Document and Entity Information
Document and Entity Information - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | EASTMAN CHEMICAL CO | |
Entity Central Index Key | 915,389 | |
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 | $ 12,041,772,344 | |
Entity Common Stock, Shares Outstanding | 147,836,635 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 |
UNAUDITED CONSOLIDATED STATEMEN
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND RETAINED EARNINGS - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | |||
Income Statement [Abstract] | ||||
Sales | $ 2,236 | $ 2,443 | ||
Cost of sales | 1,602 | 1,787 | ||
Gross profit | 634 | 656 | ||
Selling, general and administrative expenses | 183 | 180 | ||
Research and development expenses | 54 | 56 | ||
Asset impairments and restructuring (gains) charges, net | (2) | 109 | ||
Operating earnings | 399 | 311 | ||
Net interest expense | 64 | 66 | ||
Other charges (income), net | 12 | (11) | ||
Earnings before income taxes | 323 | 256 | ||
Provision for income taxes | 72 | 84 | ||
Net earnings | 251 | 172 | ||
Less: Net earnings attributable to noncontrolling interest | 0 | 1 | ||
Net earnings attributable to Eastman | $ 251 | $ 171 | ||
Basic earnings per share attributable to Eastman | ||||
Basic earnings per share attributable to Eastman | $ 1.70 | $ 1.15 | ||
Diluted earnings per share attributable to Eastman | ||||
Diluted earnings per share attributable to Eastman | $ 1.69 | $ 1.14 | ||
Comprehensive Income | ||||
Net earnings including noncontrolling interest | $ 251 | $ 172 | ||
Other comprehensive income (loss), net of tax: | ||||
Change in cumulative translation adjustment | 106 | (212) | ||
Defined benefit pension and other postretirement benefit plans: | ||||
Amortization of unrecognized prior service credits included in net periodic costs | [1] | (7) | (4) | |
Derivatives and hedging: | ||||
Unrealized (loss) gain during period | [2] | (18) | 55 | |
Reclassification adjustment for losses (gains) included in net income, net | [2] | 4 | (3) | |
Total other comprehensive income (loss), net of tax | 85 | (164) | ||
Comprehensive income including noncontrolling interest | 336 | 8 | ||
Less: Net earnings attributable to noncontrolling interest | 0 | 1 | ||
Comprehensive income attributable to Eastman | 336 | 7 | ||
Retained Earnings | ||||
Retained earnings at beginning of period | 5,146 | 4,545 | ||
Net earnings attributable to Eastman | 251 | 171 | ||
Cash dividends declared | (67) | [3] | (60) | |
Retained earnings at end of period | $ 5,330 | $ 4,656 | ||
[1] | Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans". | |||
[2] | For additional information regarding the impact of reclassifications into earnings, refer to Note 7, "Derivatives". | |||
[3] | Includes cash dividends paid and dividends declared, but unpaid. |
UNAUDITED CONSOLIDATED STATEME3
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 | |
Current assets | |||
Cash and cash equivalents | $ 202 | $ 293 | |
Trade receivables, net of allowance for doubtful accounts | 951 | 792 | |
Miscellaneous receivables | 155 | 246 | |
Inventories | 1,493 | 1,479 | |
Other current assets | 62 | 68 | |
Total current assets | 2,863 | 2,878 | |
Properties | |||
Properties and equipment at cost | 11,395 | 11,234 | |
Less: Accumulated depreciation | 6,210 | 6,104 | |
Net properties | 5,185 | 5,130 | |
Goodwill | 4,527 | 4,518 | |
Intangible assets, net of accumulated amortization | 2,637 | 2,650 | |
Other noncurrent assets | 404 | 404 | |
Total assets | [1] | 15,616 | 15,580 |
Current liabilities | |||
Payables and other current liabilities | 1,334 | 1,625 | |
Borrowings due within one year | 513 | 431 | |
Total current liabilities | 1,847 | 2,056 | |
Long-term borrowings | 6,565 | 6,577 | |
Deferred income tax liabilities | 939 | 928 | |
Post-employment obligations | 1,294 | 1,297 | |
Other long-term liabilities | 686 | 701 | |
Total liabilities | 11,331 | 11,559 | |
Stockholders' equity | |||
Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 217,211,091 and 216,899,964 for 2016 and 2015, respectively) | 2 | 2 | |
Additional paid-in capital | 1,877 | 1,863 | |
Retained earnings | 5,330 | 5,146 | |
Accumulated other comprehensive loss | (305) | (390) | |
Stockholder's Equity before Treasury Stock | 6,904 | 6,621 | |
Less: Treasury stock at cost (69,425,254 shares for 2016 and 69,137,973 shares for 2015) | 2,700 | 2,680 | |
Total Eastman stockholders' equity | 4,204 | 3,941 | |
Noncontrolling interest | 81 | 80 | |
Total equity | 4,285 | 4,021 | |
Total liabilities and stockholders' equity | $ 15,616 | $ 15,580 | |
[1] | The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets. |
UNAUDITED CONSOLIDATED STATEME4
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Stockholders' equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 350,000,000 | 350,000,000 |
Common stock, shares issued (in shares) | 217,211,091 | 216,899,964 |
Treasury stock at cost (in shares) | 69,425,254 | 69,137,973 |
UNAUDITED CONSOLIDATED STATEME5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating activities | ||
Net earnings | $ 251 | $ 172 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 147 | 145 |
Asset impairment charges | 0 | 89 |
Provision for deferred income taxes | 9 | 16 |
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | ||
Increase in trade receivables | (144) | (91) |
(Increase) decrease in inventories | (2) | 21 |
Decrease in trade payables | (62) | (108) |
Pension and other postretirement contributions in excess of expenses | (19) | (23) |
Variable compensation in excess of expenses | (109) | (80) |
Other items, net | (24) | (50) |
Net cash provided by operating activities | 47 | 91 |
Investing activities | ||
Additions to properties and equipment | (110) | (125) |
Proceeds from sale of assets | 6 | 4 |
Acquisitions, net of cash acquired | (21) | 0 |
Other items, net | (1) | (1) |
Net cash used in investing activities | (126) | (122) |
Financing activities | ||
Net increase in commercial paper borrowings | 82 | 93 |
Repayment of borrowings | (10) | 0 |
Dividends paid to stockholders | (68) | (59) |
Treasury stock purchases | (20) | (26) |
Dividends paid to noncontrolling interest | 0 | (2) |
Proceeds from stock option exercises and other items, net | 4 | 11 |
Net cash (used in) provided by financing activities | (12) | 17 |
Effect of exchange rate changes on cash and cash equivalents | 0 | (4) |
Net change in cash and cash equivalents | (91) | (18) |
Cash and cash equivalents at beginning of period | 293 | 214 |
Cash and cash equivalents at end of period | $ 202 | $ 196 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | 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 2015 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 2015 Annual Report on Form 10-K. The December 31, 2015 financial position data included herein was derived from the audited consolidated financial statements included in the 2015 Annual Report on Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). The unaudited consolidated financial statements are prepared in conformity with 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, sales revenue, and expenses of all majority-owned subsidiaries and joint ventures in which a controlling interest is maintained. Eastman accounts for other joint ventures and investments where it exercises significant influence 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 confirm to current period presentation. In April 2015, the Financial Accounting Standards Board ("FASB") issued new guidance for debt issuance costs as a part of the simplification and productivity initiative. Under this guidance, debt issuance costs will be presented as a direct reduction from the carrying amount of the debt liability, consistent with the presentation of debt discounts. The amortization of debt issuance costs will be reported as interest expense. The recognition and measurement guidance for debt issuance costs is not affected by the amendment. As of March 31, 2016 , the new guidance has been applied on a retrospective basis which resulted in a reclassification of $31 million from "Other noncurrent assets" to "Long-term borrowings" line items in the Unaudited Consolidated Statement of Financial Position at December 31, 2015 . See Note 6, "Borrowings" . In January 2016, Eastman changed its organizational and management structure following completion of the integration of recently acquired businesses to better align similar strategies and business models. As a result, beginning first quarter 2016, the Company's products and operations are managed and reported in four operating segments: Additives & Functional Products ("AFP"), Advanced Materials ("AM"), Chemical Intermediates ("CI"), and Fibers. For further information, see Note 3, "Goodwill" and Note 17, " Segment Information ". Off Balance Sheet Financing Arrangements The Company has rights and obligations under non-recourse factoring facilities that have a combined limit of $180 million (the U.S. Dollar equivalent of the €158 million limit amount as of March 31, 2016 ) and are committed until December 2017. These arrangements include receivables in the United States, Belgium, Germany, and Finland, and are subject to various eligibility requirements. The Company sells the receivables at face value but receives funding (approximately 85 percent ) net of a deposit amount until collections are received from customers for the receivables sold. The total amounts of cumulative receivables sold in first three months 2016 and 2015 were approximately $235 million and $280 million , respectively. As part of the program, the Company continues to service the sold receivables at market rates with no servicing assets or liabilities recognized. The amounts of sold receivables outstanding under the non-recourse factoring facilities were $104 million and $106 million at March 31, 2016 and December 31, 2015 , respectively. The fair value of the receivables sold equals the carrying value at the time of the sale, and no gain or loss is recognized. The Company is exposed to a credit loss of up to 10 percent on sold receivables. |
Basis of Accounting, Policy [Policy Text Block] | 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 2015 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 2015 Annual Report on Form 10-K. The December 31, 2015 financial position data included herein was derived from the audited consolidated financial statements included in the 2015 Annual Report on Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). The unaudited consolidated financial statements are prepared in conformity with 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, sales revenue, and expenses of all majority-owned subsidiaries and joint ventures in which a controlling interest is maintained. Eastman accounts for other joint ventures and investments where it exercises significant influence on the equity basis. Intercompany transactions and balances are eliminated in consolidation |
Trade and Other Accounts Receivable, Policy [Policy Text Block] | Off Balance Sheet Financing Arrangements The Company has rights and obligations under non-recourse factoring facilities that have a combined limit of $180 million (the U.S. Dollar equivalent of the €158 million limit amount as of March 31, 2016 ) and are committed until December 2017. These arrangements include receivables in the United States, Belgium, Germany, and Finland, and are subject to various eligibility requirements. The Company sells the receivables at face value but receives funding (approximately 85 percent ) net of a deposit amount until collections are received from customers for the receivables sold. The total amounts of cumulative receivables sold in first three months 2016 and 2015 were approximately $235 million and $280 million , respectively. As part of the program, the Company continues to service the sold receivables at market rates with no servicing assets or liabilities recognized. The amounts of sold receivables outstanding under the non-recourse factoring facilities were $104 million and $106 million at March 31, 2016 and December 31, 2015 , respectively. The fair value of the receivables sold equals the carrying value at the time of the sale, and no gain or loss is recognized. The Company is exposed to a credit loss of up to 10 percent on sold receivables. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES March 31, December 31, (Dollars in millions) 2016 2015 At FIFO or average cost (approximates current cost) Finished goods $ 1,090 $ 1,063 Work in process 213 212 Raw materials and supplies 486 500 Total inventories 1,789 1,775 Less: LIFO Reserve 296 296 Total inventories $ 1,493 $ 1,479 Inventories valued on the last-in, first-out ("LIFO") method were approximately 60 percent at both March 31, 2016 and December 31, 2015 . |
GOODWILL (Notes)
