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 June 30, 2018
	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, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company," and "emerging growth 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	[  ]
			Emerging growth company	[  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

YES [  ]  NO  [  ]

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 June 30, 2018
Common Stock, par value $0.01 per share	141,280,046

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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	5
	Unaudited Consolidated Statements of Cash Flows	6
	Notes to the Unaudited Consolidated Financial Statements	7
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
3.	Quantitative and Qualitative Disclosures About Market Risk	52
4.	Controls and Procedures	53

PART II.  OTHER INFORMATION

1.	Legal Proceedings	54
1A.	Risk Factors	54
2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
6.	Exhibits	55

SIGNATURES

Signatures 57

2

FORWARD-LOOKING STATEMENTS

Certain statements made or incorporated by reference 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 ("Eastman" or the "Company") 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; exposure to, and effects of hedging of, raw material and energy prices and costs; foreign currencies and interest rates; disruption or interruption of operations and of raw material or energy supply; global and regional economic, political, and business conditions; competition; growth opportunities; supply and demand, volume, price, cost, margin and sales; pending and future legal proceedings; earnings, cash flow, dividends, stock repurchases and other expected financial results, events, and conditions; expectations, strategies, and plans for individual assets and products, businesses, and operating 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 and technology and product innovation 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 Part I, Item 2 of this Quarterly Report. Other factors, risks or uncertainties of which management is not aware, or presently deems immaterial, could also cause actual results to differ materially from those in the forward-looking statements.

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. Investors are advised, however, to consult any further public Company disclosures (such as filings with the Securities and Exchange Commission or in Company press releases) on related subjects.

3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS,

COMPREHENSIVE INCOME AND RETAINED EARNINGS

	Second Quarter						First Six Months
(Dollars in millions, except per share amounts)	2018			2017			2018			2017
Sales	$	2,621		$	2,419		$	5,228		$	4,722
Cost of sales	1,917			1,789			3,943			3,487
Gross profit	704			630			1,285			1,235
Selling, general and administrative expenses	189			181			379			360
Research and development expenses	60			58			116			115
Asset impairments and restructuring charges, net	4			—			6			—
Other components of post-employment (benefit) cost, net	(30		)	(30		)	(60		)	(58		)
Other (income) charges, net	(10		)	1			(56		)	(3		)
Earnings before interest and taxes	491			420			900			821
Net interest expense	61			61			120			121
Earnings before income taxes	430			359			780			700
Provision for income taxes	84			65			144			127
Net earnings	346			294			636			573
Less: Net earnings attributable to noncontrolling interest	2			2			2			3
Net earnings attributable to Eastman	$	344		$	292		$	634		$	570
Basic earnings per share attributable to Eastman	$	2.42		$	2.01		$	4.45		$	3.91
Diluted earnings per share attributable to Eastman	$	2.39		$	2.00		$	4.39		$	3.89

Comprehensive Income
Net earnings including noncontrolling interest	$	346		$	294		$	636		$	573
Other comprehensive income (loss), net of tax:
Change in cumulative translation adjustment	(34		)	36			(7		)	43
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(8		)	(6		)	(15		)	(13		)
Derivatives and hedging:
Unrealized gain (loss) during period	64			(18		)	41			(39		)
Reclassification adjustment for (gains) losses included in net income, net	(3		)	8			(3		)	4
Total other comprehensive income (loss), net of tax	19			20			16			(5		)
Comprehensive income including noncontrolling interest	365			314			652			568
Less: Comprehensive income attributable to noncontrolling interest	2			2			2			3
Comprehensive income attributable to Eastman	$	363		$	312		$	650		$	565
Retained Earnings
Retained earnings at beginning of period	$	7,026		$	5,925		$	6,802		$	5,721
Cumulative effect adjustment resulting from adoption of new accounting standards	—			—			16			—
Net earnings attributable to Eastman	344			292			634			570
Cash dividends declared	(78		)	(75		)	(160		)	(149		)
Retained earnings at end of period	$	7,292		$	6,142		$	7,292		$	6,142

