(Mark
One)
|
|
[X]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the fiscal year ended December 31, 2005
|
|
OR
|
|
[
]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the transition period from ______________ to
______________
|
Commission
file number 1-12626
|
EASTMAN
CHEMICAL COMPANY
|
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
62-1539359
|
|
(State
or other jurisdiction of
|
(I.R.S.
employer
|
|
incorporation
or organization)
|
identification
no.)
|
|
200
South Wilcox Drive
|
||
Kingsport,
Tennessee
|
37660
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
Registrant’s
telephone number, including area code: (423)
229-2000
|
Securities
registered pursuant to Section 12(b) of the Act:
|
||
Title
of each class
|
Name
of each exchange on which registered
|
|
Common
Stock, par value $0.01 per share
|
New
York Stock Exchange
|
(including
rights to purchase shares of Common Stock or Participating Preferred
Stock)
|
Securities
registered pursuant to Section 12(g) of the Act:
None
|
Yes
|
No
|
|
Indicate
by check mark if the registrant is a well-known seasoned issuer,
as
defined in Rule 405 of the Securities Act.
|
[X]
|
|
Yes
|
No
|
|
Indicate
by check mark if the registrant is not required to file reports pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|
[X]
|
|
Yes
|
No
|
|
Indicate
by check mark whether the registrant (1) has filed all reports required
to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to
such filing requirements for the past 90 days.
|
[X]
|
|
Yes
|
No
|
|
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of
Regulation S-K is not contained herein, and will not be contained,
to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any
amendment to this Form 10-K.
|
[X]
|
|
Yes
|
No
|
|
Indicate
by check mark whether the registrant is an accelerated filer (as
defined
in Rule 12b-2 of the Securities Exchange Act of 1934).
|
[X]
|
|
Yes
|
No
|
|
Indicate
by check mark whether the registrant is a shell company (as defined
in
Rule 12b-2 of the Exchange Act).
|
[X]
|
ITEM
|
PAGE
|
1.
|
5
|
||
1A.
|
27
|
||
1B.
|
27
|
||
28
|
|||
2.
|
30
|
||
3.
|
31
|
||
4.
|
32
|
||
5.
|
33
|
||
6.
|
35
|
||
7.
|
36
|
||
7A.
|
69
|
||
8.
|
70
|
||
9.
|
121
|
||
9A.
|
121
|
||
9B.
|
121
|
||
10.
|
122
|
||
11.
|
122
|
||
12.
|
122
|
||
13.
|
123
|
||
14.
|
123
|
||
125
|
SEGMENTS
|
ACETYL
STREAM
|
POLYESTER
STREAM
|
OLEFINS
STREAM
|
KEY
PRODUCTS, MARKETS AND END USES
|
CASPI
|
X
|
X
|
Adhesives
(tape, label, nonwovens), paint and coatings (architectural, automotive,
industrial, and original equipment manufacturing "OEM")
|
|
PCI
|
X
|
X
|
X
|
Agrochemical,
automotive, beverages, nutrition, pharmaceuticals, coatings, medical
devices, toys, photographic and imaging, household products, polymers,
textiles, and consumer and industrials
|
SP
|
X
|
X
|
X
|
Appliances,
store fixtures and displays, building and construction, electronic
packaging, medical devices and packaging, personal care and cosmetics,
performance films, tape and labels, fibers/nonwovens, photographic
and
optical film, graphic arts and general packaging
|
Polymers
|
X
|
X
|
X
|
Beverage
and food packaging, custom-care and cosmetic packaging, health care
and
pharmaceutical uses, household products and industrial packaging
applications, extrusion coating, film and molding
applications
|
Fibers
|
X
|
Acetate
tow, apparel, home furnishings, and industrial applications
|
·
|
Exploit
Growth Opportunities in Core
Businesses
|
Ø |
Develop
New Specialty Products and Expand into New
Markets
|
Ø |
Leverage
Opportunities Created by the Broad Product
Line
|
Ø |
Diversify
Globally and Pursue Opportunities for Business
Development
|
·
|
Improve
Gross Margins
|
Ø |
Enhancing
pricing processes and strategies, and implementing pricing systems
to
improve responsiveness to changes in operating costs and other factors
impacting gross margins;
|
Ø |
Institutionalizing
cost reduction processes, including a Six Sigma quality improvement
program aimed at reducing costs, improving customer satisfaction,
improving efficiency through reduction of variations and defects,
and
focusing on business simplification and channels to
market;
|
Ø |
Implementing
information technology solutions to maximize the Company’s enterprise
resource planning system used in production planning and other
manufacturing processes to reduce safety stock, improve responsiveness
to
demand forecasting, and increase manufacturing efficiency;
and
|
Ø |
Maintaining
high utilization of manufacturing assets, particularly for intermediates
and specialty polymers, and pursuing high value debottlenecking
opportunities and incremental expansions of current
assets.
|
·
|
Overview
|
· |
Products
|
Ø |
Coatings
Additives and Solvents
|
Ø |
Adhesives
Raw Materials
|
· |
Strategy
|
· |
Customers
and Markets
|
· |
Competition
|
· |
Overview
|
· |
Products
|
· |
Strategy
|
· |
Customers
and Markets
|
· |
Competition
|
· |
Overview
|
· |
Products
|
Ø |
Engineering
and Specialty Polymers
|
Ø |
Specialty
Film and Sheet
|
Ø |
Packaging,
Film and Fiber
|
· |
Strategy
|
· |
Customers
and Markets
|
· |
Competition
|
· |
developing
new products, processes, and markets through applications research;
and
|
· |
improving
existing products and processes to lower costs, improve product
quality,
and reduce potential environmental
impact.
|
· |
Operational
Efficiency
|
· |
Capital
Efficiency
|
· |
Superior
Process Technology
|
· |
Quality
and Innovation
|
· |
Overview
|
· |
Products
|
Ø |
PET
|
Ø |
PE
|
· |
Strategy
|
Ø |
Growth
|
Ø |
Innovation
|
· |
Customers
and Markets
|
· |
Competition
|
Ø |
PET
|
Ø |
PE
|
·
|
Overview
|
· |
Products
|
Ø
|
Acetate
Tow
|
Ø
|
Acetate
Yarn
|
Ø
|
Acetyl
Chemical Products
|
·
|
Strategy
|
Ø
|
Position
for Growth
|
Ø
|
Continue
to Capitalize on Expertise
|
Ø
|
Maintain
Cost-Effective Operations and Consistent Cash
Flows
|
·
|
Customers
and Markets
|
·
|
Competition
|
Ø |
Polymers
Segment
|
·
|
Lowering
manufacturing costs through process technology innovations and
process
improvement efforts;
|
·
|
Developing
new products and services in PET polymers that both meet customers'
fitness for use requirements and are protective of the environment
through
applications research and customer feedback;
and
|
·
|
Enhancing
product quality by improvement in manufacturing technology and
processes.
|
Ø |
Fibers
Segment
|
Segment
using manufacturing facility
|
||||||
Location
|
CASPI
|
PCI
|
SP
|
Polymers
|
Fibers
|
|
USA
Batesville,
Arkansas
|
x
|
x
|
||||
Jefferson,
Pennsylvania
|
x
|
|||||
Columbia,
South Carolina
|
x
|
x
|
||||
Kingsport,
Tennessee
|
x
|
x
|
x
|
x
|
x
|
|
Longview,
Texas
|
x
|
x
|
x
|
|||
Franklin,
Virginia*
|
x
|
|||||
Europe
|
||||||
Workington,
England
|
x
|
x
|
||||
Middelburg,
the Netherlands
|
x
|
|||||
Rotterdam,
the Netherlands**
|
x
|
|||||
San
Roque, Spain
|
x
|
x
|
x
|
|||
Llangefni,
Wales
|
x
|
|||||
Asia
Pacific
|
||||||
Kuantan,
Malaysia**
|
x
|
|||||
Jurong
Island, Singapore**
|
x
|
x
|
||||
Zibo
City, China***
|
x
|
x
|
||||
Latin
America
Zarate,
Argentina
|
x
|
|||||
Cosoleacaque,
Mexico
|
x
|
|||||
Uruapan,
Mexico
|
x
|
High
|
Low
|
Cash
Dividends Declared
|
|||||
2004
|
First
Quarter
|
$
|
43.70
|
$
|
38.00
|
$
|
0.44
|
Second
Quarter
|
46.97
|
41.90
|
0.44
|
||||
Third
Quarter
|
47.77
|
42.19
|
0.44
|
||||
Fourth
Quarter
|
58.17
|
44.86
|
0.44
|
||||
2005
|
First
Quarter
|
$
|
61.80
|
$
|
50.40
|
$
|
0.44
|
Second
Quarter
|
60.80
|
47.40
|
0.44
|
||||
Third
Quarter
|
58.38
|
44.10
|
0.44
|
||||
Fourth
Quarter
|
50.77
|
|
45.34
|
0.44
|
Period
|
Total
Number
of
Shares
Purchased
(1)
|
Average
Price Paid Per Share
(2)
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans
or
Programs
(3)
|
Approximate
Dollar
Value
(in Millions) that May Yet Be Purchased Under the Plans or Programs
(3)
|
|||
October
1- 31, 2005
|
3,482
|
$
|
47.05
|
0
|
$
|
288
|
|
November
1-30, 2005
|
25,178
|
$
|
54.98
|
0
|
$
|
288
|
|
December
1-31, 2005
|
1,126
|
$
|
51.71
|
0
|
$
|
288
|
|
Total
|
29,786
|
0
|
Summary
of Operating Data
|
||||||||||
(Dollars
in millions, except per share amounts)
|
2005
|
2004
|
2003
|
2002
|
2001
|
|||||
Sales
|
$
|
7,059
|
$
|
6,580
|
$
|
5,800
|
$
|
5,320
|
$
|
5,390
|
Operating
earnings (loss)
|
757
|
175
|
(267)
|
208
|
(120)
|
|||||
Earnings
(loss) before cumulative effect of change in accounting
principles
|
557
|
170
|
(273)
|
79
|
(175)
|
|||||
Cumulative
effect of change in
|
||||||||||
accounting
principles, net
|
--
|
--
|
3
|
(18)
|
--
|
|||||
Net
earnings (loss)
|
557
|
170
|
(270)
|
61
|
(175)
|
|||||
Basic
|
||||||||||
Earnings
(loss) per share before
|
||||||||||
cumulative
effect of change in
|
||||||||||
accounting
principles
|
$
|
6.90
|
$
|
2.20
|
$
|
(3.54)
|
$
|
1.02
|
$
|
(2.28)
|
Cumulative
effect of change in
|
||||||||||
accounting
principles, net
|
--
|
--
|
0.04
|
(0.23)
|
--
|
|||||
Net
earnings (loss) per share
|
$
|
6.90
|
$
|
2.20
|
$
|
(3.50)
|
$
|
0.79
|
$
|
(2.28)
|
Diluted
|
||||||||||
Earnings
(loss) per share before
|
||||||||||
cumulative
effect of change in
|
||||||||||
accounting
principles
|
$
|
6.81
|
$
|
2.18
|
$
|
(3.54)
|
$
|
1.02
|
$
|
(2.28)
|
Cumulative
effect of change in
|
||||||||||
accounting
principles, net
|
--
|
--
|
0.04
|
(0.23)
|
--
|
|||||
Net
earnings (loss) per share
|
$
|
6.81
|
$
|
2.18
|
$
|
(3.50)
|
$
|
0.79
|
$
|
(2.28)
|
Statement
of Financial Position Data
|
||||||||||
Current
assets
|
$
|
1,924
|
$
|
1,768
|
$
|
2,010
|
$
|
1,547
|
$
|
1,464
|
Net
properties
|
3,162
|
3,192
|
3,419
|
3,753
|
3,627
|
|||||
Total
assets
|
5,773
|
5,839
|
6,244
|
6,287
|
6,092
|
|||||
Current
liabilities
|
1,051
|
1,099
|
1,477
|
1,247
|
960
|
|||||
Long-term
borrowings
|
1,621
|
2,061
|
2,089
|
2,054
|
2,143
|
|||||
Total
liabilities
|
4,161
|
4,655
|
5,201
|
5,016
|
4,710
|
|||||
Total
stockholders’ equity
|
1,612
|
1,184
|
1,043
|
1,271
|
1,382
|
|||||
Dividends
declared per share
|
1.76
|
1.76
|
1.76
|
1.76
|
1.76
|
ITEM
|
Page
|
37
|
|
40
|
|
Results
of Operations
|
|
41
|
|
44
|
|
49
|
|
50
|
|
54
|
|
58
|
|
59
|
|
63
|
|
64
|
|
64
|
|
66
|
|
66
|
|
Change
in
Assumption
|
Impact
on
2006
Pre-tax U.S.
