| For Release October 27, 2005 | Contacts: |
| 5:00 p.m. Eastern Time | Media: Nancy Ledford |
| 423-229-5264 / nledford@eastman.com | |
| Investors: Greg Riddle | |
| 423-229-8692 / griddle@eastman.com |
Eastman Announces Record Quarterly Sales Revenue and Solid Third-Quarter Earnings
KINGSPORT, Tenn., October 27, 2005 - Eastman Chemical Company (NYSE:EMN) today announced record sales revenue of $1.82 billion and earnings of $1.50 per diluted share for third quarter 2005 versus earnings of $0.49 per diluted share for third quarter 2004. Excluding the items described below for both periods, third-quarter 2005 earnings were $1.53 per diluted share, while third-quarter 2004 earnings were $0.79 per diluted share. For reconciliation to reported earnings, see Table 8 in the accompanying third-quarter 2005 financial tables.
Included in the results for third quarter 2005 were asset impairments and restructuring charges of $4 million. Third-quarter 2004 results included asset impairments and restructuring charges of $42 million and a net deferred tax benefit of $8 million.
"Our strong base continued to deliver solid earnings despite the margin compression that occurred toward the end of the quarter due to volatile raw material and energy costs," said Brian Ferguson, chairman and CEO. "Year-over-year, our third-quarter earnings per share excluding the items described above increased by over 90 percent, and we remain on track for one of the best years in our company's history."
| (In millions, except per share amounts) | 3Q2005 | 3Q2004 | ||
| Sales revenue | $ | 1,816 | $ | 1,649 |
| Sales revenue excluding restructured, divested and consolidated CASPI product lines* | $ | 1,816 | $ | 1,575 |
| Earnings per diluted share | $ | 1.50 | $ | 0.49 |
| Earnings per diluted share excluding asset impairments and restructuring charges, and net deferred tax benefit* | $ | 1.53 | $ | 0.79 |
| Net cash provided by operating activities | $ | 165 | $ | 119 |
Operating earnings in third quarter 2005 were $198 million compared with operating earnings of $73 million in third quarter 2004. Excluding asset impairments and restructuring charges in both periods, operating earnings were $202 million in third quarter 2005 compared with $115 million in third quarter 2004. The year-over-year increase was due primarily to higher selling prices, higher sales volume from continuing product lines and ongoing cost reduction efforts. Third-quarter 2005 operating earnings increased despite raw material and energy costs that were more than $100 million over third-quarter 2004 levels.
Sales revenue for third quarter 2005 was $1.82 billion, a 10 percent increase over third quarter 2004 and a company record. The increase in sales revenue was due to higher selling prices throughout the company and increased sales volume from continuing product lines. Third-quarter 2004 sales revenue included sales revenue from restructured, divested and consolidated product lines in the coatings, adhesives, specialty polymers and inks (CASPI) segment. Excluding sales revenue from those product lines for third quarter 2004, year-over-year sales revenue increased by 15 percent and sales volume increased by 3 percent.
Eastman Division Results 3Q 2005 versus 3Q 2004
Coatings, Adhesives, Specialty Polymers and Inks - External sales revenue decreased by 7 percent as a result of the restructured, divested, and consolidated product lines in third quarter 2004. Sales revenue for continuing product lines in the segment increased by 17 percent primarily due to higher selling prices for cyclical commodity product lines. Operating earnings increased as higher selling prices and continued cost reduction efforts more than offset higher raw material and energy costs.
Performance Chemicals and Intermediates - External sales revenue increased by 16 percent primarily due to higher selling prices. Operating earnings increased substantially as a result of higher selling prices and continued cost reduction efforts that more than offset higher raw material and energy costs. Third-quarter operating earnings included $10 million of operating earnings from the achievement of certain milestones under an acetyls technology licensing agreement.
Specialty Plastics - External sales revenue increased by 8 percent as higher selling prices more than offset lower sales volume. The lower sales volume was attributed mainly to the impact on demand of higher selling prices that were largely the result of efforts to offset increased raw material and energy costs. Lower acetate sales volume for use in photographic film also contributed to the segment's overall lower sales volume. Operating earnings declined as higher sales revenue was more than offset by increased raw material and energy costs and expenditures related to growth efforts.
