10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

FORM 10-Q

(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2015
	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	37662
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (423) 229-2000

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.

YES [X]  NO  [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES [X]  NO  [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[X]		Accelerated filer	[  ]
Non-accelerated filer	[   ]	(Do not check if a smaller reporting company)	Smaller reporting company	[  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [  ]  NO  [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Number of Shares Outstanding at September 30, 2015
Common Stock, par value $0.01 per share	148,607,527

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1

TABLE OF CONTENTS

ITEM PAGE

Forward-Looking Statements 3

PART I.  FINANCIAL INFORMATION

1.	Financial Statements
	Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings	4
	Unaudited Consolidated Statements of Financial Position	6
	Unaudited Consolidated Statements of Cash Flows	7
	Notes to the Unaudited Consolidated Financial Statements	8
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
3.	Quantitative and Qualitative Disclosures About Market Risk	57
4.	Controls and Procedures	57

PART II.  OTHER INFORMATION

1.	Legal Proceedings	58
1A.	Risk Factors	58
2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
6.	Exhibits	59

SIGNATURES

Signatures 60

EXHIBIT INDEX

Exhibit Index 61

2

FORWARD-LOOKING STATEMENTS

Certain statements made in this Quarterly Report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements are all statements, other than statements of historical fact, that may be made by Eastman Chemical Company (the "Company" or "Eastman") from time to time. In some cases, you can identify forward-looking statements by terminology such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would," and similar expressions or expressions of the negative of these terms. Forward-looking statements may relate to, among other things, such matters as planned and expected capacity increases and utilization; anticipated capital spending; expected depreciation and amortization; environmental matters; pending and future legal proceedings; exposure to, and effects of hedging of, raw material and energy costs, foreign currencies and interest rates; global and regional economic, political, and business conditions; competition; growth opportunities; supply and demand, volume, price, cost, margin and sales; earnings, cash flow, dividends and other expected financial results, events, and conditions; expectations, strategies, and plans for individual assets and products, businesses, and segments, as well as for the whole of Eastman; cash requirements and uses of available cash; financing plans and activities; pension expenses and funding; credit ratings; anticipated and other future restructuring, acquisition, divestiture, and consolidation activities; cost reduction and control efforts and targets; the timing and costs of, and benefits from, the integration of, and expected business and financial performance of, acquired businesses; strategic initiatives and development, production, commercialization and acceptance of new products, services and technologies and related costs; asset, business, and product portfolio changes; and expected tax rates and net interest costs.

Forward-looking statements are based upon certain underlying assumptions as of the date such statements were made. Such assumptions are based upon internal estimates and other analyses of current market conditions and trends, management expectations, plans, and strategies, economic conditions, and other factors. Forward-looking statements and the assumptions underlying them are necessarily subject to risks and uncertainties inherent in projecting future conditions and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions and expectations proves to be inaccurate or is unrealized. The most significant known factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements are identified and discussed under "Management's Discussion and Analysis of Financial Condition and Results of Operations- Risk Factors" in Item 2 of this Quarterly Report.

The Company cautions you not to place undue reliance on forward-looking statements, which speak only as of the date such statements are made. Except as may be required by law, the Company undertakes no obligation to update or alter these forward-looking statements, whether as a result of new information, future events, or otherwise.

3

UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS,

COMPREHENSIVE INCOME AND RETAINED EARNINGS

	Third Quarter					First Nine Months
(Dollars in millions, except per share amounts)	2015		2014			2015		2014
Sales	$	2,447	$	2,413		$	7,423	$	7,178
Cost of sales	1,752		1,777			5,352		5,290
Gross profit	695		636			2,071		1,888
Selling, general and administrative expenses	178		171			552		511
Research and development expenses	64		56			177		165
Asset impairments and restructuring charges, net	21		71			130		77
Operating earnings	432		338			1,212		1,135
Net interest expense	66		45			198		132
Other (income) charges, net	13		(5		)	2		(16		)
Earnings from continuing operations before income taxes	353		298			1,012		1,019
Provision for income taxes from continuing operations	95		86			283		281
Earnings from continuing operations	258		212			729		738
Earnings from discontinued operations, net of tax	—		—			—		2
Net earnings	$	258	$	212		$	729	$	740
Less: Net earnings attributable to noncontrolling interest	2		2			5		5
Net earnings attributable to Eastman	$	256	$	210		$	724	$	735
Amounts attributable to Eastman stockholders
Earnings from continuing operations, net of tax	$	256	$	210		$	724	$	733
Earnings from discontinued operations, net of tax	—		—			—		2
Net earnings attributable to Eastman stockholders	$	256	$	210		$	724	$	735
Basic earnings per share attributable to Eastman
Earnings from continuing operations	$	1.73	$	1.41		$	4.87	$	4.89
Earnings from discontinued operations	—		—			—		0.01
Basic earnings per share attributable to Eastman	$	1.73	$	1.41		$	4.87	$	4.90
Diluted earnings per share attributable to Eastman
Earnings from continuing operations	$	1.71	$	1.39		$	4.83	$	4.83
Earnings from discontinued operations	—		—			—		0.02
Diluted earnings per share attributable to Eastman	$	1.71	$	1.39		$	4.83	$	4.85

4

	Third Quarter						First Nine Months
(Dollars in millions, except per share amounts)	2015			2014			2015			2014
Comprehensive Income
Net earnings including noncontrolling interest	$	258		$	212		$	729		$	740
Other comprehensive income (loss), net of tax
Change in cumulative translation adjustment	(47		)	(127		)	(183		)	(114		)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs	(4		)	(4		)	(15		)	(12		)
Derivatives and hedging:
Unrealized gain (loss) during period	(66		)	36			(27		)	42
Reclassification adjustment for (gain) loss included in net income	34			—			56			(9		)
Total other comprehensive income (loss), net of tax	(83		)	(95		)	(169		)	(93		)
Comprehensive income including noncontrolling interest	175			117			560			647
Comprehensive income attributable to noncontrolling interest	2			2			5			5
Comprehensive income attributable to Eastman	$	173		$	115		$	555		$	642
Retained Earnings
Retained earnings at beginning of period	$	4,893		$	4,431		$	4,545		$	4,012
Net earnings attributable to Eastman	256			210			724			735
Cash dividends declared	(59		)	(53		)	(179		)	(159		)
Retained earnings at end of period	$	5,090		$	4,588		$	5,090		$	4,588

The accompanying notes are an integral part of these consolidated financial statements.

5

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	September 30,			December 31,
(Dollars in millions, except per share amounts)	2015			2014
Assets
Current assets
Cash and cash equivalents	$	309		$	214
Trade receivables, net	968			936
Miscellaneous receivables	152			264
Inventories	1,484			1,509
Other current assets	269			250
Total current assets	3,182			3,173
Properties
Properties and equipment at cost	11,052			11,026
Less:  Accumulated depreciation	6,007			5,939
Net properties	5,045			5,087
Goodwill	4,482			4,486
Intangible assets, net of accumulated amortization	2,718			2,905
Other noncurrent assets	453			421
Total assets	$	15,880		$	16,072
Liabilities and Stockholders' Equity
Current liabilities
Payables and other current liabilities	$	1,549		$	1,721
Borrowings due within one year	251			301
Total current liabilities	1,800			2,022
Long-term borrowings	7,029			7,248
Deferred income tax liabilities	1,004			946
Post-employment obligations	1,380			1,498
Other long-term liabilities	711			768
Total liabilities	11,924			12,482
Stockholders' equity
Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 216,873,620 and 216,256,971 for 2015 and 2014, respectively)	2			2
Additional paid-in capital	1,856			1,817
Retained earnings	5,090			4,545
Accumulated other comprehensive loss	(446		)	(277		)
	6,502			6,087
Less: Treasury stock at cost (68,316,891 shares for 2015 and 67,660,313 shares for 2014)	2,625			2,577
Total Eastman stockholders' equity	3,877			3,510
Noncontrolling interest	79			80
Total equity	3,956			3,590
Total liabilities and stockholders' equity	$	15,880		$	16,072

The accompanying notes are an integral part of these consolidated financial statements.

6

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	First Nine Months
(Dollars in millions)	2015			2014
Operating activities
Net earnings	$	729		$	740
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	429			328
Asset impairment charges	107			50
Gain on sale of assets	—			(5		)
Provision for deferred income taxes	29			58
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables	(54		)	(118		)
(Increase) decrease in inventories	(23		)	(76		)
Increase (decrease) in trade payables	(139		)	(12		)
Pension and other postretirement contributions (in excess of) less than expenses	(147		)	(76		)
Variable compensation (in excess of) less than expenses	20			(8		)
Other items, net	99			68
Net cash provided by operating activities	1,050			949
Investing activities
Additions to properties and equipment	(426		)	(406		)
Proceeds from sale of assets	4			13
Acquisitions, net of cash acquired	(45		)	(325		)
Additions to capitalized software	(2		)	(2		)
Other items, net	2			2
Net cash used in investing activities	(467		)	(718		)
Financing activities
Net increase (decrease) in commercial paper borrowings	157			(185		)
Proceeds from borrowings	250			615
Repayment of borrowings	(675		)	(125		)
Dividends paid to stockholders	(179		)	(159		)
Treasury stock purchases	(48		)	(410		)
Dividends paid to noncontrolling interest	(6		)	(9		)
Proceeds from stock option exercises and other items, net	20			22
Net cash used in financing activities	(481		)	(251		)
Effect of exchange rate changes on cash and cash equivalents	(7		)	(5		)
Net change in cash and cash equivalents	95			(25		)
Cash and cash equivalents at beginning of period	214			237
Cash and cash equivalents at end of period	$	309		$	212

The accompanying notes are an integral part of these consolidated financial statements.

7

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

ITEM		Page
Note 1.	Basis of Presentation	9
Note 2.	Acquisitions	9
Note 3.	Inventories	12
Note 4.	Payables and Other Current Liabilities	12
Note 5.	Provision for Income Taxes	12
Note 6.	Borrowings	13
Note 7.	Derivatives	14
Note 8.	Retirement Plans	19
Note 9.	Commitments	20
Note 10.	Environmental Matters and Asset Retirement Obligations	20
Note 11.	Legal Matters	21
Note 12.	Stockholders' Equity	22
Note 13.	Earnings and Dividends Per Share	24
Note 14.	Asset Impairments and Restructuring Charges, Net	24
Note 15.	Share-Based Compensation Awards	26
Note 16.	Supplemental Cash Flow Information	27
Note 17.	Segment Information	27
Note 18.	Recently Issued Accounting Standards	30

8

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company (the "Company" or "Eastman") in accordance and consistent with the accounting policies stated in the Company's 2014 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 2014 Annual Report on Form 10-K. The December 31, 2014 financial position data included herein was derived from the audited consolidated financial statements included in the 2014 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.

Off Balance Sheet Financing Arrangements

The Company assumed the rights and obligations under non-recourse factoring facilities as part of the acquisition of Taminco Corporation ("Taminco"). The non-recourse factoring facilities have a combined limit of $177 million (the U.S. Dollar equivalent of the €158 million limit amount as of September 30, 2015) 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 third quarter and first nine months2015, were approximately $245 million and $780 million, respectively. The total amount of cumulative receivables sold during the year ended December 31, 2014, since the acquisition of Taminco on December 5, 2014, was $70 million. 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 $117 million and $105 million at September 30, 2015 and December 31, 2014, 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.

2. ACQUISITIONS

Taminco Corporation

On December 5, 2014, the Company completed its acquisition of Taminco, a global specialty chemical company. The fair value of total consideration transferred was $2.8 billion, consisting of cash of $1.7 billion, net of cash acquired, and repayment of Taminco's debt of $1.1 billion. Taminco's former specialty amines and crop protection businesses are now operated as part of the Additives & Functional Products ("AFP") segment and its former functional amines business are now operated as part of the Specialty Fluids & Intermediates ("SFI") segment. For the preliminary purchase price allocation see Note 2, "Acquisitions", to the consolidated financial statements in Part II, Item 8 of the Company's 2014 Annual Report on Form 10-K. During third quarter 2015, the Company continued to refine its preliminary purchase price allocation with no adjustments to goodwill. As of September 30, 2015, the purchase price allocation remains preliminary as management completes its assessment of certain items, primarily environmental, legal, and tax. The purchase price allocation will be finalized in fourth quarter 2015. The following table summarizes the preliminary purchase price allocation for the Taminco acquisition. Any subsequent adjustments are not expected to have a material impact on the Company's results of operations.

9

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Assets acquired and liabilities assumed
(Dollars in millions)	December 31, 2014			2015 Net Adjustments to Fair Value			September 30, 2015
Current assets	$	266		$	(3	)	$	263
Properties and equipment	658			(3		)	655
Intangible assets	1,002			(13		)	989
Other noncurrent assets	37			1			38
Goodwill	1,509			32			1,541
Current liabilities	(161		)	1			(160		)
Long-term liabilities	(546		)	(15		)	(561		)
Total purchase price, net of cash acquired	$	2,765		$	—		$	2,765

Acquired intangible assets are definite-lived assets and consist primarily of customer relationships, developed technologies, and contracts.

Intangible Assets acquired
(Dollars in millions)	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets
Customer relationships	$	604	24
Developed technologies	205		17
Contracts	180		5
Total	$	989

Goodwill from the Taminco acquisition has been preliminarily allocated to certain of the Company's reportable segments as set out in the table below. None of the goodwill is deductible for tax purposes.

Goodwill	Goodwill by Segment
(Dollars in millions)
Additives & Functional Products	$	918
Specialty Fluids & Intermediates	623
Total	$	1,541

In third quarter and first nine months2015, the Company recognized $4 million and $15 million, respectively in integration and transaction costs related to the acquisition. In 2014, the Company recognized $15 million in pre-close transaction and integration costs, and $13 million in pre-close financing costs related to the acquisition. Integration and transaction costs were expensed as incurred and are included in the "Selling, general and administrative expenses" line item and pre-close financing costs are included in the "Other (income) charges, net" and "Net interest expense" line items in the Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.

Commonwealth Laminating & Coating, Inc.

On December 11, 2014, the Company acquired Commonwealth Laminating & Coating, Inc. ("Commonwealth") for a total cash purchase price of $438 million. The acquisition was accounted for as a business combination and is reported in the Advanced Materials ("AM") segment. There was no change to the final purchase price allocation from the preliminary allocation in the Company's 2014 Annual Report on Form 10-K, see Note 2, "Acquisitions", to the consolidated financial statements in Part II, Item 8 of the Company's 2014 Annual Report on Form 10-K.

10

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the final purchase price allocation for the Commonwealth acquisition:

Assets acquired and liabilities assumed
(Dollars in millions)	As of December 11, 2014
Current assets	$	51
Machinery and equipment	38
Goodwill	274
Intangible assets	125
Long-term liabilities	(50		)
Total purchase price	$	438

Current assets consist primarily of inventory acquired. Machinery and equipment acquired included a manufacturing operation in Martinsville, Virginia. Management valued machinery and equipment using the cost approach supported by published industry sources.

Acquired intangible assets included customer relationships and developed technologies in the window film industry. Also acquired was the SunTek^® brand name that is business-to-business in nature. Management valued intangible assets using the relief from royalty and multi-period excess earnings methods, both forms of the income approach supported by observable market data for peer chemical companies.

Intangible Assets acquired
(Dollars in millions)	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets
Customer relationships	$	72	14
Developed technologies	41		18
Indefinite-lived intangible asset
Brand name	12
Total	$	125

In connection with this acquisition, the Company recognized goodwill equal to the excess of the purchase price over the estimated fair value of net tangible and intangible assets acquired and liabilities assumed. None of the goodwill is deductible for tax purposes.

In third quarter and first nine months2015, the Company recognized $1 million and $5 million, respectively in integration costs related to the acquisition. In 2014, the Company recognized $7 million in pre-close transaction and integration costs related to the acquisition. Integration and transaction costs were expensed as incurred and are included in the "Selling, general and administrative expenses" line item in the Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. As required by purchase accounting, acquired inventories were marked to fair value. In first six months2015, the remaining portion of these inventories was sold resulting in an increase in cost of sales of $7 million.

Beginning in December 2014, the Company's consolidated results of operations included the results of Commonwealth. Based on applicable accounting and reporting guidance, the acquisition is not material to the Company's consolidated financial statements; therefore, pro forma financial information has not been presented.

11

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

3. INVENTORIES

	September 30,			December 31,
(Dollars in millions)	2015			2014
At FIFO or average cost (approximates current cost)
Finished goods	$	1,116		$	1,130
Work in process	214			288
Raw materials and supplies	510			553
Total inventories	1,840			1,971
LIFO Reserve	(356		)	(462		)
Total inventories	$	1,484		$	1,509

Inventories valued on the last-in, first-out ("LIFO") method were approximately 55 percent at both September 30, 2015 and December 31, 2014.

4. PAYABLES AND OTHER CURRENT LIABILITIES

	September 30,		December 31,
(Dollars in millions)	2015		2014
Trade creditors	$	685	$	827
Derivative hedging liability	209		227
Accrued payrolls, vacation, and variable-incentive compensation	180		191
Accrued taxes	97		66
Other	378		410
Total payables and other current liabilities	$	1,549	$	1,721

"Other" consists primarily of accruals for interest payable, dividends payable, post-employment obligations, payroll deductions and employee benefits, accrued taxes, and the current portion of environmental liabilities.

5. PROVISION FOR INCOME TAXES

	Third Quarter						First Nine Months
(Dollars in millions)	2015			2014			2015			2014
Provision for income taxes from continuing operations	$	95		$	86		$	283		$	281
Effective tax rate	27		%	29		%	28		%	28		%

12

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. BORROWINGS

	September 30,		December 31,
(Dollars in millions)	2015		2014
Borrowings consisted of:
3% notes due 2015	$	250	$	250
2.4% notes due 2017	999		998
6.30% notes due 2018	167		169
5.5% notes due 2019	250		250
2.7% notes due 2020	799		798
4.5% notes due 2021	250		250
3.6% notes due 2022	903		903
7 1/4% debentures due 2024	244		244
7 5/8% debentures due 2024	54		54
3.8% notes due 2025	796		796
7.60% debentures due 2027	222		222
4.8% notes due 2042	497		497
4.65% notes due 2044	877		877
Credit facilities and commercial paper borrowings	967		1,235
Capital leases	5		6
Total borrowings	7,280		7,549
Borrowings due within one year	251		301
Long-term borrowings	$	7,029	$	7,248

Credit Facility and Commercial Paper Borrowings

In connection with the acquisition of Taminco, Eastman entered into a $1.0 billion five-year Term Loan Agreement. As of September 30, 2015, the Term Loan Agreement balance outstanding was $350 million with an interest rate of 1.44 percent. In third quarter2015, $25 million of the Term Loan Agreement balance was repaid using available cash. As of December 31, 2014, the Term Loan Agreement balance outstanding was $1.0 billion with an interest rate of 1.41 percent. Borrowings under the Term Loan Agreement 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 was amended in October 2015 to extend the maturity to 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. At September 30, 2015 and December 31, 2014, the Company had no outstanding borrowings under the Credit Facility.

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. Given the expiration date of the Credit Facility, any commercial paper borrowings supported by the Credit Facility are classified as long-term borrowings because the Company has the ability to refinance such borrowings on a long-term basis and intends, at least over the next twelve months, to maintain commercial paper borrowings at current levels. At September 30, 2015, the Company's commercial paper borrowings were $392 million with a weighted average interest rate of 0.50 percent. At December 31, 2014, the Company's commercial paper borrowings were $235 million with a weighted average interest rate of 0.47 percent.

13

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In July 2015, the Company amended its $250 million accounts receivable securitization agreement (the "A/R Facility") to extend the maturity to 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 September 30, 2015, the Company's borrowings under the A/R Facility were $225 million secured by trade receivables with an interest rate of 0.95 percent. In third quarter2015, $25 million of the Company's borrowings under the A/R Facility were repaid using available cash. At December 31, 2014, the Company had no outstanding borrowings under the A/R Facility. During first quarter 2014, $125 million of the available amount under the A/R Facility was borrowed and then repaid during second quarter 2014.

The Term Loan Agreement, Credit Facility, and the A/R Facility 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 $883 million and $1.265 billion as of September 30, 2015 and December 31, 2014, respectively. 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 September 30, 2015, and December 31, 2014, 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 2014 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 other borrowings, which include the Term Loan Agreement, A/R Facility, commercial paper, and capital leases equals the carrying value and is classified as Level 2.

			Fair Value Measurements at September 30, 2015
(Dollars in millions)	Recorded Amount September 30, 2015		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	$	7,029	$	7,146	$	6,176	$	970	$	—

			Fair Value Measurements at December 31, 2014
(Dollars in millions)	Recorded Amount December 31, 2014		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	$	7,248	$	7,557	$	6,366	$	1,191	$	—

7. 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 transaction, 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 part or in whole 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 2014 Annual Report on Form 10-K.

14

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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. In 2014, the Company entered into interest rate swaps to hedge the interest rate risk on the 3.6% notes due 2022. As of September 30, 2015 and December 31, 2014, the total notional amount of the Company's interest rate swaps was $275 million.

Fair Value Measurement of Derivatives Designated as Fair Value Hedging Instruments

(Dollars in millions)		Fair Value Measurement
Derivative Assets	Statement of Financial Position Location	September 30, 2015		December 31, 2014
Interest rate swap	Other noncurrent assets	$	12	$	5

Derivatives' Fair Value Hedging Relationships

	Third 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		September 30, 2015		September 30, 2014
Interest rate swaps	Net interest expense	$	3	$	2

	Nine Months Ended
(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		September 30, 2015		September 30, 2014
Interest rate swaps	Net interest expense	$	10	$	3

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.

15

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Total notional amounts		September 30, 2015	December 31, 2014
Foreign Exchange Forward and Option Contracts (in millions)
	EUR/USD (in EUR)	€696	€810
	EUR/USD (in approximate USD equivalent)	$795	$1,000
	JPY/USD (in JPY)	¥3,000	¥4,800
	JPY/USD (in approximate USD equivalent)	$25	$40
Commodity Forward and Collar Contracts
	Contract ethylene sales (in thousand metric tons)	0	14
	Feedstock (in million barrels)	25	33
	Feedstock (in thousand metric tons)	8	30
	Energy (in million million british thermal units)	28	25
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	September 30, 2015		December 31, 2014
Cash Flow Hedges
Commodity contracts	Other current assets	$	—	$	2
Foreign exchange contracts	Other current assets	66		61
Foreign exchange contracts	Other noncurrent assets	84		71
		$	150	$	134

(Dollars in millions)		Fair Value Measurements Significant Other Observable Inputs
Derivative Liabilities	Statement of Financial Position Location	September 30, 2015		December 31, 2014
Cash Flow Hedges
Commodity contracts	Payables and other current liabilities	$	177	$	193
Commodity contracts	Other long-term liabilities	250		289
Foreign exchange contracts	Payables and other current liabilities	2		10
Forward starting interest rate swap contracts	Other long-term liabilities	34		16
		$	463	$	508

16

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Derivatives' Hedging Relationships

	Third 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	September 30, 2015			September 30, 2014				September 30, 2015			September 30, 2014
Commodity contracts	$	(6	)	$	(22	)	Sales	$	1		$	—
							Cost of Sales	(74		)	(1		)
Foreign exchange contracts	(11		)	57			Sales	20			4
Forward starting interest rate swap contracts	(15		)	1			Net interest expense	(1		)	(2		)
	$	(32	)	$	36			$	(54	)	$	1
	First Nine Months
(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	September 30, 2015			September 30, 2014				September 30, 2015			September 30, 2014
Commodity contracts	$	21		$	(27	)	Sales	$	4		$	—
							Cost of sales	(152		)	18
Foreign exchange contracts	16			59			Sales	63			3
Forward starting interest rate swap contracts	(8		)	1			Net interest expense	(5		)	(6		)
	$	29		$	33			$	(90	)	$	15

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 $386 million at September 30, 2015 and $8 million at September 30, 2014. Losses reclassified from Accumulated Other Comprehensive Income increased in 2015 compared to 2014 as a result of a sharp decline in commodity prices, particularly propane, partially offset by increased gains resulting from a weaker Euro and Japanese Yen relative to the U.S. Dollar. If realized, $142 million net losses as of September 30, 2015 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 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 (income) charges, 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 $11 million net losses during third quarter 2015 and $1 million net gains during third quarter 2014 on nonqualifying derivatives. The Company recognized approximately $23 million net losses and $4 million net gains on nonqualifying derivatives during the first nine months of 2015 and 2014, respectively.

17

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 2014 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 September 30, 2015
Description	September 30, 2015			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	162		$	—	$	162		$	—
Derivative Liabilities	(463		)	—		(463		)	—
	$	(301	)	$	—	$	(301	)	$	—

(Dollars in millions)				Fair Value Measurements at December 31, 2014
Description	December 31, 2014			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	139		$	—	$	137		$	2
Derivative Liabilities	(508		)	—		(508		)	—
	$	(369	)	$	—	$	(371	)	$	2

The majority of the Company's derivative assets are 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 $160 million and a derivative in a net liability position of $461 million as of September 30, 2015. The Company does not have any cash collateral due under such agreements.

18

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. 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 2014 Annual Report on Form 10-K.

Components of net periodic benefit (credit) cost were as follows:

	Third Quarter
	Pension Plans												Other Postretirement Benefit Plans
	2015						2014						2015			2014
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit (credit) cost:
Service cost	$	10		$	3		$	11		$	4		$	2		$	2
Interest cost	21			7			24			7			9			11
Expected return on assets	(38		)	(9		)	(36		)	(9		)	(1		)	(2		)
Amortization of:
Prior service (credit) cost	(1		)	—			(1		)	—			(6		)	(6		)
Net periodic benefit (credit) cost	$	(8	)	$	1		$	(2	)	$	2		$	4		$	5
	First Nine Months
	Pension Plans												Other Postretirement Benefit Plans
	2015						2014						2015			2014
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit (credit) cost:
Service cost	$	29		$	11		$	31		$	11		$	6		$	6
Interest cost	65			20			74			23			29			33
Expected return on assets	(111		)	(28		)	(107		)	(28		)	(4		)	(5		)
Curtailment gain(1)	—			(7		)	—			—			—			—
Amortization of:
Prior service (credit) cost	(3		)	—			(3		)	—			(18		)	(18		)
Mark-to-market pension and other postretirement benefits loss(2)	—			2			—			—			—			—
Net periodic benefit (credit) cost	$	(20	)	$	(2	)	$	(5	)	$	6		$	13		$	16

⁽¹⁾  Gain in the Fibers segment due to the closure of the Workington, UK acetate tow manufacturing facility.

⁽²⁾  Mark-to-market loss due to the interim remeasurement of the Workington, UK pension plan, triggered by the closure of the Workington, UK acetate tow manufacturing facility.

First nine months 2015 includes pension curtailment gains related to the remeasurement of the Workington, UK pension plan triggered by the closure of the Workington, UK acetate tow manufacturing facility. The remeasurement of the plan also resulted in a mark-to-market ("MTM") loss which was primarily due to asset returns being lower than expected returns.

19

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company contributed $90 million and $47 million to its U.S. defined benefit pension plans in first nine months2015 and 2014, respectively.

9. COMMITMENTS

Purchase Obligations and Lease Commitments

The Company had various purchase obligations at September 30, 2015, 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 $272 million over a period of approximately 45 years. Of the total lease commitments, approximately 50 percent relate to real property, including office space, storage facilities, and land; approximately 45 percent relate to railcars; and approximately 5 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 at September 30, 2015, totaled $121 million and consisted primarily of leases for railcars and company aircraft and will expire beginning in 2016. 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 $29 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.