Benefits
Expense
|
Impact
on
December
31, 2005 Projected Benefit Obligation for U.S. Pension
Plans
|
Impact
on
December
31, 2005 Benefit Obligation for Other U.S. Postretirement
Plans
|
25
basis point
decrease
in discount
rate
|
+$6
Million
|
+$52
Million
|
+$23
Million
|
25
basis point
increase
in discount
rate
|
-$6
Million
|
-$47
Million
|
-$23
Million
|
25
basis point
decrease
in expected return on assets
|
+$2
Million
|
No
Impact
|
N/A
|
25
basis point
increase
in expected
return
on assets
|
-$2
Million
|
No
Impact
|
N/A
|
(Dollars
in millions)
|
2005
|
2004
|
Change
|
Volume
Effect
|
Price
Effect
|
Product
Mix
Effect
|
Exchange
Rate Effect
|
||
Sales
|
$
|
7,059
|
$
|
6,580
|
7%
|
(7)%
|
15%
|
(1)%
|
--%
|
(Dollars
in millions)
|
2005
|
2004
|
Change
|
|||
Gross
Profit
|
$
|
1,404
|
$
|
978
|
44
%
|
|
As
a percentage of sales
|
19.9%
|
14.9%
|
· |
increased
selling prices across all segments, primarily in response to higher
raw
material and energy costs which increased more than $500
million;
|
· |
a
continued focus on more profitable businesses and product
lines;
and
|
· |
cost
reduction programs.
|
(Dollars
in millions)
|
2005
|
2004
|
Change
|
|||
Selling,
General and Administrative Expenses ("SG&A")
|
$
|
454
|
$
|
450
|
1
%
|
|
Research
and Development Expenses ("R&D")
|
162
|
154
|
5
%
|
|||
$
|
616
|
$
|
604
|
2
%
|
||
As
a percentage of sales
|
8.7%
|
9.2%
|
Operating
Earnings
|
||||||
(Dollars
in millions, except per share amounts)
|
2005
|
2004
|
Change
|
|||
Operating
earnings
|
$
|
757
|
$
|
175
|
$
|
>100%
|
· |
increased
selling prices throughout the Company of approximately $1 billion
in
response to increasing raw material and energy
costs;
|
· |
lower
asset impairment and restructuring charges of $33 million in 2005
compared
to $206 million in 2004;
|
· |
completion
of previously announced restructuring, divestiture and consolidation
actions in 2004;
|
· |
a
continued focus on more profitable businesses and product lines
across the
Company's portfolio of businesses, including acetyl, olefins, and
polyester stream optimization; and
|
· |
continued
cost reduction efforts.
|
(Dollars
in millions)
|
2005
|
2004
|
Change
|
|||
Gross
interest costs
|
$
|
118
|
$
|
126
|
||
Less:
capitalized interest
|
5
|
3
|
||||
Interest
expense
|
113
|
123
|
(9)
%
|
|||
Interest
income
|
13
|
8
|
||||
Interest
expense, net
|
$
|
100
|
$
|
115
|
(14)
%
|
(Dollars
in millions)
|
2005
|
2004
|
Change
|
|||
Other
income
|
$
|
(11)
|
$
|
(10)
|
$
|
(1)
|
Other
charges
|
12
|
20
|
(8)
|
|||
Other
(income) charges, net
|
$
|
1
|
$
|
10
|
$
|
(9)
|
(Dollars
in millions)
|
2005
|
2004
|
Change
|
|||
Provision
(benefit) for income taxes
|
$
|
226
|
$
|
(106)
|
>
100 %
|
|
Effective
tax rate
|
29
%
|
N/A
|
Net
Earnings
|
||||
(Dollars
in millions, except per share amounts)
|
2005
|
2004
|
||
Net
earnings
|
$
|
557
|
$
|
170
|
Earnings
per share
|
||||
Basic
|
$
|
6.90
|
$
|
2.20
|
Diluted
|
6.81
|
2.18
|
||
CASPI
Segment
|
|||||||||||||||
All
Product Lines
|
Continuing
Product Lines(1)
|
||||||||||||||
Change
|
Change
|
||||||||||||||
(Dollars
in millions)
|
2005
|
2004
|
$
|
%
|
2004
|
$
|
%
|
||||||||
External
Sales
|
$
|
1,299
|
$
|
1,554
|
$
|
(255)
|
(16)
%
|
$
|
1,113
|
$
|
186
|
17
%
|
|||
Volume
effect
|
(464)
|
(30)
%
|
(23)
|
(2)
%
|
|||||||||||
Price
effect
|
192
|
13
%
|
192
|
18
%
|
|||||||||||
Product
mix effect
|
13
|
1
%
|
13
|
1%
|
|||||||||||
Exchange
rate effect
|
4
|
--
%
|
4
|
--
%
|
|||||||||||
Operating
earnings
|
229
|
67
|
162
|
>100
%
|
152
|
77
|
51
%
|
||||||||
Asset
impairments and restructuring charges, net
|
4
|
81
|
(77)
|
9
|
(5)
|
||||||||||
Other
operating income
|
2
|
--
|
2
|
>100
%
|
--
|
3
|
>100
%
|
PCI
Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2005
|
2004
|
$
|
%
|
|||||||||
External
sales
|
$
|
1,627
|
$
|
1,347
|
$
|
280
|
21
%
|
||||||
Volume
effect
|
64
|
5
%
|
|||||||||||
Price
effect
|
244
|
18
%
|
|||||||||||
Product
mix effect
|
(30)
|
(2)
%
|
|||||||||||
Exchange
rate effect
|
2
|
--
%
|
|||||||||||
Interdivisional
sales
|
665
|
583
|
82
|
14
%
|
|||||||||
Operating
earnings
|
161
|
16
|
145
|
>100
%
|
|||||||||
Asset
impairments and restructuring charges, net
|
11
|
38
|
(27)
|
(71
%
|
|||||||||
SP
Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2005
|
2004
|
$
|
%
|
|||||||||
External
sales
|
$
|
718
|
$
|
644
|
$
|
74
|
12
%
|
||||||
Volume
effect
|
(2)
|
--
%
|
|||||||||||
Price
effect
|
75
|
12
%
|
|||||||||||
Product
mix effect
|
(1)
|
--
%
|
|||||||||||
Exchange
rate effect
|
2
|
--
%
|
|||||||||||
Interdivisional
sales
|
48
|
51
|
(3)
|
(6)
%
|
|||||||||
Operating
earnings
|
64
|
13
|
51
|
>100
%
|
|||||||||
Asset
impairments and restructuring charges, net
|
--
|
53
|
(53)
|
--
%
|
|||||||||
Polymers
Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2005
|
2004
|
$
|
%
|
|||||||||
External
sales
|
$
|
2,519
|
$
|
2,183
|
$
|
336
|
15
%
|
||||||
Volume
effect
|
(97)
|
(5)
%
|
|||||||||||
Price
effect
|
424
|
19
%
|
|||||||||||
Product
mix effect
|
(4)
|
--
%
|
|||||||||||
Exchange
rate effect
|
13
|
1
%
|
|||||||||||
Interdivisional
sales
|
87
|
69
|
18
|
27
%
|
|||||||||
Operating
earnings
|
159
|
25
|
134
|
>100
%
|
|||||||||
Asset
impairments and restructuring charges, net
|
--
|
13
|
(13)
|
--
%
|
|||||||||
Fibers
Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2005
|
2004
|
$
|
%
|
|||||||||
External
sales
|
$
|
869
|
$
|
731
|
$
|
138
|
19
%
|
||||||
Volume
effect
|
51
|
7
%
|
|||||||||||
Price
effect
|
76
|
11
%
|
|||||||||||
Product
mix effect
|
10
|
1
%
|
|||||||||||
Exchange
rate effect
|
1
|
--
%
|
|||||||||||
Interdivisional
sales
|
99
|
88
|
11
|
12
%
|
|||||||||
Operating
earnings
|
207
|
146
|
61
|
42
%
|
Developing
Businesses Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2005
|
2004
|
$
|
%
|
|||||||||
External
sales
|
$
|
27
|
$
|
121
|
$
|
(94)
|
(78)
%
|
||||||
Interdivisional
sales
|
61
|
424
|
(363)
|
(86)
%
|
|||||||||
Operating
loss
|
(70)
|
(86)
|
16
|
19
%
|
|||||||||
Asset
impairments and restructuring charges, net
|
18
|
21
|
(3)
|
(14)%
|
|||||||||
Other
operating income
|
--
|
7
|
(7)
|
--
%
|
(Dollars
in millions)
|
2005
|
2004
|
Change
|
Volume
Effect
|
Price
Effect
|
Product
Mix
Effect
|
Exchange
Rate
Effect
|
|||||||
United
States and Canada
|
$
|
4,098
|
$
|
3,723
|
10
%
|
(5)
%
|
19
%
|
(4)
%
|
--
%
|
|||||
Europe,
Middle East, and Africa
|
1,344
|
1,467
|
(8)
%
|
(15)
%
|
5
%
|
1
%
|
1
%
|
|||||||
Asia
Pacific
|
930
|
785
|
18
%
|
4
%
|
12
%
|
2
%
|
--
%
|
|||||||
Latin
America
|
687
|
605
|
14
%
|
(8)
%
|
20
%
|
1
%
|
1%
|
|||||||
$
|
7,059
|
$
|
6,580
|
(Dollars
in millions)
|
2004
|
2003
|
Change
|
Volume
Effect
|
Price
Effect
|
Product
Mix
Effect
|
Exchange
Rate Effect
|
||
Sales
|
$
|
6,580
|
$
|
5,800
|
13%
|
4%
|
6%
|
1%
|
2%
|
(Dollars
in millions)
|
2004
|
2003
|
Change
|
|||
Gross
Profit
|
$
|
978
|
$
|
810
|
21
%
|
|
As
a percentage of sales
|
14.9
%
|
14.0
%
|
· |
increased
selling prices in response to higher raw material costs, particularly
in
Polymers and PCI, and the Company’s continued efforts to improve
profitability;
|
· |
increased
volumes, excluding restructured, divested, and consolidated businesses
and
product lines, across all segments due to strengthening general
economic
conditions and the substitution of other materials with SP and
Polymers
products;
|
· |
focus
on more profitable product lines, achieved by a variety of actions,
including restructuring, divestiture, and consolidation activity,
as well
as improving product mix, particularly in CASPI, SP, and Fibers;
and
|
· |
improved
cost structure through restructuring efforts and cost
reduction programs.
|
(Dollars
in millions)
|
2004
|
2003
|
Change
|
|||
Selling,
General and Administrative Expenses
|
$
|
450
|
$
|
414
|
9
%
|
|
Research
and Development Expenses
|
154
|
173
|
(11)
%
|
|||
$
|
604
|
$
|
587
|
|||
As
a percentage of sales
|
9.2%
|
10.1%
|
(Dollars
in millions)
|
2004
|
2003
|
Change
|
|||
Other
operating income
|
$
|
(7)
|
$
|
(33)
|
$
|
26
|
(Dollars
in millions)
|
2004
|
2003
|
Change
|
|||
Gross
interest costs
|
$
|
126
|
$
|
133
|
||
Less:
capitalized interest
|
3
|
3
|
||||
Interest
expense
|
123
|
130
|
(5)
%
|
|||
Interest
income
|
8
|
6
|
||||
Interest
expense, net
|
$
|
115
|
$
|
124
|
(7)
%
|
Operating
Earnings (Loss)
|
||||
(Dollars
in millions, except per share amounts)
|
2004
|
2003
|
||
Operating
earnings (loss)
|
$
|
175
|
$
|
(267)
|
· |
increased
selling prices of approximately $350
million;
|
· |
increased
volumes, excluding restructured, divested, and consolidated businesses
and
product lines;
|
· |
focus
on more profitable product lines and the impact of favorable product
mix;
|
· |
improved
cost structure; and
|
· |
favorable
impact of foreign exchange.
