additives
resins
|
filtration and friction media for transportation
industrial
agriculture and mining
aerospace markets
personal hygiene
consumables
|
EASTMAN CHEMICAL COMPANY GENERAL INFORMATION
|
•
|
In the cellulose and acetyl stream, the Company begins with coal which is gasified with oxygen in its coal gasification facility. The resulting synthesis gas is converted into acetic acid and acetic anhydride. Cellulose derivative manufacturing at the Company begins with natural polymers, sourced from managed forests, which, when combined with acetyl and olefin chemicals, provide differentiated product lines. Through a new recycling innovation, carbon renewal technology is now enabling the recycling of complex plastics to the basic building blocks of Eastman's cellulosic product stream. The major end-markets for products from the cellulose and acetyl stream include coatings, displays, thermoplastics, and filtration media.
|
•
|
In the olefins stream, the Company begins primarily with propane and ethane, which are "cracked" (the process whereby hydrocarbon molecules are broken down and rearranged) into ethylene and propylene in three cracking units at its site in Longview, Texas. As a result of modifications completed in 2018, these units also offer flexibility to use RGP as a diversified feedstock to minimize the impact of olefins spread volatility. The Company purchases some additional propylene to supplement cracking unit production. Propylene derivative products are used in a variety of items such as paints and coatings, automotive safety glass, and non-phthalate plasticizers. Ethylene derivative products are converted for end-uses in the food industry, health and beauty products, detergents, and automotive products.
|
•
|
In the polyester stream, the Company begins with paraxylene and glycol feedstocks, converting them through a series of intermediate materials to ultimately produce copolyesters. Eastman can add specialty monomers to copolyesters to provide clear, tough, chemically resistant product characteristics. As a result, the Company's copolyesters effectively compete with materials such as polycarbonate and acrylic. The polyester stream is now leveraging advanced circular recycling technology to enable various waste plastics to be recycled into high quality, specialty copolyester products.
|
•
|
In the alkylamines stream, the Company begins with ammonia and alcohol feedstocks to produce methylamines and higher alkylamines, which can then be further converted into alkylamine derivatives. The Company's alkylamines products are primarily used in agriculture, water treatment, consumables, animal nutrition, and oil and gas end-markets.
|
ITEM 1A. RISK FACTORS
|
ITEM 1B. UNRESOLVED STAFF COMMENTS
|
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
|
ITEM 2.
|
PROPERTIES
|
|
Segment using manufacturing location
|
|||
Location
|
Additives & Functional Products
|
Advanced Materials
|
Chemical Intermediates
|
Fibers
|
|
|
|
|
|
USA
|
|
|
|
|
Alvin, Texas (1)
|
x
|
|
|
|
Anniston, Alabama
|
x
|
|
|
|
Axton, Virginia
|
|
x
|
|
|
Canoga Park, California (2)
|
|
x
|
|
|
Cartersville, Georgia (1)
|
x
|
|
|
|
Chestertown, Maryland
|
|
|
x
|
|
Columbia, South Carolina (1)
|
|
x
|
|
|
Franklin, Virginia (1)
|
x
|
|
|
|
Jefferson, Pennsylvania
|
x
|
|
|
|
Kingsport, Tennessee
|
x
|
x
|
x
|
x
|
Lemoyne, Alabama (1)
|
x
|
|
|
|
Linden, New Jersey
|
x
|
|
|
|
Longview, Texas
|
x
|
x
|
x
|
|
Martinsville, Virginia (3)
|
|
x
|
|
|
Monongahela, Pennsylvania
|
x
|
|
|
|
Pace, Florida (2)
|
x
|
|
x
|
|
Sauget, Illinois
|
x
|
|
|
|
Springfield, Massachusetts
|
|
x
|
|
|
St. Gabriel, Louisiana
|
x
|
|
x
|
|
Sun Prairie, Wisconsin
|
|
x
|
|
|
Texas City, Texas
|
|
|
x
|
|
Trenton, Michigan
|
|
x
|
|
|
Watertown, New York
|
|
|
|
x
|
Europe
|
|
|
|
|
Antwerp, Belgium (1)
|
x
|
x
|
|
|
Ghent, Belgium (3)
|
x
|
x
|
x
|
|
Kohtla-Järve, Estonia
|
x
|
|
x
|
|
Oulu, Finland (2)
|
x
|
|
|
|
Dresden, Germany
|
|
x
|
|
|
Leuna, Germany
|
x
|
|
x
|
|
Marl, Germany (2)
|
x
|
|
|
|
Nienburg, Germany
|
x
|
|
|
|
Middelburg, the Netherlands
|
x
|
|
|
|
LA Batllòria, Spain
|
|
|
|
x
|
Newport, Wales
|
x
|
x
|
|
|
(1)
|
Eastman is a guest under an operating agreement with a third party that operates its manufacturing facilities at the site.
|
(2)
|
Eastman leases from a third party and operates the site.
|
(3)
|
Eastman has more than one manufacturing facility at this location.
|
|
Segment using manufacturing location
|
|||
Location
|
Additives & Functional Products
|
Advanced Materials
|
Chemical Intermediates
|
Fibers
|
|
|
|
|
|
Asia Pacific
|
|
|
|
|
Nanjing, China
|
x
|
|
x
|
|
Suzhou, China (1)(2)(3)
|
x
|
x
|
|
|
Wuhan, China (4)
|
|
|
x
|
|
Yixing, China
|
x
|
|
|
|
Zibo, China (5)
|
x
|
|
x
|
|
Kashima, Japan
|
x
|
|
|
|
Ulsan, Korea (6)
|
|
|
|
x
|
Kuantan, Malaysia (1)
|
x
|
x
|
|
|
Jurong Island, Singapore (1)(7)
|
x
|
|
x
|
|
Latin America
|
|
|
|
|
Itupeva, Brazil (8)
|
x
|
|
|
|
Mauá, Brazil
|
|
|
x
|
|
Santo Toribio, Mexico
|
|
x
|
|
|
Uruapan, Mexico
|
x
|
|
|
|
(1)
|
Eastman leases from a third party and operates the site.
|
(2)
|
Eastman has more than one manufacturing facility at this location.
|
(3)
|
Eastman holds a 60 percent share of Solutia Therminol Co., Ltd. Suzhou in the AFP segment.
|
(4)
|
Eastman holds a 51 percent share of Eastman Specialties Wuhan Youji Chemical Co., Ltd.
|
(5)
|
Eastman holds a 51 percent share of Qilu Eastman Specialty Chemical, Ltd.
|
(6)
|
Eastman holds an 80 percent share of Eastman Fibers Korea Limited.
|
(7)
|
In fourth quarter 2019, management approved a plan to discontinue production of certain products at this location by the end of 2020.
|
(8)
|
Eastman is a guest under an operating agreement with a third party that operates its manufacturing facilities at the site.
|
|
Segment using manufacturing location
|
|||
Location
|
Additives & Functional Products
|
Advanced Materials
|
Chemical Intermediates
|
Fibers
|
|
|
|
|
|
Asia Pacific
|
|
|
|
|
Hefei, China
|
|
|
|
x
|
Nanjing, China
|
x
|
|
|
|
Shenzhen, China
|
|
x
|
|
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT'S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
Statements of Earnings Data
|
Year Ended December 31,
|
||||||||||||||||||
(Dollars in millions, except per share amounts)
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Sales
|
$
|
9,273
|
|
|
$
|
10,151
|
|
|
$
|
9,549
|
|
|
$
|
9,008
|
|
|
$
|
9,648
|
|
Earnings before interest and taxes
|
1,120
|
|
|
1,552
|
|
|
1,530
|
|
|
1,389
|
|
|
1,392
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings
|
762
|
|
|
1,084
|
|
|
1,388
|
|
|
859
|
|
|
854
|
|
|||||
Less: Net earnings attributable to noncontrolling interest
|
3
|
|
|
4
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|||||
Net earnings attributable to Eastman
|
$
|
759
|
|
|
$
|
1,080
|
|
|
$
|
1,384
|
|
|
$
|
854
|
|
|
$
|
848
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share attributable to Eastman:
|
$
|
5.52
|
|
|
$
|
7.65
|
|
|
$
|
9.56
|
|
|
$
|
5.80
|
|
|
$
|
5.71
|
|
Diluted earnings per share attributable to Eastman:
|
$
|
5.48
|
|
|
$
|
7.56
|
|
|
$
|
9.47
|
|
|
$
|
5.75
|
|
|
$
|
5.66
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statements of Financial Position Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current assets
|
$
|
3,321
|
|
|
$
|
3,365
|
|
|
$
|
3,143
|
|
|
$
|
2,866
|
|
|
$
|
2,878
|
|
Net properties
|
5,571
|
|
|
5,600
|
|
|
5,607
|
|
|
5,276
|
|
|
5,130
|
|
|||||
Goodwill
|
4,431
|
|
|
4,467
|
|
|
4,527
|
|
|
4,461
|
|
|
4,518
|
|
|||||
Intangible assets, net of accumulated amortization
|
2,011
|
|
|
2,185
|
|
|
2,373
|
|
|
2,479
|
|
|
2,650
|
|
|||||
Total assets
|
16,008
|
|
|
15,995
|
|
|
15,999
|
|
|
15,457
|
|
|
15,580
|
|
|||||
Current liabilities
|
1,789
|
|
|
1,851
|
|
|
1,982
|
|
|
1,795
|
|
|
2,056
|
|
|||||
Long-term borrowings
|
5,611
|
|
|
5,925
|
|
|
6,147
|
|
|
6,311
|
|
|
6,577
|
|
|||||
Total liabilities
|
9,976
|
|
|
10,117
|
|
|
10,519
|
|
|
10,849
|
|
|
11,559
|
|
|||||
Total Eastman stockholders' equity
|
5,958
|
|
|
5,803
|
|
|
5,403
|
|
|
4,532
|
|
|
3,941
|
|
|||||
Dividends declared per share
|
2.52
|
|
|
2.30
|
|
|
2.09
|
|
|
1.89
|
|
|
1.66
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Statements of Cash Flow Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash provided by operating activities
|
$
|
1,504
|
|
|
$
|
1,543
|
|
|
$
|
1,657
|
|
|
$
|
1,385
|
|
|
$
|
1,624
|
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Change in
Assumption
|
Impact on
2020 Pre-tax
Benefits Expense
(Excludes mark-to-market impact)
for Pension Plans
|
Impact on December 31, 2019 Projected Benefit Obligation for Pension Plans
|
Impact on 2020 Pre-tax Benefits Expense (Excludes mark-to-market impact) for Other Postretirement Benefit Plans
|
Impact on December 31, 2019 Benefit Obligation for Other Postretirement Benefit Plans
|
|
U.S.
|
Non-U.S.
|
||||
25 basis point
decrease in discount
rate
|
-$3 Million
|
+$53 Million
|
+$49 Million
|
-$1 Million
|
+$17 Million
|
25 basis point
increase in discount
rate
|
+$3 Million
|
-$51 Million
|
-$44 Million
|
+$1 Million
|
-$16 Million
|
25 basis point
decrease in expected return on plan assets
|
+$7 Million
|
No Impact
|
No Impact
|
<+$0.5 Million
|
No Impact
|
25 basis point
increase in expected
return on plan assets
|
-$7 Million
|
No Impact
|
No Impact
|
<-$0.5 Million
|
No Impact
|
•
|
Non-core transactions, costs, and losses or gains relate to, among other things, cost reductions, growth and profitability improvement initiatives, and other events outside of core business operations, and have included asset impairments and restructuring charges and gains, costs of and related to acquisitions, gains and losses from and costs related to dispositions, closure, or shutdowns of businesses or assets, financing transaction costs, and MTM losses or gains for pension and other postretirement benefit plans.
|
•
|
In 2018 the Company recognized unusual income from insurance in excess of costs for, and in 2017 recognized unusual net costs of, the disruption, repairs, and reconstruction of the Kingsport site's coal gasification operations area resulting from the previously reported October 4, 2017 explosion (the "coal gasification incident"). Management considers the coal gasification incident unusual because of the Company's operational and safety history and the magnitude of the unplanned disruption.
|
•
|
In 2018 the Company recognized unusual costs and in both 2019 and 2018 unusual net decreases to earnings from adjustments of the net tax benefit recognized in fourth quarter 2017, resulting from tax law changes, primarily the 2017 Tax Cuts and Jobs Act (the "Tax Reform Act"), and related outside-U.S. entity reorganizations as part of the transition to an international treasury services center. Management considers these actions and associated costs and income unusual because of the infrequent nature of such changes in tax law and resulting actions and the significant impacts on earnings.
|
•
|
MTM pension and other postretirement benefit plans gains and losses resulting from the changes in discount rates and other actuarial assumptions and the difference between actual and expected returns on plan assets during the period;
|
•
|
Asset impairments and restructuring charges, including severance costs and site closure or shutdown charges, net, of which asset impairments are non-cash transactions impacting profitability;
|
•
|
Early debt extinguishment and other related costs resulting from repayment of borrowings;
|
•
|
Cost of disposition of claims against operations that were discontinued by Solutia, Inc. ("Solutia") prior to the Company's acquisition of Solutia in 2012;
|
•
|
Gain from sale of the formulated electronics cleaning solutions business, which was part of the Additives & Functional Products segment; and
|
•
|
Tax benefit associated with a previously impaired site.
|
•
|
Costs of, and income from insurance for, the coal gasification incident;
|
•
|
Costs of currency transaction and professional fees resulting from fourth quarter 2017 tax law changes and related outside-U.S. entity reorganizations; and
|
•
|
Estimated net tax benefit recognized in fourth quarter 2017 resulting from tax law changes, primarily the Tax Reform Act, and tax impact of related outside-U.S. entity reorganizations and related subsequent adjustments recognized in 2018 and 2019.
|
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Non-core items impacting EBIT:
|
|
|
|
|
|
||||||
Mark-to-market pension and other postretirement benefits (gain) loss, net
|
$
|
143
|
|
|
$
|
99
|
|
|
$
|
(21
|
)
|
Asset impairments and restructuring charges, net
|
126
|
|
|
45
|
|
|
8
|
|
|||
Cost of disposition of claims against discontinued Solutia operations
|
—
|
|
|
—
|
|
|
9
|
|
|||
Gains from sale of businesses
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Unusual items impacting EBIT:
|
|
|
|
|
|
||||||
Net coal gasification incident (insurance) costs
|
—
|
|
|
(83
|
)
|
|
112
|
|
|||
Costs resulting from tax law changes and outside-U.S. entity reorganizations
|
—
|
|
|
20
|
|
|
—
|
|
|||
Total non-core and unusual items impacting EBIT
|
269
|
|
|
81
|
|
|
105
|
|
|||
Non-core item impacting earnings before income taxes:
|
|
|
|
|
|
||||||
Early debt extinguishment and other related costs
|
—
|
|
|
7
|
|
|
—
|
|
|||
Total non-core item impacting earnings before income taxes
|
—
|
|
|
7
|
|
|
—
|
|
|||
Less: Items impacting provision for (benefit from) income taxes:
|
|
|
|
|
|
||||||
Tax effect for non-core and unusual items
|
47
|
|
|
16
|
|
|
30
|
|
|||
Tax benefit associated with previously impaired site
|
—
|
|
|
—
|
|
|
8
|
|
|||
Estimated net tax (expense) benefit from tax law changes and tax loss from outside-U.S. entity reorganizations
|
(7
|
)
|
|
(20
|
)
|
|
339
|
|
|||
Total items impacting provision for (benefit from) income taxes
|
40
|
|
|
(4
|
)
|
|
377
|
|
|||
Total items impacting net earnings attributable to Eastman
|
$
|
229
|
|
|
$
|
92
|
|
|
$
|
(272
|
)
|
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Other components of post-employment (benefit) cost, net
|
$
|
60
|
|
|
$
|
(21
|
)
|
|
$
|
(135
|
)
|
Service cost
|
41
|
|
|
49
|
|
|
53
|
|
|||
Net periodic benefit (credit) cost
|
101
|
|
|
28
|
|
|
(82
|
)
|
|||
Less: Mark-to-market (gain) loss
|
143
|
|
|
99
|
|
|
(21
|
)
|
|||
Components of post-employment (benefit) cost, net included in non-GAAP earnings measures
|
$
|
(42
|
)
|
|
$
|
(71
|
)
|
|
$
|
(61
|
)
|
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Actual return and percentage of return on assets
|
$
|
406
|
|
|
15
|
%
|
|
$
|
(82
|
)
|
|
(3
|
)%
|
|
$
|
314
|
|
|
11
|
%
|
Less: expected return on assets
|
165
|
|
|
6
|
%
|
|
189
|
|
|
7
|
%
|
|
180
|
|
|
7
|
%
|
|||
Mark-to-market (loss) gain on assets
|
241
|
|
|
|
|
(271
|
)
|
|
|
|
134
|
|
|
|
||||||
Actuarial (loss) gain
|
(384
|
)
|
|
|
|
172
|
|
|
|
|
(113
|
)
|
|
|
||||||
Total mark-to-market (loss) gain
|
$
|
(143
|
)
|
|
|
|
$
|
(99
|
)
|
|
|
|
$
|
21
|
|
|
|
•
|
Gross profit,
|
•
|
Selling, general and administrative ("SG&A") expenses,
|
•
|
Other components of post-employment (benefit) cost, net,
|
•
|
Other (income) charges, net,
|
•
|
EBIT,
|
•
|
Provision for (benefit from) income taxes,
|
•
|
Net earnings attributable to Eastman,
|
•
|
Diluted EPS, and
|
•
|
Net cash provided by operating activities.
|
|
2019
|
|
2018
|
||||||||||||
(Dollars in millions, except diluted EPS)
|
$
|
|
EPS
|
|
$
|
|
EPS
|
||||||||
Net earnings attributable to Eastman
|
$
|
759
|
|
|
$
|
5.48
|
|
|
$
|
1,080
|
|
|
$
|
7.56
|
|
Total non-core and unusual items, net of tax
|
229
|
|
|
1.65
|
|
|
92
|
|
|
0.64
|
|
||||
Net earnings attributable to Eastman excluding non-core and unusual items
|
$
|
988
|
|
|
$
|
7.13
|
|
|
$
|
1,172
|
|
|
$
|
8.20
|
|
|
2019 Compared to 2018
|
|
2018 Compared to 2017
|
||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Sales
|
$
|
9,273
|
|
|
$
|
10,151
|
|
|
(9
|
)%
|
|
$
|
10,151
|
|
|
$
|
9,549
|
|
|
6
|
%
|
Volume / product mix effect
|
|
|
|
|
|
|
(4
|
)%
|
|
|
|
|
|
|
|
2
|
%
|
||||
Price effect
|
|
|
|
|
|
|
(4
|
)%
|
|
|
|
|
|
|
|
3
|
%
|
||||
Exchange rate effect
|
|
|
|
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|
1
|
%
|
|
2019 Compared to 2018
|
|
2018 Compared to 2017
|
||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Gross profit
|
$
|
2,234
|
|
|
$
|
2,479
|
|
|
(10
|
)%
|
|
$
|
2,479
|
|
|
$
|
2,363
|
|
|
5
|
%
|
Net coal gasification incident (insurance) costs
|
—
|
|
|
(18
|
)
|
|
|
|
(18
|
)
|
|
112
|
|
|
|
||||||
Gross profit excluding unusual item
|
$
|
2,234
|
|
|
$
|
2,461
|
|
|
(9
|
)%
|
|
$
|
2,461
|
|
|
$
|
2,475
|
|
|
(1
|
)%
|
|
2019 Compared to 2018
|
|
2018 Compared to 2017
|
||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Selling, general and administrative expenses
|
$
|
691
|
|
|
$
|
721
|
|
|
(4
|
)%
|
|
$
|
721
|
|
|
$
|
729
|
|
|
(1
|
)%
|
Costs resulting from tax law changes and outside-U.S. entity reorganizations
|
—
|
|
|
(7
|
)
|
|
|
|
(7
|
)
|
|
—
|
|
|
|
||||||
Selling, general and administrative expenses excluding unusual item
|
$
|
691
|
|
|
$
|
714
|
|
|
(3
|
)%
|
|
$
|
714
|
|
|
$
|
729
|
|
|
(2
|
)%
|
|
2019 Compared to 2018
|
|
2018 Compared to 2017
|
||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Research and development expenses
|
$
|
234
|
|
|
$
|
235
|
|
|
—
|
%
|
|
$
|
235
|
|
|
$
|
227
|
|
|
4
|
%
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Asset impairments
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Intangible asset and goodwill impairments
|
45
|
|
|
39
|
|
|
—
|
|
|||
Severance charges
|
45
|
|
|
6
|
|
|
6
|
|
|||
Site closure and restructuring charges
|
9
|
|
|
—
|
|
|
1
|
|
|||
Total
|
$
|
126
|
|
|
$
|
45
|
|
|
$
|
8
|
|
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign exchange transaction losses (gains), net (1)
|
$
|
9
|
|
|
$
|
12
|
|
|
$
|
5
|
|
Currency transaction costs resulting from tax law changes and outside-U.S. entity reorganizations
|
—
|
|
|
13
|
|
|
—
|
|
|||
(Income) loss from equity investments and other investment (gains) losses, net
|
(10
|
)
|
|
(17
|
)
|
|
(12
|
)
|
|||
Coal gasification incident property insurance
|
—
|
|
|
(65
|
)
|
|
—
|
|
|||
Cost of disposition of claims against discontinued Solutia operations
|
—
|
|
|
—
|
|
|
9
|
|
|||
Gain from sale of business (2)
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Other, net
|
4
|
|
|
4
|
|
|
5
|
|
|||
Other (income) charges, net
|
$
|
3
|
|
|
$
|
(53
|
)
|
|
$
|
4
|
|
Currency transaction costs resulting from tax law changes and outside-U.S. entity reorganizations
|
—
|
|
|
(13
|
)
|
|
—
|
|
|||
Coal gasification incident property insurance
|
—
|
|
|
65
|
|
|
—
|
|
|||
Cost of disposition of claims against discontinued Solutia operations
|
—
|
|
|
—
|
|
|
(9
|
)
|
|||
Gain from sale of business (2)
|
—
|
|
|
—
|
|
|
3
|
|
|||
Other (income) charges, net excluding non-core and unusual items
|
$
|
3
|
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
(1)
|
Net impact of revaluation of foreign entity assets and liabilities and effect of foreign exchange non-qualifying derivatives.
