Eastman Announces Third-Quarter 2009 Financial Results
KINGSPORT, Tenn., Oct. 22, 2009 – Eastman Chemical Company (NYSE:EMN) today announced earnings per diluted share of $1.38 for third quarter 2009 versus $1.33 for third quarter 2008. Earnings per diluted share for third quarter 2009 were reduced $0.16 per share by the reversal of a previously recognized investment tax credit for the company’s Beaumont, Texas, industrial gasification project as discussed below.
"We continued to make solid progress improving our profitability during what remains a challenging economic environment," said Jim Rogers, president and CEO. "Cash generation also continues to be a priority, and we did a great job during the quarter generating well over $200 million in free cash flow."
| (In millions, except per share amounts) | 3Q2009 | 3Q2008 |
| | | |
| Sales revenue | $1,337 | $1,819 |
| Earnings per diluted share | $1.38 | $1.33 |
| Earnings per diluted share excluding asset impairments and restructuring charges, net, accelerated depreciation costs, and net deferred tax benefits related to the previous divestiture of businesses* | $1.38 | $1.35 |
Net cash provided by operating activities | $331 | $214 |
*For reconciliations to reported company and segment earnings, see Tables 3 and 5 in the accompanying third-quarter 2009 financial tables.
Sales revenue in third quarter 2009 was $1.3 billion compared with $1.8 billion in third quarter 2008. Sales revenue for third quarter 2008 included contract ethylene sales resulting from the fourth-quarter 2006 divestiture of the polyethylene business. Also included in third-quarter 2008 sales revenue were contract polymer intermediates sales resulting from the fourth-quarter 2007 divestiture of PET polymers manufacturing facilities and related businesses in Mexico and Argentina. Excluding these items, sales revenue declined by 21 percent due to lower selling prices in response to lower raw material and energy costs and a decline in sales volume of 4 percent. For reconciliations to reported company and segment sales revenue, see Table 4 in the accompanying third-quarter 2009 financial tables.
Operating earnings in third quarter 2009 were $191 million compared with operating earnings of $174 million in third quarter 2008. Excluding accelerated depreciation costs and asset impairments and restructuring charges, net, operating earnings were $179 million in third quarter 2008. Operating earnings increased as lower raw material and energy costs and cost reduction actions were partially offset by lower selling prices and lower sales volume. The increased operating margin was attributed to a favorable shift in company product mix due to a higher percentage of overall sales revenue from the Fibers, CASPI, and Specialty Plastics segments compared to the PCI and Performance Polymers segments.
Segment Results 3Q 2009 versus 3Q 2008
Coatings, Adhesives, Specialty Polymers and Inks – Sales revenue declined by 18 percent primarily due to lower selling prices and lower sales volume. The lower selling prices were in response to lower raw material and energy costs. The lower sales volume was due to reduced customer demand attributed to the global recession, particularly for products sold into the automotive, building and construction, and packaging markets. Operating earnings were $84 million in third quarter 2009 compared to $55 million in third quarter 2008. Operating earnings increased primarily due to lower raw material and energy costs and cost reduction actions, which more than offset lower selling prices and lower sales volume.
Fibers – Sales revenue declined by 5 percent as lower sales volume more than offset higher selling prices. The lower sales volume was primarily for acetyl chemical products. The higher selling prices were in response to higher raw material costs, particularly for wood pulp. Operating earnings increased to $79 million in third quarter 2009 compared with $65 million in third quarter 2008 due to higher selling prices and cost reduction actions partially offset by lower sales volume.
Performance Chemicals and Intermediates – Sales revenue declined by 40 percent, and excluding contract ethylene sales resulting from the divestiture of the polyethylene business, declined by 30 percent due to lower selling prices. The lower selling prices were primarily due to lower raw material and energy costs. Operating earnings were $33 million in third quarter 2009 compared with $65 million in third quarter 2008 excluding asset impairments and restructuring charges and accelerated depreciation costs in third quarter 2008. The decline was due to lower selling prices partially offset by lower raw material and energy costs and cost reduction actions.
Performance Polymers – Sales revenue declined by 36 percent, and excluding contract polymer intermediates sales to divested manufacturing facilities in second quarter 2008 declined by 27 percent due to lower selling prices while sales volume was unchanged. The lower selling prices were attributed to a decline in raw material and energy costs, particularly for paraxylene. Operating results were a loss of $10 million in third quarter 2009, compared with earnings of $1 million in third quarter 2008 excluding asset impairments and restructuring charges and accelerated depreciation costs. Operating results declined due to lower selling prices and the impact on sales revenue and manufacturing costs of continuing operational challenges with the IntegRex™-based PET manufacturing facility partially offset by lower raw material and energy costs and cost reduction actions.
