For Release July 26, 2007 Contacts:
5:00 p.m. EDT Media: Tracy Kilgore
423-224-0498 / tjkilgore@eastman.com
Investors: Greg Riddle
212-835-1620 / griddle@eastman.com
Eastman Announces Second-Quarter 2007 Financial Results
KINGSPORT, Tenn., July 26, 2007 – Eastman Chemical Company (NYSE:EMN) today announced earnings of $1.22 per diluted share for second quarter 2007 versus earnings of $1.37 per diluted share for second quarter 2006. Excluding the items described in the following paragraph, second-quarter 2007 earnings were $1.34 per diluted share, while second-quarter 2006 earnings were $1.40 per diluted share. For reconciliations to reported company and segment earnings, see Tables 3, 5 and 6 in the accompanying second-quarter 2007 financial tables.
Included in the results for second quarter 2007 were accelerated depreciation costs of $14 million resulting from continuing actions at the company's Longview, Texas, and Columbia, S.C., facilities and asset impairments and restructuring charges of $2 million primarily related to the recently completed sale of the company's San Roque, Spain, PET facility. Second-quarter 2006 results included asset impairments and restructuring charges of $3 million.
"Our second-quarter results demonstrate that we remain focused on delivering strong earnings from our solid base of businesses," said Brian Ferguson, chairman and CEO. "At the same time, we are making great progress on our strategic initiatives, including two gasification projects in the Gulf Coast."
| (In millions, except per share amounts) | 2Q2007 | 2Q2006 |
| Sales revenue | $1,895 | $1,929 |
| Earnings per diluted share | $1.22 | $1.37 |
| Earnings per diluted share excluding accelerated depreciation costs and asset impairments and restructuring charges* | $1.34 | $1.40 |
| Net cash provided by operating activities | $165 | $126 |
Sales revenue for second quarter 2007 was $1.9 billion, similar to second quarter 2006. Second-quarter 2007 sales revenue included contract ethylene sales resulting from the fourth-quarter 2006 divestiture of the polyethylene business while second-quarter 2006 sales revenue included sales from divested product lines. Excluding the contract ethylene sales and sales from the divested product lines, sales revenue increased by 6 percent due primarily to higher selling prices. For reconciliations to reported company and segment sales revenue, see Tables 4 and 5 in the accompanying second-quarter 2007 financial tables.
Operating earnings in second quarter 2007 were $168 million compared with operating earnings of $190 million in second quarter 2006. Excluding accelerated depreciation costs from second quarter 2007 and asset impairments and restructuring charges from both second quarter 2007 and second quarter 2006, operating earnings were $184 million in second quarter 2007 compared with $193 million in second quarter 2006. The decline was due primarily to lower operating results in the Performance Polymers and Fibers segments. The company's second-quarter 2007 raw material and energy costs increased by approximately $50 million compared with second quarter 2006.
Segment Results 2Q 2007 versus 2Q 2006
Coatings, Adhesives, Specialty Polymers and Inks– Sales revenue increased by 4 percent as higher selling prices, a favorable shift in product mix, and the favorable effect of a strengthening Euro versus the U.S. dollar were partially offset by lower sales volume. The lower sales volume was due to the divestiture of the company's Epolene product lines in fourth quarter 2006. Excluding asset impairments and restructuring charges of $1 million for second quarter 2006, operating earnings for the segment were $66 million in second quarter 2007 compared with best-ever results of $69 million in second quarter 2006.
Fibers– Sales revenue was unchanged as higher selling prices were offset by lower sales volume. The higher selling prices were due to efforts to offset higher raw material and energy costs, particularly for wood pulp. The lower sales volume was attributed to customer buying patterns for acetate tow and lower demand for acetyl chemicals as a result of a customer operational disruption. Operating earnings were $51 million in second quarter 2007 compared with $61 million in second quarter 2006 primarily due to lower sales volume and higher raw material and energy costs.