Voridian Division Results 3Q 2005 versus 3Q 2004
Polymers - External sales revenue increased by 19 percent primarily due to higher selling prices and increased sales volume. The higher selling prices were mainly the result of efforts to offset volatile raw material and energy costs. Operating earnings increased as higher selling prices and ongoing cost reduction efforts more than offset the higher raw material and energy costs.
Fibers - External sales revenue increased by 24 percent as a result of higher selling prices and increased sales volume. The higher sales volume was attributed to stronger demand for acetate tow and acetate yarn resulting from structural changes in their respective markets. Operating earnings increased as higher selling prices and increased sales volume more than offset higher raw material and energy costs.
Developing Businesses Division Results 3Q 2005 versus 3Q 2004 - External sales revenue for third quarter 2005 was $2 million compared with $31 million for third quarter 2004. The decline was attributed primarily to the shutdown of Cendian Corporation. Division third-quarter 2005 operating results included asset impairments and restructuring charges of $3 million related to the Cendian actions.
Cash Flow
Eastman generated $165 million in cash from operating activities in third quarter 2005 compared with cash from operating activities of $119 million in third quarter 2004. The increase is primarily attributed to strong operating results. In addition, the company made a contribution of $103 million to its U.S. defined benefit pension plans during the third quarter and has contributed $165 million year-to-date.
Outlook
Commenting on the outlook for the fourth quarter 2005, Ferguson said, "There is currently limited visibility regarding the degree to which the aftermath of the hurricanes in the Gulf Coast will affect the costs and availability of key raw materials and the economic growth for the remainder of 2005. In addition, normal seasonality typically reduces demand in some of our businesses and product lines in the fourth quarter. We remain focused on pricing as a key determinant of our profitability, particularly in the current business environment."
Eastman will host a conference call with industry analysts on Oct. 28 at 8:00 a.m. Eastern Time. To listen to the live webcast of the conference call, go to www.eastman.com, investors, event information, audio archives. To listen via telephone, the dial-in number is 913-981-5532, passcode number 290845. A telephone replay will be available continuously from 11:00 a.m. Eastern Time, Oct. 28, to 12:00 a.m. Eastern Time, Nov. 4, at 888-203-1112, passcode number 290845.
Eastman manufactures and markets chemicals, fibers and plastics worldwide. It provides key differentiated coatings, adhesives and specialty plastics products; is the world’s largest producer of PET polymers for packaging; and is a major supplier of cellulose acetate fibers. Founded in 1920 and headquartered in Kingsport, Tenn., Eastman is a FORTUNE 500 company with 2004 sales of $6.6 billion and approximately 12,000 employees. For more information about Eastman and its products, visit www.eastman.com.
Forward-Looking Statements: This news release includes forward-looking statements concerning current expectations for future economic and business conditions; raw material and energy costs; company strategies, actions and efforts to control and reduce costs and to increase overall selling prices and continue to improve operating and financial performance; and overall operating and financial performance for the fourth quarter of 2005. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company’s filings with the Securities and Exchange Commission, including the Form 10-Q filed for second quarter 2005 and the Form 10-Q to be filed for third quarter 2005, available on the Eastman web site at www.eastman.com in the Investors, SEC filings section.
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
5:00 PM EDT | |
FINANCIAL INFORMATION
October 27, 2005
For use in the Eastman Chemical Company Conference Call
at 8:00 AM (EDT), October 28, 2005.