10. 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 postclosure under the federal Resource Conservation and Recovery Act. Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2014 Annual Report on Form 10-K. The Company's total reserve for environmental contingencies was $339 million and $345 million at September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, this reserve included $8 million and $10 million, respectively, 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.

20

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Estimated future environmental expenditures for remediation costs ranged from the minimum or best estimate of $315 million to the maximum of $526 million and from the minimum or best estimate of $324 million to the maximum of $548 million at September 30, 2015 and December 31, 2014, respectively. The maximum estimated future costs are considered to be reasonably possible and include the minimum or best estimate amounts accrued at both September 30, 2015 and December 31, 2014. 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, and are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2014	$	324
Changes in estimates recognized in earnings	11
Cash reductions	(20		)
Balance at September 30, 2015	$	315

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 obligation is 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 $24 million and $21 million at September 30, 2015 and December 31, 2014, respectively. 

The Company's total environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is recognized in the Unaudited Consolidated Statements of Financial Position as follows:

(Dollars in millions)	September 30, 2015		December 31, 2014
Environmental contingent liabilities, current	$	35	$	35
Environmental contingent liabilities, long-term	304		310
Total	$	339	$	345

The Company also has contractual asset retirement obligations other than for environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily for the future closure of leased manufacturing assets at Pace, Florida and Oulu, Finland acquired from Taminco. These accrued non-environmental asset retirement obligations were $43 million and $44 million at September 30, 2015 and December 31, 2014, respectively.

11. 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.

21

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

12. STOCKHOLDERS' EQUITY

A reconciliation of the changes in stockholders' equity for first nine months 2015 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, 2014	2	1,817	4,545		(277	)	(2,577	)	3,510		80		3,590
Net Earnings	—	—	724		—		—		724		5		729
Cash Dividends Declared (1) ($1.20 per share)	—	—	(179	)	—		—		(179	)	—		(179	)
Other Comprehensive Income	—	—	—		(169	)	—		(169	)	—		(169	)
Share-Based Compensation Expense (2)	—	30	—		—		—		30		—		30
Stock Option Exercises	—	7	—		—		—		7		—		7
Other (3)	—	2	—		—		—		2		—		2
Share Repurchase	—	—	—		—		(48	)	(48	)	—		(48	)
Distributions to Noncontrolling Interest	—	—	—		—		—		—		(6	)	(6	)
Balance at September 30, 2015	2	1,856	5,090		(446	)	(2,625	)	3,877		79		3,956

⁽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, 2013	$	133		$	78		$	(39	)	$	(1	)	$	171
Period change	(201		)	(17		)	(230		)	—			(448		)
Balance at December 31, 2014	(68		)	61			(269		)	(1		)	(277		)
Period change	(183		)	(15		)	29			—			(169		)
Balance at September 30, 2015	$	(251	)	$	46		$	(240	)	$	(1	)	$	(446	)

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.

22

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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:

	Third Quarter
	2015						2014
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(47	)	$	(47	)	$	(127	)	$	(127	)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs (1)	(7		)	(4		)	(7		)	(4		)
Derivatives and hedging: (2)
Unrealized gain (loss)	(107		)	(66		)	58			36
Reclassification adjustment for (gain) loss included in net income	55			34			—			—
Change in derivatives and hedging	(52		)	(32		)	58			36
Total other comprehensive income (loss)	$	(106	)	$	(83	)	$	(76	)	$	(95	)
	First Nine Months
	2015						2014
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(183	)	$	(183	)	$	(115	)	$	(114	)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs (1)	(21		)	(15		)	(21		)	(12		)
Derivatives and hedging:(2)
Unrealized gain (loss)	(44		)	(27		)	67			42
Reclassification adjustment for (gain) loss included in net income	90			56			(14		)	(9		)
Change in derivatives and hedging	46			29			53			33
Total other comprehensive income (loss)	$	(158	)	$	(169	)	$	(83	)	$	(93	)

⁽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".

23

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

13. EARNINGS AND DIVIDENDS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share ("EPS") from continuing operations:

	Third Quarter				First Nine Months
	2015		2014		2015		2014
(In millions, except per share amounts)
Numerator
Earnings attributable to Eastman:
Earnings from continuing operations, net of tax	$	256	$	210	$	724	$	733
Denominator
Weighted average shares used for basic EPS	148.6		148.7		148.6		149.8
Dilutive effect of stock options and other awards	1.2		1.6		1.2		1.7
Weighted average shares used for diluted EPS	149.8		150.3		149.8		151.5
EPS from continuing operations (1)
Basic	$	1.73	$	1.41	$	4.87	$	4.89
Diluted	$	1.71	$	1.39	$	4.83	$	4.83

⁽¹⁾  Earnings per share are calculated using whole dollars and shares.

In third quarter and first nine months2015, common shares underlying options to purchase 773,643 and 264,043 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. Third quarter and first nine months2015 reflect the impact of share repurchases of 221,578 and 656,578, respectively.

In both third quarter and first nine months 2014, common shares underlying options to purchase 210,143 shares 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. Third quarter and first nine months 2014 reflect the impact of share repurchases of 618,896 and 4,945,452 shares, respectively.

The Company declared cash dividends of $0.40 and $0.35 per share in third quarter2015 and 2014, respectively, and $1.20 and $1.05 per share in first nine months 2015 and 2014, respectively.

14. ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET

2015

In third quarter and first nine months 2015 there were net asset impairments and restructuring charges of $21 million and $130 million, respectively.

As a result of the annual impairment testing of indefinite-lived intangible assets, in third quarter and first nine months 2015 the Company recognized intangible asset impairments of $18 million in the AM segment primarily to reduce the carrying value of the V-Kool^® window films products trade name to the estimated fair value. The estimated fair value was determined using an income approach, specifically, the relief from royalty method. The impairment resulted from a decrease in projected revenues since the tradename was acquired from Solutia Inc. ("Solutia") in 2012. The decrease in projected revenues was primarily due to the Asian economic downturn impacting car sales growth in those geographic markets.

24

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In first nine months 2015, net asset impairments and restructuring charges included $81 million of asset impairments and $14 million of restructuring charges, including severance, in the Fibers segment due to the closure of the Workington, UK acetate tow manufacturing facility which is expected to be substantially completed in 2015. Additionally, in first nine months 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.

Additionally, during first nine months 2015, net asset impairments and restructuring charges included $4 million of restructuring charges primarily for severance associated with the integration of Taminco.

2014

In third quarter and first nine months 2014 there were net asset impairments and restructuring charges of $71 million and $77 million, respectively.

During third quarter and first nine months 2014, net asset impairments of $18 million and restructuring charges, including severance, of $24 million were recognized in the AFP segment for costs of the closure of a Crystex^® research and development facility in France.

As a result of the annual impairment testing of indefinite-lived intangible assets, in third quarter and first nine months 2014 the Company recognized an intangible asset impairment of $22 million in the AFP segment to reduce the carrying value of the Crystex^® tradename to the estimated fair value. The impairment resulted from a decrease in projected revenue since the tradename was acquired from Solutia in 2012.

In addition, during third quarter and first nine months 2014, a change in estimate of certain costs for the fourth quarter 2012 termination of the operation agreement for the São Jose dos Campos, Brazil site resulted in a restructuring charge of $5 million in addition to previously recognized asset impairments and restructuring charges.

During first nine months 2014, the Company recognized gains from the sales of previously impaired assets at the former Photovoltaics production facility in Germany and a former polymers production facility in China of $5 million and $2 million, respectively.

In first nine months 2014, charges included $8 million of asset impairments, including intangible assets, and $2 million of restructuring charges in the AM segment primarily due to the closure of a production facility in Taiwan for the Flexvue^® product line. First nine months 2014 also included $5 million of restructuring charges for severance associated with the continued integration of the acquired Solutia businesses.

25

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 nine months2015 and full year 2014:

(Dollars in millions)	Balance at January 1, 2015		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at September 30, 2015
Non-cash charges	$	—	$	107	$	(107	)	$	—		$	—
Severance costs	13		15		2			(22		)	8
Site closure and restructuring costs	15		8		2			(13		)	12
Total	$	28	$	130	$	(103	)	$	(35	)	$	20

(Dollars in millions)	Balance at January 1, 2014		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at December 31, 2014
Non-cash charges	$	—	$	52	$	(52	)	$	—		$	—
Severance costs	22		13		—			(22		)	13
Site closure and restructuring costs	14		12		(4		)	(7		)	15
Total	$	36	$	77	$	(56	)	$	(29	)	$	28

Substantially all severance costs remaining are expected to be applied to the reserves within one year.

15. SHARE-BASED COMPENSATION AWARDS

The Company utilizes share-based awards under employee and non-employee director compensation programs. These share-based awards may include restricted and unrestricted stock, restricted stock units, stock options, and performance shares. In third quarter2015 and 2014, $9 million and $6 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. The impact on third quarter2015 and 2014 net earnings of $5 million and $4 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

In first nine months 2015 and 2014, $30 million and $23 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. The impact on first nine months 2015 and 2014 net earnings of $18 million and $14 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

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 2014 Annual Report on Form 10-K.

26

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

16. 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 Nine Months
	2015			2014
Other current assets	$	29		$	23
Other noncurrent assets	43			25
Payables and other current liabilities	92			52
Long-term liabilities and equity	(65		)	(32		)
Total	$	99		$	68

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.

17. SEGMENT INFORMATION

The Company's products and operations are currently managed and reported in five operating segments: Additives & Functional Products ("AFP"), Adhesives & Plasticizers ("A&P"), Advanced Materials ("AM"), Fibers, and Specialty Fluids & Intermediates ("SFI"). 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 2014 Annual Report on Form 10-K.

Third quarter and first nine months 2015 included sales revenue from the acquired Taminco businesses reported in the AFP and SFI segments, and sales revenue from the acquired Commonwealth business reported in the AM segment.

27

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Third Quarter
(Dollars in millions)	2015		2014
Sales
Additives & Functional Products	$	602	$	458
Adhesives & Plasticizers	305		347
Advanced Materials	624		604
Fibers	320		346
Specialty Fluids & Intermediates	584		650
Total Sales by Segment	2,435		2,405
Other	12		8
Total Sales	$	2,447	$	2,413
	First Nine Months
(Dollars in millions)	2015		2014
Sales
Additives & Functional Products	$	1,827	$	1,333
Adhesives & Plasticizers	942		1,050
Advanced Materials	1,832		1,816
Fibers	903		1,086
Specialty Fluids & Intermediates	1,883		1,884
Total Sales by Segment	7,387		7,169
Other	36		9
Total Sales	$	7,423	$	7,178

28

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Third Quarter
(Dollars in millions)	2015			2014
Operating Earnings (Loss)
Additives & Functional Products	$	126		$	37
Adhesives & Plasticizers	74			52
Advanced Materials	98			76
Fibers	102			112
Specialty Fluids & Intermediates	48			90
Total Operating Earnings by Segment	448			367
Other
Growth initiatives and businesses not allocated to segments	(18		)	(18		)
Pension and other postretirement benefit income (expense), net not allocated to operating segments	11			3
Acquisition integration, transaction, and restructuring costs	(9		)	(14		)
Total Operating Earnings	$	432		$	338
	First Nine Months
(Dollars in millions)	2015			2014
Operating Earnings (Loss)
Additives & Functional Products	$	365		$	236
Adhesives & Plasticizers	190			155
Advanced Materials	301			217
Fibers	188			352
Specialty Fluids & Intermediates	233			248
Total Operating Earnings by Segment	1,277			1,208
Other
Growth initiatives and businesses not allocated to segments	(66		)	(46		)
Pension and other postretirement benefit income (expense), net not allocated to operating segments	28			9
Acquisition integration, transaction, and restructuring costs	(27		)	(36		)
Total Operating Earnings	$	1,212		$	1,135

	September 30,		December 31,
(Dollars in millions)	2015		2014
Assets by Segment (1)
Additives & Functional Products	$	4,813	$	4,900
Adhesives & Plasticizers	960		1,011
Advanced Materials	4,249		4,235
Fibers	997		986
Specialty Fluids & Intermediates	3,603		3,710
Total Assets by Segment	14,622		14,842
Corporate Assets	1,258		1,230
Total Assets	$	15,880	$	16,072

⁽¹⁾  The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

29

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

18. RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2014, the Financial Accounting Standards Board ("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 or results of operations and related disclosures.

In April 2015, the 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. In August 2015, the FASB released clarifying guidance for debt issuance costs related to line-of-credit arrangements which may be deferred and for presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The new guidance is to be applied on a retrospective basis and reported as a change in an accounting principle. This guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted for financial statements that have not been previously issued. 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 April 2015, the FASB issued new guidance for cloud computing arrangement fees, also as a part of the simplification and productivity initiative. The guidance establishes a new requirement to determine if cloud computing arrangements include a software license. If an arrangement is deemed to include a software license then the customer would account for the license as any other purchased software, capitalized and depreciated over the life of the contract. If an arrangement is deemed not to include a license, the agreement would be accounted for as a service contract. This guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period and early adoption is permitted. 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 July 2015, the FASB issued new guidance for benefit plan accounting. The new guidance allows for reduced disclosures. The guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period and early adoption is permitted. The changes in accounting required by this standard will only impact the Company's Department of Labor 5500, "Annual Return/Report of Employee Benefit Plan" and will have no impact to the Company's financial position or results of operations and related disclosures.

In July 2015, the FASB issued new guidance to simplify the measurement of inventory under the simplification and productivity initiative. The final standard changes the subsequent inventory measurement from lower of cost or market to lower of cost and net realizable value ("NRV"). NRV is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The subsequent method of estimating the cost of inventory under GAAP (i.e., LIFO) is not being changed. 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. The new guidance is to be applied prospectively as of the beginning of an interim or annual reporting period. 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.

30

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In September 2015, the FASB issued guidance under the simplification and productivity initiative for business combination accounting. The new guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Under this guidance the acquirer recognizes, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. New disclosures are required to present separately on the face of the income statement or disclose in the notes the portion of the amount recognized in current-period earnings by line item that would have been recognized in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. This guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. At adoption, the new guidance is to be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The Company has elected to early adopt the new guidance beginning in third quarter2015 for acquisitions in which the initial purchase price allocation is incomplete. At September 30, 2015, there have been no material changes or effect on earnings for any acquisitions as disclosed in Note 2,Acquisitions.

31

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM	Page
Critical Accounting Estimates	33
Non-GAAP Financial Measures	35
Overview	37
Results of Operations	38
Summary by Operating Segment	42
Summary by Customer Location	47
Liquidity, Capital Resources, and Other Financial Information	48
Recently Issued Accounting Standards	53
2015 Outlook	53
Risk Factors	53

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is based upon the consolidated financial statements of Eastman Chemical Company ("Eastman" or the "Company"), which have been prepared in accordance with accounting principles generally accepted ("GAAP") in the United States, and should be read in conjunction with the Company's audited consolidated financial statements, including related notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's 2014 Annual Report on Form 10-K, and the Company's unaudited consolidated financial statements, including related notes, included elsewhere in this Quarterly Report on Form 10-Q. All references to earnings per share ("EPS") contained in this report are diluted earnings per share unless otherwise noted.

On December 5, 2014, Eastman Chemical Company completed its acquisition of Taminco Corporation ("Taminco"), a global specialty chemical company. The fair value of total consideration transferred was $2.8 billion, consisting of cash of $1.7 billion, net of cash acquired, and repayment of Taminco's debt of $1.1 billion. The acquisition was accounted for as a business combination. Taminco's former specialty amines and crop protection businesses are managed and reported as part of the Additives & Functional Products segment and its former functional amines business are managed and reported as part of the Specialty Fluids & Intermediates ("SFI") segment. Certain pro forma combined financial information giving effect to the Taminco acquisition is presented in Exhibit 99.01 to the Quarterly Report on Form 10-Q for first quarter 2015 and in the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on February 19, 2015.

On December 11, 2014, the Company acquired Commonwealth Laminating & Coating, Inc. ("Commonwealth") for a total purchase price of $438 million including the repayment of debt. The acquisition was accounted for as a business combination and the acquired Commonwealth business is managed and reported in the Advanced Materials segment.

On June 2, 2014, the Company acquired BP plc's global aviation turbine engine oil business ("aviation turbine oil business") for a total cash purchase price of $283 million. The acquisition was accounted for as a business combination and the acquired aviation turbine oil business is managed and reported in the SFI segment.

32

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

On August 6, 2014, the Company acquired Knowlton Technologies, LLC ("Knowlton"), for a total cash purchase price of $42 million. The acquisition was accounted for as a business combination. The acquired Knowlton business is a developing business of the Eastman™ microfiber technology platform, the financial results of which are not identifiable to an operating segment and are shown as "other" operating earnings (loss).

CRITICAL ACCOUNTING ESTIMATES

In preparing the consolidated financial statements in conformity with GAAP, the Company's management must make decisions which impact the reported amounts and the related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and assumptions on which to base estimates and judgments that affect the reported amounts of assets, liabilities, sales revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to allowances for doubtful accounts, impairment of long-lived assets, environmental costs, pension and other postretirement benefits, litigation and contingent liabilities, income taxes, and purchase accounting. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company's management believes the critical accounting estimates described in Part II, Item 7 of the Company's 2014 Annual Report on Form 10-K, as updated and enhanced below, are the most important to the fair presentation of the Company's financial condition and results. These estimates require management's most significant judgments in the preparation of the Company's consolidated financial statements.

Impairment of Long-Lived Assets

The Company conducts testing of goodwill and indefinite-lived intangibles assets annually in third quarter of each year or when impairment indicators arise, whichever comes first.

Goodwill

The testing of goodwill is performed at the "reporting unit" level which the Company has determined to be its "components". Components are defined as one level below an operating segment, and in order to be a reporting unit, the component must 1) be a "business" as defined by applicable accounting standards (an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to the investors or other owners, member, or participants); 2) have discrete financial information available; and 3) be reviewed regularly by Company operating segment management. The Company aggregates certain components into reporting units based on economic similarities.

The Company uses an income approach and applies a fair value methodology based on discounted cash flows in testing the carrying value of goodwill for each reporting unit. Key assumptions and estimates used in the Company's 2015 goodwill impairment testing included projections of revenues, expenses, and cash flows determined using the Company's annual multi-year strategic plan. The most critical assumptions are the estimated discount rate, a projected long-term growth rate, and the estimated tax rate. The Company believes these assumptions are consistent with those a hypothetical market participant would use given circumstances that were present at the time the estimates were made. However, actual results and amounts may be significantly different from the Company's estimates. In addition, the use of different estimates or assumptions could result in materially different determinations. In order to determine the discount rate, the Company uses a market perspective weighted average cost of capital ("WACC") approach. The WACC is calculated incorporating weighted average returns on debt and equity from market participants. Therefore, changes in the market, which are beyond the control of the Company, may have an impact on future calculations of estimated fair value.

If the estimated fair value of a reporting unit is determined to be less than the carrying value of the net assets of the reporting unit including goodwill, additional steps, including an allocation of the estimated fair value to the assets and liabilities of the reporting unit, would be necessary to determine the amount, if any, of goodwill impairment.

33

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

As a result of the tests performed during third quarter 2015, there was no impairment of the Company's goodwill. Fair values substantially exceeded the carrying values for each reporting unit tested, except for the specialty fluids reporting unit (a part of the Specialty Fluids and Intermediates operating segment as described in the "Business" section) which had an estimated fair value that exceeded the carry value including goodwill by five percent. As of September 30, 2015, goodwill of $543 million is allocated to the specialty fluids reporting unit. Goodwill acquired in the acquisition of Taminco was not tested during third quarter because purchase accounting remains preliminary and will be finalized in fourth quarter 2015.

Cash flows from the specialty fluids reporting unit are susceptible to changes in demand due to cyclicality and timing of customer project completions primarily in the industrial and solar markets. Weakened demand in solar markets since the Solutia Inc. ("Solutia") acquisition has caused lower sales volume for specialty fluids products in recent periods, and further delay in the timing of customer project completions or slower overall growth in these markets could decrease the estimated fair value of the specialty fluids reporting unit. Two of the most critical assumptions used in the calculation of the fair value of the specialty fluids reporting unit are the target market long-term growth rate and the discount rate. The Company performed a sensitivity analysis on both of those assumptions. The fair value was nine percent less than the carrying value with a one percent decrease in the target market long-term growth rate and 12 percent less than the carrying value with a one percent increase in the discount rate. In first nine months 2015, the business has shown improvement from expectations. Although we believe our estimate of fair value is reasonable, if the specialty fluids reporting unit's financial performance falls below our expectations or there are negative revisions to key assumptions, we may be required to recognize an impairment charge.

Indefinite-lived Intangible Assets

The carrying value of an indefinite-lived intangible asset is considered to be impaired when the fair value, as established by appraisal or based on discounted future cash flows of certain related products, is less than the respective carrying value.

Indefinite-lived intangible assets, consisting of various tradenames, are tested for potential impairment by comparing the estimated fair value to the carrying amount. The Company uses an income approach, specifically the relief from royalty method, to test indefinite-lived intangible assets. The estimated fair value of the tradenames is determined based on an assumed royalty rate savings, discounted by the calculated market participant WACC plus a 1 percent risk premium. The carrying value of an indefinite-lived intangible asset is considered to be impaired when the estimated fair value is less than the carrying value of the trademark.

As of July 1, 2015, the testing date, the Company had $548 million in indefinite-lived intangible assets. In third quarter 2015, the Company recognized intangible asset impairments of $18 million in the Advanced Materials segment primarily to adjust the carrying value of the V-Kool^®window films products tradename to $35 million as a result of a decrease in projected revenues since the tradename was acquired from Solutia in 2012. The decrease in projected revenues was primarily due to the Asian economic downturn impacting car sales growth in those geographic markets.

The Company will continue to monitor both goodwill and indefinite-lived intangible assets for any indication of triggering events which might require additional testing before the next required annual impairment test.

34

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

NON-GAAP FINANCIAL MEASURES

Non-GAAP financial measures, and the accompanying reconciliations of the non-GAAP financial measures to the most comparable GAAP measures, are presented in "Overview", "Results of Operations", and "Summary by Operating Segment" in this MD&A.

Company Use of Non-GAAP Financial Measures

In addition to evaluating the Company's financial condition, results of operations, liquidity, and cash flows as reported in accordance with GAAP, Eastman management also evaluates Company and operating segment performance, and makes resource allocation and performance evaluation decisions, excluding the effect of transactions, costs, and losses or gains that do not directly arise from Eastman's normal, or "core", business and operations, or are otherwise of an unusual or non-recurring nature. These transactions, costs, and losses or gains relate to, among other things, cost reduction, growth and profitability improvement initiatives, and other events outside of core business operations (such as asset impairments and restructuring charges and mark-to-market ("MTM") losses or gains for pension and other postretirement benefit plans, typically in the fourth quarter of each year and any other quarters in which an interim remeasurement is triggered). Because non-core or non-recurring transactions, costs, and losses or gains may materially affect the Company's, or any particular operating segment's, financial condition or results in a specific period in which they are recognized, Eastman believes it is appropriate to evaluate both the financial measures prepared and calculated in accordance with GAAP and the related non-GAAP financial measures excluding the effect on our results of these non-core or non-recurring items. In addition to using such measures to evaluate results in a specific period, management evaluates such non-GAAP measures, and believes that investors may also evaluate such measures, because such measures may provide more complete and consistent comparisons of the Company's, and its segments', operational performance on a period-over-period historical basis and, as a result, provide a better indication of expected future trends. Management discloses these non-GAAP measures, and the related reconciliations to the most comparable GAAP financial measures, because it believes investors use these metrics in evaluating longer term period-over-period performance, and to allow investors to better understand and evaluate the information used by management to assess the Company's, and its operating segments', performance, make resource allocation decisions and evaluate organizational and individual performance in determining certain performance-based compensation. Non-GAAP measures do not have definitions under GAAP, and may be defined differently by, and not be comparable to, similarly titled measures used by other companies. As a result, management cautions investors not to place undue reliance on any non-GAAP measure, but to consider such measures with the most directly comparable GAAP measure.

Non-GAAP Measures in this Quarterly Report

The following non-core items are excluded by management in its evaluation of certain results in this Quarterly Report:

• Asset impairments and restructuring charges, net, of which asset impairments are non-cash transactions impacting profitability;

• Costs resulting from the sale of acquired inventories at fair value, net of the last-in, first-out ("LIFO") impact for certain of these inventories (as required by purchase accounting, these inventories were marked to fair value);

• Acquisition integration, transaction, and financing costs; and

• MTM pension plan loss due to an interim remeasurement of the Workington, UK pension plan obligation triggered by the closure of the Workington, UK acetate tow manufacturing facility.

in each case for the periods and in the amounts in the table below.

35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Non - GAAP Financial Measures -- Excluded Non-Core Items

	Third Quarter				First Nine Months
(Dollars in millions)	2015		2014		2015		2014
Non-core items impacting operating earnings:
Asset impairments and restructuring charges, net (1)	$	21	$	71	$	130	$	77
Acquisition integration and transaction costs		6	12		23		31
Additional costs of acquired inventories		—	6		7		8
Mark-to-market pension and other postretirement benefits loss		—	—		2		—
Non-core items impacting earnings before income taxes:
Taminco acquisition financing costs		—	3		—		3

⁽¹⁾ See Results of Operations - Earnings from Continuing Operations and Diluted Earnings per Share for additional item excluded only from earnings per share.

This MD&A includes the effect of the foregoing on the following financial measures:

• Gross profit,

• Selling, general, and administrative ("SG&A") expenses,

• Operating earnings,

• Other charges (income), net,

• Earnings from continuing operations, and

• Diluted earnings per share.

Other Non-GAAP Financial Measures

Alternative Non-GAAP Cash Flow Measures

In addition to the non-GAAP measures presented in this Quarterly Report and other periodic reports, from time to time management evaluates and discloses to investors and securities analysts the non-GAAP measure cash provided by operating activities excluding certain non-core or non-recurring items ("cash provided by operating activities, as adjusted") when analyzing, among other things, business performance, liquidity and financial position, and performance-based compensation. Eastman management uses this non-GAAP measure in conjunction with the GAAP measure cash provided by operating activities because it believes it is a more appropriate metric to evaluate the cash flows from Eastman's core operations that are available to grow the business and create stockholder value, and because it allows for a more consistent period-over-period presentation of such amounts. In its evaluation, Eastman management generally excludes the impact of certain non-core activities and decisions of management because such activities and decisions are not considered core, ongoing components of operations and the decisions to undertake or not to undertake such activities may be made irrespective of the cash generated from operations. From time to time, management discloses this non-GAAP measure and the related reconciliation to investors and securities analysts to allow them to better understand and evaluate the information used by management in its decision making processes and because management believes investors and securities analysts use similar measures to assess Company performance, liquidity, and financial position over multiple periods and to compare these with other companies.

36

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Similarly, from time to time, Eastman may disclose to investors and securities analysts an alternative non-GAAP measure of "free cash flow", which management defines as cash provided by operating activities, as adjusted, described above, less the amount of capital expenditures. Management believes such items are generally funded from available cash and, as such, should be considered in determining free cash flow. Eastman management believes this is an appropriate metric to use to evaluate the Company's overall ability to generate cash to fund future operations, inorganic growth opportunities, and to meet the Company's debt repayment obligations. Management believes this metric is useful to investors and securities analysts in order to provide them with information similar to that used by management in evaluating potential future cash available for various initiatives and because management believes investors and securities analysts often use a similar measure of free cash flow to compare the results, and value, of comparable companies. In addition, Eastman may disclose to investors and securities analysts an alternative non-GAAP measure of "free cash flow yield", which management defines as free cash flow per outstanding share of common stock divided by per share stock price.