|
(Dollars
in millions)
|
2004
|
2003
|
Change
|
|||
Other
income
|
$
|
(10)
|
$
|
(18)
|
$
|
8
|
Other
charges
|
20
|
18
|
2
|
|||
Other
(income) charges, net
|
$
|
10
|
$
|
--
|
$
|
10
|
(Dollars
in millions)
|
2004
|
2003
|
Change
|
|||
Provision
(benefit) for income taxes
|
$
|
(106)
|
$
|
(108)
|
(2.0)
%
|
|
Effective
tax rate
|
N/A
|
28%
|
(Dollars
in millions)
|
2004
|
2003
|
||
Cumulative
effect of change in accounting principles, net
|
$
|
--
|
$
|
3
|
Net
Earnings (Loss)
|
||||
(Dollars
in millions, except per share amounts)
|
2004
|
2003
|
||
Net
earnings (loss) before cumulative effect of change in accounting
principle
|
$
|
170
|
$
|
(273)
|
Net
earnings (loss)
|
170
|
(270)
|
||
Earnings
(loss) per share before cumulative effect of change in accounting
principle
|
||||
Basic
|
$
|
2.20
|
$
|
(3.54)
|
Diluted
|
2.18
|
(3.54)
|
||
Earnings
(loss) per share
|
||||
Basic
|
$
|
2.20
|
$
|
(3.50)
|
Diluted
|
2.18
|
(3.50)
|
CASPI
Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2004
|
2003
|
$
|
%
|
|||||||||
Total
external sales
|
$
|
1,554
|
$
|
1,683
|
(129)
|
(8)
%
|
|||||||
Volume
effect
|
(194)
|
(11)
%
|
|||||||||||
Price
effect
|
41
|
2
%
|
|||||||||||
Product
mix effect
|
(16)
|
(1)
%
|
|||||||||||
Exchange
rate effect
|
40
|
2
%
|
|||||||||||
Sales
- restructured, divested, and consolidated product lines (1)
|
441
|
719
|
(278)
|
(39)
%
|
|||||||||
Sales
- continuing product lines
|
1,113
|
964
|
149
|
15
%
|
|||||||||
Interdivisional
Sales
|
1
|
--
|
1
|
--
%
|
|||||||||
Total
operating earnings (loss)
|
67
|
(402)
|
469
|
>100
%
|
|||||||||
Operating
earnings (loss) - restructured, divested, and consolidated product
lines
(1) (2)
|
(85)
|
(538)
|
453
|
84
%
|
|||||||||
Operating
earnings - continuing product lines
|
152
|
136
|
16
|
12
%
|
|||||||||
Total
asset impairments and restructuring charges
|
81
|
462
|
(381)
|
||||||||||
Asset
impairments and restructuring charges - restructured, divested,
and
consolidated product lines (1)
|
72
|
457
|
(385)
|
||||||||||
Asset
impairments and restructuring charges - continuing product
lines
|
9
|
5
|
4
|
||||||||||
Other
operating income
|
--
|
13
|
(13)
|
||||||||||
PCI
Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2004
|
2003
|
$
|
%
|
|||||||||
External
sales
|
$
|
1,347
|
$
|
1,098
|
$
|
249
|
23
%
|
||||||
Volume
effect
|
133
|
12
%
|
|||||||||||
Price
effect
|
117
|
11
%
|
|||||||||||
Product
mix effect
|
(10)
|
(1)
%
|
|||||||||||
Exchange
rate effect
|
9
|
1
%
|
|||||||||||
Interdivisional
sales
|
583
|
495
|
88
|
18
%
|
|||||||||
Operating
earnings
|
16
|
(45)
|
61
|
>100
%
|
|||||||||
Asset
impairments and restructuring charges, net
|
38
|
57
|
(19)
|
||||||||||
SP
Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2004
|
2003
|
$
|
%
|
|||||||||
External
sales
|
$
|
644
|
$
|
559
|
$
|
85
|
15
%
|
||||||
Volume
effect
|
65
|
12
%
|
|||||||||||
Price
effect
|
6
|
1
%
|
|||||||||||
Product
mix effect
|
--
|
--
%
|
|||||||||||
Exchange
rate effect
|
14
|
2
%
|
|||||||||||
Interdivisional
sales
|
51
|
49
|
2
|
4
%
|
|||||||||
Operating
earnings
|
13
|
63
|
(50)
|
(
79) %
|
|||||||||
Asset
impairments and restructuring charges, net
|
53
|
1
|
52
|
||||||||||
Other
operating income
|
--
|
20
|
(20)
|
Polymers
Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2004
|
2003
|
$
|
%
|
|||||||||
External
sales
|
$
|
2,183
|
$
|
1,756
|
$
|
427
|
24
%
|
||||||
Volume
effect
|
156
|
9
%
|
|||||||||||
Price
effect
|
211
|
12
%
|
|||||||||||
Product
mix effect
|
4
|
--
%
|
|||||||||||
Exchange
rate effect
|
56
|
3
%
|
|||||||||||
Interdivisional
sales
|
69
|
68
|
1
|
1
%
|
|||||||||
Operating
earnings
|
25
|
62
|
(37)
|
(
60) %
|
|||||||||
Asset
impairments and restructuring charges, net
|
13
|
2
|
11
|
Fibers
Segment
|
|||||||||||||
Change
|
|||||||||||||
(Dollars
in millions)
|
2004
|
2003
|
$
|
%
|
|||||||||
External
sales
|
$
|
731
|
$
|
635
|
$
|
96
|
15
%
|
||||||
Volume
effect
|
83
|
13
%
|
|||||||||||
Price
effect
|
(13)
|
(2)
%
|
|||||||||||
Product
mix effect
|
17
|
3
%
|
|||||||||||
Exchange
rate effect
|
9
|
1
%
|
|||||||||||
Interdivisional
sales
|
88
|
80
|
8
|
10
%
|
|||||||||
Operating
earnings
|
146
|
125
|
21
|
17
%
|
|||||||||
Asset
impairments and restructuring charges, net
|
--
|
1
|
(1)
|
Fibers
Segment
|
||||||||||||
Change
|
||||||||||||
(Dollars
in millions)
|
2004
|
2003
|
$
|
%
|
||||||||
External
sales
|
$
|
121
|
$
|
69
|
$
|
52
|
75
%
|
|||||
Interdivisional
sales
|
424
|
396
|
28
|
7
%
|
||||||||
Operating
earnings
|
(86)
|
(65)
|
(21)
|
(32)
%
|
||||||||
Asset
impairments and restructuring charges, net
|
21
|
--
|
21
|
|||||||||
Other
operating income
|
7
|
--
|
7
|
(Dollars
in millions)
|
2004
|
2003
|
Change
|
Volume
Effect
|
Price
Effect
|
Product
Mix
Effect
|
Exchange
Rate
Effect
|
|||||||
United
States and Canada
|
$
|
3,723
|
$
|
3,302
|
13
%
|
6
%
|
8
%
|
(1)
%
|
--
%
|
|||||
Europe,
Middle East, and Africa
|
1,467
|
1,368
|
7
%
|
(5)
%
|
2
%
|
1
%
|
9
%
|
|||||||
Asia
Pacific
|
785
|
643
|
22
%
|
9
%
|
6
%
|
6
%
|
1
%
|
|||||||
Latin
America
|
605
|
487
|
24
%
|
11
%
|
11
%
|
1
%
|
1%
|
|||||||
$
|
6,580
|
$
|
5,800
|
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Net
cash provided by (used in):
|
|
|||||
Operating
activities
|
$
|
764
|
$
|
494
|
$
|
244
|
Investing
activities
|
(18)
|
(148)
|
(160)
|
|||
Financing
activities
|
(547)
|
(579)
|
397
|
|||
Net
change in cash and cash equivalents
|
$
|
199
|
$
|
(233)
|
$
|
481
|
|
||||||
Cash
and cash equivalents at end of period
|
$
|
524
|
$
|
325
|
$
|
558
|
(Dollars
in millions)
|
Payments
Due For
|
|||||||||||
Period
|
Notes
and Debentures
|
Credit
Facility Borrowings
|
Purchase
Obligations
|
Operating
Leases
|
Other
Liablities (a)
|
Total
|
||||||
2006
|
$
|
4
|
$
|
--
|
$
|
291
|
$
|
44
|
$
|
134
|
$
|
473
|
2007
|
--
|
--
|
282
|
36
|
87
|
405
|
||||||
2008
|
72
|
--
|
177
|
23
|
68
|
340
|
||||||
2009
|
12
|
25
|
172
|
19
|
65
|
293
|
||||||
2010
|
--
|
189
|
162
|
16
|
62
|
429
|
||||||
2011
and beyond
|
1,323
|
--
|
658
|
70
|
765
|
2,816
|
||||||
Total
|
$
|
1,411
|
$
|
214
|
$
|
1,742
|
$
|
208
|
$
|
1,181
|
$
|
4,756
|
· |
that
the volatility of raw material and energy costs will continue and
that the
Company will continue to pursue pricing strategies and ongoing
cost
control initiatives to offset the effects on gross
profit;
|
· |
strong
volumes will be maintained due to continued economic strength,
continued
substitution of Eastman products for other materials, and new applications
for existing products;
|
· |
that
pension and other post-employment benefit expenses will be similar
to 2005
levels;
|
· |
to
contribute approximately $75 million to the Company’s U.S. defined benefit
pension plans;
|
· |
net
interest expense to decrease compared with 2005 primarily as a
result of
anticipated lower average borrowings, increased capitalized interest
and
higher interest income;
|
· |
the
effective tax rate to be approximately 33
percent;
|
· |
to
continue to evaluate its portfolio, which could lead to further
restructuring, divestiture, or consolidation of product lines as
it
continues to focus on
profitability;
|
· |
capital
expenditures to increase to up to $450 million and exceed estimated
depreciation and amortization of approximately $300 million; in
2006, the
Company plans to complete construction of the new PET facility
in South
Carolina, utilizing IntegRex
technology, and pursue a copolyester intermediates expansion and
other
targeted growth initiatives; and
|
· |
that
priorities for use of available cash will be to pay the quarterly
cash
dividend and fund targeted growth initiatives and defined benefit
pension
plans.
|
· |
The
Company is reliant on certain strategic raw materials for its operations
and utilizes risk management tools, including hedging, as appropriate,
to
mitigate short-term market fluctuations in raw material costs.
There can
be no assurance, however, that such measures will result in cost
savings
or that all market fluctuation exposure will be eliminated. In
addition,
natural disasters, changes in laws or regulations, war or other
outbreak
of hostilities, or other political factors in any of the countries
or
regions in which the Company operates or does business, or in countries
or
regions that are key suppliers of strategic raw materials, could
affect
availability and costs of raw
materials.
|
· |
While
temporary shortages of raw materials and energy may occasionally
occur,
these items have historically been sufficiently available to cover
current
and projected requirements. However, their continuous availability
and
price are impacted by natural disasters, plant interruptions occurring
during periods of high demand, domestic and world market and political
conditions, changes in government regulation, and war or other
outbreak of
hostilities. Eastman’s operations or products may, at times, be adversely
affected by these factors.
|
· |
The
Company's competitive position in the markets in which it participates
is,
in part, subject to external factors in addition to those that
the Company
can impact. Natural disasters, changes in laws or regulations,
war or
other outbreak of hostilities, or other political factors in any
of the
countries or regions in which the Company operates or does business,
or in
countries or regions that are key suppliers of strategic raw materials,
could negatively impact the Company’s competitive position and its ability
to maintain market share. For example, supply and demand for certain
of
the Company's products is driven by end-use markets and worldwide
capacities which, in turn, impact demand for and pricing of the
Company's
products.
|
· |
Limitation
of the Company's available manufacturing capacity due to significant
disruption in its manufacturing operations, including natural disasters,
could have a material adverse affect on sales revenue, costs and
results
of operations and financial condition.
|
· |
The
Company has an extensive customer base; however, loss of, or material
financial weakness of, certain of the largest customers could adversely
affect the Company's financial condition and results of operations
until
such business is replaced and no assurances can be made that the
Company
would be able to regain or replace any lost customers. In addition,
the
Company's competitive position may be adversely impacted by low
cost
competitors in certain regions and customers developing internal
or
alternative sources of supply.
|
· |
In
addition to productivity and cost reduction initiatives, the Company
is
striving to improve margins on its products through price increases
where
warranted and accepted by the market; however, the Company's earnings
could be negatively impacted should such increases be unrealized,
not be
sufficient to cover increased raw material and energy costs, or
have a
negative impact on demand and volume. There can be no assurances
that
price increases will be realized or will be realized within the
Company’s
anticipated timeframe.
|
· |
The
Company is endeavoring to exploit growth opportunities in certain
core
businesses by developing new products, expanding into new markets,
and
tailoring product offerings to customer needs. There can be no
assurance
that such efforts will result in financially successful commercialization
of such products or acceptance by existing or new customers or
new
markets.
|
· |
The
Company has made, and intends to continue making, strategic investments,
including IntegRex
technology,
and has entered, and expects to continue to enter, into strategic
alliances in technology, services businesses, and other ventures
in order
to build, diversify, and strengthen certain Eastman capabilities
and to
maintain high utilization of manufacturing assets. There can be
no
assurance that such investments and alliances will achieve their
underlying strategic business objectives or that they will be beneficial
to the Company's results of
operations.
|
· |
The
Company has undertaken and expects to continue to undertake productivity
and cost reduction initiatives and organizational restructurings
to
improve performance and generate cost savings. There can be no
assurance
that these will be completed as planned or beneficial or that estimated
cost savings from such activities will be
realized.
|
· |
The
Company's facilities and businesses are subject to complex health,
safety
and environmental laws and regulations, which require and will
continue to
require significant expenditures to remain in compliance with such
laws
and regulations currently and in the future. The Company's accruals
for
such costs and associated liabilities are subject to changes in
estimates
on which the accruals are based. The amount accrued reflects the
Company’s
assumptions about remediation requirements at the contaminated
site, the
nature of the remedy, the outcome of discussions with regulatory
agencies
and other potentially responsible parties at multi-party sites,
and the
number and financial viability of other potentially responsible
parties.
Changes in the estimates on which the accruals are based, unanticipated
government enforcement action, or changes in health, safety,
environmental, chemical control regulations and testing requirements
could
result in higher or lower costs.
|
· |
The
Company and its operations from time to time 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 handled and defended in the ordinary
course
of business. The Company believes amounts reserved are adequate
for such
pending matters; however, results of operations could be affected
by
significant litigation adverse to the
Company.
|
· |
The
Company has deferred tax assets related to capital and operating
losses.
The Company establishes valuation allowances to reduce these deferred
tax
assets to an amount that is more likely than not to be realized.