Table of Contents
| Item | Page | |
| TABLE 1 | Statements of Earnings | 1 |
| TABLE 2 | Other Sales Information | 2-3 |
| TABLE 3 | Operating Earnings (Loss), Asset Impairments and Restructuring Charges and Other Operating Income | 4 |
| TABLE 4 | Eastman Chemical Company and Eastman Division Detail of Sales Revenue Excluding CASPI Restructured, Divested and Consolidated Product Lines | 5 |
| TABLE 5 | CASPI Segment Detail of Sales Revenue, Operating Earnings (Loss), Asset Impairments and Restructuring Charges, and Other Operating Income | 6 |
| TABLE 6 | Sales Revenue Change - External Sales | 7 |
| TABLE 7 | Percentage Growth in Sales Volume | 8-9 |
| TABLE 8 | Operating Earnings, Net Earnings, and Earnings Per Share Reconciliation | 10 |
| TABLE 9 | Statements of Cash Flows | 11 |
| TABLE 10 | Selected Balance Sheet Items | 12 |
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
5:00 PM EDT | |
Page 1 |
TABLE 1 - STATEMENTS OF EARNINGS
Third Quarter | First Nine Months | |||||||
| (Dollars in millions, except per share amounts) | 2005 | 2004 | 2005 | 2004 | ||||
| Sales | $ | 1,816 | $ | 1,649 | $ | 5,330 | $ | 4,922 |
| Cost of sales | 1,464 | 1,392 | 4,205 | 4,160 | ||||
| Gross profit | 352 | 257 | 1,125 | 762 | ||||
| Selling, general and administrative expenses | 108 | 107 | 339 | 329 | ||||
| Research and development expenses | 42 | 35 | 120 | 116 | ||||
| Asset impairments and restructuring charges, net | 4 | 42 | 23 | 188 | ||||
| Other operating income | -- | -- | (2) | -- | ||||
| Operating earnings | 198 | 73 | 645 | 129 | ||||
| Interest expense, net | 23 | 29 | 77 | 88 | ||||
| Income from equity investment in Genencor | -- | (5) | (173) | (14) | ||||
| Early debt extinguishment costs | -- | -- | 46 | -- | ||||
| Other (income) charges, net | (2) | 1 | (3) | 10 | ||||
| Earnings (loss) before income taxes | 177 | 48 | 698 | 45 | ||||
| Provision (benefit) for income taxes | 54 | 10 | 207 | (71) | ||||
| Net earnings | $ | 123 | $ | 38 | $ | 491 | $ | 116 |
| Earnings per share | ||||||||
| Basic | $ | 1.51 | $ | 0.50 | $ | 6.10 | $ | 1.51 |
| Diluted | $ | 1.50 | $ | 0.49 | $ | 6.01 | $ | 1.49 |
| Shares (in millions) outstanding at end of period | 81.5 | 77.9 | 81.5 | 77.9 | ||||
| Shares (in millions) used for earnings per share calculation | ||||||||
| Basic | 81.3 | 77.6 | 80.5 | 77.4 | ||||
| Diluted | 82.0 | 78.3 | 81.7 | 78.1 | ||||
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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Page 2 |
TABLE 2 - OTHER SALES INFORMATION
Third Quarter, 2005 | ||||||||
| (Dollars in millions) | Gross Sales | Interdivisional Sales | External Sales | |||||
| Sales by Division and Segment | ||||||||
| Eastman Division | ||||||||
| Coatings, Adhesives, Specialty Polymers, and Inks | $ | 333 | $ | -- | $ | 333 | ||
| Performance Chemicals and Intermediates | 599 | 171 | 428 | |||||
| Specialty Plastics | 190 | 11 | 179 | |||||
| Total Eastman Division | 1,122 | 182 | 940 | |||||
| Voridian Division | ||||||||
| Polymers | 667 | 21 | 646 | |||||
| Fibers | 251 | 23 | 228 | |||||
| Total Voridian Division | 918 | 44 | 874 | |||||
| Developing Businesses Division | ||||||||
| Developing Businesses | 2 | -- | 2 | |||||
| Total Developing Businesses Division | 2 | -- | 2 | |||||
| Total Eastman Chemical Company | $ | 2,042 | $ | 226 | $ | 1,816 | ||
Third Quarter, 2004 | ||||||||
Gross Sales | Interdivisional Sales | External Sales | ||||||
| Sales by Division and Segment | ||||||||
| Eastman Division | ||||||||
| Coatings, Adhesives, Specialty Polymers, and Inks | $ | 357 | $ | -- | $ | 357 | ||
