Eastman Chemical (EMN) 10-Q 23 Oct 09 2009 Q3 Quarterly report Financial data

UNAUDITED CONSOLIDATED STATEMEN

UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND RETAINED EARNINGS (USD $)
In Millions	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND RETAINED EARNINGS
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	0	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	0	0	0	18
Net earnings	101	100	168	348
Basic earnings per share
Earnings from continuing operations, Per Basic Share	1.4	1.35	2.31	4.34
Earnings from discontinued operations, Per Basic Share	0	0	0	0.23
Basic earnings per share	1.4	1.35	2.31	4.57
Diluted earnings per share
Earnings from continuing operations, Per Diluted Share	1.38	1.33	2.29	4.27
Earnings from discontinued operations, Per Diluted Share	0	0	0	0.23
Diluted earnings per share	1.38	1.33	2.29	4.5
Comprehensive Income
Net Earnings	101	100	168	348
[OtherComprehensiveIncomeLossNetOfTaxPeriodIncreaseDecreaseAbstract]
Change in cumulative translation adjustment, net of tax	2	(27)	17	(68)
Change in pension plans, net of tax	0	(1)	(2)	7
Change in unrealized gains (losses) on derivative instruments, net of tax	(7)	(6)	(6)	(3)
Total other comprehensive income (loss)	(5)	(34)	9	(64)
Comprehensive income	96	66	177	284
Retained Earnings
Retained earnings at beginning of period	2,566	2,529	2,563	2,349
Net Earnings	101	100	168	348
Cash dividends declared	(32)	(31)	(96)	(99)
Retained Earnings at End of Period	$2,635	$2,598	$2,635	$2,598

CONSOLIDATED STATEMENTS OF FINA

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (USD $)
In Millions	Sep. 30, 2009	Dec. 31, 2008
Current Assets
Cash and cash equivalents	$668	$387
Trade receivables, net	316	275
Miscellaneous receivables	68	79
Inventories	495	637
Other current assets	33	45
Total current assets	1,580	1,423
Properties
Properties and equipment at cost	8,636	8,527
Less: Accumulated depreciation	5,363	5,329
Net properties and equipment	3,273	3,198
Goodwill	326	325
Other noncurrent assets	375	335
Total assets	5,554	5,281
Current liabilities
Payables and other current liabilities	827	819
Borrowings due within one year	1	13
Total current liabilities	828	832
Long-term borrowings	1,440	1,442
Deferred income tax liabilities	274	106
Post-employment obligations	1,250	1,246
Other long-term liabilities	117	102
Total liabilities	3,909	3,728
Stockholders' equity
Common stock	1	1
Additional paid-in capital	649	638
Retained earnings	2,635	2,563
Accumulated other comprehensive loss	(326)	(335)
Treasury stock at cost	1,314	1,314
Total stockholders' equity	1,645	1,553
Total liabilities and stockholders' equity	$5,554	$5,281

Paranthetical Data To The Conso

Paranthetical Data To The Consolidated Statements Of Financial Position (USD $)
	Sep. 30, 2009	Dec. 31, 2008
Stockholders' equity
Common Stock, Par or Stated Value Per Share	0.01	0.01
Common Stock, Shares Authorized	350,000,000	350,000,000
Common Stock, Shares Issued	94,659,859	94,495,860
Treasury Stock, Shares	22,035,296	22,031,357