Alternative Non-GAAP Earnings Measures

From time to time, Eastman may disclose to investors and securities analysts the non-GAAP earnings measures "Adjusted EBITDA" and "Return on Invested Capital" (or "ROIC"). Management defines "Adjusted EBITDA" as "EBITDA" (net earnings or net earnings per share before interest, taxes, depreciation and amortization) adjusted to exclude the same non-core and non-recurring items as are excluded from the Company's other non-GAAP earnings measures for the same periods. "EBITDA Margin" is Adjusted EBITDA divided by the GAAP measure sales revenue in the Company's income statement for the same periods. Management defines "ROIC" as net income plus interest expense after tax divided by average total borrowings plus average stockholders' equity for the periods presented, each derived from the GAAP measures in the Company's financial statements for the periods presented. Management believes that Adjusted EBITDA and ROIC are useful as supplemental measures in evaluating the performance of and returns from Eastman's operating businesses, and from time to time uses such measures in internal performance calculations. Further, management understands that investors and securities analysts often use similar measures of Adjusted EBITDA and ROIC to compare the results, returns, and value of the Company with those of other companies.

OVERVIEW

Eastman's businesses are managed and reported in five reporting segments: Additives & Functional Products ("AFP"), Adhesives & Plasticizers ("A&P"), Advanced Materials ("AM"), Fibers, and Specialty Fluids & Intermediates ("SFI"). Eastman management believes that the Company's end-market diversity is a source of strength, and that many of the markets into which the Company's products are sold are benefiting from longer-term global trends such as energy efficiency, a rising middle class in emerging economies, and an increased focus on health and wellness. Management believes that these trends, combined with the diversity of the Company's end markets, facilitate more consistent demand for the Company's products over time. The businesses acquired from Taminco are expected to provide additional opportunities for growth in agriculture, personal care, coatings, and oil and gas markets. Eastman is focused on consistent earnings growth through a market-driven approach that takes advantage of the Company's existing technology platforms, global market and manufacturing presence, and leading positions in key end markets.

As anticipated, the Company's third quarter and first nine months2015 sales revenue and operating results benefited from the 2014 acquisitions. The comparisons of sales revenues under "Results of Operations" and "Summary by Operating Segment" below include the contribution to revenue and earnings of businesses acquired in 2014.

The Company generated sales revenue of $2.45 billion and $2.41 billion in third quarter2015 and 2014, respectively. Sales revenue increased $34 million in third quarter2015 compared to third quarter2014, primarily due to sales volume from the acquired businesses, mostly offset by lower selling prices, particularly in the SFI and AFP segments primarily due to lower raw material and energy costs, and an unfavorable shift in foreign currency exchange rates.

The Company generated sales revenue of $7.42 billion and $7.18 billion in first nine months2015 and 2014, respectively. Sales revenue increased $245 million in first nine months2015 compared to first nine months2014, primarily due to sales volume from the acquired businesses, mostly offset by lower selling prices, particularly in the SFI segment primarily due to lower raw material and energy costs, an unfavorable shift in foreign currency exchange rates, and lower Fibers segment sales volume.

37

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Operating earnings were $432 million in third quarter2015 compared with $338 million in third quarter2014. Excluding the non-core items identified in "Non-GAAP Financial Measures", operating earnings in third quarter2015 and 2014 were $459 million and $427 million, respectively. Adjusted operating earnings increased in third quarter 2015 primarily due to lower raw material and energy costs exceeding lower selling prices by $83 million, earnings from the acquired businesses, and higher sales volume and improved product mix in the AM segment of $12 million. Adjusted operating earnings were negatively impacted $60 million by commodity hedges, particularly for propane, and an unfavorable shift in foreign currency exchange rates of $17 million.

Operating earnings were $1.21 billion in first nine months2015 compared with $1.14 billion in first nine months2014. Excluding the non-core items identified in "Non-GAAP Financial Measures", operating earnings in first nine months2015 and 2014 were $1.37 billion and $1.25 billion, respectively. Adjusted operating earnings increased in first nine months2015primarily due to lower raw material and energy costs exceeding lower selling prices by $232 million, and earnings from the acquired businesses. Adjusted operating earnings were negatively impacted $140 million by commodity hedges, particularly for propane, an unfavorable shift in foreign currency exchange rates of $58 million, and lower sales volume of $51 million as lower Fibers segment sales volume was partially offset by higher AM segment sales volume.

Earnings and earnings per share and adjusted earnings and earnings per share attributable to Eastman were as follows:

	Third Quarter
	2015				2014
(Dollars in millions, except diluted EPS)	$		EPS		$		EPS
Earnings from continuing operations, net of tax	$	256	$	1.71	$	210	$	1.39
Total non-core items, net of tax	20		0.13		74		0.50
Earnings from continuing operations excluding non-core items, net of tax	$	276	$	1.84	$	284	$	1.89
	First Nine Months
	2015				2014
(Dollars in millions, except diluted EPS)	$		EPS		$		EPS
Earnings from continuing operations, net of tax	$	724	$	4.83	$	733	$	4.83
Total non-core items, net of tax	128		0.86		89		0.60
Earnings from continuing operations excluding non-core items, net of tax	$	852	$	5.69	$	822	$	5.43

The Company generated $1.05 billion in cash from operating activities in first nine months2015 compared with cash generated by operating activities of $949 million in first nine months2014. The increase in cash from operating activities was primarily due to earnings from the acquired businesses partially offset by higher interest and pension payments.

RESULTS OF OPERATIONS

	Third Quarter									First Nine Months
					Change									Change
(Dollars in millions)	2015		2014		$			%		2015		2014		$			%
Sales	$	2,447	$	2,413	$	34		1	%	$	7,423	$	7,178	$	245		3	%
Acquired business effect					326			14	%					1,078			15	%
Volume / product mix effect					(22		)	(1	)%					(136		)	(2	)%
Price effect					(207		)	(9	)%					(506		)	(7	)%
Exchange rate effect					(63		)	(3	)%					(191		)	(3	)%

Sales revenue increased $34 millionthird quarter2015 compared to third quarter2014, primarily due to sales volume from the acquired businesses, mostly offset by lower selling prices, particularly in the SFI and AFP segments primarily due to lower raw material and energy costs, and an unfavorable shift in foreign currency exchange rates.

38

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Sales revenue increased $245 million in first nine months2015 compared to first nine months2014, primarily due to sales volume from the acquired businesses, mostly offset by lower selling prices, particularly in the SFI segment primarily due to lower raw material and energy costs, an unfavorable shift in foreign currency exchange rates, and lower Fibers segment sales volume.

	Third Quarter						First Nine Months
(Dollars in millions)	2015		2014		Change		2015		2014		Change
Gross Profit	$	695	$	636	9	%	$	2,071	$	1,888	10	%
Additional costs of acquired inventories	—		6				7		8
Mark-to-market pension and other postretirement benefits loss	—		—				2		—
Gross Profit excluding non-core items	$	695	$	642	8	%	$	2,080	$	1,896	10	%

Gross profit increased in third quarter2015 compared with third quarter2014, primarily due to lower raw material and energy costs exceeding lower selling prices by $83 million, gross profit from the acquired businesses, and higher sales volume and improved product mix in the AM segment of $12 million. Gross profit was negatively impacted $60 million by commodity hedges, particularly for propane, and an unfavorable shift in foreign currency exchange rates of $21 million.

Gross profit increased in first nine months2015 compared to first nine months2014, primarily due to lower raw material and energy costs exceeding lower selling prices by $232 million, and gross profit from the acquired businesses. Gross profit was negatively impacted $140 million by commodity hedges, particularly for propane, an unfavorable shift in foreign currency exchange rates of $73 million, and lower sales volume of $51 million as lower Fibers segment sales volume was partially offset by higher AM segment sales volume.

Gross profit in first nine months2015 included $2 million MTM loss in the Fibers segment due to the interim remeasurement of the Workington, UK pension plan triggered by the closure of the Workington, UK acetate tow manufacturing facility.

	Third Quarter								First Nine Months
(Dollars in millions)	2015			2014			Change		2015			2014			Change
Selling, General and Administrative Expenses	$	178		$	171		4	%	$	552		$	511		8	%
Acquisition integration and transaction costs	(6		)	(12		)			(23		)	(31		)
Selling, General, and Administrative Expenses excluding non-core items	$	172		$	159		8	%	$	529		$	480		10	%

SG&A expenses in third quarter and first nine months2015 were higher compared to third quarter and first nine months2014. Excluding non-core items, SG&A expenses were higher primarily due to SG&A expenses of acquired businesses, partially offset by the decrease in expense due to foreign currency exchange rates.

	Third Quarter						First Nine Months
(Dollars in millions)	2015		2014		Change		2015		2014		Change
Research and Development Expenses	$	64	$	56	14	%	$	177	$	165	7	%

Research and development ("R&D) expenses were higher in third quarter and first nine months2015 compared to third quarter and first nine months2014 primarily due to R&D expenses of acquired businesses.

Asset Impairments and Restructuring Charges, Net

2015

In third quarter and first nine months 2015 there were net asset impairments and restructuring charges of $21 million and $130 million, respectively.

39

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

As a result of the annual impairment testing of indefinite-lived intangible assets, in third quarter 2015 the Company recognized intangible asset impairments of $18 million in the Advanced Materials segment primarily to reduce the carrying value of the V-Kool^® window films products trade name to the estimated fair value. The estimated fair value was determined using an income approach, specifically, the relief from royalty method. The impairment resulted from a decrease in projected revenues since the tradename was acquired from Solutia in 2012. The decrease in projected revenues was primarily due to the Asian economic downturn impacting car sales growth in those geographic markets.

In first nine months 2015, net asset impairments and restructuring charges included $81 million of asset impairments and $14 million of restructuring charges, including severance, in the Fibers segment due to the closure of the Workington, UK acetate tow manufacturing facility which is expected to be substantially completed in 2015. Management anticipates annual cost savings in the Fibers segment of approximately $20 million, primarily cost of sales, to be realized beginning upon completion of the closure. Additionally, in first nine months 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.

Additionally, during first nine months 2015, net asset impairments and restructuring charges included $4 million of restructuring charges primarily for severance associated with the integration of Taminco.

2014

In third quarter and first nine months 2014 there were net asset impairments and restructuring charges of $71 million and $77 million, respectively.

During third quarter and first nine months 2014, net asset impairments of $18 million and restructuring charges, including severance, of $24 million were recognized in the AFP segment for costs of the closure of a Crystex^® R&D facility in France.

As a result of the annual impairment testing of indefinite-lived intangible assets, in third quarter and first nine months 2014 the Company recognized an intangible asset impairment of $22 million in the AFP segment to reduce the carrying value of the Crystex^® tradename to the estimated fair value. The impairment resulted from a decrease in projected revenue since the tradename was acquired from Solutia in 2012.

In addition, during third quarter and first nine month 2014, a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the São Jose dos Campos, Brazil site resulted in a restructuring charge of $5 million in addition to previously recognized asset impairments and restructuring charges.

During first nine months 2014, the Company recognized gains from the sales of previously impaired assets at the former Photovoltaics production facility in Germany and a former polymers production facility in China of $5 million and $2 million, respectively.

In first nine months 2014, charges included $8 million of asset impairments, including intangible assets, and $2 million of restructuring charges in the AM segment primarily due to the closure of a production facility in Taiwan for the Flexvue^® product line. First nine months 2014 also included $5 million of restructuring charges for severance associated with the continued integration of the acquired Solutia businesses.

For more information regarding asset impairments and restructuring charges and gains see Note 14, "Asset Impairments and Restructuring Charges, Net",to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

40

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Operating Earnings

	Third Quarter						First Nine Months
(Dollars in millions)	2015		2014		Change		2015		2014		Change
Operating earnings	$	432	$	338	28	%	$	1,212	$	1,135	7	%
Asset impairments and restructuring charges, net	21		71				130		77
Acquisition integration and transaction costs	6		12				23		31
Additional costs of acquired inventories	—		6				7		8
Mark-to-market pension and other postretirement benefits loss	—		—				2		—
Operating earnings excluding non-core items	$	459	$	427	7	%	$	1,374	$	1,251	10	%

Net Interest Expense

	Third Quarter						First Nine Months
(Dollars in millions)	2015		2014		Change		2015		2014		Change
Gross interest costs	$	71	$	51			$	215	$	148
Less:  Capitalized interest	1		1				5		5
Interest expense	70		50		40	%	210		143		47	%
Interest income	4		5				12		11
Net interest expense	$	66	$	45	47	%	$	198	$	132	50	%

Net interest expense increased$21 million in third quarter2015 compared to third quarter2014 and increased$66 million in first nine months2015 compared to first nine months2014, primarily due to interest on the additional $3 billion of debt incurred in fourth quarter 2014 to finance the Taminco acquisition.

Other Charges (Income), Net

	Third Quarter						First Nine Months
(Dollars in millions)	2015			2014			2015			2014
Foreign exchange transaction (gains) losses, net	$	14		$	(6	)	$	9		$	(6	)
Financing costs related to the acquisition of Taminco	—			3			—			3
(Income) loss from equity investments and other investment (gains) losses, net	(2		)	(2		)	(10		)	(7		)
Other, net	1			—			3			(6		)
Other charges (income), net	$	13		$	(5	)	$	2		$	(16	)
Financing costs related to the acquisition of Taminco	—			(3		)	—			(3		)
Other charges (income), net excluding financing costs related to the acquisition of Taminco	$	13		$	(8	)	$	2		$	(19	)

Included in other charges (income), net are gains or losses on foreign exchange transactions, equity investments, business venture investments, non-operating assets, and in first nine months 2014 certain litigation costs and earnings. "Foreign exchange transaction (gains) losses, net" include the Euro, Malaysian Ringgit, Chinese Yuan Renminbi, and Brazilian Real. Third quarter and first nine months 2014 included Taminco acquisition financing costs. Financing costs recognized in "Other charges (income), net" during 2014 were primarily Taminco acquisitions borrowing fees.

41

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Provision for Income Taxes

	Third Quarter						First Nine Months
(Dollars in millions)	2015			2014			2015			2014
Provision for income taxes, as reported	$	95		$	86		$	283		$	281
Effective tax rate	27		%	29		%	28		%	28		%

Excluding non-core items, the third quarter and first nine months2015 effective tax rates on reported earnings were 27 percent.

Earnings from Continuing Operations and Diluted Earnings per Share

	Third Quarter
	2015				2014
(Dollars in millions, except diluted EPS)	$		EPS		$		EPS
Earnings from continuing operations, net of tax	$	256	$	1.71	$	210	$	1.39
Asset impairments and restructuring charges, net of tax	17		0.10		60		0.42
Acquisition integration, transaction, and financing costs, net of tax	3		0.03		10		0.06
Additional costs of acquired inventories, net of tax	—		—		4		0.02
Earnings from continuing operations excluding non-core items, net of tax	$	276	$	1.84	$	284	$	1.89
	First Nine Months
	2015				2014
(Dollars in millions, except diluted EPS)	$		EPS		$		EPS
Earnings from continuing operations, net of tax	$	724	$	4.83	$	733	$	4.83
Asset impairments and restructuring charges, net of tax	109		0.72		63		0.43
Acquisition transaction, integration, and financing costs, net of tax	14		0.10		21		0.14
Additional costs of acquired inventories, net of tax	4		0.03		5		0.03
Mark-to-market pension and other post-employment benefits loss, net of tax	1		0.01		—		—
Earnings from continuing operations excluding non-core items, net of tax	$	852	$	5.69	$	822	$	5.43

SUMMARY BY OPERATING SEGMENT

Eastman has five reporting segments: Additives & Functional Products ("AFP"), Adhesives & Plasticizers ("A&P"), Advanced Materials ("AM"), Fibers, and Specialty Fluids & Intermediates ("SFI"). For additional financial and product information for each segment, see Part 1, Item 1, Business -- Business Segments and Part II, Item 8, Note 20, "Segment Information", in the Company's 2014 Annual Report on Form 10-K.

42

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Additives & Functional Products Segment

	Third Quarter									First Nine Months
					Change									Change
(Dollars in millions)	2015		2014		$			%		2015		2014		$			%
Sales	$	602	$	458	$	144		31	%	$	1,827	$	1,333	$	494		37	%
Acquired business effect					192			42	%					593			45	%
Volume / product mix effect					12			2	%					35			3	%
Price effect					(45		)	(10	)%					(87		)	(7	)%
Exchange rate effect					(15		)	(3	)%					(47		)	(4	)%
Operating earnings	126		37		89			241	%	365		236		129			55	%
Asset impairments and restructuring charges, net	—		65		(65		)			—		63		(63		)
Operating earnings excluding non-core items	126		102		24			24	%	365		299		66			22	%

Sales revenue in third quarter and first nine months2015 increased compared to third quarter and first nine months2014, primarily due to sales of products of the acquired Taminco specialty amines and crop protection businesses. These revenues were partially offset by lower coatings and other formulated products selling prices, primarily due to lower raw material and energy costs, and an unfavorable shift in foreign currency exchange rates.

Operating earnings in third quarter 2014 included $42 million of asset impairments and restructuring charges for the closure of a Crystex^® R&D facility in France and a $22 million intangible asset impairment of the Crystex^® tradename. The impairment of the Crystex^® tradename was a result of a decrease in projected revenue since the tradename was acquired from Solutia in 2012.

Excluding these non-core items, operating earnings increased in third quarter2015 compared to third quarter2014, primarily due to earnings from acquired businesses, and lower raw material and energy costs exceeding lower coatings and other formulated products selling prices by $13 million. These items were partially offset by the negative impact of commodity hedges, primarily for propane, of $12 million.

Excluding these non-core items, operating earnings increased in first nine months2015 compared to first nine months2014, primarily due to earnings of the acquired businesses, and lower raw material and energy costs exceeding lower coatings and other formulated products selling prices by $30 million. These items were partially offset by the negative impact of commodity hedges, primarily for propane, of $29 million, and an unfavorable shift in foreign currency exchange rates of $9 million.

43

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Adhesives & Plasticizers Segment

	Third Quarter									First Nine Months
					Change									Change
(Dollars in millions)	2015		2014		$			%		2015		2014		$			%
Sales	$	305	$	347	$	(42	)	(12	)%	$	942	$	1,050	$	(108	)	(10	)%
Volume / product mix effect					(3		)	(1	)%					(16		)	(1	)%
Price effect					(27		)	(8	)%					(54		)	(5	)%
Exchange rate effect					(12		)	(3	)%					(38		)	(4	)%
Operating earnings	74		52		22			42	%	190		155		35			23	%

Sales revenue in third quarter and first nine months2015 decreased compared to third quarter and first nine months2014, primarily due to lower plasticizers products selling prices and an unfavorable shift in foreign currency exchange rates. Lower plasticizers products selling prices were primarily in response to lower raw material and energy costs.

Operating earnings increased in third quarter2015 compared to third quarter2014, primarily due to lower raw material and energy costs for both adhesives resins and plasticizers products exceeding lower plasticizers products selling prices by $33 million. This was partially offset by an unfavorable shift in foreign currency exchange rates of $6 million and the negative impact of commodity hedges, primarily for propane, of $5 million.

Operating earnings increased in first nine months2015 compared to first nine months2014, primarily due to lower raw material and energy costs for both adhesives resins and plasticizers products exceeding lower plasticizers products selling prices by $80 million. This was partially offset by an unfavorable shift in foreign currency exchange rates of $17 million, the negative impact of commodity hedges, primarily for propane, of $13 million, and higher operating costs of $5 million.

Advanced Materials Segment

	Third Quarter									First Nine Months
					Change									Change
(Dollars in millions)	2015		2014		$			%		2015		2014		$			%
Sales	$	624	$	604	$	20		3	%	$	1,832	$	1,816	$	16		1	%
Acquired business effect					33			5	%					99			6	%
Volume / product mix effect					29			5	%					56			3	%
Price effect					(18		)	(3	)%					(64		)	(4	)%
Exchange rate effect					(24		)	(4	)%					(75		)	(4	)%
Operating earnings	98		76		22			29	%	301		217		84			39	%
Asset impairments and restructuring charges, net	18		4		14					18		14		4
Additional costs of acquired inventories	—		—		—					7		—		7
Operating earnings excluding non-core items	116		80		36			45	%	326		231		95			41	%

44

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Sales revenue in third quarter and first nine months2015 increased compared to third quarter and first nine months2014, primarily due to sales of products of the acquired Commonwealth performance films business, and increased sales volume and improved product mix, partially offset by an unfavorable shift in foreign currency exchange rates and lower selling prices, primarily for copolyesters, due to lower raw material and energy costs.

Operating earnings in third quarter and first nine months2015 included $18 million of indefinite-lived intangible asset impairments, primarily to reduce the carrying value of trade names in the window films market to their estimated current fair value. Operating earnings in first nine months2015 included additional costs of acquired Commonwealth inventories of $7 million. Operating earnings in third quarter and first nine months2014 included asset impairment and restructuring charges of $4 million related to a change in estimate of certain costs for the fourth quarter 2012 termination of the operating agreement for the São Jose dos Campos, Brazil site. Operating earnings in first nine months2014 included asset impairment and restructuring charges of $10 million primarily for the closure of a Flexvue^® production facility.

Excluding these non-core items, operating earnings in third quarter2015 increased compared to third quarter2014, primarily due to lower raw material and energy costs exceeding lower selling prices by $27 million, higher sales volume and improved product mix of $13 million, and earnings from the acquired business. These items were partially offset by an unfavorable shift in foreign currency exchange rates of $6 million, and the negative impact of commodity hedges, primarily for propane, of $5 million.

Excluding these non-core items, operating earnings in first nine months2015 increased compared to first nine months2014, primarily due to lower raw material and energy costs exceeding lower selling prices by $47 million, and higher sales volume and resulting higher capacity utilization of $42 million, which led to lower unit costs. Operating earnings also benefited from earnings of the acquired business. These items were partially offset by an unfavorable shift in foreign currency exchange rates of $22 million and the negative impact of commodity hedges, primarily for propane, of $11 million.

Fibers Segment

	Third Quarter									First Nine Months
					Change									Change
(Dollars in millions)	2015		2014		$			%		2015		2014		$			%
Sales	$	320	$	346	$	(26	)	(8	)%	$	903	$	1,086	$	(183	)	(17	)%
Volume / product mix effect					(21		)	(6	)%					(175		)	(16	)%
Price effect					(2		)	(1	)%					(2		)	—	%
Exchange rate effect					(3		)	(1	)%					(6		)	(1	)%
Operating earnings	102		112		(10		)	(9	)%	188		352		(164		)	(47	)%
Asset impairments and restructuring charges, net	—		—		—					95		—		95
Operating earnings excluding non-core item	102		112		(10		)	(9	)%	283		352		(69		)	(20	)%

Sales revenue in third quarter2015 decreased compared to third quarter2014, primarily due to lower acetyl chemicals sales volume and acetate tow and acetate yarn sales volume slightly below the previous year. Lower acetyl chemicals sales volume was due to decreased sales to the cellulose acetate flake joint venture in Kingsport, Tennessee.

Sales revenue in first nine months2015 decreased compared to first nine months2014, primarily due to lower acetate tow and acetyl chemicals sales volume attributed to customer inventory destocking.

Operating earnings in third quarter2015 decreased compared to third quarter2014 primarily due to lower sales volume.

45

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Operating earnings in first nine months2015 decreased compared to first nine months2014. Excluding the non-core item, operating earnings decreased primarily due to $87 million of lower acetate tow and acetyl chemicals sales volume and related lower capacity utilization resulting in higher unit costs, partially offset by $29 million of lower raw material and energy costs and costs savings related to the Workington, UK site closure.

As a result of acetate tow market conditions, including additional industry capacity, management decided in first quarter 2015 to close its Workington, UK acetate tow manufacturing site resulting in $95 million of asset impairments and restructuring charges. Site closure is expected to be substantially completed in 2015. Management anticipates annual cost savings of approximately $20 million, primarily cost of sales, to be realized beginning upon completion of the closure. The Workington site has 24,000 metric tons of acetate tow manufacturing capacity.

Specialty Fluids & Intermediates Segment

	Third Quarter									First Nine Months
					Change									Change
(Dollars in millions)	2015		2014		$			%		2015		2014		$			%
Sales	$	584	$	650	$	(66	)	(10	)%	$	1,883	$	1,884	$	(1	)	—	%
Acquired business effect					97			15	%					360			19	%
Volume / product mix effect					(39		)	(6	)%					(37		)	(2	)%
Price effect					(115		)	(18	)%					(299		)	(16	)%
Exchange rate effect					(9		)	(1	)%					(25		)	(1	)%
Operating earnings	48		90		(42		)	(47	)%	233		248		(15		)	(6	)%
Additional costs of acquired inventories	—		6		(6		)			—		8		(8		)
Operating earnings excluding non-core item	48		96		(48		)	(50	)%	233		256		(23		)	(9	)%

Sales revenue in third quarter and first nine months2015 decreased compared to third quarter and first nine months2014 primarily due to lower olefin-based intermediates selling prices and lower chemical and other intermediates sales volume more than offsetting sales of products of the acquired Taminco functional amines business in third quarter 2015 and of the acquired Taminco functional amines and aviation turbine oil businesses in first nine months 2015. The lower selling prices were primarily in response to lower raw material and energy costs.

Operating earnings in third quarter 2014 included $6 million of additional costs of the acquired aviation turbine oil business inventories. Excluding the non-core item, operating earnings decreased in third quarter 2015 compared to third quarter 2014, primarily due to the negative impact of commodity hedges, primarily for propane, of $36 million, and lower chemical and other intermediates sales volume of $15 million, more than offsetting earnings from the acquired business.

Operating earnings in first nine months 2014 included $8 million of additional costs of the acquired aviation turbine oil business inventories. Excluding the non-core item, operating earnings decreased in first nine months 2015 compared to first nine months 2014, primarily due to the negative impact of commodity hedges, primarily for propane, of $86 million, lower chemical and other intermediates sales volume of $13 million, and an unfavorable shift in foreign currency exchange rates of $10 million. These items were mostly offset by earnings from the acquired businesses and lower raw material and energy costs exceeding lower selling prices by $44 million.

46

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Other

	Third Quarter						First Nine Months
(Dollars in millions)	2015			2014			2015			2014
Sales	$	12		$	8		$	36		$	9
Operating loss
Growth initiatives and businesses not allocated to segments	$	(18	)	$	(18	)	$	(66	)	$	(46	)
Pension and other postretirement benefit income (expense), net not allocated to operating segments	11			3			28			9
Acquisition integration, transaction, and restructuring costs	(9		)	(14		)	(27		)	(36		)
Operating loss before exclusions	(16		)	(29		)	(65		)	(73		)
Acquisition integration and transaction costs	6			12			23			31
Asset impairments and restructuring charges, net	3			2			17			—
Mark-to-market pension and other postretirement benefits loss	—			—			2			—
Operating loss excluding non-core items	$	(7	)	$	(15	)	$	(23	)	$	(42	)

Sales revenue and costs related to growth initiatives, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in segment operating results for any of the periods presented and are shown as "other" sales revenue and "other" operating earnings (loss). Sales revenue in third quarter and first nine months2015 increased compared to third quarter and first nine months2014, primarily due to sales of products of the acquired Knowlton business, part of the Eastman™ microfiber technology platform.

Included in third quarter and first nine months2015 operating losses are integration and transaction costs of $6 million and $23 million, respectively, primarily for the acquired Taminco and Commonwealth businesses, and severance associated with the integration of Taminco of $2 million and $4 million, respectively. Included in first nine months2015 operating losses are $12 million of asset impairments and restructuring charges resulting from management's decision not to continue a growth initiative.