GOODWILL (Notes) | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill Disclosure [Text Block] | GOODWILL In January 2016, as a result of the changes in Eastman's organizational and management structure, goodwill was reassigned to segments using a relative fair value allocation. In conjunction with the organizational changes and in accordance with GAAP, during first quarter 2016 Eastman performed an impairment assessment and concluded that no indication of an impairment existed. For further information on the organizational changes, see Note 1, "Basis of Presentation" and Note 17, " Segment Information ". Changes to the carrying value of goodwill follow: (Dollars in millions) Additives & Functional Products Adhesives & Plasticizers Advanced Materials Chemical Intermediates Other Segments Total Balance at December 31, 2015 $ 1,865 $ 111 $ 1,293 $ 1,239 $ 10 $ 4,518 Adjustments to net goodwill resulting from reorganization 583 (111 ) — (472 ) — — Currency translation adjustments 5 — — 4 — 9 Balance at March 31, 2016 $ 2,453 $ — $ 1,293 $ 771 $ 10 $ 4,527 As of March 31, 2016, the reported balance of goodwill included accumulated impairment losses of $23 million , $12 million , and $14 million in the AFP segment, CI segment, and other segments, respectively. As of December 31, 2015, the reported balance of goodwill included accumulated impairment losses of $35 million and $14 million in the Adhesives & Plasticizers segment and other segments, respectively. |
PAYABLES AND OTHER CURRENT LIAB
PAYABLES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Mar. 31, 2016 | |
Payables and Accruals [Abstract] | |
PAYABLES AND OTHER CURRENT LIABILITIES | PAYABLES AND OTHER CURRENT LIABILITIES March 31, December 31, (Dollars in millions) 2016 2015 Trade creditors $ 633 $ 699 Derivative hedging liability 170 218 Accrued payrolls, vacation, and variable-incentive compensation 125 227 Post-employment obligations 107 120 Other 299 361 Total payables and other current liabilities $ 1,334 $ 1,625 "Other" consists primarily of accruals for dividends payable, interest payable, accrued taxes, and the current portion of environmental liabilities. |
PROVISION FOR INCOME TAXES
PROVISION FOR INCOME TAXES | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
PROVISION FOR INCOME TAXES | PROVISION FOR INCOME TAXES First Quarter (Dollars in millions) 2016 2015 Provision for income taxes $ 72 $ 84 Effective tax rate 22 % 33 % The first quarter 2016 effective tax rate reflects a $9 million tax benefit primarily due to adjustments to the tax provision to reflect the finalization of 2014 foreign income tax returns. The first quarter 2016 effective tax rate also reflects a benefit from the timing of the extension of favorable U.S. federal tax provisions, primarily research and development ("R&D") tax credits and deferral of certain earnings of foreign subsidiaries from U.S. income taxes. The first quarter 2015 effective tax rate was negatively impacted by limited deductibility of costs for shutdown of the Workington, UK acetate tow manufacturing facility. |
BORROWINGS
BORROWINGS | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
BORROWINGS | BORROWINGS March 31, December 31, (Dollars in millions) 2016 2015 Borrowings consisted of: 2.4% notes due June 2017 $ 998 $ 998 6.30% notes due November 2018 165 166 5.5% notes due November 2019 249 249 2.7% notes due January 2020 795 794 4.5% notes due January 2021 249 249 3.6% notes due August 2022 894 896 7 1/4% debentures due January 2024 244 244 7 5/8% debentures due June 2024 54 54 3.8% notes due March 2025 791 791 7.60% debentures due February 2027 222 222 4.8% notes due September 2042 492 492 4.65% notes due October 2044 869 869 Credit facilities and commercial paper borrowings 1,052 980 Capital leases 4 4 Total borrowings 7,078 7,008 Borrowings due within one year 513 431 Long-term borrowings $ 6,565 $ 6,577 Credit Facility and Commercial Paper Borrowings In connection with the 2014 acquisition of Taminco Corporation, Eastman borrowed $1 billion under a five-year Term Loan. As of March 31, 2016 , the Term Loan balance outstanding was $350 million with an interest rate of 1.68 percent . As of December 31, 2015 , the Term Loan balance outstanding was $350 million with an interest rate of 1.67 percent . Borrowings under the Term Loan are subject to interest at varying spreads above quoted market rates. The Company has access to a $1.25 billion revolving credit agreement (the "Credit Facility") that expires October 2020. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility provides liquidity support for commercial paper borrowings and general corporate purposes. Accordingly, any outstanding commercial paper borrowings reduce capacity for borrowings available under the Credit Facility. Commercial paper borrowings are classified as short-term. At March 31, 2016 and December 31, 2015, the Company had no outstanding borrowings under the Credit Facility. At March 31, 2016 , the Company's commercial paper borrowings were $ 512 million with a weighted average interest rate of 0.81 percent . At December 31, 2015, the Company's commercial paper borrowings were $430 million with a weighted average interest rate of 0.80 percent . The $250 million accounts receivable securitization agreement (the "A/R Facility") expires April 2018. Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and the Company pays a fee to maintain availability of the A/R Facility. At March 31, 2016 , the Company's borrowings under the A/R Facility were $190 million supported by trade receivables with an interest rate of 1.25 percent . In first quarter 2016 , $ 10 million of the Company's borrowings under the A/R Facility were repaid using available cash. At December 31, 2015, the Company's borrowings under the A/R Facility were $200 million supported by trade receivables with an interest rate of 1.11 percent . The Credit Facility and the A/R Facility, and the Term Loan, 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. Total available borrowings under the Credit Facility and A/R Facility were $769 million and $842 million as of March 31, 2016 and December 31, 2015, respectively. Changes in available borrowings were due primarily to an increase in commercial paper borrowings. The Company would not have violated applicable covenants for these periods if the total available amounts of the facilities had been borrowed. Fair Value of Borrowings The Company has classified its long-term borrowings at March 31, 2016 , and December 31, 2015 , under the fair value hierarchy as defined in the accounting policies in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2015 Annual Report on Form 10-K. The fair value for fixed-rate debt securities is based on current market prices and is classified as Level 1. The fair value for the Company's floating-rate borrowings, which relate to the Term Loan, the A/R Facility, and capital leases, equals the carrying value and is classified as Level 2. Fair Value Measurements at March 31, 2016 (Dollars in millions) Recorded Amount Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Long-term borrowings $ 6,565 $ 6,854 $ 6,311 $ 543 $ — Fair Value Measurements at December 31, 2015 (Dollars in millions) Recorded Amount Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Long-term borrowings $ 6,577 $ 6,647 $ 6,094 $ 553 $ — |
DERIVATIVES
DERIVATIVES | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES | DERIVATIVES Hedging Programs The Company is exposed to market risks, such as changes in foreign currency exchange rates, commodity prices, and interest rates. To mitigate these market risks and their effects on the cash flows of the underlying transactions, the Company uses various derivative financial instruments when appropriate in accordance with the Company's hedging strategy and policies. Designation is performed on a specific exposure basis to support hedge accounting. The changes in fair value of these hedging instruments are offset in whole or in part by corresponding changes in the anticipated cash flows of the underlying exposures being hedged. The Company does not enter into derivative transactions for speculative purposes. For further information on hedging programs, see Note 10, "Derivatives", to the consolidated financial statements in Part II, Item 8 of the Company's 2015 Annual Report on Form 10-K. Fair Value Hedges Fair value hedges are defined as derivative or non-derivative instruments designated as and used to hedge the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk. For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. As of March 31, 2016 and December 31, 2015 , there are no outstanding interest rate swap hedges. Derivatives' Fair Value Hedging Relationships First Quarter (Dollars in millions) Consolidated Statement of Earnings Location of Gain/(Loss) Recognized in Income on Derivatives Amount of Gain/(Loss) Recognized in Income on Derivatives Derivatives in Fair Value Hedging Relationships March 31, 2016 March 31, 2015 Interest rate swaps Net interest expense $ 3 $ 4 Cash Flow Hedges Cash flow hedges are derivative instruments designated as and used to hedge the exposure to variability in expected future cash flows that is attributable to a particular risk. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income, net of income taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Total Notional Amounts March 31, 2016 December 31, 2015 Foreign Exchange Forward and Option Contracts (in millions): EUR/USD (in EUR) €558 €618 EUR/USD (in approximate USD equivalent) $650 $689 JPY/USD (in JPY) ¥2,100 ¥2,400 JPY/USD (in approximate USD equivalent) $19 $20 Commodity Forward and Collar Contracts: Feedstock (in million barrels) 19 22 Energy (in million million British thermal units) 33 32 Interest rate swaps for the future issuance of debt (in millions) $500 $500 Fair Value Measurement of Derivatives Designated as Cash Flow Hedging Instruments (Dollars in millions) Fair Value Measurements Significant Other Observable Inputs Derivative Assets Statement of Financial Position Location March 31, 2016 December 31, 2015 Commodity contracts Other noncurrent assets $ 1 $ — Foreign exchange contracts Other current assets 48 65 Foreign exchange contracts Other noncurrent assets 54 79 $ 103 $ 144 (Dollars in millions) Fair Value Measurements Significant Other Observable Inputs Derivative Liabilities Statement of Financial Position Location March 31, 2016 December 31, 2015 Commodity contracts Payables and other current liabilities $ 154 $ 194 Commodity contracts Other long-term liabilities 196 242 Forward starting interest rate swap contracts Other long-term liabilities 61 30 $ 411 $ 466 Derivatives' Hedging Relationships First Quarter (Dollars in millions) Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion) Location of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion) Pre-tax amount of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion) Derivatives' Cash Flow Hedging Relationships March 31, March 31, March 31, March 31, Commodity contracts $ 30 $ 5 Sales $ — $ 2 Cost of Sales (20 ) (16 ) Foreign exchange contracts (26 ) 55 Sales 15 21 Forward starting interest rate swap contracts (18 ) (8 ) Net interest expense (2 ) (2 ) $ (14 ) $ 52 $ (7 ) $ 5 Hedging Summary Monetized positions and mark-to-market gains and losses from raw materials and energy, currency, and certain interest rate hedges that were included in accumulated other comprehensive income before taxes totaled losses of $400 million at March 31, 2016 and $348 million at March 31, 2015 . If realized, $133 million net losses as of March 31, 2016 will be reclassified into earnings during the next 12 months. Ineffective portions of hedges are immediately recognized in cost of sales or other charges (income), net. The Company recognized pre-tax losses for ineffectiveness of the commodity hedging portfolio of $2 million and $1 million during first quarter 2016 and 2015 , respectively. The gains or losses on nonqualifying derivatives or derivatives that are not designated as hedges are marked to market and reported in the line item "Other charges (income), net" of the Unaudited Consolidated Statements of Earnings, and, in all periods presented, represent foreign exchange derivatives denominated in multiple currencies and are transacted and settled in the same quarter. The Company recognized $9 million net gains and $11 million net losses on nonqualifying derivatives during first quarter of 2016 and 2015 , respectively. Fair Value Measurements For additional information on fair value measurement, see Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2015 Annual Report on Form 10-K. The following chart shows the gross financial assets and liabilities valued on a recurring basis. (Dollars in millions) Fair Value Measurements at March 31, 2016 Description March 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative Assets $ 103 $ — $ 103 $ — Derivative Liabilities (411 ) — (411 ) — $ (308 ) $ — $ (308 ) $ — (Dollars in millions) Fair Value Measurements at December 31, 2015 Description December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative Assets $ 144 $ — $ 144 $ — Derivative Liabilities (466 ) — (466 ) — $ (322 ) $ — $ (322 ) $ — All of the Company's derivative assets and liabilities are currently classified as Level 2. Level 2 fair value is based on estimates using standard pricing models. These standard pricing models use inputs which are derived from or corroborated by observable market data such as interest rate yield curves and currency spot and forward rates. The fair value of commodity contracts is derived using forward curves supplied by an industry recognized and unrelated third party. In addition, on an ongoing basis, the Company tests a subset of its valuations against valuations received from the transaction's counterparty to validate the accuracy of its standard pricing models. Counterparties to these derivative contracts are highly rated financial institutions which the Company believes carry minimal risk of nonperformance. All of the Company's derivative contracts are subject to master netting arrangements, or similar agreements, which provide for the option to settle contracts on a net basis when they settle on the same day and in the same currency. In addition, these arrangements provide for a net settlement of all contracts with a given counterparty in the event that the arrangement is terminated due to the occurrence of default or a termination event. Management has elected to present the derivative contracts on a gross basis in the Unaudited Consolidated Statements of Financial Position. Had it chosen to present the derivatives contracts on a net basis, it would have a derivative in a net asset position of $102 million and a derivative in a net liability position of $410 million as of March 31, 2016 . The Company does not have any cash collateral due under such agreements. |