| Performance Chemicals and Intermediates | 518 | 147 | 371 | |||||
| Specialty Plastics | 179 | 15 | 164 | |||||
| Total Eastman Division | 1,054 | 162 | 892 | |||||
| Voridian Division | ||||||||
| Polymers | 559 | 17 | 542 | |||||
| Fibers | 206 | 22 | 184 | |||||
| Total Voridian Division | 765 | 39 | 726 | |||||
| Developing Businesses Division | ||||||||
| Developing Businesses | 137 | 106 | 31 | |||||
| Total Developing Businesses Division | 137 | 106 | 31 | |||||
| Total Eastman Chemical Company | $ | 1,956 | $ | 307 | $ | 1,649 | ||
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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Page 3 |
TABLE 2 - OTHER SALES INFORMATION (Continued)
First Nine Months, 2005 | ||||||
| (Dollars in millions) | Gross Sales | Interdivisional Sales | External Sales | |||
| Sales by Division and Segment | ||||||
| Eastman Division | ||||||
| Coatings, Adhesives, Specialty Polymers, and Inks | $ | 978 | $ | 1 | $ | 977 |
| Performance Chemicals and Intermediates | 1,711 | 497 | 1,214 | |||
| Specialty Plastics | 572 | 36 | 536 | |||
| Total Eastman Division | 3,261 | 534 | 2,727 | |||
| Voridian Division | ||||||
| Polymers | 2,009 | 65 | 1,944 | |||
| Fibers | 704 | 71 | 633 | |||
| Total Voridian Division | 2,713 | 136 | 2,577 | |||
| Developing Businesses Division | ||||||
| Developing Businesses | 87 | 61 | 26 | |||
| Total Developing Businesses Division | 87 | 61 | 26 | |||
| Total Eastman Chemical Company | $ | 6,061 | $ | 731 | $ | 5,330 |
First Nine Months, 2004 | ||||||
Gross Sales | Interdivisional Sales | External Sales | ||||
| Sales by Division and Segment | ||||||
| Eastman Division | ||||||
| Coatings, Adhesives, Specialty Polymers, and Inks | $ | 1,272 | $ | -- | $ | 1,272 |
| Performance Chemicals and Intermediates | 1,402 | 428 | 974 | |||
| Specialty Plastics | 515 | 40 | 475 | |||
| Total Eastman Division | 3,189 | 468 | 2,721 | |||
| Voridian Division | ||||||
| Polymers | 1,622 | 50 | 1,572 | |||
| Fibers | 603 | 66 | 537 | |||
| Total Voridian Division | 2,225 | 116 | 2,109 | |||
| Developing Businesses Division | ||||||
| Developing Businesses | 418 | 326 | 92 | |||
| Total Developing Businesses Division | 418 | 326 | 92 | |||
| Total Eastman Chemical Company | $ | 5,832 | $ | 910 | $ | 4,922 |
Third Quarter | First Nine Months | |||||||
| (Dollars in millions) | 2005 | 2004 | 2005 | 2004 | ||||
| Sales by Region - External Sales | ||||||||
| United States and Canada | $ | 1,052 | $ | 969 | $ | 3,068 | $ | 2,784 |
| Europe, Middle East, and Africa | 332 | 333 | 1,051 | 1,137 | ||||
| Asia Pacific | 235 | 192 | 685 | 562 | ||||
| Latin America | 197 | 155 | 526 | 439 | ||||
| $ | 1,816 | $ | 1,649 | $ | 5,330 | $ | 4,922 | |
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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TABLE 3 - OPERATING EARNINGS (LOSS), ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES AND OTHER OPERATING INCOME
Third Quarter | First Nine Months | |||||||
| (Dollars in millions) | 2005 | 2004 | 2005 | 2004 | ||||
| Operating Earnings (Loss) by Segment and Certain Items | ||||||||
| Eastman Division Segments | ||||||||
| Coatings, Adhesives, Specialty Polymers, and Inks | ||||||||
| Operating earnings (loss) | $ | 64 | $ | 38 | $ | 195 | $ | 44 |
| Asset impairments and restructuring charges | 1 | 4 | 3 | 79 | ||||
| Other operating income | -- | -- | (2) | -- | ||||
| Performance Chemicals and Intermediates | ||||||||
| Operating earnings (loss) | 47 | (10) | 149 | 10 | ||||
| Asset impairments and restructuring charges | -- | 30 | 4 | 37 | ||||
| Specialty Plastics | ||||||||
| Operating earnings (loss) | 17 | 18 | 59 | 14 | ||||