The
Company’s ability to utilize these deferred tax assets depends on
projected future operating results, the reversal of existing temporary
differences, and the availability of tax planning strategies. Realization
of these assets is expected to occur over an extended period of
time. As a
result, changes in tax laws, assumptions with respect to future
taxable
income and tax planning strategies could result in adjustments
to these
assets.
|
ITEM
|
Page
|
71
|
|
72
|
|
74
|
|
75
|
|
76
|
|
Notes
to Consolidated Financial Statements
|
|
77
|
|
83
|
|
83
|
|
84
|
|
85
|
|
86
|
|
86
|
|
87
|
|
88
|
|
89
|
|
96
|
|
98
|
|
98
|
|
99
|
|
101
|
|
103
|
|
108
|
|
109
|
|
109
|
|
112
|
|
112
|
|
117
|
|
118
|
|
119
|
|
120
|
|
/s/
J. Brian Ferguson
|
/s/
Richard A. Lorraine
|
|
Chairman
of the Board and
|
Senior
Vice President and
|
|
Chief
Executive Officer
|
Chief
Financial Officer
|
|
March
13, 2006
|
For
years ended December 31,
|
||||||
(Dollars
in millions, except per share amounts)
|
2005
|
2004
|
2003
|
|||
Earnings
(Loss)
|
||||||
Sales
|
$
|
7,059
|
$
|
6,580
|
$
|
5,800
|
Cost
of sales
|
5,655
|
5,602
|
4,990
|
|||
Gross
profit
|
1,404
|
978
|
810
|
|||
Selling,
general and administrative expenses
|
454
|
450
|
414
|
|||
Research
and development expenses
|
162
|
154
|
173
|
|||
Asset
impairments and restructuring charges, net
|
33
|
206
|
489
|
|||
Goodwill
impairments
|
--
|
--
|
34
|
|||
Other
operating income
|
(2)
|
(7)
|
(33)
|
|||
Operating
earnings (loss)
|
757
|
175
|
(267)
|
|||
Interest
expense, net
|
100
|
115
|
124
|
|||
Income
from equity investment in Genencor
|
(173)
|
(14)
|
(10)
|
|||
Early
debt extinguishment costs
|
46
|
--
|
--
|
|||
Other
(income) charges, net
|
1
|
10
|
--
|
|||
Earnings
(loss) before income taxes and cumulative effect of change in accounting
principles
|
783
|
64
|
(381)
|
|||
Provision
(benefit) for income taxes
|
226
|
(106)
|
(108)
|
|||
Earnings
(loss) before cumulative effect of change in accounting
principles
|
557
|
170
|
(273)
|
|||
Cumulative
effect of change in accounting principles, net
|
--
|
--
|
3
|
|||
Net
earnings (loss)
|
$
|
557
|
$
|
170
|
$
|
(270)
|
Earnings
(loss) per share
|
||||||
Basic
|
||||||
Before
cumulative effect of change in accounting principles
|
$
|
6.90
|
$
|
2.20
|
$
|
(3.54)
|
Cumulative
effect of change in accounting principles, net
|
--
|
--
|
0.04
|
|||
Net
earnings (loss) per share
|
$
|
6.90
|
$
|
2.20
|
$
|
(3.50)
|
Diluted
|
||||||
Before
cumulative effect of change in accounting principles
|
$
|
6.81
|
$
|
2.18
|
$
|
(3.54)
|
Cumulative
effect of change in accounting principles, net
|
--
|
--
|
0.04
|
|||
Net
earnings (loss) per share
|
$
|
6.81
|
$
|
2.18
|
$
|
(3.50)
|
Comprehensive
Income (Loss)
|
||||||
Net
earnings (loss)
|
$
|
557
|
$
|
170
|
$
|
(270)
|
Other
comprehensive income (loss)
|
||||||
Change
in cumulative translation adjustment
|
(94)
|
36
|
150
|
|||
Change
in minimum pension liability, net of tax
|
(7)
|
(6)
|
19
|
|||
Change
in unrealized gains (losses) on derivative instruments, net of
tax
|
3
|
(12)
|
5
|
|||
Change
in unrealized gains (losses) on investments, net of tax
|
1
|
--
|
--
|
|||
Total
other comprehensive income (loss)
|
(97)
|
18
|
174
|
|||
Comprehensive
income (loss)
|
$
|
460
|
$
|
188
|
$
|
(96)
|
Retained
Earnings
|
||||||
Retained
earnings at beginning of period
|
$
|
1,509
|
$
|
1,476
|
$
|
1,882
|
Net
earnings (loss)
|
557
|
170
|
(270)
|
|||
Cash
dividends declared
|
(143)
|
(137)
|
(136)
|
|||
Retained
earnings at end of period
|
$
|
1,923
|
$
|
1,509
|
$
|
1,476
|
(Dollars
in millions, except per share amounts)
|
December
31,
|
|||
Assets
|
2005
|
2004
|
||
Current
assets
|
||||
Cash
and cash equivalents
|
$
|
524
|
$
|
325
|
Trade
receivables, net of allowance of $20 and $15
|
575
|
675
|
||
Miscellaneous
receivables
|
81
|
104
|
||
Inventories
|
671
|
582
|
||
Other
current assets
|
73
|
82
|
||
Total
current assets
|
1,924
|
1,768
|
||
Properties
|
|
|||
Properties
and equipment at cost
|
9,597
|
9,628
|
||
Less:
Accumulated depreciation
|
6,435
|
6,436
|
||
Net
properties
|
3,162
|
3,192
|
||
Goodwill
|
312
|
314
|
||
Other
noncurrent assets
|
375
|
565
|
||
Total
assets
|
$
|
5,773
|
$
|
5,839
|
Liabilities
and Stockholders’ Equity
|
||||
Current
liabilities
|
||||
Payables
and other current liabilities
|
$
|
1,047
|
$
|
1,098
|
Borrowings
due within one year
|
4
|
1
|
||
Total
current liabilities
|
1,051
|
1,099
|
||
Long-term
borrowings
|
1,621
|
2,061
|
||
Deferred
income tax liabilities
|
317
|
210
|
||
Post-employment
obligations
|
1,017
|
1,112
|
||
Other
long-term liabilities
|
155
|
173
|
||
Total
liabilities
|
4,161
|
4,655
|
||
Commitments
and contingencies
|
||||
Stockholders’
equity
|
||||
Common
stock ($0.01 par value- 350,000,000 shares authorized; shares
issued
- 89,566,115 and 87,257,499 at December 31, 2005 and 2004,
respectively)
|
1
|
1
|
||
Additional
paid-in capital
|
320
|
210
|
||
Retained
earnings
|
1,923
|
1,509
|
||
Accumulated
other comprehensive loss
|
(200)
|
(103)
|
||
2,044
|
1,617
|
|||
Less:
Treasury stock at cost (8,034,901 and 8,043,513 shares at December
31,
2005 and 2004, respectively)
|
432
|
433
|
||
Total
stockholders’ equity
|
1,612
|
1,184
|
||
Total
liabilities and stockholders’ equity
|
$
|
5,773
|
$
|
5,839
|
For
years ended December 31,
|
||||||
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Cash
flows from operating activities
|
||||||
Net
earnings (loss)
|
$
|
557
|
$
|
170
|
$
|
(270)
|
|
||||||
Adjustments
to reconcile net earnings (loss) to net cash provided by operating
activities:
|
||||||
Depreciation
and amortization
|
304
|
322
|
367
|
|||
Cumulative
effect of change in accounting principles, net
|
--
|
--
|
(3)
|
|||
Asset
impairments
|
12
|
140
|
500
|
|||
Gains
on sale of assets
|
--
|
(8)
|
(33)
|
|||
Income
from equity investment in Genencor
|
(173)
|
(14)
|
(10)
|
|||
Early
debt extinguishment costs
|
46
|
--
|
--
|
|||
Provision
(benefit) for deferred income taxes
|
115
|
(136)
|
(137)
|
|||
Changes
in operating assets and liabilities, net of effect of acquisitions
and
divestitures:
|
||||||
(Increase)
decrease in trade receivables
|
60
|
(133)
|
(46)
|
|||
(Increase)
decrease in inventories
|
(110)
|
18
|
41
|
|||
Increase
(decrease) in trade payables
|
71
|
49
|
(2)
|
|||
Increase
(decrease) in liabilities for employee benefits and incentive
pay
|
(63)
|
71
|
(214)
|
|||
Other
items, net
|
(50)
|
15
|
48
|
|||
Net
cash provided by operating activities
|
769
|
494
|
241
|
|||
Cash
flows from investing activities
|
||||||
Additions
to properties and equipment
|
(343)
|
(248)
|
(230)
|
|||
Proceeds
from sale of assets
|
50
|
127
|
71
|
|||
Proceeds
from sale of equity investment in Genencor, net
|
417
|
--
|
--
|
|||
Loan
to joint venture
|
(125)
|
--
|
--
|
|||
Additions
to capitalized software
|
(11)
|
(14)
|
(15)
|
|||
Other
items, net
|
(6)
|
(13)
|
14
|
|||
Net
cash used in investing activities
|
(18)
|
(148)
|
(160)
|
|||
Cash
flows from financing activities
|
||||||
Net
increase (decrease) in commercial paper, credit facility, and other
short-term borrowings
|
(150)
|
(19)
|
39
|
|||
Proceeds
from long-term borrowings
|
189
|
--
|
495
|
|||
Repayment
of borrowings
|
(544)
|
(500)
|
(5)
|
|||
Dividends
paid to stockholders
|
(142)
|
(137)
|
(136)
|
|||
Proceeds
from stock option exercises and other items
|
100
|
77
|
4
|
|||
Net
cash provided by (used in) financing activities
|
(547)
|
(579)
|
397
|
|||
Effect
of exchange rate changes on cash and cash equivalents
|
(5)
|
--
|
3
|
|||
Net
change in cash and cash equivalents
|
199
|
(233)
|
481
|
|||
Cash
and cash equivalents at beginning of period
|
325
|
558
|
77
|
|||
Cash
and cash equivalents at end of period
|
$
|
524
|
$
|
325
|
$
|
558
|
(In
millions, except per share amounts)
|
2005
|
2004
|
2003
|
|||
Net
earnings (loss), as reported
|
$
|
557
|
$
|
170
|
$
|
(270)
|
Add:
Stock-based employee compensation expense included in net earnings,
as
reported
|
11
|
5
|
1
|
|||
Deduct:
Total additional stock-based employee compensation cost, net
of tax, that
would have been included in net earnings (loss) under fair value
method
|
14
|
10
|
11
|
|||
Pro
forma net earnings (loss)
|
$
|
554
|
$
|
165
|
$
|
(280)
|
Basic
earnings (loss) per share
|
As
reported
|
$6.90
|
$2.20
|
$(3.50)
|
||
Pro
forma
|
$6.85
|
$2.13
|
$(3.62)
|
|||
Diluted
earnings (loss) per share
|
As
reported
|
$6.81
|
$2.18
|
$(3.50)
|
||
Pro
forma
|
$6.78
|
$2.12
|
$(3.62)
|
2. |
December
31,
|
||||
(Dollars
in millions)
|
2005
|
2004
|
||
At
FIFO or average cost (approximates current cost)
|
||||
Finished
goods
|
$
|
664
|
$
|
550
|
Work
in process
|
207
|
171
|
||
Raw
materials and supplies
|
247
|
216
|
||
Total
inventories
|
1,118
|
937
|
||
LIFO
Reserve
|
(447)
|
(355)
|
||
Total
inventories
|
$
|
671
|
$
|
582
|
December
31,
|
||||
(Dollars
in millions)
|
2005
|
2004
|
||
Properties
at Cost
|
||||
Balance
at beginning of year
|
$
|
9,628
|
$
|
9,861
|
Capital
expenditures
|
343
|
248
|
||
Deductions
|
(374)
|
(481)
|
||
Balance
at end of year
|
$
|
9,597
|
$
|
9,628
|
Properties
|
||||
Land
|
$
|
42
|
$
|
52
|
Buildings
and building equipment
|
861
|
888
|
||
Machinery
and equipment
|
8,495
|
8,599
|
||
Construction
in progress
|
199
|
89
|
||
Balance
at end of year
|
$
|
9,597
|
$
|
9,628
|
Accumulated
Depreciation
|
||||
Balance
at beginning of year
|
$
|
6,436
|
$
|
6,442
|
Provision
for depreciation
|
287
|
302
|
||
Fixed
asset impairments
|
9
|
134
|
||
Deductions
|
(297)
|
(442)
|
||
Balance
at end of year
|
$
|
6,435
|
$
|
6,436
|
As
of December 31, 2005
|
As
of December 31, 2004
|
|||||||
(Dollars
in millions)
|
Gross
Carrying Amount
|
Net
Carrying Amount
|
Gross
Carrying Amount
|
Net
Carrying Amount
|
||||
Amortizable
intangible assets
|
||||||||
Developed
technology
|
$
|
2
|
$
|
2
|
$
|
2
|
$
|
2
|
Customer
lists
|
3
|
1
|
3
|
1
|
||||
Patents
and patent licenses
|
10
|
6
|
8
|
8
|
||||
Total