RETIREMENT PLANS
RETIREMENT PLANS | 3 Months Ended |
Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
RETIREMENT PLANS | RETIREMENT PLANS Defined Benefit Pension Plans and Other Postretirement Benefit Plans Eastman maintains defined benefit pension plans that provide eligible employees with retirement benefits. In addition, Eastman provides a subsidy for life insurance, health care, and dental benefits to eligible retirees hired prior to January 1, 2007, and a subsidy for health care and dental benefits to retirees' eligible survivors. Costs recognized for these benefits are recorded using estimated amounts, which may change as actual costs derived for the year are determined. For additional information regarding retirement plans, see Note 11, "Retirement Plans", to the consolidated financial statements in Part II, Item 8 of the Company's 2015 Annual Report on Form 10-K. Components of net periodic benefit (credit) cost were as follows: First Quarter Pension Plans Other Postretirement Benefit Plans 2016 2015 2016 2015 (Dollars in millions) U.S. Non-U.S. U.S. Non-U.S. Components of net periodic benefit (credit) cost: Service cost $ 10 $ 3 $ 9 $ 4 $ 2 $ 2 Interest cost 18 6 22 6 7 10 Expected return on assets (34 ) (8 ) (36 ) (9 ) (2 ) (2 ) Amortization of: Prior service credit, net (1 ) — (1 ) — (10 ) (6 ) Net periodic benefit (credit) cost $ (7 ) $ 1 $ (6 ) $ 1 $ (3 ) $ 4 The Company did not make any contributions to its U.S. defined benefit pension plans in first three months 2016 or 2015 . In first quarter 2016, the Company changed the approach used to calculate service and interest cost components of net periodic benefit costs for its significant defined benefit pension and other postretirement benefit plans. The Company elected to calculate service and interest costs by applying the specific spot rates along the yield curve to the plans' projected cash flows. The change does not affect the measurement of the total benefit obligation or the annual net periodic benefit cost or credit of the plans because the change in the service and interest costs will be offset in the mark-to-market actuarial gain or loss which typically is recognized in the fourth quarter of each year or in any other quarters in which an interim remeasurement is triggered. |
COMMITMENTS
COMMITMENTS | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | COMMITMENTS Purchase Obligations and Lease Commitments The Company had various purchase obligations at March 31, 2016 , totaling $1.6 billion over a period of approximately 30 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 $274 million over a period of approximately 40 years. Of the total lease commitments, approximately 50 percent relate to real property, including office space, storage facilities, and land; approximately 40 percent relate to railcars; and approximately 10 percent relate to machinery and equipment, including computer and communications equipment and production equipment. 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 as well as other guarantees. Disclosures about each group of similar guarantees are provided below. Residual Value 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 totaled $122 million at March 31, 2016 and consist primarily of leases for railcars and the company aircraft mostly expiring in 2016 and 2017. Residual guarantee payments that become probable and estimable are accrued to rent expense over the remaining life of the applicable lease. Management's current expectation is that the likelihood of material residual guarantee payments is remote. Other Guarantees Guarantees and claims also arise during the ordinary course of business from relationships with customers, suppliers, joint venture partners, and other parties when the Company undertakes an obligation to guarantee the performance of others, if specified triggering events occur. Non-performance under a contract could trigger an obligation of the Company. The Company's current other guarantees include guarantees relating primarily to intellectual property, environmental matters, and other indemnifications and have arisen through the normal course of business. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these claims, if they were to occur. These other guarantees have terms up to 30 years with maximum potential future payments of approximately $35 million in the aggregate, with none of these guarantees being individually significant to the Company's operating results, financial position, or liquidity. Management's current expectation is that future payment or performance related to non-performance under other guarantees is remote. |
ENVIRONMENTAL MATTERS AND ASSET
ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS | 3 Months Ended |
Mar. 31, 2016 | |
Accrual for Environmental Loss Contingencies Disclosure [Abstract] | |
Environmental Matters | ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS 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 will be required to incur costs for environmental remediation and closure and post-closure 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 2015 Annual Report on Form 10-K. The Company's total reserve for environmental contingencies was $332 million and $336 million at March 31, 2016 and December 31, 2015 , respectively. At both March 31, 2016 and December 31, 2015 , this reserve included $8 million related to sites previously closed and impaired by Eastman and sites that have been divested by Eastman but for which the Company retains the environmental liability related to these sites. The Company's total environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is included in the Unaudited Consolidated Statements of Financial Position as follows: (Dollars in millions) March 31, 2016 December 31, 2015 Environmental contingent liabilities, current $ 30 $ 35 Environmental contingent liabilities, long-term 302 301 Total $ 332 $ 336 Remediation Estimated future environmental expenditures for remediation costs ranged from the minimum or best estimate of $305 million to the maximum of $507 million and from the minimum or best estimate of $308 million to the maximum of $516 million at March 31, 2016 and December 31, 2015 , respectively. The maximum estimated future costs are considered to be reasonably possible and include the amounts accrued at both March 31, 2016 and December 31, 2015 . Although the resolution of uncertainties related to these environmental matters may have a material adverse effect on the Company's consolidated results of operations in the period recognized, because of the availability of legal defenses, the Company's preliminary assessment of actions that may be required, and if applicable, the expected sharing of costs, 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 or cash flows. Reserves for environmental remediation that management believes to be probable and estimable are recognized as current and long-term liabilities in the Unaudited Consolidated Statements of Financial Position. These reserves include liabilities expected to be paid within 30 years . The amounts charged to pre-tax earnings for environmental remediation and related charges are included in cost of sales and other charges (income), net. Changes in the reserves for environmental remediation liabilities during first three months 2016 are summarized below: (Dollars in millions) Environmental Remediation Liabilities Balance at December 31, 2015 $ 308 Changes in estimates recognized in earnings and other 3 Cash reductions (6 ) Balance at March 31, 2016 $ 305 Closure/Post-Closure An asset retirement obligation is an obligation for the retirement of a tangible long-lived asset that is incurred upon the acquisition, construction, development, or normal operation of that long-lived asset. The Company recognizes asset retirement obligations in the period in which they are incurred if a reasonable estimate of fair value can be made. The asset retirement obligations are discounted to expected present value and subsequently adjusted for changes in fair value. The associated estimated asset retirement costs are capitalized as part of the carrying value of the long-lived assets and depreciated over their useful life. Environmental asset retirement obligations consist primarily of closure and post-closure costs. For facilities that have environmental asset retirement obligations, the best estimate accrued to date over the facilities' estimated useful lives for these environmental asset retirement obligation costs was $27 million and $28 million at March 31, 2016 and December 31, 2015 , respectively. Other The Company also has contractual asset retirement obligations not associated with environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily associated with the future closure of leased manufacturing assets at Pace, Florida and Oulu, Finland. These accrued non-environmental asset retirement obligations were $45 million and $46 million as of March 31, 2016 and December 31, 2015 , respectively. |
LEGAL MATTERS
LEGAL MATTERS | 3 Months Ended |
Mar. 31, 2016 | |
Loss Contingency, Information about Litigation Matters [Abstract] | |
LEGAL MATTERS | 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. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY A reconciliation of the changes in stockholders' equity for first three months 2016 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 Attributed to Eastman Noncontrolling Interest Total Stockholders' Equity Balance at December 31, 2015 $ 2 $ 1,863 $ 5,146 $ (390 ) $ (2,680 ) $ 3,941 $ 80 $ 4,021 Net Earnings — — 251 — — 251 — 251 Cash Dividends Declared (1) ($0.46 per share) — — (67 ) — — (67 ) — (67 ) Other Comprehensive Income — — — 85 — 85 — 85 Share-Based Compensation Expense (2) — 13 — — — 13 — 13 Stock Option Exercises — 5 — — — 5 — 5 Other (3) — (4 ) — — — (4 ) 1 (3 ) Share Repurchase — — — — (20 ) (20 ) — (20 ) Balance at March 31, 2016 $ 2 $ 1,877 $ 5,330 $ (305 ) $ (2,700 ) $ 4,204 $ 81 $ 4,285 (1) Includes cash dividends paid and dividends declared, but unpaid. (2) Fair value of share-based awards. (3) Paid in capital includes tax benefits/charges relating to the differences between the amounts deductible for federal income taxes over the amounts charged to income for book value purposes and other items. Equity attributable to noncontrolling interest includes adjustments for currency revaluation. Accumulated Other Comprehensive Income (Loss), Net of Tax (Dollars in millions) Cumulative Translation Adjustment Benefit Plans Unrecognized Prior Service Credits Unrealized Gains (Losses) on Derivative Instruments Unrealized Losses on Investments Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2014 $ (68 ) $ 61 $ (269 ) $ (1 ) $ (277 ) Period change (216 ) 68 35 — (113 ) Balance at December 31, 2015 (284 ) 129 (234 ) (1 ) (390 ) Period change 106 (7 ) (14 ) — 85 Balance at March 31, 2016 $ (178 ) $ 122 $ (248 ) $ (1 ) $ (305 ) Amounts of other comprehensive income (loss) are presented net of applicable taxes. The Company recognizes deferred income taxes on the cumulative translation adjustment related to branch operations and income from other entities included in the Company's consolidated U.S. tax return. No deferred income taxes are provided on the cumulative translation adjustment of other subsidiaries outside the United States, as such cumulative translation adjustment is considered to be a component of indefinitely invested, unremitted earnings of these foreign subsidiaries. Components of other comprehensive income recognized in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects: First Quarter 2016 2015 (Dollars in millions) Before Tax Net of Tax Before Tax Net of Tax Other comprehensive income (loss) Change in cumulative translation adjustment $ 106 $ 106 $ (212 ) $ (212 ) Defined benefit pension and other postretirement benefit plans: Amortization of unrecognized prior service credits included in net periodic costs (1) (11 ) (7 ) (7 ) (4 ) Derivatives and hedging: (2) Unrealized (loss) gain during period (30 ) (18 ) 89 55 Reclassification adjustment for losses (gains) included in net income, net 7 4 (5 ) (3 ) Change in derivatives and hedging (23 ) (14 ) 84 52 Total other comprehensive income (loss) $ 72 $ 85 $ (135 ) $ (164 ) (1) Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans" . (2) For additional information regarding the impact of reclassifications into earnings, refer to Note 7, "Derivatives" . |