|
(2)
|
Gain from sale of the AFP segment formulated electronic cleaning solution business.
|
|
2019 Compared to 2018
|
2018 Compared to 2017
|
|||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
EBIT
|
$
|
1,120
|
|
|
$
|
1,552
|
|
|
(28
|
)%
|
|
$
|
1,552
|
|
|
$
|
1,530
|
|
|
1
|
%
|
Mark-to-market pension and other postretirement benefit (gain) loss, net
|
143
|
|
|
99
|
|
|
|
|
|
99
|
|
|
(21
|
)
|
|
|
|
||||
Net coal gasification incident (insurance) costs
|
—
|
|
|
(83
|
)
|
|
|
|
(83
|
)
|
|
112
|
|
|
|
||||||
Asset impairments and restructuring charges, net
|
126
|
|
|
45
|
|
|
|
|
|
45
|
|
|
8
|
|
|
|
|
||||
Costs resulting from tax law changes and outside-U.S. entity reorganizations
|
—
|
|
|
20
|
|
|
|
|
20
|
|
|
—
|
|
|
|
||||||
Cost of disposition of claims against discontinued Solutia operations
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
9
|
|
|
|
||||||
Gains from sale of businesses
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(3
|
)
|
|
|
||||||
EBIT excluding non-core and unusual items
|
$
|
1,389
|
|
|
$
|
1,633
|
|
|
(15
|
)%
|
|
$
|
1,633
|
|
|
$
|
1,635
|
|
|
—
|
%
|
|
2019 Compared to 2018
|
2018 Compared to 2017
|
|||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Gross interest expense
|
$
|
225
|
|
|
$
|
242
|
|
|
|
|
$
|
242
|
|
|
$
|
251
|
|
|
|
||
Less: Capitalized interest
|
4
|
|
|
4
|
|
|
|
|
4
|
|
|
7
|
|
|
|
||||||
Interest Expense
|
221
|
|
|
238
|
|
|
|
|
238
|
|
|
244
|
|
|
|
||||||
Less: Interest income
|
3
|
|
|
3
|
|
|
|
|
3
|
|
|
3
|
|
|
|
||||||
Net interest expense
|
$
|
218
|
|
|
$
|
235
|
|
|
(7
|
)%
|
|
$
|
235
|
|
|
$
|
241
|
|
|
(2
|
)%
|
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
Provision for (benefit from) income taxes and effective tax rate
|
$
|
140
|
|
|
16
|
%
|
|
$
|
226
|
|
|
17
|
%
|
|
$
|
(99
|
)
|
|
(8
|
)%
|
Tax provision for non-core and unusual items(1)
|
47
|
|
|
|
|
16
|
|
|
|
|
30
|
|
|
|
||||||
Tax benefit associated with previously impaired site
|
—
|
|
|
|
|
—
|
|
|
|
|
8
|
|
|
|
||||||
Estimated net tax (expense) benefit from tax law changes and tax loss from outside-U.S. entity reorganizations
|
(7
|
)
|
|
|
|
(20
|
)
|
|
|
|
339
|
|
|
|
||||||
Adjusted provision for income taxes and effective tax rate
|
$
|
180
|
|
|
15
|
%
|
|
$
|
222
|
|
|
16%
|
|
$
|
278
|
|
|
20
|
%
|
(1)
|
Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
(Dollars in millions, except per share amounts)
|
$
|
|
EPS
|
|
$
|
|
EPS
|
|
$
|
|
EPS
|
||||||||||||
Net earnings and diluted earnings per share attributable to Eastman
|
$
|
759
|
|
|
$
|
5.48
|
|
|
$
|
1,080
|
|
|
$
|
7.56
|
|
|
$
|
1,384
|
|
|
$
|
9.47
|
|
Non-core items, net of tax: (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mark-to-market pension and other postretirement benefit (gain) loss, net
|
109
|
|
|
0.79
|
|
|
75
|
|
|
0.52
|
|
|
(14
|
)
|
|
(0.09
|
)
|
||||||
Asset impairments and restructuring charges (gain), net
|
113
|
|
|
0.81
|
|
|
43
|
|
|
0.30
|
|
|
(3
|
)
|
|
(0.02
|
)
|
||||||
Early debt extinguishment and other related costs
|
—
|
|
|
—
|
|
|
6
|
|
|
0.04
|
|
|
—
|
|
|
—
|
|
||||||
Cost of disposition of claims against discontinued Solutia operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
0.03
|
|
||||||
Gains from sale of businesses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(0.01
|
)
|
||||||
Unusual items, net of tax: (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net coal gasification incident (insurance) costs
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
(0.47
|
)
|
|
80
|
|
|
0.55
|
|
||||||
Estimated net tax expense (benefit) from tax law changes and tax loss from outside-U.S. entity reorganizations
|
7
|
|
|
0.05
|
|
|
20
|
|
|
0.14
|
|
|
(339
|
)
|
|
(2.32
|
)
|
||||||
Costs resulting from tax law changes and outside-U.S. entity reorganizations
|
—
|
|
|
—
|
|
|
15
|
|
|
0.11
|
|
|
—
|
|
|
—
|
|
||||||
Adjusted net earnings and diluted earnings per share attributable to Eastman
|
$
|
988
|
|
|
$
|
7.13
|
|
|
$
|
1,172
|
|
|
$
|
8.20
|
|
|
$
|
1,112
|
|
|
$
|
7.61
|
|
(1)
|
The provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
|
Additives & Functional Products Segment
|
||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
2019 Compared to 2018
|
|
2018 Compared to 2017
|
|||||||||||||||||||||
|
|
|
|
|
|
Change
|
|
|
|
|
|
Change
|
||||||||||||
(Dollars in millions)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
3,273
|
|
$
|
3,647
|
|
$
|
(374
|
)
|
|
(10
|
)%
|
$
|
3,647
|
|
$
|
3,343
|
|
$
|
304
|
|
|
9
|
%
|
Volume / product mix effect
|
|
|
|
|
|
(177
|
)
|
|
(5
|
)%
|
|
|
|
|
|
151
|
|
|
4
|
%
|
||||
Price effect
|
|
|
|
|
|
(133
|
)
|
|
(3
|
)%
|
|
|
|
|
|
98
|
|
|
3
|
%
|
||||
Exchange rate effect
|
|
|
|
|
|
(64
|
)
|
|
(2
|
)%
|
|
|
|
|
|
55
|
|
|
2
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
EBIT
|
$
|
496
|
|
$
|
639
|
|
$
|
(143
|
)
|
|
(22
|
)%
|
$
|
639
|
|
$
|
653
|
|
$
|
(14
|
)
|
|
(2
|
)%
|
Asset impairments and restructuring charges, net
|
|
54
|
|
|
38
|
|
|
16
|
|
|
|
|
38
|
|
|
3
|
|
|
35
|
|
|
|
||
Gain from sale of business
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(3
|
)
|
|
3
|
|
|
|
||
Net coal gasification incident (insurance) costs
|
|
—
|
|
|
(6
|
)
|
|
6
|
|
|
|
|
(6
|
)
|
|
8
|
|
|
(14
|
)
|
|
|
||
EBIT excluding non-core and unusual items
|
|
550
|
|
|
671
|
|
|
(121
|
)
|
|
(18
|
)%
|
|
671
|
|
|
661
|
|
|
10
|
|
|
2
|
%
|
•
|
advanced growth and innovation of Regalite™ UltraPure hydrocarbon resin, a new class of clean tackifying hydrocarbon resins, through a capacity expansion at the Middelburg, Netherlands manufacturing site;
|
•
|
acquired the Marlotherm™ heat transfer assets in Marl, Germany and the related formulations, intellectual property, and customer contracts, as a targeted addition to the specialty fluids business;
|
•
|
advanced growth of Impera™ resins through capacity expansions for the production of performance resins for tires at both the Middelburg, Netherlands, and Jefferson, Pennsylvania, manufacturing sites to serve demand from tire manufacturers around the world for product solutions that enable improved safety, efficiency, and performance;
|
•
|
continued to enhance our ability to serve the global customer base in low volatile organic compound ("VOC") coatings and other markets by completing the final phase of a ketones capacity expansion at the Kingsport, Tennessee manufacturing site in fourth quarter 2019; and
|
•
|
responded to growing demand for purified water and sustainable waste water treatment across the globe with world scale production units for Dimethylaminoethanol ("DMAE"/"DMEA") in Europe (Belgium) and North America (Louisiana) and decided to expand capacity in China to respond to stricter regulation and rapidly growing demand in Asia (DMAE is used as a key component into flocculants that are critical for municipal and industrial water treatments).
|
Advanced Materials Segment
|
||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
2019 Compared to 2018
|
|
2018 Compared to 2017
|
|||||||||||||||||||||
|
|
|
|
|
|
Change
|
|
|
|
|
|
Change
|
||||||||||||
(Dollars in millions)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
2,688
|
|
$
|
2,755
|
|
$
|
(67
|
)
|
|
(2
|
)%
|
$
|
2,755
|
|
$
|
2,572
|
|
$
|
183
|
|
|
7
|
%
|
Volume / product mix effect
|
|
|
|
|
|
(25
|
)
|
|
(1
|
)%
|
|
|
|
|
|
130
|
|
|
5
|
%
|
||||
Price effect
|
|
|
|
|
|
—
|
|
|
—
|
%
|
|
|
|
|
|
22
|
|
|
1
|
%
|
||||
Exchange rate effect
|
|
|
|
|
|
(42
|
)
|
|
(1
|
)%
|
|
|
|
|
|
31
|
|
|
1
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
EBIT
|
$
|
517
|
|
$
|
509
|
|
$
|
8
|
|
|
2
|
%
|
$
|
509
|
|
$
|
483
|
|
$
|
26
|
|
|
5
|
%
|
Asset impairments and restructuring charges, net
|
|
1
|
|
|
1
|
|
|
—
|
|
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
|
||
Net coal gasification incident (insurance) costs
|
|
—
|
|
|
(9
|
)
|
|
9
|
|
|
|
|
(9
|
)
|
|
11
|
|
|
(20
|
)
|
|
|
||
EBIT excluding non-core and unusual items
|
|
518
|
|
|
501
|
|
|
17
|
|
|
3
|
%
|
|
501
|
|
|
494
|
|
|
7
|
|
|
1
|
%
|
•
|
continued the growth of Tritan™ copolyester in the durable goods and health and wellness markets, supported by continued market and application development;
|
•
|
strengthened growth in automotive paint protection films in North America and China through an improved sales channel, marketing, and commercial execution strategies and capabilities;
|
•
|
finalized development and announced the launch of Eastman CORE (trademark and patent pending) next generation analytics-based software platform for automotive window and paint protection film products, enabling more efficient application and overall business management for dealers; and
|
•
|
developed and enhanced Eastman's sustainability capabilities and commercial opportunities, including strategic collaborations with third parties to secure a consistent source of recyclable copolyester feedstock and to innovate new sustainable specialty plastic solutions.
|
Chemical Intermediates Segment
|
||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
2019 Compared to 2018
|
|
2018 Compared to 2017
|
|||||||||||||||||||||
|
|
|
|
|
|
Change
|
|
|
|
|
|
Change
|
||||||||||||
(Dollars in millions)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
2,443
|
|
$
|
2,831
|
|
$
|
(388
|
)
|
|
(14
|
)%
|
$
|
2,831
|
|
$
|
2,728
|
|
$
|
103
|
|
|
4
|
%
|
Volume / product mix effect
|
|
|
|
|
|
(122
|
)
|
|
(4
|
)%
|
|
|
|
|
|
(142
|
)
|
|
(5
|
)%
|
||||
Price effect
|
|
|
|
|
|
(247
|
)
|
|
(9
|
)%
|
|
|
|
|
|
229
|
|
|
8
|
%
|
||||
Exchange rate effect
|
|
|
|
|
|
(19
|
)
|
|
(1
|
)%
|
|
|
|
|
|
16
|
|
|
1
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
EBIT
|
$
|
170
|
|
$
|
308
|
|
$
|
(138
|
)
|
|
(45
|
)%
|
$
|
308
|
|
$
|
255
|
|
$
|
53
|
|
|
21
|
%
|
Asset impairments and restructuring charges, net
|
|
22
|
|
|
—
|
|
|
22
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||
Net coal gasification incident (insurance) costs
|
|
—
|
|
|
(30
|
)
|
|
30
|
|
|
|
|
(30
|
)
|
|
44
|
|
|
(74
|
)
|
|
|
||
EBIT excluding unusual item
|
|
192
|
|
|
278
|
|
|
(86
|
)
|
|
(31
|
)%
|
|
278
|
|
|
299
|
|
|
(21
|
)
|
|
(7
|
)%
|
Fibers Segment
|
||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
2019 Compared to 2018
|
|
2018 Compared to 2017
|
|||||||||||||||||||||
(Dollars in millions)
|
|
|
|
|
Change
|
|
|
|
|
|
Change
|
|||||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales
|
$
|
869
|
|
$
|
918
|
|
$
|
(49
|
)
|
|
(5
|
)%
|
$
|
918
|
|
$
|
852
|
|
$
|
66
|
|
|
8
|
%
|
Volume / product mix effect
|
|
|
|
|
|
(38
|
)
|
|
(4
|
)%
|
|
|
|
|
|
95
|
|
|
11
|
%
|
||||
Price effect
|
|
|
|
|
|
(7
|
)
|
|
(1
|
)%
|
|
|
|
|
|
(30
|
)
|
|
(3
|
)%
|
||||
Exchange rate effect
|
|
|
|
|
|
(4
|
)
|
|
—
|
%
|
|
|
|
|
|
1
|
|
|
—
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
EBIT
|
$
|
194
|
|
$
|
257
|
|
$
|
(63
|
)
|
|
(25
|
)%
|
$
|
257
|
|
$
|
181
|
|
$
|
76
|
|
|
42
|
%
|
Net coal gasification incident (insurance) costs
|
|
—
|
|
|
(38
|
)
|
|
38
|
|
|
|
|
|
(38
|
)
|
|
49
|
|
|
(87
|
)
|
|
|
|
EBIT excluding non-core and unusual items
|
|
194
|
|
|
219
|
|
|
(25
|
)
|
|
(11
|
)%
|
|
219
|
|
|
230
|
|
|
(11
|
)
|
|
(5
|
)%
|
(Dollars in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
|
||||||
Sales
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
54
|
|
|
|
|
|
|
|
|
||||||
Loss before interest and taxes
|
|
|
|
|
|
|
||||||
Growth initiatives and businesses not allocated to operating segments
|
|
$
|
(102
|
)
|
|
$
|
(114
|
)
|
|
$
|
(114
|
)
|
Pension and other postretirement benefit plans income (expense), net not allocated to operating segments
|
|
(97
|
)
|
|
(17
|
)
|
|
93
|
|
|||
Asset impairments and restructuring charges, net
|
|
(49
|
)
|
|
(6
|
)
|
|
(5
|
)
|
|||
Other income (charges), net not allocated to operating segments
|
|
(9
|
)
|
|
(24
|
)
|
|
(16
|
)
|
|||
Loss before interest and taxes before non-core and unusual items
|
|
$
|
(257
|
)
|
|
$
|
(161
|
)
|
|
$
|
(42
|
)
|
Mark-to-market pension and other postretirement benefit plans (gain) loss, net
|
|
143
|
|
|
99
|
|
|
(21
|
)
|
|||
Asset impairments and restructuring charges, net
|
|
49
|
|
|
6
|
|
|
5
|
|
|||
Cost of disposition of claims against discontinued Solutia operations
|
|
—
|
|
|
—
|
|
|
9
|
|
|||
Costs resulting from tax law changes and outside-U.S. entity reorganizations
|
|
—
|
|
|
20
|
|
|
—
|
|
|||
Loss before interest and taxes excluding non-core and unusual items
|
|
(65
|
)
|
|
(36
|
)
|
|
(49
|
)
|
|
Sales Revenue
|
||||||||||||||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
Change
|
|||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
$
|
%
|
|
2018
|
|
2017
|
|
$
|
%
|
||||||||||||||
United States and Canada
|
$
|
3,885
|
|
|
$
|
4,303
|
|
|
$
|
(418
|
)
|
(10
|
)%
|
|
$
|
4,303
|
|
|
$
|
4,189
|
|
|
$
|
114
|
|
3
|
%
|
Europe, Middle East, and Africa
|
2,544
|
|
|
2,756
|
|
|
(212
|
)
|
(8
|
)%
|
|
2,756
|
|
|
2,539
|
|
|
217
|
|
9
|
%
|
||||||
Asia Pacific
|
2,278
|
|
|
2,504
|
|
|
(226
|
)
|
(9
|
)%
|
|
2,504
|
|
|
2,306
|
|
|
198
|
|
9
|
%
|
||||||
Latin America
|
566
|
|
|
588
|
|
|
(22
|
)
|
(4
|
)%
|
|
588
|
|
|
515
|
|
|
73
|
|
14
|
%
|
||||||
Total
|
$
|
9,273
|
|
|
$
|
10,151
|
|
|
$
|
(878
|
)
|
(9
|
)%
|
|
$
|
10,151
|
|
|
$
|
9,549
|
|
|
$
|
602
|
|
6
|
%
|
(Dollars in millions)
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash and cash equivalents
|
$
|
204
|
|
|
$
|
226
|
|
|
$
|
191
|
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
1,504
|
|
|
$
|
1,543
|
|
|
$
|
1,657
|
|
Investing activities
|
(480
|
)
|
|
(463
|
)
|
|
(643
|
)
|
|||
Financing activities
|
(1,043
|
)
|
|
(1,040
|
)
|
|
(1,006
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(3
|
)
|
|
(5
|
)
|
|
2
|
|
|||
Net change in cash and cash equivalents
|
(22
|
)
|
|
35
|
|
|
10
|
|
|||
Cash and cash equivalents at beginning of period
|
226
|
|
|
191
|
|
|
181
|
|
|||
Cash and cash equivalents at end of period
|
$
|
204
|
|
|
$
|
226
|
|
|
$
|
191
|
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
1,504
|
|
|
$
|
1,543
|
|
|
$
|
1,657
|
|
Capital expenditures
|
|
|
|
|
|
||||||
Additions to properties and equipment
|
(425
|
)
|
|
(528
|
)
|
|
(649
|
)
|
|||
Proceeds from property insurance (1)
|
—
|
|
|
65
|
|
|
—
|
|
|||
Net capital expenditures
|
(425
|
)
|
|
(463
|
)
|
|
(649
|
)
|
|||
Free cash flow
|
$
|
1,079
|
|
|
$
|
1,080
|
|
|
$
|
1,008
|
|
(1)
|
Cash proceeds from insurance for coal gasification incident property damage.