Performance Chemicals and Intermediates– Sales revenue increased by 28 percent due to higher sales volume, with both sales volume and selling prices significantly impacted by contract ethylene sales resulting from the divestiture of the polyethylene business. Excluding the contract ethylene sales and divested product lines, PCI's sales revenue increased 19 percent due to an increase in sales volume of 13 percent and higher selling prices. As a result, operating earnings excluding accelerated depreciation costs increased to $64 million in the second quarter, which was PCI's best quarterly performance in 10 years. This compares with $45 million in operating earnings in the second quarter 2006. The higher sales revenue and operating earnings were attributed to strong demand, particularly for olefin-based derivative products and acetyl chemicals in Asia Pacific and the United States.
Performance Polymers– Sales revenue declined by 26 percent due mainly to the divestiture of the polyethylene business. Sales revenue for PET polymers product lines decreased 3 percent due primarily to lower sales volume partially offset by higher selling prices. The lower sales volume was primarily attributed to lower sales volume in the European region resulting from the divestiture of the Spain PET facility. The decrease in sales volume was partially offset by higher sales volume in North America due to increased operating rates for the company's South Carolina PET facility based on IntegRex™ technology. Second-quarter 2007 results included asset impairments and restructuring charges of $1 million and accelerated depreciation costs of $6 million. Excluding those items, operating results for continuing PET product lines were a loss of $6 million in second quarter 2007 compared to a loss of $1 million in second quarter 2006. The change, primarily in North America, was attributed to continued volatile raw material and energy costs and low PET industry operating rates which resulted in compressed gross margins. The change was partially offset by improved results for PET in Europe due to strong end-market demand and improved cost structure resulting from the divestiture of the Spain site.
Specialty Plastics– Sales revenue increased by 7 percent due primarily to higher selling prices in response to higher raw material and energy costs. Sales volume increased slightly as higher volumes in copolyester and cellulosic products were mostly offset by a decline in demand for polyester products used in photographic and optical films. Second quarter 2007 operating earnings included asset impairments and restructuring charges of $1 million and accelerated depreciation costs of $1 million. Excluding those items, operating earnings increased to $20 million in second quarter 2007 from $14 million in second quarter 2006. The increase was due primarily to higher selling prices more than offsetting higher raw material and energy costs.
Cash Flow
Eastman generated $165 million in cash from operating activities during second quarter 2007. The company completed its 2007 contribution of $100 million to its U.S. defined benefit pension plans during the first quarter 2007. Priorities for use of available cash continue to be to pay the dividend, fund targeted growth initiatives, and to repurchase shares under the authorized share repurchase plan. During the second quarter, share repurchases totaled $53 million.
Outlook
Commenting on the outlook for third quarter 2007, Ferguson said, "During the third quarter, we expect continued solid results in all of our segments, with the exception of Performance Polymers outside the U.S. We also expect continued high and volatile raw material and energy costs for the company. As a result, we expect third quarter 2007 earnings per share excluding items related to ongoing strategic decisions to be slightly above third quarter 2006 earnings per share excluding items of $1.24."
Eastman will host a conference call with industry analysts on July 27 at 8:00 a.m. EDT. To listen to the live webcast of the conference call, go to www.eastman.com, Investors, Presentations. To listen via telephone, the dial-in number is (719) 457-2617, passcode number 2394993. A telephone replay will be available continuously from 11:00 a.m. EDT, July 27, to 12:00 midnight EDT, August 3, at 888-203-1112, passcode number 2394993.
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. As a Responsible Care® company, Eastman is committed to achieving the highest standards of health, safety, environmental and security performance. Founded in 1920 and headquartered in Kingsport, Tenn., Eastman is a FORTUNE 500 company with 2006 sales of $7.5 billion and approximately 11,000 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; operation of new manufacturing facilities; costs of and improved financial performance from strategic restructuring decisions and actions; and earnings of the company and its segments for third-quarter 2007. 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 the first quarter 2007 and the Form 10-Q to be filed for the second quarter 2007, available on the Eastman web site at www.eastman.com in the Investors, SEC filings section.