Specialty Plastics – Sales revenue declined by 21 percent due to lower sales volume and lower selling prices. The decline in sales volume was attributed to the global recession which has weakened demand for plastic resins, including copolyester products sold into the consumer and durable goods markets, and for cellulosic plastics sold into various markets. Operating earnings increased to $13 million in third quarter 2009 from $6 million in third quarter 2008. The increase was due to lower raw material and energy costs and cost reduction actions partially offset by lower sales volume, lower capacity utilization resulting in higher unit costs, and an unfavorable shift in product mix with less cellulosic plastics sold into various markets.
Income Taxes
During third quarter 2009, the company reversed a previously recognized $12 million investment tax credit for the Beaumont, Texas, industrial gasification project because of a later estimated project completion date based on completed front-end engineering and design, and continuing legislative and other uncertainties. Including the investment tax credit reversal, the effective tax rate for the third quarter was 40 percent.
Cash Flow
Eastman generated $331 million in cash from operating activities during third quarter 2009, which included solid net earnings, a continued reduction in working capital, and approximately $100 million from a combination of a refund of previously paid taxes and lower estimated tax payments. The company generated $304 million of positive free cash flow (cash from operations less capital expenditures and dividends) through the first nine months of 2009.
Outlook
Commenting on the outlook for fourth quarter 2009, Rogers said: “We expect to continue to benefit from a favorable shift in company product mix and cost reduction actions we have taken. However, we also expect volatility in raw material and energy costs and a decline in sales volume due to normal seasonality to negatively impact our fourth quarter results. We therefore expect fourth-quarter 2009 earnings per share to decline sequentially, but to be slightly above the high end of analysts’ estimates on First Call, which is $0.85 per share.”
Eastman will host a conference call with industry analysts on October 23 at 8:00 a.m. EDT. To listen to the live webcast of the conference call and view the accompanying slides, go to www.investors.eastman.com, Presentations. To listen via telephone, the dial-in number is (913) 981-5564, passcode number 2194056. A web replay and the accompanying slides will be available at www.investors.eastman.com, Presentations. A telephone replay will be available continuously from 11:00 a.m. Eastern time October 23 to 12:00 midnight Eastern time, November 2, at (719) 457-0820, passcode number 2194056.
Eastman’s chemicals, fibers and plastics are used as key ingredients in products that people use every day. Approximately 10,000 Eastman employees around the world blend technical expertise and innovation to deliver practical solutions. The company is committed to finding sustainable business opportunities within the diverse markets it serves. A global company headquartered in Kingsport, Tennessee, USA, Eastman had 2008 sales of $6.7 billion. For more information, visit www.eastman.com.
Forward-Looking Statements: This news release includes forward-looking statements concerning current expectations for future economic and business conditions, the financial impact of cost reduction actions, the relative mix of sales among the company’s segments and products within those segments, demand and sales volumes for the company’s products, raw material and energy costs, and earnings per share for fourth quarter 2009. 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 2009 available, and the Form 10-Q to be filed for third quarter 2009 and to be available, on the Eastman web site at www.eastman.com in the Investors, SEC filings section.
# # #
| Contacts: |
| |
| Media: Tracy Broadwater |
423-224-0498 / tkbroadwater@eastman.com |
| |
| Investors: Greg Riddle |
212-835-1620 / griddle@eastman.com |
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | |
FINANCIAL INFORMATION
October 22, 2009
For use in the Eastman Chemical Company Conference Call
at 8:00 AM (EDT), October 23, 2009.