| Asset impairments and restructuring charges | -- | 3 | -- | 53 | ||||
| Total operating earnings (loss) | $ | 128 | $ | 46 | $ | 403 | $ | 68 |
| Total asset impairments and restructuring charges | $ | 1 | $ | 37 | $ | 7 | $ | 169 |
| Total other operating income | $ | -- | $ | -- | $ | (2) | $ | -- |
| Voridian Division Segments | ||||||||
| Polymers | ||||||||
| Operating earnings (loss) | $ | 27 | $ | 3 | $ | 146 | $ | 11 |
| Asset impairments and restructuring charges | -- | 1 | -- | 13 | ||||
| Fibers | ||||||||
| Operating earnings (loss) | 58 | 44 | 148 | 110 | ||||
| Total operating earnings (loss) | $ | 85 | $ | 47 | $ | 294 | $ | 121 |
| Total asset impairments and restructuring charges | $ | -- | $ | 1 | $ | -- | $ | 13 |
| Developing Business Division Segment | ||||||||
| Developing Businesses | ||||||||
| Operating earnings (loss) | $ | (14) | $ | (21) | $ | (57) | $ | (60) |
| Asset impairments and restructuring charges | 3 | 4 | 16 | 6 | ||||
| Total operating earnings (loss) | $ | (14) | $ | (21) | $ | (57) | $ | (60) |
| Total asset impairments and restructuring charges | $ | 3 | $ | 4 | $ | 16 | $ | 6 |
| Eliminations to operating earnings (loss) | $ | (1) | $ | 1 | $ | 5 | $ | -- |
| Total Eastman Chemical Company | ||||||||
| Total operating earnings (loss) | $ | 198 | $ | 73 | $ | 645 | $ | 129 |
| Total asset impairments and restructuring charges | $ | 4 | $ | 42 | $ | 23 | $ | 188 |
| Total other operating income | $ | -- | $ | -- | $ | (2) | $ | -- |
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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TABLE 4a- EASTMAN CHEMICAL COMPANY DETAIL OF SALES REVENUE
First Quarter | Second Quarter | Third Quarter | ||||||||
| (Dollars in millions) | 2005 | 2005 | 2005 | |||||||
| Sales Revenue | $ | 1,762 | $ | 1,752 | $ | 1,816 | ||||
Less: CASPI restructured, divested, and consolidated product lines (1) | -- | -- | -- | |||||||
| Sales revenue - continuing product lines | $ | 1,762 | $ | 1,752 | $ | 1,816 | ||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Twelve Months | ||||||
| (Dollars in millions) | 2004 | 2004 | 2004 | 2004 | 2004 | |||||
| Sales Revenue | $ | 1,597 | $ | 1,676 | $ | 1,649 | $ | 1,658 | $ | 6,580 |
Less: CASPI restructured, divested, and consolidated product lines (1) | 174 | 193 | 74 | -- | 441 | |||||
| Sales revenue - continuing product lines | $ | 1,423 | $ | 1,483 | $ | 1,575 | $ | 1,658 | $ | 6,139 |
TABLE 4b- EASTMAN DIVISION DETAIL OF SALES REVENUE
First Quarter | Second Quarter | Third Quarter | ||||||||
| (Dollars in millions) | 2005 | 2005 | 2005 | |||||||
| Sales Revenue | $ | 885 | $ | 902 | $ | 940 | ||||
Less: CASPI restructured, divested, and consolidated product lines (1) | -- | -- | -- | |||||||
| Sales revenue - continuing product lines | $ | 885 | $ | 902 | $ | 940 | ||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Twelve Months | ||||||
| (Dollars in millions) | 2004 | 2004 | 2004 | 2004 | 2004 | |||||
| Sales Revenue | $ | 886 | $ | 943 | $ | 892 | $ | 824 | $ | 3,545 |
Less: CASPI restructured, divested, and consolidated product lines (1) | 174 | 193 | 74 | -- | 441 | |||||
| Sales revenue - continuing product lines | $ | 712 | $ | 750 | $ | 818 | $ | 824 | $ | 3,104 |
(1) These businesses and product lines include acrylate ester monomers, composites (unsaturated polyester resins), inks and graphic arts raw materials, liquid resins, powder resins and textile chemicals divested on July 31, 2004 as well as other restructuring, divestiture and consolidation activities that the Company has completed related to these businesses and product lines.