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

4

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	June 30,			December 31,
(Dollars in millions, except per share amounts)	2018			2017
Assets
Current assets
Cash and cash equivalents	$	193		$	191
Trade receivables, net of allowance for doubtful accounts	1,393			1,026
Miscellaneous receivables	314			360
Inventories	1,532			1,509
Other current assets	66			57
Total current assets	3,498			3,143
Properties
Properties and equipment at cost	12,513			12,370
Less: Accumulated depreciation	6,943			6,763
Net properties	5,570			5,607
Goodwill	4,514			4,527
Intangible assets, net of accumulated amortization	2,278			2,373
Other noncurrent assets	400			349
Total assets	$	16,260		$	15,999
Liabilities and Stockholders' Equity
Current liabilities
Payables and other current liabilities	$	1,406		$	1,589
Borrowings due within one year	662			393
Total current liabilities	2,068			1,982
Long-term borrowings	6,033			6,147
Deferred income tax liabilities	933			893
Post-employment obligations	924			963
Other long-term liabilities	528			534
Total liabilities	10,486			10,519
Stockholders' equity
Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 219,093,133 and 218,369,992 for 2018 and 2017, respectively)	2			2
Additional paid-in capital	2,021			1,983
Retained earnings	7,292			6,802
Accumulated other comprehensive income (loss)	(193		)	(209		)
	9,122			8,578
Less: Treasury stock at cost (77,863,885 shares for 2018 and 75,454,111 shares for 2017)	3,425			3,175
Total Eastman stockholders' equity	5,697			5,403
Noncontrolling interest	77			77
Total equity	5,774			5,480
Total liabilities and stockholders' equity	$	16,260		$	15,999

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

5

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	First Six Months
(Dollars in millions)	2018			2017
Operating activities
Net earnings	$	636		$	573
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	300			292
Gain from property insurance	(65		)	—
Provision for deferred income taxes	5			36
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables	(213		)	(166		)
(Increase) decrease in inventories	(158		)	(108		)
Increase (decrease) in trade payables	(10		)	(28		)
Pension and other postretirement contributions (in excess of) less than expenses	(78		)	(56		)
Variable compensation (in excess of) less than expenses	(24		)	(34		)
Other items, net	15			(26		)
Net cash provided by operating activities	408			483
Investing activities
Additions to properties and equipment	(244		)	(279		)
Proceeds from property insurance	65			—
Proceeds from sale of assets	—			1
Acquisitions, net of cash acquired	—			(4		)
Other items, net	—			(1		)
Net cash used in investing activities	(179		)	(283		)
Financing activities
Net increase (decrease) in commercial paper and other borrowings	268			(95		)
Proceeds from borrowings	350			500
Repayment of borrowings	(428		)	(250		)
Dividends paid to stockholders	(160		)	(149		)
Treasury stock purchases	(250		)	(175		)
Dividends paid to noncontrolling interest	(2		)	(1		)
Other items, net	(1		)	12
Net cash used in financing activities	(223		)	(158		)
Effect of exchange rate changes on cash and cash equivalents	(4		)	(1		)
Net change in cash and cash equivalents	2			41
Cash and cash equivalents at beginning of period	191			181
Cash and cash equivalents at end of period	$	193		$	222

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

6

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

		Page
Note 1.	Significant Accounting Policies	8
Note 2.	Inventories	10
Note 3.	Payables and Other Current Liabilities	11
Note 4.	Income Taxes	11
Note 5.	Borrowings	12
Note 6.	Derivative and Non-Derivative Financial Instruments	14
Note 7.	Retirement Plans	20
Note 8.	Commitments and Off Balance Sheet Arrangements	21
Note 9.	Environmental Matters and Asset Retirement Obligations	22
Note 10.	Legal Matters	23
Note 11.	Stockholders' Equity	24
Note 12.	Earnings and Dividends Per Share	26
Note 13.	Asset Impairments and Restructuring Charges, Net	26
Note 14.	Share-Based Compensation Awards	27
Note 15.	Other (Income) Charges, Net	27
Note 16.	Supplemental Cash Flow Information	28
Note 17.	Segment Information	28
Note 18.	Revenue Recognition	29

7

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company ("Eastman" or the "Company") in accordance and consistent with the accounting policies stated in the Company's 2017 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 2017 Annual Report on Form 10-K, with the exception of the items noted below. The December 31, 2017 financial position data included herein was derived from the audited consolidated financial statements included in the 2017 Annual Report on Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP").

In the opinion of management, the unaudited consolidated financial statements include all normal recurring adjustments necessary for fair statement of the interim financial information in conformity with GAAP. These statements contain some amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. The unaudited consolidated financial statements include assets, liabilities, sales revenue, and expenses of all majority-owned subsidiaries and joint ventures in which a controlling interest is maintained. Eastman accounts for other joint ventures and investments where it exercises significant influence on the equity basis. Intercompany transactions and balances are eliminated in consolidation.