Included in third quarter and first nine months2014 operating losses were integration and transaction costs of $12 million and $31 million, respectively, for the acquisitions of Solutia, the aviation turbine engine oil, Taminco, Commonwealth, and Knowlton businesses. Also included in third quarter and first nine months2014 operating losses are $2 million and $5 million, respectively, for severance related to the continued integration of Solutia. Included in first nine months2014 is a $5 million gain for sales of previously impaired assets at the former Photovoltaics production facility in Germany.

SUMMARY BY CUSTOMER LOCATION

	Sales Revenue
	Third Quarter						First Nine Months
(Dollars in millions)	2015		2014		Change		2015		2014		Change
United States and Canada	$	1,089	$	1,131	(4	)%	$	3,391	$	3,342	1	%
Asia Pacific	600		631		(5	)%	1,741		1,886		(8	)%
Europe, Middle East, and Africa	615		520		18	%	1,865		1,578		18	%
Latin America	143		131		9	%	426		372		15	%
	$	2,447	$	2,413	1	%	$	7,423	$	7,178	3	%

47

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Sales revenue in United States and Canada decreased in third quarter2015 compared to third quarter2014, primarily due to lower SFI, A&P, AFP, and AM segments selling prices and lower SFI and Fibers segments sales volume, mostly offset by sales of products of the acquired Taminco and Commonwealth businesses.

Sales revenue in United States and Canada increased slightly in first nine months2015 compared to first nine months2014,primarily due to sales of products of the acquired Taminco, Commonwealth, Knowlton, and aviation turbine oil businesses mostly offset by lower SFI, A&P, AFP, and AM segments selling prices and lower SFI and Fibers segments sales volume.

Sales revenue in Asia Pacific decreased in third quarter2015 compared to third quarter2014, primarily due to lower SFI, AFP, and AM segments selling prices, lower Fibers segment sales volume, particularly for acetate tow, and an unfavorable shift in foreign currency exchange rates, partially offset by sales of products of the acquired Taminco and Commonwealth businesses.

Sales revenue in Asia Pacific decreased in first nine months2015 compared to first nine months2014, primarily due to lower Fibers segment sales volume, particularly for acetate tow, and lower SFI, AM, and AFP segments selling prices, partially offset by sales of products of the acquired Taminco, Commonwealth and aviation turbine oil businesses.

Sales revenue in Europe, Middle East, and Africa increased in third quarter and first nine months2015 compared to third quarter and first nine months2014, primarily due to sales of products of the acquired Taminco businesses, partially offset by an unfavorable shift in foreign currency exchange rates.

Sales revenue in Latin America increased in third quarter and first nine months2015 compared to third quarter and first nine months2014, primarily due to sales of products of the acquired Taminco businesses, partially offset by an unfavorable shift in foreign currency exchange rates.

With a substantial portion of sales to customers outside the United States, Eastman is subject to the risks associated with operating in international markets. To mitigate its exchange rate risks, the Company frequently seeks to negotiate payment terms in U.S. dollars or euros. In addition, where it deems such actions advisable, the Company engages in foreign currency hedging transactions and requires letters of credit and prepayment for shipments where its assessment of individual customer and country risks indicates their use is appropriate. For additional information concerning these practices, see Note 10, "Derivatives", to the consolidated financial statements in Part II, Item 8 and Part II, Item 7A "Qualitative and Quantitative Disclosures About Market Risk" of the Company's 2014 Annual Report on Form 10-K and "Risk Factors" of this Quarterly Report on Form 10-Q.

LIQUIDITY, CAPITAL RESOURCES, AND OTHER FINANCIAL INFORMATION

Cash and Cash Flows

	First Nine Months
(Dollars in millions)	2015			2014
Net cash provided by (used in)
Operating activities	$	1,050		$	949
Investing activities	(467		)	(718		)
Financing activities	(481		)	(251		)
Effect of exchange rate changes on cash and cash equivalents	(7		)	(5		)
Net change in cash and cash equivalents	95			(25		)
Cash and cash equivalents at beginning of period	214			237
Cash and cash equivalents at end of period	$	309		$	212

Cash provided by operating activities was $1.05 billion in first nine months2015 compared with $949 million in first nine months2014. The increase in cash from operating activities was primarily due to earnings from acquired businesses partially offset by higher interest and pension payments. Interest payments were higher in first nine months2015 as compared with first nine months2014 primarily due to increased borrowings for the acquisition of Taminco. Pension payments were higher in first nine months2015 as compared with first nine months2014 due to timing of funding.

48

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Cash used in investing activities decreased $251 million in first nine months2015 compared with first nine months2014. The decrease was primarily due to cash used for the acquisition of the aviation turbine oil business in first nine months 2014. Cash used for additions to properties and equipment was $426 million in first nine months 2015 and $406 million in first nine months2014.

Cash used in financing activities was $481 million in first nine months2015 compared with $251 million in first nine months2014. The increase in cash used is primarily due to a higher repayment of borrowings partially offset by lower share repurchases in first nine months 2015 compared to first nine months 2014. During first nine months 2015, the Company had net proceeds of $157 million from commercial paper borrowings and $225 million from its accounts receivable securitization agreement (the "A/R Facility") and repayments of $650 million related to term loan borrowings. During first nine months 2014, the Company had net proceeds of $490 million from the issuance of new debt and repaid $185 million of commercial paper borrowings. Share repurchases totaled $48 million in first nine months2015 compared with $410 million in first nine months2014. Dividend payments were $179 million in first nine months2015 and $159 million in first nine months2014.

The priorities for uses of available cash in 2015 include payment of the quarterly stock dividend, repayment of debt, and funding targeted growth initiatives.

Liquidity and Capital Resources

The Company has access to the sources of liquidity described below.

The Company has access to a $1.25 billion revolving credit agreement (the "Credit Facility") that was amended in October 2015 to extend the maturity to 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. At September 30, 2015 and December 31, 2014, the Company had no outstanding borrowings under the Credit Facility.

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. Given the expiration date of the Credit Facility, any commercial paper borrowings supported by the Credit Facility are classified as long-term borrowings because the Company has the ability to refinance such borrowings on a long-term basis and intends, at least over the next twelve months, to maintain commercial paper borrowings at current levels. At September 30, 2015, the Company's commercial paper borrowings were $392 million with a weighted average interest rate of 0.50 percent. At December 31, 2014, the Company's commercial paper borrowings were $235 million with a weighted average interest rate of 0.47 percent.

In July 2015, the Company amended its $250 million A/R Facility to extend the maturity to 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 September 30, 2015, the Company's borrowings under the A/R Facility were $225 million secured by trade receivables with an interest rate of 0.95 percent. In third quarter2015, $25 million of the Company's borrowings under the A/R facility were repaid using available cash. At December 31, 2014, the Company had no outstanding borrowings under the A/R Facility. During first quarter 2014, $125 million of the available amount under the A/R Facility was borrowed and then repaid during second quarter 2014.

The Term Loan Agreement, Credit Facility, and the A/R Facility 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 $883 million and $1.265 billion as of September 30, 2015 and December 31, 2014, respectively. The Company would not have violated applicable covenants for these periods if the total available amounts of the facilities had been borrowed.

In first nine months 2015, the Company made $90 million in contributions to its U.S. defined benefit pension plans. In 2015, the Company expects U.S. defined benefit pension plan funding of $100 million.

49

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Cash flows from operations, cash and cash equivalents, and the other sources of liquidity described above are expected to be available and sufficient to meet foreseeable cash requirements. However, the Company's cash flows from operations can be affected by numerous factors including risks associated with global operations, raw material availability and cost, demand for and pricing of Eastman's products, capacity utilization, and other factors described under "Risk Factors" below. Eastman management believes maintaining a financial profile consistent with an investment grade credit rating is important to its long-term strategic and financial flexibility.

Capital Expenditures

Capital expenditures were $426 million and $406 million in first nine months2015 and 2014, respectively. The expenditures in first nine months2015 were primarily for organic growth initiatives particularly in the SFI and AM segments, improvements to plants, and purchases of equipment. The expenditures in first nine months 2014 were primarily for improvements to plants, purchases of equipment, and organic growth initiatives particularly in the SFI and AM segments. The Company expects that 2015 capital spending will be approximately $675 million, including capital investment that will modernize and expand the Kingsport, Tennessee site, investment in the Kuantan, Malaysia site in the AFP and AM segments, additional expansion of Eastman Tritan™ copolyester capacity in Kingsport, Tennessee, and a Therminol^® heat transfer fluid capacity expansion in Newport, Wales. Capital expenditures in 2015 are expected to include approximately $50 million for the recently acquired Taminco facilities.

Debt and Other Commitments

Debt Securities and Term Loan

At September 30, 2015, the Company's borrowings totaled approximately $7.3 billion to be paid over a period of approximately 30 years. See Note 6, "Borrowings", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The Company plans to repay the $250 million principal amount of the 3% notes due 2015 in fourth quarter of 2015 using available cash.

In connection with the acquisition of Taminco, Eastman entered into a $1.0 billion five-year Term Loan Agreement. As of September 30, 2015, the Term Loan Agreement balance outstanding was $350 million with an interest rate of 1.44 percent. In third quarter2015, $25 million of the Term Loan Agreement balance was repaid using available cash. As of December 31, 2014, the Term Loan Agreement balance outstanding was $1.0 billion with an interest rate of 1.41 percent. Borrowings under the Term Loan Agreement are subject to interest at varying spreads above quoted market rates.

Other Commitments

The Company had various purchase obligations at September 30, 2015, 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 $272 million over a period of approximately 45 years. Of the total lease commitments, approximately 50 percent relate to real property, including office space, storage facilities, and land; approximately 45 percent relate to railcars; and approximately 5 percent relate to machinery and equipment, including computer and communications equipment and production equipment.

In addition, the Company had other liabilities at September 30, 2015, totaling $2.2 billion related primarily to pension, retiree medical, other postretirement obligations, and environmental reserves.

As of September 30, 2015, there have been no material changes to the Company's commitments at December 31, 2014. See Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Company's 2014 Annual Report on Form 10-K.

50

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Off Balance Sheet and Other Financing Arrangements

If certain operating leases are terminated by the Company, it has guaranteed a portion of the residual value loss, if any, incurred by the lessors in disposing of the related assets. For information on the Company's residual value guarantees, see Note 9, "Commitments", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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 $29 million in the aggregate, with none of these guarantees being individually significant to the Company's operating results, financial position, or liquidity. The Company's current expectation is that future payment or performance related to non-performance under other guarantees is considered remote.

The Company assumed the rights and obligations under non-recourse factoring facilities as part of the acquisition of Taminco. The non-recourse factoring facilities have a combined limit of $177 million (the U.S. Dollar equivalent of the €158 million limit amount as of September 30, 2015) 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 third quarter and first nine months2015, were approximately $245 million and $780 million, respectively. The total amount of cumulative receivables sold during the year ended December 31, 2014, since the acquisition of Taminco on December 5, 2014 was $70 million. As part of the program, the Company continues to service the receivables at market rates with no servicing assets or liabilities recognized. The amounts of sold receivables outstanding under the non-recourse factoring facilities were $117 million and $105 million at September 30, 2015 and December 31, 2014, 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.

Treasury Stock

In May 2013, the Company's Board of Directors authorized repurchase of up to $300 million of the Company's outstanding common stock. The Company completed the $300 million of repurchases in March 2014, acquiring a total of 3,840,949 shares.

In February 2014, the Company's Board of Directors authorized repurchase of up to an additional $1 billion of the Company's outstanding common stock at such times, in such amounts, and on such terms, as determined to be in the best interests of the Company. As of September 30, 2015, a total of 3,589,607 shares have been repurchased under this authorization for a total amount of $298 million.

During first nine months2015, the Company repurchased 656,578 shares of common stock for a cost of approximately $48 million.

Dividends

The Company declared cash dividends of $0.40 and $0.35 per share in third quarter2015 and 2014, respectively, and $1.20 and $1.05 per share in first nine months2015 and 2014, respectively.

51

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 postclosure under the federal Resource Conservation and Recovery Act. Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2014 Annual Report on Form 10-K. The Company's total reserve for environmental contingencies was $339 million and $345 million at September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, this reserve included $8 million and $10 million, respectively, 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.

Estimated future environmental expenditures for remediation costs ranged from the minimum or best estimate of $315 million to the maximum of $526 million and from the minimum or best estimate of $324 million to the maximum of $548 million at September 30, 2015 and December 31, 2014, respectively. The maximum estimated future costs are considered to be reasonably possible and include the minimum or best estimate amounts accrued at both September 30, 2015 and December 31, 2014. 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. Changes in the reserves for environmental remediation liabilities during first nine months2015 including net charges taken, which are included in cost of goods sold, and cash reductions are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2014	$	324
Changes in estimates recognized in earnings	11
Cash reductions	(20		)
Balance at September 30, 2015	$	315

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 obligation is 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 $24 million and $21 million at September 30, 2015 and December 31, 2014, respectively.

The Company also has contractual asset retirement obligations not associated with environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily for the future closure of leased manufacturing assets at Pace, Florida and Oulu, Finland acquired from Taminco. These accrued non-environmental asset retirement obligations were $43 million and $44 million at September 30, 2015 and December 31, 2014, respectively.

52

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

RECENTLY ISSUED ACCOUNTING STANDARDS

For information regarding the impact of recently issued accounting standards, see Note 18, "Recently Issued Accounting Standards", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

2015 OUTLOOK

Eastman is focused on consistent earnings growth through a market-driven approach that takes advantage of the Company's existing technology platforms, global market and manufacturing presence, leading positions in key end markets, vertically integrated manufacturing streams, and advantaged cost positions. This focus is supported by the Company's geographic and end-market diversity as it serves global markets, including emerging economies with above average growth rates, and offers both original equipment manufacturing and after-market products in a variety of end markets, such as transportation and building and construction.

While the impact of regional and global economic growth on the Company's financial results varies by product and market, management expects global growth in 2015 to be approximately three percent, with the U.S. approximately two percent, Europe approximately one percent, and China below seven percent.

Management expects that market prices for commodity products and raw material and energy costs will continue to be volatile, and management will continue to evaluate and when appropriate use pricing and hedging strategies to mitigate this volatility. Management expects that significant declines in crude oil and certain related commodity prices will not be fully reflected in Company raw material and energy costs primarily because the positive impact will be largely offset in 2015 by our current commodity hedges, particularly for propane.

Management expects the significant strengthening of the U.S. Dollar to continue to have an overall negative impact on the Company's results, partially offset by hedging of those foreign currencies, particularly the euro.

For 2015, management also expects:

• operating results to continue to benefit from recent acquisitions, organic growth, and improved product mix from continued market adoption of specialty products;

• cash generated by operating activities of approximately $1.6 billion;

• capital spending to be approximately $675 million;

• priorities for uses of available cash to include payment of the quarterly stock dividend, repayment of debt, and funding targeted growth initiatives; and

• the full year effective tax rate on reported earnings before income tax to be between 26 percent and 27 percent, excluding non-core items.

Based on first nine months results and the foregoing expectations and assumptions, management continues to expect that 2015 earnings per share excluding non-core and any non-recurring items will exceed 2014 earnings per share excluding non-core items.

See "Risk Factors" below.

RISK FACTORS

In addition to the factors described elsewhere in this Quarterly Report, the following are the most significant known factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements made in this Quarterly Report and elsewhere from time to time. See "Forward-looking Statements".

53

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Continued uncertain conditions in the global economy and the financial markets could negatively impact the Company.

Continued uncertain conditions in the global economy and global capital markets may adversely affect the Company's results of operations, financial condition, and cash flows. The Company's business and operating results were affected by the impact of the most recent global recession, including the credit market crisis, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, and other challenges that affected the global economy. If the global economy or financial markets again deteriorate or experience significant new disruptions, or if current uncertainty over the timing or extent of a full long-term recovery persists, the Company's results of operations, financial condition, and cash flows could be materially adversely affected; in addition the Company's ability to access the credit and capital markets under attractive rates and terms could be constrained, which may negatively impact the Company's liquidity or ability to pursue certain growth initiatives.

Volatility in costs for strategic raw material and energy commodities or disruption in the supply of these commodities could adversely affect our financial results.

The Company is reliant on certain strategic raw material and energy commodities for its operations which are subject to significant market fluctuations in cost. Significant changes to raw material and energy costs could negatively impact the Company's financial results. The Company seeks to manage and mitigate the impact of this volatility through a number of risk management strategies including formula pricing for sales of certain products, inventory management, and hedging. These risk mitigation measures cannot eliminate all exposure to market fluctuations, and have from time-to-time reduced the positive impact of unexpected decreases of the market price of purchased raw materials. In addition, natural disasters, plant interruptions, changes in laws or regulations, war or other outbreak of hostilities or terrorism, and breakdown or degradation of transportation infrastructure used for delivery of strategic raw material and energy commodities, could adversely impact both the cost and availability of these commodities.

The Company's business is subject to operating risks common to chemical manufacturing businesses, including cyber risks, any of which could disrupt manufacturing operations or related infrastructure and adversely affect results of operations.

As a global specialty chemicals manufacturing company, our business is subject to operating risks common to chemical manufacturing, storage, handling, and transportation. Significant limitation on the Company's ability to manufacture products due to disruption of manufacturing operations or related infrastructure could have a material adverse effect on the Company's sales revenue, costs, results of operations, and financial condition. Disruptions could occur due to internal factors such as computer or equipment malfunction (accidental or intentional), operator error, or process failures; or external factors such as computer or equipment malfunction at third-party service providers, natural disasters, pandemic illness, changes in laws or regulations, war or other outbreak of hostilities or terrorism, cyber attacks, or breakdown or degradation of transportation infrastructure used for delivery of supplies to the Company or for delivery of products to customers. The Company has in the past experienced cyber attacks and breaches of its computer information systems, and although none of these has had a material adverse effect on the Company's operations, no assurances can be provided that any future disruptions due to these, or other, circumstances will not have a material effect on operations. Such disruptions could result in an unplanned event that could be significant in scale and could negatively impact operations, neighbors, and the environment, and could have a negative impact on the Company's results of operations.

Loss or financial weakness of any of the Company's largest customers could adversely affect our financial results.

Although the Company has an extensive customer base, loss of, or material financial weakness of, certain of our largest customers could adversely affect the Company's financial condition and results of operations until such business is replaced. No assurances can be made that the Company would be able to regain or replace any lost customers.

54

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Growth initiatives may not achieve desired business or financial objectives and may require a significant use of resources in excess of those estimated or budgeted for such initiatives.

The Company continues to identify and pursue growth opportunities through both organic growth initiatives and inorganic initiatives. These growth opportunities include development and commercialization or licensing of innovative new products and technologies and related employee leadership, expertise, and skill development and retention, expansion into new markets and geographic regions, and alliances, ventures, and acquisitions that complement and extend the Company's portfolio of businesses and capabilities. There can be no assurance that such innovation, development and commercialization or licensing efforts, investments, or acquisitions and alliances (including integration of acquired businesses) will result in financially successful commercialization of products, or acceptance by existing or new customers, or successful entry into new markets or otherwise achieve their underlying strategic business objectives or that they will be beneficial to the Company's results of operations. There also can be no assurance regarding the timing of completion of proposed acquisitions or licensing, expected benefits of proposed acquisitions or licensing, completion of integration plans, and synergies therefrom. There also can be no assurance that capital projects for growth efforts can be completed within the time or at the costs projected due, among other things, to demand for and availability of construction materials and labor and obtaining regulatory approvals and operating permits and reaching agreement on terms of key agreements and arrangements with potential suppliers and customers. Any such delays or cost overruns or the inability to obtain such approvals or to reach such agreements on acceptable terms could negatively affect the returns from any proposed or current investments and projects.

Significant acquisitions expose the Company to risks and uncertainties, the occurrence of any of which could materially adversely affect the Company's business, financial condition, and results of operations.

While acquisitions have been and continue to be a part of the Company's growth strategy, acquisitions of large companies (such as the acquisition of Taminco in 2014 and of Solutia in 2012) subject the Company to a number of risks and uncertainties, the occurrence of any of which could have a material adverse effect on Eastman. These include, but are not limited to the possibilities that the financial performance of the acquired business may be significantly worse than expected; that significant additional indebtedness may constrain the Company's ability to access the credit and capital markets at attractive interest rates and favorable terms, which may negatively impact the Company's liquidity or ability to pursue certain growth initiatives; that the Company may not be able to achieve the cost, revenue, tax, or other "synergies" expected from any acquisition, or that there may be delays in achieving any such synergies; that management's time and effort may be dedicated to the new business resulting in a loss of focus on the successful operation of the Company's existing businesses; and that the Company may be required to expend significant additional resources in order to integrate any acquired business into Eastman or that the integration efforts will not achieve the expected benefits.

Legislative or regulatory actions could increase the Company's future compliance costs.

The Company and its 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. The Company's accruals for such costs and associated liabilities are subject to changes in estimates on which the accruals are based. For example, any amount accrued for environmental matters 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 costs. Specifically, pending and proposed U.S. Federal legislation and regulation increase the likelihood that the Company's manufacturing sites will in the future be impacted by regulation of greenhouse gas emissions and energy policy, which legislation and regulation, if enacted, may result in capital expenditures, increases in costs for raw materials and energy, limitations on raw material and energy source and supply choices, and other direct compliance costs.

55

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

In addition to the foregoing most significant known risk factors to the Company, there may be other factors, not currently known to the Company, which could, in the future, materially adversely affect the Company, its business, financial condition, or results of operations. The foregoing discussion of the most significant risk factors to the Company does not necessarily present them in order of importance. This disclosure, including that under "Outlook" and other forward-looking statements and related disclosures made by the Company in this Quarterly Report and elsewhere from time to time, represents management's best judgment as of the date the information is given. The Company does not undertake responsibility for updating any of such information, whether as a result of new information, future events, or otherwise, except as required by law. Investors are advised, however, to consult any further public Company disclosures (such as in filings with the Securities and Exchange Commission or in Company press releases) on related subjects.

56

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There are no material changes to the Company's market risks from those disclosed in Part II, Item 7A of the Company's 2014 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures. Based on that evaluation, the CEO and CFO have concluded that as of September 30, 2015 the Company's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed was accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company's internal control over financial reporting that occurred during the third quarter of 2015 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

57

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

General

From time to time, Eastman Chemical Company ("Eastman" or 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 (including the Solutia Legacy Torts Claims described below) will have a material adverse effect on its overall financial condition, results of operations, or cash flows.

Solutia Legacy Torts Claims Litigation

Pursuant to an Amended and Restated Settlement Agreement effective February 28, 2008, between Solutia Inc. ("Solutia") and Monsanto Company ("Monsanto") in connection with Solutia's emergence from Chapter 11 bankruptcy proceedings (the "Monsanto Settlement Agreement"), Monsanto is responsible to defend and indemnify Solutia against any Legacy Tort Claims (as defined in the Monsanto Settlement Agreement) and Solutia agreed to retain responsibility for certain tort claims, if any, that may arise from Solutia's conduct after its spinoff from Pharmacia Corporation (f/k/a Monsanto), which occurred on September 1, 1997. Solutia, which became a wholly owned subsidiary of Eastman on July 2, 2012, has been named as a defendant in several such proceedings, and has submitted the matters to Monsanto as Legacy Tort Claims. To the extent these matters are not within the meaning of Legacy Tort Claims, Solutia could potentially be liable thereunder. In connection with the completion of its acquisition of Solutia, Eastman guaranteed the obligations of Solutia and Eastman was added as an indemnified party under the Monsanto Settlement Agreement.

ITEM 1A. RISK FACTORS

For identification and discussion of the most significant risks applicable to the Company and its business, see "Risk Factors" in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2 of this Quarterly Report on Form 10-Q.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Purchases of Equity Securities by the Issuer

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)
July 1 - 31, 2015	—	$	—	—	$	719
August 1 - 31, 2015	150,000	$	77.37	150,000	$	707
September 1 -30, 2015	71,578	$	69.85	71,578	$	702
Total	221,578	$	74.94	221,578

⁽¹⁾  All shares were repurchased under a Company announced repurchase plan.

⁽²⁾  Average price paid per share reflects the weighted average purchase price paid for shares.

⁽³⁾  In February 2014, the Board of Directors authorized repurchase of up to an additional $1 billion of the Company's outstanding common stock. As of September 30, 2015, a total of 3,589,607 shares have been repurchased under this authorization for a total amount of $298 million. During first nine months2015, the Company repurchased 656,578 shares of common stock for a cost of approximately $48 million. For additional information, see Note 12, "Stockholders' Equity", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

58

ITEM 6. EXHIBITS

Exhibits filed as part of this report are listed in the Exhibit Index.

59

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Eastman Chemical Company
Date:	November 3, 2015	By:	/s/ Curtis E. Espeland
			Curtis E. Espeland
			Executive Vice President and Chief Financial Officer

60

	EXHIBIT INDEX
Exhibit Number	Description	Sequential Page Number
3.01	Amended and Restated Certificate of Incorporation of Eastman Chemical Company (incorporated herein by reference to Exhibit 3.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012)
3.02	Amended and Restated Bylaws of Eastman Chemical Company (incorporated herein by reference to Exhibit 3.02 to the Company's Annual Report on Form 10-K for the year ended December 31, 2014)
4.01	Form of Eastman Chemical Company common stock certificate as amended February 1, 2001 (incorporated herein by reference to Exhibit 4.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001)
4.02	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 the Company's Current Report on Form 8-K dated January 10, 1994)
4.03	Indenture, dated as of June 5, 2012, between Eastman Chemical Company and Wells Fargo Bank, as Trustee (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated June 5, 2012)
4.04	Form of 7 1/4% Debentures due January 15, 2024 (incorporated herein by reference to Exhibit 4(d) to the Company's Current Report on Form 8-K dated January 10, 1994)
4.05	Officers' Certificate pursuant to Sections 201 and 301 of the Indenture related to 7 5/8% Debentures due 2024 (incorporated herein by reference to Exhibit 4(a) to the Company's Current Report on Form 8-K dated June 8, 1994)
4.06	Form of 7 5/8% Debentures due June 15, 2024 (incorporated herein by reference to Exhibit 4(b) to the Company's Current Report on Form 8-K dated June 8, 1994)
4.07	Form of 7.60% Debentures due February 1, 2027 (incorporated herein by reference to Exhibit 4.08 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996)
4.08	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 Company's Annual Report on Form 10-K for the year ended December 31, 2006)
4.09	Form of 5.500% Notes due 2019 (incorporated  herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated November 2, 2009)
4.10	Form of 6.30% Notes due 2018 (incorporated herein by reference to Exhibit 4.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003)
4.11	Form of 3% Note due 2015 (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated December 10, 2010)
4.12	Form of 4.5% Note due 2021 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated December 10, 2010)
4.13	Form of 2.4% Note due 2017 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated June 5, 2012)
4.14	Form of 3.6% Note due 2022 (incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K dated June 5, 2012)

61

	EXHIBIT INDEX
Exhibit Number	Description	Sequential Page Number
4.15	Form of 4.8% Note due 2042 (incorporated herein by reference to Exhibit 4.4 to the Company's Current Report on Form 8-K dated June 5, 2012)
4.16	Form of 4.65% Note due 2044 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated May 15, 2014)
4.17	Form of 2.70% Note due 2020 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated November 20, 2014)
4.18	Form of 3.80% Note due 2025 (incorporated herein by reference to Exhibit 4.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 2014)
10.01	Amendment No. 1 to the Second Amended and Restated Five-Year Credit Agreement, dated as of October 9, 2015, among Eastman Chemical Company, the initial lenders named herein, and Citibank, N.A., as administrative agent, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as joint lead arrangers (Agreement incorporated herein by reference to Exhibit 10.03 to the Company's Current Report on Form 8-K dated October 9, 2014)	63-68
10.02	2015 Director Stock Compensation Subplan of the 2012 Omnibus Stock Compensation Plan and Form of Restricted Stock Award Notice	69-75
12.01	Statement re: Computation of Ratios of Earnings to Fixed Charges	76
31.01	Rule 13a – 14(a) Certification by Mark J. Costa, Chief Executive Officer, for the quarter ended September 30, 2015	77
31.02	Rule 13a – 14(a) Certification by Curtis E. Espeland, Executive Vice President and Chief Financial Officer, for the quarter ended September 30, 2015	78
32.01	Section 1350 Certification by Mark J. Costa, Chief Executive Officer, for the quarter ended September 30, 2015	79
32.02	Section 1350 Certification by Curtis E. Espeland, Executive Vice President and Chief Financial Officer, for the quarter ended September 30, 2015	80
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

62

EX-10.01

Exhibit 10.01

U.S. $1,250,000,000

AMENDMENT NO. 1 TO THE

SECOND AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT

Dated as of October 9, 2015

Among

EASTMAN CHEMICAL COMPANY

asCompany

THE INITIAL LENDERS NAMED HEREIN

asInitialLenders

CITIBANK, N.A.

asAdministrativeAgent

CITIGROUP GLOBAL MARKETS INC.

and

J.P. MORGAN SECURITIES LLC

asJointLeadArrangers

JPMORGAN CHASE BANK, N.A.

asSyndicationAgent

and

BANK OF AMERICA, N.A.