EARNINGS AND DIVIDENDS PER SHAR
EARNINGS AND DIVIDENDS PER SHARE | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS AND DIVIDENDS PER SHARE | EARNINGS AND DIVIDENDS PER SHARE The following table sets forth the computation of basic and diluted earnings per share ("EPS"): First Quarter (In millions, except per share amounts) 2016 2015 Numerator Earnings attributable to Eastman: Earnings, net of tax $ 251 $ 171 Denominator Weighted average shares used for basic EPS 147.8 148.7 Dilutive effect of stock options and other awards 1.0 1.0 Weighted average shares used for diluted EPS 148.8 149.7 EPS (1) Basic $ 1.70 $ 1.15 Diluted $ 1.69 $ 1.14 (1) Earnings per share are calculated using whole dollars and shares. In first quarter 2016 and 2015, common shares underlying options to purchase 1,081,423 and 784,890 shares, respectively, of common stock were excluded from the shares treated as outstanding for computation of diluted earnings per share because the total market value of option exercises for these awards was less than the total cash proceeds that would be received for these exercises. First quarter 2016 and 2015 reflect the impact of share repurchases of 287,281 and 370,000 , respectively. The Company declared cash dividends of $0.46 and $0.40 per share in first quarter 2016 and 2015 , respectively. |
ASSETS IMPAIRMENTS AND RESTRUCT
ASSETS IMPAIRMENTS AND RESTRUCTURING | 3 Months Ended |
Mar. 31, 2016 | |
Restructuring Costs and Asset Impairment Charges [Abstract] | |
ASSET IMPAIRMENTS AND RESTRUCTURING | ASSET IMPAIRMENTS AND RESTRUCTURING In first quarter 2016, there were net asset impairments and restructuring gains of $2 million in the AFP segment for the sale of previously impaired assets at the Crystex ® R&D facility in France. In first quarter 2015 there were net asset impairments and restructuring charges of $109 million . Net asset impairments and restructuring charges included $81 million of asset impairments and $16 million of restructuring charges, including severance, in the Fibers segment due to the closure of the Workington, UK acetate tow manufacturing facility which was substantially completed in 2015. Additionally, in first quarter 2015, management decided not to continue a growth initiative that was reported in "Other". This resulted in the Company recognizing asset impairments of $8 million and restructuring charges of $4 million . Changes in Reserves for Asset Impairments, Restructuring Charges, Net, and Severance Charges The following table summarizes the changes in asset impairments and restructuring charges and gains, the non-cash reductions attributable to asset impairments, and the cash reductions in restructuring reserves for severance costs and site closure costs paid in first three months 2016 and full year 2015 : (Dollars in millions) Balance at January 1, 2016 Provision/ Adjustments Non-cash Reductions Cash Reductions Balance at March 31, 2016 Non-cash charges $ — $ — $ — $ — $ — Severance costs 55 — — (8 ) 47 Site closure and restructuring costs 11 (2 ) 1 — 10 Total $ 66 $ (2 ) $ 1 $ (8 ) $ 57 (Dollars in millions) Balance at January 1, 2015 Provision/ Adjustments Non-cash Reductions Cash Reductions Balance at December 31, 2015 Non-cash charges $ — $ 107 $ (107 ) $ — $ — Severance costs 13 67 1 (26 ) 55 Site closure and restructuring costs 15 9 3 (16 ) 11 Total $ 28 $ 183 $ (103 ) $ (42 ) $ 66 Substantially all severance costs remaining are expected to be applied to the reserves within one year. |
SHARE-BASED COMPENSATION AWARDS
SHARE-BASED COMPENSATION AWARDS | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION AWARDS | 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 first quarter 2016 and 2015 , $13 million and $11 million , respectively, of compensation expense before tax were recognized in "Selling, general and administrative expense" in the Unaudited Consolidated Statements of Earnings for all share-based awards of which $3 million in both periods related to stock options. The compensation expense is recognized over the substantive vesting period, which may be a shorter time period than the stated vesting period for qualifying termination eligible employees as defined in the forms of award notice. For both first quarter 2016 and 2015 , $2 million of stock option compensation expense was recognized due to qualifying termination eligibility preceding the requisite vesting period. The impact on first quarter 2016 and 2015 net earnings of $8 million and $7 million , respectively, is net of deferred tax expense related to share-based award compensation for each period. Stock Option Grants In first quarter 2016 and 2015 , the number of stock options granted under the 2012 Omnibus Stock Compensation Plan were approximately 550,000 and 500,000 , respectively. Options have an exercise price equal to the closing price of the Company's stock on the date of grant. The term of options is 10 years with vesting periods that vary up to three years. Vesting usually occurs ratably over the vesting period or at the end of the vesting period. The Company utilizes the Black Scholes Merton option valuation model which relies on certain assumptions to estimate an option's fair value. The assumptions used in the determination of fair value for stock options granted in first quarter 2016 and 2015 are provided in the table below: First Quarter Assumptions 2016 2015 Expected volatility rate 23.71% 24.11% Expected dividend yield 2.31% 1.75% Average risk-free interest rate 1.23% 1.45% Expected forfeiture rate 0.75% 0.75% Expected term years 5.0 4.8 The grant date exercise price and fair value of options granted during first quarter 2016 were $65.16 and $10.97 , respectively, and during first quarter 2015 were $74.46 and $13.89 , respectively. For options unvested at March 31, 2016 , $6 million in compensation expense will be recognized over the next three years. Other Share-Based Compensation Awards In addition to stock option grants, the Company has awarded long-term performance share awards, restricted stock and restricted stock unit awards, and stock appreciation rights. The long-term performance share awards are based upon actual return on capital compared to a target return on capital and total stockholder return compared to a peer group ranking by total stockholder return over a three year performance period. The awards are valued using a Monte Carlo Simulation based model and vest pro-ratably over the three year performance period. The number of long-term performance share target awards during first quarter 2016 and 2015 for the 2016-2018 and 2015-2017 periods were approximately 400,000 and 300,000 , respectively. The target shares awarded are assumed to be 100 percent. At the end of the three-year performance period, the actual number of shares awarded can range from zero percent to 250 percent of the target shares based on the award notice. The number of restricted stock unit awards during first quarter 2016 and 2015 were approximately 160,000 and 200,000 , respectively. The fair value of a restricted stock unit award is equal to the closing stock price of the Company's stock on the award date and normally vests over a period of three years. In first quarter 2016 and 2015 , $10 million and $8 million , respectively, was recognized as compensation expense before tax for these other share-based awards and was included in the total compensation expense noted above for all share-based awards. The unrecognized compensation expense before tax for these same type awards at March 31, 2016 was $73 million and will be recognized primarily over a period of three years. For additional information regarding share-based compensation plans and awards, see Note 18, "Share-Based Compensation Plans and Awards", to the consolidated financial statements in Part II, Item 8 of the Company's 2015 Annual Report on Form 10-K. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Cash Flow Information [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION Included in the line item "Other items, net" of the "Operating activities" section of the Unaudited Consolidated Statements of Cash Flows are the following changes to Unaudited Consolidated Statement of Financial Position line items: (Dollars in millions) First Three Months 2016 2015 Other current assets $ — $ 15 Other noncurrent assets 38 5 Payables and other current liabilities 24 (17 ) Long-term liabilities and equity (86 ) (53 ) Total $ (24 ) $ (50 ) The above changes resulted primarily from accrued taxes, deferred taxes, environmental liabilities, monetized positions from raw material and energy, currency, and certain interest rate hedges, prepaid insurance, miscellaneous deferrals, value-added taxes, and other miscellaneous accruals. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION As reported in the 2015 Annual Report on Form 10-K, the Company's products and operations were managed and reported in five operating segments: Additives & Functional Products ("AFP"), Adhesives & Plasticizers ("A&P"), Advanced Materials ("AM"), Fibers, and Specialty Fluids & Intermediates ("SFI"). Beginning first quarter 2016, as a result of changes in the Company's organizational structure and management, the Company's products and operations are managed and reported in four operating segments: AFP, AM, Chemical Intermediates ("CI"), and Fibers. The new structure supports the Company's strategy to transform towards a specialty portfolio by better aligning similar businesses in a more streamlined structure. Under the new structure, the adhesives resins product line of the former A&P segment is moved to the AFP segment, the specialty fluids product line of the former SFI segment is moved to the AFP segment, and the plasticizers product line of the former A&P segment is moved to the new CI segment. In addition to the product line changes, there were shifts in products among product lines in different segments. Acetyl and olefin products with animal nutrition and food ingredient applications of the former SFI segment are moved to the AFP segment as part of the care chemicals and animal nutrition product lines. Distribution solvents, ethylene oxide derivatives, and ethyl acetate products are moved from the AFP segment to the new CI segment in the other intermediates product line. For additional financial and product information concerning each segment, see Note 20, "Segment Information", to the consolidated financial statements in Part II, Item 8 of the Company's 2015 Annual Report on Form 10-K. First Quarter (Dollars in millions) 2016 2015 Sales Additives & Functional Products $ 737 $ 804 Advanced Materials 589 561 Chemical Intermediates 620 782 Fibers 280 284 Total Sales by Segment 2,226 2,431 Other 10 12 Total Sales $ 2,236 $ 2,443 First Quarter (Dollars in millions) 2016 2015 Operating Earnings (Loss) Additives & Functional Products $ 153 $ 157 Advanced Materials 108 68 Chemical Intermediates 67 118 Fibers 86 (7 ) Total Operating Earnings by Segment 414 336 Other: Growth initiatives and businesses not allocated to segments (18 ) (26 ) Pension and other postretirement benefits income, net not allocated to operating segments 12 9 Acquisition integration, transaction, and restructuring costs (9 ) (8 ) Total Operating Earnings $ 399 $ 311 March 31, December 31, (Dollars in millions) 2016 2015 Assets by Segment (1) Additives & Functional Products $ 6,471 $ 6,370 Advanced Materials 4,338 4,227 Chemical Intermediates 3,147 2,930 Fibers 768 969 Total Assets by Segment 14,724 14,496 Corporate Assets 892 1,084 Total Assets $ 15,616 $ 15,580 (1) The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets. |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 3 Months Ended |