|
(Dollars in millions)
|
|
Payments Due for
|
||||||||||||||||||||||||||
Period
|
|
Debt Securities
|
|
Credit Facilities and Other
|
|
Interest Payable
|
|
Purchase Obligations
|
|
Operating Leases
|
|
Other Liabilities
|
|
Total
|
||||||||||||||
2020
|
|
$
|
—
|
|
|
$
|
171
|
|
|
$
|
173
|
|
|
$
|
181
|
|
|
$
|
62
|
|
|
$
|
241
|
|
|
$
|
828
|
|
2021
|
|
483
|
|
|
—
|
|
|
186
|
|
|
156
|
|
|
49
|
|
|
81
|
|
|
955
|
|
|||||||
2022
|
|
741
|
|
|
—
|
|
|
175
|
|
|
102
|
|
|
38
|
|
|
87
|
|
|
1,143
|
|
|||||||
2023
|
|
840
|
|
|
—
|
|
|
156
|
|
|
91
|
|
|
25
|
|
|
87
|
|
|
1,199
|
|
|||||||
2024
|
|
240
|
|
|
—
|
|
|
137
|
|
|
100
|
|
|
14
|
|
|
89
|
|
|
580
|
|
|||||||
2025 and beyond
|
|
3,307
|
|
|
—
|
|
|
1,414
|
|
|
1,967
|
|
|
30
|
|
|
1,106
|
|
|
7,824
|
|
|||||||
Total
|
|
$
|
5,611
|
|
|
$
|
171
|
|
|
$
|
2,241
|
|
|
$
|
2,597
|
|
|
$
|
218
|
|
|
$
|
1,691
|
|
|
$
|
12,529
|
|
•
|
earnings to benefit from higher sales volume due to increased new business revenue, less market and customer inventory destocking, and stable growth in some end-markets, actions to reduce operating costs by $20 million to $40 million, and lower pension and depreciation costs;
|
•
|
earnings to be negatively impacted by lower product margins in the CI segment and adhesive resins, tire additives, and animal nutrition products in the AFP segment, higher variable compensation costs, and a stronger U.S. dollar;
|
•
|
interest expense of approximately $215 million;
|
•
|
the full-year effective tax rate on reported earnings before income tax to be similar to 2019;
|
•
|
depreciation and amortization of approximately $560 million;
|
•
|
capital expenditures between $450 million and $475 million;
|
•
|
debt reduction greater than $400 million; and
|
•
|
continued share repurchases.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Mark J. Costa
|
|
/s/ Curtis E. Espeland
|
Mark J. Costa
|
|
Curtis E. Espeland
|
Chief Executive Officer
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|
February 26, 2020
|
|
February 26, 2020
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions, except per share amounts)
|
2019
|
|
2018
|
|
2017
|
||||||
Sales
|
$
|
9,273
|
|
|
$
|
10,151
|
|
|
$
|
9,549
|
|
Cost of sales
|
7,039
|
|
|
7,672
|
|
|
7,186
|
|
|||
Gross profit
|
2,234
|
|
|
2,479
|
|
|
2,363
|
|
|||
Selling, general and administrative expenses
|
691
|
|
|
721
|
|
|
729
|
|
|||
Research and development expenses
|
234
|
|
|
235
|
|
|
227
|
|
|||
Asset impairments and restructuring charges, net
|
126
|
|
|
45
|
|
|
8
|
|
|||
Other components of post-employment (benefit) cost, net
|
60
|
|
|
(21
|
)
|
|
(135
|
)
|
|||
Other (income) charges, net
|
3
|
|
|
(53
|
)
|
|
4
|
|
|||
Earnings before interest and taxes
|
1,120
|
|
|
1,552
|
|
|
1,530
|
|
|||
Net interest expense
|
218
|
|
|
235
|
|
|
241
|
|
|||
Early debt extinguishment and other related costs
|
—
|
|
|
7
|
|
|
—
|
|
|||
Earnings before income taxes
|
902
|
|
|
1,310
|
|
|
1,289
|
|
|||
Provision for (benefit from) income taxes
|
140
|
|
|
226
|
|
|
(99
|
)
|
|||
Net earnings
|
762
|
|
|
1,084
|
|
|
1,388
|
|
|||
Less: Net earnings attributable to noncontrolling interest
|
3
|
|
|
4
|
|
|
4
|
|
|||
Net earnings attributable to Eastman
|
$
|
759
|
|
|
$
|
1,080
|
|
|
$
|
1,384
|
|
|
|
|
|
|
|
|
|
|
|||
Basic earnings per share attributable to Eastman
|
$
|
5.52
|
|
|
$
|
7.65
|
|
|
$
|
9.56
|
|
Diluted earnings per share attributable to Eastman
|
$
|
5.48
|
|
|
$
|
7.56
|
|
|
$
|
9.47
|
|
Comprehensive Income
|
|
|
|
|
|
||||||
Net earnings including noncontrolling interest
|
$
|
762
|
|
|
$
|
1,084
|
|
|
$
|
1,388
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Change in cumulative translation adjustment
|
45
|
|
|
(13
|
)
|
|
85
|
|
|||
Defined benefit pension and other postretirement benefit plans:
|
|
|
|
|
|
||||||
Amortization of unrecognized prior service credits included in net periodic costs
|
(29
|
)
|
|
(30
|
)
|
|
(27
|
)
|
|||
Derivatives and hedging:
|
|
|
|
|
|
||||||
Unrealized gain (loss) during period
|
(20
|
)
|
|
22
|
|
|
7
|
|
|||
Reclassification adjustment for (gains) losses included in net income, net
|
15
|
|
|
(15
|
)
|
|
7
|
|
|||
Total other comprehensive income (loss), net of tax
|
11
|
|
|
(36
|
)
|
|
72
|
|
|||
Comprehensive income including noncontrolling interest
|
773
|
|
|
1,048
|
|
|
1,460
|
|
|||
Less: Comprehensive income attributable to noncontrolling interest
|
3
|
|
|
4
|
|
|
4
|
|
|||
Comprehensive income attributable to Eastman
|
$
|
770
|
|
|
$
|
1,044
|
|
|
$
|
1,456
|
|
Retained Earnings
|
|
|
|
|
|
||||||
Retained earnings at beginning of period
|
$
|
7,573
|
|
|
$
|
6,802
|
|
|
$
|
5,721
|
|
Cumulative effect adjustment resulting from adoption of new accounting standards
|
(20
|
)
|
|
16
|
|
|
—
|
|
|||
Net earnings attributable to Eastman
|
759
|
|
|
1,080
|
|
|
1,384
|
|
|||
Cash dividends declared
|
(347
|
)
|
|
(325
|
)
|
|
(303
|
)
|
|||
Retained earnings at end of period
|
$
|
7,965
|
|
|
$
|
7,573
|
|
|
$
|
6,802
|
|
|
December 31,
|
|
December 31,
|
||||
(Dollars in millions, except per share amounts)
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
204
|
|
|
$
|
226
|
|
Trade receivables, net of allowance for doubtful accounts
|
980
|
|
|
1,154
|
|
||
Miscellaneous receivables
|
395
|
|
|
329
|
|
||
Inventories
|
1,662
|
|
|
1,583
|
|
||
Other current assets
|
80
|
|
|
73
|
|
||
Total current assets
|
3,321
|
|
|
3,365
|
|
||
Properties
|
|
|
|
||||
Properties and equipment at cost
|
12,904
|
|
|
12,731
|
|
||
Less: Accumulated depreciation
|
7,333
|
|
|
7,131
|
|
||
Net properties
|
5,571
|
|
|
5,600
|
|
||
Goodwill
|
4,431
|
|
|
4,467
|
|
||
Intangible assets, net of accumulated amortization
|
2,011
|
|
|
2,185
|
|
||
Other noncurrent assets
|
674
|
|
|
378
|
|
||
Total assets
|
$
|
16,008
|
|
|
$
|
15,995
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Payables and other current liabilities
|
$
|
1,618
|
|
|
$
|
1,608
|
|
Borrowings due within one year
|
171
|
|
|
243
|
|
||
Total current liabilities
|
1,789
|
|
|
1,851
|
|
||
Long-term borrowings
|
5,611
|
|
|
5,925
|
|
||
Deferred income tax liabilities
|
915
|
|
|
884
|
|
||
Post-employment obligations
|
1,016
|
|
|
925
|
|
||
Other long-term liabilities
|
645
|
|
|
532
|
|
||
Total liabilities
|
9,976
|
|
|
10,117
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
||||
Stockholders' equity
|
|
|
|
||||
Common stock ($0.01 par value per share – 350,000,000 shares authorized; shares issued – 219,638,646 and 219,140,523 for 2019 and 2018, respectively)
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
2,105
|
|
|
2,048
|
|
||
Retained earnings
|
7,965
|
|
|
7,573
|
|
||
Accumulated other comprehensive loss
|
(214
|
)
|
|
(245
|
)
|
||
|
9,858
|
|
|
9,378
|
|
||
Less: Treasury stock at cost (83,696,398 shares for 2019 and 79,413,989 shares for 2018)
|
3,900
|
|
|
3,575
|
|
||
Total Eastman stockholders' equity
|
5,958
|
|
|
5,803
|
|
||
Noncontrolling interest
|
74
|
|
|
75
|
|
||
Total equity
|
6,032
|
|
|
5,878
|
|
||
Total liabilities and stockholders' equity
|
$
|
16,008
|
|
|
$
|
15,995
|
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net earnings
|
$
|
762
|
|
|
$
|
1,084
|
|
|
$
|
1,388
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
611
|
|
|
604
|
|
|
587
|
|
|||
Mark-to-market pension and other postretirement benefit plans (gain) loss, net
|
143
|
|
|
99
|
|
|
(21
|
)
|
|||
Asset impairment charges
|
72
|
|
|
39
|
|
|
1
|
|
|||
Early debt extinguishment and other related costs
|
—
|
|
|
7
|
|
|
—
|
|
|||
Gains from sale of assets and businesses
|
—
|
|
|
(4
|
)
|
|
(3
|
)
|
|||
Gain from property insurance
|
—
|
|
|
(65
|
)
|
|
—
|
|
|||
Provision for (benefit from) deferred income taxes
|
23
|
|
|
(51
|
)
|
|
(394
|
)
|
|||
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
|
|
|
|
|
|
||||||
(Increase) decrease in trade receivables
|
170
|
|
|
16
|
|
|
(53
|
)
|
|||
(Increase) decrease in inventories
|
(80
|
)
|
|
(224
|
)
|
|
(71
|
)
|
|||
Increase (decrease) in trade payables
|
(27
|
)
|
|
90
|
|
|
123
|
|
|||
Pension and other postretirement contributions (in excess of) less than expenses
|
(119
|
)
|
|
(152
|
)
|
|
(115
|
)
|
|||
Variable compensation (in excess of) less than expenses
|
38
|
|
|
55
|
|
|
71
|
|
|||
Other items, net
|
(89
|
)
|
|
45
|
|
|
144
|
|
|||
Net cash provided by operating activities
|
1,504
|
|
|
1,543
|
|
|
1,657
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Additions to properties and equipment
|
(425
|
)
|
|
(528
|
)
|
|
(649
|
)
|
|||
Proceeds from property insurance
|
—
|
|
|
65
|
|
|
—
|
|
|||
Proceeds from sale of assets and businesses
|
—
|
|
|
5
|
|
|
14
|
|
|||
Acquisitions, net of cash acquired
|
(48
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|||
Other items, net
|
(7
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|||
Net cash used in investing activities
|
(480
|
)
|
|
(463
|
)
|
|
(643
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net increase (decrease) in commercial paper and other borrowings
|
(70
|
)
|
|
(146
|
)
|
|
(19
|
)
|
|||
Proceeds from borrowings
|
460
|
|
|
1,604
|
|
|
675
|
|
|||
Repayment of borrowings
|
(760
|
)
|
|
(1,774
|
)
|
|
(1,025
|
)
|
|||
Dividends paid to stockholders
|
(343
|
)
|
|
(318
|
)
|
|
(296
|
)
|
|||
Treasury stock purchases
|
(325
|
)
|
|
(400
|
)
|
|
(350
|
)
|
|||
Other items, net
|
(5
|
)
|
|
(6
|
)
|
|
9
|
|
|||
Net cash used in financing activities
|
(1,043
|
)
|
|
(1,040
|
)
|
|
(1,006
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(3
|
)
|
|
(5
|
)
|
|
2
|
|
|||
Net change in cash and cash equivalents
|
(22
|
)
|
|
35
|
|
|
10
|
|
|||
Cash and cash equivalents at beginning of period
|
226
|
|
|
191
|
|
|
181
|
|
|||
Cash and cash equivalents at end of period
|
$
|
204
|
|
|
$
|
226
|
|
|
$
|
191
|
|
1.
|
SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
INVENTORIES
|
|
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Finished goods
|
$
|
1,114
|
|
|
$
|
1,143
|
|
Work in process
|
220
|
|
|
262
|
|
||
Raw materials and supplies
|
576
|
|
|
515
|
|
||
Total inventories at FIFO or average cost
|
1,910
|
|
|
1,920
|
|
||
Less: LIFO reserve
|
248
|
|
|
337
|
|
||
Total inventories
|
$
|
1,662
|
|
|
$
|
1,583
|
|
3.
|
PROPERTIES AND ACCUMULATED DEPRECIATION
|
|
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Properties
|
|
|
|
||||
Land
|
$
|
158
|
|
|
$
|
158
|
|
Buildings
|
1,430
|
|
|
1,385
|
|
||
Machinery and equipment
|
10,960
|
|
|
10,801
|
|
||
Construction in progress
|
356
|
|
|
387
|
|
||
Properties and equipment at cost
|
$
|
12,904
|
|
|
$
|
12,731
|
|
Less: Accumulated depreciation
|
7,333
|
|
|
7,131
|
|
||
Net properties
|
$
|
5,571
|
|
|
$
|
5,600
|
|
4.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
(Dollars in millions)
|
Additives & Functional Products
|
|
Advanced Materials
|
|
Chemical Intermediates
|
|
Other
|
|
Total
|
||||||||||
Balance at December 31, 2017
|
$
|
2,459
|
|
|
$
|
1,289
|
|
|
$
|
769
|
|
|
$
|
10
|
|
|
$
|
4,527
|
|
Impairments recognized
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|||||
Currency translation adjustments
|
(11
|
)
|
|
(6
|
)
|
|
(5
|
)
|
|
—
|
|
|
(22
|
)
|
|||||
Balance at December 31, 2018
|
2,410
|
|
|
1,283
|
|
|
764
|
|
|
10
|
|
|
4,467
|
|
|||||
Acquisitions
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Impairments recognized
|
(45
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45
|
)
|
|||||
Currency translation adjustments
|
(3
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|
(6
|
)
|
|||||
Balance at December 31, 2019
|
$
|
2,377
|
|
|
$
|
1,282
|
|
|
$
|
762
|
|
|
$
|
10
|
|
|
$
|
4,431
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(Dollars in millions)
|
Estimated Useful Life in Years
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||||||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
8
|
-
|
25
|
$
|
1,566
|
|
|
$
|
494
|
|
|
$
|
1,072
|
|
|
$
|
1,567
|
|
|
$
|
419
|
|
|
$
|
1,148
|
|
Technology
|
7
|
-
|
20
|
677
|
|
|
343
|
|
|
334
|
|
|
680
|
|
|
294
|
|
|
386
|
|
||||||
Contracts
|
|
5
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180
|
|
|
147
|
|
|
33
|
|
||||||
Other
|
5
|
-
|
37
|
88
|
|
|
22
|
|
|
66
|
|
|
102
|
|
|
23
|
|
|
79
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tradenames
|
|
|
|
529
|
|
|
—
|
|
|
529
|
|
|
529
|
|
|
—
|
|
|
529
|
|
||||||
Other
|
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||||
Total identified intangible assets
|
|
|
|
$
|
2,870
|
|
|
$
|
859
|
|
|
$
|
2,011
|
|
|
$
|
3,068
|
|
|
$
|
883
|
|
|
$
|
2,185
|
|
5.
|
EQUITY INVESTMENTS
|
6.
|
PAYABLES AND OTHER CURRENT LIABILITIES
|
|
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Trade creditors
|
$
|
890
|
|
|
$
|
914
|
|
Accrued payrolls, vacation, and variable-incentive compensation
|
176
|
|
|
197
|
|
||
Accrued taxes
|
89
|
|
|
94
|
|
||
Post-employment obligations
|
93
|
|
|
80
|
|
||
Dividends payable to shareholders
|
90
|
|
|
87
|
|
||
Other
|
280
|
|
|
236
|
|
||
Total payables and other current liabilities
|
$
|
1,618
|
|
|
$
|
1,608
|
|
7.
|
INCOME TAXES
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Earnings before income taxes
|
|
|
|
|
|
||||||
United States
|
$
|
454
|
|
|
$
|
718
|
|
|
$
|
654
|
|
Outside the United States
|
448
|
|
|
592
|
|
|
635
|
|
|||
Total
|
$
|
902
|
|
|
$
|
1,310
|
|
|
$
|
1,289
|
|
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
|
|||
United States Federal
|
|
|
|
|
|
|
|
|
|||
Current (1)
|
$
|
55
|
|
|
$
|
161
|
|
|
$
|
220
|
|
Deferred (2)
|
19
|
|
|
(11
|
)
|
|
(383
|
)
|
|||
Outside the United States
|
|
|
|
|
|
||||||
Current
|
62
|
|
|
86
|
|
|
62
|
|
|||
Deferred
|
(32
|
)
|
|
(22
|
)
|
|
2
|
|
|||
State and other
|
|
|
|
|
|
||||||
Current
|
—
|
|
|
30
|
|
|
13
|
|
|||
Deferred
|
36
|
|
|
(18
|
)
|
|
(13
|
)
|
|||
Total
|
$
|
140
|
|
|
$
|
226
|
|
|
$
|
(99
|
)
|
(1)
|
A one-time transition tax of $71 million on deferred foreign income tax is included for 2017.
|
(2)
|
Includes a one-time benefit of $517 million primarily due to the remeasurement of certain net deferred tax liabilities using the lower U.S. corporate income tax rate and a one-time $72 million valuation allowance on deferred tax assets for foreign tax credit carryforwards for 2017.