BARCLAYS BANK PLC

MIZUHO BANK, LTD.

MORGAN STANLEY BANK, N.A.

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

asDocumentationAgents

63

Exhibit 10.01

AMENDMENT TO CREDIT AGREEMENT

AMENDMENT dated as of October 9, 2015 (the “Amendment”) to the Second Amended and Restated Five-Year Credit Agreement dated as of October 9, 2014 (the “Credit Agreement”) among EASTMAN CHEMICAL COMPANY (the “Company”), the banks, financial institutions and other institutional lenders (the “Initial Lenders”) and initial issuing banks (the “Initial Issuing Banks”) listed on the signature pages thereof, CITIGROUP GLOBAL MARKETS INC. and J.P. MORGAN SECURITIES LLC, as joint lead arrangers, JPMORGAN CHASE BANK, N.A., as syndication agent, and CITIBANK, N.A., as administrative agent (the “Agent”).

The parties hereto agree as follows:

Section 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein that is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. Each reference to “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each reference to “this Agreement” and each other similar reference contained in the Credit Agreement shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby.

Section 2. Amendments.

(a)     The definition of “Termination Date” in Section 1.01 is amended by deleting the date “October 9, 2019” and substituting therefor the date “October 9, 2020”.

(b)    The definition of “Applicable Percentage” in Section 1.01 is amended in full to read as follows:

“Applicable Percentage” means, as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:

Public Debt Rating S&P/Moody's	Applicable Percentage
Level 1 A- or A3 or above	0.090%
Level 2 BBB+ or Baa1	0.125%
Level 3 BBB or Baa2	0.150%
Level 4 BBB- or Baa3	0.200%
Level 5 Lower than Level 4	0.250%

(c)    The following new definition “Amendment Effective Date” is added to Section 1.01 in appropriate alphabetical order:

“Amendment Effective Date” means October 9, 2015.

(d)    Section 2.20(a) is amended by deleting the phrase “the Effective Date” and substituting therefor the phrase :”the Amendment Effective Date”.

(e)    Schedule I is amended in full to read as set forth on Annex A to this Amendment.

64

Exhibit 10.01

Section 3.    Waiver; Assignment. The requirements of Sections 2.20, 2.22(b) and 9.07 of the Credit Agreement are, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 4 below, hereby waived to the extent that such Sections require prior notice, consents or execution and delivery of an Assignment and Assumption to effect an assignment by any Lender to effect the restatement of Schedule I to the Credit Agreement as set forth above. Accordingly, after giving effect to this Amendment, only those Lenders listed on Annex A to this Amendment shall have any Commitment, or be considered Lenders under the Credit Agreement, in such amounts as set forth on Annex A.

For an agreed consideration, each Lender whose Revolving Credit Commitment is reduced or terminated by giving effect to this Amendment (each, an “Assignor”) hereby irrevocably sells and assigns to each Lender whose Revolving Credit Commitment is increased (or created) by giving effect to this Amendment, whether by assignment of an Assigned Interest or otherwise (each, an “Increasing Lender”), and each Increasing Lender hereby irrevocably purchases and assumes from each Assignor, subject to and in accordance with the Standard Terms and Conditions attached to the form of Assignment and Assumption (attached to the Credit Agreement as Exhibit C) and the Credit Agreement, as of October 9, 2015, the Assigned Interests (as defined below). Each such sale and assignment is without recourse to any Assignor and, except as expressly provided in this Amendment, without representation or warranty by any Assignor.

“Assigned Interest” has the meaning ascribed to such term in the form of Assignment and Assumption attached to the Credit Agreement as Exhibit C.

Section 4. Representations of Company. The Company represents and warrants that (i) the representations and warranties of the Company set forth in Article 4 of the Credit Agreement will be true and correct on and as of the Amendment Effective Date (as defined in Section 7 below) , before and after giving effect to this Amendment, and (ii) no Default will have occurred and be continuing on such date.

Section 5. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

Section 6. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by electronic means shall be as effective as delivery of an original executed counterpart of this Amendment.

Section 7. Effectiveness. This Amendment shall become effective on the date when the following conditions are met (the “Amendment Effective Date”):

(a)the Agent shall have received from each of the Company and each of the Lenders a counterpart hereof signed by such party or facsimile or other written confirmation (in form satisfactory to the Agent) that such party has signed a counterpart hereof.

(b)the Company shall have paid all reasonable accrued fees and expenses of the Agent and the Lenders (including the reasonable accrued fees and expenses of counsel to the Agent) and accrued fees under the Credit Agreement.

Section 8. Reference to and Effect on the Credit Agreement. The Credit Agreement, as specifically amended by this Amendment, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed.

The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Agent under the Credit Agreement, nor constitute waiver of any provision of the Credit Agreement.

65

Exhibit 10.01

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

EASTMAN CHEMICAL COMPANY
By:	/s/ Mary D. Hall
	Name:	Mary D. Hall
	Title:	Vice President and Treasurer

CITIBANK, N.A., as Agent and as Lender

By:	/s/ Michael Vondriska
	Name:	Michael Vondriska
	Title:	Vice President

JPMORGAN CHASE BANK, N.A.

By:	/s/ Peter S. Predun
	Name:	Peter S. Predun
	Title:	Executive Director

BANK OF AMERICA, N.A.

By:	/s/ Christopher DiBiase
	Name:	Christopher DiBiase
	Title:	Director

BARCLAYS BANK PLC

By:	/s/ Vanessa A. Kurbatskiy
	Name:	Vanessa A. Kurbatskiy
	Title:	Vice President

MIZUHO BANK, LTD.

By:	/s/ Donna DeMagistris
	Name:	Donna DeMagistris
	Title:	Authorized Signatory

66

Exhibit 10.01

MORGAN STANLEY BANK, N.A.

By:	/s/ Michael King
	Name:	Michael King
	Title:	Authorized Signatory

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:	/s/ Andrew G. Payne
	Name:	Andrew G. Payne
	Title:	Director

HSBC BANK USA, NATIONAL ASSOCIATION

By:	/s/ Heather Allen
	Name:	Heather Allen
	Title:	SVP

ROYAL BANK OF CANADA

By:	/s/ Kevin Flynn
	Name:	Kevin Flynn
	Title:	Authorized Signatory

SUMITOMO MITSUI BANKING CORPORATION

By:	/s/ David W. Kee
	Name:	David W. Kee
	Title:	Managing Director

SUNTRUST BANK

By:	/s/ Christopher Hursey
	Name:	Christopher Hursey
	Title:	Director

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

67

Exhibit 10.01

By:	/s/ Mustafa Khan
	Name:	Mustafa Khan
	Title:	Director

THE NORTHERN TRUST COMPANY

By:	/s/ Michael Fornal
	Name:	Michael Fornal
	Title:	Vice President

PNC BANK, NATIONAL ASSOCIATION

By:	/s/ Deroy Scott
	Name:	Deroy Scott
	Title:	Senior Vice President

REGIONS BANK

By:	/s/ R. Todd Gaddis
	Name:	R. Todd Gaddis
	Title:	Vice President

SANTANDER BANK, N.A.

By:	/s/ John W. Deegan
	Name:	John W. Deegan
	Title:	Executive Director

68

EX-10.02

Exhibit 10.02

EASTMAN CHEMICAL COMPANY

2015 DIRECTOR STOCK COMPENSATION SUBPLAN

(a Subplan of the 2012 Omnibus Stock Compensation Plan)

69

Exhibit 10.02

EASTMAN CHEMICAL COMPANY

2015 DIRECTOR STOCK COMPENSATION SUBPLAN

(a Subplan of the 2012 Omnibus Stock Compensation Plan)

ARTICLE 1

PURPOSE

1.1.           PURPOSE. The purpose of the Plan is to attract, retain and compensate highly-qualified individuals who are not employees of Eastman Chemical Company or any of its subsidiaries or affiliates for service as members of the Board by providing them with competitive compensation and an ownership interest in the Stock of the Company. The Company intends that the Plan will benefit the Company and its stockholders by allowing Non-Employee Directors to have a personal financial stake in the Company through an ownership interest in the Stock and will closely associate the interests of Non-Employee Directors with that of the Company’s stockholders. The Plan replaces and supersedes the 2013 Director Stock Compensation Subplan of the 2012 Omnibus Stock Compensation Plan.

1.2.           ELIGIBILITY.  Non-Employee Directors of the Company who are Eligible Participants, as defined below, shall automatically be participants in the Plan.

ARTICLE 2

DEFINITIONS

2.1.           DEFINITIONS.  Capitalized terms used herein and not otherwise defined shall have the meanings assigned such terms in the Omnibus Plan.  Unless the context clearly indicates otherwise, the following terms shall have the following meanings:

(a)           “Committee” means the Nominating and Corporate Governance Committee of the Board.

(b)           “Effective Date” of the Plan has the meaning set forth in Section 7.4 hereof.

(c)           “Eligible Participant” means any person who is a Non-Employee Director on the Effective Date or becomes a Non-Employee Director while this Plan is in effect; except that during any period a director is prohibited from participating in the Plan by his or her employer or otherwise waives participation in the Plan, such director shall not be an Eligible Participant.

(d)           “Omnibus Plan” means the Eastman Chemical Company 2012 Omnibus Stock Compensation Plan, or any subsequent equity compensation plan approved by the Board and designated as the Omnibus Plan for purposes of this Plan.

(e)           “Plan” means this Eastman Chemical Company 2015 Director Stock Compensation Subplan, as amended from time to time.  The Plan is a subplan of the Omnibus Plan.

(f)           “Plan Year(s)” means the approximate twelve-month periods between annual meetings of the stockholders of the Company, which, for purposes of the Plan, are the periods for which equity Awards are earned.

70

Exhibit 10.02

ARTICLE 3

ADMINISTRATION

3.1.           ADMINISTRATION.  The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee shall be authorized to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. The Committee’s interpretation of the Plan, and all actions taken and determinations made by the Committee pursuant to the powers vested in it hereunder, shall be conclusive and binding upon all parties concerned including the Company, its stockholders, and Non-Employee Directors with Awards under the Plan. The Committee may appoint a plan administrator to carry out the ministerial functions of the Plan, but the administrator shall have no other authority or powers of the Committee. The Board may reserve to itself any or all of the authority and responsibility of the Committee under the Plan or may act as administrator of the Plan for any and all purposes. To the extent the Board has reserved any authority and responsibility or during any time that the Board is acting as administrator of the Plan, it shall have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 3.1) shall include the Board. To the extent any action of the Board under the Plan conflicts with actions taken by the Committee, the actions of the Board shall control.

3.2.           RELIANCE.  In administering the Plan, the Committee may rely upon any information furnished by the Company, its public accountants, and other experts. No individual will have personal liability by reason of anything done or omitted to be done by the Company or the Committee in connection with the Plan. This limitation of liability shall not be exclusive of any other limitation of liability to which any such person may be entitled under the Company’s Certificate of Incorporation or otherwise.

ARTICLE 4

SHARES

4.1.           SOURCE OF SHARES FOR THE PLAN.  The shares of Stock that may be issued pursuant to the Plan shall be issued under the Omnibus Plan, subject to all of the terms and conditions of the Omnibus Plan. The terms contained in the Omnibus Plan are incorporated into and made a part of this Plan with respect to Restricted Stock Awards pursuant hereto and such Awards shall be governed by and construed in accordance with the Omnibus Plan. In the event of any actual or alleged conflict between the provisions of the Omnibus Plan and the provisions of this Plan, the provisions of the Omnibus Plan shall be controlling and determinative; provided that the provisions of Section 5.4 of this Plan (rather than those of Section 14.6 of the Omnibus Plan) shall control and be determinative in the event of a Change in Control. This Plan does not constitute a separate source of shares for the Awards described herein.

ARTICLE 5

RESTRICTED STOCK AWARDS

5.1     INITIAL AWARD OF RESTRICTED STOCK.  Subject to share availability under the Omnibus Plan, on the date that a new Non-Employee Director is initially elected or appointed to the Board, such director will receive a Restricted Stock Award. The number of shares of Restricted Stock to be awarded shall be established from time to time by the Board. Unless and until changed by the Board, the number of shares of Restricted Stock to be awarded in each initial Restricted Stock Award shall be determined by dividing $10,000 by the Fair Market Value of one share of Stock as of the award date, and rounding up to the nearest whole share (the “Initial Restricted Stock Award”). Non-Employee Directors shall be eligible to receive both an Initial Restricted Stock Award and an Annual Restricted Stock Award (as defined below) in his or her initial year of service. Such shares of Restricted Stock shall be evidenced by a written Award Notice in the form at the end of this Plan and shall be subject to such restrictions and risk of forfeiture as are described in the form of Award Notice and any other restrictions and terms determined by the Board, and shall be granted under and pursuant to the terms of the Omnibus Plan.

71

Exhibit 10.02

5.2           ANNUAL AWARD OF RESTRICTED STOCK.  Subject to share availability under the Omnibus Plan, on the date of each annual meeting of the Company’s stockholders, each Eligible Participant in service on the close of business on that date shall receive a Restricted Stock Award. The number of shares of Restricted Stock to be awarded shall be established from time to time by the Board. Unless and until changed by the Board, the number of shares of Restricted Stock to be awarded in each annual Restricted Stock Award for a full Plan Year shall be determined by dividing $75,000 by the Fair Market Value of one share of Stock as of the award date, and rounding up to the nearest whole share (the “Annual Restricted Stock Award”). Such shares of Restricted Stock shall be evidenced by a written Award Notice in the form at the end of this Plan and shall be subject to such restrictions and risk of forfeiture as are described in the form of Award Notice and any other restrictions and terms determined by the Board, and shall be granted under and pursuant to the terms of the Omnibus Plan.

5.3           VESTING.  Unless and until provided otherwise by the Board, the Initial Restricted Stock Awards and the Annual Restricted Stock Awards shall vest and all restrictions with respect thereto shall lapse only upon the earliest to occur of: (i) one (1) year from the date of grant, but only if the Non-Employee Director is still a director of the Company immediately prior to the election of directors at the annual meeting of stockholders at the end of such one-year period; (ii) the date that his or her tenure as a director of the Company terminates by reason of death, Disability, resignation effective at an annual meeting of stockholders because he or she is no longer qualified to serve as a director under Section 3.1 of the Bylaws of the Company, or for another approved reason as determined by the Committee; or (iii) the date that his or her tenure as director of the Company terminates by reason of his or her failure to be reelected as a director in an election in which he or she consented to be named as a director nominee.  If the grantee’s service as a director of the Company (whether or not in a Non-Employee Director capacity) terminates prior to the first anniversary of the date of grant other than as described in clause (ii) or (iii) of the foregoing sentence, then the grantee shall forfeit all of his or her right, title and interest in and to any unvested shares of Restricted Stock as of the date of such termination from the Board and such shares of Restricted Stock shall be reconveyed to the Company without further consideration or any act or action by the grantee.

5.4           CHANGE IN CONTROL.

(a)           Vesting of Awards.  Upon a Change in Control: (i) the terms of this Section 5.4 shall immediately become operative, without further action or consent by any person or entity; (ii) all conditions, restrictions, and limitations in effect on Restricted Stock Awards pursuant to this Plan shall immediately lapse as of the date of such event; (iii) no other terms, conditions, restrictions or limitations shall be imposed upon any such Awards on or after such date, and in no circumstance shall such Awards be forfeited on or after such date; and (iv) all such Awards shall automatically become one hundred percent (100%) vested immediately.

(b)           Valuation and Payment of Awards.  Upon a Change in Control, each Non-Employee Director, whether or not continuing in service as a director of the Company in any capacity, shall be paid, in a single lump-sum cash payment, as soon as practicable but in no event later than seventy-five (75) days after the effective date of the Change in Control, the value of all of his or her outstanding Restricted Stock Awards. For purposes of calculating the cash-out value of Awards for purposes of this Section 5.4, the Fair Market Value of Shares as of the date of the Change in Control shall be used as the Fair Market Value of the Shares.

ARTICLE 6

AMENDMENT, MODIFICATION, AND TERMINATION

6.1.           AMENDMENT, MODIFICATION AND TERMINATION.  The Board may, at any time and from time to time, amend, modify, or terminate the Plan without stockholder approval; provided, however, that if an amendment to the Plan would, in the reasonable opinion of the Board, require stockholder approval under applicable laws, policies, or regulations or the applicable listing or other requirements of a securities exchange on which the Stock is listed or traded, then such amendment shall be subject to stockholder approval; and provided further, that the Board may condition any other amendment or modification on the approval of stockholders of the Company for any reason.

72

Exhibit 10.02

ARTICLE 7

GENERAL PROVISIONS

7.1.           ADJUSTMENTS.  The adjustment provisions of the Omnibus Plan shall apply with respect to Awards outstanding or to be awarded or granted pursuant to this Plan.

7.2.           DURATION OF THE PLAN.  The Plan shall remain in effect until terminated by the Board or until the earlier termination of the Omnibus Plan.

7.3.           EXPENSES OF THE PLAN.  The expenses of administering the Plan shall be borne by the Company.

7.4.           EFFECTIVE DATE.  The Plan was adopted by the Board on September 30, 2015, and became effective on that date (the “Effective Date”).

73

Exhibit 10.02

FORM OF NOTICE OF RESTRICTED STOCK AWARDS

UNDER THE EASTMAN CHEMICAL COMPANY

2015 DIRECTOR STOCK COMPENSATION SUBPLAN

OF THE 2012 OMNIBUS STOCK COMPENSATION PLAN

Grantee:

Number of Restricted Shares:

Date of Award:

1.  Award of Restricted Stock.  Eastman Chemical Company (“Company”) has granted to you, under the 2015 Director Stock Compensation Subplan of the 2012 Eastman Chemical Company Omnibus Stock Compensation Plan (the “Plan”), the number of Restricted Shares shown above(“Restricted Stock”) of its $.01 par value Common Stock (“Common Stock”) to be held as restricted stock under the terms of the Plan and this Award Notice (“Award Notice”). The Plan is incorporated herein by reference and made a part of this Award Notice. Capitalized terms not defined herein shall have the respective meanings set forth in the Plan.

2.  Lapse of Restrictions.  The restrictions on transfer described below with respect to the Restricted Stock awarded to you hereunder will lapse upon the “Vesting Date”, which shall be the earliest of:  (a) 4:00 p.m., Eastern Time, the first anniversary of the Date of Award, if and only if you are still a director of the Company immediately prior to the election of directors at the annual meeting of stockholders at the end of such one-year period; or (b) the date that your tenure as a director of the Company terminates by reason of death, disability, resignation effective at an annual meeting of stockholders because you are no longer qualified to serve as a director under Section 3.1 of the Bylaws of the Company, or for another approved reason as determined by the Nominating and Corporate Governance Committee of the Board of Directors ; or (c) the date that your tenure as a director of the Company terminates by reason of completion of your then-current term in office and you fail to be reelected as a director to another term.

3.  Book-Entry Registration.  The Restricted Stock awarded pursuant to this Award Notice initially will be evidenced by book-entry registration only, without the issuance of a certificate representing such shares.

4.  Issuance of Shares.  Subject to the provisions of Section 7 of this Award Notice, the Company shall, provided that the conditions to vesting specified in Section 2 of this Award Notice are satisfied, issue a certificate or certificates for unrestricted shares of Common Stock equal to the number of shares of Restricted Stock as promptly as practicable following the Vesting Date.

5.  Restrictions on Transfer of Shares.  Shares of Restricted Stock awarded under the Plan, and the right to vote such shares and to receive dividends thereon, may not, except as otherwise provided in the Plan, be sold, assigned, transferred, pledged, or encumbered in any way prior to the Vesting Date, whether by operation of law or otherwise, except by will or the laws of descent and distribution.  After the Vesting Date, the unrestricted shares of Common Stock may be issued during your lifetime only to you, except in the case of a permanent disability involving mental incapacity.

6.  Rights as a Stockholder.  Except as otherwise provided in the Plan or this Award Notice, prior to the Vesting Date, you will have all of the other rights of a stockholder with respect to the Restricted Stock, including, but not limited to, the right to receive such cash or other dividends, if any, as may be declared on such shares from time to time and the right to vote (in person or by proxy) such shares at any meeting of stockholders of the Company.

7.  Termination of Tenure as a Director.  Upon termination of your tenure as a director of the Company prior to the Vesting Date, all of the Restricted Stock awarded to you shall be canceled and forfeited by you to the Company without the payment of any consideration by the Company. In such event, neither you nor your successors, heirs, assigns, or personal representatives will thereafter have any further rights or interest in or with respect to such shares.

8.  Change in Control.  Upon a Change in Control of the Company, the provisions of Section 5.4 of the Plan shall automatically and immediately become operative with respect to the Restricted Stock.

74

Exhibit 10.02

9.  No Right to Continued Position on Board.  Neither the Plan, the award of Restricted Stock, nor this Award Notice, shall give you any right to remain on the Company’s Board of Directors.

10.  Restrictions on Issuance of Shares.  If at any time the Company shall determine, in its sole discretion, that listing, registration, or qualification of the shares of Restricted Stock upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or advisable as a condition to the award or issuance of certificate(s) for such Restricted Stock hereunder, such award or issuance may not be made in whole or in part unless and until such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Company.

11.  Plan Controls.  In the event of any actual or alleged conflict between the provisions of the Plan and the provisions of this Award Notice, the provisions of the Plan shall be controlling and determinative.

12.  Successors.  This Award Notice shall be binding upon any successor of the Company, in accordance with the terms of this Award Notice and the Plan.

75

EX-12.01

Exhibit 12.01

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Computation of Ratios of Earnings to Fixed Charges

		Third Quarter				First Nine Months
(Dollars in millions)		2015		2014		2015		2014
Earnings from continuing operations before income taxes excluding noncontrolling interest	$	351	$	296	$	1,007	$	1,014
Add:
Interest expense		70		50		210		143
Appropriate portion of rental expense (1)		7		5		20		16
Amortization of capitalized interest		1		1		4		5
Earnings as adjusted	$	429	$	352	$	1,241	$	1,178
Fixed charges:
Interest expense	$	70	$	50	$	210	$	143
Appropriate portion of rental expense (1)		7		5		20		16
Capitalized interest		1		1		5		5
Total fixed charges	$	78	$	56	$	235	$	164
Ratio of earnings to fixed charges		5.5x		6.3x		5.3x		7.2x

⁽¹⁾  For all periods presented, the interest component of rental expense is estimated to equal one-third of such expense.

76

EX-31.01

Exhibit 31.01

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Rule 13a - 14(a)/15d - 14(a) Certifications

I, Mark J. Costa, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eastman Chemical Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

Date:  November 3, 2015

/s/ Mark J. Costa

Mark J. Costa

Chief Executive Officer

77

EX-31.02

Exhibit 31.02

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Rule 13a - 14(a)/15d - 14(a) Certifications

I, Curtis E. Espeland, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eastman Chemical Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

Date:  November 3, 2015

/s/ Curtis E. Espeland               

Curtis E. Espeland

Executive Vice President and Chief Financial Officer

78

EX-32.01

Exhibit 32.01

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Section 1350 Certifications

In connection with the Quarterly Report of Eastman Chemical Company (the "Company") on Form 10-Q for the period ending September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

A signed original of this written statement required by Section 906 has been provided to Eastman Chemical Company and will be retained by Eastman Chemical Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date:   November 3, 2015

/s/ Mark J. Costa

Mark J. Costa

Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.

79

EX-32.02

Exhibit 32.02

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Section 1350 Certifications

In connection with the Quarterly Report of Eastman Chemical Company (the "Company") on Form 10-Q for the period ending September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

A signed original of this written statement required by Section 906 has been provided to Eastman Chemical Company and will be retained by Eastman Chemical Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date:  November 3, 2015

/s/ Curtis E. Espeland               

Curtis E. Espeland

Executive Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.

80

XML

INVENTORIES (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
At FIFO or average cost (approximates current cost) [Abstract]
Finished goods	$ 1,116	$ 1,130
Work in process	214	288
Raw materials and supplies	510	553
Total inventories	1,840	1,971
LIFO Reserve	(356)	(462)
Total inventories	$ 1,484	$ 1,509
Inventories valued on the LIFO method	55.00%	55.00%

XML

EARNINGS AND DIVIDENDS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share [Abstract]
Earnings from continuing operations, net of tax		$ 256	$ 210	$ 724	$ 733
Net earnings attributable to Eastman		$ 256	$ 210	$ 724	$ 735
Weighted average shares used for basic EPS (in shares)		148,600,000	148,700,000	148,600,000	149,800,000
Dilutive effect of stock options and other awards		1,200,000	1,600,000	1,200,000	1,700,000
Weighted average shares used for diluted EPS (in shares)		149,800,000	150,300,000	149,800,000	151,500,000
Earnings from continuing operations, basic	[1]	$ 1.73	$ 1.41	$ 4.87	$ 4.89
Earnings from continuing operations, diluted	[1]	$ 1.71	$ 1.39	$ 4.83	$ 4.83
Underlying options excluded from the computation of diluted earnings per share (in shares)		773,643	210,143	264,043	210,143
Shares repurchased (in shares)		221,578	618,896	656,578	4,945,452
Cash dividends declared (per share)		$ 0.40	$ 0.35	$ 1.20	$ 1.05

[1] Earnings per share are calculated using whole dollars and shares.