Mar. 31, 2016 | |
Recently Issued Accounting Standards [Abstract] | |
Recently Issued Accounting Standards [Text Block] | RECENTLY ISSUED ACCOUNTING STANDARDS In May 2014, the FASB and International Accounting Standards Board jointly issued new principles-based accounting guidance for revenue recognition that will supersede virtually all existing revenue guidance. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve the core principle, the guidance establishes the following five steps: 1) identify the contract(s) with a customer, 2) identify the performance obligation in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also details the accounting treatment for costs to obtain or fulfill a contract. Lastly, disclosure requirements have been enhanced to provide sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued new guidance to delay the effective date of the new revenue standard by one year. The deferral results in the new revenue standard being effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early application is permitted under the original effective date of fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company is currently evaluating the impact on the Company's financial position and results of operations and related disclosures. In January 2016, the FASB issued targeted improvements in regards to the recognition and measurement of financial assets and financial liabilities. The changes are as follows: requires equity investments (except equity method and consolidated investments) to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, when a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and early adoption is permitted but limited. The new guidance is to be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and for equity securities without readily determinable fair values, applied prospectively to equity investments that exist as of the date of adoption. The Company has concluded that changes in its accounting required by this new guidance will not materially impact the Company's financial position or results of operations and related disclosures. In February 2016, the FASB issued guidance on lease accounting. The new guidance establishes two types of leases for lessees: finance or operating. The guidance for lessors is largely unchanged. Under the guidance, a lessee is to recognize a right-of-use asset and lease liability that arises from a lease. A lessee can make a policy election, by asset class, to not recognize lease assets or liabilities for leases with a term of 12 months or less. Both finance and operating leases will have associated right-of-use assets and liabilities initially measured at the present value of the lease payments. Current and noncurrent balance sheet classification will apply. Finance leases will have another reported element for interest associated with the principal lease liability. The component concept from the 2014 revenue recognition standard has been included in the new lease standard which will guide identification of individual assets and non-lease components. As with current GAAP, the guidance does not apply to the following leases: intangible assets to explore for or use minerals, oil, natural gas, and similar nonregenerative resources, biological assets (includes timber), inventory, or assets under construction. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and early adoption is permitted. The new guidance is to be applied under a modified retrospective approach wherein practical expedients have been allowed that will not require reassessment of current leases at the effective date. The Company is currently evaluating the impact on the Company's financial position and results of operations and related disclosures. In March 2016, the FASB issued guidance for derivatives and hedging given lack of specific guidance and diversity in practice. The guidance clarifies that a change in the counterparty to a derivative instrument under Topic 815 treatment does not, in and of itself, require dedesignation of that hedge accounting relationship provided all other hedge accounting criteria continues to be met (specifically points to counterparty credit worthiness). This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early adoption is permitted, including adoption in an interim period. The new guidance is to be applied under the prospective method or modified retrospective approach. The Company has concluded that changes in its accounting required by this new guidance will not materially impact the Company's financial position or results of operations and related disclosures. In March 2016, the FASB issued guidance in regards to stock compensation as a part of the simplification initiative that covers related tax accounting, cash flow presentation, and forfeitures. The two tax accounting related amendments are as follows: all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit in the income statement, the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur, an entity also should recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period; and the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. The cash flow presentation items sets forth that excess tax benefits should be classified along with other income tax cash flows as an operating activity and cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. For forfeitures, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early adoption is permitted, including adoption in an interim period. The new guidance application is mixed among the various elements that include, retrospective, prospective, and modified retrospective transition methods. The Company is currently evaluating the impact on the Company's financial position and results of operations and related disclosures. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | March 31, December 31, (Dollars in millions) 2016 2015 At FIFO or average cost (approximates current cost) Finished goods $ 1,090 $ 1,063 Work in process 213 212 Raw materials and supplies 486 500 Total inventories 1,789 1,775 Less: LIFO Reserve 296 296 Total inventories $ 1,493 $ 1,479 |
GOODWILL (Tables)
GOODWILL (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill [Line Items] | |
Schedule of Goodwill [Table Text Block] | Changes to the carrying value of goodwill follow: (Dollars in millions) Additives & Functional Products Adhesives & Plasticizers Advanced Materials Chemical Intermediates Other Segments Total Balance at December 31, 2015 $ 1,865 $ 111 $ 1,293 $ 1,239 $ 10 $ 4,518 Adjustments to net goodwill resulting from reorganization 583 (111 ) — (472 ) — — Currency translation adjustments 5 — — 4 — 9 Balance at March 31, 2016 $ 2,453 $ — $ 1,293 $ 771 $ 10 $ 4,527 |
PAYABLES AND OTHER CURRENT LI26
PAYABLES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of payables and other current liabilities | March 31, December 31, (Dollars in millions) 2016 2015 Trade creditors $ 633 $ 699 Derivative hedging liability 170 218 Accrued payrolls, vacation, and variable-incentive compensation 125 227 Post-employment obligations 107 120 Other 299 361 Total payables and other current liabilities $ 1,334 $ 1,625 |
PROVISION FOR INCOME TAXES (Tab
PROVISION FOR INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | First Quarter (Dollars in millions) 2016 2015 Provision for income taxes $ 72 $ 84 Effective tax rate 22 % 33 % |
BORROWINGS (Tables)
BORROWINGS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Long-term Borrowings | March 31, December 31, (Dollars in millions) 2016 2015 Borrowings consisted of: 2.4% notes due June 2017 $ 998 $ 998 6.30% notes due November 2018 165 166 5.5% notes due November 2019 249 249 2.7% notes due January 2020 795 794 4.5% notes due January 2021 249 249 3.6% notes due August 2022 894 896 7 1/4% debentures due January 2024 244 244 7 5/8% debentures due June 2024 54 54 3.8% notes due March 2025 791 791 7.60% debentures due February 2027 222 222 4.8% notes due September 2042 492 492 4.65% notes due October 2044 869 869 Credit facilities and commercial paper borrowings 1,052 980 Capital leases 4 4 Total borrowings 7,078 7,008 Borrowings due within one year 513 431 Long-term borrowings $ 6,565 $ 6,577 |
Fair Value of Borrowings | Fair Value Measurements at March 31, 2016 (Dollars in millions) Recorded Amount Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Long-term borrowings $ 6,565 $ 6,854 $ 6,311 $ 543 $ — Fair Value Measurements at December 31, 2015 (Dollars in millions) Recorded Amount Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Long-term borrowings $ 6,577 $ 6,647 $ 6,094 $ 553 $ — |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] | March 31, 2016 December 31, 2015 Foreign Exchange Forward and Option Contracts (in millions): EUR/USD (in EUR) €558 €618 EUR/USD (in approximate USD equivalent) $650 $689 JPY/USD (in JPY) ¥2,100 ¥2,400 JPY/USD (in approximate USD equivalent) $19 $20 Commodity Forward and Collar Contracts: Feedstock (in million barrels) 19 22 Energy (in million million British thermal units) 33 32 Interest rate swaps for the future issuance of debt (in millions) $500 $500 |
Schedule of Derivative Financial Assets and Liabilities Based on Fair Value on Recurring Basis and Balance Sheet Location | Fair Value Measurement of Derivatives Designated as Cash Flow Hedging Instruments (Dollars in millions) Fair Value Measurements Significant Other Observable Inputs Derivative Assets Statement of Financial Position Location March 31, 2016 December 31, 2015 Commodity contracts Other noncurrent assets 1 — Foreign exchange contracts Other current assets 48 65 Foreign exchange contracts Other noncurrent assets 54 79 $ 103 $ 144 (Dollars in millions) Fair Value Measurements Significant Other Observable Inputs Derivative Liabilities Statement of Financial Position Location March 31, 2016 December 31, 2015 Commodity contracts Payables and other current liabilities $ 154 $ 194 Commodity contracts Other long-term liabilities 196 242 Forward starting interest rate swap contracts Other long-term liabilities 61 30 $ 411 $ 466 |
Derivative Instrument Gain Loss in Statement of Financial Performance | Derivatives' Fair Value Hedging Relationships First quarter (Dollars in millions) Consolidated Statement of Earnings Location of Gain/(Loss) Recognized in Income on Derivatives Amount of Gain/ (Loss) Recognized in Income on Derivatives Derivatives in Fair Value Hedging Relationships March 31, 2016 March 31, 2015 Interest rate swaps Net interest expense $ 3 $ 4 Derivatives' Hedging Relationships First Quarter (Dollars in millions) Change in amount after tax of gain/(loss) recognized in Other Comprehensive Income on derivatives (effective portion) Location of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion) Pre-tax amount of gain/(loss) reclassified from Accumulated Other Comprehensive Income into income (effective portion) Derivatives' Cash Flow Hedging Relationships March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Commodity contracts $ 30 $ 5 Sales $ — $ 2 Cost of Sales (20 ) (16 ) Foreign exchange contracts (26 ) 55 Sales 15 21 Forward starting interest rate swap contracts (18 ) (8 ) Net interest expense (2 ) (2 ) $ (14 ) $ 52 $ (7 ) $ 5 |
Financial assets and liabilities valued on a recurring basis | The following chart shows the gross financial assets and liabilities valued on a recurring basis. (Dollars in millions) Fair Value Measurements at March 31, 2016 Description March 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative Assets $ 103 $ — $ 103 $ — Derivative Liabilities (411 ) — (411 ) — $ (308 ) $ — $ (308 ) $ — (Dollars in millions) Fair Value Measurements at December 31, 2015 Description December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative Assets $ 144 $ — $ 144 $ — Derivative Liabilities (466 ) — (466 ) — $ (322 ) $ — $ (322 ) $ — |
RETIREMENT PLANS (Tables)
RETIREMENT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Components of net periodic benefit cost | Components of net periodic benefit (credit) cost were as follows: First Quarter Pension Plans Other Postretirement Benefit Plans 2016 2015 2016 2015 (Dollars in millions) U.S. Non-U.S. U.S. Non-U.S. Components of net periodic benefit (credit) cost: Service cost $ 10 $ 3 $ 9 $ 4 $ 2 $ 2 Interest cost 18 6 22 6 7 10 Expected return on assets (34 ) (8 ) (36 ) (9 ) (2 ) (2 ) Amortization of: Prior service credit, net (1 ) — (1 ) — (10 ) (6 ) Net periodic benefit (credit) cost $ (7 ) $ 1 $ (6 ) $ 1 $ (3 ) $ 4 |
ENVIRONMENTAL MATTERS AND ASS31
ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accrual for Environmental Loss Contingencies Disclosure [Abstract] | |