|
$
|
15
|
$
|
9
|
$
|
13
|
$
|
11
|
Indefinite-lived
intangible assets
|
||||||||
Trademarks
|
14
|
14
|
||||||
Other
intangible assets
|
$
|
23
|
$
|
25
|
(Dollars
in millions)
|
CASPI
Segment
|
Other
Segments
|
Total
Eastman Chemical
|
|||
Reported
balance at December 31, 2003
|
$
|
308
|
$
|
9
|
$
|
317
|
Divestitures
|
--
|
(3)
|
(3)
|
|||
Reported
balance at December 31, 2004
|
308
|
6
|
314
|
|||
Currency
translation adjustments
|
(2)
|
--
|
(2)
|
|||
Reported
balance at December 31, 2005
|
$
|
306
|
$
|
6
|
$
|
312
|
(Dollars
in millions)
|
2004
|
2003
|
||||
Statement
of Earnings Data
|
||||||
Revenues
|
$
|
410
|
$
|
383
|
||
Costs
of products sold
|
226
|
207
|
||||
Net
earnings (loss)
|
26
|
23
|
||||
Statement
of Financial Position Data
|
||||||
Current
assets
|
$
|
371
|
||||
Noncurrent
assets
|
381
|
|||||
Total
assets
|
752
|
|||||
Current
liabilities
|
114
|
|||||
Noncurrent
liabilities
|
73
|
|||||
Total
liabilities
|
187
|
|||||
Redeemable
preferred stock
|
184
|
December
31,
|
||||
(Dollars
in millions)
|
2005
|
2004
|
||
Trade
creditors
|
$
|
534
|
$
|
474
|
Accrued
payrolls, vacation, and variable-incentive compensation
|
154
|
124
|
||
Accrued
taxes
|
49
|
94
|
||
Post-employment
obligations
|
134
|
131
|
||
Interest
payable
|
31
|
34
|
||
Bank
overdrafts
|
10
|
40
|
||
Other
|
135
|
201
|
||
Total
|
$
|
1,047
|
$
|
1,098
|
7. |
December
31,
|
||||
(Dollars
in millions)
|
2005
|
2004
|
||
Borrowings
consisted of:
|
||||
3
1/4% notes due 2008
|
$
|
72
|
$
|
250
|
6.30%
notes due 2018
|
185
|
253
|
||
7%
notes due 2012
|
142
|
399
|
||
7
1/4% debentures due 2024
|
497
|
497
|
||
7
5/8% debentures due 2024
|
200
|
200
|
||
7.60%
debentures due 2027
|
297
|
297
|
||
Credit
facility borrowings
|
214
|
146
|
||
Other
|
18
|
20
|
||
Total
borrowings
|
1,625
|
2,062
|
||
Borrowings
due within one year
|
(4)
|
(1)
|
||
Long-term
borrowings
|
$
|
1,621
|
$
|
2,061
|
(Dollars
in millions)
|
Book
Value
|
|
3
1/4% notes due 2008
|
$
|
178
|
6.30%
notes due 2018
|
68
|
|
7%
notes due 2012
|
254
|
|
Total
|
$
|
500
|
December
31, 2005
|
December
31, 2004
|
|||||||
(Dollars
in millions)
|
Recorded
Amount
|
Fair
Value
|
Recorded
Amount
|
Fair
Value
|
||||
Long-term
borrowings
|
$
|
1,621
|
$
|
1,770
|
$
|
2,061
|
$
|
2,300
|
10. |
Summary
Balance Sheet
|
||||
(Dollars
in millions)
|
2005
|
2004
|
||
Change
in projected benefit obligation:
|
||||
Benefit
obligation, beginning of year
|
$
|
1,382
|
$
|
1,346
|
Service
cost
|
43
|
41
|
||
Interest
cost
|
80
|
82
|
||
Actuarial
loss
|
77
|
56
|
||
New
plans
|
--
|
11
|
||
Plan
amendments
|
7
|
11
|
||
Effect
of currency exchange
|
(23)
|
17
|
||
Benefits
paid
|
(89)
|
(182)
|
||
Benefit
obligation, end of year
|
$
|
1,477
|
$
|
1,382
|
Change
in plan assets:
|
||||
Fair
value of plan assets, beginning of year
|
$
|
878
|
$
|
903
|
Actual
return on plan assets
|
100
|
107
|
||
New
plans
|
--
|
21
|
||
Effect
of currency exchange
|
(14)
|
10
|
||
Company
contributions
|
177
|
15
|
||
Benefits
paid
|
(87)
|
(178)
|
||
Fair
value of plan assets, end of year
|
$
|
1,054
|
$
|
878
|
Benefit
obligation in excess of plan assets
|
$
|
423
|
$
|
504
|
Unrecognized
actuarial loss
|
(555)
|
(536)
|
||
Unrecognized
prior service credit
|
46
|
54
|
||
Net
amount recognized, end of year
|
$
|
(86)
|
$
|
22
|
Amounts
recognized in the Statements of Financial Position consist
of:
|
||||
Prepaid
benefit cost
|
$
|
(105)
|
$
|
(2)
|
Intangible
assets
|
(15)
|
(16)
|
||
Accrued
benefit cost
|
19
|
24
|
||
Additional
minimum liability
|
417
|
409
|
||
Accumulated
other comprehensive loss
|
(402)
|
(393)
|
||
Net
amount recognized, end of year
|
$
|
(86)
|
$
|
22
|
Summary
of Benefit Costs
|
||||||
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Components
of net periodic benefit cost:
|
||||||
Service
cost
|
$
|
43
|
$
|
41
|
$
|
42
|
Interest
cost
|
80
|
82
|
84
|
|||
Expected
return on assets
|
(79)
|
(82)
|
(82)
|
|||
Curtailment
charge
|
--
|
2
|
--
|
|||
Amortization
of:
|
||||||
Prior
service credit
|
(9)
|
(10)
|
(11)
|
|||
Actuarial
loss
|
36
|
27
|
19
|
|||
Net
periodic benefit cost
|
$
|
71
|
$
|
60
|
$
|
52
|
2005
|
2004
|
2003
|
|||
Weighted-average
assumptions used to determine benefit obligations for years ended
December
31:
|
|||||
Discount
rate
|
5.51%
|
5.67%
|
6.18%
|
||
Expected
return on assets
|
8.59%
|
8.65%
|
8.88%
|
||
Rate
of compensation increase
|
3.75%
|
3.78%
|
3.77%
|
||
Weighted-average
assumptions used to determine net periodic pension cost for years
ended
December 31:
|
|||||
Discount
rate
|
5.67%
|
6.18%
|
6.72%
|
||
Expected
return on assets
|
8.65%
|
8.88%
|
8.94%
|
||
Rate
of compensation increase
|
3.78%
|
3.77%
|
4.00%
|
||
|
Target
Allocation for 2006
|
Plan
Assets at December 31, 2005
|
Plan
Assets at December 31, 2004
|
Asset
category
|
|||
Equity
securities
|
70%
|
78%
|
77%
|
Debt
securities
|
10%
|
9%
|
11%
|
Real
estate
|
5%
|
3%
|
4%
|
Other
investments
|
15%
|
10%
|
8%
|
Total
|
100%
|
100%
|
100%
|
|
Target
Allocation for 2006
|
Plan
Assets at December 31, 2005
|
Plan
Assets at December 31, 2004
|
Asset
category
|
|||
Equity
securities
|
50%
|
49%
|
42%
|
Debt
securities
|
45%
|
45%
|
46%
|
Real
estate
|
5%
|
5%
|
5%
|
Other
investments
|
--
|
1%
|
7%
|
Total
|
100%
|
100%
|
100%
|
(Dollars in millions) |
2006
|
2007
|
2008
|
2009
|
2010
|
2011-2015
|
US
plans
|
$86
|
$90
|
$96
|
$96
|
$97
|
$601
|
International
plans
|
$3
|
$3
|
$3
|
$4
|
$4
|
$19
|
Summary
Balance Sheet
|
||||
(Dollars
in millions)
|
2005
|
2004
|
||
Change
in benefit obligation:
|
||||
Benefit
obligation, beginning of year
|
$
|
795
|
$
|
977
|
Service
cost
|
8
|
7
|
||
Interest
cost
|
43
|
52
|
||
Plan
participants’ contributions
|
12
|
8
|
||
Actuarial
(gain) loss
|
(23)
|
37
|
||
Plan
amendments
|
--
|
(240)
|
||
Benefits
paid
|
(56)
|
(55)
|
||
Settlements
and curtailments
|
--
|
9
|
||
Benefit
obligation, end of year
|
$
|
779
|
$
|
795
|
Change
in plan assets:
|
||||
Fair
value of plan assets, beginning of year
|
$
|
13
|
$
|
19
|
Company
contributions
|
37
|
41
|
||
Plan
participants’ contributions
|
12
|
8
|
||
Benefits
paid
|
(56)
|
(55)
|
||
Fair
value of plan assets, end of year
|
$
|
6
|
$
|
13
|
Benefit
obligation in excess of plan assets
|
$
|
773
|
$
|
782
|
Unrecognized
actuarial loss
|
(325)
|
(367)
|
||
Unrecognized
prior service credit
|
235
|
258
|
||
Net
amount recognized, end of year
|
$
|
683
|
$
|
673
|
Amounts
recognized in the Statements of Financial Position consist
of:
|
||||
Accrued
benefit cost, current
|
$
|
34
|
$
|
41
|
Accrued
benefit cost, non-current
|
649
|
632
|
||
Net
amount recognized, end of year
|
$
|
683
|
$
|
673
|
Summary
of Benefit Costs
|
||||||
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Components
of net periodic benefit cost:
|
||||||
Service
cost
|
$
|
8
|
$
|
7
|
$
|
8
|
Interest
cost
|
43
|
52
|
58
|
|||
Expected
return on assets
|
(1)
|
(1)
|
||||
Curtailment
gain
|
--
|
(3)
|
--
|
|||
Amortization
of:
|
||||||
Prior
service credit
|
(23)
|
(15)
|
(4)
|
|||
Actuarial
loss
|
20
|
17
|
13
|
|||
Net
periodic benefit cost
|
$
|
48
|
$
|
57
|
$
|
74
|
Weighted-average
assumptions used to determine end of year benefit obligations:
|
2005
|
2004
|
2003
|
||
Discount
rate
|
5.62%
|
5.75%
|
6.25%
|
||
Rate
of compensation increase
|
3.75%
|
3.75%
|
3.75%
|
||
Health
care cost trend
|
|||||
Initial
|
8.00%
|
9.00%
|
10.00%
|
||
Decreasing
to ultimate trend of
|
5.00%
|
5.00%
|
5.00%
|
||
in
year
|
2009
|
2009
|
2009
|
Weighted-average
assumptions used to determine end of year net benefit cost:
|
2005
|
2004
|
2003
|
||
Discount
rate
|
5.75%
|
6.25%
|
6.75%
|
||
Rate
of compensation increase
|
3.75%
|
3.75%
|
4.00%
|
||
Health
care cost trend
|
|||||
Initial
|
9.00%
|
10.00%
|
10.00%
|
||
Decreasing
to ultimate trend of
|
5.00%
|
5.00%
|
5.25%
|
||
in
year
|
2009
|
2009
|
2007
|
(Dollars in millions) |
2006
|
2007
|
2008
|
2009
|
2010
|
2011-2015
|
U.S
plans
|
$46
|
$46
|
$46
|
$46
|
$46
|
$243
|
11. |
COMMITMENTS
|
(Dollars
in millions)
|
Payments
Due For
|
|||||||||
Period
|
Notes
and Debentures
|
Credit
Facility Borrowings
|
Purchase
Obligations
|
Operating
Leases
|
Total
|
|||||
2006
|
$
|
4
|
$
|
--
|
$
|
291
|
$
|
44
|
$
|
339
|
2007
|
--
|
--
|
282
|
36
|
318
|
|||||
2008
|
72
|
--
|
177
|
23
|
272
|
|||||
2009
|
12
|
25
|
172
|
19
|
228
|
|||||
2010
|
--
|
189
|
162
|
16
|
367
|
|||||
2011
and beyond
|
1,323
|
--
|
658
|
70
|
2,051
|
|||||
Total
|
$
|
1,411
|
$
|
214
|
$
|
1,742
|
$
|
208
|
$
|
3,575
|
12. |
ENVIRONMENTAL
MATTERS
|
13. |
LEGAL
MATTERS
|
14. |
STOCKHOLDERS’
EQUITY
|
(Dollars
in millions)
|
Common
Stock at Par Value
$
|
Paid-in
Capital
$
|
Retained
Earnings
$
|
Accumulated
Other Comprehensive Income (Loss)
$
|
Treasury
Stock at Cost
$
|
Total
Stockholders’ Equity
$
|
Balance
at January 1, 2003
|
1
|
119
|
1,882
|
(295)
|
(436)
|
1,271
|
Net
Loss
|
(270)
|
(270)
|
||||
Cash
Dividends(2)
|
(136)
|
(136)
|
||||
Other
Comprehensive Loss
|
174
|
174
|
||||
Stock
Option Exercises and other Items
(1)
|
3
|
1
|
4
|
|||
Balance
at December 31, 2003
|
1
|
122
|
1,476
|
(121)
|
(435)
|
1,043
|
Net
Earnings
|
170
|
170
|
||||
Cash
Dividends(2)
|
(137)
|
(137)
|
||||
Other
Comprehensive Income
|
18
|
18
|
||||
Stock
Option Exercises and other Items
|
88
|
2
|
90
|
|||
Balance
at December 31, 2004
|
1
|
210
|
1,509
|
(103)
|
(433)
|
1,184
|
Net
Earnings
|
557
|
557
|
||||
Cash
Dividends(2)
|
(143)
|
(143)
|
||||
Other
Comprehensive Income
|
(97)
|
(97)
|
||||
Stock
Option Exercises and other Items (1)
|
110
|
1
|
111
|
|||
Balance
at December 31, 2005
|
1
|
320
|
1,923
|
(200)
|
(432)
|
1,612
|
Shares
of common stock issued (1)
|
2005
|
2004
|
2003
|
|||
Balance
at beginning of year
|
87,257,499
|
85,296,460
|
85,233,216
|
|||
Issued
for employee compensation and benefit plans
|
2,308,616
|
1,961,039
|
63,244
|
|||
Balance
at end of year
|
89,566,115
|
87,257,499
|
85,296,460
|
|||
(1)
Includes shares held in treasury.