1_UNAUDITED CONSOLIDATED STATEM

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Cash flows from operating activities
Net Earnings	$168	$348
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	203	199
Asset impairments charges	0	1
Gains on sale of assets	0	(13)
Provision (benefit) for deferred income taxes	165	(56)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables	(35)	(16)
(Increase) decrease in inventories	141	(170)
Increase (decrease) in trade payables	(8)	(49)
Increase (decrease) in liabilities for employee benefits and incentive pay	(14)	(6)
Other items, net	48	55
Net cash provided by operating activities	668	293
Cash flows from investing activities
Additions to properties and equipment	(268)	(430)
Proceeds from sale of assets	25	333
Acquisitions of Joint Ventures	0	(38)
Additions to capitalized software	(6)	(8)
Other items, net	(64)	(2)
Net cash used in investing activities	(313)	(145)
Cash flows from financing activities
Net increase in commercial paper, credit facility and other borrowings	23	42
Repayment of borrowings	(16)	(175)
Dividends paid to stockholders	(96)	(103)
Treasury stock purchases	0	(501)
Proceeds from stock option exercises and other items	15	38
Net cash used in financing activities	(74)	(699)
Net change in cash and cash equivalents	281	(551)
Cash and cash equivalents at beginning of period	387	888
Cash and Cash Equivalents at End of Period	$668	$337

STATEMENTOFSTOCKHOLDERSEQUITY

STATEMENTOFSTOCKHOLDERSEQUITY (USD $)
In Millions	Common Stock [Member]		Additional Paid In Capital [Member]		Retained Earnings [Member]		Accumulated Other Comprehensive Income [Member]		Treasury Stock [Member]		Total
Stockholders Equity at Dec. 31, 2008	$1		$638		$2,563		($335)		($1,314)		$1,553
Net Earnings	0		0		168		0		0		168
Cash dividends declared	0	[1]	0	[1]	(96)	[1]	0	[1]	0	[1]	(96)
Other Comprehensive Income Loss Net Of Tax Period Increase Decrease	0		0		0		9		0		9
Share-based Compensation Expense, Value	0	[2]	13	[2]	0	[2]	0	[2]	0	[2]	13	[2]
Other Items	0	[3]	(2)	[3]	0	[3]	0	[3]	0	[3]	(2)	[3]
Stockholders Equity at Sep. 30, 2009	$1		$649		$2,635		($326)		($1,314)		$1,645
[1]Includes cash dividends declared, but unpaid.
[2]The fair value of equity share-based awards recognized under GAAP for share-based payments.
[3]The tax benefits relating to the difference between the amounts deductible for federal income taxes over the amounts charged to income for book value purposes have been credited to paid-in capital.

BASIS OF PRESENTATION

BASIS OF PRESENTATION
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Basis of Accounting [Text Block]	1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company (the "Company" or "Eastman") in accordance and consistent with the accounting policies stated in the Company's 2008 Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements in Part II, Item 8 of the Company's 2008 Annual Report on Form 10-K.The unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States ("GAAP") and, of necessity, include some amounts that are based upon management estimates and judgments.Future actual results could differ from such current estimates.The unaudited consolidated financial statements include assets, liabilities, revenues, and expenses of all majority-owned subsidiaries and joint ventures.Eastman accounts for other joint ventures and investments in minority-owned companies where it exercises significant influence, but does not have control, on the equity basis.Intercompany transactions and balances are eliminated in consolidation.Certain prior period data has been reclassified in the Consolidated Financial Statements and accompanying footnotes to conform to current period presentation. The Company has evaluated the period from September 30, 2009, the date of the financial statements, through October 23, 2009, the date of the issuance and filing of the financial statements and has determined that no material subsequent events have occurred that would affect the information presented in these financial statements or require additional disclosure.

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Discontinued Operations	2. DISCONTINUED OPERATIONS In first quarter 2008, the Company sold its polyethylene terephthalate ("PET") polymers and purified terephthalic acid ("PTA") production facilities in the Netherlands and its PET production facility in the United Kingdom and related businesses for approximately $329 million.The Company recognized a gain of $18 million, net of tax, related to the sale of these businesses which included the recognition of deferred currency translation adjustments of approximately $40 million, net of tax.In addition, the Company indemnified the buyer against certain liabilities primarily related to taxes, legal matters, environmental matters, and other representations and warranties. The sale of the manufacturing facilities in the Netherlands and United Kingdom, and related businesses completed the Company's exit from the European PET business and qualified as a component of an entity under GAAP for the impairment or disposal of long-lived assets, and accordingly their results are presented as discontinued operations and are not included in the results from continuing operations for the effected period presented in the Company's unaudited consolidated financial statements. In fourth quarter 2007, the Company sold its PET polymers production facilities in Mexico and Argentina and the related businesses.The results related to the Mexico and Argentina facilities were not presented as discontinued operations due to continuing involvement of the Company's Performance Polymers segment in the region including contract polymer intermediates sales under a transition supply agreement to the divested sites through 2008. Operating results of the discontinued operations which were formerly included in the Performance Polymers segment are summarized below: First Nine Months (Dollars in millions) 2008 Sales $ 169 Earnings before income taxes 2 Gain on disposal, net of tax 18