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
| | 5:00 PM EDT |
| | |
FINANCIAL INFORMATION
July 26, 2007
For use in the Eastman Chemical Company Conference Call
at 8:00 AM (EDT), July 27, 2007.
Table of Contents
| Item | | Page |
| | | |
| TABLE 1 | Statements of Earnings | 1 |
| | | |
| TABLE 2A | Other Sales Information | 2 |
| | | |
| TABLE 2B | Sales Revenue Change | 2 |
| | | |
| TABLE 2C | Sales by Region | 3 |
| | | |
| TABLE 2D | Percentage Growth in Sales Volume by Region | 3 |
| | | |
| TABLE 3 | Operating Earnings (Loss), Accelerated Depreciation and Asset Impairments and Restructuring Charges | 4 |
| | | |
| TABLE 4 | Eastman Chemical Company Detail of Sales Revenue | 5 |
| | | |
| TABLE 5 | Performance Polymers Segment Detail of Sales Revenue, Operating Earnings (Loss), Accelerated Depreciation and Asset Impairments and Restructuring Charges | 6 |
| | | |
| TABLE 6 | Operating Earnings, Net Earnings, and Earnings Per Share Reconciliation | 8 |
| | | |
| TABLE 7 | Statements of Cash Flows | 10 |
| | | |
| TABLE 8 | Selected Balance Sheet Items | 11 |
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
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TABLE 1 – STATEMENTS OF EARNINGS
| | | Second Quarter | | First Six Months |
(Dollars in millions, except per share amounts) | | 2007 | | 2006 | | 2007 | | 2006 |
| | | | | | | | | |
| Sales | $ | 1,895 | $ | 1,929 | $ | 3,690 | $ | 3,732 |
| Cost of sales | | 1,575 | | 1,579 | | 3,077 | | 3,051 |
| Gross profit | | 320 | | 350 | | 613 | | 681 |
| | | | | | | | | |
| Selling, general and administrative expenses | | 113 | | 113 | | 214 | | 211 |
| Research and development expenses | | 37 | | 44 | | 73 | | 86 |
| Asset impairments and restructuring charges, net | | 2 | | 3 | | 23 | | 10 |
| Operating earnings | | 168 | | 190 | | 303 | | 374 |
| | | | | | | | | |
| Interest expense, net | | 15 | | 21 | | 33 | | 41 |
| Other (income) charges, net | | (3) | | (2) | | (6) | | (3) |
| Earnings before income taxes | | 156 | | 171 | | 276 | | 336 |
| Provision for income taxes | | 51 | | 57 | | 94 | | 117 |
| Net earnings | $ | 105 | $ | 114 | $ | 182 | $ | 219 |
| | | | | | | | | |
| Earnings per share | | | | | | | | |
| Basic | $ | 1.24 | $ | 1.39 | $ | 2.16 | $ | 2.68 |
| Diluted | $ | 1.22 | $ | 1.37 | $ | 2.13 | $ | 2.64 |
| | | | | | | | | |
| Shares (in millions) outstanding at end of period | | 84.0 | | 82.7 | | 84.0 | | 82.7 |
| | | | | | | | | |
| Shares (in millions) used for earnings per share calculation | | | | | | | | |
| Basic | | 84.2 | | 81.9 | | 84.1 | | 81.7 |
| Diluted | | 85.5 | | 83.0 | | 85.3 | | 82.7 |
| | | | | | | | | |
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
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TABLE 2A - OTHER SALES INFORMATION
| | | Second Quarter (1) | | First Six Months (1) |
| (Dollars in millions) | | 2007 | | 2006 | | 2007 | | 2006 |
| Sales by Segment | | | | | | | | |
| Coatings, Adhesives, Specialty Polymers, and Inks | $ | 376 | $ | 362 | $ | 721 | $ | 711 |
| Fibers | | 239 | | 238 | | 473 | | 468 |
| Performance Chemicals and Intermediates | | 552 | | 431 | | 1,050 | | 823 |
| Performance Polymers | | 513 | | 696 | | 1,019 | | 1,341 |
| Specialty Plastics | | 215 | | 202 | | 427 | | 389 |
| Total Sales by Segment | | 1,895 | | 1,929 | | 3,690 | | 3,732 |
| Other | | -- | | -- | | -- | | -- |