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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Page 6 |
TABLE 5 - CASPI SEGMENT DETAIL OF SALES REVENUE, OPERATING EARNINGS (LOSS), ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, AND OTHER OPERATING INCOME
First Quarter | Second Quarter | Third Quarter | ||||||||
| (Dollars in millions) | 2005 | 2005 | 2005 | |||||||
| Sales Revenue | ||||||||||
CASPI restructured, divested, and consolidated product lines (1) | $ | -- | $ | -- | $ | -- | ||||
| Continuing product lines | 319 | 325 | 333 | |||||||
| Total sales revenue | $ | 319 | $ | 325 | $ | 333 | ||||
| Operating earnings (loss) | ||||||||||
CASPI restructured, divested, and consolidated product lines (1) (2) | $ | -- | $ | -- | $ | -- | ||||
| Continuing product lines | 67 | 64 | 64 | |||||||
| Total operating earnings (loss) | $ | 67 | $ | 64 | $ | 64 | ||||
| Asset impairments and restructuring charges | ||||||||||
CASPI restructured, divested, and consolidated product lines (1) | $ | 1 | $ | 1 | $ | 1 | ||||
| Continuing product lines | -- | -- | -- | |||||||
| Total asset impairments and restructuring charges | $ | 1 | $ | 1 | $ | 1 | ||||
| Other Operating income | ||||||||||
CASPI restructured, divested, and consolidated product lines (1) | $ | (2) | $ | -- | $ | -- | ||||
| Continuing product lines | -- | -- | -- | |||||||
| Total other operating income | $ | (2) | $ | -- | $ | -- |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Twelve Months | ||||||
| (Dollars in millions) | 2004 | 2004 | 2004 | 2004 | 2004 | |||||
| Sales Revenue | ||||||||||
CASPI restructured, divested, and consolidated product lines (1) | $ | 174 | $ | 193 | $ | 74 | $ | -- | $ | 441 |
| Continuing product lines | 265 | 283 | 283 | 282 | 1,113 | |||||
| Total sales revenue | $ | 439 | $ | 476 | $ | 357 | $ | 282 | $ | 1,554 |
| Operating earnings (loss) | ||||||||||
CASPI restructured, divested, and consolidated product lines (1) (2) | $ | (11) | $ | (72) | $ | (2) | $ | -- | $ | (85) |
| Continuing product lines | 41 | 48 | 40 | 23 | 152 | |||||
| Total operating earnings (loss) | $ | 30 | $ | (24) | $ | 38 | $ | 23 | $ | 67 |
| Asset Impairments and Restructuring Charges | ||||||||||
CASPI restructured, divested, and consolidated product lines (1) | $ | 5 | $ | 66 | $ | 1 | $ | -- | $ | 72 |
| Continuing product lines | 1 | 3 | 3 | 2 | 9 | |||||
| Total asset impairments and restructuring charges | $ | 6 | $ | 69 | $ | 4 | $ | 2 | $ | 81 |
(1) See note (1) to Table 4a and 4b
(2) Includes allocated costs consistent with the Company’s historical practices, some of which may remain and could be reallocated to the remainder of the segment and other segments.