INVENTORIES

INVENTORIES
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Inventories	3. INVENTORIES September 30, December 31, (Dollars in millions) 2009 2008 At FIFO or average cost (approximates current cost) Finished goods $ 535 $ 634 Work in process 161 200 Raw materials and supplies 259 328 Total inventories 955 1,162 LIFO Reserve (460) (525) Total inventories $ 495 $ 637 Inventories valued on the LIFO method were approximately 70 percent as of September 30, 2009 and 75 percent as of December 31, 2008 of total inventories.

PAYABLES AND OTHER CURRENT LIAB

PAYABLES AND OTHER CURRENT LIABILITIES
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Payable and Other Current Liabilities	4. PAYABLES AND OTHER CURRENT LIABILITIES September 30, December 31, (Dollars in millions) 2009 2008 Trade creditors $ 403 $ 390 Accrued payrolls, vacation, and variable-incentive compensation 110 129 Accrued taxes 60 41 Post-employment obligations 62 60 Interest payable 25 30 Bank overdrafts 25 4 Other 142 165 Total payables and other current liabilities $ 827 $ 819 The current portion of post-employment obligations is an estimate of current year payments in excess of plan assets.

PROVISION FOR INCOME TAXES

PROVISION FOR INCOME TAXES
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Provision for Income Taxes	5. PROVISION FOR INCOME TAXES Third Quarter First Nine Months (Dollars in millions) 2009 2008 2009 2008 Provision for income taxes $ 69 $ 48 $ 110 $ 124 Effective tax rate 40 % 33 % 39 % 27 % Third quarter 2009 effective tax rate reflects a $12 million tax charge associated with the recapture of gasification investment tax credits.Third quarter 2008 effective tax rate reflected an $8 million benefit from the reversal of a U.S. capital loss valuation allowance associated with the sale of businesses, and a $6 million benefit from the settlement of a non-U.S. income tax audit. First nine months 2009 effective tax rate reflects a $12 million tax charge associated with the recapture of gasification investment tax credits and a $7 million tax charge associated with a change in accounting method for tax purposes to accelerate timing of deductions for manufacturing repairs expense.First nine months 2008 effective tax rate reflected the estimated benefit resulting from the gasification investment tax credit, an $8 million benefit from the reversal of a U.S. capital loss valuation allowance associated with the sale of businesses, and a $6 million benefit from the settlement of a non-U.S. income tax audit.Including the above items, first nine months 2009 and 2008 effective tax rates reflect the Company's expected full year tax rate on reported earnings from continuing operations before income tax, of approximately 38 and 28 percent, respectively. The Company or one of its subsidiaries files tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions.With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2004, or non-U.S. income tax examinations by tax authorities for years before 2003.