XML

RETIREMENT PLANS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items]
Pension Contributions			$ 90	$ 47
United States Pension Plans of US Entity, Defined Benefit [Member]
Components of net periodic benefit cost [Abstract]
Service cost	$ 10	$ 11	29	31
Interest cost	21	24	65	74
Expected return on assets	(38)	(36)	(111)	(107)
Prior service credit	(1)	(1)	(3)	(3)
Curtailment gain			0	0
Mark-to-market pension and other postretirement benefit loss			0	0
Net periodic benefit (credit) cost	(8)	(2)	(20)	(5)
Foreign Pension Plans, Defined Benefit [Member]
Components of net periodic benefit cost [Abstract]
Service cost	3	4	11	11
Interest cost	7	7	20	23
Expected return on assets	(9)	(9)	(28)	(28)
Prior service credit	0	0	0	0
Curtailment gain			(7)	0
Mark-to-market pension and other postretirement benefit loss			2	0
Net periodic benefit (credit) cost	1	2	(2)	6
Post Retirement Welfare Plans [Member]
Components of net periodic benefit cost [Abstract]
Service cost	2	2	6	6
Interest cost	9	11	29	33
Expected return on assets	(1)	(2)	(4)	(5)
Prior service credit	(6)	(6)	(18)	(18)
Curtailment gain			0	0
Mark-to-market pension and other postretirement benefit loss			0	0
Net periodic benefit (credit) cost	$ 4	$ 5	$ 13	$ 16

XML

ASSETS IMPAIRMENTS AND RESTRUCTURING CHARGES, NET (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Restructuring Cost and Reserve [Line Items]
Restructuring, Settlement and Impairment Provisions	$ 21	$ 71	$ 130	$ 77
Asset Impairment Charges			107	50
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			28	36	$ 36
Provision / Adjustments			130		77
Non-cash Reductions			(103)		(56)
Cash Reductions			(35)		(29)
Balance at End of Period	20		20		28
Parent Company [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring, Settlement and Impairment Provisions	21		130
Non-Cash Charges [Member]
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			0	0	0
Provision / Adjustments			107		52
Non-cash Reductions			(107)		(52)
Cash Reductions			0		0
Balance at End of Period	0		0		0
Employee Severance [Member]
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			13	22	22
Provision / Adjustments			15		13
Non-cash Reductions			2		0
Cash Reductions			(22)		(22)
Balance at End of Period	8		8		13
Facility Closing [Member]
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			15	14	14
Provision / Adjustments			8		12
Non-cash Reductions			2		(4)
Cash Reductions			(13)		(7)
Balance at End of Period	12		12		$ 15
Advanced Materials [Member] | Trademarks and Trade Names [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges	$ 18		18
Additives And Functional Products [Member] | Trademarks and Trade Names [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges				22
Workington UK Closure [Member] | Fibers [Member] | Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges			81
Restructuring Charges			14
Discontinue growth initiative [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges			8
Restructuring Charges			4
Tawain closure [Member] | Advanced Materials [Member] | Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges				8
Restructuring Charges				2
Taminco [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring, Settlement and Impairment Provisions			$ 4
Crystex R&D facility in France [Member] | Additives And Functional Products [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges		24		24
Crystex R&D facility in France [Member] | Additives And Functional Products [Member] | Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges		18		18
Solutia [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges				5
Brazil Site Closure [Member] | Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges		5		5
Crystex Tradename [Member] | Additives And Functional Products [Member] | Trademarks and Trade Names [Member]
Restructuring Cost and Reserve [Line Items]
Asset Impairment Charges		$ 22		22
Germany Site Closure [Member]
Restructuring Cost and Reserve [Line Items]
Gain (Loss) on Disposition of Assets				5
China Site Closure [Member]
Restructuring Cost and Reserve [Line Items]
Gain (Loss) on Disposition of Assets				$ 2

XML

DERIVATIVES Part 2 (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Derivatives, Fair Value [Line Items]
Derivative Assets	$ 160		$ 160
Derivative Liabilities	461		461
Derivative Assets [Abstract]
Derivative Asset, Fair Value, Gross Asset	150		150		$ 134
Designated as Hedging Instrument [Member]
Derivative Liabilities [Abstract]
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value	463		463		508
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Derivative Assets [Abstract]
Cash Flow Hedge Derivative Instrument Assets at Fair Value	0		0		2
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Derivative Liabilities [Abstract]
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value	177		177		193
Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member]
Derivative Liabilities [Abstract]
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value	250		250		289
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	66		66		61
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	84		84		71
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Derivative Liabilities [Abstract]
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value	2		2		10
Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member]
Derivative Assets [Abstract]
Fair Value Hedge Derivative Instrument Assets at Fair Value	12		12		5
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	34		34		16
Fair Value, Measurements, Recurring [Member]
Derivative Assets [Abstract]
Derivative Asset, Fair Value, Gross Asset	162		162		139
Derivative Liabilities [Abstract]
Derivative Liability, Fair Value, Gross Liability	(463)		(463)		(508)
Derivative, Fair Value, Net	(301)		(301)		(369)
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative Assets [Abstract]
Derivative Asset, Fair Value, Gross Asset	0		0		0
Derivative Liabilities [Abstract]
Derivative Liability, Fair Value, Gross Liability	0		0		0
Derivative, Fair Value, Net	0		0		0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative Assets [Abstract]
Derivative Asset, Fair Value, Gross Asset	162		162		137
Derivative Liabilities [Abstract]
Derivative Liability, Fair Value, Gross Liability	(463)		(463)		(508)
Derivative, Fair Value, Net	(301)		(301)		(371)
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative Assets [Abstract]
Derivative Asset, Fair Value, Gross Asset	0		0		2
Derivative Liabilities [Abstract]
Derivative Liability, Fair Value, Gross Liability	0		0		0
Derivative, Fair Value, Net	0		0		$ 2
Fair Value Hedging [Member] | Interest Expense [Member] | Interest Rate Contract [Member]
Derivatives, Fair Value [Line Items]
Gain (Loss) on Fair Value Hedges Recognized in Earnings	$ 3	$ 2	$ 10	$ 3

XML

EARNINGS AND DIVIDENDS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2015

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") from continuing operations:

	Third Quarter				First Nine Months
	2015		2014		2015		2014
(In millions, except per share amounts)
Numerator
Earnings attributable to Eastman:
Earnings from continuing operations, net of tax	$	256	$	210	$	724	$	733
Denominator
Weighted average shares used for basic EPS	148.6		148.7		148.6		149.8
Dilutive effect of stock options and other awards	1.2		1.6		1.2		1.7
Weighted average shares used for diluted EPS	149.8		150.3		149.8		151.5
EPS from continuing operations (1)
Basic	$	1.73	$	1.41	$	4.87	$	4.89
Diluted	$	1.71	$	1.39	$	4.83	$	4.83

XML

SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Supplemental Cash Flow Information [Abstract]
Other current assets	$ 29	$ 23
Other noncurrent assets	43	25
Payables and other current liabilities	92	52
Long-term liabilities and equity	(65)	(32)
Total	$ 99	$ 68

XML

INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Schedule of inventories

	September 30,			December 31,
(Dollars in millions)	2015			2014
At FIFO or average cost (approximates current cost)
Finished goods	$	1,116		$	1,130
Work in process	214			288
Raw materials and supplies	510			553
Total inventories	1,840			1,971
LIFO Reserve	(356		)	(462		)
Total inventories	$	1,484		$	1,509

XML

ENVIRONMENTAL MATTERS (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014
Site Contingency [Line Items]
Amount Accrued to Date for Environmental Contingent Liabilities	$ 345	$ 339	$ 345
Portion Of Environmental Reserve Related To Previously Closed, Impaired, And Divested Sites		8	10
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning of period	345
End of period	339
Accrual for Environmental Loss Contingencies, Balance Sheet Classification [Abstract]
Accrued Environmental Loss Contingencies, Current		35	35
Accrued Environmental Loss Contingencies, Noncurrent		304	310
Amount Accrued to Date for Environmental Contingent Liabilities	345	339	345
Environmental Remediation [Member]
Site Contingency [Line Items]
Amount Accrued to Date for Environmental Contingent Liabilities	324	315	324
Loss Contingency, Range of Possible Loss, Minimum		315	324
Loss Contingency, Range of Possible Loss, Maximum		526	548
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning of period	324
Accrual for Environmental Loss Contingencies, Increase (Decrease) for Revision in Estimates	11
Cash reductions	(20)
End of period	315
Accrual for Environmental Loss Contingencies, Balance Sheet Classification [Abstract]
Amount Accrued to Date for Environmental Contingent Liabilities	$ 324	315	324
Environmental ARO [Member]
Site Contingency [Line Items]
Best Estimate Accrued to-date For Asset Retirement Obligation		24	21
Non Environmental ARO [Member]
Site Contingency [Line Items]
Best Estimate Accrued to-date For Asset Retirement Obligation		$ 43	$ 44

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BORROWINGS Part 1 (Details) Schedule of Long-term Debt Instruments - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Total Borrowings	$ 7,280	$ 7,549
Borrowings due within one year	251	301
Long-term borrowings	7,029	7,248
3% notes due 2015 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 250	250
Debt Instrument Maturity Date Year	2015
Debt Instrument, Interest Rate, Stated Percentage	3.00%
2.4% notes due 2017 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 999	998
Debt Instrument Maturity Date Year	2017
Debt Instrument, Interest Rate, Stated Percentage	2.40%
6.30% notes due 2018 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 167	169
Debt Instrument Maturity Date Year	2018
Debt Instrument, Interest Rate, Stated Percentage	6.30%
5.5% notes due 2019 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 250	250
Debt Instrument Maturity Date Year	2019
Debt Instrument, Interest Rate, Stated Percentage	5.50%
2.7% notes due 2020 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 799	798
Debt Instrument Maturity Date Year	2020
Debt Instrument, Interest Rate, Stated Percentage	2.70%
4.5% notes due 2021 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 250	250
Debt Instrument Maturity Date Year	2021
Debt Instrument, Interest Rate, Stated Percentage	4.50%
3.6% notes due 2022 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 903	903
Debt Instrument Maturity Date Year	2022
Debt Instrument, Interest Rate, Stated Percentage	3.60%
7 1/4% debentures due 2024 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 244	244
Debt Instrument Maturity Date Year	2024
Debt Instrument, Interest Rate, Stated Percentage	7.25%
7 5/8% debentures due 2024 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 54	54
Debt Instrument Maturity Date Year	2024
Debt Instrument, Interest Rate, Stated Percentage	7.625%
3.8% notes due 2025 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 796	796
Debt Instrument Maturity Date Year	2025
Debt Instrument, Interest Rate, Stated Percentage	3.80%
7.60% debentures due 2027 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 222	222
Debt Instrument Maturity Date Year	2027
Debt Instrument, Interest Rate, Stated Percentage	7.60%
4.8% notes due 2042 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 497	497
Debt Instrument Maturity Date Year	2042
Debt Instrument, Interest Rate, Stated Percentage	4.80%
4.65% notes due 2044 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 877	877
Debt Instrument Maturity Date Year	2044
Debt Instrument, Interest Rate, Stated Percentage	4.65%
Credit Facilities and commercial paper [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 967	1,235
Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 5	$ 6

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BASIS OF PRESENTATION Basis of Presentation (Details) € in Millions, $ in Millions	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)	Sep. 30, 2015 EUR (€)
Accounting Policies [Abstract]
Line of Credit Facility, Capacity Available for Trade Purchases	$ 177	$ 177		€ 158
Percentage Of Sale On Receivables		85.00%
Receivable Sold Under Factoring Arrangement	245	$ 780	$ 70
Cash Drawn From Facility	$ 117	$ 117	$ 105
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure, Percent		10.00%

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STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 2 AOCI (Details) - USD ($) $ in Millions	3 Months Ended				9 Months Ended				12 Months Ended
	Sep. 30, 2015		Sep. 30, 2014		Sep. 30, 2015		Sep. 30, 2014		Dec. 31, 2014	Dec. 31, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cumulative Translation Adjustment	$ (251)				$ (251)				$ (68)	$ 133
Change in cumulative translation adjustment	(47)		$ (127)		(183)		$ (114)		(201)
Benefit Plans Unrecognized Prior Service Credits	46				46				61	78
Amortization of unrecognized prior service credits included in net periodic costs	(4)	[1]	(4)	[1]	(15)	[1]	(12)	[1]	(17)
Unrealized Gains (Losses) on Derivative Instruments	(240)				(240)				(269)	(39)
Change in Unrealized Gains (Losses) on Derivative Instruments	(32)	[2]	36	[2]	29	[2]	33	[2]	(230)
Unrealized Losses on Investments	(1)				(1)				(1)	(1)
Change in Unrealized Losses on Investments					0				0
Accumulated Other Comprehensive Income (Loss), Net of Tax	(446)				(446)				(277)	$ 171
Total other comprehensive income (loss), net of tax	$ (83)		$ (95)		$ (169)		$ (93)		$ (448)

[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".

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DERIVATIVES Part 3 (Details) - USD ($) $ in Millions	3 Months Ended				9 Months Ended				12 Months Ended
	Sep. 30, 2015		Sep. 30, 2014		Sep. 30, 2015		Sep. 30, 2014		Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Objectives for Using Derivative Instruments					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 transaction, 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 part or in whole 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.
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Unrealized Gains (Losses) on Derivative Instruments	$ (32)	[1]	$ 36	[1]	$ 29	[1]	$ 33	[1]	$ (230)
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	(54)		1		(90)		15
Hedging Summary [Abstract]
Monetized positions and mark to market (gain) loss in accumulated other comprehensive income before tax	386		8		386		8
Price Risk Cash Flow Hedge Unrealized (Gain) Loss to be Reclassified During Next 12 Months	142				142
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	(11)		1		(23)		4
Commodity Contract [Member] | Cash Flow Hedging [Member]
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Unrealized Gains (Losses) on Derivative Instruments	(6)		(22)		21		(27)
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	(74)		(1)		(152)		18
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	1		0		4		0
Foreign Exchange Contract [Member] | Cash Flow Hedging [Member]
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Unrealized Gains (Losses) on Derivative Instruments	(11)		57		16		59
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	20		4		63		3
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]
Unrealized Gains (Losses) on Derivative Instruments	(15)		1		(8)		1
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	$ (1)		$ (2)		$ (5)		$ (6)

[1] For additional information regarding the impact of reclassifications into earnings, refer to Note 7, "Derivatives".

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PAYABLES AND OTHER CURRENT LIABILITIES

9 Months Ended

Sep. 30, 2015

Payables and Accruals [Abstract]

PAYABLES AND OTHER CURRENT LIABILITIES

PAYABLES AND OTHER CURRENT LIABILITIES

	September 30,		December 31,
(Dollars in millions)	2015		2014
Trade creditors	$	685	$	827
Derivative hedging liability	209		227
Accrued payrolls, vacation, and variable-incentive compensation	180		191
Accrued taxes	97		66
Other	378		410
Total payables and other current liabilities	$	1,549	$	1,721

"Other" consists primarily of accruals for interest payable, dividends payable, post-employment obligations, payroll deductions and employee benefits, accrued taxes, and the current portion of environmental liabilities.

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BORROWINGS Part 2 (Details) Credit Facility and Commercial Paper Borrowings - USD ($) $ in Millions	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2015	Jun. 30, 2014	Sep. 30, 2015	Dec. 31, 2014
Term Loan Agreement [Member]
Credit Facilities [Abstract]
Debt Instrument, Term			5 years
Credit Facility, Borrowing Capacity	$ 1,000		$ 1,000
Line of Credit Facility, Maximum Month-end Outstanding Amount			$ 350	$ 1,000
Line of Credit Facility, Interest Rate During Period			1.44%	1.41%
Repayments of Lines of Credit				$ 25
Long term commercial paper [Member]
Credit Facilities [Abstract]
Long-term Commercial Paper, Noncurrent	$ 392		$ 392	$ 235
Debt, Weighted Average Interest Rate	0.50%		0.50%	0.47%
A/R Facility [Member]
Credit Facilities [Abstract]
Credit Facility, Borrowing Capacity	$ 250		$ 250
Line of Credit Facility, Interest Rate During Period			0.95%
Line of Credit Facility, Expiration Date			Apr. 30, 2018
Borrowings under the A/R facility	225		$ 225
Repayments of Lines of Credit	25	$ 125
Revolving Credit Facility [Member]
Credit Facilities [Abstract]
Line of Credit Facility, Maximum Month-end Outstanding Amount			$ 0
Line of Credit Facility, Expiration Date			Oct. 31, 2020
Credit and A/R Facility
Credit Facilities [Abstract]
Credit Facility, Borrowing Capacity	883		$ 883	$ 1,265
Revolving Credit Facility [Member]
Credit Facilities [Abstract]
Credit Facility, Borrowing Capacity	$ 1,250		$ 1,250

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DERIVATIVES (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block]

Total notional amounts		September 30, 2015	December 31, 2014
Foreign Exchange Forward and Option Contracts (in millions)
	EUR/USD (in EUR)	€696	€810
	EUR/USD (in approximate USD equivalent)	$795	$1,000
	JPY/USD (in JPY)	¥3,000	¥4,800
	JPY/USD (in approximate USD equivalent)	$25	$40
Commodity Forward and Collar Contracts
	Contract ethylene sales (in thousand metric tons)	0	14
	Feedstock (in million barrels)	25	33
	Feedstock (in thousand metric tons)	8	30
	Energy (in million million british thermal units)	28	25
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 Fair Value Hedging Instruments

(Dollars in millions)		Fair Value Measurement
Derivative Assets	Statement of Financial Position Location	September 30, 2015		December 31, 2014
Interest rate swap	Other noncurrent assets	$	12	$	5

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	September 30, 2015		December 31, 2014
Cash Flow Hedges
Commodity contracts	Other current assets	$	—	$	2
Foreign exchange contracts	Other current assets	66		61
Foreign exchange contracts	Other noncurrent assets	84		71
		$	150	$	134

(Dollars in millions)		Fair Value Measurements Significant Other Observable Inputs
Derivative Liabilities	Statement of Financial Position Location	September 30, 2015		December 31, 2014
Cash Flow Hedges
Commodity contracts	Payables and other current liabilities	$	177	$	193
Commodity contracts	Other long-term liabilities	250		289
Foreign exchange contracts	Payables and other current liabilities	2		10
Forward starting interest rate swap contracts	Other long-term liabilities	34		16
		$	463	$	508

Derivative Instrument Gain Loss in Statement of Financial Performance

Derivatives' Hedging Relationships

	Third 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	September 30, 2015			September 30, 2014				September 30, 2015			September 30, 2014
Commodity contracts	$	(6	)	$	(22	)	Sales	$	1		$	—
							Cost of Sales	(74		)	(1		)
Foreign exchange contracts	(11		)	57			Sales	20			4
Forward starting interest rate swap contracts	(15		)	1			Net interest expense	(1		)	(2		)
	$	(32	)	$	36			$	(54	)	$	1
	First Nine Months
(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	September 30, 2015			September 30, 2014				September 30, 2015			September 30, 2014
Commodity contracts	$	21		$	(27	)	Sales	$	4		$	—
							Cost of sales	(152		)	18
Foreign exchange contracts	16			59			Sales	63			3
Forward starting interest rate swap contracts	(8		)	1			Net interest expense	(5		)	(6		)
	$	29		$	33			$	(90	)	$	15

Financial assets and liabilities valued on a recurring basis

(Dollars in millions)				Fair Value Measurements at September 30, 2015
Description	September 30, 2015			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	162		$	—	$	162		$	—
Derivative Liabilities	(463		)	—		(463		)	—
	$	(301	)	$	—	$	(301	)	$	—

(Dollars in millions)				Fair Value Measurements at December 31, 2014
Description	December 31, 2014			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	139		$	—	$	137		$	2
Derivative Liabilities	(508		)	—		(508		)	—
	$	(369	)	$	—	$	(371	)	$	2

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BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Long-term Borrowings

	September 30,		December 31,
(Dollars in millions)	2015		2014
Borrowings consisted of:
3% notes due 2015	$	250	$	250
2.4% notes due 2017	999		998
6.30% notes due 2018	167		169
5.5% notes due 2019	250		250
2.7% notes due 2020	799		798
4.5% notes due 2021	250		250
3.6% notes due 2022	903		903
7 1/4% debentures due 2024	244		244
7 5/8% debentures due 2024	54		54
3.8% notes due 2025	796		796
7.60% debentures due 2027	222		222
4.8% notes due 2042	497		497
4.65% notes due 2044	877		877
Credit facilities and commercial paper borrowings	967		1,235
Capital leases	5		6
Total borrowings	7,280		7,549
Borrowings due within one year	251		301
Long-term borrowings	$	7,029	$	7,248

Fair Value of Borrowings

evel 2.

			Fair Value Measurements at September 30, 2015
(Dollars in millions)	Recorded Amount September 30, 2015		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	$	7,029	$	7,146	$	6,176	$	970	$	—

			Fair Value Measurements at December 31, 2014
(Dollars in millions)	Recorded Amount December 31, 2014		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	$	7,248	$	7,557	$	6,366	$	1,191	$	—

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SHARE-BASED COMPENSATION AWARDS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense before tax	$ 9	$ 6	$ 30	$ 23
Share-based compensation net of deferred tax expense	$ 5	$ 4	$ 18	$ 14

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BORROWINGS Part 3 (Details) Fair Value - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term borrowings	$ 7,029	$ 7,248
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Borrowings, Fair Value	7,146	7,557
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	6,176	6,366
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	970	1,191
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

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RETIREMENT PLANS (Tables)

9 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Components of net periodic benefit cost

Components of net periodic benefit (credit) cost were as follows:

	Third Quarter
	Pension Plans												Other Postretirement Benefit Plans
	2015						2014						2015			2014
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit (credit) cost:
Service cost	$	10		$	3		$	11		$	4		$	2		$	2
Interest cost	21			7			24			7			9			11
Expected return on assets	(38		)	(9		)	(36		)	(9		)	(1		)	(2		)
Amortization of:
Prior service (credit) cost	(1		)	—			(1		)	—			(6		)	(6		)
Net periodic benefit (credit) cost	$	(8	)	$	1		$	(2	)	$	2		$	4		$	5
	First Nine Months
	Pension Plans												Other Postretirement Benefit Plans
	2015						2014						2015			2014
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit (credit) cost:
Service cost	$	29		$	11		$	31		$	11		$	6		$	6
Interest cost	65			20			74			23			29			33
Expected return on assets	(111		)	(28		)	(107		)	(28		)	(4		)	(5		)
Curtailment gain(1)	—			(7		)	—			—			—			—
Amortization of:
Prior service (credit) cost	(3		)	—			(3		)	—			(18		)	(18		)
Mark-to-market pension and other postretirement benefits loss(2)	—			2			—			—			—			—
Net periodic benefit (credit) cost	$	(20	)	$	(2	)	$	(5	)	$	6		$	13		$	16

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ENVIRONMENTAL MATTERS (Tables)

9 Months Ended

Sep. 30, 2015

Accrual for Environmental Loss Contingencies Disclosure [Abstract]

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, and are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2014	$	324
Changes in estimates recognized in earnings	11
Cash reductions	(20		)
Balance at September 30, 2015	$	315

Schedule of environmental remediation liabilities, current and non-current

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 obligation is 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 $24 million and $21 million at September 30, 2015 and December 31, 2014, respectively. 

The Company's total environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is recognized in the Unaudited Consolidated Statements of Financial Position as follows:

(Dollars in millions)	September 30, 2015		December 31, 2014
Environmental contingent liabilities, current	$	35	$	35
Environmental contingent liabilities, long-term	304		310
Total	$	339	$	345

The Company also has contractual asset retirement obligations other than for environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily for the future closure of leased manufacturing assets at Pace, Florida and Oulu, Finland acquired from Taminco. These accrued non-environmental asset retirement obligations were $43 million and $44 million at September 30, 2015 and December 31, 2014, respectively.

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INVENTORIES

9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

	September 30,			December 31,
(Dollars in millions)	2015			2014
At FIFO or average cost (approximates current cost)
Finished goods	$	1,116		$	1,130
Work in process	214			288
Raw materials and supplies	510			553
Total inventories	1,840			1,971
LIFO Reserve	(356		)	(462		)
Total inventories	$	1,484		$	1,509

Inventories valued on the last-in, first-out ("LIFO") method were approximately 55 percent at both September 30, 2015 and December 31, 2014.

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STOCKHOLDERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Reconciliation of the changes in stockholders' equity

A reconciliation of the changes in stockholders' equity for first nine months 2015 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, 2014	2	1,817	4,545		(277	)	(2,577	)	3,510		80		3,590
Net Earnings	—	—	724		—		—		724		5		729
Cash Dividends Declared (1) ($1.20 per share)	—	—	(179	)	—		—		(179	)	—		(179	)
Other Comprehensive Income	—	—	—		(169	)	—		(169	)	—		(169	)
Share-Based Compensation Expense (2)	—	30	—		—		—		30		—		30
Stock Option Exercises	—	7	—		—		—		7		—		7
Other (3)	—	2	—		—		—		2		—		2
Share Repurchase	—	—	—		—		(48	)	(48	)	—		(48	)
Distributions to Noncontrolling Interest	—	—	—		—		—		—		(6	)	(6	)
Balance at September 30, 2015	2	1,856	5,090		(446	)	(2,625	)	3,877		79		3,956

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, 2013	$	133		$	78		$	(39	)	$	(1	)	$	171
Period change	(201		)	(17		)	(230		)	—			(448		)
Balance at December 31, 2014	(68		)	61			(269		)	(1		)	(277		)
Period change	(183		)	(15		)	29			—			(169		)
Balance at September 30, 2015	$	(251	)	$	46		$	(240	)	$	(1	)	$	(446	)

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:

	Third Quarter
	2015						2014
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(47	)	$	(47	)	$	(127	)	$	(127	)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs (1)	(7		)	(4		)	(7		)	(4		)
Derivatives and hedging: (2)
Unrealized gain (loss)	(107		)	(66		)	58			36
Reclassification adjustment for (gain) loss included in net income	55			34			—			—
Change in derivatives and hedging	(52		)	(32		)	58			36
Total other comprehensive income (loss)	$	(106	)	$	(83	)	$	(76	)	$	(95	)
	First Nine Months
	2015						2014
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(183	)	$	(183	)	$	(115	)	$	(114	)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs (1)	(21		)	(15		)	(21		)	(12		)
Derivatives and hedging:(2)
Unrealized gain (loss)	(44		)	(27		)	67			42
Reclassification adjustment for (gain) loss included in net income	90			56			(14		)	(9		)
Change in derivatives and hedging	46			29			53			33
Total other comprehensive income (loss)	$	(158	)	$	(169	)	$	(83	)	$	(93	)

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PAYABLES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Payables and Accruals [Abstract]
Trade creditors	$ 685	$ 827
Derivative hedging liability	209	227
Accrued payrolls, vacation, and variable-incentive compensation	180	191
Accrued taxes	97	66
Environmental contingent liabilities, current portion	35	35
Other	378	410
Total payables and other current liabilities	$ 1,549	$ 1,721

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STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 3 OCI (Details) - USD ($) $ in Millions		3 Months Ended				9 Months Ended				12 Months Ended
		Sep. 30, 2015		Sep. 30, 2014		Sep. 30, 2015		Sep. 30, 2014		Dec. 31, 2014
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Change in cumulative translation adjustment		$ (47)		$ (127)		$ (183)		$ (114)		$ (201)
Amortization of unrecognized prior service credits included in net periodic costs		(4)	[1]	(4)	[1]	(15)	[1]	(12)	[1]	(17)
Unrealized gain (loss)	[2]	(66)		36		(27)		42
Reclassification adjustment for (gain) loss included in net income	[2]	34		0		56		(9)
Change in derivatives and hedging		(32)	[2]	36	[2]	29	[2]	33	[2]	(230)
Total other comprehensive income (loss), net of tax		(83)		(95)		(169)		(93)		$ (448)
Other Comprehensive Income (Loss), before Tax [Abstract]
Change in cumulative translation adjustment, before tax		(47)		(127)		(183)		(115)
Amortization of unrecognized prior service credits included in net periodic costs, before tax	[1]	(7)		(7)		(21)		(21)
Unrealized gain (loss), before tax	[2]	(107)		58		(44)		67
Reclassification adjustment for (gain) loss included in net income, before tax	[2]	55		0		90		(14)
Change in derivatives and hedging, before tax	[2]	(52)		58		46		53
Total other comprehensive income (loss), before tax		$ (106)		$ (76)		$ (158)		$ (83)

[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".