| Total Eastman Chemical Company | $ | 1,895 | $ | 1,929 | $ | 3,690 | $ | 3,732 |
| | | | | | | | | |
| (1)Amounts for sales have been adjusted to retrospectively apply changes for transfer of certain product lines between PCI and Performance Polymers. |
TABLE 2B – SALES REVENUE CHANGE | |
| | Second Quarter 2007 Compared to Second Quarter 2006 |
| | | | Change in Sales Revenue Due To |
| | Revenue % Change | | Volume Effect | | Price Effect | | Product Mix Effect | | Exchange Rate Effect |
| | | | | | | | | | |
Coatings, Adhesives, Specialty Polymers, and Inks (1) | 4 % | | (4) % | | 4 % | | 2 % | | 2 % |
| Fibers | -- % | | (4) % | | 4 % | | -- % | | -- % |
Performance Chemicals and Intermediates (1)(2) | 28 % | | 31 % | | -- % | | (3) % | | -- % |
Performance Polymers (1) | (26) % | | (30) % | | 2 % | | 1 % | | 1 % |
| Specialty Plastics | 7 % | | 1 % | | 3 % | | 2 % | | 1 % |
| | | | | | | | | | |
| Total Eastman Chemical Company | (2) % | | (5) % | | 2 % | | -- % | | 1 % |
| | |
| | |
| | First Six Months 2007 Compared to First Six Months 2006 |
| | | | Change in Sales Revenue Due To |
| | Revenue % Change | | Volume Effect | | Price Effect | | Product Mix Effect | | Exchange Rate Effect |
| | | | | | | | | | |
Coatings, Adhesives, Specialty Polymers, and Inks (1) | 1 % | | (6) % | | 4 % | | 1 % | | 2 % |
| Fibers | 1 % | | (4) % | | 4 % | | 1 % | | -- % |
Performance Chemicals and Intermediates (1)(2) | 28 % | | 33 % | | (6) % | | -- % | | 1 % |
Performance Polymers (1) | (24) % | | (27) % | | 1 % | | -- % | | 2 % |
| Specialty Plastics | 10 % | | 5 % | | 3 % | | 1 % | | 1 % |
| | | | | | | | | | |
| Total Eastman Chemical Company | (1) % | | (4) % | | 1 % | | 1 % | | 1 % |
| (1) Included in 2006 sales revenue are the divested product lines of the Company's Batesville, Arkansas manufacturing facility and related assets in the Performance Chemicals and Intermediates ("PCI") segment and its polyethylene ("PE") and Epolene polymer businesses and related assets of the Performance Polymers and Coatings, Adhesives, Specialty Polymers, and Inks ("CASPI") segments. |
| (2) Included in 2007 sales revenue are contract ethylene sales resulting from the divestiture of the PE business. Refer to Table 4 for more information. |
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
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TABLE 2C – SALES BY REGION | |
| | | Second Quarter | | First Six Months |
| (Dollars in millions) | | 2007 | | 2006 | | 2007 | | 2006 |
| | | | | | | | | |
| Sales by Region | | | | | | | | |
United States and Canada (1)(2) | $ | 1,065 | $ | 1,094 | $ | 2,032 | $ | 2,167 |
Europe, Middle East, and Africa (1) | | 376 | | 384 | | 749 | | 709 |
| Asia Pacific | | 270 | | 248 | | 523 | | 459 |
Latin America (1) | | 184 | | 203 | | 386 | | 397 |
| | $ | 1,895 | $ | 1,929 | $ | 3,690 | $ | 3,732 |
| (1) Included in 2006 sales revenue are the divested product lines of the Company's Batesville, Arkansas manufacturing facility and related assets in the Performance Chemicals and Intermediates ("PCI") segment and its polyethylene ("PE") and Epolene polymer businesses and related assets of the Performance Polymers and Coatings, Adhesives, Specialty Polymers, and Inks ("CASPI") segments. |
| (2) Included in 2007 sales revenue are contract ethylene sales resulting from the divestiture of the PE business. Refer to Table 4 for more information. |