BORROWINGS

BORROWINGS
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Borrowings	6. BORROWINGS September 30, December 31, (Dollars in millions) 2009 2008 Borrowings consisted of: 7% notes due 2012 $ 152 $ 154 6.30% notes due 2018 206 207 7 1/4% debentures due 2024 497 497 7 5/8% debentures due 2024 200 200 7.60% debentures due 2027 298 298 Credit facilities borrowings 85 84 Other 3 15 Total borrowings 1,441 1,455 Borrowings due within one year (1) (13) Long-term borrowings $ 1,440 $ 1,442 At September 30, 2009, the Company had credit facilities with various U.S. and foreign banks totaling approximately $800 million.These credit facilities consist of a $700 million revolving credit facility (the "Credit Facility"), as well as a 58 million euro credit facility ("Euro Facility").The Credit Facility has two tranches, with $125 million expiring in 2012 and $575 million expiring in 2013.The Euro Facility expires in 2012.Borrowings under these credit facilities are subject to interest at varying spreads above quoted market rates.The Credit Facility requires a facility fee on the total commitment.In addition, these credit facilities contain a number of customary covenants and events of default, including the maintenance of certain financial ratios.The Company was in compliance with all such covenants for all periods presented.At September 30, 2009, the Company's credit facility borrowings totaled $85 million at an effective interest rate of 0.79 percent.At December 31, 2008, the Company's credit facility borrowings totaled $84 million at an effective interest rate of 3.74 percent. The Credit Facility provides liquidity support for commercial paper borrowings and general corporate purposes.Accordingly, any outstanding commercial paper borrowings reduce borrowings available under the Credit Facility.Given the expiration dates of the Credit Facility, any commercial paper borrowings supported by the Credit Facility are classified as long-term borrowings because the Company has the ability and intent to refinance such borrowings on a long-term basis.

ASSET IMPAIRMENTS AND RESTRUCTU

ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Asset Impairments and Restructuring Charges Net	7. ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET In first nine months 2009, restructuring charges were $23 million, net.The charges, primarily for severance, resulted from a reduction in force. In third quarter and first nine months 2008, asset impairments and restructuring charges, net totaled $2 million and $22 million, respectively, primarily for severance, pension charges, and site closure costs in the Performance Chemicals and Intermediates ("PCI") segment resulting from the decision to close a previously impaired site in the United Kingdom, and in the Performance Polymers segment for restructuring at the South Carolina facility and the divestiture of the PET manufacturing facilities in Mexico and Argentina. Changes in Reserves for Asset Impairments, Restructuring Charges, and Severance Charges The following table summarizes the beginning reserves, charges to and changes in estimates to the reserves as described above, and the cash and non-cash reductions to the reserves attributable to asset impairments and the cash payments for severance and site closure costs for full year 2008 and first nine months 2009: (Dollars in millions) Balance at January 1, 2008 Provision/ Adjustments Non-cash Reductions Cash Reductions Balance at December 31, 2008 Non-cash charges $ -- $ 2 $ (2) $ -- $ -- Severance costs 7 10 -- (12) 5 Site closure and otherrestructuring costs 11 34 -- (20) 25 Total $ 18 $ 46 $ (2) $ (32) $ 30 Balance at January 1, 2009 Provision/ Adjustments Non-cash Reductions Cash Reductions Balance at September 30, 2009 Non-cash charges $ -- $ -- $ -- $ -- $ -- Severance costs 5 24 -- (18) 11 Site closure and otherrestructuring costs 25 (1) -- -- 24 Total $ 30 $ 23 $ -- $ (18) $ 35 A majority of the remaining severance and site closure costs is expected to be applied to the reserves within one year.