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UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND RETAINED EARNINGS - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015		Sep. 30, 2014
Income Statement [Abstract]
Sales		$ 2,447	$ 2,413	$ 7,423		$ 7,178
Cost of sales		1,752	1,777	5,352		5,290
Gross profit		695	636	2,071		1,888
Selling, general and administrative expenses		178	171	552		511
Research and development expenses		64	56	177		165
Asset impairments and restructuring charges, net		21	71	130		77
Operating earnings		432	338	1,212		1,135
Net interest expense		66	45	198		132
Other (income) charges, net		13	(5)	2		(16)
Earnings from continuing operations before income taxes		353	298	1,012		1,019
Provision for income taxes from continuing operations		95	86	283		281
Earnings from continuing operations		258	212	729		738
Earnings from discontinued operations, net of tax		0	0	0		2
Net earnings		258	212	729		740
Net earnings attributable to noncontrolling interest		2	2	5		5
Net earnings attributable to Eastman		256	210	724		735
Amounts attributable to Eastman stockholders
Earnings from continuing operations, net of tax		256	210	724		733
Earnings from discontinued operations, net of tax		0	0			2
Net earnings attributable to Eastman		$ 256	$ 210	$ 724		$ 735
Basic earnings per share attributable to Eastman
Earnings from continuing operations	[1]	$ 1.73	$ 1.41	$ 4.87		$ 4.89
Earnings from discontinued operations		0.00	0.00	0.00		0.01
Basic earnings per share attributable to Eastman		1.73	1.41	4.87		4.90
Diluted earnings per share attributable to Eastman
Earnings from continuing operations	[1]	1.71	1.39	4.83		4.83
Earnings from discontinued operations		0.00	0.00	0.00		0.02
Diluted earnings per share attributable to Eastman		$ 1.71	$ 1.39	$ 4.83		$ 4.85
Comprehensive Income
Net earnings including noncontrolling interest		$ 258	$ 212	$ 729		$ 740
Other comprehensive income (loss), net of tax
Change in cumulative translation adjustment		(47)	(127)	(183)		(114)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs	[2]	(4)	(4)	(15)		(12)
Derivatives and hedging:
Unrealized gain (loss) during period	[3]	(66)	36	(27)		42
Reclassification adjustment for (gain) loss included in net income	[3]	34	0	56		(9)
Total other comprehensive income (loss), net of tax		(83)	(95)	(169)		(93)
Comprehensive income including noncontrolling interest		175	117	560		647
Net earnings attributable to noncontrolling interest		2	2	5		5
Comprehensive income attributable to Eastman		173	115	555		642
Retained Earnings
Retained earnings at beginning of period		4,893	4,431	4,545		4,012
Net earnings attributable to Eastman		256	210	724		735
Cash dividends declared		(59)	(53)	(179)	[4]	(159)
Retained earnings at end of period		$ 5,090	$ 4,588	$ 5,090		$ 4,588

[1] Earnings per share are calculated using whole dollars and shares.

[2] Included in the calculation of net periodic benefit costs for pension and other postretirement benefit plans. See Note 8, "Retirement Plans".

[3] For additional information regarding the impact of reclassifications into earnings, refer to Note 7, "Derivatives".

[4] Includes cash dividends paid and dividends declared, but unpaid.

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DERIVATIVES Part 1 (Details) T in Thousands, € in Millions, ¥ in Millions, bbl in Millions, MMBTU in Millions, $ in Millions	9 Months Ended
	Sep. 30, 2015 bbl	Sep. 30, 2015 T	Sep. 30, 2015 MMBTU	Sep. 30, 2015 JPY (¥)	Sep. 30, 2015 USD ($)	Sep. 30, 2015 EUR (€)	Dec. 31, 2014 bbl	Dec. 31, 2014 T	Dec. 31, 2014 MMBTU	Dec. 31, 2014 JPY (¥)	Dec. 31, 2014 USD ($)	Dec. 31, 2014 EUR (€)
Hedging Programs [Abstract]
Objectives for Using Derivative Instruments	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 transaction, 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 part or in whole 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.
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset					$ 150						$ 134
Designated as Hedging Instrument [Member]
Derivative [Line Items]
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value					463						508
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | Interest Rate Contract [Member]
Derivative [Line Items]
Derivative, Notional Amount					275						275
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Commodity Contract [Member] | Raw Materials [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount	25	8					33	30
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Commodity Contract [Member] | Energy Related Derivative [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount | MMBTU			28						25
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Commodity Contract [Member] | Contract ethylene sales contracts [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount | T		0						14
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Foreign Exchange Contract [Member] | Euro Member Countries, Euro
Derivative [Line Items]
Derivative, Notional Amount					795	€ 696					1,000	€ 810
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Foreign Exchange Contract [Member] | Japan, Yen
Derivative [Line Items]
Derivative, Notional Amount				¥ 3,000	25					¥ 4,800	40
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Derivative, Notional Amount					$ 500						$ 500

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2015

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 2014 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 2014 Annual Report on Form 10-K. The December 31, 2014 financial position data included herein was derived from the audited consolidated financial statements included in the 2014 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.

Off Balance Sheet Financing Arrangements

The Company assumed the rights and obligations under non-recourse factoring facilities as part of the acquisition of Taminco Corporation ("Taminco"). The non-recourse factoring facilities have a combined limit of $177 million (the U.S. Dollar equivalent of the €158 million limit amount as of September 30, 2015) 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 third quarter and first nine months2015, were approximately $245 million and $780 million, respectively. The total amount of cumulative receivables sold during the year ended December 31, 2014, since the acquisition of Taminco on December 5, 2014, was $70 million. 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 $117 million and $105 million at September 30, 2015 and December 31, 2014, 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 2014 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 2014 Annual Report on Form 10-K. The December 31, 2014 financial position data included herein was derived from the audited consolidated financial statements included in the 2014 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 assumed the rights and obligations under non-recourse factoring facilities as part of the acquisition of Taminco Corporation ("Taminco"). The non-recourse factoring facilities have a combined limit of $177 million (the U.S. Dollar equivalent of the €158 million limit amount as of September 30, 2015) 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 third quarter and first nine months2015, were approximately $245 million and $780 million, respectively. The total amount of cumulative receivables sold during the year ended December 31, 2014, since the acquisition of Taminco on December 5, 2014, was $70 million. 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 $117 million and $105 million at September 30, 2015 and December 31, 2014, 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.

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

9 Months Ended

Sep. 30, 2015

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 Nine Months
	2015			2014
Other current assets	$	29		$	23
Other noncurrent assets	43			25
Payables and other current liabilities	92			52
Long-term liabilities and equity	(65		)	(32		)
Total	$	99		$	68

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company's products and operations are currently managed and reported in five operating segments: Additives & Functional Products ("AFP"), Adhesives & Plasticizers ("A&P"), Advanced Materials ("AM"), Fibers, and Specialty Fluids & Intermediates ("SFI"). 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 2014 Annual Report on Form 10-K.

Third quarter and first nine months 2015 included sales revenue from the acquired Taminco businesses reported in the AFP and SFI segments, and sales revenue from the acquired Commonwealth business reported in the AM segment.

	Third Quarter
(Dollars in millions)	2015		2014
Sales
Additives & Functional Products	$	602	$	458
Adhesives & Plasticizers	305		347
Advanced Materials	624		604
Fibers	320		346
Specialty Fluids & Intermediates	584		650
Total Sales by Segment	2,435		2,405
Other	12		8
Total Sales	$	2,447	$	2,413
	First Nine Months
(Dollars in millions)	2015		2014
Sales
Additives & Functional Products	$	1,827	$	1,333
Adhesives & Plasticizers	942		1,050
Advanced Materials	1,832		1,816
Fibers	903		1,086
Specialty Fluids & Intermediates	1,883		1,884
Total Sales by Segment	7,387		7,169
Other	36		9
Total Sales	$	7,423	$	7,178

	Third Quarter
(Dollars in millions)	2015			2014
Operating Earnings (Loss)
Additives & Functional Products	$	126		$	37
Adhesives & Plasticizers	74			52
Advanced Materials	98			76
Fibers	102			112
Specialty Fluids & Intermediates	48			90
Total Operating Earnings by Segment	448			367
Other
Growth initiatives and businesses not allocated to segments	(18		)	(18		)
Pension and other postretirement benefit income (expense), net not allocated to operating segments	11			3
Acquisition integration, transaction, and restructuring costs	(9		)	(14		)
Total Operating Earnings	$	432		$	338
	First Nine Months
(Dollars in millions)	2015			2014
Operating Earnings (Loss)
Additives & Functional Products	$	365		$	236
Adhesives & Plasticizers	190			155
Advanced Materials	301			217
Fibers	188			352
Specialty Fluids & Intermediates	233			248
Total Operating Earnings by Segment	1,277			1,208
Other
Growth initiatives and businesses not allocated to segments	(66		)	(46		)
Pension and other postretirement benefit income (expense), net not allocated to operating segments	28			9
Acquisition integration, transaction, and restructuring costs	(27		)	(36		)
Total Operating Earnings	$	1,212		$	1,135

	September 30,		December 31,
(Dollars in millions)	2015		2014
Assets by Segment (1)
Additives & Functional Products	$	4,813	$	4,900
Adhesives & Plasticizers	960		1,011
Advanced Materials	4,249		4,235
Fibers	997		986
Specialty Fluids & Intermediates	3,603		3,710
Total Assets by Segment	14,622		14,842
Corporate Assets	1,258		1,230
Total Assets	$	15,880	$	16,072

⁽¹⁾  The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information Disclosure

	Third Quarter
(Dollars in millions)	2015		2014
Sales
Additives & Functional Products	$	602	$	458
Adhesives & Plasticizers	305		347
Advanced Materials	624		604
Fibers	320		346
Specialty Fluids & Intermediates	584		650
Total Sales by Segment	2,435		2,405
Other	12		8
Total Sales	$	2,447	$	2,413
	First Nine Months
(Dollars in millions)	2015		2014
Sales
Additives & Functional Products	$	1,827	$	1,333
Adhesives & Plasticizers	942		1,050
Advanced Materials	1,832		1,816
Fibers	903		1,086
Specialty Fluids & Intermediates	1,883		1,884
Total Sales by Segment	7,387		7,169
Other	36		9
Total Sales	$	7,423	$	7,178

	Third Quarter
(Dollars in millions)	2015			2014
Operating Earnings (Loss)
Additives & Functional Products	$	126		$	37
Adhesives & Plasticizers	74			52
Advanced Materials	98			76
Fibers	102			112
Specialty Fluids & Intermediates	48			90
Total Operating Earnings by Segment	448			367
Other
Growth initiatives and businesses not allocated to segments	(18		)	(18		)
Pension and other postretirement benefit income (expense), net not allocated to operating segments	11			3
Acquisition integration, transaction, and restructuring costs	(9		)	(14		)
Total Operating Earnings	$	432		$	338
	First Nine Months
(Dollars in millions)	2015			2014
Operating Earnings (Loss)
Additives & Functional Products	$	365		$	236
Adhesives & Plasticizers	190			155
Advanced Materials	301			217
Fibers	188			352
Specialty Fluids & Intermediates	233			248
Total Operating Earnings by Segment	1,277			1,208
Other
Growth initiatives and businesses not allocated to segments	(66		)	(46		)
Pension and other postretirement benefit income (expense), net not allocated to operating segments	28			9
Acquisition integration, transaction, and restructuring costs	(27		)	(36		)
Total Operating Earnings	$	1,212		$	1,135

	September 30,		December 31,
(Dollars in millions)	2015		2014
Assets by Segment (1)
Additives & Functional Products	$	4,813	$	4,900
Adhesives & Plasticizers	960		1,011
Advanced Materials	4,249		4,235
Fibers	997		986
Specialty Fluids & Intermediates	3,603		3,710
Total Assets by Segment	14,622		14,842
Corporate Assets	1,258		1,230
Total Assets	$	15,880	$	16,072

⁽¹⁾  The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

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ACQUISITIONS ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2015

Taminco [Member]

Acquired Finite-Lived Intangible Assets [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

llowing table summarizes the preliminary purchase price allocation for the Taminco acquisition. Any subsequent adjustments are not expected to have a material impact on the Company's results of operations.

Assets acquired and liabilities assumed
(Dollars in millions)	December 31, 2014			2015 Net Adjustments to Fair Value			September 30, 2015
Current assets	$	266		$	(3	)	$	263
Properties and equipment	658			(3		)	655
Intangible assets	1,002			(13		)	989
Other noncurrent assets	37			1			38
Goodwill	1,509			32			1,541
Current liabilities	(161		)	1			(160		)
Long-term liabilities	(546		)	(15		)	(561		)
Total purchase price, net of cash acquired	$	2,765		$	—		$	2,765

Acqu

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

Acquired intangible assets are definite-lived assets and consist primarily of customer relationships, developed technologies, and contracts.

Intangible Assets acquired
(Dollars in millions)	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets
Customer relationships	$	604	24
Developed technologies	205		17
Contracts	180		5
Total	$	989

Business Combination, Segment Allocation [Table Text Block]

Goodwill from the Taminco acquisition has been preliminarily allocated to certain of the Company's reportable segments as set out in the table below. None of the goodwill is deductible for tax purposes.

Goodwill	Goodwill by Segment
(Dollars in millions)
Additives & Functional Products	$	918
Specialty Fluids & Intermediates	623
Total	$	1,541

Commonwealth [Member]

Acquired Finite-Lived Intangible Assets [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following table summarizes the final purchase price allocation for the Commonwealth acquisition:

Assets acquired and liabilities assumed
(Dollars in millions)	As of December 11, 2014
Current assets	$	51
Machinery and equipment	38
Goodwill	274
Intangible assets	125
Long-term liabilities	(50		)
Total purchase price	$	438

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

Intangible Assets acquired
(Dollars in millions)	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets
Customer relationships	$	72	14
Developed technologies	41		18
Indefinite-lived intangible asset
Brand name	12
Total	$	125

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ACQUISITIONS ACQUISITIONS

9 Months Ended

Sep. 30, 2015

Acquisitions [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

ACQUISITIONS

Taminco Corporation

On December 5, 2014, the Company completed its acquisition of Taminco, a global specialty chemical company. The fair value of total consideration transferred was $2.8 billion, consisting of cash of $1.7 billion, net of cash acquired, and repayment of Taminco's debt of $1.1 billion. Taminco's former specialty amines and crop protection businesses are now operated as part of the Additives & Functional Products ("AFP") segment and its former functional amines business are now operated as part of the Specialty Fluids & Intermediates ("SFI") segment. For the preliminary purchase price allocation see Note 2, "Acquisitions", to the consolidated financial statements in Part II, Item 8 of the Company's 2014 Annual Report on Form 10-K. During third quarter 2015, the Company continued to refine its preliminary purchase price allocation with no adjustments to goodwill. As of September 30, 2015, the purchase price allocation remains preliminary as management completes its assessment of certain items, primarily environmental, legal, and tax. The purchase price allocation will be finalized in fourth quarter 2015. The following table summarizes the preliminary purchase price allocation for the Taminco acquisition. Any subsequent adjustments are not expected to have a material impact on the Company's results of operations.

Assets acquired and liabilities assumed
(Dollars in millions)	December 31, 2014			2015 Net Adjustments to Fair Value			September 30, 2015
Current assets	$	266		$	(3	)	$	263
Properties and equipment	658			(3		)	655
Intangible assets	1,002			(13		)	989
Other noncurrent assets	37			1			38
Goodwill	1,509			32			1,541
Current liabilities	(161		)	1			(160		)
Long-term liabilities	(546		)	(15		)	(561		)
Total purchase price, net of cash acquired	$	2,765		$	—		$	2,765

Acquired intangible assets are definite-lived assets and consist primarily of customer relationships, developed technologies, and contracts.

Intangible Assets acquired
(Dollars in millions)	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets
Customer relationships	$	604	24
Developed technologies	205		17
Contracts	180		5
Total	$	989

Goodwill from the Taminco acquisition has been preliminarily allocated to certain of the Company's reportable segments as set out in the table below. None of the goodwill is deductible for tax purposes.

Goodwill	Goodwill by Segment
(Dollars in millions)
Additives & Functional Products	$	918
Specialty Fluids & Intermediates	623
Total	$	1,541

In third quarter and first nine months2015, the Company recognized $4 million and $15 million, respectively in integration and transaction costs related to the acquisition. In 2014, the Company recognized $15 million in pre-close transaction and integration costs, and $13 million in pre-close financing costs related to the acquisition. Integration and transaction costs were expensed as incurred and are included in the "Selling, general and administrative expenses" line item and pre-close financing costs are included in the "Other (income) charges, net" and "Net interest expense" line items in the Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.

Commonwealth Laminating & Coating, Inc.

On December 11, 2014, the Company acquired Commonwealth Laminating & Coating, Inc. ("Commonwealth") for a total cash purchase price of $438 million. The acquisition was accounted for as a business combination and is reported in the Advanced Materials ("AM") segment. There was no change to the final purchase price allocation from the preliminary allocation in the Company's 2014 Annual Report on Form 10-K, see Note 2, "Acquisitions", to the consolidated financial statements in Part II, Item 8 of the Company's 2014 Annual Report on Form 10-K.

The following table summarizes the final purchase price allocation for the Commonwealth acquisition:

Assets acquired and liabilities assumed
(Dollars in millions)	As of December 11, 2014
Current assets	$	51
Machinery and equipment	38
Goodwill	274
Intangible assets	125
Long-term liabilities	(50		)
Total purchase price	$	438

Current assets consist primarily of inventory acquired. Machinery and equipment acquired included a manufacturing operation in Martinsville, Virginia. Management valued machinery and equipment using the cost approach supported by published industry sources.

Acquired intangible assets included customer relationships and developed technologies in the window film industry. Also acquired was the SunTek^® brand name that is business-to-business in nature. Management valued intangible assets using the relief from royalty and multi-period excess earnings methods, both forms of the income approach supported by observable market data for peer chemical companies.

Intangible Assets acquired
(Dollars in millions)	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets
Customer relationships	$	72	14
Developed technologies	41		18
Indefinite-lived intangible asset
Brand name	12
Total	$	125

In connection with this acquisition, the Company recognized goodwill equal to the excess of the purchase price over the estimated fair value of net tangible and intangible assets acquired and liabilities assumed. None of the goodwill is deductible for tax purposes.

In third quarter and first nine months2015, the Company recognized $1 million and $5 million, respectively in integration costs related to the acquisition. In 2014, the Company recognized $7 million in pre-close transaction and integration costs related to the acquisition. Integration and transaction costs were expensed as incurred and are included in the "Selling, general and administrative expenses" line item in the Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. As required by purchase accounting, acquired inventories were marked to fair value. In first six months2015, the remaining portion of these inventories was sold resulting in an increase in cost of sales of $7 million.

Beginning in December 2014, the Company's consolidated results of operations included the results of Commonwealth. Based on applicable accounting and reporting guidance, the acquisition is not material to the Company's consolidated financial statements; therefore, pro forma financial information has not been presented.

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UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Millions		Sep. 30, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents		$ 309	$ 214
Trade receivables, net		968	936
Miscellaneous receivables		152	264
Inventories		1,484	1,509
Other current assets		269	250
Total current assets		3,182	3,173
Properties
Properties and equipment at cost		11,052	11,026
Less: Accumulated depreciation		6,007	5,939
Net properties		5,045	5,087
Goodwill		4,482	4,486
Intangible assets, net of accumulated amortization		2,718	2,905
Other noncurrent assets		453	421
Total assets	[1]	15,880	16,072
Current liabilities
Payables and other current liabilities		1,549	1,721
Borrowings due within one year		251	301
Total current liabilities		1,800	2,022
Long-term borrowings		7,029	7,248
Deferred income tax liabilities		1,004	946
Post-employment obligations		1,380	1,498
Other long-term liabilities		711	768
Total liabilities		11,924	12,482
Stockholders' equity
Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 216,873,620 and 216,256,971 for 2015 and 2014, respectively)		2	2
Additional paid-in capital		1,856	1,817
Retained earnings		5,090	4,545
Accumulated other comprehensive loss		(446)	(277)
Stockholder's Equity before Treasury Stock		6,502	6,087
Less: Treasury stock at cost (68,316,891 shares for 2015 and 67,660,313 shares for 2014)		2,625	2,577
Total Eastman stockholders' equity		3,877	3,510
Noncontrolling interest		79	80
Total equity		3,956	3,590
Total liabilities and stockholders' equity		$ 15,880	$ 16,072

[1] The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

A reconciliation of the changes in stockholders' equity for first nine months 2015 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, 2014	2	1,817	4,545		(277	)	(2,577	)	3,510		80		3,590
Net Earnings	—	—	724		—		—		724		5		729
Cash Dividends Declared (1) ($1.20 per share)	—	—	(179	)	—		—		(179	)	—		(179	)
Other Comprehensive Income	—	—	—		(169	)	—		(169	)	—		(169	)
Share-Based Compensation Expense (2)	—	30	—		—		—		30		—		30
Stock Option Exercises	—	7	—		—		—		7		—		7
Other (3)	—	2	—		—		—		2		—		2
Share Repurchase	—	—	—		—		(48	)	(48	)	—		(48	)
Distributions to Noncontrolling Interest	—	—	—		—		—		—		(6	)	(6	)
Balance at September 30, 2015	2	1,856	5,090		(446	)	(2,625	)	3,877		79		3,956

⁽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, 2013	$	133		$	78		$	(39	)	$	(1	)	$	171
Period change	(201		)	(17		)	(230		)	—			(448		)
Balance at December 31, 2014	(68		)	61			(269		)	(1		)	(277		)
Period change	(183		)	(15		)	29			—			(169		)
Balance at September 30, 2015	$	(251	)	$	46		$	(240	)	$	(1	)	$	(446	)

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:

	Third Quarter
	2015						2014
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(47	)	$	(47	)	$	(127	)	$	(127	)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs (1)	(7		)	(4		)	(7		)	(4		)
Derivatives and hedging: (2)
Unrealized gain (loss)	(107		)	(66		)	58			36
Reclassification adjustment for (gain) loss included in net income	55			34			—			—
Change in derivatives and hedging	(52		)	(32		)	58			36
Total other comprehensive income (loss)	$	(106	)	$	(83	)	$	(76	)	$	(95	)
	First Nine Months
	2015						2014
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(183	)	$	(183	)	$	(115	)	$	(114	)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs (1)	(21		)	(15		)	(21		)	(12		)
Derivatives and hedging:(2)
Unrealized gain (loss)	(44		)	(27		)	67			42
Reclassification adjustment for (gain) loss included in net income	90			56			(14		)	(9		)
Change in derivatives and hedging	46			29			53			33
Total other comprehensive income (loss)	$	(158	)	$	(169	)	$	(83	)	$	(93	)

⁽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".

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Document and Entity Information - USD ($)	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	EASTMAN CHEMICAL CO
Entity Central Index Key	0000915389
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 12,933,550,862
Entity Common Stock, Shares Outstanding	148,607,527
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015

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EARNINGS AND DIVIDENDS PER SHARE

9 Months Ended

Sep. 30, 2015

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") from continuing operations:

	Third Quarter				First Nine Months
	2015		2014		2015		2014
(In millions, except per share amounts)
Numerator
Earnings attributable to Eastman:
Earnings from continuing operations, net of tax	$	256	$	210	$	724	$	733
Denominator
Weighted average shares used for basic EPS	148.6		148.7		148.6		149.8
Dilutive effect of stock options and other awards	1.2		1.6		1.2		1.7
Weighted average shares used for diluted EPS	149.8		150.3		149.8		151.5
EPS from continuing operations (1)
Basic	$	1.73	$	1.41	$	4.87	$	4.89
Diluted	$	1.71	$	1.39	$	4.83	$	4.83

⁽¹⁾  Earnings per share are calculated using whole dollars and shares.

In third quarter and first nine months2015, common shares underlying options to purchase 773,643 and 264,043 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. Third quarter and first nine months2015 reflect the impact of share repurchases of 221,578 and 656,578, respectively.

In both third quarter and first nine months 2014, common shares underlying options to purchase 210,143 shares 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. Third quarter and first nine months 2014 reflect the impact of share repurchases of 618,896 and 4,945,452 shares, respectively.

The Company declared cash dividends of $0.40 and $0.35 per share in third quarter2015 and 2014, respectively, and $1.20 and $1.05 per share in first nine months 2015 and 2014, respectively.

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UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
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)	216,873,620	216,256,971
Treasury stock at cost (in shares)	68,316,891	67,660,313

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DERIVATIVES

9 Months Ended

Sep. 30, 2015

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 transaction, 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 part or in whole 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 2014 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. In 2014, the Company entered into interest rate swaps to hedge the interest rate risk on the 3.6% notes due 2022. As of September 30, 2015 and December 31, 2014, the total notional amount of the Company's interest rate swaps was $275 million.

Fair Value Measurement of Derivatives Designated as Fair Value Hedging Instruments

(Dollars in millions)		Fair Value Measurement
Derivative Assets	Statement of Financial Position Location	September 30, 2015		December 31, 2014
Interest rate swap	Other noncurrent assets	$	12	$	5

Derivatives' Fair Value Hedging Relationships

	Third 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		September 30, 2015		September 30, 2014
Interest rate swaps	Net interest expense	$	3	$	2

	Nine Months Ended
(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		September 30, 2015		September 30, 2014
Interest rate swaps	Net interest expense	$	10	$	3

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		September 30, 2015	December 31, 2014
Foreign Exchange Forward and Option Contracts (in millions)
	EUR/USD (in EUR)	€696	€810
	EUR/USD (in approximate USD equivalent)	$795	$1,000
	JPY/USD (in JPY)	¥3,000	¥4,800
	JPY/USD (in approximate USD equivalent)	$25	$40
Commodity Forward and Collar Contracts
	Contract ethylene sales (in thousand metric tons)	0	14
	Feedstock (in million barrels)	25	33
	Feedstock (in thousand metric tons)	8	30
	Energy (in million million british thermal units)	28	25
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	September 30, 2015		December 31, 2014
Cash Flow Hedges
Commodity contracts	Other current assets	$	—	$	2
Foreign exchange contracts	Other current assets	66		61
Foreign exchange contracts	Other noncurrent assets	84		71
		$	150	$	134

(Dollars in millions)		Fair Value Measurements Significant Other Observable Inputs
Derivative Liabilities	Statement of Financial Position Location	September 30, 2015		December 31, 2014
Cash Flow Hedges
Commodity contracts	Payables and other current liabilities	$	177	$	193
Commodity contracts	Other long-term liabilities	250		289
Foreign exchange contracts	Payables and other current liabilities	2		10
Forward starting interest rate swap contracts	Other long-term liabilities	34		16
		$	463	$	508

Derivatives' Hedging Relationships

	Third 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	September 30, 2015			September 30, 2014				September 30, 2015			September 30, 2014
Commodity contracts	$	(6	)	$	(22	)	Sales	$	1		$	—
							Cost of Sales	(74		)	(1		)
Foreign exchange contracts	(11		)	57			Sales	20			4
Forward starting interest rate swap contracts	(15		)	1			Net interest expense	(1		)	(2		)
	$	(32	)	$	36			$	(54	)	$	1
	First Nine Months
(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	September 30, 2015			September 30, 2014				September 30, 2015			September 30, 2014
Commodity contracts	$	21		$	(27	)	Sales	$	4		$	—
							Cost of sales	(152		)	18
Foreign exchange contracts	16			59			Sales	63			3
Forward starting interest rate swap contracts	(8		)	1			Net interest expense	(5		)	(6		)
	$	29		$	33			$	(90	)	$	15

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 $386 million at September 30, 2015 and $8 million at September 30, 2014. Losses reclassified from Accumulated Other Comprehensive Income increased in 2015 compared to 2014 as a result of a sharp decline in commodity prices, particularly propane, partially offset by increased gains resulting from a weaker Euro and Japanese Yen relative to the U.S. Dollar. If realized, $142 million net losses as of September 30, 2015 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 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 (income) charges, 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 $11 million net losses during third quarter 2015 and $1 million net gains during third quarter 2014 on nonqualifying derivatives. The Company recognized approximately $23 million net losses and $4 million net gains on nonqualifying derivatives during the first nine months of 2015 and 2014, 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 2014 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 September 30, 2015
Description	September 30, 2015			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	162		$	—	$	162		$	—
Derivative Liabilities	(463		)	—		(463		)	—
	$	(301	)	$	—	$	(301	)	$	—

(Dollars in millions)				Fair Value Measurements at December 31, 2014
Description	December 31, 2014			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Derivative Assets	$	139		$	—	$	137		$	2
Derivative Liabilities	(508		)	—		(508		)	—
	$	(369	)	$	—	$	(371	)	$	2

The majority of the Company's derivative assets are 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 $160 million and a derivative in a net liability position of $461 million as of September 30, 2015. The Company does not have any cash collateral due under such agreements.