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Defined benefit pension and other postretirement benefit plans
|
$
|
(10
|
)
|
|
$
|
(10
|
)
|
|
$
|
(16
|
)
|
Derivatives and hedging
|
(2
|
)
|
|
3
|
|
|
8
|
|
|||
Total
|
$
|
(12
|
)
|
|
$
|
(7
|
)
|
|
$
|
(8
|
)
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Earnings before income taxes
|
$
|
140
|
|
|
$
|
226
|
|
|
$
|
(99
|
)
|
Other comprehensive income
|
(12
|
)
|
|
(7
|
)
|
|
(8
|
)
|
|||
Total
|
$
|
128
|
|
|
$
|
219
|
|
|
$
|
(107
|
)
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Amount computed using the statutory rate
|
$
|
189
|
|
|
$
|
274
|
|
|
$
|
450
|
|
State income taxes, net
|
36
|
|
|
6
|
|
|
(4
|
)
|
|||
Foreign rate variance
|
(68
|
)
|
|
(52
|
)
|
|
(150
|
)
|
|||
Domestic manufacturing deduction
|
—
|
|
|
—
|
|
|
(18
|
)
|
|||
Change in reserves for tax contingencies
|
36
|
|
|
21
|
|
|
20
|
|
|||
General business credits
|
(52
|
)
|
|
(60
|
)
|
|
(65
|
)
|
|||
U.S. tax on foreign earnings
|
(17
|
)
|
|
10
|
|
|
29
|
|
|||
Foreign tax credits
|
—
|
|
|
(12
|
)
|
|
(26
|
)
|
|||
Tax law changes and tax loss from outside-U.S. entity reorganizations (1)
|
7
|
|
|
20
|
|
|
(339
|
)
|
|||
Other
|
9
|
|
|
19
|
|
|
4
|
|
|||
Provision for (benefit from) income taxes
|
$
|
140
|
|
|
$
|
226
|
|
|
$
|
(99
|
)
|
|
|
|
|
|
|
||||||
Effective income tax rate
|
16
|
%
|
|
17
|
%
|
|
(8
|
)%
|
(1)
|
Includes a one-time net benefit primarily due to the remeasurement of certain net deferred tax liabilities using the lower U.S. corporate income tax rate partially offset by the transition tax on deferred foreign income and changes in the valuation of deferred tax assets associated with tax law changes and the tax impact from intercompany reorganization activities in 2017 and a net incremental adjustment to those amounts under the Tax Reform Act in 2018 and 2019.
|
|
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018 (1)
|
||||
Deferred tax assets
|
|
|
|
||||
Post-employment obligations
|
$
|
247
|
|
|
$
|
230
|
|
Net operating loss carryforwards
|
606
|
|
|
634
|
|
||
Tax credit carryforwards
|
239
|
|
|
239
|
|
||
Environmental reserves
|
68
|
|
|
70
|
|
||
Unrealized derivative loss
|
18
|
|
|
18
|
|
||
Other
|
173
|
|
|
94
|
|
||
Total deferred tax assets
|
1,351
|
|
|
1,285
|
|
||
Less: Valuation allowance
|
453
|
|
|
487
|
|
||
Deferred tax assets less valuation allowance
|
$
|
898
|
|
|
$
|
798
|
|
Deferred tax liabilities
|
|
|
|
|
|
||
Property, plant, and equipment
|
$
|
(895
|
)
|
|
$
|
(856
|
)
|
Intangible assets
|
(439
|
)
|
|
(473
|
)
|
||
Investments
|
(235
|
)
|
|
(179
|
)
|
||
Other
|
(178
|
)
|
|
(131
|
)
|
||
Total deferred tax liabilities
|
$
|
(1,747
|
)
|
|
$
|
(1,639
|
)
|
Net deferred tax liabilities
|
$
|
(849
|
)
|
|
$
|
(841
|
)
|
As recorded in the Consolidated Statements of Financial Position:
|
|
|
|
|
|
||
Other noncurrent assets
|
$
|
66
|
|
|
$
|
43
|
|
Deferred income tax liabilities
|
(915
|
)
|
|
(884
|
)
|
||
Net deferred tax liabilities
|
$
|
(849
|
)
|
|
$
|
(841
|
)
|
(1)
|
Revised from Note 7, "Income Taxes", to the Company's 2018 Annual Report on Form 10-K, which reported net operating loss carryforwards as $708 million, valuation allowance as $466 million, and investments as $(274) million.
|
|
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Miscellaneous receivables
|
$
|
211
|
|
|
$
|
135
|
|
|
|
|
|
||||
Payables and other current liabilities
|
$
|
36
|
|
|
$
|
43
|
|
Other long-term liabilities
|
139
|
|
|
162
|
|
||
Total income taxes payable
|
$
|
175
|
|
|
$
|
205
|
|
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at January 1
|
$
|
182
|
|
|
$
|
142
|
|
|
$
|
114
|
|
Adjustments based on tax positions related to current year
|
22
|
|
|
44
|
|
|
29
|
|
|||
Lapse of statute of limitations
|
(2
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|||
Balance at December 31 (1)
|
$
|
202
|
|
|
$
|
182
|
|
|
$
|
142
|
|
(1)
|
All of the unrecognized tax benefits would, if recognized, impact the Company's effective tax rate.
|
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at January 1
|
$
|
10
|
|
|
$
|
6
|
|
|
$
|
4
|
|
Expense for interest, net of tax
|
5
|
|
|
4
|
|
|
3
|
|
|||
Income for interest, net of tax
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Balance at December 31
|
$
|
13
|
|
|
$
|
10
|
|
|
$
|
6
|
|
8.
|
BORROWINGS
|
|
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Borrowings consisted of:
|
|
|
|
||||
2.7% notes due January 2020
|
$
|
—
|
|
|
$
|
250
|
|
4.5% notes due January 2021
|
185
|
|
|
185
|
|
||
3.5% notes due December 2021
|
298
|
|
|
297
|
|
||
3.6% notes due August 2022
|
741
|
|
|
739
|
|
||
1.50% notes due May 2023 (1)
|
840
|
|
|
855
|
|
||
7 1/4% debentures due January 2024
|
198
|
|
|
197
|
|
||
7 5/8% debentures due June 2024
|
43
|
|
|
43
|
|
||
3.8% notes due March 2025
|
695
|
|
|
691
|
|
||
1.875% notes due November 2026 (1)
|
556
|
|
|
566
|
|
||
7.60% debentures due February 2027
|
195
|
|
|
195
|
|
||
4.5% notes due December 2028
|
493
|
|
|
492
|
|
||
4.8% notes due September 2042
|
493
|
|
|
493
|
|
||
4.65% notes due October 2044
|
874
|
|
|
872
|
|
||
Commercial paper and short-term borrowings
|
171
|
|
|
243
|
|
||
Credit facilities borrowings
|
—
|
|
|
50
|
|
||
Total borrowings
|
5,782
|
|
|
6,168
|
|
||
Borrowings due within one year
|
171
|
|
|
243
|
|
||
Long-term borrowings
|
$
|
5,611
|
|
|
$
|
5,925
|
|
(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 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.
|
9.
|
DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS
|
Notional Outstanding
|
December 31, 2019
|
|
December 31, 2018
|
|||
|
|
|
|
|
||
Derivatives designated as cash flow hedges:
|
|
|
|
|||
Foreign Exchange Forward and Option Contracts (in millions)
|
|
|
|
|||
|
EUR/USD (in EUR)
|
€630
|
|
€263
|
||
Commodity Forward and Collar Contracts
|
|
|
|
|||
|
Feedstock (in million barrels)
|
1
|
|
|
5
|
|
|
Energy (in million british thermal units)
|
27
|
|
|
40
|
|
|
|
|
|
|||
Derivatives designated as fair value hedges:
|
|
|
|
|||
Fixed-for-floating interest rate swaps (in millions)
|
$75
|
|
$75
|
|||
|
|
|
|
|||
Derivatives designated as net investment hedges:
|
|
|
|
|||
Cross-currency interest rate swaps (in millions)
|
|
|
|
|||
|
EUR/USD (in EUR)
|
€851
|
|
€851
|
||
|
|
|
|
|||
Non-derivatives designated as net investment hedges:
|
|
|
|
|||
Foreign Currency Net Investment Hedges (in millions)
|
|
|
|
|||
|
EUR/USD (in EUR)
|
€1,243
|
|
€1,241
|
The Financial Position and Fair Value Measurements of Hedging Instruments on a Gross Basis
|
||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
||||
Derivative Type
|
|
Statements of Financial
Position Location
|
|
December 31, 2019
Level 2
|
|
December 31, 2018
Level 2
|
||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
||||
Commodity contracts
|
|
Other current assets
|
|
$
|
—
|
|
|
$
|
4
|
|
Foreign exchange contracts
|
|
Other current assets
|
|
13
|
|
|
15
|
|
||
Foreign exchange contracts
|
|
Other noncurrent assets
|
|
2
|
|
|
4
|
|
||
|
|
|
|
|
|
|
||||
Derivatives designated as fair value hedges:
|
|
|
|
|
|
|
||||
Fixed-for-floating interest rate swap
|
|
Other current assets
|
|
1
|
|
|
1
|
|
||
|
|
|
|
|
|
|
||||
Derivatives designated as net investment hedges:
|
|
|
|
|
|
|
||||
Cross-currency interest rate swaps
|
|
Other noncurrent assets
|
|
68
|
|
|
26
|
|
||
Total Derivative Assets
|
|
|
|
$
|
84
|
|
|
$
|
50
|
|
|
|
|
|
|
|
|
||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
||||
Commodity contracts
|
|
Payables and other current liabilities
|
|
$
|
26
|
|
|
$
|
24
|
|
Commodity contracts
|
|
Other long-term liabilities
|
|
2
|
|
|
5
|
|
||
Foreign exchange contracts
|
|
Payables and other current liabilities
|
|
1
|
|
|
—
|
|
||
Foreign exchange contracts
|
|
Other long-term liabilities
|
|
2
|
|
|
—
|
|
||
|
|
|
|
|
|
|
||||
Derivatives designated as fair value hedges:
|
|
|
|
|
|
|
||||
Fixed-for-floating interest rate swap
|
|
Long-term borrowings
|
|
1
|
|
|
4
|
|
||
Total Derivative Liabilities
|
|
|
|
$
|
32
|
|
|
$
|
33
|
|
Total Net Derivative Assets (Liabilities)
|
|
|
|
$
|
52
|
|
|
$
|
17
|
|
(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 in the Consolidated Statements of Financial Position in which the hedged item is included
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
Long-term borrowings (1)
|
|
$
|
763
|
|
|
$
|
759
|
|
|
$
|
(7
|
)
|
|
$
|
(12
|
)
|
(1)
|
At both December 31, 2019 and 2018, the cumulative amount of fair value hedging loss adjustment remaining for hedged liabilities for which hedge accounting has been discontinued was $7 million.
|
(Dollars in millions)
|
|
Change in amount of after tax gain/(loss) recognized in OCI on Derivatives
|
|
Pre-tax amount of gain/(loss) reclassified from AOCI into income
|
||||||||||||
|
|
December 31,
|
|
December 31,
|
||||||||||||
Hedging Relationships
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(40
|
)
|
|
$
|
(3
|
)
|
Foreign exchange contracts
|
|
(5
|
)
|
|
3
|
|
|
26
|
|
|
29
|
|
||||
Forward starting interest rate and treasury lock swap contracts
|
|
4
|
|
|
4
|
|
|
(6
|
)
|
|
(5
|
)
|
||||
Non-derivatives in net investment hedging relationships (pre-tax):
|
|
|
|
|
|
|
|
|
||||||||
Net investment hedges
|
|
26
|
|
|
67
|
|
|
—
|
|
|
—
|
|
||||
Derivatives in net investment hedging relationships (pre-tax):
|
|
|
|
|
|
|
|
|
||||||||
Cross-currency interest rate swaps
|
|
19
|
|
|
26
|
|
|
—
|
|
|
—
|
|
||||
Cross-currency interest rate swaps excluded component
|
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Location and Amount of Gain or (Loss) Recognized in Earnings on Fair Value and Cash Flow Hedging Relationships
|
||||||||||||||||||||||||
|
|
Twelve Months
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||||||||||
(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 Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized
|
|
$
|
9,273
|
|
|
$
|
7,039
|
|
|
$
|
218
|
|
|
$
|
10,151
|
|
|
$
|
7,672
|
|
|
$
|
235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
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
|
|
|
|
|
|
1
|
|
|
|
|
|
|
—
|
|
||||||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
—
|
|
||||||||||
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
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
(5
|
)
|
||||||||||
Commodity Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount reclassified from AOCI into earnings
|
|
|
|
(40
|
)
|
|
|
|
|
|
(3
|
)
|
|
|
||||||||||
Foreign Exchange Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount reclassified from AOCI into earnings
|
|
26
|
|
|
|
|
|
|
29
|
|
|
|
|
|
10.
|
RETIREMENT PLANS
|
|
Pension Plans
|
|
Postretirement Benefit Plans
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
(Dollars in millions)
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
|
|
|
||||||||||||
Change in projected benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Benefit obligation, beginning of year
|
$
|
1,959
|
|
|
$
|
840
|
|
|
$
|
2,154
|
|
|
$
|
893
|
|
|
$
|
672
|
|
|
$
|
738
|
|
Service cost
|
27
|
|
|
14
|
|
|
35
|
|
|
14
|
|
|
—
|
|
|
—
|
|
||||||
Interest cost
|
76
|
|
|
20
|
|
|
67
|
|
|
20
|
|
|
25
|
|
|
22
|
|
||||||
Actuarial (gain) loss
|
200
|
|
|
113
|
|
|
(119
|
)
|
|
(20
|
)
|
|
71
|
|
|
(33
|
)
|
||||||
Plan participants' contributions
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
10
|
|
|
11
|
|
||||||
Effect of currency exchange
|
—
|
|
|
11
|
|
|
—
|
|
|
(45
|
)
|
|
1
|
|
|
(1
|
)
|
||||||
Benefits paid
|
(195
|
)
|
|
(27
|
)
|
|
(178
|
)
|
|
(23
|
)
|
|
(63
|
)
|
|
(65
|
)
|
||||||
Benefit obligation, end of year
|
$
|
2,067
|
|
|
$
|
972
|
|
|
$
|
1,959
|
|
|
$
|
840
|
|
|
$
|
716
|
|
|
$
|
672
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets, beginning of year
|
$
|
1,820
|
|
|
$
|
713
|
|
|
$
|
2,054
|
|
|
$
|
773
|
|
|
$
|
135
|
|
|
$
|
148
|
|
Actual return on plan assets
|
289
|
|
|
102
|
|
|
(61
|
)
|
|
(19
|
)
|
|
27
|
|
|
(6
|
)
|
||||||
Effect of currency exchange
|
—
|
|
|
9
|
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
||||||
Company contributions
|
5
|
|
|
22
|
|
|
5
|
|
|
20
|
|
|
42
|
|
|
43
|
|
||||||
Reserve for third party contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
4
|
|
||||||
Plan participants' contributions
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
10
|
|
|
11
|
|
||||||
Benefits paid
|
(195
|
)
|
|
(27
|
)
|
|
(178
|
)
|
|
(23
|
)
|
|
(63
|
)
|
|
(65
|
)
|
||||||
Fair value of plan assets, end of year
|
$
|
1,919
|
|
|
$
|
820
|
|
|
$
|
1,820
|
|
|
$
|
713
|
|
|
$
|
139
|
|
|
$
|
135
|
|
Funded status at end of year
|
$
|
(148
|
)
|
|
$
|
(152
|
)
|
|
$
|
(139
|
)
|
|
$
|
(127
|
)
|
|
$
|
(577
|
)
|
|
$
|
(537
|
)
|
Amounts recognized in the Consolidated Statements of Financial Position consist of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other noncurrent assets
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
41
|
|
Current liabilities
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
(47
|
)
|
|
(45
|
)
|
||||||
Post-employment obligations
|
(158
|
)
|
|
(151
|
)
|
|
(137
|
)
|
|
(126
|
)
|
|
(580
|
)
|
|
(533
|
)
|
||||||
Net amount recognized, end of year
|
$
|
(148
|
)
|
|
$
|
(152
|
)
|
|
$
|
(139
|
)
|
|
$
|
(127
|
)
|
|
$
|
(577
|
)
|
|
$
|
(537
|
)
|
Accumulated benefit obligation
|
$
|
2,005
|
|
|
$
|
919
|
|
|
$
|
1,900
|
|
|
$
|
796
|
|
|
|
|
|
||||
Amounts recognized in accumulated other comprehensive income consist of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service (credit) cost
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(143
|
)
|
|
$
|
(182
|
)
|
(Dollars in millions)
|
2019
|
|
2018
|
||||||||||||
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
||||||||
Projected benefit obligation
|
$
|
1,673
|
|
|
$
|
972
|
|
|
$
|
1,726
|
|
|
$
|
840
|
|
Fair value of plan assets
|
1,512
|
|
|
820
|
|
|
1,585
|
|
|
713
|
|
(Dollars in millions)
|
2019
|
|
2018
|
||||||||||||
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
||||||||
Projected benefit obligation
|
$
|
1,673
|
|
|
$
|
651
|
|
|
$
|
1,726
|
|
|
$
|
568
|
|
Accumulated benefit obligation
|
1,611
|
|
|
625
|
|
|
1,667
|
|
|
547
|
|
||||
Fair value of plan assets
|
1,512
|
|
|
513
|
|
|
1,585
|
|
|
448
|
|
|
Pension Plans
|
|
Postretirement Benefit Plans
|
||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||
(Dollars in millions)
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
|
|
|
|
|
||||||||||||||||||
Components of net periodic benefit (credit) cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Service cost
|
$
|
27
|
|
|
$
|
14
|
|
|
$
|
35
|
|
|
$
|
14
|
|
|
$
|
37
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Interest cost
|
76
|
|
|
20
|
|
|
67
|
|
|
20
|
|
|
66
|
|
|
20
|
|
|
25
|
|
|
22
|
|
|
23
|
|
|||||||||
Expected return on plan assets
|
(128
|
)
|
|
(32
|
)
|
|
(147
|
)
|
|
(37
|
)
|
|
(140
|
)
|
|
(35
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|||||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Prior service (credit) cost
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
(4
|
)
|
|
1
|
|
|
(39
|
)
|
|
(40
|
)
|
|
(40
|
)
|
|||||||||
Mark-to-market pension and other postretirement benefits (gain) loss, net
|
39
|
|
|
43
|
|
|
89
|
|
|
36
|
|
|
(37
|
)
|
|
(7
|
)
|
|
61
|
|
|
(26
|
)
|
|
23
|
|
|||||||||
Net periodic benefit (credit) cost
|
$
|
14
|
|
|
$
|
45
|
|
|
$
|
43
|
|
|
$
|
34
|
|
|
$
|
(78
|
)
|
|
$
|
(8
|
)
|
|
$
|
42
|
|
|
$
|
(49
|
)
|
|
$
|
4
|
|
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Prior service (credit) cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
|
$
|
(39
|
)
|
|
$
|
(40
|
)
|
|
$
|
(40
|
)
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
|
$
|
(39
|
)
|
|
$
|
(40
|
)
|
|
$
|
(40
|
)
|
|
Pension Plans
|
|
Postretirement Benefit Plans
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Weighted-average assumptions used to determine benefit obligations for years ended December 31:
|
U.S.
|
Non-U.S.
|
|
U.S.
|
Non-U.S.
|
|
U.S.
|
Non-U.S.
|
|
|
|
|
|
|
|||||||||
Discount rate
|
3.25
|
%
|
1.56
|
%
|
|
4.29
|
%
|
2.35
|
%
|
|
3.57
|
%
|
2.25
|
%
|
|
3.21
|
%
|
|
4.26
|
%
|
|
3.54
|
%
|
Rate of compensation increase
|
3.25
|
%
|
2.94
|
%
|
|
3.25
|
%
|
2.94
|
%
|
|
3.25
|
%
|
2.95
|
%
|
|
3.25
|
%
|
|
3.25
|
%
|
|
3.25
|
%
|
Health care cost trend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Initial
|
|
|
|
|
|
|
|
|
|
6.50
|
%
|
|
6.50
|
%
|
|
6.75
|
%
|
||||||
Decreasing to ultimate trend of
|
|
|
|
|
|
|
|
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
||||||
in year
|
|
|
|
|
|
|
|
|
|
2026
|
|
|
2025
|
|
|
2025
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Weighted-average assumptions used to determine net periodic cost for years ended December 31:
|
U.S.
|
Non-U.S.
|
|
U.S.
|
Non-U.S.
|
|
U.S.