RETIREMENT PLANS

RETIREMENT PLANS
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Retirement Plans	8. RETIREMENT PLANS DEFINED BENEFIT PENSION PLANS Eastman maintains defined benefit pension plans that provide eligible employeeswith retirement benefits.Costs recognized for these benefits are recorded using estimated amounts, which may change as actual costs derived for the year are determined. Below is a summary of the components of net periodic benefit cost recognized for Eastman's significant defined benefit pension plans: Summary of Components of Net Periodic Benefit Costs Third Quarter First Nine Months (Dollars in millions) 2009 2008 2009 2008 Service cost $ 10 $ 11 $ 31 $ 34 Interest cost 22 22 65 66 Expected return on assets (25) (26) (74) (79) Curtailment charge -- -- -- 9 Amortization of: Prior service credit (4) (5) (12) (12) Actuarial loss 8 7 25 21 Net periodic benefit cost $ 11 $ 9 $ 35 $ 39 The Company contributed $30 million to its U.S. defined benefit pension plan in third quarter 2009. The curtailment charge in 2008 was primarily related to the decision to close a previously impaired site in the United Kingdom. POSTRETIREMENT WELFARE PLANS Eastman provides a subsidy toward life insurance, health care, and dental benefits for eligible retirees hired prior to January 1, 2007, and a subsidy toward health care benefits for retirees' eligible survivors.In general, Eastman provides those benefits to retirees eligible under the Company's U.S. plans.Similar benefits are also made available to retirees of Holston Defense Corporation, a wholly-owned subsidiary of the Company that, prior to January 1, 1999, operated a government-owned ammunitions plant. Eligible employees hired on or after January 1, 2007 have access to postretirement health care benefits, but Eastman does not provide a subsidy toward the premium cost of postretirement health care benefits for those employees. A few of the Company's non-U.S. operations have supplemental health benefit plans for certain retirees, the cost of which is not significant to the Company. Costs recognized for benefits for eligible retirees hired prior to January 1, 2007 are recorded using estimated amounts, which may change as actual costs derived for the year are determined.Below is a summary of the components of net periodic benefit cost recognized for the Company's U.S. plans: Summary of Components of Net Periodic Benefit Costs Third Quarter First Nine Months (Dollars in millions) 2009 2008 2009 2008 Service cost $ 2 $ 2 $ 6 $ 5 Interest cost 12 11 34 33 Expected return on assets (1) (1) (2) (3) Amortization of: Prior service credit (5) (6) (17) (17) Actuarial loss 4 2 10 7 Net periodic benefit cost $ 12 $ 8 $ 31 $ 25

ENVIRONMENTAL MATTERS

ENVIRONMENTAL MATTERS
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Environmental Matters	9. ENVIRONMENTAL MATTERS Certain Eastman manufacturing sites generate hazardous and nonhazardous wastes, the treatment, storage, transportation, and disposal of which are regulated by various governmental agencies.In connection with the cleanup of various hazardous waste sites, the Company, along with many other entities, has been designated a potentially responsible party ("PRP") by the U.S. Environmental Protection Agency under the Comprehensive Environmental Response, Compensation and Liability Act, which potentially subjects PRPs to joint and several liability for such cleanup costs.In addition, the Company could be required to incur costs for environmental remediation and closure and postclosure under the federal Resource Conservation and Recovery Act.Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2008 Annual Report on Form 10-K.Because of expected sharing of costs, the availability of legal defenses, and the Company's preliminary assessment of actions that may be required, management does not believe that the Company's liability for these environmental matters, individually or in the aggregate, will be material to the Company's consolidated financial position, results of operations or cash flows.The Company's reserve for environmental contingencies was $42 million and $41 million at September 30, 2009 and December 31, 2008, respectively, representing the minimum or best estimate for remediation costs and the best estimate accrued to date over the facilities' estimated useful lives for asset retirement obligation costs.Estimated future environmental expenditures for remediation costs range from the minimum or best estimate of $10 million to the maximum of $21 million at September 30, 2009, and $11 million to the maximum of $21 million at December 31, 2008.