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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TABLE 6 - SALES REVENUE CHANGE - EXTERNAL SALES
Third Quarter, 2005 Compared to Third Quarter, 2004 | |||||||||
Change in External Sales Revenue Due To | |||||||||
Revenue Change | Volume Effect | Price Effect | Product Mix Effect | Exchange Rate Effect | |||||
| Eastman Division | |||||||||
| Coatings, Adhesives, Specialty Polymers, | |||||||||
| and Inks | (7) % | (19) % | 13 % | (1) % | -- % | ||||
| Performance Chemicals and Intermediates | 16 % | (1) % | 17 % | -- % | -- % | ||||
| Specialty Plastics | 8 % | (3) % | 12 % | (1) % | -- % | ||||
| Total Eastman Division | 5 % | (8) % | 14 % | (1) % | -- % | ||||
| Voridian Division | |||||||||
| Polymers | 19 % | 4 % | 14 % | -- % | 1 % | ||||
| Fibers | 24 % | 11 % | 13 % | -- % | -- % | ||||
| Total Voridian Division | 20 % | 6 % | 14 % | -- % | -- % | ||||
| Developing Businesses Division | |||||||||
| Developing Businesses | (95) % | -- % | -- % | (95) % | -- % | ||||
| Total Developing Businesses Division | (95) % | -- % | -- % | (95) % | -- % | ||||
| Total Eastman Chemical Company | 10% | (2) % | 14% | (2) % | -- % | ||||
First Nine Months, 2005 Compared to First Nine Months, 2004 | |||||||||
Change in External Sales Revenue Due To | |||||||||
Revenue Change | Volume Effect | Price Effect | Product Mix Effect | Exchange Rate Effect | |||||
| Eastman Division | |||||||||
| Coatings, Adhesives, Specialty Polymers, | |||||||||
| and Inks | (23) % | (35) % | 11 % | -- % | 1 % | ||||
| Performance Chemicals and Intermediates | 25 % | 8 % | 19 % | (3) % | 1 % | ||||
| Specialty Plastics | 13 % | 2 % | 10 % | -- % | 1 % | ||||
| Total Eastman Division | -- % | (13) % | 14 % | (1) % | -- % | ||||
| Voridian Division | |||||||||
| Polymers | 24 % | -- % | 23 % | -- % | 1 % | ||||
| Fibers | 18 % | 7 % | 9 % | 2 % | -- % | ||||
| Total Voridian Division | 22 % | 2 % | 19 % | -- % | 1 % | ||||
| Developing Businesses Division | |||||||||
| Developing Businesses | (72) % | -- % | -- % | (72) % | -- % | ||||
| Total Developing Businesses Division | (72) % | -- % | -- % | (72) % | -- % | ||||
| Total Eastman Chemical Company | 8 % | (7) % | 16 % | (2) % | 1 % | ||||
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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TABLE 7 - PERCENTAGE GROWTH IN SALES VOLUME
Third Quarter, 2005 Compared to | |||||
Third Quarter, 2004 | |||||
Total | |||||
External | Interdivisional | Including | |||
Volume | Volume | Interdivisional | |||
| Eastman Division | |||||
| Coatings, Adhesives, Specialty Polymers, and Inks | (19) % | (53) % | (19) % | ||
| Performance Chemicals and Intermediates | -- % | 5 % | 2 % | ||
| Specialty Plastics | (3) % | (33) % | (8) % | ||
| Total Eastman Division | (7) % | 2 % | (5) % | ||
| Voridian Division | |||||
| Polymers | 4 % | 7 % | 5 % | ||
| Fibers | 11 % | 4 % | 7 % | ||
| Total Voridian Division | 6 % | 4 % | 5 % | ||
| Developing Businesses Division | |||||
| Developing Businesses | >100 % | -- % | >100 % | ||
| Total Developing Businesses Division | >100 % | -- % | >100 % | ||
| Total Eastman Chemical Company | (1) % | ||||
| Regional sales volume growth | |||||
| United States and Canada | (1) % | ||||
| Europe, Middle East, and Africa | (11) % | ||||
| Asia Pacific | 9 % | ||||
| Latin America | 6 % | ||||
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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TABLE 7 - PERCENTAGE GROWTH IN SALES VOLUME (Continued)
First Nine Months, 2005 Compared to | |||||
First Nine Months, 2004 | |||||
Total | |||||
External | Interdivisional | Including | |||
Volume | Volume | Interdivisional | |||
| Eastman Division | |||||
| Coatings, Adhesives, Specialty Polymers, and Inks | (34) % | >100 % | (34) % | ||
| Performance Chemicals and Intermediates | 9 % | 3 % | 7 % | ||
| Specialty Plastics | 2 % | (27) % | (3) % | ||
| Total Eastman Division | (10) % | 1 % | (8) % | ||
| Voridian Division | |||||
| Polymers | -- % | 10 % | -- % | ||
| Fibers | 7 % | 1 % | 4 % | ||
| Total Voridian Division | 1 % | 3 % | 1 % | ||