Schedule of environmental remediation liabilities, current and non-current | he Company's total environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is included in the Unaudited Consolidated Statements of Financial Position as follows: (Dollars in millions) March 31, 2016 December 31, 2015 Environmental contingent liabilities, current $ 30 $ 35 Environmental contingent liabilities, long-term 302 301 Total $ 332 $ 336 |
Schedule of changes to environmental remediation liabilities | The amounts charged to pre-tax earnings for environmental remediation and related charges are included in cost of sales and other charges (income), net. Changes in the reserves for environmental remediation liabilities during first three months 2016 are summarized below: (Dollars in millions) Environmental Remediation Liabilities Balance at December 31, 2015 $ 308 Changes in estimates recognized in earnings and other 3 Cash reductions (6 ) Balance at March 31, 2016 $ 305 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Reconciliation of the changes in stockholders' equity | A reconciliation of the changes in stockholders' equity for first three months 2016 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 Attributed to Eastman Noncontrolling Interest Total Stockholders' Equity Balance at December 31, 2015 $ 2 $ 1,863 $ 5,146 $ (390 ) $ (2,680 ) $ 3,941 $ 80 $ 4,021 Net Earnings — — 251 — — 251 — 251 Cash Dividends Declared (1) ($0.46 per share) — — (67 ) — — (67 ) — (67 ) Other Comprehensive Income — — — 85 — 85 — 85 Share-Based Compensation Expense (2) — 13 — — — 13 — 13 Stock Option Exercises — 5 — — — 5 — 5 Other (3) — (4 ) — — — (4 ) 1 (3 ) Share Repurchase — — — — (20 ) (20 ) — (20 ) Balance at March 31, 2016 $ 2 $ 1,877 $ 5,330 $ (305 ) $ (2,700 ) $ 4,204 $ 81 $ 4,285 |
Accumulated Other Comprehensive Income (Loss) | (Dollars in millions) Cumulative Translation Adjustment Benefit Plans Unrecognized Prior Service Credits Unrealized Gains (Losses) on Derivative Instruments Unrealized Losses on Investments Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2014 $ (68 ) $ 61 $ (269 ) $ (1 ) $ (277 ) Period change (216 ) 68 35 — (113 ) Balance at December 31, 2015 (284 ) 129 (234 ) (1 ) (390 ) Period change 106 (7 ) (14 ) — 85 Balance at March 31, 2016 $ (178 ) $ 122 $ (248 ) $ (1 ) $ (305 ) |
Schedule of components of comprehensive income (loss) before tax and net of tax effects | Components of other comprehensive income recognized in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects: First Quarter 2016 2015 (Dollars in millions) Before Tax Net of Tax Before Tax Net of Tax Other comprehensive income (loss) Change in cumulative translation adjustment $ 106 $ 106 $ (212 ) $ (212 ) Defined benefit pension and other postretirement benefit plans: Amortization of unrecognized prior service credits included in net periodic costs (1) (11 ) (7 ) (7 ) (4 ) Derivatives and hedging: (2) Unrealized (loss) gain during period (30 ) (18 ) 89 55 Reclassification adjustment for losses (gains) included in net income, net 7 4 (5 ) (3 ) Change in derivatives and hedging (23 ) (14 ) 84 52 Total other comprehensive income (loss) $ 72 $ 85 $ (135 ) $ (164 ) |
EARNINGS AND DIVIDENDS PER SH33
EARNINGS AND DIVIDENDS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings per share, basic and diluted | The following table sets forth the computation of basic and diluted earnings per share ("EPS"): First Quarter (In millions, except per share amounts) 2016 2015 Numerator Earnings attributable to Eastman: Earnings, net of tax $ 251 $ 171 Denominator Weighted average shares used for basic EPS 147.8 148.7 Dilutive effect of stock options and other awards 1.0 1.0 Weighted average shares used for diluted EPS 148.8 149.7 EPS (1) Basic $ 1.70 $ 1.15 Diluted $ 1.69 $ 1.14 |
ASSETS IMPAIRMENTS AND RESTRU34
ASSETS IMPAIRMENTS AND RESTRUCTURING (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Restructuring Costs and Asset Impairment Charges [Abstract] | |
Changes to restructuring reserve and related activities | The following table summarizes the changes in asset impairments and restructuring charges and gains, the non-cash reductions attributable to asset impairments, and the cash reductions in restructuring reserves for severance costs and site closure costs paid in first three months 2016 and full year 2015 : (Dollars in millions) Balance at January 1, 2016 Provision/ Adjustments Non-cash Reductions Cash Reductions Balance at March 31, 2016 Non-cash charges $ — $ — $ — $ — $ — Severance costs 55 — — (8 ) 47 Site closure and restructuring costs 11 (2 ) 1 — 10 Total $ 66 $ (2 ) $ 1 $ (8 ) $ 57 (Dollars in millions) Balance at January 1, 2015 Provision/ Adjustments Non-cash Reductions Cash Reductions Balance at December 31, 2015 Non-cash charges $ — $ 107 $ (107 ) $ — $ — Severance costs 13 67 1 (26 ) 55 Site closure and restructuring costs 15 9 3 (16 ) 11 Total $ 28 $ 183 $ (103 ) $ (42 ) $ 66 |
SHARE-BASED COMPENSATION AWAR35
SHARE-BASED COMPENSATION AWARDS Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The assumptions used in the determination of fair value for stock options granted in first quarter 2016 and 2015 are provided in the table below: First Quarter Assumptions 2016 2015 Expected volatility rate 23.71% 24.11% Expected dividend yield 2.31% 1.75% Average risk-free interest rate 1.23% 1.45% Expected forfeiture rate 0.75% 0.75% Expected term years 5.0 4.8 |
SUPPLEMENTAL CASH FLOW INFORM36
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | Included in the line item "Other items, net" of the "Operating activities" section of the Unaudited Consolidated Statements of Cash Flows are the following changes to Unaudited Consolidated Statement of Financial Position line items: (Dollars in millions) First Three Months 2016 2015 Other current assets $ — $ 15 Other noncurrent assets 38 5 Payables and other current liabilities 24 (17 ) Long-term liabilities and equity (86 ) (53 ) Total $ (24 ) $ (50 ) |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Information Disclosure | First Quarter (Dollars in millions) 2016 2015 Sales Additives & Functional Products $ 737 $ 804 Advanced Materials 589 561 Chemical Intermediates 620 782 Fibers 280 284 Total Sales by Segment 2,226 2,431 Other 10 12 Total Sales $ 2,236 $ 2,443 First Quarter (Dollars in millions) 2016 2015 Operating Earnings (Loss) Additives & Functional Products $ 153 $ 157 Advanced Materials 108 68 Chemical Intermediates 67 118 Fibers 86 (7 ) Total Operating Earnings by Segment 414 336 Other: Growth initiatives and businesses not allocated to segments (18 ) (26 ) Pension and other postretirement benefits income, net not allocated to operating segments 12 9 Acquisition integration, transaction, and restructuring costs (9 ) (8 ) Total Operating Earnings $ 399 $ 311 March 31, December 31, (Dollars in millions) 2016 2015 Assets by Segment (1) Additives & Functional Products $ 6,471 $ 6,370 Advanced Materials 4,338 4,227 Chemical Intermediates 3,147 2,930 Fibers 768 969 Total Assets by Segment 14,724 14,496 Corporate Assets 892 1,084 Total Assets $ 15,616 $ 15,580 (1) The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets. |
BASIS OF PRESENTATION Basis of
BASIS OF PRESENTATION Basis of Presentation (Details) € in Millions, $ in Millions | 3 Months Ended | |||
Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | Mar. 31, 2016EUR (€) | Dec. 31, 2015USD ($) | |
Accounting Policies [Abstract] | ||||
New Accounting Pronouncement or Change in Accounting Principle, Description | $ 31 | |||
Line of Credit Facility, Capacity Available for Trade Purchases | $ 180 | € 158 | ||
Percentage Of Sale On Receivables | 85.00% | |||
Receivable Sold Under Factoring Arrangement | $ 235 | $ 280 | ||
Cash Drawn From Facility | $ 104 | $ 106 | ||
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure, Percent | 10.00% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
At FIFO or average cost (approximates current cost) [Abstract] | ||
Finished goods | $ 1,090 | $ 1,063 |
Work in process | 213 | 212 |
Raw materials and supplies | 486 | 500 |
Total inventories | 1,789 | 1,775 |
Less: LIFO Reserve | 296 | 296 |
Total inventories | $ 1,493 | $ 1,479 |
Inventories valued on the LIFO method | 60.00% | 60.00% |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||
Goodwill | $ 4,527 | $ 4,518 |
Goodwill, Transfers | 0 | |
Goodwill, Translation Adjustments | 9 | |
Additives And Functional Products [Member] | ||
Goodwill [Line Items] | ||
Goodwill, Impaired, Accumulated Impairment Loss | 23 | |
Goodwill | 2,453 | 1,865 |
Goodwill, Transfers | 583 | |
Goodwill, Translation Adjustments | 5 | |
Adhesives And Plasticizers [Member] | ||
Goodwill [Line Items] | ||
Goodwill, Impaired, Accumulated Impairment Loss | 35 | |
Goodwill | 0 | 111 |
Goodwill, Transfers | (111) | |
Goodwill, Translation Adjustments | 0 | |
Advanced Materials [Member] | ||
Goodwill [Line Items] | ||
Goodwill | 1,293 | 1,293 |
Goodwill, Transfers | 0 | |
Goodwill, Translation Adjustments | 0 | |
Chemical Intermediates [Member] | ||
Goodwill [Line Items] | ||
Goodwill, Impaired, Accumulated Impairment Loss | 12 | |
Goodwill | 771 | 1,239 |
Goodwill, Transfers | (472) | |
Goodwill, Translation Adjustments | 4 | |
Other Segments [Domain] | ||
Goodwill [Line Items] | ||
Goodwill, Impaired, Accumulated Impairment Loss | 14 | 14 |
Goodwill | 10 | $ 10 |
Goodwill, Transfers | 0 | |
Goodwill, Translation Adjustments | $ 0 |
PAYABLES AND OTHER CURRENT LI41
PAYABLES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Trade creditors | $ 633 | $ 699 |
Derivative hedging liability | 170 | 218 |
Accrued payrolls, vacation, and variable-incentive compensation | 125 | 227 |
Post-employment obligations | 107 | 120 |
Other | 299 | 361 |
Total payables and other current liabilities | $ 1,334 | $ 1,625 |
PROVISION FOR INCOME TAXES PROV
PROVISION FOR INCOME TAXES PROVISION FOR INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation, Prior Year Income Taxes, Amount | $ 9 | |
Provision for income taxes | $ 72 | $ 84 |
Effective tax rate | 22.00% | 33.00% |
BORROWINGS Part 1 (Details) Sch
BORROWINGS Part 1 (Details) Schedule of Long-term Debt Instruments - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Total Borrowings | $ 7,078 | $ 7,008 |
Borrowings due within one year | 513 | 431 |
Long-term borrowings | 6,565 | 6,577 |
2.4% notes due June 2017 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 998 | 998 |
Debt Instrument, Interest Rate, Stated Percentage | 2.40% | |
Debt Instrument, Maturity Date | Jun. 30, 2017 | |
6.30% notes due November 2018 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 165 | 166 |
Debt Instrument, Interest Rate, Stated Percentage | 6.30% | |
Debt Instrument, Maturity Date | Nov. 30, 2018 | |
5.5% notes due November 2019 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 249 | 249 |
Debt Instrument, Interest Rate, Stated Percentage | 5.50% | |
Debt Instrument, Maturity Date | Nov. 30, 2019 | |
2.7% notes due January 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 795 | 794 |
Debt Instrument, Interest Rate, Stated Percentage | 2.70% | |
Debt Instrument, Maturity Date | Jan. 31, 2020 | |
4.5% notes due January 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 249 | 249 |
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | |
Debt Instrument, Maturity Date | Jan. 31, 2021 | |
3.6% notes due August 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 894 | 896 |
Debt Instrument, Interest Rate, Stated Percentage | 3.60% | |
Debt Instrument, Maturity Date | Aug. 31, 2022 | |
7 1/4% debentures due January 2024 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 244 | 244 |
Debt Instrument, Interest Rate, Stated Percentage | 7.25% | |
Debt Instrument, Maturity Date | Jan. 31, 2024 | |
7 5/8% debentures due June 2024 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 54 | 54 |
Debt Instrument, Interest Rate, Stated Percentage | 7.625% | |
Debt Instrument, Maturity Date | Jun. 30, 2024 | |
3.8% notes due March 2025 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 791 | 791 |
Debt Instrument, Interest Rate, Stated Percentage | 3.80% | |
Debt Instrument, Maturity Date | Mar. 31, 2025 | |
7.60% debentures due February 2027 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 222 | 222 |
Debt Instrument, Interest Rate, Stated Percentage | 7.60% | |
Debt Instrument, Maturity Date | Feb. 28, 2027 | |
4.8% notes due September 2042 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 492 | 492 |
Debt Instrument, Interest Rate, Stated Percentage | 4.80% | |
Debt Instrument, Maturity Date | Sep. 30, 2042 | |
4.65% notes due October 2044 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 869 | 869 |
Debt Instrument, Interest Rate, Stated Percentage | 4.65% | |
Debt Instrument, Maturity Date | Oct. 31, 2044 | |
Credit Facilities and commercial paper [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 1,052 | 980 |
Capital Lease Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 4 | $ 4 |
BORROWINGS Part 2 (Details) Cre
BORROWINGS Part 2 (Details) Credit Facility and Commercial Paper Borrowings - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Term Loan Agreement [Member] | ||