COMMITMENTS DISCLOSURE

COMMITMENTS DISCLOSURE
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Commitments Disclosure	10. COMMITMENTS Purchasing Obligations and Lease Commitments At September 30, 2009, the Company had various purchase obligations totaling approximately $1.3 billion over a period of approximately 15 years for materials, supplies, and energy incident to the ordinary conduct of business.The Company also had various lease commitments for property and equipment under cancelable, noncancelable, and month-to-month operating leases totaling $103 million over a period of several years.Of the total lease commitments, approximately 17 percent relate to machinery and equipment, including computer and communications equipment and production equipment; approximately 41 percent relate to real property, including office space, storage facilities and land; and approximately 42 percent relate to vehicles, primarily railcars. Accounts Receivable Securitization Program In 1999, the Company entered into an agreement that allows the Company to sell certain trade receivables on a non-recourse basis to a consolidated special purpose entity which in turn may sell interests in those receivables to a third party purchaser which generally funds its purchases via the issuance of commercial paper backed by the receivables interests.The annually renewable agreement permits the sale of undivided interests in domestic trade accounts receivable.The assets of the special purpose entity are not available to satisfy the Company's general obligations.Receivables sold to the third party totaled $200 million at September 30, 2009 and December 31, 2008.Undivided interests in designated receivable pools were sold to the purchaser with recourse limited to the purchased interest in the receivable pools.Average monthly proceeds from collections reinvested in the continuous sale program were approximately $245 million and $370 million in third quarter 2009 and 2008, respectively, and $225 million and $345 million in first nine months 2009 and 2008, respectively.The securitization program was fully drawn at September 30, 2009 and renewed in July 2009. Guarantees The Company has operating leases with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease.These residual value guarantees at September 30, 2009totaled $159 million and consisted of leases for railcars and aircraft.Leases with guarantee amounts totaling $11 million, $138 million, and $10 million will expire in 2011, 2012, and 2014 and beyond, respectively.The Company believes, based on current facts and circumstances, that the likelihood of a material payment pursuant to such guarantees is remote. Variable Interest Entities The Company has evaluated its material contractual relationships and has concluded that the entities involved in these relationships are not Variable Interest Entities ("VIEs") or, in the case of Primester, a joint venture that manufactures cellulose acetate at the Company's Kingsport, Tennessee plant, the Company is not the primary beneficiary of the VIE.As such, in accordance with consolidations rules included in GAAP, the Company is not required to consolidate these entities.In addition, the Company

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Fair Value Financial Instruments	11. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair Value of Borrowings GAAP requires public companies to disclose the fair value of financial assets and liabilities whenever summarizing financial information for interim reporting periods.The fair value for fixed-rate borrowings is based on current interest rates for comparable securities.The Company's floating-rate borrowings approximate fair value. (Dollars in millions) September 30, 2009 December 31, 2008 Recorded Amount Fair Value Recorded Amount Fair Value Long-term borrowings $ 1,440 $ 1,484 $ 1,442 $ 1,369 Fair Value Measurements On January 1, 2008, the Company began recording financial assets and liabilities subject to recurring fair value measurement at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.On January 1, 2009 the Company began recording non-recurring financial as well as all non-financial assets and liabilities subject to fair value measurement under the same principles.These fair value principles prioritize valuation inputs across three broad levels.Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.Level 3 inputs are unobservable inputs based on the Company's assumptions used to measure assets and liabilities at fair value.An asset or liability's classification within the various levels is determined based on the lowest level input that is significant to the fair value measurement. The following chart shows the financial assets and liabilities valued on a recurring basis. (Dollars in millions) Fair Value Measurements at September 30, 2009 Description September 30, 2009 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative Assets $ 12 $ -- $ 12 $ -- Derivative Liabilities (6) -- (6) -- $ 6 $ -- $ 6 $ -- (Dollars in millions) Fair Value Measurements at December 31, 2008 Description December 31, 2008 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative Assets $ 16 $ -- $ 16 $ -- Derivative Liabilities (14) -- (14) -- $ 2 $ -- $ 2 $ -- Hedging Programs The Company is exposed to market risk, such as changes in currency exchange rates, raw material and energy costs, and interest rates.The Company uses various derivative financial instruments pursuant to the Company's hedging policies to mit