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BORROWINGS

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS

	September 30,		December 31,
(Dollars in millions)	2015		2014
Borrowings consisted of:
3% notes due 2015	$	250	$	250
2.4% notes due 2017	999		998
6.30% notes due 2018	167		169
5.5% notes due 2019	250		250
2.7% notes due 2020	799		798
4.5% notes due 2021	250		250
3.6% notes due 2022	903		903
7 1/4% debentures due 2024	244		244
7 5/8% debentures due 2024	54		54
3.8% notes due 2025	796		796
7.60% debentures due 2027	222		222
4.8% notes due 2042	497		497
4.65% notes due 2044	877		877
Credit facilities and commercial paper borrowings	967		1,235
Capital leases	5		6
Total borrowings	7,280		7,549
Borrowings due within one year	251		301
Long-term borrowings	$	7,029	$	7,248

Credit Facility and Commercial Paper Borrowings

In connection with the acquisition of Taminco, Eastman entered into a $1.0 billion five-year Term Loan Agreement. As of September 30, 2015, the Term Loan Agreement balance outstanding was $350 million with an interest rate of 1.44 percent. In third quarter2015, $25 million of the Term Loan Agreement balance was repaid using available cash. As of December 31, 2014, the Term Loan Agreement balance outstanding was $1.0 billion with an interest rate of 1.41 percent. Borrowings under the Term Loan Agreement 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 was amended in October 2015 to extend the maturity to 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. At September 30, 2015 and December 31, 2014, the Company had no outstanding borrowings under the Credit Facility.

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. Given the expiration date of the Credit Facility, any commercial paper borrowings supported by the Credit Facility are classified as long-term borrowings because the Company has the ability to refinance such borrowings on a long-term basis and intends, at least over the next twelve months, to maintain commercial paper borrowings at current levels. At September 30, 2015, the Company's commercial paper borrowings were $392 million with a weighted average interest rate of 0.50 percent. At December 31, 2014, the Company's commercial paper borrowings were $235 million with a weighted average interest rate of 0.47 percent.

In July 2015, the Company amended its $250 million accounts receivable securitization agreement (the "A/R Facility") to extend the maturity to 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 September 30, 2015, the Company's borrowings under the A/R Facility were $225 million secured by trade receivables with an interest rate of 0.95 percent. In third quarter2015, $25 million of the Company's borrowings under the A/R Facility were repaid using available cash. At December 31, 2014, the Company had no outstanding borrowings under the A/R Facility. During first quarter 2014, $125 million of the available amount under the A/R Facility was borrowed and then repaid during second quarter 2014.

The Term Loan Agreement, Credit Facility, and the A/R Facility 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 $883 million and $1.265 billion as of September 30, 2015 and December 31, 2014, respectively. 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 September 30, 2015, and December 31, 2014, 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 2014 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 other borrowings, which include the Term Loan Agreement, A/R Facility, commercial paper, and capital leases equals the carrying value and is classified as Level 2.

			Fair Value Measurements at September 30, 2015
(Dollars in millions)	Recorded Amount September 30, 2015		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	$	7,029	$	7,146	$	6,176	$	970	$	—

			Fair Value Measurements at December 31, 2014
(Dollars in millions)	Recorded Amount December 31, 2014		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	$	7,248	$	7,557	$	6,366	$	1,191	$	—

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RECENTLY ISSUED ACCOUNTING STANDARDS

9 Months Ended

Sep. 30, 2015

Recently Issued Accounting Standards [Abstract]

Recently Issued Accounting Standards [Text Block]

RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2014, the Financial Accounting Standards Board ("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 or results of operations and related disclosures.

In April 2015, the 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. In August 2015, the FASB released clarifying guidance for debt issuance costs related to line-of-credit arrangements which may be deferred and for presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The new guidance is to be applied on a retrospective basis and reported as a change in an accounting principle. This guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted for financial statements that have not been previously issued. 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 April 2015, the FASB issued new guidance for cloud computing arrangement fees, also as a part of the simplification and productivity initiative. The guidance establishes a new requirement to determine if cloud computing arrangements include a software license. If an arrangement is deemed to include a software license then the customer would account for the license as any other purchased software, capitalized and depreciated over the life of the contract. If an arrangement is deemed not to include a license, the agreement would be accounted for as a service contract. This guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period and early adoption is permitted. 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 July 2015, the FASB issued new guidance for benefit plan accounting. The new guidance allows for reduced disclosures. The guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period and early adoption is permitted. The changes in accounting required by this standard will only impact the Company's Department of Labor 5500, "Annual Return/Report of Employee Benefit Plan" and will have no impact to the Company's financial position or results of operations and related disclosures.

In July 2015, the FASB issued new guidance to simplify the measurement of inventory under the simplification and productivity initiative. The final standard changes the subsequent inventory measurement from lower of cost or market to lower of cost and net realizable value ("NRV"). NRV is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The subsequent method of estimating the cost of inventory under GAAP (i.e., LIFO) is not being changed. 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. The new guidance is to be applied prospectively as of the beginning of an interim or annual reporting period. 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 September 2015, the FASB issued guidance under the simplification and productivity initiative for business combination accounting. The new guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Under this guidance the acquirer recognizes, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. New disclosures are required to present separately on the face of the income statement or disclose in the notes the portion of the amount recognized in current-period earnings by line item that would have been recognized in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. This guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. At adoption, the new guidance is to be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The Company has elected to early adopt the new guidance beginning in third quarter2015 for acquisitions in which the initial purchase price allocation is incomplete. At September 30, 2015, there have been no material changes or effect on earnings for any acquisitions as disclosed in Note 2,Acquisitions.

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ASSETS IMPAIRMENTS AND RESTRUCTURING CHARGES, NET

9 Months Ended

Sep. 30, 2015

Restructuring Costs and Asset Impairment Charges [Abstract]

ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET

ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET

2015

In third quarter and first nine months 2015 there were net asset impairments and restructuring charges of $21 million and $130 million, respectively.

As a result of the annual impairment testing of indefinite-lived intangible assets, in third quarter and first nine months 2015 the Company recognized intangible asset impairments of $18 million in the AM segment primarily to reduce the carrying value of the V-Kool^® window films products trade name to the estimated fair value. The estimated fair value was determined using an income approach, specifically, the relief from royalty method. The impairment resulted from a decrease in projected revenues since the tradename was acquired from Solutia Inc. ("Solutia") in 2012. The decrease in projected revenues was primarily due to the Asian economic downturn impacting car sales growth in those geographic markets.

In first nine months 2015, net asset impairments and restructuring charges included $81 million of asset impairments and $14 million of restructuring charges, including severance, in the Fibers segment due to the closure of the Workington, UK acetate tow manufacturing facility which is expected to be substantially completed in 2015. Additionally, in first nine months 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.

Additionally, during first nine months 2015, net asset impairments and restructuring charges included $4 million of restructuring charges primarily for severance associated with the integration of Taminco.

2014

In third quarter and first nine months 2014 there were net asset impairments and restructuring charges of $71 million and $77 million, respectively.

During third quarter and first nine months 2014, net asset impairments of $18 million and restructuring charges, including severance, of $24 million were recognized in the AFP segment for costs of the closure of a Crystex^® research and development facility in France.

As a result of the annual impairment testing of indefinite-lived intangible assets, in third quarter and first nine months 2014 the Company recognized an intangible asset impairment of $22 million in the AFP segment to reduce the carrying value of the Crystex^® tradename to the estimated fair value. The impairment resulted from a decrease in projected revenue since the tradename was acquired from Solutia in 2012.

In addition, during third quarter and first nine months 2014, a change in estimate of certain costs for the fourth quarter 2012 termination of the operation agreement for the São Jose dos Campos, Brazil site resulted in a restructuring charge of $5 million in addition to previously recognized asset impairments and restructuring charges.

During first nine months 2014, the Company recognized gains from the sales of previously impaired assets at the former Photovoltaics production facility in Germany and a former polymers production facility in China of $5 million and $2 million, respectively.

In first nine months 2014, charges included $8 million of asset impairments, including intangible assets, and $2 million of restructuring charges in the AM segment primarily due to the closure of a production facility in Taiwan for the Flexvue^® product line. First nine months 2014 also included $5 million of restructuring charges for severance associated with the continued integration of the acquired Solutia businesses.

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 nine months2015 and full year 2014:

(Dollars in millions)	Balance at January 1, 2015		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at September 30, 2015
Non-cash charges	$	—	$	107	$	(107	)	$	—		$	—
Severance costs	13		15		2			(22		)	8
Site closure and restructuring costs	15		8		2			(13		)	12
Total	$	28	$	130	$	(103	)	$	(35	)	$	20

(Dollars in millions)	Balance at January 1, 2014		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at December 31, 2014
Non-cash charges	$	—	$	52	$	(52	)	$	—		$	—
Severance costs	22		13		—			(22		)	13
Site closure and restructuring costs	14		12		(4		)	(7		)	15
Total	$	36	$	77	$	(56	)	$	(29	)	$	28

Substantially all severance costs remaining are expected to be applied to the reserves within one year.

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ENVIRONMENTAL MATTERS

9 Months Ended

Sep. 30, 2015

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 postclosure under the federal Resource Conservation and Recovery Act. Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2014 Annual Report on Form 10-K. The Company's total reserve for environmental contingencies was $339 million and $345 million at September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, this reserve included $8 million and $10 million, respectively, 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.

Estimated future environmental expenditures for remediation costs ranged from the minimum or best estimate of $315 million to the maximum of $526 million and from the minimum or best estimate of $324 million to the maximum of $548 million at September 30, 2015 and December 31, 2014, respectively. The maximum estimated future costs are considered to be reasonably possible and include the minimum or best estimate amounts accrued at both September 30, 2015 and December 31, 2014. 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, and are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2014	$	324
Changes in estimates recognized in earnings	11
Cash reductions	(20		)
Balance at September 30, 2015	$	315

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 obligation is 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 $24 million and $21 million at September 30, 2015 and December 31, 2014, respectively. 

The Company's total environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is recognized in the Unaudited Consolidated Statements of Financial Position as follows:

(Dollars in millions)	September 30, 2015		December 31, 2014
Environmental contingent liabilities, current	$	35	$	35
Environmental contingent liabilities, long-term	304		310
Total	$	339	$	345

The Company also has contractual asset retirement obligations other than for environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily for the future closure of leased manufacturing assets at Pace, Florida and Oulu, Finland acquired from Taminco. These accrued non-environmental asset retirement obligations were $43 million and $44 million at September 30, 2015 and December 31, 2014, respectively.

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RETIREMENT PLANS

9 Months Ended

Sep. 30, 2015

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 2014 Annual Report on Form 10-K.

Components of net periodic benefit (credit) cost were as follows:

	Third Quarter
	Pension Plans												Other Postretirement Benefit Plans
	2015						2014						2015			2014
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit (credit) cost:
Service cost	$	10		$	3		$	11		$	4		$	2		$	2
Interest cost	21			7			24			7			9			11
Expected return on assets	(38		)	(9		)	(36		)	(9		)	(1		)	(2		)
Amortization of:
Prior service (credit) cost	(1		)	—			(1		)	—			(6		)	(6		)
Net periodic benefit (credit) cost	$	(8	)	$	1		$	(2	)	$	2		$	4		$	5
	First Nine Months
	Pension Plans												Other Postretirement Benefit Plans
	2015						2014						2015			2014
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of net periodic benefit (credit) cost:
Service cost	$	29		$	11		$	31		$	11		$	6		$	6
Interest cost	65			20			74			23			29			33
Expected return on assets	(111		)	(28		)	(107		)	(28		)	(4		)	(5		)
Curtailment gain(1)	—			(7		)	—			—			—			—
Amortization of:
Prior service (credit) cost	(3		)	—			(3		)	—			(18		)	(18		)
Mark-to-market pension and other postretirement benefits loss(2)	—			2			—			—			—			—
Net periodic benefit (credit) cost	$	(20	)	$	(2	)	$	(5	)	$	6		$	13		$	16

⁽¹⁾  Gain in the Fibers segment due to the closure of the Workington, UK acetate tow manufacturing facility.

⁽²⁾  Mark-to-market loss due to the interim remeasurement of the Workington, UK pension plan, triggered by the closure of the Workington, UK acetate tow manufacturing facility.

First nine months 2015 includes pension curtailment gains related to the remeasurement of the Workington, UK pension plan triggered by the closure of the Workington, UK acetate tow manufacturing facility. The remeasurement of the plan also resulted in a mark-to-market ("MTM") loss which was primarily due to asset returns being lower than expected returns.

The Company contributed $90 million and $47 million to its U.S. defined benefit pension plans in first nine months2015 and 2014, respectively.

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COMMITMENTS

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS

COMMITMENTS

Purchase Obligations and Lease Commitments

The Company had various purchase obligations at September 30, 2015, 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 $272 million over a period of approximately 45 years. Of the total lease commitments, approximately 50 percent relate to real property, including office space, storage facilities, and land; approximately 45 percent relate to railcars; and approximately 5 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 at September 30, 2015, totaled $121 million and consisted primarily of leases for railcars and company aircraft and will expire beginning in 2016. 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 $29 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.

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LEGAL MATTERS

9 Months Ended

Sep. 30, 2015

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.

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ASSETS IMPAIRMENTS AND RESTRUCTURING CHARGES, NET (Tables)

9 Months Ended

Sep. 30, 2015

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 nine months2015 and full year 2014:

(Dollars in millions)	Balance at January 1, 2015		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at September 30, 2015
Non-cash charges	$	—	$	107	$	(107	)	$	—		$	—
Severance costs	13		15		2			(22		)	8
Site closure and restructuring costs	15		8		2			(13		)	12
Total	$	28	$	130	$	(103	)	$	(35	)	$	20

(Dollars in millions)	Balance at January 1, 2014		Provision/ Adjustments		Non-cash Reductions			Cash Reductions			Balance at December 31, 2014
Non-cash charges	$	—	$	52	$	(52	)	$	—		$	—
Severance costs	22		13		—			(22		)	13
Site closure and restructuring costs	14		12		(4		)	(7		)	15
Total	$	36	$	77	$	(56	)	$	(29	)	$	28

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STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 1 (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended			12 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015		Sep. 30, 2014	Dec. 31, 2014
Stockholders' Equity Note [Abstract]
Dividends, Per Share		$ 0.40	$ 0.35	$ 1.20		$ 1.05
Stockholders' Equity Attributable to Parent		$ 3,877		$ 3,877			$ 3,510
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		3,956		3,956			3,590
Net earnings attributable to Eastman		256	$ 210	724		$ 735
Net earnings attributable to noncontrolling interest		2	2	5		5
Net earnings including noncontrolling interest		258	212	729		740
Cash dividends declared		(59)	(53)	(179)	[1]	(159)
Total other comprehensive income (loss), net of tax		(83)	$ (95)	(169)		$ (93)	(448)
Share-based Compensation Expense	[2]			30
Stock Option Exercises				7
Other	[3]			2
Share Repurchase				(48)
Distributions to Noncontrollling Interest				(6)
Common Stock [Member]
Stockholders' Equity Attributable to Parent		2		2			2
Net earnings attributable to Eastman				0
Cash dividends declared	[1]			0
Total other comprehensive income (loss), net of tax				0
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other	[3]			0
Share Repurchase				0
Distributions to Noncontrollling Interest				0
Additional Paid-in Capital [Member]
Stockholders' Equity Attributable to Parent		1,856		1,856			1,817
Net earnings attributable to Eastman				0
Cash dividends declared	[1]			0
Total other comprehensive income (loss), net of tax				0
Share-based Compensation Expense	[2]			30
Stock Option Exercises				7
Other	[3]			2
Share Repurchase				0
Distributions to Noncontrollling Interest				0
Retained Earnings [Member]
Stockholders' Equity Attributable to Parent		5,090		5,090			4,545
Net earnings attributable to Eastman				724
Cash dividends declared	[1]			(179)
Total other comprehensive income (loss), net of tax				0
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other	[3]			0
Share Repurchase				0
Distributions to Noncontrollling Interest				0
Accumulated Other Comprehensive Income (Loss) [Member]
Stockholders' Equity Attributable to Parent		(446)		(446)			(277)
Net earnings attributable to Eastman				0
Cash dividends declared	[1]			0
Total other comprehensive income (loss), net of tax				(169)
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other	[3]			0
Share Repurchase				0
Distributions to Noncontrollling Interest				0
Treasury Stock [Member]
Stockholders' Equity Attributable to Parent		(2,625)		(2,625)			(2,577)
Net earnings attributable to Eastman				0
Cash dividends declared	[1]			0
Total other comprehensive income (loss), net of tax				0
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other	[3]			0
Share Repurchase				(48)
Distributions to Noncontrollling Interest				0
Parent [Member]
Stockholders' Equity Attributable to Parent		3,877		3,877			3,510
Net earnings attributable to Eastman				724
Cash dividends declared	[1]			(179)
Total other comprehensive income (loss), net of tax				(169)
Share-based Compensation Expense	[2]			30
Stock Option Exercises				7
Other	[3]			2
Share Repurchase				(48)
Distributions to Noncontrollling Interest				0
Noncontrolling Interest [Member]
Stockholders' Equity Attributable to Parent		$ 79		79			$ 80
Net earnings attributable to noncontrolling interest				5
Cash dividends declared	[1]			0
Total other comprehensive income (loss), net of tax				0
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other	[3]			0
Share Repurchase				0
Distributions to Noncontrollling Interest				$ (6)

[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.

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SUPPLEMENTAL CASH FLOW INFORMATION

9 Months Ended

Sep. 30, 2015

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 Nine Months
	2015			2014
Other current assets	$	29		$	23
Other noncurrent assets	43			25
Payables and other current liabilities	92			52
Long-term liabilities and equity	(65		)	(32		)
Total	$	99		$	68

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.

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PAYABLES AND OTHER CURRENT LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2015

Payables and Accruals [Abstract]

Schedule of payables and other current liabilities

	September 30,		December 31,
(Dollars in millions)	2015		2014
Trade creditors	$	685	$	827
Derivative hedging liability	209		227
Accrued payrolls, vacation, and variable-incentive compensation	180		191
Accrued taxes	97		66
Other	378		410
Total payables and other current liabilities	$	1,549	$	1,721

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COMMITMENTS (Details) $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($)
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	$ 272
Lessee Leasing Arrangements, Operating Leases, Term of Contract	45 years
Percentage of Operating Lease Commitments related to real property	50.00%
Percentage of Operating Lease Commitments related to railcars	45.00%
Percentage of Operating Lease Commitments related to machinery and equipment	5.00%
Guarantees [Abstract]
Operating Lease Residual Value Guarantees	$ 121
Term, other guarantees	30
Maximum potential future payment, other guarantees	$ 29

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PROVISION FOR INCOME TAXES PROVISION FOR INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Provision for income taxes from continuing operations	$ 95	$ 86	$ 283	$ 281
Effective tax rate	27.00%	29.00%	28.00%	28.00%

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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Operating activities
Net earnings	$ 729	$ 740
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	429	328
Asset impairment charges	107	50
Gain on sale of assets	0	(5)
Provision for deferred income taxes	29	58
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables	(54)	(118)
(Increase) decrease in inventories	(23)	(76)
Increase (decrease) in trade payables	(139)	(12)
Pension and other postretirement contributions (in excess of) less than expenses	(147)	(76)
Variable compensation (in excess of) less than expenses	20	(8)
Other items, net	99	68
Net cash provided by operating activities	1,050	949
Investing activities
Additions to properties and equipment	(426)	(406)
Proceeds from sale of assets	4	13
Acquisitions, net of cash acquired	(45)	(325)
Additions to capitalized software	(2)	(2)
Other items, net	2	2
Net cash used in investing activities	(467)	(718)
Financing activities
Net increase (decrease) in commercial paper borrowings	157	(185)
Proceeds from borrowings	250	615
Repayment of borrowings	(675)	(125)
Dividends paid to stockholders	(179)	(159)
Treasury stock purchases	(48)	(410)
Dividends paid to noncontrolling interest	(6)	(9)
Proceeds from stock option exercises and other items, net	20	22
Net cash used in financing activities	(481)	(251)
Effect of exchange rate changes on cash and cash equivalents	(7)	(5)
Net change in cash and cash equivalents	95	(25)
Cash and cash equivalents at beginning of period	214	237
Cash and cash equivalents at end of period	$ 309	$ 212

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PROVISION FOR INCOME TAXES

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

PROVISION FOR INCOME TAXES

PROVISION FOR INCOME TAXES

	Third Quarter						First Nine Months
(Dollars in millions)	2015			2014			2015			2014
Provision for income taxes from continuing operations	$	95		$	86		$	283		$	281
Effective tax rate	27		%	29		%	28		%	28		%

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SEGMENT INFORMATION (Details) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) Segment	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Segment Reporting Information [Line Items]
Number of Operating Segments | Segment				5
Sales [Abstract]
Sales		$ 2,447	$ 2,413	$ 7,423	$ 7,178
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		432	338	1,212	1,135
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	15,880		15,880		$ 16,072
Operating Segments [Member]
Sales [Abstract]
Sales		2,435	2,405	7,387	7,169
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		448	367	1,277	1,208
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	14,622		14,622		14,842
Corporate and Other [Member]
Sales [Abstract]
Sales		12	8	36	9
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	1,258		1,258		1,230
Growth Initiatives and Businesses not Allocated to Segments [Member] | Corporate and Other [Member]
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		(18)	(18)	(66)	(46)
Pension and OPEB Costs Not Allocated to Operating Segments [Member] | Corporate and Other [Member]
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		11	3	28	9
Transaction, Integration, and Restructuring Costs Related to Solutia Acquisition [Member] | Corporate and Other [Member]
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		(9)	(14)	(27)	(36)
Additives And Functional Products [Member] | Operating Segments [Member]
Sales [Abstract]
Sales		602	458	1,827	1,333
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		126	37	365	236
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	4,813		4,813		4,900
Adhesives And Plasticizers [Member] | Operating Segments [Member]
Sales [Abstract]
Sales		305	347	942	1,050
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		74	52	190	155
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	960		960		1,011
Advanced Materials [Member] | Operating Segments [Member]
Sales [Abstract]
Sales		624	604	1,832	1,816
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		98	76	301	217
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	4,249		4,249		4,235
Fibers [Member] | Operating Segments [Member]
Sales [Abstract]
Sales		320	346	903	1,086
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		102	112	188	352
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	997		997		986
Specialty Fluids And Intermediates [Member] | Operating Segments [Member]
Sales [Abstract]
Sales		584	650	1,883	1,884
Operating Earnings (loss) [Abstract]
Operating Earnings (loss)		48	$ 90	233	$ 248
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	$ 3,603		$ 3,603		$ 3,710

[1] The chief operating decision maker holds segment management accountable for accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

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PROVISION FOR INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	Third Quarter						First Nine Months
(Dollars in millions)	2015			2014			2015			2014
Provision for income taxes from continuing operations	$	95		$	86		$	283		$	281
Effective tax rate	27		%	29		%	28		%	28		%

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ACQUISITIONS ACQUISITIONS (Details) - USD ($) $ in Millions			3 Months Ended	6 Months Ended	9 Months Ended	12 Months Ended
	Dec. 11, 2014	Dec. 05, 2014	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2015	Dec. 31, 2014
Assets Acquired and Liabilities Assumed, Net [Abstract]
Goodwill			$ 4,482		$ 4,482	$ 4,486
Taminco [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Business Combination, Consideration Transferred		$ 2,800
Payments to Acquire Businesses, Gross		1,700
Repayments of Other Long-term Debt		1,100
Acquisition Transaction, Integration, and Other Costs [Abstract]
Business Acquisition, Transaction Costs						15
Integration Costs			4		15
Acquisition Pre-Close Financing costs						$ 13
Taminco [Member] | Customer Relationships [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets		604
Acquisition Transaction, Integration, and Other Costs [Abstract]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life						24 years
Taminco [Member] | Developed Technology Rights [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets		205
Acquisition Transaction, Integration, and Other Costs [Abstract]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life						17 years
Taminco [Member] | Contracts [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets		180
Acquisition Transaction, Integration, and Other Costs [Abstract]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life						5 years
Taminco [Member] | All Intangible Assets [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets		989
Taminco [Member] | Scenario, Previously Reported [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Current assets		266
Properties and equipment		658
Intangible assets		1,002
Other noncurrent assets		37
Goodwill		1,509
Current liabilities		(161)
Long-term liabilities		(546)
Total purchase price, net of cash acquired		2,765
Taminco [Member] | Scenario, Adjustment [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Current assets		(3)
Properties and equipment		(3)
Intangible assets		(13)
Other noncurrent assets		1
Goodwill		32
Current liabilities		1
Long-term liabilities		(15)
Total purchase price, net of cash acquired		0
Taminco [Member] | Scenario, Actual [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Current assets		263
Properties and equipment		655
Intangible assets		989
Other noncurrent assets		38
Goodwill		1,541
Current liabilities		(160)
Long-term liabilities		(561)
Total purchase price, net of cash acquired		2,765
Taminco [Member] | Additives And Functional Products [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Goodwill		918
Taminco [Member] | Specialty Fluids And Intermediates [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Goodwill		623
Taminco [Member] | All Operating Segments [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Goodwill		$ 1,541
Commonwealth [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Business Combination, Consideration Transferred	$ 438
Assets Acquired and Liabilities Assumed, Net [Abstract]
Current assets	51
Properties and equipment	38
Intangible assets	125
Goodwill	274
Long-term liabilities	(50)
Total purchase price, net of cash acquired	438
Acquisition Transaction, Integration, and Other Costs [Abstract]
Business Acquisition, Transaction Costs						$ 7
Integration Costs			$ 1		$ 5
Business Combinations, Additional Costs Of Acquired Inventory, Net				$ 7
Commonwealth [Member] | Customer Relationships [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets	72
Acquisition Transaction, Integration, and Other Costs [Abstract]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life						14 years
Commonwealth [Member] | Developed Technology Rights [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets	41
Acquisition Transaction, Integration, and Other Costs [Abstract]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life						18 years
Commonwealth [Member] | Trade Names [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets	12
Commonwealth [Member] | All Intangible Assets [Member]
Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets	$ 125

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SHARE-BASED COMPENSATION AWARDS

9 Months Ended

Sep. 30, 2015

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 third quarter2015 and 2014, $9 million and $6 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. The impact on third quarter2015 and 2014 net earnings of $5 million and $4 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

In first nine months 2015 and 2014, $30 million and $23 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. The impact on first nine months 2015 and 2014 net earnings of $18 million and $14 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

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 2014 Annual Report on Form 10-K.