TABLE 2D – PERCENTAGE GROWTH IN SALES VOLUME BY REGION | |
| | Second Quarter | | First Six Months |
| Regional sales volume growth | | | |
| United States and Canada | 3 % | | -- % |
| Europe, Middle East, and Africa | (15) % | | (6) % |
| Asia Pacific | (6) % | | 2 % |
| Latin America | (16) % | | (6) % |
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
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TABLE 3 - OPERATING EARNINGS (LOSS), ACCELERATED DEPRECIATION AND ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES
| | | Second Quarter | | First Six Months |
| (Dollars in millions) | | 2007 | | 2006 | | 2007 | | 2006 |
| Operating Earnings by Segment and Certain Items | | | | | | | | |
| Coatings, Adhesives, Specialty Polymers, and Inks | | | | | | | | |
| Operating earnings | $ | 66 | $ | 68 | $ | 131 | $ | 123 |
| Asset impairments and restructuring charges | | -- | | 1 | | -- | | 8 |
| Operating earnings excluding items | | 66 | | 69 | | 131 | | 131 |
| | | | | | | | | |
| Fibers | | | | | | | | |
| Operating earnings | | 51 | | 61 | | 110 | | 127 |
| | | | | | | | | |
| Performance Chemicals and Intermediates | | | | | | | | |
| Operating earnings | | 57 | | 45 | | 111 | | 86 |
Accelerated depreciation included in costs of goods sold | | 7 | | -- | | 14 | | -- |
| Operating earnings excluding items | | 64 | | 45 | | 125 | | 86 |
| | | | | | | | | |
Performance Polymers | | | | | | | | |
| Operating earnings (loss) | | (13) | | 14 | | (64) | | 31 |
Accelerated depreciation included in costs of goods sold | | 6 | | -- | | 13 | | -- |
| Asset impairments and restructuring charges | | 1 | | -- | | 22 | | -- |
| Operating earnings (loss) excluding items | | (6) | | 14 | | (29) | | 31 |
| | | | | | | | | |
| Specialty Plastics | | | | | | | | |
| Operating earnings | | 18 | | 14 | | 36 | | 32 |
Accelerated depreciation included in costs of goods sold | | 1 | | -- | | 1 | | -- |
| Asset impairments and restructuring charges | | 1 | | -- | | 1 | | -- |
| Operating earnings excluding items | | 20 | | 14 | | 38 | | 32 |
| | | | | | | | | |
| Total Operating Earnings by Segment and Items | | | | | | | | |
| Total operating earnings | | 179 | | 202 | | 324 | | 399 |
Total accelerated depreciation included in costs of goods sold | | 14 | | -- | | 28 | | -- |
| Total asset impairments and restructuring charges | | 2 | | 1 | | 23 | | 8 |
| Total operating earnings excluding items | | 195 | | 203 | | 375 | | 407 |
| | | | | | | | | |
| Other | | | | | | | | |
| Operating loss | | (11) | | (12) | | (21) | | (25) |
| Asset impairments and restructuring charges | | -- | | 2 | | -- | | 2 |
| Operating loss excluding items | | (11) | | (10) | | (21) | | (23) |
| | | | | | | | | |
| Total Eastman Chemical Company | | | | | | | | |
| Total operating earnings | $ | 168 | $ | 190 | $ | 303 | $ | 374 |
Total accelerated depreciation included in costs of goods sold | | 14 | | -- | | 28 | | -- |
| Total asset impairments and restructuring charges | | 2 | | 3 | | 23 | | 10 |
| Total operating earnings excluding items | | 184 | | 193 | | 354 | | 384 |
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
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TABLE 4 – EASTMAN CHEMICAL COMPANY DETAIL OF SALES REVENUE
| | | First Quarter | | Second Quarter |
| (Dollars in millions) | | 2007 | | 2007 |
| | | | | |