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY
	1/1/2009 - 9/30/2009
Notes To Financial Statements [Abstract]
Stockholders' Equity	12. STOCKHOLDERS' EQUITY A reconciliation of the changes in stockholders' equity in first nine months 2009 is provided below: (Dollars in millions) Common Stock at Par Value $ Paid-in Capital $ Retained Earnings $ Accumulated Other Comprehensive Income (Loss) $ Treasury Stock at Cost $ Total Stockholders' Equity $ Balance at December 31, 2008 1 638 2,563 (335) (1,314) 1,553 Net Earnings -- -- 168 -- -- 168 Cash Dividends Declared (1) -- -- (96) -- -- (96) Other Comprehensive Income -- -- -- 9 -- 9 Stock-Based Compensation Expense (2) -- 13 -- -- -- 13 Other (3) -- (2) -- -- -- (2) Balance at September 30, 2009 1 649 2,635 (326) (1,314) 1,645 (1) Includes cash dividends declared, but unpaid. (2) The fair value of equity share-based awards recognized under GAAP for share-based payments. (3) The tax benefits relating to the difference between the amounts deductible for federal income taxes over the amounts charged to income for book value purposes have been credited to paid-in capital. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX (Dollars in millions) Cumulative Translation Adjustment $ Unrecognized Loss and Prior Service Cost $ Unrealized Gains (Losses) on Derivative Instruments $ Unrealized Losses on Investments $ Accumulated Other Comprehensive Income (Loss) $ Balance at December 31, 2007 157 (182) (3) -- (28) Period change (97) (232) 23 (1) (307) Balance at December 31, 2008 60 (414) 20 (1) (335) Period change 17 (2) (6) -- 9 Balance at September 30, 2009 77 (416) 14 (1) (326) Amounts of other comprehensive income (loss) are presented net of applicable taxes.The Company records deferred income taxes on the cumulative translation adjustment related to branch operations and other entities included in the Company's consolidated U.S. tax return.No deferred income taxes are provided on the cumulative translation adjustment of subsidiaries outside the United States, as such cumulative translation adjustment is considered to be a component of permanently invested, unremitted earnings of these foreign subsidiaries.

EARNINGS AND DIVIDENDS PER SHAR

EARNINGS AND DIVIDENDS PER SHARE
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Earnings and Dividends Per Share	13. EARNINGS AND DIVIDENDS PER SHARE Third Quarter First Nine Months 2009 2008 2009 2008 Shares used for earnings per share calculation (in millions): Basic 72.6 74.2 72.5 76.1 Diluted 73.5 75.1 73.3 77.2 In third quarter and first nine months 2009, common shares underlying options to purchase 3,037,007 shares of common stock and 3,720,448 shares of common stock, respectively, were excluded from the computation of diluted earnings per share because the total market value of option exercises for these awards was less than the total proceeds that would be received for these awards.There were no share repurchases in first nine months 2009. In third quarter and first nine months 2008, common shares underlying options to purchase 655,884 shares of common stock and 596,784 shares of common stock, respectively, were excluded from the computation of diluted earnings per share because the total market value of option exercises for these awards was less than the total proceeds that would be received for these awards.Third quarter and first nine months 2008 reflect the impact of share repurchases of 3.9 million and 8.1 million shares, respectively. The Company declared cash dividends of $0.44 per share in third quarter 2009 and 2008 and $1.32 per share in first nine months 2009 and 2008.

SHARE-BASED COMPENSATION AWARDS

SHARE-BASED COMPENSATION AWARDS
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Share Based Compensation Awards	14. SHARE-BASED COMPENSATION AWARDS The Company utilizes share-based awards under employee and non-employee director compensation programs.These share-based awards may include restricted and unrestricted stock, restricted stock units, stock options, and performance shares.In third quarter 2009 and 2008, approximately $4 million and $6 million of compensation expense before tax were recognized in selling, general and administrative expense in the earnings statement for all share-based awards.The impact on third quarter 2009 and 2008 net earnings of $3 million and $4 million, respectively, is net of deferred tax expense related to share-based award compensation. In first nine months 2009 and 2008, $13 million and $19 million, respectively, of compensation expense before tax were recognized in selling, general and administrative expense in the earnings statement for all share-based awards.The impact on first nine months 2009 and 2008 net earnings of $8 million and $12 million, respectively, is net of deferred tax expense related to share-based award compensation. Additional information regarding share-based compensation plans and awards may be found in Note 16, "Share-Based Compensation Plans and Awards", to the consolidated financial statements in Part II, Item 8 of the Company's 2008 Annual Report on Form 10-K.