|
Non-U.S.
|
|
|
|
|
|
|
|||||||||
Discount rate
|
4.29
|
%
|
2.35
|
%
|
|
3.57
|
%
|
2.25
|
%
|
|
3.89
|
%
|
2.33
|
%
|
|
4.26
|
%
|
|
3.54
|
%
|
|
3.91
|
%
|
Discount rate for service cost
|
4.32
|
%
|
2.35
|
%
|
|
3.64
|
%
|
2.25
|
%
|
|
3.89
|
%
|
2.33
|
%
|
|
4.05
|
%
|
|
3.28
|
%
|
|
4.31
|
%
|
Discount rate for interest cost
|
3.96
|
%
|
2.35
|
%
|
|
3.18
|
%
|
2.25
|
%
|
|
3.24
|
%
|
2.33
|
%
|
|
3.93
|
%
|
|
3.14
|
%
|
|
3.28
|
%
|
Expected return on assets
|
7.43
|
%
|
4.49
|
%
|
|
7.48
|
%
|
4.83
|
%
|
|
7.49
|
%
|
5.02
|
%
|
|
3.75
|
%
|
|
3.75
|
%
|
|
3.75
|
%
|
Rate of compensation increase
|
3.25
|
%
|
2.94
|
%
|
|
3.25
|
%
|
2.95
|
%
|
|
3.25
|
%
|
2.94
|
%
|
|
3.25
|
%
|
|
3.25
|
%
|
|
3.25
|
%
|
Health care cost trend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Initial
|
|
|
|
|
|
|
|
|
|
6.50
|
%
|
|
6.75
|
%
|
|
7.00
|
%
|
||||||
Decreasing to ultimate trend of
|
|
|
|
|
|
|
|
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
||||||
in year
|
|
|
|
|
|
|
|
|
|
2025
|
|
|
2025
|
|
|
2021
|
|
(Dollars in millions)
|
|
|
|
|
Fair Value Measurements at December 31, 2019
|
||||||||||||||||||||||||||
Description
|
Total Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||||||||||||||||||
Pension Assets:
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
||||||||||||||||
Cash & Cash Equivalents (1)
|
$
|
35
|
|
|
$
|
72
|
|
|
$
|
35
|
|
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Public Equity - United States (2)
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other Investments (3)
|
—
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
||||||||
Total Assets at Fair Value
|
$
|
36
|
|
|
$
|
129
|
|
|
$
|
36
|
|
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
57
|
|
Investments Measured at Net Asset Value (4)
|
1,883
|
|
|
691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total Assets
|
$
|
1,919
|
|
|
$
|
820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
|
|
|
Fair Value Measurements at December 31, 2018
|
||||||||||||||||||||||||||
Description
|
Total Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs
(Level 3) |
||||||||||||||||||||||||
Pension Assets:
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
||||||||||||||||
Cash & Cash Equivalents (1)
|
$
|
16
|
|
|
$
|
53
|
|
|
$
|
16
|
|
|
$
|
53
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Public Equity - United States (2)
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other Investments (3)
|
—
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
||||||||
Total Assets at Fair Value
|
$
|
18
|
|
|
$
|
104
|
|
|
$
|
18
|
|
|
$
|
53
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51
|
|
Investments Measured at Net Asset Value (4)
|
1,802
|
|
|
609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total Assets
|
$
|
1,820
|
|
|
$
|
713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Cash & Cash Equivalents: Funds generally invested in actively managed collective trust funds or interest bearing accounts.
|
(2)
|
Public Equity - United States: Common stock equity securities which are primarily valued using a market approach based on the quoted market prices.
|
(3)
|
Other Investments: Primarily consist of insurance contracts which are generally valued using a crediting rate that approximates market returns and investments in underlying securities whose market values are unobservable and determined using pricing models, discounted cash flow methodologies, or similar techniques.
|
(4)
|
Investments Measured at Net Asset Value: The underlying debt and public equity investments in this category are generally held in common trust funds, which are either actively or passively managed investment vehicles, that are valued at the net asset value per unit/share multiplied by the number of units/shares held as of the measurement date. The other alternative investments in this category are valued under the practical expedient method which is based on the most recently reported net asset value provided by the management of each private investment fund, adjusted as appropriate, for any lag between the date of the financial reports and the measurement date.
|
(Dollars in millions)
|
|
|
Fair Value Measurements at
December 31, 2019
|
||||||||||||
Description
|
Total Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
Postretirement Benefit Plan Assets:
|
|
|
|
|
|
|
|
||||||||
Debt (1):
|
|
|
|
|
|
|
|
||||||||
Fixed Income (U.S.)
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
85
|
|
|
$
|
—
|
|
Fixed Income (Non-U.S.)
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
||||
Total
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
111
|
|
|
$
|
—
|
|
(Dollars in millions)
|
|
|
Fair Value Measurements at
December 31, 2018 |
||||||||||||
Description
|
Total Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
||||||||
Postretirement Benefit Plan Assets:
|
|
|
|
|
|
|
|
||||||||
Cash & Cash Equivalents (2)
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt (1):
|
|
|
|
|
|
|
|
||||||||
Fixed Income (U.S.)
|
78
|
|
|
—
|
|
|
78
|
|
|
—
|
|
||||
Fixed Income (Non-U.S.)
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
||||
Total
|
$
|
107
|
|
|
$
|
3
|
|
|
$
|
104
|
|
|
$
|
—
|
|
(1)
|
Debt: The fixed income securities are primarily valued upon a market approach, using matrix pricing and considering a security's relationship to other securities for which quoted prices in an active market may be available, or an income approach, converting future cash flows to a single present value amount. Inputs used in developing fair value estimates include reported trades, broker quotes, benchmark yields, and base spreads.
|
(2)
|
Cash & Cash Equivalents: Funds generally invested in actively managed collective trust funds or interest bearing accounts.
|
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
||
|
|
Other Investments(1)
|
||
(Dollars in millions)
|
|
Non-U.S. Pension Plans
|
||
Balance at December 31, 2017
|
|
$
|
51
|
|
Unrealized gains
|
|
—
|
|
|
Balance at December 31, 2018
|
|
51
|
|
|
Unrealized gains
|
|
5
|
|
|
Purchases, issuances, sales, and settlements
|
|
1
|
|
|
Balance at December 31, 2019
|
|
$
|
57
|
|
(1)
|
Primarily consists of insurance contracts.
|
|
U.S. Pension Plans
|
|
Non-U.S. Pension Plans
|
|
Postretirement Benefit Plan
|
||||||
|
2020 Target Allocation
|
Plan Assets at
December 31, 2019 |
Plan Assets at
December 31, 2018 |
|
2020 Target Allocation
|
Plan Assets at
December 31, 2019 |
Plan Assets at
December 31, 2018 |
|
2020 Target Allocation
|
Plan Assets at
December 31, 2019 |
Plan Assets at
December 31, 2018 |
Asset category
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
44%
|
50%
|
43%
|
|
24%
|
21%
|
19%
|
|
—%
|
—%
|
—%
|
Debt securities
|
39%
|
37%
|
44%
|
|
57%
|
53%
|
54%
|
|
100%
|
100%
|
100%
|
Real estate
|
2%
|
2%
|
2%
|
|
5%
|
8%
|
8%
|
|
—%
|
—%
|
—%
|
Other investments (1)
|
15%
|
11%
|
11%
|
|
14%
|
18%
|
19%
|
|
—%
|
—%
|
—%
|
Total
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
(1)
|
U.S. primarily consists of private equity and natural resource and energy related limited partnership investments. Non-U.S. primarily consists of annuity contracts and alternative investments.
|
|
Pension Plans
|
|
Postretirement
Benefit Plans
|
||||||||
(Dollars in millions)
|
U.S.
|
|
Non-U.S.
|
|
|
||||||
2020
|
$
|
197
|
|
|
$
|
31
|
|
|
$
|
57
|
|
2021
|
161
|
|
|
30
|
|
|
57
|
|
|||
2022
|
156
|
|
|
31
|
|
|
53
|
|
|||
2023
|
151
|
|
|
34
|
|
|
47
|
|
|||
2024
|
151
|
|
|
38
|
|
|
47
|
|
|||
2025-2029
|
686
|
|
|
210
|
|
|
223
|
|
11.
|
LEASES AND OTHER COMMITMENTS
|
(Dollars in millions)
|
|
Operating lease liabilities
|
||
2020
|
|
$
|
62
|
|
2021
|
|
49
|
|
|
2022
|
|
38
|
|
|
2023
|
|
25
|
|
|
2024
|
|
14
|
|
|
2025 and beyond
|
|
30
|
|
|
Total lease payments
|
|
218
|
|
|
Less: amounts of lease payments representing interest
|
|
22
|
|
|
Present value of future lease payments
|
|
196
|
|
|
Less: current obligations under leases
|
|
55
|
|
|
Long-term lease obligations
|
|
$
|
141
|
|
|
|
For year ended
|
||
(Dollars in millions)
|
December 31, 2019
|
|||
Lease costs:
|
|
|||
|
Operating lease costs
|
$
|
70
|
|
|
Short-term lease costs
|
40
|
|
|
|
Sublease income
|
(2
|
)
|
|
|
Total
|
$
|
108
|
|
|
|
|
||
Other operating lease information:
|
|
|||
|
Cash paid for amounts included in the measurement of lease liabilities
|
$
|
72
|
|
|
Right-to-use assets obtained in exchange for new lease liabilities
|
54
|
|
|
|
|
|
||
|
Weighted-average remaining lease term, in years
|
5
|
|
|
|
Weighted-average discount rate
|
4.0
|
%
|
(Dollars in millions)
|
|
Payments Due for
|
||||||||||||||||||||||||||
Period
|
|
Debt Securities
|
|
Credit Facilities and Other
|
|
Interest Payable
|
|
Purchase Obligations
|
|
Operating Leases
|
|
Other Liabilities
|
|
Total
|
||||||||||||||
2020
|
|
$
|
—
|
|
|
$
|
171
|
|
|
$
|
173
|
|
|
$
|
181
|
|
|
$
|
62
|
|
|
$
|
241
|
|
|
$
|
828
|
|
2021
|
|
483
|
|
|
—
|
|
|
186
|
|
|
156
|
|
|
49
|
|
|
81
|
|
|
955
|
|
|||||||
2022
|
|
741
|
|
|
—
|
|
|
175
|
|
|
102
|
|
|
38
|
|
|
87
|
|
|
1,143
|
|
|||||||
2023
|
|
840
|
|
|
—
|
|
|
156
|
|
|
91
|
|
|
25
|
|
|
87
|
|
|
1,199
|
|
|||||||
2024
|
|
240
|
|
|
—
|
|
|
137
|
|
|
100
|
|
|
14
|
|
|
89
|
|
|
580
|
|
|||||||
2025 and beyond
|
|
3,307
|
|
|
—
|
|
|
1,414
|
|
|
1,967
|
|
|
30
|
|
|
1,106
|
|
|
7,824
|
|
|||||||
Total
|
|
$
|
5,611
|
|
|
$
|
171
|
|
|
$
|
2,241
|
|
|
$
|
2,597
|
|
|
$
|
218
|
|
|
$
|
1,691
|
|
|
$
|
12,529
|
|
12.
|
ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS
|
(Dollars in millions)
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Environmental contingent liabilities, current
|
$
|
20
|
|
|
$
|
25
|
|
Environmental contingent liabilities, long-term
|
267
|
|
|
271
|
|
||
Total
|
$
|
287
|
|
|
$
|
296
|
|
(Dollars in millions)
|
Environmental Remediation Liabilities
|
||
Balance at December 31, 2017
|
$
|
280
|
|
Changes in estimates recognized in earnings and other
|
7
|
|
|
Cash reductions
|
(16
|
)
|
|
Balance at December 31, 2018
|
271
|
|
|
Changes in estimates recognized in earnings and other
|
4
|
|
|
Cash reductions
|
(15
|
)
|
|
Balance at December 31, 2019
|
$
|
260
|
|
13.
|
LEGAL MATTERS
|
14.
|
STOCKHOLDERS' EQUITY
|
(Dollars in millions)
|
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, 2016
|
$
|
2
|
|
|
$
|
1,915
|
|
|
$
|
5,721
|
|
|
$
|
(281
|
)
|
|
$
|
(2,825
|
)
|
|
$
|
4,532
|
|
|
$
|
76
|
|
|
$
|
4,608
|
|
Net Earnings
|
—
|
|
|
—
|
|
|
1,384
|
|
|
—
|
|
|
—
|
|
|
1,384
|
|
|
4
|
|
|
1,388
|
|
||||||||
Cash Dividends (1)
|
—
|
|
|
—
|
|
|
(303
|
)
|
|
—
|
|
|
—
|
|
|
(303
|
)
|
|
—
|
|
|
(303
|
)
|
||||||||
Other Comprehensive Income
|
—
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
72
|
|
||||||||
Share-Based Compensation Expense (2)
|
—
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
||||||||
Stock Option Exercises
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
||||||||
Other
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
1
|
|
|
(5
|
)
|
||||||||
Share Repurchase
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(350
|
)
|
|
(350
|
)
|
|
—
|
|
|
(350
|
)
|
||||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||||
Balance at December 31, 2017
|
$
|
2
|
|
|
$
|
1,983
|
|
|
$
|
6,802
|
|
|
$
|
(209
|
)
|
|
$
|
(3,175
|
)
|
|
$
|
5,403
|
|
|
$
|
77
|
|
|
$
|
5,480
|
|
Cumulative Effect of Adoption of New Accounting Standards (3)
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||||||
Net Earnings
|
—
|
|
|
—
|
|
|
1,080
|
|
|
—
|
|
|
—
|
|
|
1,080
|
|
|
4
|
|
|
1,084
|
|
||||||||
Cash Dividends (1)
|
—
|
|
|
—
|
|
|
(325
|
)
|
|
—
|
|
|
—
|
|
|
(325
|
)
|
|
—
|
|
|
(325
|
)
|
||||||||
Other Comprehensive (Loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
(36
|
)
|
||||||||
Share-Based Compensation Expense (2)
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
64
|
|
||||||||
Stock Option Exercises
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
||||||||
Other (4)
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
(1
|
)
|
|
(18
|
)
|
||||||||
Share Repurchase
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(400
|
)
|
|
(400
|
)
|
|
—
|
|
|
(400
|
)
|
||||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||||
Balance at December 31, 2018
|
$
|
2
|
|
|
$
|
2,048
|
|
|
$
|
7,573
|
|
|
$
|
(245
|
)
|
|
$
|
(3,575
|
)
|
|
$
|
5,803
|
|
|
$
|
75
|
|
|
$
|
5,878
|
|
Cumulative Effect of Adoption of New Accounting Standards (5)
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net Earnings
|
—
|
|
|
—
|
|
|
759
|
|
|
—
|
|
|
—
|
|
|
759
|
|
|
3
|
|
|
762
|
|
||||||||
Cash Dividends (1)
|
—
|
|
|
—
|
|
|
(347
|
)
|
|
—
|
|
|
—
|
|
|
(347
|
)
|
|
—
|
|
|
(347
|
)
|
||||||||
Other Comprehensive Income
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||||
Share-Based Compensation Expense (2)
|
—
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
59
|
|
||||||||
Stock Option Exercises
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
||||||||
Other (4)
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
||||||||
Share Repurchase
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(325
|
)
|
|
(325
|
)
|
|
—
|
|
|
(325
|
)
|
||||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||||
Balance at December 31, 2019
|
$
|
2
|
|
|
$
|
2,105
|
|
|
$
|
7,965
|
|
|
$
|
(214
|
)
|
|
$
|
(3,900
|
)
|
|
$
|
5,958
|
|
|
$
|
74
|
|
|
$
|
6,032
|
|
(1)
|
Cash dividends includes cash dividends paid and dividends declared, but unpaid.
|
(2)
|
Share-based compensation expense is the fair value of share-based awards.
|
(3)
|
On January 1, 2018, the Company adopted new accounting standards for revenue recognition and derivatives and hedging, which resulted in increases to beginning retained earnings of $53 million and $2 million, respectively. The Company also adopted a new accounting standard for income taxes, which resulted in a decrease to beginning retained earnings of $39 million.
|
(4)
|
Additional paid-in capital includes value of shares withheld for employees' taxes on vesting of share-based compensation awards.
|
(5)
|
On January 1, 2019, the Company adopted a new accounting standard for reporting comprehensive income, which resulted in a reclassification of stranded tax effects from the Tax Reform Act from AOCI to retained earnings. See Note 1, "Significant Accounting Policies", for additional information.
|
|
For years ended December 31,
|
||||||||||
(In millions, except per share amounts)
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator
|
|
|
|
|
|
||||||
Net earnings attributable to Eastman
|
$
|
759
|
|
|
$
|
1,080
|
|
|
$
|
1,384
|
|
|
|
|
|
|
|
||||||
Denominator
|
|
|
|
|
|
||||||
Weighted average shares used for basic EPS
|
137.4
|
|
|
141.2
|
|
|
144.8
|
|
|||
Dilutive effect of stock options and other award plans
|
1.1
|
|
|
1.7
|
|
|
1.3
|
|
|||
Weighted average shares used for diluted EPS
|
138.5
|
|
|
142.9
|
|
|
146.1
|
|
|||
|
|
|
|
|
|
||||||
EPS (1)
|
|
|
|
|
|
||||||
Basic
|
$
|
5.52
|
|
|
$
|
7.65
|
|
|
$
|
9.56
|
|
Diluted
|
$
|
5.48
|
|
|
$
|
7.56
|
|
|
$
|
9.47
|
|
(1)
|
EPS is calculated using whole dollars and shares.
|
|
For years ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
|
|
|
|
|
|
|||
Balance at beginning of year
|
219,140,523
|
|
|
218,369,992
|
|
|
217,707,600
|
|
Issued for employee compensation and benefit plans
|
498,123
|
|
|
770,531
|
|
|
662,392
|
|
Balance at end of year
|
219,638,646
|
|
|
219,140,523
|
|
|
218,369,992
|
|
(Dollars in millions)
|
Cumulative Translation Adjustment
|
|
Benefit Plans Unrecognized Prior Service Credits
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Losses on Investments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
Balance at December 31, 2017
|
$
|
(296
|
)
|
|
$
|
136
|
|
|
$
|
(48
|
)
|
|
$
|
(1
|
)
|
|
$
|
(209
|
)
|
Period change
|
(13
|
)
|
|
(30
|
)
|
|
7
|
|
|
—
|
|
|
(36
|
)
|
|||||
Balance at December 31, 2018
|
(309
|
)
|
|
106
|
|
|
(41
|
)
|
|
(1
|
)
|
|
(245
|
)
|
|||||
Period change (1)
|
45
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
31
|
|
|||||
Balance at December 31, 2019
|
$
|
(264
|
)
|
|
$
|
106
|
|
|
$
|
(55
|
)
|
|
$
|
(1
|
)
|
|
$
|
(214
|
)
|
(1)
|
Benefit plans unrecognized prior service credits includes $29 million reclassification of stranded tax expense from AOCI to retained earnings and unrealized gains (losses) on derivative instruments includes $9 million reclassification of stranded tax benefit from AOCI to retained earnings. See Note 1, "Significant Accounting Policies", for additional information.
|
|
For years ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
(Dollars in millions)
|
Before Tax
|
|
Net of Tax
|
|
Before Tax
|
|
Net of Tax
|
|
Before Tax
|
|
Net of Tax
|
||||||||||||
Change in cumulative translation adjustment
|
$
|
45
|
|
|
$
|
45
|
|
|
$
|
(13
|
)
|
|
$
|
(13
|
)
|
|
$
|
85
|
|
|
$
|
85
|
|
Defined benefit pension and other postretirement benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Amortization of unrecognized prior service credits included in net periodic costs
|
(39
|
)
|
|
(29
|
)
|
|
(40
|
)
|
|
(30
|
)
|
|
(43
|
)
|
|
(27
|
)
|
||||||
Derivatives and hedging:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Unrealized gain (loss) during period
|
(27
|
)
|
|
(20
|
)
|
|
30
|
|
|
22
|
|
|
11
|
|
|
7
|
|
||||||
Reclassification adjustment for (gains) losses included in net income, net
|
20
|
|
|
15
|
|
|
(20
|
)
|
|
(15
|
)
|
|
11
|
|
|
7
|
|
||||||
Total other comprehensive income (loss)
|
$
|
(1
|
)
|
|
$
|
11
|
|
|
$
|
(43
|
)
|
|
$
|
(36
|
)
|
|
$
|
64
|
|
|
$
|
72
|
|
15.