| Developing Businesses Division | |||||
| Developing Businesses | >100 % | -- % | >100 % | ||
| Total Developing Businesses Division | >100 % | -- % | >100 % | ||
| Total Eastman Chemical Company | (5) % | ||||
| Regional sales volume growth | |||||
| United States and Canada | (2) % | ||||
| Europe, Middle East, and Africa | (19) % | ||||
| Asia Pacific | 5 % | ||||
| Latin America | (8) % | ||||
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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TABLE 8 - OPERATING EARNINGS, NET EARNINGS, AND EARNINGS PER SHARE RECONCILIATION
OPERATING EARNINGS, NET EARNINGS, AND NET EARNINGS PER DILUTED SHARE
Third Quarter 2005 | ||||||||
| (Dollars in millions) | Operating Earnings | Earnings Before Tax | Net Earnings | Net Earnings Per Diluted Share | ||||
As reported | $ | 198 | $ | 177 | $ | 123 | $ | 1.50 |
Certain Items: | ||||||||
| Asset impairments and restructuring charges | 4 | 4 | 3 | 0.03 | ||||
Excluding certain items | $ | 202 | $ | 181 | $ | 126 | $ | 1.53 |
Third Quarter 2004 | ||||||||
| (Dollars in millions) | Operating Earnings | Earnings Before Tax | Net Earnings | Net Earnings Per Diluted Share | ||||
As reported | $ | 73 | $ | 48 | $ | 38 | $ | 0.49 |
Certain Items: | ||||||||
| Asset impairments and restructuring charges | 42 | 42 | 31 | 0.40 | ||||
| Net deferred tax benefit related to assets held for sale in the CASPI segment | -- | -- | (8) | (0.10) | ||||
Excluding certain items | $ | 115 | $ | 90 | $ | 61 | $ | 0.79 |
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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TABLE 9 - STATEMENTS OF CASH FLOWS
First Nine Months | ||||
| (Dollars in millions) | 2005 | 2004 | ||
| Cash flows from operating activities | ||||
| Net earnings | $ | 491 | $ | 116 |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||
| Depreciation and amortization | 229 | 243 | ||
| Asset impairments | 1 | 131 | ||
| Income from equity investment in Genencor | (173) | (14) | ||
| Early debt extinguishment costs | 46 | -- | ||
| Provision (benefit) for deferred income taxes | 130 | (82) | ||
| Changes in operating assets and liabilities: | ||||
| (Increase) decrease in receivables | (35) | (151) | ||
| (Increase) decrease in inventories | (141) | 9 | ||
| Increase (decrease) in trade payables | (5) | 10 | ||
| Increase (decrease) in liabilities for employee benefits and incentive pay | (108) | 35 | ||
| Other items, net | (61) | 4 | ||
| Net cash provided by operating activities | 374 | 301 | ||
| Cash flows from investing activities | ||||
| Additions to properties and equipment | (224) | (171) | ||
| Proceeds from sale of assets | 50 | 115 | ||
| Proceeds from sale of equity investment in Genencor | 417 | -- | ||
| Additions to capitalized software | (8) | (11) | ||
| Other items, net | (5) | (10) | ||
| Net cash provided by (used in) investing activities | 230 | (77) | ||
| Cash flows from financing activities | ||||
| Net increase (decrease) in commercial paper, credit facility and other short-term borrowings | (84) | (15) | ||
| Repayment of borrowings | (544) | (500) | ||
| Dividends paid to stockholders | (106) | (102) | ||
| Proceeds from stock option exercises and other items | 91 | 14 | ||
| Net cash used in financing activities | (643) | (603) | ||
| Net change in cash and cash equivalents | (39) | (379) | ||
| Cash and cash equivalents at beginning of period | 325 | 558 | ||
| Cash and cash equivalents at end of period | $ | 286 | $ | 179 |
EASTMAN CHEMICAL COMPANY - EMN | October 27, 2005 |
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TABLE 10 - SELECTED BALANCE SHEET ITEMS
September 30, | December 31, | |||
| (Dollars in millions) | 2005 | 2004 | ||
| Current Assets | $ | 1,844 | $ | 1,768 |
| Net Properties | 3,134 | 3,192 | ||
| Other Assets | 630 | 879 | ||
| Total Assets | $ | 5,608 | $ | 5,839 |
| Payables and Other Current Liabilities | $ | 1,021 | $ | 1,098 |
| Short-term Borrowings | 4 | 1 | ||
| Long-term Borrowings | 1,436 | 2,061 | ||
| Other Liabilities | 1,552 | 1,495 | ||
| Stockholders’ Equity | 1,595 | 1,184 | ||
| Total Liabilities and Stockholders’ Equity | $ | 5,608 | $ | 5,839 |