SEGMENT INFORMATION

SEGMENT INFORMATION
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Segment Information	15. SEGMENT INFORMATION The Company's products and operations are managed and reported in five reportable operating segments, consisting of the Coatings, Adhesives, Specialty Polymers, and Inks ("CASPI") segment, the Fibers segment, the PCI segment, the Performance Polymers segment, and the Specialty Plastics ("SP") segment.For additional information concerning the Company's segments' businesses and products, see Note 23, "Segment Information", to the consolidated financial statements in Part II, Item 8 of the Company's 2008 Annual Report on Form 10-K. Research and development and other expenses not identifiable to an operating segment are not included in segment operating results for either of the periods presented and are shown in the tables below as "other" operating losses. Third Quarter (Dollars in millions) 2009 2008 Sales by Segment CASPI $ 338 $ 410 Fibers 257 269 PCI 355 594 Performance Polymers 187 293 SP 200 253 Total Sales $ 1,337 $ 1,819 First Nine Months (Dollars in millions) 2009 2008 Sales by Segment CASPI $ 890 $ 1,213 Fibers 779 783 PCI 943 1,768 Performance Polymers 563 886 SP 544 730 Total Sales $ 3,719 $ 5,380 Third Quarter (Dollars in millions) 2009 2008 Operating Earnings (Loss) CASPI $ 84 $ 55 Fibers 79 65 PCI (1) 33 62 Performance Polymers (2) (10) (1) SP 13 6 Total Operating Earnings by Segment 199 187 Other (8) (13) Total Operating Earnings $ 191 $ 174 (1) Third quarter 2008 includes $1 million of asset impairments and restructuring charges, net primarily related to severance and pension costs from the decision to close a previously impaired site in the United Kingdom and $2 million in accelerated depreciation costs resulting from the previously reported shutdown of cracking units at the Company's Longview, Texas facility. (2) Third quarter 2008 includes $1 million of asset impairments and restructuring charges, net related to previously divested manufacturing facilities in Mexico and Argentina and restructuring at the South Carolina facility using IntegRexTM technology, partially offset by a resolution of a contingency from the sale of the Company's polyethylene ("PE") and EpoleneTM polymer businesses divested in fourth quarter 2006, and $1 million of accelerated depreciation costs resulting from restructuring actions associated with certain assets in Columbia, South Carolina. First Nine Months (Dollars in millions) 2009 2008 Operating Earnings (Loss) CASPI (1)(2) $ 148 $ 167 Fibers (1) 222 195 PCI (1)(3) 35 160 Performance Polymers (1)(4) (32) (5) SP (1) 3 36 Total Operating Earnings by Segment 376 553 Other (29) (39)

LEGAL MATTERS

LEGAL MATTERS
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Legal Matters	16. LEGAL MATTERS From time to time, the Company and its operations are parties to, or targets of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which are being handled and defended in the ordinary course of business.While the Company is unable to predict the outcome of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations or cash flows.However, adverse developments could negatively impact earnings or cash flows in a particular future period.

RECENTLY ISSUED ACCOUNTING STAN

RECENTLY ISSUED ACCOUNTING STANDARDS
	9 Months Ended Sep. 30, 2009
Notes To Financial Statements [Abstract]
Description of New Accounting Pronouncements Not yet Adopted	17. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2009, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 166, "Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140" ("SFAS No. 166").This statement addresses the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferors continuing involvement in transferred financial assets.This statement is effective as of the beginning of each reporting entitys first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter.The Company is currently evaluating the effect SFAS No. 166 will have on its consolidated financial position, liquidity, or results of operations. In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No. 46(R)" ("SFAS No. 167").This statement amends certain requirements of FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities", to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements.This statement is effective as of the beginning of each reporting entitys first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter.The Company is currently evaluating the effect SFAS No. 167 will have on its consolidated financial position, liquidity, or results of operations.

Document Information

Document Information
	9 Months Ended Sep. 30, 2009
Document Information [Line Items]
Document Type	10-Q
Document Period End Date	2009-09-30
Amendment Flag	false

Entity Information

Entity Information (USD $)
	9 Months Ended Sep. 30, 2009	Jun. 30, 2008
Entity Information [Line Items]
Entity Registrant Name	EASTMAN CHEMICAL CO
Entity Central Index Key	0000915389
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$4,959,686,328
Entity Common Stock, Shares Outstanding	94,659,859