|
ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Asset impairments
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Intangible asset and goodwill impairments
|
45
|
|
|
39
|
|
|
—
|
|
|||
Severance charges
|
45
|
|
|
6
|
|
|
6
|
|
|||
Site closure and restructuring charges
|
9
|
|
|
—
|
|
|
1
|
|
|||
Total
|
$
|
126
|
|
|
$
|
45
|
|
|
$
|
8
|
|
(Dollars in millions)
|
Balance at
January 1,
2019
|
|
Provision/ Adjustments
|
|
Non-cash Reductions/ Additions
|
|
Cash
Reductions
|
|
Balance at
December 31,
2019
|
||||||||||
Non-cash charges
|
$
|
—
|
|
|
$
|
72
|
|
|
$
|
(72
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Severance costs
|
6
|
|
|
45
|
|
|
—
|
|
|
(34
|
)
|
|
17
|
|
|||||
Site closure & restructuring costs
|
8
|
|
|
9
|
|
|
1
|
|
|
(7
|
)
|
|
11
|
|
|||||
Total
|
$
|
14
|
|
|
$
|
126
|
|
|
$
|
(71
|
)
|
|
$
|
(41
|
)
|
|
$
|
28
|
|
(Dollars in millions)
|
Balance at
January 1, 2018 |
|
Provision/ Adjustments
|
|
Non-cash Reductions/ Additions
|
|
Cash
Reductions |
|
Balance at
December 31, 2018 |
||||||||||
Non-cash charges
|
$
|
—
|
|
|
$
|
39
|
|
|
$
|
(39
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Severance costs
|
19
|
|
|
6
|
|
|
1
|
|
|
(20
|
)
|
|
6
|
|
|||||
Site closure & restructuring costs
|
10
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
8
|
|
|||||
Total
|
$
|
29
|
|
|
$
|
45
|
|
|
$
|
(38
|
)
|
|
$
|
(22
|
)
|
|
$
|
14
|
|
(Dollars in millions)
|
Balance at
January 1, 2017 |
|
Provision/ Adjustments
|
|
Non-cash Reductions/ Additions
|
|
Cash
Reductions |
|
Balance at
December 31, 2017 |
||||||||||
Non-cash charges
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Severance costs
|
42
|
|
|
6
|
|
|
—
|
|
|
(29
|
)
|
|
19
|
|
|||||
Site closure & restructuring costs
|
13
|
|
|
1
|
|
|
1
|
|
|
(5
|
)
|
|
10
|
|
|||||
Total
|
$
|
55
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
(34
|
)
|
|
$
|
29
|
|
16.
|
OTHER (INCOME) CHARGES, NET
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign exchange transaction losses (gains), net (1)
|
$
|
9
|
|
|
$
|
12
|
|
|
$
|
5
|
|
Currency transaction costs resulting from tax law changes and outside-U.S. entity reorganizations
|
—
|
|
|
13
|
|
|
—
|
|
|||
(Income) loss from equity investments and other investment (gains) losses, net
|
(10
|
)
|
|
(17
|
)
|
|
(12
|
)
|
|||
Coal gasification incident property insurance
|
—
|
|
|
(65
|
)
|
|
—
|
|
|||
Cost of disposition of claims against discontinued Solutia operations
|
—
|
|
|
—
|
|
|
9
|
|
|||
Gain from sale of business (2)
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Other, net
|
4
|
|
|
4
|
|
|
5
|
|
|||
Other (income) charges, net
|
$
|
3
|
|
|
$
|
(53
|
)
|
|
$
|
4
|
|
(1)
|
Net impact of revaluation of foreign entity assets and liabilities and effects of foreign exchange non-qualifying derivatives.
|
(2)
|
Gain resulting from the sale of the formulated electronic cleaning solution business in the AFP segment in 2017.
|
17.
|
SHARE-BASED COMPENSATION PLANS AND AWARDS
|
Assumptions
|
|
2019
|
|
2018
|
|
2017
|
Expected volatility rate
|
|
19.80%
|
|
19.03%
|
|
20.45%
|
Expected dividend yield
|
|
2.51%
|
|
2.48%
|
|
2.64%
|
Average risk-free interest rate
|
|
2.44%
|
|
2.61%
|
|
1.91%
|
Expected term years
|
|
5.7
|
|
5.1
|
|
5.0
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Options
|
|
Weighted-Average Exercise Price
|
|
Options
|
|
Weighted-Average Exercise Price
|
|
Options
|
|
Weighted-Average Exercise Price
|
|||||||||
Outstanding at beginning of year
|
2,905,600
|
|
|
$
|
79
|
|
|
2,614,100
|
|
|
$
|
70
|
|
|
2,363,700
|
|
|
$
|
61
|
|
Granted
|
786,000
|
|
|
81
|
|
|
619,700
|
|
|
104
|
|
|
745,800
|
|
|
80
|
|
|||
Exercised
|
(135,700
|
)
|
|
67
|
|
|
(323,000
|
)
|
|
55
|
|
|
(489,300
|
)
|
|
44
|
|
|||
Cancelled, forfeited, or expired
|
(76,600
|
)
|
|
88
|
|
|
(5,200
|
)
|
|
78
|
|
|
(6,100
|
)
|
|
74
|
|
|||
Outstanding at end of year
|
3,479,300
|
|
|
$
|
80
|
|
|
2,905,600
|
|
|
$
|
79
|
|
|
2,614,100
|
|
|
$
|
70
|
|
Options exercisable at year-end
|
2,077,600
|
|
|
|
|
1,606,800
|
|
|
|
|
1,335,500
|
|
|
|
||||||
Available for grant at end of year
|
6,085,857
|
|
|
|
|
8,174,614
|
|
|
|
|
9,943,033
|
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
|||||||||||
Range of Exercise Prices
|
|
Number Outstanding at
December 31, 2019
|
|
Weighted-Average Remaining Contractual Life (Years)
|
|
Weighted-Average Exercise Price
|
|
Number Exercisable at
December 31, 2019
|
|
Weighted-Average Exercise Price
|
|||||
$38-$50
|
|
176,700
|
|
1.5
|
|
$
|
39
|
|
|
176,700
|
|
$
|
39
|
|
|
$51-$73
|
|
720,500
|
|
5.9
|
|
67
|
|
|
625,100
|
|
66
|
|
|||
$74-$89
|
|
1,985,100
|
|
7.1
|
|
81
|
|
|
1,076,800
|
|
79
|
|
|||
$90-$104
|
|
597,000
|
|
8.2
|
|
104
|
|
|
199,000
|
—
|
|
104
|
|
||
|
|
3,479,300
|
|
6.8
|
|
$
|
80
|
|
|
2,077,600
|
|
$
|
74
|
|
Nonvested Options
|
|
Number of Options
|
|
Weighted-Average Grant Date Fair Value
|
|
Nonvested at January 1, 2019
|
|
1,298,800
|
|
|
$13.63
|
Granted
|
|
786,000
|
|
|
$13.12
|
Vested
|
|
(608,200
|
)
|
|
$12.89
|
Cancelled, forfeited, or expired
|
|
(74,900
|
)
|
|
$13.43
|
Nonvested options at December 31, 2019
|
|
1,401,700
|
|
|
$13.68
|
18.
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Current assets
|
$
|
(5
|
)
|
|
$
|
(47
|
)
|
|
$
|
13
|
|
Other assets
|
15
|
|
|
43
|
|
|
29
|
|
|||
Current liabilities
|
(82
|
)
|
|
(38
|
)
|
|
59
|
|
|||
Long-term liabilities and equity
|
(17
|
)
|
|
87
|
|
|
43
|
|
|||
Total
|
$
|
(89
|
)
|
|
$
|
45
|
|
|
$
|
144
|
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Interest, net of amounts capitalized
|
$
|
235
|
|
|
$
|
239
|
|
|
$
|
263
|
|
Income taxes
|
217
|
|
|
202
|
|
|
97
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Outstanding trade payables related to capital expenditures
|
22
|
|
|
18
|
|
|
27
|
|
|||
(Gain) loss from equity investments
|
(10
|
)
|
|
(17
|
)
|
|
(14
|
)
|
19.
|
SEGMENT AND REGIONAL SALES INFORMATION
|
|
Percentage of Total Segment Sales
|
||
Product Lines
|
2019
|
2018
|
2017
|
Coatings and Inks Additives
|
24%
|
23%
|
23%
|
Adhesives Resins
|
15%
|
16%
|
18%
|
Tire Additives
|
16%
|
17%
|
17%
|
Care Chemicals
|
18%
|
17%
|
17%
|
Specialty Fluids
|
14%
|
13%
|
13%
|
Animal Nutrition and Crop Protection
|
13%
|
14%
|
12%
|
Total
|
100%
|
100%
|
100%
|
|
Percentage of Total Segment Sales
|
||
Sales by Customer Location
|
2019
|
2018
|
2017
|
United States and Canada
|
37%
|
36%
|
35%
|
Asia Pacific
|
24%
|
24%
|
23%
|
Europe, Middle East, and Africa
|
33%
|
34%
|
36%
|
Latin America
|
6%
|
6%
|
6%
|
Total
|
100%
|
100%
|
100%
|
|
Percentage of Total Segment Sales
|
||
Sales by Customer Location
|
2019
|
2018
|
2017
|
United States and Canada
|
34%
|
35%
|
36%
|
Asia Pacific
|
32%
|
33%
|
33%
|
Europe, Middle East, and Africa
|
28%
|
27%
|
26%
|
Latin America
|
6%
|
5%
|
5%
|
Total
|
100%
|
100%
|
100%
|
|
Percentage of Total Segment Sales
|
||
Sales by Customer Location
|
2019
|
2018
|
2017
|
United States and Canada
|
64%
|
64%
|
68%
|
Asia Pacific
|
14%
|
15%
|
14%
|
Europe, Middle East, and Africa
|
15%
|
15%
|
12%
|
Latin America
|
7%
|
6%
|
6%
|
Total
|
100%
|
100%
|
100%
|
|
Percentage of Total Segment Sales
|
||
Product Lines
|
2019
|
2018
|
2017
|
Acetate Tow
|
68%
|
69%
|
77%
|
Acetyl Chemical Products
|
15%
|
15%
|
15%
|
Acetate Yarn
|
12%
|
10%
|
8%
|
Nonwovens
|
5%
|
6%
|
—%
|
Total
|
100%
|
100%
|
100%
|
|
Percentage of Total Segment Sales
|
||
Sales by Customer Location
|
2019
|
2018
|
2017
|
United States and Canada
|
25%
|
26%
|
22%
|
Asia Pacific
|
32%
|
33%
|
37%
|
Europe, Middle East, and Africa
|
39%
|
37%
|
37%
|
Latin America
|
4%
|
4%
|
4%
|
Total
|
100%
|
100%
|
100%
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Sales by Segment
|
|
|
|
|
|
||||||
Additives & Functional Products
|
$
|
3,273
|
|
|
$
|
3,647
|
|
|
$
|
3,343
|
|
Advanced Materials
|
2,688
|
|
|
2,755
|
|
|
2,572
|
|
|||
Chemical Intermediates
|
2,443
|
|
|
2,831
|
|
|
2,728
|
|
|||
Fibers
|
869
|
|
|
918
|
|
|
852
|
|
|||
Total Sales by Operating Segment
|
9,273
|
|
|
10,151
|
|
|
9,495
|
|
|||
Other
|
—
|
|
|
—
|
|
|
54
|
|
|||
Total Sales
|
$
|
9,273
|
|
|
$
|
10,151
|
|
|
$
|
9,549
|
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Earnings Before Interest and Taxes by Segment
|
|
|
|
|
|
||||||
Additives & Functional Products
|
$
|
496
|
|
|
$
|
639
|
|
|
$
|
653
|
|
Advanced Materials
|
517
|
|
|
509
|
|
|
483
|
|
|||
Chemical Intermediates
|
170
|
|
|
308
|
|
|
255
|
|
|||
Fibers
|
194
|
|
|
257
|
|
|
181
|
|
|||
Total EBIT by Operating Segment
|
1,377
|
|
|
1,713
|
|
|
1,572
|
|
|||
Other
|
|
|
|
|
|
||||||
Growth initiatives and businesses not allocated to operating segments
|
(102
|
)
|
|
(114
|
)
|
|
(114
|
)
|
|||
Pension and other postretirement benefit plans income (expense), net not allocated to operating segments
|
(97
|
)
|
|
(17
|
)
|
|
93
|
|
|||
Asset impairments and restructuring charges, net
|
(49
|
)
|
|
(6
|
)
|
|
(5
|
)
|
|||
Other income (charges), net not allocated to operating segments
|
(9
|
)
|
|
(24
|
)
|
|
(16
|
)
|
|||
Total EBIT
|
$
|
1,120
|
|
|
$
|
1,552
|
|
|
$
|
1,530
|
|
|
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Assets by Segment (1)
|
|
|
|
||||
Additives & Functional Products
|
$
|
6,387
|
|
|
$
|
6,545
|
|
Advanced Materials
|
4,415
|
|
|
4,456
|
|
||
Chemical Intermediates
|
2,775
|
|
|
2,934
|
|
||
Fibers
|
1,014
|
|
|
978
|
|
||
Total Assets by Operating Segment
|
14,591
|
|
|
14,913
|
|
||
Corporate Assets
|
1,417
|
|
|
1,082
|
|
||
Total Assets
|
$
|
16,008
|
|
|
$
|
15,995
|
|
(1)
|
The chief operating decision maker holds operating segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Depreciation and Amortization Expense by Segment
|
|
|
|
|
|
||||||
Additives & Functional Products
|
$
|
218
|
|
|
$
|
219
|
|
|
$
|
213
|
|
Advanced Materials
|
172
|
|
|
169
|
|
|
164
|
|
|||
Chemical Intermediates
|
150
|
|
|
151
|
|
|
148
|
|
|||
Fibers
|
64
|
|
|
64
|
|
|
58
|
|
|||
Total Depreciation and Amortization Expense by Operating Segment
|
604
|
|
|
603
|
|
|
583
|
|
|||
Other
|
7
|
|
|
1
|
|
|
4
|
|
|||
Total Depreciation and Amortization Expense
|
$
|
611
|
|
|
$
|
604
|
|
|
$
|
587
|
|
|
For years ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Capital Expenditures by Segment
|
|
|
|
|
|
||||||
Additives & Functional Products
|
$
|
152
|
|
|
$
|
150
|
|
|
$
|
229
|
|
Advanced Materials
|
130
|
|
|
187
|
|
|
248
|
|
|||
Chemical Intermediates
|
98
|
|
|
137
|
|
|
116
|
|
|||
Fibers
|
42
|
|
|
50
|
|
|
52
|
|
|||
Total Capital Expenditures by Operating Segment
|
422
|
|
|
524
|
|
|
645
|
|
|||
Other
|
3
|
|
|
4
|
|
|
4
|
|
|||
Total Capital Expenditures
|
$
|
425
|
|
|
$
|
528
|
|
|
$
|
649
|
|
(Dollars in millions)
|
For years ended December 31,
|
||||||||||
Geographic Information
|
2019
|
|
2018
|
|
2017
|
||||||
Sales
|
|
|
|
|
|
||||||
United States
|
$
|
3,720
|
|
|
$
|
4,118
|
|
|
$
|
3,999
|
|
All foreign countries
|
5,553
|
|
|
6,033
|
|
|
5,550
|
|
|||
Total
|
$
|
9,273
|
|
|
$
|
10,151
|
|
|
$
|
9,549
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net properties
|
|
|
|
|
|
||||||
United States
|
$
|
4,178
|
|
|
$
|
4,228
|
|
|
$
|
4,203
|
|
All foreign countries
|
1,393
|
|
|
1,372
|
|
|
1,404
|
|
|||
Total
|
$
|
5,571
|
|
|
$
|
5,600
|
|
|
$
|
5,607
|
|
20.
|
QUARTERLY SALES AND EARNINGS DATA – UNAUDITED
|
(Dollars in millions, except per share amounts)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
2,380
|
|
|
$
|
2,363
|
|
|
$
|
2,325
|
|
|
$
|
2,205
|
|
Gross profit
|
574
|
|
|
589
|
|
|
574
|
|
|
497
|
|
||||
Asset impairments and restructuring charges, net
|
32
|
|
|
18
|
|
|
2
|
|
|
74
|
|
||||
Net earnings attributable to Eastman
|
209
|
|
|
258
|
|
|
266
|
|
|
26
|
|
||||
Net earnings per share attributable to Eastman(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
1.50
|
|
|
$
|
1.87
|
|
|
$
|
1.95
|
|
|
$
|
0.19
|
|
Diluted
|
$
|
1.49
|
|
|
$
|
1.85
|
|
|
$
|
1.93
|
|
|
$
|
0.19
|
|
(1)
|
Each quarter is calculated as a discrete period; the sum of the four quarters may not equal the calculated full year amount.
|
(Dollars in millions, except per share amounts)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
2,607
|
|
|
$
|
2,621
|
|
|
$
|
2,547
|
|
|
$
|
2,376
|
|
Gross profit
|
581
|
|
|
704
|
|
|
728
|
|
|
466
|
|
||||
Asset impairments and restructuring charges, net
|
2
|
|
|
4
|
|
|
—
|
|
|
39
|
|
||||
Net earnings attributable to Eastman
|
290
|
|
|
344
|
|
|
412
|
|
|
34
|
|
||||
Net earnings per share attributable to Eastman(1)
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
2.03
|
|
|
$
|
2.42
|
|
|
$
|
2.93
|
|
|
$
|
0.25
|
|
Diluted
|
$
|
2.00
|
|
|
$
|
2.39
|
|
|
$
|
2.89
|
|
|
$
|
0.24
|
|
(1)
|
Each quarter is calculated as a discrete period; the sum of the four quarters may not equal the calculated full year amount.
|
21.
|
RESERVE ROLLFORWARDS
|
(Dollars in millions)
|
|
|
Additions
|
|
|
|
|
||||||||||||
|
Balance at January 1,
2019
|
|
Charges (Credits) to Cost and Expense
|
|
Other Accounts
|
|
Deductions
|
|
Balance at December 31, 2019
|
||||||||||
Reserve for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Doubtful accounts and returns
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
LIFO inventory
|
337
|
|
|
(89
|
)
|
|
—
|
|
|
—
|
|
|
248
|
|
|||||
Non-environmental asset retirement obligations
|
46
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
48
|
|
|||||
Environmental contingencies
|
296
|
|
|
7
|
|
|
—
|
|
|
16
|
|
|
287
|
|
|||||
Deferred tax valuation allowance
|
487
|
|
|
(20
|
)
|
|
(14
|
)
|
|
—
|
|
|
453
|
|
|||||
|
$
|
1,177
|
|
|
$
|
(100
|
)
|
|
$
|
(14
|
)
|
|
$
|
16
|
|
|
$
|
1,047
|
|
(Dollars in millions)
|
|
|
Additions
|
|
|
|
|
||||||||||||
|
Balance at January 1,
2018 |
|
Charges (Credits) to Cost and Expense
|
|
Other Accounts
|
|
Deductions |
|
Balance at December 31, 2018
|
||||||||||
Reserve for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Doubtful accounts and returns
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
11
|
|
LIFO inventory
|
288
|
|
|
44
|
|
|
5
|
|
|
—
|
|
|
337
|
|
|||||
Non-environmental asset retirement obligations
|
49
|
|
|
(2
|
)
|
|
—
|
|
|
1
|
|
|
46
|
|
|||||
Environmental contingencies
|
304
|
|
|
9
|
|
|
—
|
|
|
17
|
|
|
296
|
|
|||||
Deferred tax valuation allowance (1)
|
410
|
|
|
81
|
|
|
(4
|
)
|
|
—
|
|
|
487
|
|
|||||
|
$
|
1,063
|
|
|
$
|
132
|
|
|
$
|
1
|
|
|
$
|
19
|
|
|
$
|
1,177
|
|
(Dollars in millions)
|
|
|
Additions
|
|
|
|
|
||||||||||||
|
Balance at January 1,
2017 |
|
Charges (Credits) to Cost and Expense
|
|
Other Accounts
|
|
Deductions |
|
Balance at December 31, 2017
|
||||||||||
Reserve for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Doubtful accounts and returns
|
$
|
10
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
12
|
|
LIFO inventory
|
264
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
288
|
|
|||||
Non-environmental asset retirement obligations
|
46
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
49
|
|
|||||
Environmental contingencies
|
321
|
|
|
8
|
|
|
4
|
|
|
29
|
|
|
304
|
|
|||||
Deferred tax valuation allowance
|
278
|
|
|
126
|
|
|
6
|
|
|
—
|
|
|
410
|
|
|||||
|
$
|
919
|
|
|
$
|
163
|
|
|
$
|
11
|
|
|
$
|
30
|
|
|
$
|
1,063
|
|
(1)
|
Revised from Note 21, "Reserve Rollforwards", to the Company's 2018 Annual Report on Form 10-K, which reported deferred tax valuation allowance as $466 million.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
•
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and acquisitions and dispositions of assets of the Company;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the directors of the Company; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the Company's financial statements.