Certain prior period data has been reclassified in the consolidated financial statements and accompanying footnotes to conform to current period presentation. As of January 1, 2018:

• Eastman's primary measure of operating performance for all periods presented is earnings before interest and taxes ("EBIT") on a consolidated and segment basis. Previously, the Company's primary measure of operating performance was operating earnings.

• As discussed below, the new accounting standard for the presentation of net periodic benefit costs requires the Company to present non-service cost components of net periodic benefit costs (interest cost, expected return on plan assets, curtailment gains or losses, amortization of prior service costs or credits, and mark-to-market gains or losses) separately from service cost. These non-service cost components were reclassified from "Cost of sales", "Selling, general and administrative expenses", and "Research and development expenses" line items and are now included in a new line item, "Other components of post-employment (benefit) cost, net" on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all periods presented. This reclassification does not change prior period EBIT and, accordingly, management does not consider this change to have a material impact on the Company's financial statements and related disclosures.

Recently Adopted Accounting Standards

Accounting Standards Update ("ASU") 2014-09 Revenue Recognition (Accounting Standards Codification "ASC" 606): On January 1, 2018, Eastman adopted this standard under the modified retrospective method, such that revenue for all periods prior to January 1, 2018 continue to be reported under the previous standard, which resulted in an increase to retained earnings of $53 million after tax for products shipped but not delivered as of December 31, 2017.

Under the new standard, the Company recognizes revenue when performance obligations of the sale are satisfied. The majority of the Company's terms of sale have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when control has been transferred to the customer, generally at the time of shipment of products. Under the previous revenue recognition accounting standard, the Company recognized revenue upon transfer of title and risk of loss, generally upon the delivery of goods.

Management does not expect that changes in its accounting required by this new standard will materially impact the Company's financial statements and related disclosures when comparing 2018 under the new revenue standard to previous years under the prior standard. However, the difference in timing of revenue recognition under the current and former accounting standards is expected to have some impact on seasonal revenue and EBIT trends during 2018 compared to previous years. For further information, see Note 18, "Revenue Recognition".

8

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

ASU 2016-01 Financial Instruments: On January 1, 2018, Eastman adopted this standard relating to the recognition and measurement of financial assets and financial liabilities. This standard requires equity investments (except equity method and consolidated investments) to be measured at fair value with changes in fair value recognized in net income. Management has concluded that changes in its accounting required by the new standard will not materially impact the Company's financial statements and related disclosures. In February 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-03 as an update to the standard described above which is effective for the Company July 1, 2018. Management has concluded that changes in its accounting required by the update will not materially impact the Company's financial statements and related disclosures.

ASU 2016-16 Income Taxes - Intra-Entity Transfers: On January 1, 2018, Eastman adopted this standard under the modified retrospective method resulting in a beginning retained earnings decrease of $39 million. Under this standard, the Company is required to recognize the income tax consequence of an intra-entity transfer of an asset other than inventory when the transfer occurs.

ASU 2017-05 Other Income - Gains and Losses from Derecognition of Nonfinancial Assets: On January 1, 2018, Eastman adopted this standard in conjunction with the revenue recognition standard mentioned above. This standard clarifies the scope of nonfinancial asset derecognition and the accounting for partial sales of nonfinancial assets. This adoption had no impact on the Company's financial statements and related disclosures in the current period.

ASU 2017-07 Compensation - Retirement Benefits: On January 1, 2018, Eastman adopted this standard retrospectively for income statement effects and prospectively for balance sheet effects. This standard is intended to improve the presentation of net periodic pension and postretirement benefit costs by requiring the reporting of the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit costs (interest cost, expected return on plan assets, curtailment gains or losses, amortization of prior service costs or credits, and mark-to-market gains or losses) are to be presented in the income statement separately from the service cost component and outside the subtotal of income from operations, if presented. Management has concluded that changes in its accounting required by this new standard will not materially impact the Company's financial statements and related disclosures.

ASU 2017-12 Derivatives and Hedging: On January 1, 2018, Eastman adopted this standard on a modified retrospective basis for income statement impacts and prospectively for presentation and disclosure resulting in a beginning retained earnings increase of $2 million related to ineffectiveness recognized in "Accumulated other comprehensive income (loss)" ("AOCI") which was recognized in the Unaudited Consolidated Statements of Financial Position under the previous standard. This standard is intended to simplify the application of hedge accounting and improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in the financial statements. Management has included the additional disclosures required by this standard in Note 6, "Derivative and Non-Derivative Financial Instruments".