Table of Contents
| Item | | Page |
| | | |
| TABLE 1 | Statements of Earnings | 1 |
| | | |
| TABLE 2A | Segment 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 Costs, and Asset Impairments and Restructuring Charges, Net | 4 |
| | | |
| TABLE 4 | Eastman Chemical Company Detail of Sales Revenue | 5 |
| | | |
| TABLE 5 | Operating Earnings, Earnings, and Earnings Per Share from Continuing Operations Reconciliation | 6 |
| | | |
| TABLE 6 | Statements of Cash Flows | 8 |
| | | |
| TABLE 7 | Selected Balance Sheet Items | 9 |
During 2007 and first quarter 2008, the company took strategic actions in its Performance Polymers segment for its underperforming polyethylene terephthalate ("PET") manufacturing facilities outside the United States. During second quarter 2007, the company sold its PET manufacturing facility in Spain. In first quarter 2008, the company sold its PET polymers and purified terephthalic acid ("PTA") production facilities in the Netherlands and its PET production facility in the United Kingdom and the related assets and businesses. Because the company exited the PET business in the European region, results from sales of PET products manufactured at the Spain, the Netherlands, and the United Kingdom facilities, including impairments and restructuring charges of those operations, and gains and losses from disposal of those assets and businesses, are presented in the first nine months of 2008 as discontinued operations and are therefore not included in results from continuing operations for the company or the Performance Polymers segment under generally accepted accounting principles.
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | Page 1 |
| TABLE 1 – STATEMENTS OF EARNINGS |
| | | Third Quarter | | First Nine Months |
| (Dollars in millions, except per share amounts) | | 2009 | | 2008 | | 2009 | | 2008 |
| | | | | | | | | |
| Sales | $ | 1,337 | $ | 1,819 | $ | 3,719 | $ | 5,380 |
| Cost of sales | | 1,009 | | 1,497 | | 2,952 | | 4,400 |
| Gross profit | | 328 | | 322 | | 767 | | 980 |
| | | | | | | | | |
| Selling, general and administrative expenses | | 104 | | 107 | | 296 | | 324 |
| Research and development expenses | | 33 | | 39 | | 101 | | 120 |
| Asset impairments and restructuring charges, net | | -- | | 2 | | 23 | | 22 |
| Operating earnings | | 191 | | 174 | | 347 | | 514 |
| | | | | | | | | |
| Net interest expense | | 19 | | 19 | | 58 | | 53 |
| Other charges (income), net | | 2 | | 7 | | 11 | | 7 |
| Earnings from continuing operations before income taxes | | 170 | | 148 | | 278 | | 454 |
| Provision for income taxes from continuing operations | | 69 | | 48 | | 110 | | 124 |
| Earnings from continuing operations | | 101 | | 100 | | 168 | | 330 |
| | | | | | | | | |
| Earnings from disposal of discontinued operations, net of tax | | -- | | -- | | -- | | 18 |
| Net earnings | $ | 101 | $ | 100 | $ | 168 | $ | 348 |
| | | | | | | | | |
| Basic earnings per share | | | | | | | | |
| Earnings from continuing operations | $ | 1.40 | $ | 1.35 | $ | 2.31 | $ | 4.34 |
| Earnings from discontinued operations | | -- | | -- | | -- | | 0.23 |
| Basic earnings per share | $ | 1.40 | $ | 1.35 | $ | 2.31 | $ | 4.57 |
| | | | | | | | | |
| Diluted earnings per share | | | | | | | | |
| Earnings from continuing operations | $ | 1.38 | $ | 1.33 | $ | 2.29 | $ | 4.27 |
| Earnings from discontinued operations | | -- | | -- | | -- | | 0.23 |
| Diluted earnings per share | $ | 1.38 | $ | 1.33 | $ | 2.29 | $ | 4.50 |
| | | | | | | | | |
| | | | | | | | | |
| Shares (in millions) outstanding at end of period | | 72.7 | | 72.5 | | 72.7 | | 72.5 |
| | | | | | | | | |
| Shares (in millions) used for earnings per share calculation | | | | | | | | |
| Basic | | 72.6 | | 74.2 | | 72.5 | | 76.1 |
| Diluted | | 73.5 | | 75.1 | | 73.3 | | 77.2 |