| Sales Revenue | $ | 1,795 | $ | 1,895 |
Less: contract ethylene sales (1) | | 70 | | 74 |
| Sales revenue excluding contract ethylene sales | $ | 1,725 | $ | 1,821 |
| | | | | |
| | | First Quarter | | Second Quarter | | Third Quarter | | Fourth Quarter | | Twelve Months |
| (Dollars in millions) | | 2006 | | 2006 | | 2006 | | 2006 | | 2006 |
| | | | | | | | | | | |
| Sales Revenue | $ | 1,803 | $ | 1,929 | $ | 1,966 | $ | 1,752 | $ | 7,450 |
| Less: divested product lines | | | | | | | | | | |
Coatings, Adhesives, Specialty Polymers and Inks (2) | | 18 | | 17 | | 18 | | 12 | | 65 |
Performance Chemicals and Intermediates (3) | | 30 | | 29 | | 38 | | 14 | | 111 |
Performance Polymers (2) | | 180 | | 168 | | 169 | | 118 | | 635 |
| Sales revenue – continuing product lines | $ | 1,575 | $ | 1,715 | $ | 1,741 | $ | 1,608 | $ | 6,639 |
| | | | | | | | | | | |
| (1) Contract ethylene sales under the transition supply agreement related to the divestiture of the polyethylene businesses. |
| (2) Divested product lines are the product lines related to the polyethylene and Epolene polymer businesses and related assets of the Performance Polymers and Coatings, Adhesives, Specialty Polymers, and Inks ("CASPI") segments located at the Longview, Texas site and the Company's ethylene pipeline which were sold in fourth quarter 2006. |
| (3) The Company's Batesville, Arkansas manufacturing facility and related assets and the specialty organic chemicals product lines in the Performance Chemicals and Intermediates ("PCI") segment were sold in fourth quarter 2006. |
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
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TABLE 5 – PERFORMANCE POLYMERS SEGMENT DETAIL OF SALES REVENUE, OPERATING EARNINGS (LOSS), ACCELERATED DEPRECIATION AND ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES
| | | First Quarter | | Second Quarter |
| (Dollars in millions) | | 2007 | | 2007 |
| | | | | |
| Sales Revenue | | | | |
| Performance Polymers divested product lines | $ | -- | $ | -- |
| Continuing product lines | | 506 | | 513 |
| Total sales revenue | $ | 506 | $ | 513 |
| | | | | |
| Operating loss | | | | |
Performance Polymers divested product lines (1) | $ | -- | $ | -- |
| Continuing product lines | | (51) | | (13) |
| Total operating loss | $ | (51) | $ | (13) |
Accelerated depreciation included in costs of goods sold | | | | |
| Performance Polymers divested product lines | $ | -- | $ | -- |
| Continuing product lines | | 7 | | 6 |
| Total accelerated depreciation | $ | 7 | $ | 6 |
Asset impairments and restructuring charges, net | | | | |
| Performance Polymers divested product lines | $ | -- | $ | -- |
| Continuing product lines | | 21 | | 1 |
Total asset impairments and restructuring charges, net | $ | 21 | $ | 1 |
| | | | | |
| (1) 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 | July 26, 2007 |
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TABLE 5 – PERFORMANCE POLYMERS SEGMENT DETAIL OF SALES REVENUE, OPERATING EARNINGS (LOSS), ACCELERATED DEPRECIATION, ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES AND OTHER OPERATING (INCOME) CHARGES
| | | First Quarter | | Second Quarter | | Third Quarter | | Fourth Quarter | | Twelve Months |
| (Dollars in millions) | | 2006 | | 2006 | | 2006 | | 2006 | | 2006 |
| | | | | | | | | | | |
| Sales Revenue | | | | | | | | | | |