|
(Dollars
in millions)
|
Cumulative
Translation Adjustment
|
Unfunded
Additional
Minimum
Pension Liability
|
Unrealized
Gains (Losses) on Cash Flow Hedges
|
Unrealized
Losses on Investments
|
Accumulated
Other Comprehensive Income (Loss)
|
|||||
Balance
at December 31, 2003
|
$
|
119
|
$
|
(242)
|
$
|
4
|
$
|
(2)
|
$
|
(121)
|
Period
change
|
36
|
(6)
|
(12)
|
--
|
18
|
|||||
Balance
at December 31, 2004
|
$
|
155
|
$
|
(248)
|
$
|
(8)
|
$
|
(2)
|
$
|
(103)
|
Period
change
|
(94)
|
(7)
|
3
|
1
|
(97)
|
|||||
Balance
at December 31, 2005
|
$
|
61
|
$
|
(255)
|
$
|
(5)
|
$
|
(1)
|
$
|
(200)
|
15. |
STOCK
BASED COMPENSATION PLANS
|
Assumptions
|
2005
|
2004
|
2003
|
Expected
volatility rate
|
22.90%
|
28.00%
|
27.90%
|
Expected
dividend yield
|
3.29%
|
3.80%
|
5.90%
|
Average
risk-free interest rate
|
4.48%
|
3.46%
|
3.50%
|
Expected
forfeiture rate
|
Actual
|
Actual
|
Actual
|
Expected
term years
|
5.00
|
6.00
|
6.00
|
2005
|
2004
|
2003
|
|||||||||
Options
|
Weighted-Average
Exercise Price
|
Options
|
Weighted-Average
Exercise Price
|
Options
|
Weighted-Average
Exercise Price
|
||||||
Outstanding
at beginning of year
|
8,155,100
|
$
|
47
|
10,338,100
|
$
|
45
|
8,511,597
|
$
|
49
|
||
Granted
|
1,275,700
|
54
|
1,051,500
|
45
|
1,987,100
|
30
|
|||||
Exercised
|
(2,342,600)
|
43
|
(1,954,200)
|
41
|
--
|
--
|
|||||
Cancelled,
forfeited or expired
|
(471,400)
|
64
|
(1,280,300)
|
44
|
(160,597)
|
45
|
|||||
Outstanding
at end of year
|
6,616,800
|
$
|
48
|
8,155,100
|
$
|
47
|
10,338,100
|
$
|
45
|
||
Options
exercisable at year-end
|
4,688,000
|
6,091,100
|
7,412,800
|
||||||||
Available
for grant at end of year
|
2,954,500
|
4,503,500
|
5,778,900
|
||||||||
Options
Outstanding
|
Options
Exercisable
|
|||||||||
Range
of Exercise Prices
|
Number
Outstanding at 12/31/05
|
Weighted-Average
Remaining Contractual Life (Years)
|
Weighted-Average
Exercise Price
|
Number
Exercisable at 12/31/05
|
Weighted-Average
Exercise Price
|
|||||
$30-42
|
776,800
|
7.0
|
$
|
30
|
723,200
|
$
|
30
|
|||
$43-46
|
1,032,100
|
5.6
|
45
|
730,600
|
46
|
|||||
$47-49
|
2,183,300
|
6.5
|
48
|
1,817,500
|
48
|
|||||
$50-74
|
2,624,600
|
5.6
|
55
|
1,416,700
|
56
|
|||||
6,616,800
|
6.1
|
$
|
48
|
4,688,000
|
$
|
47
|
16. |
IMPAIRMENTS
AND RESTRUCTURING CHARGES,
NET
|
(Dollars
in millions)
|
2005
|
2004
|
2003
|
Eastman
Division segments:
|
|||
CASPI:
|
|||
Fixed
asset impairments
|
$--
|
$57
|
$235
|
Intangible
asset impairments
|
--
|
6
|
175
|
Goodwill
impairments
|
--
|
--
|
34
|
Severance
charges
|
--
|
12
|
15
|
Site
closure costs
|
4
|
6
|
3
|
PCI:
|
|||
Fixed
asset impairments
|
8
|
27
|
55
|
Severance
charges
|
3
|
10
|
2
|
Site
closure costs
|
--
|
1
|
--
|
Specialty
Plastics (“SP”):
|
|||
Fixed
asset impairments
|
--
|
41
|
--
|
Severance
charges
|
--
|
10
|
1
|
Site
closure costs
|
--
|
2
|
--
|
Total
Eastman Division
|
15
|
172
|
520
|
Voridian
Division segments:
|
|||
Polymers:
|
|||
Fixed
asset impairments
|
--
|
--
|
1
|
Severance
charges
|
--
|
13
|
1
|
Fibers:
|
|||
Severance
charges
|
--
|
--
|
1
|
Total
Voridian Division
|
--
|
13
|
3
|
Developing
Businesses Division:
|
|||
Developing
Businesses ("DB"):
|
|||
Fixed
asset impairments
|
1
|
9
|
--
|
Intangible
asset impairments
|
3
|
--
|
--
|
Severance
costs
|
--
|
8
|
--
|
Restructuring
charges
|
14
|
4
|
--
|
Total
Developing Businesses Division
|
18
|
21
|
--
|
Total
Eastman Chemical Company
|
$33
|
$206
|
$523
|
Total
asset impairments and restructuring charges, net
|
33
|
206
|
489
|
Total
goodwill impairments
|
--
|
--
|
34
|
Total
Eastman Chemical Company
|
$33
|
$206
|
$523
|
(Dollars
in millions)
|
Balance
at
January
1, 2003
|
Provision/
Adjustments
|
Non-cash
Reductions
|
Cash
Reductions
|
Balance
at
December
31, 2003
|
|||||
Noncash
charges
|
$
|
--
|
$
|
500
|
$
|
(500)
|
$
|
--
|
$
|
--
|
Severance
costs
|
2
|
20
|
--
|
(12)
|
10
|
|||||
Site
closure costs
|
7
|
3
|
--
|
(5)
|
5
|
|||||
Total
|
$
|
9
|
$
|
523
|
$
|
(500)
|
$
|
(17)
|
$
|
15
|
Balance
at
January
1, 2004
|
Provision/
Adjustments
|
Non-cash
Reductions
|
Cash
Reductions
|
Balance
at
December
31, 2004
|
||||||
Noncash
charges
|
$
|
--
|
$
|
140
|
$
|
(140)
|
$
|
--
|
$
|
--
|
Severance
costs
|
10
|
53
|
--
|
(37)
|
26
|
|||||
Site
closure costs
|
5
|
13
|
--
|
(9)
|
9
|
|||||
Total
|
$
|
15
|
$
|
206
|
$
|
(140)
|
$
|
(46)
|
$
|
35
|
Balance
at
January
1, 2005
|
Provision/
Adjustments
|
Non-cash
Reductions
|
Cash
Reductions
|
Balance
at
December
31, 2005
|
||||||
Noncash
charges
|
$
|
--
|
$
|
12
|
(12)
|
--
|
--
|
|||
Severance
costs
|
26
|
3
|
--
|
(26)
|
3
|
|||||
Site
closure costs
|
9
|
18
|
(1)
|
(19)
|
7
|
|||||
Total
|
$
|
35
|
$
|
33
|
(13)
|
(45)
|
10
|
17. |
OTHER
OPERATING INCOME
|
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Other
operating income
|
$
|
(2)
|
$
|
(7)
|
$
|
(33)
|
18. |
OTHER
(INCOME) CHARGES, NET
|
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Other
income
|
$
|
(11)
|
$
|
(10)
|
$
|
(18)
|
Other
charges
|
12
|
20
|
18
|
|||
Other
(income) charges, net
|
$
|
1
|
$
|
10
|
$
|
--
|
19. |
INCOME
TAXES
|
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Earnings
(loss) before income taxes
|
||||||
United
States
|
$
|
698
|
$
|
65
|
$
|
(309)
|
Outside
the United States
|
85
|
(1)
|
(72)
|
|||
Total
|
$
|
783
|
$
|
64
|
$
|
(381)
|
Provision
(benefit) for income taxes
|
||||||
United
States
|
||||||
Current
|
$
|
80
|
$
|
16
|
$
|
16
|
Deferred
|
112
|
(128)
|
(102)
|
|||
Outside
the United States
|
||||||
Current
|
25
|
8
|
10
|
|||
Deferred
|
(6)
|
(8)
|
(29)
|
|||
State
and other
|
||||||
Current
|
6
|
6
|
3
|
|||
Deferred
|
9
|
--
|
(6)
|
|||
Total
|
$
|
226
|
$
|
(106)
|
$
|
(108)
|
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Minimum
pension liability
|
$
|
4
|
$
|
2
|
$
|
(12)
|
Net
unrealized gains (losses) on derivative instruments
|
(1)
|
7
|
(3)
|
|||
Total
|
$
|
(3)
|
$
|
9
|
$
|
(15)
|
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Amount
computed using the statutory rate
|
$
|
275
|
$
|
23
|
$
|
(133)
|
State
income taxes, net
|
5
|
(1)
|
(4)
|
|||
Foreign
rate variance
|
(4)
|
4
|
27
|
|||
Extraterritorial
income exclusion
|
(12)
|
(10)
|
(9)
|
|||
Domestic
Manufacturing Deduction
|
(5)
|
--
|
--
|
|||
ESOP
dividend payout
|
(2)
|
(2)
|
(2)
|
|||
Capital
loss benefits
|
(13)
|
(116)
|
--
|
|||
Change
in reserves for tax contingencies
|
(14)
|
(2)
|
--
|
|||
Goodwill
Impairment
|
--
|
--
|
12
|
|||
Donation
of intangibles
|
(12)
|
(2)
|
--
|
|||
Other
|
8
|
--
|
1
|
|||
Provision
(benefit) for income taxes
|
$
|
226
|
$
|
(106)
|
$
|
(108)
|
December
31,
|
||||
(Dollars
in millions)
|
2005
|
2004
|
||
Deferred
tax assets
|
||||
Post-employment
obligations
|
$
|
412
|
$
|
444
|
Net
operating loss carry forwards
|
130
|
204
|
||
Capital
loss carry forwards
|
93
|
130
|
||
Other
|
123
|
163
|
||
Total
deferred tax assets
|
758
|
941
|
||
Less
valuation allowance
|
(197)
|
(221)
|
||
Deferred
tax assets less valuation allowance
|
$
|
561
|
$
|
720
|
Deferred
tax liabilities
|
||||
Depreciation
|
$
|
(
692)
|
$
|
(
677)
|
Inventory
reserves
|
(42)
|
(41)
|
||
Other
|
(66)
|
(118)
|
||
Total
deferred tax liabilities
|
$
|
(800)
|
$
|
(836)
|
Net
deferred tax liabilities
|
$
|
(239)
|
$
|
(116)
|
As
recorded in the Consolidated Statements of Financial
Position:
|
||||
Other
current assets
|
$
|
39
|
$
|
48
|
Other
noncurrent assets
|
45
|
52
|
||
Payables
and other current liabilities
|
(6)
|
(6)
|
||
Deferred
income tax liabilities
|
(317)
|
(210)
|
||
Net
deferred tax liabilities
|
$
|
(239)
|
$
|
(116)
|
December
31,
|
||||
(Dollars
in millions)
|
2005
|
2004
|
||
Payables
and other current liabilities
|
$
|
9
|
$
|
55
|
Other
long-term liabilities
|
32
|
27
|
||
Total
income taxes payable
|
$
|
41
|
$
|
82
|
20. |
SUPPLEMENTAL
CASH FLOW INFORMATION
|
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Cash
paid for interest and income taxes is as follows:
|
||||||
Interest,
net of amounts capitalized
|
$
|
126
|
$
|
135
|
$
|
133
|
Income
taxes paid (received)
|
138
|
(3)
|
(43)
|
21. |
SEGMENT
INFORMATION
|
(Dollars
in millions)
|
2005
|
|||||
Sales
by Division and Segment
|
Total
Sales
|
Interdivisional
Sales
|
External
Sales
|
|||
Eastman
Division Segments
|
|
|
|
|||
CASPI
|
$
|
1,301
|
$
|
2
|
$
|
1,299
|
PCI
|
2,292
|
665
|
1,627
|
|||
SP
|
766
|
48
|
718
|
|||
Total
|
4,359
|
715
|
3,644
|
|||
Voridian
Division Segments
|
|
|
|
|||
Polymers
|
2,606
|
87
|
2,519
|
|||
Fibers
|
968
|
99
|
869
|
|||
Total
|
3,574
|
186
|
3,388
|
|||
Developing
Businesses Division
|
||||||
DB
|
88
|
61
|
27
|
|||
Total
|
88
|
61
|
27
|
|||
Total
Eastman Chemical Company
|
$
|
8,021
|
$
|
962
|
$
|
7,059
|
(Dollars
in millions)
|
2004
|
|||||
Sales
by Division and Segment
|
Total
Sales
|
Interdivisional
Sales
|
External
Sales
|
|||
Eastman
Division Segments
|
|
|
|
|||
CASPI
|
$
|
1,555
|
$
|
1
|
$
|
1,554
|
PCI
|
1,930
|
583
|
1,347
|
|||
SP
|
695
|
51
|
644
|
|||
Total
|
4,180
|
635
|
3,545
|
|||
Voridian
Division Segments
|
|
|
|
|||
Polymers
|
2,252
|
69
|
2,183
|
|||
Fibers
|
819
|
88
|
731
|
|||
Total
|
3,071
|
157
|
2,914
|
|||
Developing
Businesses Division
|
||||||
DB
|
545
|
424
|
121
|
|||
Total
|
545
|
424
|
121
|
|||
Total
Eastman Chemical Company
|
$
|
7,796
|
$
|
1,216
|
$
|
6,580
|
(Dollars
in millions)
|
2003*
|
|||||
Sales
by Division and Segment
|
Total
Sales
|
Interdivisional
Sales
|
External
Sales
|
|||
Eastman
Division Segments
|
|
|
|
|||
CASPI
|
$
|
1,683
|
$
|
--
|
$
|
1,683
|
PCI
|
1,593
|
495
|
1,098
|
|||
SP
|
608
|
49
|
559
|
|||
Total
|
3,884
|
544
|
3,340
|
|||
Voridian
Division Segments
|
|
|
|
|||
Polymers
|
1,824
|
68
|
1,756
|
|||
Fibers
|
715
|
80
|
635
|
|||
Total
|
2,539
|
148
|
2,391
|
|||
Developing
Businesses Division
|
||||||
DB
|
465
|
396
|
69
|
|||
Total
|
465
|
396
|
69
|
|||
Total
Eastman Chemical Company
|
$ |
6,888
|
$ | 1,088 | $ | 5,800 |
(Dollars
in millions)
|
||||||
Operating
Earnings (Loss) (1)
|
2005
|
2004
|
2003
(2)
|
|||
Eastman
Division Segments
|
|
|
|
|||
CASPI
|
$
|
229
|
$
|
67
|
$
|
(402)
|
PCI
|
161
|
16
|
(45)
|
|||
SP
|
64
|
13
|
63
|
|||
Total
|
454
|
96
|
(384)
|
|||
Voridian
Division Segments
|
||||||
Polymers
|
159
|
25
|
62
|
|||
Fibers
|
207
|
146
|
125
|
|||
Total
|
366
|
171
|
187
|
|||
Developing
Businesses Division
|
||||||
DB
|
(70)
|
(86)
|
(65)
|
|||
Total
|
(70)
|
(86)
|
(65)
|
|||
Eliminations
|
7
|
(6)
|
(5)
|
|||
Total
Eastman Chemical Company
|
$
|
757
|
$
|
175
|
$
|
(267)
|
(1) |
Operating
earnings (loss) includes the impact of asset impairments
and restructuring
charges, goodwill impairments, and other operating income
and expense as
described in Notes 16 and 17.