Accounting Standards Issued But Not Adopted as of June 30, 2018

ASU 2016-02 Leases: In February 2016, the FASB issued a standard on lease accounting. The new standard establishes two types of leases for lessees: finance and operating. Both finance and operating leases will have associated right-of-use assets and liabilities initially measured at the present value of the lease payments. This standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and early adoption is permitted. The new standard is to be applied under a modified retrospective approach wherein practical expedients have been allowed that will not require reassessment of current leases at the effective date. In January 2018, the FASB issued an update to the new standard above in ASU 2018-01 that sets forth the requirement to assess land easements to determine if the arrangement should be accounted for as a lease. The effective date for this amended standard is the same as that of the lease standard stated above. Management is currently evaluating implementation options and impact on the Company's financial statements and related disclosures.

9

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

ASU 2016-13 Financial Instruments - Credit Losses: In June 2016, the FASB issued a standard relating to credit losses. The amendments require a financial asset (including trade receivables) to be presented at the net amount expected to be collected through the use of allowances for credit losses valuation account. The income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period and early adoption is permitted, including adoption in an interim period, beginning after December 15, 2018. The new standard application is mixed among the various elements that include modified retrospective and prospective transition methods. Management does not expect that changes in its accounting required by the new standard will materially impact the Company's financial statements and related disclosures.

ASU 2017-04 Intangibles - Goodwill and Other: In January 2017, the FASB issued a standard as a part of its simplification initiative that bases the impairment of goodwill on any difference for which the carrying value is greater than the fair value of the reporting unit. This standard is effective for annual reporting periods, or interim period testing performed, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment testing performed after January 1, 2017. This standard is to be applied on a prospective basis for goodwill testing that occur after the effective date. Management does not expect that changes in its accounting required by the new standard will materially impact the Company's financial statements and related disclosures.

ASU 2018-02 Income Statement - Reporting Comprehensive Income: In February 2018, the FASB issued a standard that allows the reclassification from AOCI to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act ("Tax Reform Act"). The amount of the reclassification is the difference between the historical corporate income tax rate and the newly enacted tax rate. This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The new standard is to be applied either in the period of adoption or retrospectively to each period (or periods) in which the effects of the change in the income tax rate in the Tax Reform Act is recognized. Management is currently evaluating implementation options and impact on the Company's financial statements and related disclosures.

2. INVENTORIES

	June 30,		December 31,
(Dollars in millions)	2018		2017
Finished goods	$	1,044	$	1,114
Work in process	241		213
Raw materials and supplies	549		470
Total inventories at FIFO or average cost	1,834		1,797
Less: LIFO reserve	302		288
Total inventories	$	1,532	$	1,509

Inventories valued on the last-in, first-out ("LIFO") method were approximately 55 percent and 60 percent of total inventories at June 30, 2018 and December 31, 2017, respectively.

10

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

3. PAYABLES AND OTHER CURRENT LIABILITIES

	June 30,		December 31,
(Dollars in millions)	2018		2017
Trade creditors	$	811	$	842
Accrued payrolls, vacation, and variable-incentive compensation	135		199
Accrued taxes	79		111
Other	381		437
Total payables and other current liabilities	$	1,406	$	1,589

"Other" consists primarily of accruals for post-employment obligations, dividends payable, interest payable, the current portion of environmental liabilities, and miscellaneous accruals.

4. INCOME TAXES

	Second Quarter								First Six Months
(Dollars in millions)	2018				2017				2018				2017
	$		%		$		%		$		%		$		%
Provision for income taxes and tax rate	$	84	20	%	$	65	18	%	$	144	19	%	$	127	18	%

In second quarter and first six months 2018, the Company recognized an increase to the provision for income taxes of $10 million from an adjustment of the provisional net tax benefit recognized in fourth quarter 2017 resulting from the Tax Reform Act and tax impact of outside-U.S. entity reorganizations as part of the transition to an international treasury services center. The adjustment increased the one-time transition tax on deferred foreign income resulting from the Tax Reform Act. The first six months 2018 effective tax rate also includes the impact of the U.S. corporate tax rate reduction resulting from the Tax Reform Act.

The second quarter and first six months 2017 effective tax rates included a $22 million tax benefit to reflect finalization of prior years' income tax returns. The first six months 2017 effective tax rate also reflected a $22 million tax benefit due to planned amendments to prior years' income tax returns.