Credit Facilities [Abstract] | ||
Credit Facility, Borrowing Capacity | $ 1,000 | |
Debt Instrument, Term | 5 years | |
Line of Credit Facility, Maximum Month-end Outstanding Amount | $ 350 | $ 350 |
Line of Credit Facility, Interest Rate During Period | 1.68% | 1.67% |
Revolving Credit Facility [Member] | ||
Credit Facilities [Abstract] | ||
Credit Facility, Borrowing Capacity | $ 1,250 | |
Line of Credit Facility, Maximum Month-end Outstanding Amount | $ 0 | $ 0 |
Line of Credit Facility, Expiration Date | Oct. 31, 2020 | |
Long term commercial paper [Member] | ||
Credit Facilities [Abstract] | ||
Long-term Commercial Paper, Noncurrent | $ 512 | $ 430 |
Debt, Weighted Average Interest Rate | 0.81% | 0.80% |
A/R Facility [Member] | ||
Credit Facilities [Abstract] | ||
Credit Facility, Borrowing Capacity | $ 250 | |
Line of Credit Facility, Interest Rate During Period | 1.25% | 1.11% |
Line of Credit Facility, Expiration Date | Apr. 30, 2018 | |
Borrowings under the A/R facility | $ 190 | $ 200 |
Repayments of Lines of Credit | 10 | |
Credit and A/R Facility | ||
Credit Facilities [Abstract] | ||
Credit Facility, Borrowing Capacity | $ 769 | $ 842 |
BORROWINGS Part 3 (Details) Fai
BORROWINGS Part 3 (Details) Fair Value - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term borrowings | $ 6,565 | $ 6,577 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term Borrowings, Fair Value | 6,854 | 6,647 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term Borrowings, Fair Value | 6,311 | 6,094 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term Borrowings, Fair Value | 543 | 553 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term Borrowings, Fair Value | $ 0 | $ 0 |
DERIVATIVES Part 1 (Details)
DERIVATIVES Part 1 (Details) - Designated as Hedging Instrument [Member] € in Millions, ¥ in Millions, MMBTU in Millions, $ in Millions | Mar. 31, 2016JPY (¥)bblMMBTU | Mar. 31, 2016USD ($)bblMMBTU | Mar. 31, 2016EUR (€)bblMMBTU | Dec. 31, 2015JPY (¥)bblMMBTU | Dec. 31, 2015USD ($)bblMMBTU | Dec. 31, 2015EUR (€)bblMMBTU |
Interest Rate Contract [Member] | Fair Value Hedging [Member] | ||||||
Derivative [Line Items] | ||||||
Derivative, Notional Amount | $ 0 | $ 0 | ||||
Interest Rate Swap [Member] | Cash Flow Hedging [Member] | ||||||
Derivative [Line Items] | ||||||
Derivative, Notional Amount | 500 | 500 | ||||
Euro Member Countries, Euro | Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | ||||||
Derivative [Line Items] | ||||||
Derivative, Notional Amount | 650 | € 558 | 689 | € 618 | ||
Japan, Yen | Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | ||||||
Derivative [Line Items] | ||||||
Derivative, Notional Amount | ¥ 2,100 | $ 19 | ¥ 2,400 | $ 20 | ||
Raw Materials [Member] | Commodity Contract [Member] | Cash Flow Hedging [Member] | ||||||
Derivative [Line Items] | ||||||
Derivative, Nonmonetary Notional Amount | bbl | 19,000,000 | 19,000,000 | 19,000,000 | 22,000,000 | 22,000,000 | 22,000,000 |
Energy Related Derivative [Member] | Commodity Contract [Member] | Cash Flow Hedging [Member] | ||||||
Derivative [Line Items] | ||||||
Derivative, Nonmonetary Notional Amount | MMBTU | 33 | 33 | 33 | 32 | 32 | 32 |
DERIVATIVES Part 2 (Details)
DERIVATIVES Part 2 (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Derivative Assets [Abstract] | ||
Derivative Asset, Net | $ 102 | |
Derivative Liabilities [Abstract] | ||
Derivative Liability, Net | 410 | |
Fair Value, Measurements, Recurring [Member] | ||
Derivative Assets [Abstract] | ||
Derivative Asset, Cash Flow Hedge, Fair Value, Gross Asset | 103 | $ 144 |
Derivative Liabilities [Abstract] | ||
Derivative Liability, Cash Flow Hedge, Fair Value, Gross Liability | 411 | 466 |
Derivative, Fair Value, Net | (308) | (322) |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Derivative Assets [Abstract] | ||
Derivative Asset, Cash Flow Hedge, Fair Value, Gross Asset | 0 | 0 |
Derivative Liabilities [Abstract] | ||
Derivative Liability, Cash Flow Hedge, Fair Value, Gross Liability | 0 | 0 |
Derivative, Fair Value, Net | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Derivative Assets [Abstract] | ||
Derivative Asset, Cash Flow Hedge, Fair Value, Gross Asset | 103 | 144 |
Derivative Liabilities [Abstract] | ||
Derivative Liability, Cash Flow Hedge, Fair Value, Gross Liability | 411 | 466 |
Derivative, Fair Value, Net | (308) | (322) |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Derivative Assets [Abstract] | ||
Derivative Asset, Cash Flow Hedge, Fair Value, Gross Asset | 0 | 0 |
Derivative Liabilities [Abstract] | ||
Derivative Liability, Cash Flow Hedge, Fair Value, Gross Liability | 0 | 0 |
Derivative, Fair Value, Net | 0 | 0 |
Designated as Hedging Instrument [Member] | ||
Derivative Assets [Abstract] | ||
Derivative Asset, Cash Flow Hedge, Fair Value, Gross Asset | 103 | 144 |
Derivative Liabilities [Abstract] | ||
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value | 411 | 466 |
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member] | ||
Derivative Assets [Abstract] | ||
Cash Flow Hedge Derivative Instrument Assets at Fair Value | 1 | 0 |
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Liabilities [Member] | ||
Derivative Liabilities [Abstract] | ||
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value | 154 | 194 |
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member] | ||
Derivative Liabilities [Abstract] | ||
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value | 196 | 242 |
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Assets [Member] | ||
Derivative Assets [Abstract] | ||
Cash Flow Hedge Derivative Instrument Assets at Fair Value | 48 | 65 |
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member] | ||
Derivative Assets [Abstract] | ||
Cash Flow Hedge Derivative Instrument Assets at Fair Value | 54 | 79 |
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member] | ||
Derivative Liabilities [Abstract] | ||
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value | $ 61 | $ 30 |
DERIVATIVES Part 3 (Details)
DERIVATIVES Part 3 (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |||
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract] | |||||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | $ (14) | [1] | $ 52 | [1] | $ 35 |
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract] | |||||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | (7) | 5 | |||
Hedging Summary [Abstract] | |||||
Monetized positions and mark to market (gain) loss in accumulated other comprehensive income before tax | 400 | 348 | |||
Price Risk Cash Flow Hedge Unrealized (Gain) Loss to be Reclassified During Next 12 Months | 133 | ||||
Loss on Cash Flow Hedge Ineffectiveness | 2 | 1 | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | 9 | (11) | |||
Interest Rate Contract [Member] | Fair Value Hedging [Member] | Net Interest Expense | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Gain (Loss) on Fair Value Hedges Recognized in Earnings | 3 | 4 | |||
Commodity Contract [Member] | Cash Flow Hedging [Member] | |||||
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract] | |||||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | 30 | 5 | |||
Commodity Contract [Member] | Cash Flow Hedging [Member] | Cost of Sales [Member] | |||||
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract] | |||||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | (20) | (16) | |||
Commodity Contract [Member] | Cash Flow Hedging [Member] | Sales [Member] | |||||
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract] | |||||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | 0 | 2 | |||
Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | |||||
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract] | |||||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | (26) | 55 | |||
Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | Sales [Member] | |||||
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract] | |||||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | 15 | 21 | |||
Forward Starting Interest Rate Swap [Member] | Cash Flow Hedging [Member] | |||||
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract] | |||||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | (18) | (8) | |||
Forward Starting Interest Rate Swap [Member] | Cash Flow Hedging [Member] | Net Interest Expense | |||||
Pre-tax Amount of Gain (Loss) reclassified From Accumulated Other Comprehensive Income Into Income (Effective Portion) [Abstract] | |||||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | $ (2) | $ (2) | |||
[1] | For additional information regarding the impact of reclassifications into earnings, refer to Note 7, "Derivatives". |
RETIREMENT PLANS (Details)
RETIREMENT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | ||
Pension Contributions | $ 0 | $ 0 |
United States Pension Plans of US Entity, Defined Benefit [Member] | ||
Components of net periodic benefit cost [Abstract] | ||
Service cost | 10 | 9 |
Interest cost | 18 | 22 |
Expected return on assets | (34) | (36) |
Prior service credit | (1) | (1) |
Net periodic benefit (credit) cost | (7) | (6) |
Foreign Pension Plans, Defined Benefit [Member] | ||
Components of net periodic benefit cost [Abstract] | ||
Service cost | 3 | 4 |
Interest cost | 6 | 6 |
Expected return on assets | (8) | (9) |
Prior service credit | 0 | 0 |
Net periodic benefit (credit) cost | 1 | 1 |
Post Retirement Welfare Plans [Member] | ||
Components of net periodic benefit cost [Abstract] | ||
Service cost | 2 | 2 |
Interest cost | 7 | 10 |
Expected return on assets | (2) | (2) |
Prior service credit | (10) | (6) |
Net periodic benefit (credit) cost | $ (3) | $ 4 |
COMMITMENTS (Details)
COMMITMENTS (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase Obligation | $ 1,600 |
Purchase obligations [Abstract] | |
Long-term Purchase Commitment, Period | 30 years |
Lease commitments [Abstract] | |
Operating Lease Commitments, Cancelable Noncancelable and Month-to-month | $ 274 |
Lessee Leasing Arrangements, Operating Leases, Term of Contract | 40 years |
Percentage of Operating Lease Commitments related to real property | 50.00% |
Percentage of Operating Lease Commitments related to railcars | 40.00% |
Percentage of Operating Lease Commitments related to machinery and equipment | 10.00% |
Guarantees [Abstract] | |
Operating Lease Residual Value Guarantees | $ 122 |
Term, other guarantees | 30 years |
Maximum potential future payment, other guarantees | $ 35 |
ENVIRONMENTAL MATTERS AND ASS51
ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Site Contingency [Line Items] | ||
Portion Of Environmental Reserve Related To Previously Closed, Impaired, And Divested Sites | $ 8 | $ 8 |
Accrual for Environmental Loss Contingencies [Roll Forward] | ||
Beginning of period | 336 | |
End of period | 332 | |
Accrual for Environmental Loss Contingencies, Balance Sheet Classification [Abstract] | ||
Accrued Environmental Loss Contingencies, Current | 30 | 35 |
Accrued Environmental Loss Contingencies, Noncurrent | 302 | 301 |
Environmental Remediation [Member] | ||
Site Contingency [Line Items] | ||
Loss Contingency, Range of Possible Loss, Minimum | 305 | 308 |
Loss Contingency, Range of Possible Loss, Maximum | 507 | 516 |
Accrual for Environmental Loss Contingencies [Roll Forward] | ||
Beginning of period | 308 | |
Accrual for Environmental Loss Contingencies, Increase (Decrease) for Revision in Estimates | 3 | |
Cash reductions | 6 | |
End of period | $ 305 | |
Expected Payment Period of Environmental Contingencies | 30 years | |
Environmental ARO [Member] | ||
Site Contingency [Line Items] | ||
Best Estimate Accrued to-date For Asset Retirement Obligation | $ 27 | 28 |
Non Environmental ARO [Member] | ||
Site Contingency [Line Items] | ||
Best Estimate Accrued to-date For Asset Retirement Obligation | $ 45 | $ 46 |
STOCKHOLDERS' EQUITY STOCKHOLDE
STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 1 (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |||
Stockholders' Equity Note [Abstract] | |||||
Dividends, Per Share | $ 0.46 | $ 0.40 | |||
Stockholders' Equity Attributable to Parent | $ 4,204 | $ 3,941 | |||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 4,285 | 4,021 | |||
Net earnings attributable to Eastman | 251 | $ 171 | |||
Net earnings attributable to noncontrolling interest | 0 | 1 | |||
Net earnings including noncontrolling interest | 251 | 172 | |||
Cash dividends declared | (67) | [1] | (60) | ||
Other Comprehensive Income | 85 | $ (164) | (113) | ||
Share-based Compensation Expense | [2] | 13 | |||
Stock Option Exercises | 5 | ||||
Other | [3] | (3) | |||
Share Repurchase | (20) | ||||
Common Stock [Member] | |||||
Stockholders' Equity Attributable to Parent | 2 | 2 | |||
Net earnings attributable to Eastman | 0 | ||||
Cash dividends declared | [1] | 0 | |||
Other Comprehensive Income | 0 | ||||