| Performance Polymers divested product lines | $ | 180 | $ | 168 | $ | 169 | $ | 118 | $ | 635 |
| Continuing product lines | | 465 | | 528 | | 558 | | 456 | | 2,007 |
| Total sales revenue | $ | 645 | $ | 696 | $ | 727 | $ | 574 | $ | 2,642 |
| | | | | | | | | | | |
| Operating earnings (loss) | | | | | | | | | | |
Performance Polymers divested product lines (1) | $ | 23 | $ | 15 | $ | 15 | $ | 83 | $ | 136 |
| Continuing product lines | | (6) | | (1) | | 5 | | (80) | | (82) |
| Total operating earnings | $ | 17 | $ | 14 | $ | 20 | $ | 3 | $ | 54 |
Accelerated depreciation included in costs of goods sold | | | | | | | | | | |
| Performance Polymers divested product lines | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- |
| Continuing product lines | | -- | | -- | | -- | | 7 | | 7 |
| Total accelerated depreciation | $ | -- | $ | -- | $ | -- | $ | 7 | $ | 7 |
Asset impairments and restructuring charges, net | | | | | | | | | | |
| Performance Polymers divested product lines | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- |
| Continuing product lines | | -- | | -- | | -- | | 46 | | 46 |
Total asset impairments and restructuring charges, net | $ | -- | $ | -- | $ | -- | $ | 46 | $ | 46 |
Other operating (income) charges | | | | | | | | | | |
| Performance Polymers divested product lines | $ | -- | $ | -- | $ | -- | $ | (75) | $ | (75) |
| Continuing product lines | | -- | | -- | | -- | | -- | | -- |
| Total other operating (income) charges | $ | -- | $ | -- | $ | -- | $ | (75) | $ | (75) |
| | | | | | | | | | | |
| (1) 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 | July 26, 2007 |
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TABLE 6 – OPERATING EARNINGS, NET EARNINGS, AND EARNINGS PER SHARE RECONCILIATION
EARNINGS PER DILUTED SHARE EXCLUDING CERTAIN ITEMS
| | | Second Quarter 2007 |
| (Dollars in millions) | | Operating Earnings | | Earnings Before Tax | | Net Earnings | | Net Earnings Per Diluted Share |
| | | | | | | | | |
As reported | $ | 168 | $ | 156 | $ | 105 | $ | 1.22 |
| | | | | | | | | |
Certain Items: | | | | | | | | |
Accelerated depreciation included in costs of goods sold | | 14 | | 14 | | 8 | | 0.11 |
| Asset impairments and restructuring charges | | 2 | | 2 | | 1 | | 0.01 |
| Excluding certain items | $ | 184 | $ | 172 | $ | 114 | $ | 1.34 |
| | | Second Quarter 2006 |
| (Dollars in millions) | | Operating Earnings | | Earnings Before Tax | | Net Earnings | | Net Earnings Per Diluted Share |
| | | | | | | | | |
As reported | $ | 190 | $ | 171 | $ | 114 | $ | 1.37 |
| | | | | | | | | |
Certain Items: | | | | | | | | |
| Asset impairments and restructuring charges | | 3 | | 3 | | 2 | | 0.03 |
| Excluding certain items | $ | 193 | $ | 174 | $ | 116 | $ | 1.40 |
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
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TABLE 6 – OPERATING EARNINGS, NET EARNINGS, AND EARNINGS PER SHARE RECONCILIATION
EARNINGS PER DILUTED SHARE EXCLUDING CERTAIN ITEMS (CONTINUED)
| | | First Six Months 2007 |
| (Dollars in millions) | | Operating Earnings | | Earnings Before Tax | | Net Earnings | | Net Earnings Per Diluted Share |
| | | | | | | | | |
As reported | $ | 303 | $ | 276 | $ | 182 | $ | 2.13 |
| | | | | | | | | |
Certain Items: | | | | | | | | |
Accelerated depreciation included in costs of goods sold | | 28 | | 28 | | 18 | | 0.21 |