| | | | | | | | | |
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | Page 2 |
| TABLE 2A – SEGMENT SALES INFORMATION |
| (Dollars in millions) | | Third Quarter | | First Nine Months |
| | | 2009 | | 2008 | | 2009 | | 2008 |
| Sales by Segment | | | | | | | | |
| Coatings, Adhesives, Specialty Polymers, and Inks | $ | 338 | $ | 410 | $ | 890 | $ | 1,213 |
| Fibers | | 257 | | 269 | | 779 | | 783 |
| Performance Chemicals and Intermediates | | 355 | | 594 | | 943 | | 1,768 |
| Performance Polymers | | 187 | | 293 | | 563 | | 886 |
| Specialty Plastics | | 200 | | 253 | | 544 | | 730 |
| Total Eastman Chemical Company | $ | 1,337 | $ | 1,819 | $ | 3,719 | $ | 5,380 |
| | | | | | | | | |
| TABLE 2B – SALES REVENUE CHANGE |
| | Third Quarter 2009 Compared to Third Quarter 2008 |
| | | | Change in Sales Revenue Due To |
| (Dollars in millions) | Revenue % Change | | Volume Effect | | Price Effect | | Product Mix Effect | | Exchange Rate Effect |
| | | | | | | | | | |
Coatings, Adhesives, Specialty Polymers, and Inks | (18) % | | (7) % | | (11) % | | -- % | | -- % |
| Fibers | (5) % | | (12) % | | 7 % | | -- % | | -- % |
Performance Chemicals and Intermediates (1) | (40) % | | (10) % | | (32) % | | 2 % | | -- % |
Performance Polymers (2) | (36) % | | (11) % | | (28) % | | 3 % | | -- % |
| Specialty Plastics | (21) % | | (13) % | | (7) % | | (2) % | | 1 % |
| | | | | | | | | | |
| Total Eastman Chemical Company | (27) % | | (10) % | | (17) % | | -- % | | -- % |
| | |
| | |
| | First Nine Months 2009 Compared to First Nine Months 2008 |
| | | | Change in Sales Revenue Due To |
| (Dollars in millions) | Revenue % Change | | Volume Effect | | Price Effect | | Product Mix Effect | | Exchange Rate Effect |
| | | | | | | | | | |
Coatings, Adhesives, Specialty Polymers, and Inks | (27) % | | (19) % | | (5) % | | (3) % | | -- % |
| Fibers | -- % | | (10) % | | 9 % | | 1 % | | -- % |
Performance Chemicals and Intermediates (1) | (47) % | | (25) % | | (23) % | | 1 % | | -- % |
Performance Polymers (2) | (36) % | | (13) % | | (25) % | | 2 % | | -- % |
| Specialty Plastics | (25) % | | (17) % | | (5) % | | (3) % | | -- % |
| | | | | | | | | | |
| Total Eastman Chemical Company | (31) % | | (18) % | | (13) % | | -- % | | -- % |
| | (1) Included in 2009 and 2008 sales revenue are contract ethylene sales under the transition supply agreement related to the divestiture of the polyethylene ("PE") businesses. Refer to Table 4 for more information. |
| | (2) Sales revenue in 2008 included contract polymer intermediates sales under the transition supply agreement related to the divestiture of the PET manufacturing facilities and related businesses in Mexico and Argentina in fourth quarter 2007. Refer to Table 4 for more information. |
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | Page 3 |
| TABLE 2C – SALES BY REGION |
| | | Third Quarter | | First Nine Months |
| (Dollars in millions) | | 2009 | | 2008 | | 2009 | | 2008 |
| | | | | | | | | |
| Sales by Region | | | | | | | | |
United States and Canada (1) | $ | 737 | $ | 1,124 | $ | 2,096 | $ | 3,287 |
| Asia Pacific | | 282 | | 309 | | 769 | | 921 |
| Europe, Middle East, and Africa | | 222 | | 248 | | 607 | | 774 |
Latin America (2) | | 96 | | 138 | | 247 | | 398 |
| | $ | 1,337 | $ | 1,819 | $ | 3,719 | $ | 5,380 |
| | (1) Included in 2009 and 2008 sales revenue are contract ethylene sales under the transition supply agreement related to the divestiture of the PE businesses. Refer to Table 4 for more information. |
| | (2) Included in 2008 sales revenue are contract polymer intermediates sales under the transition supply agreement related to the divestiture of the Mexican and Argentine businesses. Refer to Table 4 for more information. |
| TABLE 2D – PERCENTAGE GROWTH IN SALES VOLUME BY REGION |
| (Dollars in millions) | | | |