|
(2) |
Operating
earnings for 2003 have been realigned to reflect certain
product movements
between CASPI and PCI segments effective in the first quarter
2004.
|
(Dollars
in millions)
|
2005
|
2004
|
2003*
|
|||
Assets
|
||||||
Eastman
Division Segments
|
|
|
|
|||
CASPI
|
$
|
1,393
|
$
|
1,486
|
$
|
1,792
|
PCI
|
1,589
|
1,627
|
1,685
|
|||
SP
|
689
|
702
|
762
|
|||
Total
|
3,671
|
3,815
|
4,239
|
|||
Voridian
Division Segments
|
||||||
Polymers
|
1,416
|
1,414
|
1,351
|
|||
Fibers
|
675
|
580
|
614
|
|||
Total
|
2,091
|
1,994
|
1,965
|
|||
Developing
Businesses Division
|
||||||
DB
|
11
|
30
|
40
|
|||
Total
|
11
|
30
|
40
|
|||
Total
Eastman Chemical Company
|
$
|
5,773
|
$
|
5,839
|
$
|
6,244
|
Depreciation
Expense
|
||||||
Eastman
Division Segments
|
||||||
CASPI
|
$
|
55
|
$
|
57
|
$
|
79
|
PCI
|
76
|
87
|
94
|
|||
SP
|
47
|
43
|
41
|
|||
Total
|
178
|
187
|
214
|
|||
Voridian
Division Segments
|
||||||
Polymers
|
74
|
72
|
69
|
|||
Fibers
|
35
|
39
|
37
|
|||
Total
|
109
|
111
|
106
|
|||
Developing
Businesses Division
|
||||||
DB
|
--
|
4
|
14
|
|||
Total
|
--
|
4
|
14
|
|||
Total
Eastman Chemical Company
|
$
|
287
|
$
|
302
|
$
|
334
|
Capital
Expenditures
|
||||||
Eastman
Division Segments
|
||||||
CASPI
|
$
|
46
|
$
|
50
|
$
|
77
|
PCI
|
63
|
65
|
56
|
|||
SP
|
67
|
36
|
7
|
|||
Total
|
176
|
151
|
140
|
|||
Voridian
Division Segments
|
||||||
Polymers
|
137
|
67
|
52
|
|||
Fibers
|
28
|
14
|
34
|
|||
Total
|
165
|
81
|
86
|
|||
Developing
Businesses Division
|
||||||
DB
|
2
|
16
|
4
|
|||
Total
|
2
|
16
|
4
|
|||
Total
Eastman Chemical Company
|
$
|
343
|
$
|
248
|
$
|
230
|
(Dollars
in millions)
|
2005
|
2004
|
2003
|
|||
Geographic
Information
|
||||||
Revenues
|
|
|
|
|||
United
States
|
$
|
3,886
|
$
|
3,456
|
$
|
3,074
|
All
foreign countries
|
3,173
|
3,124
|
2,726
|
|||
Total
|
$
|
7,059
|
$
|
6,580
|
$
|
5,800
|
Long-Lived
Assets, Net
|
||||||
United
States
|
$
|
2,508
|
$
|
2,481
|
$
|
2,542
|
All
foreign countries
|
654
|
711
|
877
|
|||
Total
|
$
|
3,162
|
$
|
3,192
|
$
|
3,419
|
22. |
QUARTERLY
SALES AND EARNINGS DATA -
UNAUDITED
|
(Dollars
in millions, except per share amounts)
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
||||
2005
|
||||||||
Sales
|
$
|
1,762
|
$
|
1,752
|
$
|
1,816
|
$
|
1,729
|
Gross
profit
|
399
|
374
|
352
|
279
|
||||
Asset
impairment and restructuring charges
|
9
|
10
|
4
|
10
|
||||
Net
earnings
|
162
|
206
|
123
|
66
|
||||
Net
earnings per share (1)
|
||||||||
Basic
|
$
|
2.04
|
$
|
2.55
|
$
|
1.51
|
$
|
0.81
|
Diluted
|
$
|
2.00
|
$
|
2.51
|
$
|
1.50
|
$
|
0.81
|
(Dollars
in millions, except per share amounts)
|
First
Quarter
|
Second
Quarter
|
Third
Quarter2
|
Fourth
Quarter2
|
||||
2004
|
||||||||
Sales
|
$
|
1,597
|
$
|
1,676
|
$
|
1,649
|
$
|
1,658
|
Gross
profit
|
235
|
270
|
257
|
216
|
||||
Asset
impairment and restructuring charges
|
67
|
79
|
42
|
18
|
||||
Net
earnings (loss)
|
(6)
|
84
|
38
|
54
|
||||
Net
earnings (loss) per share (1)
|
||||||||
Basic
|
$
|
(0.07)
|
$
|
1.08
|
$
|
0.50
|
$
|
0.69
|
Diluted
|
$
|
(0.07)
|
$
|
1.07
|
$
|
0.49
|
$
|
0.68
|
23. |
RECENTLY
ISSUED ACCOUNTING
STANDARDS
|
24. |
CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES, NET OF
TAX
|
Additions
|
||||||||||
(Dollars
in millions)
|
Balance
at January 1, 2003
|
Charged
to Cost and Expense
|
Charged
to Other Accounts
|
Deductions
|
Balance
at December 31, 2003
|
|||||
Reserve
for:
|
||||||||||
Doubtful
accounts and returns
|
$
|
32
|
$
|
8
|
$
|
--
|
$
|
12
|
$
|
28
|
Environmental
contingencies
|
60
|
1
|
--
|
--
|
61
|
|||||
Deferred
tax valuation allowance
|
132
|
43
|
--
|
--
|
175
|
|||||
$
|
224
|
$
|
52
|
$
|
--
|
$
|
12
|
$
|
264
|
|
Balance
at January 1, 2004
|
|
|
|
Balance
at December 31, 2004
|
||||||
Reserve
for:
|
||||||||||
Doubtful
accounts and returns
|
$
|
28
|
$
|
4
|
$
|
--
|
$
|
17
|
$
|
15
|
Environmental
contingencies
|
61
|
--
|
--
|
5
|
56
|
|||||
Deferred
tax valuation allowance
|
175
|
39
|
7
|
--
|
221
|
|||||
$
|
264
|
$
|
43
|
$
|
7
|
$
|
22
|
$
|
292
|
|
Balance
at January 1, 2005
|
|
|
|
Balance
at December 31, 2005
|
||||||
Reserve
for:
|
||||||||||
Doubtful
accounts and returns
|
$
|
15
|
$
|
9
|
$
|
--
|
$
|
4
|
$
|
20
|
Environmental
contingencies
|
56
|
4
|
--
|
9
|
51
|
|||||
Deferred
tax valuation allowance
|
221
|
(21)
|
(3)
|
--
|
197
|
|||||
$
|
292
|
$
|
(8)
|
$
|
(3)
|
$
|
13
|
$
|
268
|
|
Plan
Category
|
Number
of Securities to be Issued upon Exercise of Outstanding Options
(a)
|
Weighted-Average
Exercise Price of Outstanding Options
(b)
|
Number
of Securities Remaining Available for Future Issuance Under
Equity
Compensation Plans (Excluding Securities reflected in Column
(a))
(c)
|
||||
Equity
compensation plans approved by stockholders
|
6,616,800
|
(1)
|
$48
|
2,954,500
|
(2)
|
||
Equity
compensation plans not approved by stockholders
|
--
|
--
|
--
|
||||
TOTAL
|
6,616,800
|
$48
|
2,954,500
|
Page
|
||||
(a)
|
1.
|
Consolidated
Financial Statements:
|
||
71
|
||||
72
|
||||
74
|
||||
75
|
||||
76
|
||||
77
|
||||
2.
|
127
|
|||
(b)
|
The
Exhibit Index and required Exhibits to this report are included
beginning
at page 127
|
|||
Eastman
Chemical Company
|
||
By:
|
/s/ J. Brian Ferguson | |
J.
Brian Ferguson
|
||
Chairman
of the Board and Chief Executive Officer
|
||
Date:
|
March
13, 2006
|
SIGNATURE
|
TITLE
|
DATE
|
||
PRINCIPAL
EXECUTIVE OFFICER:
|
||||
/s/ J. Brian Ferguson |
Chairman
of the Board of Directors
|
March
13, 2006
|
||
J.