| Asset impairments and restructuring charges | | 23 | | 23 | | 16 | | 0.19 |
| Excluding certain items | $ | 354 | $ | 327 | $ | 216 | $ | 2.53 |
| | | First Six Months 2006 |
| (Dollars in millions) | | Operating Earnings | | Earnings Before Tax | | Net Earnings | | Net Earnings Per Diluted Share |
| | | | | | | | | |
As reported | $ | 374 | $ | 336 | $ | 219 | $ | 2.64 |
| | | | | | | | | |
Certain Items: | | | | | | | | |
| Asset impairments and restructuring charges | | 10 | | 10 | | 9 | | 0.12 |
| Excluding certain items | $ | 384 | $ | 346 | $ | 228 | $ | 2.76 |
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
| | 5:00 PM EDT |
| | Page 10 |
TABLE 7 – STATEMENTS OF CASH FLOWS
| | | First Six Months |
| (Dollars in millions) | | 2007 | | 2006 |
| | | | | |
| Cash flows from operating activities | | | | |
| Net earnings | $ | 182 | $ | 219 |
| | | | | |
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | | | | |
| Depreciation and amortization | | 169 | | 150 |
| Asset impairments | | 22 | | 8 |
| Provision (benefits) for deferred income taxes | | (18) | | 29 |
| Changes in operating assets and liabilities: | | | | |
| (Increase) decrease in receivables | | (59) | | (156) |
| (Increase) decrease in inventories | | (18) | | (49) |
| Increase (decrease) in trade payables | | (63) | | 59 |
| Increase (decrease) in liabilities for employee benefits and incentive pay | | (121) | | (74) |
| Other items, net | | 5 | | (23) |
| | | | | |
| Net cash provided by operating activities | | 99 | | 163 |
| | | | | |
| Cash flows from investing activities | | | | |
| Additions to properties and equipment | | (198) | | (169) |
| Proceeds from sale of assets and investments | | 43 | | 11 |
| Additions to capitalized software | | (5) | | (8) |
| Other items, net | | 14 | | (1) |
| | | | | |
| Net cash (used in) investing activities | | (146) | | (167) |
| | | | | |
| Cash flows from financing activities | | | | |
| Net increase (decrease) in commercial paper, credit facility and other borrowings | | 75 | | 23 |
| Dividends paid to stockholders | | (75) | | (72) |
| Treasury stock purchases | | (86) | | -- |
| Proceeds from stock option exercises and other items | | 88 | | 24 |
| | | | | |
| Net cash provided by (used in) financing activities | | 2 | | (25) |
| | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | (3) | | 2 |
| | | | | |
| Net change in cash and cash equivalents | | (48) | | (27) |
| | | | | |
| Cash and cash equivalents at beginning of period | | 939 | | 524 |
| | | | | |
| Cash and cash equivalents at end of period | $ | 891 | $ | 497 |
EASTMAN CHEMICAL COMPANY – EMN | July 26, 2007 |
| | 5:00 PM EDT |
| | Page 11 |
TABLE 8 – SELECTED BALANCE SHEET ITEMS
| | | June 30, | | December 31, |
| (Dollars in millions) | | 2007 | | 2006 |
| | | | | |
| Current Assets | $ | 2,501 | $ | 2,422 |
| | | | | |
| Net Properties | | 3,040 | | 3,069 |
| | | | | |
| Other Assets | | 699 | | 682 |
| | | | | |
| Total Assets | $ | 6,240 | $ | 6,173 |
| | | | | |
| | | | | |
| Payables and Other Current Liabilities | $ | 1,028 | $ | 1,056 |
| | | | | |
| Short-term Borrowings | | 72 | | 3 |
| | | | | |
| Long-term Borrowings | | 1,507 | | 1,589 |
| | | | | |
| Other Liabilities | | 1,463 | | 1,496 |
| | | | | |
| Stockholders’ Equity | | 2,170 | | 2,029 |
| | | | | |
| Total Liabilities and Stockholders’ Equity | $ | 6,240 | $ | 6,173 |