| | Third Quarter | | First Nine Months |
| Regional sales volume growth | | | |
United States and Canada (1) | (12) % | | (20) % |
| Asia Pacific | 8 % | | (6) % |
| Europe, Middle East, and Africa | (11) % | | (33) % |
Latin America (2) | (17) % | | (30) % |
| | (1) Included in 2009 and 2008 sales revenue are contract ethylene sales under the transition supply agreement related to the divestiture of the PE businesses. Refer to Table 4 for more information. |
| | (2) Included in 2008 sales revenue are contract polymer intermediates sales under the transition supply agreement related to the divestiture of the Mexican and Argentine businesses. Refer to Table 4 for more information. |
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | Page 4 |
| TABLE 3 - OPERATING EARNINGS (LOSS), ACCELERATED DEPRECIATION COSTS, AND ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET |
| (Dollars in millions) | | Third Quarter | | First Nine Months |
| | | 2009 | | 2008 | | 2009 | | 2008 |
| Operating Earnings (Loss) by Segment and Items | | | | | | | | |
| Coatings, Adhesives, Specialty Polymers, and Inks | | | | | | | | |
| Operating earnings | $ | 84 | $ | 55 | $ | 148 | $ | 167 |
| Asset impairments and restructuring charges, net | | -- | | -- | | 5 | | (2) |
| Operating earnings excluding item | | 84 | | 55 | | 153 | | 165 |
| | | | | | | | | |
| Fibers | | | | | | | | |
| Operating earnings | | 79 | | 65 | | 222 | | 195 |
| Asset impairments and restructuring charges, net | | -- | | -- | | 4 | | -- |
| Operating earnings excluding item | | 79 | | 65 | | 226 | | 195 |
| | | | | | | | | |
| Performance Chemicals and Intermediates | | | | | | | | |
| Operating earnings | | 33 | | 62 | | 35 | | 160 |
| Accelerated depreciation costs included in costs of goods sold | | -- | | 2 | | -- | | 4 |
| Asset impairments and restructuring charges, net | | -- | | 1 | | 6 | | 20 |
| Operating earnings excluding items | | 33 | | 65 | | 41 | | 184 |
| | | | | | | | | |
| Performance Polymers | | | | | | | | |
| Operating loss | | (10) | | (1) | | (32) | | (5) |
| Accelerated depreciation costs included in costs of goods sold | | -- | | 1 | | -- | | 4 |
| Asset impairments and restructuring charges, net | | -- | | 1 | | 4 | | 4 |
| Operating earnings (loss) excluding items | | (10) | | 1 | | (28) | | 3 |
| | | | | | | | | |
| Specialty Plastics | | | | | | | | |
| Operating earnings | | 13 | | 6 | | 3 | | 36 |
| Asset impairments and restructuring charges, net | | -- | | -- | | 4 | | -- |
| Operating earnings excluding item | | 13 | | 6 | | 7 | | 36 |
| | | | | | | | | |
| Total Operating Earnings by Segment and Items | | | | | | | | |
| Total operating earnings | | 199 | | 187 | | 376 | | 553 |
| Total accelerated depreciation costs included in costs of goods sold | | -- | | 3 | | -- | | 8 |
| Total asset impairments and restructuring charges, net | | -- | | 2 | | 23 | | 22 |
| Total operating earnings excluding items | | 199 | | 192 | | 399 | | 583 |
| | | | | | | | | |
Other (1) | | | | | | | | |
| Operating loss | | (8) | | (13) | | (29) | | (39) |
| | | | | | | | | |
| Total Eastman Chemical Company | | | | | | | | |
| Total operating earnings | $ | 191 | $ | 174 | $ | 347 | $ | 514 |
| Total accelerated depreciation costs included in costs of goods sold | | -- | | 3 | | -- | | 8 |
| Total asset impairments and restructuring charges, net | | -- | | 2 | | 23 | | 22 |
| Total operating earnings excluding items | $ | 191 | $ | 179 | $ | 370 | $ | 544 |
(1) Expenses not identifiable to an operating segment are not included in segment operating results and are shown as "other" operating losses. |
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | Page 5 |
| TABLE 4 – EASTMAN CHEMICAL COMPANY DETAIL OF SALES REVENUE |
| | | First Quarter | | Second Quarter | | Third Quarter | | | | |