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Plan Category
|
|
Number of Securities to be Issued upon Exercise of Outstanding Options
(a)
|
|
Weighted-Average Exercise Price of Outstanding Options
(b)
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities reflected in Column (a))
(c)
|
|
||||
Equity compensation plans approved by stockholders
|
|
3,479,300
|
|
(1)
|
$
|
80
|
|
|
6,085,857
|
|
(2)
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
TOTAL
|
|
3,479,300
|
|
|
$
|
80
|
|
|
6,085,857
|
|
|
(1)
|
Represents shares of common stock issuable upon exercise of outstanding options granted under Eastman Chemical Company's 2007 Omnibus Long-Term Compensation Plan, the 2012 Omnibus Stock Compensation Plan, and the 2017 Omnibus Stock Compensation Plan.
|
(2)
|
Shares of common stock available for future awards under the Company's 2017 Omnibus Stock Compensation Plan, including the 2018 Director Stock Compensation Subplan, a component of the 2017 Omnibus Stock Compensation Plan.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
|
|
|
Page
|
(a)
|
1.
|
Consolidated Financial Statements:
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
2.
|
||
(b)
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Exhibit Number
|
|
EXHIBIT INDEX
|
|
Description
|
|
|
|
|
3.01
|
|
|
|
|
|
3.02
|
|
|
|
|
|
4.01
|
|
|
|
|
|
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
|
|
|
|
|
|
4.04
|
|
Form of 7 1/4% Debentures due January 15, 2024 (incorporated herein by reference to Exhibit 4(d) to the Company's Current Report on Form 8-K dated January 10, 1994)
|
|
|
|
4.05
|
|
Officers' Certificate pursuant to Sections 201 and 301 of the Indenture related to 7 5/8% Debentures due 2024 (incorporated herein by reference to Exhibit 4(a) to the Company's Current Report on Form 8-K dated June 8, 1994)
|
|
|
|
4.06
|
|
Form of 7 5/8% Debentures due June 15, 2024 (incorporated herein by reference to Exhibit 4(b) to the Company's Current Report on Form 8-K dated June 8, 1994)
|
|
|
|
4.07
|
|
|
|
|
|
4.08
|
|
|
|
|
|
4.09
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
4.18*
|
|
|
|
|
|
Exhibit Number
|
|
EXHIBIT INDEX
|
|
Description
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
Forms of Award Notices for Stock Options Granted to Executive Officers under the 2007 Omnibus Long-Term Compensation Plan (incorporated herein by reference to Exhibits 10.01 and 10.02 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010) **
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21*
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25
|
|
|
|
|
|
10.26
|
|
|
|
|
|
10.27
|
|
|
|
|
|
10.28
|
|
Forms of Award Notices for Stock Options and Stock Appreciation Rights Granted to Executive Officers under the 2012 Omnibus Stock Compensation Plan (incorporated herein by reference to Exhibit 10.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, Exhibit 10.29 to the Company's Annual Report on Form 10-K for the year ended December 31, 2013, and Exhibit 10.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016) **
|
|
|
|
10.29
|
|
Form of Award Notice for Stock Options and Restricted Stock Unit Awards Granted to Executive Officers under the 2017 Omnibus Stock Compensation Plan (incorporated by reference to Exhibit 10.31, Exhibit 10.33, and Exhibit 10.34 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017) **
|
|
|
|
Exhibit Number
|
|
EXHIBIT INDEX
|
|
Description
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
21.01*
|
|
|
|
|
|
23.01*
|
|
|
|
|
|
31.01*
|
|
|
|
|
|
31.02*
|
|
|
|
|
|
32.01*
|
|
|
|
|
|
32.02*
|
|
|
|
|
|
99.01*
|
|
|
|
|
|
99.02*
|
|
|
|
|
|
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
|
|
|
|
101.CAL*
|
|
Inline XBRL Taxonomy Calculation Linkbase
|
|
|
|
101.DEF*
|
|
Inline XBRL Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
Inline XBRL Taxonomy Label Linkbase
|
|
|
|
101.PRE*
|
|
Inline XBRL Presentation Linkbase Document
|
|
|
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
*
|
Denotes exhibit filed or furnished herewith.
|
**
|
Management contract or compensatory plan or arrangement filed pursuant to Item 601(b) (10) (iii) of Regulation S-K.
|
|
|
Eastman Chemical Company
|
|
|
|
By:
|
|
/s/ Mark J. Costa
|
|
|
Mark J. Costa
|
|
|
Chief Executive Officer
|
Date:
|
February 26, 2020
|
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
DIRECTORS* (other than Mark J. Costa, who also signed as Principal Executive Officer):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Humberto P. Alfonso
|
|
Director
|
|
February 26, 2020
|
Humberto P. Alfonso
|
|
|
|
|
|
|
|
|
|
/s/ Brett D. Begemann
|
|
Director
|
|
February 26, 2020
|
Brett D. Begemann
|
|
|
|
|
|
|
|
|
|
/s/ Michael P. Connors
|
|
Director
|
|
February 26, 2020
|
Michael P. Connors
|
|
|
|
|
|
|
|
|
|
/s/ Robert M. Hernandez
|
|
Director
|
|
February 26, 2020
|
Robert M. Hernandez
|
|
|
|
|
|
|
|
|
|
/s/ Julie F. Holder
|
|
Director
|
|
February 26, 2020
|
Julie F. Holder
|
|
|
|
|
|
|
|
|
|
/s/ Renée J. Hornbaker
|
|
Director
|
|
February 26, 2020
|
Renée J. Hornbaker
|
|
|
|
|
|
|
|
|
|
/s/ Lewis M. Kling
|
|
Director
|
|
February 26, 2020
|
Lewis M. Kling
|
|
|
|
|
|
|
|
|
|
/s/ Kim A. Mink
|
|
Director
|
|
February 26, 2020
|
Kim A. Mink
|
|
|
|
|
|
|
|
|
|
/s/ James J. O'Brien
|
|
Director
|
|
February 26, 2020
|
James J. O'Brien
|
|
|
|
|
|
|
|
|
|
/s/ David W. Raisbeck
|
|
Director
|
|
February 26, 2020
|
David W. Raisbeck
|
|
|
|
|
|
|
|
|
|
* Edward L. Doheny II and Charles K. Stevens III were appointed to the Board of Directors in February 2020.
|
||||
|
|
|
|
|
•
|
prior to that time, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an “interested stockholder”;
|
•
|
upon consummation of the transaction that resulted in the stockholder becoming an “interested stockholder,” the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding certain shares); or
|
•
|
on or subsequent to that time, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the “interested stockholder.”
|
•
|
100% of the principal amount of the applicable series of notes to be redeemed; or
|
•
|
the sum of the present values of the Remaining Scheduled Payments (as defined below) of principal and interest on the applicable series of notes to be redeemed (not including any portion of such payments of interest accrued as of the date of redemption) discounted to the date of redemption on an annual basis (ACTUAL/ACTUAL (ICMA)) at the applicable Comparable Government Bond Rate (as defined below) plus 30 basis points with respect to the 2023 notes and 25 basis points with respect to the 2026 notes;
|
1)
|
we have or will become obliged to pay Additional Amounts (as defined below) with respect to such series of notes as a result of any change in, or amendment to, the laws, regulations, treaties, or rulings of the United States (“U.S.”) or any political subdivision of or in the U.S. or any taxing authority thereof or therein affecting taxation, or any change in, or amendment to, the application, official interpretation, administration or enforcement of such laws, regulations, treaties or rulings (including a holding by a court of competent jurisdiction in the U.S.), which change or amendment is enacted, adopted, announced or becomes effective on or after the date of the issuance of such series of notes; or
|
2)
|
on or after the date of the issuance of a series of the notes, any action is taken by a taxing authority of, or any action has been brought in a court of competent jurisdiction in, the U.S. or any political subdivision of or in the U.S. or any taxing authority thereof or therein, including any of those actions specified in clause (1) above, whether or not such action was taken or brought with respect to us, or there is any change, amendment, clarification, application or interpretation of such laws, regulations, treaties or rulings, which in any such case, will result in a material probability that we will be required to pay Additional Amounts with respect to such series of notes (it being understood that such material probability will be deemed to result if the written opinion of independent tax counsel to such effect is delivered to the trustee and the paying agent).
|
1)
|
any Tax that would not have been imposed but for (1) the existence of any present or former connection (other than a connection arising solely from the ownership of those notes or the receipt of payments in respect of those notes) between a holder of a note (or the beneficial owner for whose benefit such holder holds such note), or between a fiduciary, settlor, beneficiary, member or shareholder or other equity owner of, or possessor of a power over, that holder or beneficial owner (if that holder or beneficial owner is an estate, trust, partnership, corporation or other entity) and the U.S., including that holder or beneficial owner, or that fiduciary, settlor, beneficiary, member, shareholder or possessor, being or having been a citizen or resident or treated as a resident of the U.S. or being or having been engaged in trade or business or present in the U.S. or having had a permanent establishment in the U.S., (2) the failure of a beneficial owner or holder of the notes to comply with any certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the U.S. of the beneficial owner or holder of the notes that such beneficial owner or holder is legally able to comply with (including, but not limited to, the requirement to provide Internal Revenue Service Forms W-8BEN, W-8BEN-E, W-8ECI, or any subsequent versions thereof or successor thereto, and including, without limitation, any documentation requirement under an applicable income tax treaty) or (3) the presentation of a note for payment on a date more than 30 days after the later of the date on which that payment becomes due and payable and the date on which payment is duly provided for, except to the extent that the holder or beneficial owner would have been entitled to such Additional Amounts on presenting such note on any date during such 30-day period;
|
2)
|
any estate, inheritance, gift, sales, transfer, capital gains, excise, personal property, wealth or similar Tax;
|
3)
|
any Tax imposed by reason of the beneficial owner’s past or present status as a passive foreign investment company with respect to the U.S., a controlled foreign corporation with respect to the U.S., a foreign tax exempt organization with respect to the U.S. or a personal holding company with respect to the U.S. or as a corporation that accumulates earnings to avoid U.S. federal income tax;
|
4)
|
any Tax which is payable otherwise than by withholding or deducting from payment of principal of or premium, if any, or interest on the notes;
|
5)
|
any Tax required to be withheld by any paying agent from any payment of principal of and premium, if any, or interest on any note if that payment can be made without withholding by any other paying agent;
|
6)
|
any Tax imposed on interest received by (1) a 10-percent shareholder (as defined in Section 871(h)(3)(B) of the Code (as defined below), and the regulations that may be promulgated thereunder) of us, (2) a controlled foreign corporation that is related to us within the meaning of Section 864(d)(4) of the Code, or (3) a bank receiving interest described in Section 881(c)(3)(A) of the Code, to the extent such Tax would not have been imposed but for the beneficial owner’s status as described in clauses (1) through (3) of this paragraph (6);
|
7)
|
any Tax that would not have been imposed but for a change in law, regulation, or administrative or judicial interpretation that becomes effective more than 15 days after the payment becomes due or is duly provided for, whichever occurs later;
|
8)
|
any Tax required to be withheld or deducted under Sections 1471 through 1474 of the Code or any amended or successor version of such Sections that is substantively comparable (“FATCA”), any regulations or other guidance thereunder, or any agreement (including any intergovernmental agreement) entered into in connection therewith; or any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA or an intergovernmental agreement in respect of FATCA or
|
9)
|
any combination of items (1), (2), (3), (4), (5), (6), (7) and (8);
|
•
|
accept or cause a third party to accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;
|
•
|
deposit or cause a third party to deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and
|
•
|
deliver or cause to be delivered to the trustee the notes properly accepted together with an officers’ certificate stating the aggregate principal amount of notes or portions of notes being repurchased and that all conditions precedent to the Change of Control Offer and to the repurchase by us of notes pursuant to the Change of Control Offer have been complied with.
|
•
|
the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) other than to the Company or one of its Subsidiaries;
|
•
|
the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act, it being agreed that an employee of the Company or any of its Subsidiaries for whom shares are held under an employee stock ownership, employee retirement, employee savings or similar plan and whose shares are voted in accordance with the instructions of such employee shall not be a member of a “group” (as that term is used in Section 13(d)(3) of the Exchange Act) solely because such employee’s shares are held by a trustee under said plan) becomes the ultimate Beneficial Owner, directly or indirectly, of our Voting Stock representing more than 50% of the voting power of our outstanding Voting Stock;
|
•
|
we consolidate with, or merge with or into, any Person, or any Person consolidates with, or merges with or into, us, in any such event pursuant to a transaction in which any of our outstanding Voting Stock or Voting Stock of such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where our Voting Stock outstanding immediately prior to such transaction constitutes, or is converted into or exchanged for, Voting Stock representing more than 50% of the voting power of the Voting Stock of the surviving Person or its parent immediately after giving effect to such transaction; or
|
•
|
during any period of 24 consecutive calendar months, the majority of the members of our Board of Directors shall no longer be composed of individuals (a) who were members of our Board of Directors on the first day of such period or (b) whose election or nomination to our Board of Directors was approved by individuals referred to in clause (a) above constituting, at the time of such election or nomination, at least a majority of our Board of Directors or, if directors are nominated by a committee of our Board of Directors, constituting at the time of such nomination, at least a majority of such committee.
|
•
|
Mortgage on such property or shares of stock or Debt existing as of June 5, 2012;
|
•
|
Mortgages securing only notes issued under the indenture;
|
•
|
Mortgages on such property or shares of stock of or Debt of, any Person, which Mortgages are existing at the time (i) such Person became a Restricted Subsidiary, (ii) such Person is merged into or consolidated with the Company or any Subsidiary or (iii) we or a Subsidiary merges into or consolidates with such Person (in a transaction in which such Person becomes a Restricted Subsidiary), which Mortgage was not incurred in anticipation of such transaction and was outstanding prior to such transaction;
|
•
|
Mortgages in favor of us or any Restricted Subsidiary;
|
•
|
Mortgages in favor of any governmental body to secure progress, advance or other payments pursuant to any contract or provision of any statute;
|
•
|
Mortgages on such property or shares of stock or Debt existing at the time of acquisition thereof (including acquisition through merger or consolidation);
|
•
|
Mortgages on such property or shares of stock or Debt to secure the payment of all or any part of the purchase price or construction cost thereof or to secure any Debt incurred prior to, at the time of, or within 180 days after, the acquisition of such property or shares or Debt, the completion of any construction or the commencement of full operation, for the purpose of financing all or any part of the purchase price or construction cost thereof;
|
•
|
Mortgages incurred in connection with a Sale and Leaseback Transaction (as defined below) satisfying the provisions under “-Limitations on Sale and Leaseback Transactions”; and
|
•
|
any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Mortgage referred to in the foregoing bullet points; provided that such extension, renewal or replacement Mortgage shall be limited to all or a part of the same such property or shares of stock or Debt that secured the Mortgage extended, renewed or replaced (plus improvements on such property).
|
•
|
we or such Restricted Subsidiary could create Secured Debt pursuant to the provisions described under “-Restrictions on Secured Debt” on the Principal Property to be leased in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction without equally and ratably securing notes issued under the indenture; or
|
•
|
(a) the net proceeds of the sale or transfer of the Principal Property leased pursuant to such Sale and Leaseback Transaction is at least equal to the fair market value of such Principal Property and (b) within 180 days after such sale or transfer shall have been made by us or by a Restricted Subsidiary, we apply an amount not less than the greater of (i) the net proceeds of the sale of the Principal Property leased pursuant to such arrangement or (ii) the fair market value of the Principal Property so leased at the time of entering into such arrangement (as evidenced by an officers’ certificate) to the retirement of Funded Debt (as defined below) of the Company; provided that the amount to be applied to the retirement of Funded Debt of the Company shall be reduced by (x) the principal amount of notes issued under the indenture delivered within 180 days after such sale to the trustee for retirement and cancellation, and (y) the principal amount of Funded Debt other than notes issued under the indenture, voluntarily retired by us within 180 days after such sale. No retirement referred to in this bullet point may be effected by payment at maturity or pursuant to any mandatory sinking fund payment or mandatory prepayment provision.
|
•
|
the resulting, surviving or transferee Person is either the Company or is a corporation, partnership, trust or other entity organized under the laws of the U.S., any state therein or the District of Columbia and expressly assumes by supplemental indenture all of our obligations under the indenture and the notes of each series issued under the indenture; and
|
•
|
immediately after giving effect to the transaction, with respect to each series of notes issued under the indenture, no Event of Default (as defined below) or event which with notice or lapse of time would be an Event of Default has occurred and is continuing.
|
•
|
failure to pay principal of, or premium, if any, on the notes when due;
|
•
|
failure to pay any interest on the notes when due, continued for 30 days;
|
•
|
failure to perform any other covenant in the indenture, continued for 90 days after written notice has been given by the trustee, or the holders of at least 25% in aggregate principal amount of the outstanding notes of such series, as provided in the indenture; and
|
•
|
certain events in bankruptcy, insolvency or reorganization.
|
•
|
cure any ambiguity or correct any inconsistency in the indenture or any supplement thereto;
|
•
|
secure the notes;
|
•
|
evidence the assumption by a successor corporation of our obligations;
|
•
|
add covenants for the protection of the holders of the notes;
|
•
|
provide for the issuance of, and terms of, new notes as permitted under the indenture;
|
•
|
provide for uncertificated notes or to comply with the provisions of any clearing system or requirements of the trustee relating to transfers or exchanges of the notes;
|
•
|
comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended;
|
•
|
evidence and provide for the acceptance of appointment by a successor trustee;
|
•
|
in the case of subordinated debt securities, make any change relating to subordination that would limit or terminate the benefits available to any holder of senior indebtedness, provided that such change is made in accordance with the provisions of such senior debt securities;
|
•
|
add any guarantees with respect to the notes; and
|
•
|
make any change that we may deem necessary or desirable, provided that such provisions do not materially adversely affect the legal rights of any holder of the notes of the applicable series.
|
•
|
change the stated maturity of the principal of the notes;
|
•
|
reduce the principal amount or premium, if any, on the notes;
|
•
|
reduce the rate or extend the time of payment of interest;
|
•
|
reduce any amount payable on redemption;
|
•
|
change the currency in which the principal, premium, if any, or interest is payable;
|
•
|
impair the right to institute suit for the enforcement of any payment on the notes when due;
|
•
|
reduce the percentage in principal amount of the notes outstanding whose consent is required for any modification of the indenture; or
|
•
|
modify such amendment provisions, subject to certain exceptions.