Share-based Compensation Expense | [2] | 0 | |||
Stock Option Exercises | 0 | ||||
Other | [3] | 0 | |||
Share Repurchase | 0 | ||||
Additional Paid-in Capital [Member] | |||||
Stockholders' Equity Attributable to Parent | 1,877 | 1,863 | |||
Net earnings attributable to Eastman | 0 | ||||
Cash dividends declared | [1] | 0 | |||
Other Comprehensive Income | 0 | ||||
Share-based Compensation Expense | [2] | 13 | |||
Stock Option Exercises | 5 | ||||
Other | [3] | (4) | |||
Share Repurchase | 0 | ||||
Retained Earnings [Member] | |||||
Stockholders' Equity Attributable to Parent | 5,330 | 5,146 | |||
Net earnings attributable to Eastman | 251 | ||||
Cash dividends declared | [1] | (67) | |||
Other Comprehensive Income | 0 | ||||
Share-based Compensation Expense | [2] | 0 | |||
Stock Option Exercises | 0 | ||||
Other | [3] | 0 | |||
Share Repurchase | 0 | ||||
Accumulated Other Comprehensive Income (Loss) [Member] | |||||
Stockholders' Equity Attributable to Parent | (305) | (390) | |||
Net earnings attributable to Eastman | 0 | ||||
Cash dividends declared | [1] | 0 | |||
Other Comprehensive Income | 85 | ||||
Share-based Compensation Expense | [2] | 0 | |||
Stock Option Exercises | 0 | ||||
Other | [3] | 0 | |||
Share Repurchase | 0 | ||||
Treasury Stock [Member] | |||||
Stockholders' Equity Attributable to Parent | (2,700) | (2,680) | |||
Net earnings attributable to Eastman | 0 | ||||
Cash dividends declared | [1] | 0 | |||
Other Comprehensive Income | 0 | ||||
Share-based Compensation Expense | [2] | 0 | |||
Stock Option Exercises | 0 | ||||
Other | [3] | 0 | |||
Share Repurchase | (20) | ||||
Parent [Member] | |||||
Stockholders' Equity Attributable to Parent | 4,204 | 3,941 | |||
Net earnings attributable to Eastman | 251 | ||||
Cash dividends declared | [1] | (67) | |||
Other Comprehensive Income | 85 | ||||
Share-based Compensation Expense | [2] | 13 | |||
Stock Option Exercises | 5 | ||||
Other | [3] | (4) | |||
Share Repurchase | (20) | ||||
Noncontrolling Interest [Member] | |||||
Stockholders' Equity Attributable to Parent | 81 | $ 80 | |||
Net earnings attributable to noncontrolling interest | 0 | ||||
Cash dividends declared | [1] | 0 | |||
Other Comprehensive Income | 0 | ||||
Share-based Compensation Expense | [2] | 0 | |||
Stock Option Exercises | 0 | ||||
Other | [3] | 1 | |||
Share Repurchase | $ 0 | ||||
[1] | Includes cash dividends paid and dividends declared, but unpaid. | ||||
[2] | Fair value of share-based awards. | ||||
[3] | Paid in capital includes tax benefits/charges relating to the differences between the amounts deductible for federal income taxes over the amounts charged to income for book value purposes and other items. Equity attributable to noncontrolling interest includes adjustments for currency revaluation. |
STOCKHOLDERS' EQUITY STOCKHOL53
STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 2 AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Cumulative Translation Adjustment | $ (178) | $ (284) | $ (68) | |||
Change in cumulative translation adjustment | 106 | $ (212) | (216) | |||
Benefit Plans Unrecognized Prior Service Credits | 122 | 129 | 61 | |||
Amortization of unrecognized prior service credits included in net periodic costs | (7) | [1] | (4) | [1] | 68 | |
Unrealized Gains (Losses) on Derivative Instruments | (248) | (234) | (269) | |||
Change in Unrealized Gains (Losses) on Derivative Instruments | (14) | [2] | 52 | [2] | 35 | |
Unrealized Losses on Investments | (1) | (1) | (1) | |||
Change in Unrealized Losses on Investments | 0 | 0 | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (305) | (390) | $ (277) | |||
Total other comprehensive income (loss), net of tax | $ 85 | $ (164) | $ (113) | |||
[1] | Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans". | |||||
[2] | For additional information regarding the impact of reclassifications into earnings, refer to Note 7, "Derivatives". |
STOCKHOLDERS' EQUITY STOCKHOL54
STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 3 OCI (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | ||||
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||
Change in cumulative translation adjustment | $ 106 | $ (212) | $ (216) | |||
Amortization of unrecognized prior service credits included in net periodic costs | (7) | [1] | (4) | [1] | 68 | |
Unrealized gain (loss) | [2] | (18) | 55 | |||
Reclassification adjustment for losses (gains) included in net income, net | [2] | 4 | (3) | |||
Change in derivatives and hedging | (14) | [2] | 52 | [2] | 35 | |
Total other comprehensive income (loss), net of tax | 85 | (164) | $ (113) | |||
Other Comprehensive Income (Loss), before Tax [Abstract] | ||||||
Change in cumulative translation adjustment, before tax | 106 | (212) | ||||
Amortization of unrecognized prior service credits included in net periodic costs, before tax | [1] | (11) | (7) | |||
Unrealized gain (loss), before tax | [2] | (30) | 89 | |||
Reclassification adjustment for (gain) loss included in net income, before tax | [2] | 7 | (5) | |||
Change in derivatives and hedging, before tax | [2] | (23) | 84 | |||
Total other comprehensive income (loss), before tax | $ 72 | $ (135) | ||||
[1] | Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans". | |||||
[2] | For additional information regarding the impact of reclassifications into earnings, refer to Note 7, "Derivatives". |
EARNINGS AND DIVIDENDS PER SH55
EARNINGS AND DIVIDENDS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Earnings Per Share [Abstract] | |||
Earnings, net of tax | $ 251 | $ 171 | |
Weighted average shares used for basic EPS (in shares) | 147,800,000 | 148,700,000 | |
Dilutive effect of stock options and other awards | 1,000,000 | 1,000,000 | |
Weighted average shares used for diluted EPS (in shares) | 148,800,000 | 149,700,000 | |
Earnings, basic | [1] | $ 1.70 | $ 1.15 |
Earnings, diluted | [1] | $ 1.69 | $ 1.14 |
Underlying options excluded from the computation of diluted earnings per share (in shares) | 1,081,423 | 784,890 | |
Shares repurchased (in shares) | 287,281 | 370,000 | |
Cash dividends declared (per share) | $ 0.46 | $ 0.40 | |
[1] | Earnings per share are calculated using whole dollars and shares. |
ASSETS IMPAIRMENTS AND RESTRU56
ASSETS IMPAIRMENTS AND RESTRUCTURING (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring, Settlement and Impairment Provisions | $ (2) | $ 109 | |
Asset Impairment Charges | 0 | 89 | |
Restructuring Charge [Roll Forward] | |||
Balance at Beginning of Period | 66 | 28 | $ 28 |
Provision / Adjustments | (2) | 183 | |
Restructuring Reserve, Accrual Adjustment | (1) | ||
Non-cash Reductions | (103) | ||
Cash Reductions | (8) | (42) | |
Balance at End of Period | 57 | 66 | |
Non-Cash Charges [Member] | |||
Restructuring Charge [Roll Forward] | |||
Balance at Beginning of Period | 0 | 0 | 0 |
Provision / Adjustments | 0 | 107 | |
Non-cash Reductions | 0 | (107) | |
Cash Reductions | 0 | 0 | |
Balance at End of Period | 0 | 0 | |
Employee Severance [Member] | |||
Restructuring Charge [Roll Forward] | |||
Balance at Beginning of Period | 55 | 13 | 13 |
Provision / Adjustments | 0 | 67 | |
Restructuring Reserve, Accrual Adjustment | 0 | 1 | |
Cash Reductions | (8) | (26) | |
Balance at End of Period | 47 | 55 | |
Facility Closing [Member] | |||
Restructuring Charge [Roll Forward] | |||
Balance at Beginning of Period | 11 | 15 | 15 |
Provision / Adjustments | (2) | 9 | |
Restructuring Reserve, Accrual Adjustment | 1 | 3 | |
Cash Reductions | 0 | (16) | |
Balance at End of Period | 10 | $ 11 | |
Workington UK Closure [Member] | Fibers [Member] | Facility Closing [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Asset Impairment Charges | 81 | ||
Restructuring Charges | 16 | ||
Discontinue growth initiative [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Asset Impairment Charges | 8 | ||
Restructuring Charges | $ 4 | ||
Crystex R&D facility in France [Member] | Additives And Functional Products [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Gain (Loss) on Disposition of Assets | $ 2 |
SHARE-BASED COMPENSATION AWAR57
SHARE-BASED COMPENSATION AWARDS (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense before tax | $ 13 | $ 11 |
Share-based compensation expense, retirement eligibility preceding the requisite vesting period | 2 | 2 |
Share-based compensation net of deferred tax expense | $ 8 | $ 7 |
Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 23.71% | 24.11% |
Share-based compensation expense before tax | $ 3 | $ 3 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 550,000 | 500,000 |
Share based compensation Term life of options | 10 | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 65 | $ 74 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 2.31% | 1.75% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.23% | 1.45% |
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Expected Forfeiture Rate | 0.75% | 0.75% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years | 4 years 9 months 11 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 10.97 | $ 13.89 |
Nonvested Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 6 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 3 years | |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 160,000 | 200,000 |
Other Share-Based compensations Awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense before tax | $ 10 | $ 8 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 73 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 3 years | |
Long term performance shares award 2016-2018 cycle [Member] | Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 400,000 | |
Long term performance shares award 2015-2017 cycle [Member] | Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 300,000 |
SUPPLEMENTAL CASH FLOW INFORM58
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Supplemental Cash Flow Information [Abstract] | ||
Other current assets | $ 0 | $ 15 |
Other noncurrent assets | 38 | 5 |
Payables and other current liabilities | 24 | (17) |
Long-term liabilities and equity | (86) | (53) |
Total | $ (24) | $ (50) |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2016USD ($)Segment | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | ||
Segment Reporting Information [Line Items] | ||||
Number of Operating Segments | Segment | 4 | |||
Sales [Abstract] | ||||
Sales | $ 2,236 | $ 2,443 | ||
Operating Earnings (loss) [Abstract] | ||||
Operating Income (Loss) | 399 | 311 | ||
Segment Reporting Information, Additional Information [Abstract] | ||||
Assets by Segment | [1] | 15,616 | $ 15,580 | |
Operating Segments [Member] | ||||
Sales [Abstract] | ||||
Sales | 2,226 | 2,431 | ||
Operating Earnings (loss) [Abstract] | ||||
Operating Income (Loss) | 414 | 336 | ||
Segment Reporting Information, Additional Information [Abstract] | ||||
Assets by Segment | [1] | 14,724 | 14,496 | |
Corporate and Other [Member] | ||||
Sales [Abstract] | ||||
Sales | 10 | 12 | ||
Segment Reporting Information, Additional Information [Abstract] | ||||
Assets by Segment | [1] | 892 | 1,084 | |
Growth Initiatives and Businesses not Allocated to Segments [Member] | Corporate and Other [Member] | ||||
Operating Earnings (loss) [Abstract] | ||||
Operating Income (Loss) | (18) | (26) | ||
Pension and OPEB Costs Not Allocated to Operating Segments [Member] | Corporate and Other [Member] | ||||
Operating Earnings (loss) [Abstract] | ||||
Operating Income (Loss) | 12 | 9 | ||
Transaction, Integration, and Restructuring Costs Related to Solutia Acquisition [Member] | Corporate and Other [Member] | ||||
Operating Earnings (loss) [Abstract] | ||||
Operating Income (Loss) | (9) | (8) | ||
Additives And Functional Products [Member] | Operating Segments [Member] | ||||
Sales [Abstract] | ||||
Sales | 737 | 804 | ||
Operating Earnings (loss) [Abstract] | ||||
Operating Income (Loss) | 153 | 157 | ||
Segment Reporting Information, Additional Information [Abstract] | ||||
Assets by Segment | [1] | 6,471 | 6,370 | |
Advanced Materials [Member] | Operating Segments [Member] | ||||
Sales [Abstract] | ||||
Sales | 589 | 561 | ||
Operating Earnings (loss) [Abstract] | ||||
Operating Income (Loss) | 108 | 68 | ||
Segment Reporting Information, Additional Information [Abstract] | ||||
Assets by Segment | [1] | 4,338 | 4,227 | |
Chemical Intermediates [Member] | Operating Segments [Member] | ||||
Sales [Abstract] | ||||
Sales | 620 | 782 | ||
Operating Earnings (loss) [Abstract] | ||||
Operating Income (Loss) | 67 | 118 | ||
Segment Reporting Information, Additional Information [Abstract] | ||||
Assets by Segment | [1] | 3,147 | 2,930 | |
Fibers [Member] | Operating Segments [Member] | ||||
Sales [Abstract] | ||||
Sales | 280 | 284 | ||
Operating Earnings (loss) [Abstract] | ||||
Operating Income (Loss) | 86 | $ (7) | ||
Segment Reporting Information, Additional Information [Abstract] | ||||
Assets by Segment | [1] | $ 768 | $ 969 | |
[1] | The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets. |