| (Dollars in millions) | | 2009 | | 2009 | | 2009 | | | | |
| | | | | | | | | | | |
| Sales Revenue | $ | 1,129 | $ | 1,253 | $ | 1,337 | | | | |
Less: Performance Chemicals and Intermediates – contract ethylene sales (1) | | 17 | | 1 | | - | | | | |
| Sales revenue excluding listed items | $ | 1,112 | $ | 1,252 | $ | 1,337 | | | | |
| | | | | | | | | | | |
| | | First Quarter | | Second Quarter | | Third Quarter | | Fourth Quarter | | Twelve Months |
| (Dollars in millions) | | 2008 | | 2008 | | 2008 | | 2008 | | 2008 |
| | | | | | | | | | | |
| Sales Revenue | $ | 1,727 | $ | 1,834 | $ | 1,819 | $ | 1,346 | $ | 6,726 |
Less: Performance Chemicals and Intermediates – contract ethylene sales (1) | | 92 | | 102 | | 89 | | 31 | | 314 |
Performance Polymers – contract polymer intermediates sales (2) | | 56 | | 26 | | 35 | | 21 | | 138 |
| Sales revenue excluding listed items | $ | 1,579 | $ | 1,706 | $ | 1,695 | $ | 1,294 | $ | 6,274 |
| | | | | | | | | | | |
| | (1) Sales revenue for 2009 and 2008 included contract ethylene sales under the transition supply agreement related to the divestiture of the PE businesses in fourth quarter 2006. |
| | (2) Sales revenue for 2008 included contract polymer intermediates sales under the transition supply agreement related to the divestiture of the PET manufacturing facilities and related businesses in Mexico and Argentina in fourth quarter 2007. |
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | Page 6 |
TABLE 5 – OPERATING EARNINGS, EARNINGS, AND EARNINGS PER SHARE FROM CONTINUING OPERATIONS RECONCILIATION |
EARNINGS PER DILUTED SHARE EXCLUDING CERTAIN ITEMS |
| | | Third Quarter 2009 |
| (Dollars in millions) | | Operating Earnings | | Earnings Before Tax | | Earnings After Tax | | Earnings Per Diluted Share |
| | | | | | | | | |
| As reported | $ | 191 | $ | 170 | $ | 101 | $ | 1.38 |
| | | | | | | | | |
| Certain Item: | | | | | | | | |
| Asset impairments and restructuring charges, net | | -- | | -- | | -- | | -- |
| Excluding item | $ | 191 | $ | 170 | $ | 101 | $ | 1.38 |
| | | Third Quarter 2008 |
| | Operating Earnings | | Earnings Before Tax | | Earnings After Tax | | Earnings Per Diluted Share |
| | | | | | | | | |
| As reported | $ $ | 174 | $ $ | 148 | $ $ | 100 | $ $ | 1.33 |
| | | | | | | | | |
| Certain Items: | | | | | | | | |
| Accelerated depreciation costs included in costs of goods sold | | 3 | | 3 | | 2 | | 0.02 |
| Asset impairments and restructuring charges, net | | 2 | | 2 | | 3 | | 0.04 |
| Net deferred tax benefits related to the previous divestiture of businesses | | -- | | -- | | (3) | | (0.04) |
| Excluding items | $ $ | 179 | $ $ | 153 | $ $ | 102 | $ $ | 1.35 |
[ [Table 5 continued next page]
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | Page 7 |
| TABLE 5 – OPERATING EARNINGS, EARNINGS, AND EARNINGS PER SHARE FROM CONTINUING OPERATIONS RECONCILIATION (continued) |
EARNINGS PER DILUTED SHARE FROM CONTINUING OPERATIONS EXCLUDING CERTAIN ITEMS |
| | | First Nine Months 2009 |
| (Dollars in millions) | | Operating Earnings | | Earnings Before Tax | | Earnings After Tax | | Earnings Per Diluted Share |
| | | | | | | | | |
| As reported | $ | 347 | $ | 278 | $ | 168 | $ | 2.29 |
| | | | | | | | | |
| Certain Item: | | | | | | | | |
| Asset impairments and restructuring charges, net | | 23 | | 23 | | 14 | | 0.20 |
| Excluding item | $ | 370 | $ | 301 | $ | 182 | $ | 2.49 |
| | | First Nine Months 2008 |
| | | | Earnings from Continuing Operations |
| | Operating Earnings | | Before Tax | | After Tax | | Per Diluted Share |
| | | | | | | | | |
| As reported | $ $ | 514 | $ $ | 454 | $ $ | 330 | $ $ | 4.27 |
| | | | | | | | | |
| Certain Items: | | | | | | | | |
| Accelerated depreciation costs included in costs of goods sold | | 8 | | 8 | | 5 | | 0.06 |