Brian Ferguson
|
and
Chief Executive Officer
|
|||
PRINCIPAL
FINANCIAL OFFICER:
|
||||
/s/ Richard A. Lorraine |
Senior
Vice President and
|
March
13, 2006
|
||
Richard
A. Lorraine
|
Chief
Financial Officer
|
|||
PRINCIPAL
ACCOUNTING OFFICER:
|
||||
/s/ Curtis E. Espeland |
Vice
President and
|
March
13, 2006
|
||
Curtis
E. Espeland
|
Chief
Accounting Officer
|
|||
SIGNATURE
|
TITLE
|
DATE
|
||||||
DIRECTORS:
|
||||||||
/s/ Michael P. Connors |
Director
|
March
13, 2006
|
||||||
Michael
P. Connors
|
||||||||
/s/ Stephen R. Demeritt |
Director
|
March
13, 2006
|
||||||
Stephen
R. Demeritt
|
||||||||
/s/ Donald W. Griffin |
Director
|
March
13, 2006
|
||||||
Donald
W. Griffin
|
||||||||
/s/ Robert M. Hernandez |
Director
|
March
13, 2006
|
||||||
Robert
M. Hernandez
|
||||||||
/s/ Renee J. Hornbaker |
Director
|
March
13, 2006
|
||||||
Renẻe
J. Hornbaker
|
||||||||
/s/ Howard L. Lance |
Director
|
March
13, 2006
|
||||||
Howard
L. Lance
|
||||||||
/s/ Thomas H. McLain |
Director
|
March
13, 2006
|
||||||
Thomas
H. McLain
|
||||||||
/s/ David W. Raisbeck |
Director
|
March
13, 2006
|
||||||
David
W. Raisbeck
|
||||||||
/s/ Peter M. Wood |
Director
|
March
13, 2006
|
||||||
|
EXHIBIT
INDEX
|
Sequential
|
|||||||
Exhibit
|
Page
|
|||||||
Number
|
Description
|
Number
|
||||||
3.01
|
Amended
and Restated Certificate of Incorporation of Eastman Chemical
Company, as
amended (incorporated by reference to Exhibit 3.01 to Eastman
Chemical
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30,
2001
|
|||||||
3.02
|
Amended
and Restated Bylaws of Eastman Chemical Company, as amended
December 4,
2003 (incorporated herein by referenced to Exhibit 3.02
to Eastman
Chemical Company’s Annual Report on Form 10-K for the year ended December
31, 2003 (the “2003 10-K”))
|
|||||||
4.01
|
Form
of Eastman Chemical Company common stock certificate as
amended February
1, 2001 (incorporated herein by reference to Exhibit 4.01
to Eastman
Chemical Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001)
|
|||||||
4.02
|
Stockholder
Protection Rights Agreement dated as of December 13, 1993,
between Eastman
Chemical Company and First Chicago Trust Company of New
York, as Rights
Agent (incorporated herein by reference to Exhibit 4.4
to Eastman Chemical
Company's Registration Statement on Form S-8 relating to
the Eastman
Investment Plan, File No. 33-73810)
|
|||||||
4.03
|
Indenture,
dated as of January 10, 1994, between Eastman Chemical
Company and The
Bank of New York, as Trustee (the "Indenture") (incorporated
herein by
reference to Exhibit 4(a) to Eastman Chemical Company's
Current Report on
Form 8-K dated January 10, 1994 (the "8-K"))
|
|||||||
4.04
|
Form of 7 1/4% Debentures due January 15, 2024 (incorporated herein by reference to Exhibit 4(d) to the 8-K) | |||||||
4.05
|
Officers’
Certificate pursuant to Sections 201 and 301 of the Indenture
(incorporated herein by reference to Exhibit 4(a) to Eastman
Chemical
Company's Current Report on Form 8-K dated June 8, 1994
(the "June
8-K"))
|
|||||||
4.06
|
Form of 7 5/8% Debentures due June 15, 2024 (incorporated herein by reference to Exhibit 4(b) to the June 8-K) | |||||||
4.07
|
Form
of 7.60% Debentures due February 1, 2027 (incorporated
herein by reference
to Exhibit 4.08 to Eastman Chemical Company's Annual Report
on Form 10-K
for the year ended December 31, 1996 (the "1996 10-K"))
|
|||||||
4.08
|
Form of 7% Notes due April 15, 2012 (incorporated herein by reference to Exhibit 4.09 to Eastman Chemical Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002) | |||||||
4.09
|
Officer's
Certificate pursuant to Sections 201 and 301 of the Indenture
related to
7.60% Debentures due February 1, 2027 (incorporated herein
by reference to
Exhibit 4.09 to the 1996 10-K)
|
|||||||
4.10
|
$200,000,000
Accounts Receivable Securitization agreement dated April
13, 1999 (amended
April 11, 2000), between the Company and Bank One, N.A.,
as agent.
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, in lieu
of filing a
copy of such agreement, the Company agrees to furnish a
copy of such
agreement to the Commission upon request
|
|||||||
4.11
|
Amended
and Restated Credit Agreement, dated as of April 7, 2004
(the "Credit
Agreement") among Eastman Chemical Company, the Lenders
named therein, and
Citicorp USA, Inc., as Agent (incorporated herein by reference
to Exhibit
4.12 to Eastman Chemical Company's Quarterly Report on
Form 10-Q for the
quarter ended March 31, 2004)
|
EXHIBIT
INDEX
|
Sequential
|
|||
Exhibit
|
Page
|
|||
Number
|
Description
|
Number
|
||
4.12
|
Form
of 3 ¼% Notes due June 16, 2008 (incorporated herein by reference
to
Exhibit 4.13 to Eastman Chemical Company’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003)
|
|||
4.13
|
Form of 6.30% Notes due 2018 (incorporated herein by reference to Exhibit 4.14 to Eastman Chemical Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003) | |||
4.14
|
Amendments
to Stockholder Protection Rights Agreement (incorporated
herein by
reference to Exhibits 4.1 and 4.2 to Eastman Chemical Company’s Current
Report on Form 8-K dated December 4, 2003)
|
|||
10.01*
|
Amended
and Restated Eastman Chemical Company Benefit Security Trust
dated January
2, 2002 (incorporated herein by reference to Exhibit 10.04
to Eastman
Chemical Company's Quarterly Report on Form 10-Q for the
quarter ended
September 30, 2002, (the "September 30, 2002 10-Q")
|
|||
10.02*
|
Eastman
Unit Performance Plan as amended and restated January 1,
2004
(incorporated herein by reference to Exhibit 10.09 to the
2003
10-K)
|
|||
10.03*
|
2002
Director Long-Term Compensation Plan, as amended (incorporated
herein by
reference to Appendix A to Eastman Chemical Company’s 2002 Annual Meeting
Proxy Statement)
|
|||
10.04*
|
Amended
and Restated Eastman Executive Deferred Compensation Plan
(incorporated
herein by referenced to Exhibit 10.05 to Eastman Chemical
Company’s Annual
Report on Form 10-K for the year ended December 31, 2002)
|
|||
10.05*
|
Eastman
Excess Retirement Income Plan, amended and restated effective
January 1,
2002 (incorporated herein by reference to Exhibit 10.10 to
Eastman
Chemical Company's Annual Report on Form 10-K for the year
ended December
31, 2001, (the "2001 10-K")
|
|||
10.06*
|
Eastman
Unfunded Retirement Income Plan, amended and restated effective
January 1,
2002 (incorporated herein by reference to Exhibit 10.11 to
the 2001
10-K)
|
|||
10.07*
|
Form
of Executive Severance Agreements (incorporated herein by
reference to
Exhibit 10.12 to Eastman Chemical Company's Annual Report
on Form 10-K for
the year ended December 31, 2001 and superseded by the form
of Executive
Change-in-Control Severance Agreements filed as Exhibit 10.30
hereto)
|
|||
10.08*
|
Unit
Performance Plan ("UPP") performance measures and goals,
specific target
objectives with respect to such performance goals, the method
for
computing the amount of the UPP award allocated to the award
pool if the
performance goals are attained, and the eligibility criteria
for employee
participation in the UPP, for the 2005 performance year (incorporated
herein by reference to Eastman Chemical Company’s Current Report on Form
8-K dated December 2, 2004)
|
|||
10.09*
|
2002
Omnibus Long-Term Compensation Plan (incorporated herein
by reference to
Appendix A to Eastman Chemical Company’s 2002 Annual Meeting Proxy
Statement)
|
|||
10.10*
|
1996
Non-Employee Director Stock Option Plan (incorporated herein
by reference
to Exhibit 10.02 to Eastman Chemical Company's Quarterly
Report on Form
10-Q for the quarter ended September 30, 1996)
|
|||
10.11*
|
Amended
Director Deferred Compensation Plan (incorporated herein
by reference to
Exhibit 10.02 to Eastman Chemical Company’s Annual Report on Form 10-K for
the year ended December 31, 2002)
|
EXHIBIT
INDEX
|
Sequential
|
|||
Exhibit
|
Page
|
|||
Number
|
Description
|
Number
|
||
10.12*
|
Employment Agreement between Eastman Chemical Company and James P. Rogers (incorporated herein by reference to Exhibit 10.02 to Eastman Chemical Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999) | |||
10.13*
|
Eastman 2000-2002 Long-Term Performance Subplan of 1997 Omnibus Long-Term Compensation Plan (incorporated herein by reference to Exhibit 10.20 to Eastman Chemical Company's Annual Report on Form 10-K for the year ended December 31, 1999 (the "1999 10-K")) | |||
10.14*
|
Form
of Award Notice for Stock Options Granted to Managers under
Omnibus
Long-Term Compensation Plan (incorporated herein by reference
to Exhibit
10.21 to the 1999 10-K)
|
|||
10.15*
|
Form
of Indemnification Agreements between Theresa K. Lee, Gregory
O. Nelson,
James P. Rogers and Eastman Chemical for service as directors
of Genencor
International, Inc. (incorporated herein by reference to
Exhibit 10.01 to
Eastman Chemical Company's Quarterly Report on Form 10-Q
for the quarter
ended June 30, 2000)
|
|||
10.16*
|
Notice
of Restricted Stock Granted Pursuant to the Eastman Chemical
Company 2002
Omnibus Long-Term Compensation Plan, dated October 7, 2002
(incorporated
herein by reference to Exhibit 10.01 to the September 30,
2002
10-Q)
|
|||
10.17*
|
Amended
and Restated Warrant to Purchase Shares of Common Stock
of Eastman
Chemical Company, dated January 2, 2002 (incorporated herein
by reference
to Exhibit 10.02 to the September 30, 2002 10-Q)
|
|||
10.18*
|
Amended
and Restated Registration Rights Agreement, dated January
2, 2002
(incorporated herein by reference to Exhibit 10.03 to the
September 30,
2002 10-Q)
|
|||
10.19*
|
Form
of Indemnification Agreements with Directors and Executive
Officers
(incorporated herein by reference to Exhibit 10.25 to the
2003
10-K)
|
|||
10.20*
|
Notice
of Restricted Stock Granted Pursuant to the Eastman Chemical
Company 2002
Omnibus Long-Term Compensation Plan, dated February 5,
2004 (incorporated
herein by reference to Exhibit 10.26 to the 2003 10-K)
|
|||
10.21*
|
Notice
of Restricted Stock Granted Pursuant to the Eastman Chemical
Company 2002
Omnibus Long-Term Compensation Plan, dated January 1, 2004
(incorporated
herein by reference to Exhibit 10.27 to the 2003 10-K)
|
|||
10.22*
|
Notice
of Restricted Stock Granted Pursuant to the Eastman Chemical
Company 2002
Omnibus Long-Term Compensation Plan, dated January 1, 2004
(incorporated
herein by reference to Exhibit 10.28 to the 2003 10-K)
|
|||
10.23*
|
Notice
of Restricted Stock Granted Pursuant to the Eastman Chemical
Company 2002
Omnibus Long-Term Compensation Plan, dated December 3,
2003 (incorporated
herein by reference to Exhibit 10.29 to the 2003 10-K)
|
|||
10.24*
|
Notice
of Performance Shares Granted Pursuant to the Eastman Chemical
Company
2002 Omnibus Long-Term Compensation Plan, dated January
1, 2004
(incorporated herein by reference to Exhibit 10.30 to the
2003
10-K)
|
|||
10.25*
|
Notice
of Performance Shares Granted Pursuant to the Eastman Chemical
Company
2002 Omnibus Long-Term Compensation Plan, dated January
1, 2004
(incorporated herein by reference to Exhibit 10.31 to the
2003
10-K)
|
|||
EXHIBIT
INDEX
|
Sequential
|
|||
Exhibit
|
Page
|
|||
Number
|
Description
|
Number
|
||
10.26*
|
Eastman 2004-2005 Performance Share Award Subplan of the 2002 Omnibus Long-Term Compensation Plan (incorporated herein by reference to Exhibit 10.32 to the 2003 10-K) | |||
10.27*
|
Eastman 2004-2006 Performance Share Award Subplan of the 2002 Omnibus Long-Term Compensation Plan (incorporated herein by reference to Exhibit 10.33 to the 2003 10-K) | |||
10.28*
|
Form
of Award Notice of Nonqualified Stock Option Granted to Executive
Officers
Pursuant to the Eastman Chemical Company 2002 Omnibus Long-Term
Compensation Plan (incorporated herein by reference to Exhibit
10.01 to
Eastman Chemical Company's Quarterly Report on Form 10-Q
for the quarter
ended September 30, 2004 (the “September 30, 2004 10-Q”)
|
|||
10.29*
|
Form
of Performance Share Award Subplan of the 2002 Omnibus Long-Term
Compensation Plan 2005 - 2007 Performance Period Effective
January 1, 2005
(incorporated herein by reference to Exhibit 10.02 to the
September 30,
2004 10-Q)
|
|||
10.30*
|
Form
of Executive Change-in-Control Severance Agreements (incorporated
herein
by reference to Eastman Chemical Company's Current Report
on Form 8-K
dated December 5, 2005 regarding New Executive Change-in-Control
Severance
Agreements, which supersede the former Executive Severance
Agreements
referenced in Exhibit 10.07 hereto)
|
|||
10.31*
|
Unit
Performance Plan ("UPP") performance measures and goals,
specific target
objectives with respect to such performance goals, the method
for
computing the amount of the UPP award allocated to the award
pool if the
performance goals are attained, and the eligibility criteria
for employee
participation in the UPP, for the 2006 performance year (incorporated
herein by reference to Eastman Chemical Company’s Current Report on Form
8-K dated December 6, 2005)
|
|||
12.01
|
131
|
|||
21.01
|
132
- 134
|
|||
23.01
|
135
|
|||
31.01
|
136
|
|||
31.02
|
137
|
|||
32.01
|
138
|
|||
32.02
|
139
|
|||
99.01
|
140
|
|||
99.02
|
141
|
|||
*
Management
contract or compensatory plan or arrangement filed pursuant
to Item 601(b)
(10) (iii) of Regulation S-K.
|