|
•
|
to defease and be discharged from any and all obligations with respect to all or any notes with certain limited exceptions described below (referred to as “Legal Defeasance”); or
|
•
|
to be released from our obligations with respect to all or any notes under the restrictive covenants in the indenture and any related Events of Default (referred to as “Covenant Defeasance”).
|
•
|
the common depositary provides notification that it is unwilling, unable or no longer qualified to continue as depositary for the Euro Global Notes and a successor is not appointed within 90 days;
|
•
|
we in our discretion at any time determine not to have all of the notes represented by the Euro Global Notes; or
|
•
|
a default entitling the holders of the applicable notes to accelerate the maturity thereof has occurred and is continuing.
|
Return on Invested Capital (ROIC) % Performance
|
||||||
Eastman TSR Relative to Comparison Group (rTSR)
|
>6.51 to 7.50
|
7.51 to 8.50
|
8.51 to 9.50
|
9.51 to 10.50
|
10.51 to 11.50
|
>11.51
|
5th quintile
|
0.0
|
0.0
|
0.0
|
0.2
|
0.3
|
0.4
|
4th quintile
|
0.0
|
0.2
|
0.4
|
0.6
|
0.8
|
0.9
|
3rd quintile <50%
|
0.4
|
0.6
|
0.8
|
1.0
|
1.2
|
1.4
|
3rd quintile >50%
|
0.6
|
0.8
|
1.0
|
1.3
|
1.5
|
1.7
|
2nd quintile
|
1.0
|
1.2
|
1.4
|
1.7
|
1.9
|
2.1
|
1st quintile
|
1.0
|
1.8
|
2.0
|
2.3
|
2.4
|
2.5
|
•
|
your combined age and years of service with your Employer, the Company and its Subsidiaries equals or exceeds 75;
|
•
|
you have attained age 55 and 10 years of service with your Employer, the Company and its Subsidiaries;
|
•
|
you had attained age 50 or greater as of your hire date and you have attained 5 years of service with your Employer, the Company and its Subsidiaries; or
|
•
|
you have attained age 65.
|
European Union (“EU”) / European Economic Area (“EEA”)
|
Brazil
|
China
|
a.
|
If such termination occurs before the mid-point of the Performance Period, you (or your legal representative, as applicable) shall become vested in a number of Performance Shares equal to the Target Award; or
|
b.
|
If such termination occurs on or after the mid-point of the Performance Period, you (or your legal representative, as applicable) shall become vested in a number of Performance Shares equal to the Target Award multiplied by the multiplier as set forth in Exhibit A of this Award Notice corresponding to the Company's achievement of the most recent Performance Conditions available on the date of termination, as determined by the Committee in its sole discretion.
|
Estonia
|
Finland
|
France
|
Hong Kong
|
Malaysia
|
held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that if you reside outside the United States, you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data, limit the processing of Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consent herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your employment status or service and career with the Company will not be adversely affected; the only adverse consequence of refusing or withdrawing your consent is that the Company may not be able to grant you Performance Shares or other equity awards or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
|
Data, dalam bentuk elektronik atau lain-lain, bagi tujuan melaksanakan, mentadbir dan menguruskan penyertaan anda di dalam Pelan, termasuk segala pemindahan Data tersebut sebagaimana yang dikehendaki kepada broker, egen eskrow atau pihak ketiga dengan siapa Saham diterima semasa peletakhakan Performance Shares mungkin didepositkan. Anda memahami bahawa Data hanya akan disimpan selagi ia adalah diperlukan untuk melaksanakan, mentadbir, dan menguruskan penyertaan anda dalam Pelan. Anda memahami bahawa sekiranya anda menetap di luar Amerika Syarikat, anda boleh, pada bila-bila masa, melihat Data, meminta maklumat tambahan mengenai penyimpanan dan pemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakan ke atas Data, mengehadkan pemprosesan Data atau menolak atau menarik balik persetujuan dalam ini, dalam mana-mana kes, tanpa kos, dengan menghubungi secara bertulis wakil sumber manusia tempatan. Selanjutnya, anda memahami bahawa anda memberikan persetujuan di sini secara sukarela semata-mata. Sekiranya anda tidak bersetuju, atau sekiranya anda kemudian membatalkan persetujuan anda, status pekerjaan atau perkhidmatan dan kerjaya anda dengan Syarikat tidak akan terjejas; satu-satunya akibat buruk sekiranya anda tidak bersetuju atau menarik balik persetujuan andaadalah bahawa Syarikat tidak akan dapat memberikan Perforamance Shares kepada anda atau anugerah ekuiti lain atau mentadbir atau mengekalkan anugerah-anugerah tersebut. Oleh itu, anda memahami bahawa keengganan atau penarikan balik persetujuan anda boleh menjejaskan keupayaan anda untuk mengambil bahagian dalam Pelan. Untuk maklumat lebih lanjut mengenai akibat-akibat keengganan anda untuk memberikan keizinan atau penarikan balik keizinan, anda memahami bahawa anda boleh menghubungi wakil sumber manusia tempatan.
|
Mexico
|
Netherlands
|
Singapore
|
South Korea
|
1)
|
COLLECTION AND USE OF YOUR PERSONAL DATA.
|
2)
|
PROVISION OF YOUR PERSONAL DATA TO A THIRD PART AND TRANSFER OF YOUR PERSONAL DATA OVERSEAS.
|
3)
|
PROCESSING OF YOUR UNIQUE IDENTIFYING INFORMATION (RESIDENT REGISTRATION NUMBER).
|
Spain
|
Switzerland
|
United Kingdom
|
Return on Invested Capital (ROIC) % Performance
|
||||||
Eastman TSR Relative to Comparison Group rTSR
|
> 6.51 to 7.50
|
7.51 to 8.50
|
8.51 to 9.50
|
9.51 to 10.50
|
10.51 to 11.50
|
>11.51
|
5th quintile
|
0.0
|
0.0
|
0.0
|
0.2
|
0.3
|
0.4
|
4th quintile
|
0.0
|
0.2
|
0.4
|
0.6
|
0.8
|
0.9
|
3rd quintile <50%
|
0.4
|
0.6
|
0.8
|
1.0
|
1.2
|
1.4
|
3rd quintile > 50%
|
0.6
|
0.8
|
1.0
|
1.3
|
1.5
|
1.7
|
2nd quintile
|
1.0
|
1.2
|
1.4
|
1.7
|
1.9
|
2.1
|
1st quintile
|
1.0
|
1.8
|
2.0
|
2.3
|
2.4
|
2.5
|
EASTMAN CHEMICAL COMPANY SUBSIDIARIES
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION OR ORGANIZATION
|
|
Commonwealth Laminating & Coating (Hong Kong) Limited
|
Hong Kong
|
CP Films Vertriebs GmbH
|
Germany
|
Crown Operations International, LLC
|
Delaware
|
Eastman Administración, S.A. de C.V.
|
Mexico
|
Eastman Chemical (Barbados) SRL
|
Barbados
|
Eastman Chemical (China) Co., Ltd.
|
China
|
Eastman Chemical (China) Co., Ltd. - Guangzhou Branch
|
Guangzhou
|
Eastman Chemical (Malaysia) Sdn. Bhd.
|
Malaysia
|
Eastman Chemical (Nanjing) Co., Ltd.
|
China
|
Eastman Chemical (PPU) Pte. Ltd.
|
Singapore
|
Eastman Chemical Adhesives (Hong Kong) Limited
|
Hong Kong
|
Eastman Chemical Advanced Materials B.V.
|
Netherlands
|
Eastman Chemical AMI GmbH
|
Switzerland
|
Eastman Chemical AMI LLC
|
Massachusetts
|
Eastman Chemical AP Holdings B.V.
|
Netherlands
|
Eastman Chemical Argentina S.R.L.
|
Argentina
|
Eastman Chemical Australia Pty LTD - New Zealand Branch
|
New Zealand
|
Eastman Chemical Australia Pty. Ltd.
|
Australia
|
Eastman Chemical B.V.
|
Netherlands
|
Eastman Chemical B.V. - Czech Republic Representative Office
|
Czech Republic
|
Eastman Chemical B.V. - Denmark Branch
|
Denmark
|
Eastman Chemical B.V. - France Branch
|
France
|
Eastman Chemical B.V. - Hungarian Commercial Representative Office
|
Hungary
|
Eastman Chemical B.V. - Poland Representative Office
|
Poland
|
Eastman Chemical B.V. - South Africa Representative Office
|
South Africa
|
Eastman Chemical B.V., The Hague, Zug Branch
|
Switzerland
|
Eastman Chemical Barcelona, S.L.
|
Spain
|
Eastman Chemical Canada, Inc.
|
Ontario
|
Eastman Chemical Company Investments, Inc.
|
Delaware
|
Eastman Chemical do Brasil Ltda.
|
Brazil
|
Eastman Chemical EMEA B.V.
|
Netherlands
|
Eastman Chemical Europe S.a.r.l. (Branch)
|
United Arab Emirates
|
Eastman Chemical Europe S.a.r.l.
|
Luxembourg
|
Eastman Chemical Fibers IP GmbH
|
Switzerland
|
Eastman Chemical Fibers IP LLC
|
Massachusetts
|
Eastman Chemical Finance CN S.a.r.l.
|
Luxembourg
|
Eastman Chemical Finance EUR S.a.r.l.
|
Luxembourg
|
Eastman Chemical Finance GBP S.a.r.l.
|
Luxembourg
|
Eastman Chemical Finance SGD S.a.r.l.
|
Luxembourg
|
Eastman Chemical Finance USD S.a.r.l.
|
Luxembourg
|
Eastman Chemical Financial Corporation
|
Delaware
|
Eastman Chemical GDL S.a.r.l.
|
Luxembourg
|
Eastman Chemical Germany Holdings GmbH & Co. KG
|
Germany
|
Eastman Chemical Germany Management GmbH & Co. KG
|
Germany
|
Eastman Chemical Germany Verwaltungs-GmbH
|
Germany
|
Eastman Chemical Global Holdings LLC
|
Texas
|
Eastman Chemical Global Holdings S.a.r.l.
|
Luxembourg
|
EASTMAN CHEMICAL COMPANY SUBSIDIARIES
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION OR ORGANIZATION
|
|
Eastman Chemical Global Holdings S.a.r.l. - Foreign Branch
|
United Arab Emirates
|
Eastman Chemical GmbH
|
Germany
|
Eastman Chemical HK Limited
|
Hong Kong
|
Eastman Chemical Holdings do Brasil Ltda.
|
Brazil
|
Eastman Chemical Hong Kong B.V.
|
Netherlands
|
Eastman Chemical HTF GmbH
|
Germany
|
Eastman Chemical Iberica, S.L.
|
Spain
|
Eastman Chemical India Private Limited
|
India
|
Eastman Chemical Intermediates (Hong Kong) Limited
|
Hong Kong
|
Eastman Chemical International GmbH
|
Switzerland
|
Eastman Chemical International Holdings B.V.
|
Netherlands
|
Eastman Chemical International LP, LLC
|
Delaware
|
Eastman Chemical Japan Ltd.
|
Japan
|
Eastman Chemical Korea B.V.
|
Netherlands
|
Eastman Chemical Korea, Ltd.
|
Korea
|
Eastman Chemical Latin America, Inc.
|
Delaware
|
Eastman Chemical Ltd.
|
New York
|
Eastman Chemical Ltd. - Australia Branch
|
Australia
|
Eastman Chemical Ltd. - Singapore Branch
|
Singapore
|
Eastman Chemical Ltd. - Taiwan Branch
|
Taiwan
|
Eastman Chemical Luxembourg 3 S.a.r.l.
|
Luxembourg
|
Eastman Chemical Luxembourg Finance S.a.r.l.
|
Luxembourg
|
Eastman Chemical Luxembourg Holdings 1 LLC
|
Texas
|
Eastman Chemical Luxembourg Holdings 1 S.a.r.l.
|
Luxembourg
|
Eastman Chemical Luxembourg Holdings LLC
|
Delaware
|
Eastman Chemical Luxembourg Holdings S.a.r.l.
|
Luxembourg
|
Eastman Chemical Malaysia B.V.
|
Netherlands
|
Eastman Chemical Middelburg B.V.
|
Netherlands
|
Eastman Chemical Netherlands Limited
|
United Kingdom
|
Eastman Chemical Products Singapore Pte. Ltd.
|
Singapore
|
Eastman Chemical Regional UK
|
England
|
Eastman Chemical Resins, Inc.
|
Delaware
|
Eastman Chemical S.C.S.
|
Luxembourg
|
Eastman Chemical Singapore Pte. Ltd.
|
Singapore
|
Eastman Chemical Switzerland GmbH
|
Switzerland
|
Eastman Chemical Switzerland LLC
|
Tennessee
|
Eastman Chemical Technology BVBA
|
Belgium
|
Eastman Chemical Texas City, Inc.
|
Delaware
|
Eastman Chemical Uruapan, S.A. de C.V.
|
Mexico
|
Eastman Chemical US Finance LLC
|
Delaware
|
Eastman Chemical Workington Limited
|
England
|
Eastman Chemical, Asia Pacific Pte. Ltd.
|
Singapore
|
Eastman Chemical, Asia Pacific Pte. Ltd. - Vietnam Representative Office
|
Vietnam
|
Eastman Chemical, Europe, Middle East and Africa LLC
|
Delaware
|
Eastman Cogen Management L.L.C.
|
Texas
|
Eastman Cogeneration L.P.
|
Texas
|
Eastman Company UK Limited
|
England
|
EASTMAN CHEMICAL COMPANY SUBSIDIARIES
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION OR ORGANIZATION
|
|
Eastman de Argentina S.R.L.
|
Argentina
|
Eastman Fibers Korea Limited
|
Korea
|
Eastman Fibers Singapore Pte. Ltd.
|
Singapore
|
Eastman Foundation
|
Tennessee
|
Eastman France S.a.r.l.
|
France
|
Eastman Global Holdings, Inc.
|
Delaware
|
Eastman International Holdings, LLC
|
Delaware
|
Eastman International Management Company
|
Tennessee
|
Eastman Italia S.r.l.
|
Italy
|
Eastman Kimya Sanayi ve Ticaret Limited Sirketi
|
Turkey
|
Eastman LAR Distribucion, S. de R.L. de C.V.
|
Mexico
|
Eastman Mazzucchelli Hong Kong Limited
|
Hong Kong
|
Eastman Mazzucchelli Plastics (Shenzhen) Company Limited
|
China
|
Eastman MFG Japan Ltd.
|
Japan
|
Eastman Performance Films Canada, Inc.
|
British Columbia
|
Eastman Performance Films, LLC
|
Delaware
|
Eastman Shuangwei Fibers Company Limited (45%)
|
China
|
Eastman Spain L.L.C.
|
Delaware
|
Eastman Specialties Corporation
|
Delaware
|
Eastman Specialties Holdings Corporation
|
Delaware
|
Eastman Specialties OU
|
Estonia
|
Eastman Specialties S.a.r.l.
|
Luxembourg
|
Eastman Specialties Wuhan Youji Chemical Co., Ltd (51%)
|
China
|
Ecuataminco S.A.
|
Ecuador
|
Flexsys America L.P.
|
Delaware
|
Flexsys America LLC
|
Delaware
|
Flexsys Chemicals (M) Sdn Bhd
|
Malaysia
|
Flexsys Rubber Chemicals Limited
|
United Kingdom
|
Flexsys Verkauf GmbH
|
Germany
|
Flexsys Verwaltungs- und Beteiligungsgesellschaft mbH
|
Germany
|
HDK Industries, Inc.
|
Tennessee
|
Holston Defense Corporation
|
Virginia
|
Huper Optik International Pte. Ltd.
|
Singapore
|
Industriepark Nienburg GmbH
|
Germany
|
Kingsport Hotel, L.L.C.
|
Tennessee
|
Knowlton Technologies, LLC
|
Delaware
|
Monchem International LLC
|
Delaware
|
Mustang Pipeline Company
|
Texas
|
Nanjing Yangzi Eastman Chemical Ltd (50%)
|
China
|
Novomatrix International Trading (Shanghai) Co. Ltd.
|
Shanghai
|
Novomatrix, Inc.
|
Delaware
|
Qilu Eastman Specialty Chemicals, Ltd. (51%)
|
China
|
S E Investment LLC
|
Delaware
|
Sakra Hyco Pte. Ltd.
|
Singapore
|
Sakra Island Carbon Dioxide Pte Ltd (50%)
|
Singapore
|
Scandiflex do Brasil Ltda.
|
Brazil
|
Solchem Netherlands C.V.
|
Netherlands
|
EASTMAN CHEMICAL COMPANY SUBSIDIARIES
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION OR ORGANIZATION
|
|
Solchem, S.a.r.l.
|
Lux
|
Solutia (Thailand) Ltd.
|
Thailand
|
Solutia Brasil Ltda.
|
Brazil
|
Solutia Canada Inc.
|
Canada
|
Solutia Chemicals India Private Limited
|
India
|
Solutia Chemicals India Private Limited - Branch
|
Singapore
|
Solutia Deutschland GmbH
|
Germany
|
Solutia Europe BVBA - Portugal Representative Office
|
Portugal
|
Solutia Europe BVBA - Russia Representative Office
|
Russia
|
Solutia Europe BVBA/SPRL
|
Belgium
|
Solutia Greater China, LLC
|
Delaware
|
Solutia Hong Kong Limited
|
Hong Kong
|
Solutia Inc.
|
Delaware
|
Solutia International Trading (Shanghai) Co., Ltd.
|
Shanghai, China
|
Solutia Performance Products (Suzhou) Co., Ltd.
|
China
|
Solutia Performance Products Solutions, Ltd
|
Mauritius
|
Solutia Singapore Pte. Ltd.
|
Singapore
|
Solutia Therminol Co., Ltd. Suzhou
|
China
|
Solutia Tlaxcala, S.A. de C.V.
|
Mexico
|
Solutia UK Holdings Limited
|
United Kingdom
|
Solutia UK Investments Limited
|
United Kingdom
|
Solutia UK Limited
|
United Kingdom
|
Solutia Venezuela, S.R.L.
|
Venezuela
|
Southwall Europe GmbH
|
Germany
|
Southwall Insulating Glass, LLC
|
Delaware
|
Southwall Technologies Inc.
|
Delaware
|
St. Gabriel CC Company, LLC
|
Delaware
|
SunTek Australia Pty. Ltd.
|
Australia
|
SunTek UK Limited
|
United Kingdom
|
Taminco Argentina S.A.
|
Argentina
|
Taminco BVBA
|
Belgium
|
Taminco BVBA - The Philippines
|
Phillippines
|
Taminco Chile SpA
|
Chile
|
Taminco Choline Chloride (Shanghai) Co., Ltd.
|
Shanghai, China
|
Taminco Corporation
|
Delaware
|
Taminco de Guatemala, S.A.
|
Guatemala
|
Taminco do Brasil Produtos Quimicos Ltda.
|
Brazil
|
Taminco Finland Oy
|
Finland
|
Taminco Germany GmbH
|
Germany
|
Taminco Global Chemical LLC
|
Delaware
|
Taminco Group BVBA
|
Belgium
|
Taminco Group Holdings S.a.r.l.
|
Luxembourg
|
Taminco Holding Netherlands B.V.
|
Netherlands
|
Taminco Intermediate LLC
|
Delaware
|
Taminco Limitada
|
Costa Rica
|
Taminco Mexico S. de R.L. de C.V.
|
Mexico
|
Taminco Uruguay S.A.
|
Uruguay
|
EASTMAN CHEMICAL COMPANY SUBSIDIARIES
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION OR ORGANIZATION
|
|
Taminco US LLC
|
Delaware
|
TX Energy, LLC
|
Delaware
|
V-Kool International Pte. Ltd.
|
Singapore
|
Yixing Taminco Feed Additives Co., Ltd.
|
China
|
1.
|
I have reviewed this Annual Report on Form 10-K 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 Annual Report on Form 10-K 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.
|