| Asset impairments and restructuring charges, net | | 22 | | 22 | | 17 | | 0.23 |
| Net deferred tax benefits related to the previous divestiture of businesses | | -- | | -- | | (14) | | (0.18) |
| Excluding items | $ $ | 544 | $ $ | 484 | $ $ | 338 | $ $ | 4.38 |
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | Page 8 |
| TABLE 6 – STATEMENTS OF CASH FLOWS |
| | | Third Quarter | | First Nine Months |
| (Dollars in millions) | | 2009 | | 2008 | | 2009 | | 2008 |
| | | | | | | | | |
| Cash flows from operating activities | | | | | | | | |
| Net earnings | $ | 101 | $ | 100 | $ | 168 | $ | 348 |
| | | | | | | | | |
| Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | | | | | | | | |
| Depreciation and amortization | | 69 | | 67 | | 203 | | 199 |
| Asset impairments charges | | -- | | -- | | -- | | 1 |
| Gain on sale of assets | | -- | | 1 | | -- | | (13) |
| Provision (benefit) for deferred income taxes | | 25 | | 3 | | 165 | | (56) |
| Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | | | | | | | | |
| (Increase) decrease in trade receivables | | 17 | | 72 | | (35) | | (16) |
| (Increase) decrease in inventories | | (50) | | (55) | | 141 | | (170) |
| Increase (decrease) in trade payables | | 47 | | (60) | | (8) | | (49) |
| Increase (decrease) in liabilities for employee benefits and incentive pay | | 8 | | 23 | | (14) | | (6) |
| Other items, net | | 114 | | 63 | | 48 | | 55 |
| | | | | | | | | |
| Net cash provided by operating activities | | 331 | | 214 | | 668 | | 293 |
| | | | | | | | | |
| Cash flows from investing activities | | | | | | | | |
| Additions to properties and equipment | | (64) | | (153) | | (268) | | (430) |
| Proceeds from sale of assets | | -- | | 4 | | 25 | | 333 |
| Acquisitions of and investments in joint ventures | | -- | | -- | | -- | | (38) |
| Additions to capitalized software | | (2) | | (2) | | (6) | | (8) |
| Other items, net | | (21) | | -- | | (64) | | (2) |
| | | | | | | | | |
| Net cash used in investing activities | | (87) | | ( 151) | | ( 313) | | (145) |
| | | | | | | | | |
| Cash flows from financing activities | | | | | | | | |
| Net increase in commercial paper, credit facility and other borrowings | | 14 | | (22) | | 23 | | 42 |
| Repayment of borrowings | | (14) | | -- | | (16) | | (175) |
| Dividends paid to stockholders | | (32) | | (34) | | (96) | | (103) |
| Treasury stock purchases | | -- | | (231) | | -- | | (501) |
| Proceeds from stock option exercises and other items | | 6 | | -- | | 15 | | 38 |
| | | | | | | | | |
| Net cash used in financing activities | | (26) | | (287) | | (74) | | ( 699) |
| | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | -- | | (1) | | -- | | -- |
| | | | | | | | | |
| Net change in cash and cash equivalents | | 218 | | (225) | | 281 | | (551) |
| | | | | | | | | |
| Cash and cash equivalents at beginning of period | | 450 | | 562 | | 387 | | 888 |
| | | | | | | | | |
| Cash and cash equivalents at end of period | $ | 668 | $ | 337 | $ | 668 | $ | 337 |
| EASTMAN CHEMICAL COMPANY – EMN | October 22, 2009 |
| | 5:00 PM EDT |
| | Page 9 |
| TABLE 7 – SELECTED BALANCE SHEET ITEMS |
| | | September 30, | | December 31, |
| (Dollars in millions) | | 2009 | | 2008 |
| | | | | |
| Current Assets | $ | 1,580 | $ | 1,423 |
| | | | | |
| Net Properties and Equipment | | 3,273 | | 3,198 |
| | | | | |
| Other Assets | | 701 | | 660 |
| | | | | |
| Total Assets | $ | 5,554 | $ | 5,281 |
| | | | | |
| | | | | |
| Payables and Other Current Liabilities | $ | 827 | $ | 819 |
| | | | | |
| Short-term Borrowings | | 1 | | 13 |
| | | | | |
| Long-term Borrowings | | 1,440 | | 1,442 |
| | | | | |
| Other Liabilities | | 1,641 | | 1,454 |
| | | | | |
| Stockholders’ Equity | | 1,645 | | 1,553 |
| | | | | |
| Total Liabilities and Stockholders’ Equity | $ | 5,554 | $ | 5,281 |