As previously reported, the Company recognized an estimated net tax benefit for the year ended December 31, 2017, primarily resulting from the Tax Reform Act. The net tax benefit included a benefit from the one-time revaluation of deferred tax liabilities, partially offset by a one-time transition tax on deferred foreign income and changes in valuation of deferred tax assets. The provisional benefit was updated in second quarter 2018, as described above. As of June 30, 2018, the Company continues to consider the accounting for the following impacts of the Tax Reform Act to be provisional and, accordingly, subject to adjustment in future periods: the transition tax on deferred foreign income (which consists of post-1986 accumulated earnings and profits of controlled foreign corporations and the determination of cash versus non-cash balances), the impact of the change in income tax rates on deferred tax assets and liabilities, and the evaluation of gross foreign tax credit carryforwards and related valuation allowances. In preparing the provisional estimates as of June 30, 2018, the Company has considered notices and revenue procedures issued by the Internal Revenue Service and authoritative accounting guidance.

Certain of the provisional amounts will be finalized in conjunction with the filing of the Company's U.S. federal income tax return for the year ended December 31, 2017 that will not be finalized until later in 2018. While historically differences between amounts reported in the Company's consolidated financial statements and the Company's U.S. federal income tax return have resulted in offsetting changes in estimates in current and deferred taxes for items which are timing related, the reduction of the U.S. tax rate will result in adjustments to the Company's income tax provision when recognized. The Company also considers it likely that further technical guidance regarding certain aspects of the new provisions included in the Tax Reform Act, as well as clarity regarding state income tax conformity to current federal tax code, may be issued which could result in changes to the provisional amounts reported as of June 30, 2018 and related state income tax effects.

11

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Additionally, the Company continues to consider the future impact of the Tax Reform Act for the year beginning January 1, 2018, including the new provisions known as the base erosion anti-abuse tax ("BEAT") and global intangible low-tax income ("GILTI") tax, as well as other provisions. Under U.S. GAAP, companies can make an accounting policy election to either treat taxes resulting from GILTI as a current-period expense when incurred or factor such amounts into the measurement of deferred taxes. The Company has not completed its analysis of the effects of the GILTI provisions and will further consider the accounting policy election within the measurement period as provided under Staff Accounting Bulletin No. 118, "Income Tax Accounting Implications of the Tax Cuts and Jobs Act".

5. BORROWINGS

	June 30,		December 31,
(Dollars in millions)	2018		2017
Borrowings consisted of:
5.5% notes due November 2019	$	250	$	250
2.7% notes due January 2020	798		797
4.5% notes due January 2021	185		185
3.6% notes due August 2022	738		738
1.50% notes due May 2023 (1)	872		895
7 1/4% debentures due January 2024	197		197
7 5/8% debentures due June 2024	43		43
3.8% notes due March 2025	688		690
1.875% notes due November 2026(1)	577		592
7.60% debentures due February 2027	195		195
4.8% notes due September 2042	493		493
4.65% notes due October 2044	871		871
Commercial paper and short-term borrowings	661		389
Credit facilities borrowings	125		200
Capital leases and other	2		5
Total borrowings	6,695		6,540
Borrowings due within one year	662		393
Long-term borrowings	$	6,033	$	6,147

⁽¹⁾  The carrying value of the euro-denominated 1.50% notes due May 2023 and 1.875% notes due November 2026 will fluctuate with changes in the euro exchange rate. The carrying value of these euro-denominated borrowings have been designated as non-derivative net investment hedges of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations. During thesix months endedJune 30, 2018, pre-tax gains of $39 million were recognized in other comprehensive income ("OCI") for revaluation of these notes.

Credit Facilities and Commercial Paper Borrowings

In December 2016, the Company borrowed $300 million under a five-year term loan agreement ("2021 Term Loan"). As of June 30, 2018, the 2021 Term Loan agreement balance outstanding was $100 million with an interest rate of 3.34 percent. In second quarter2018, $100 million of the Company's borrowings under the 2021 Term Loan were repaid using available cash. As of December 31, 2017, the 2021 Term Loan agreement balance outstanding was $200 million with an interest rate of 2.60 percent. Borrowings under the 2021 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") expiring October 2021. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility provides available liquidity for general corporate purposes and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. At June 30, 2018 and December 31, 2017, the Company had no outstanding borrowings under the Credit Facility. At June 30, 2018, the Company's commercial paper borrowings were $544 million with a weighted average interest rate of 2.37 percent. At December 31, 2017, the Company's commercial paper borrowings were $280 million with a weighted average interest rate of 1.61 percent.

12

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In April 2018 the Company amended its $250 million accounts receivable securitization agreement (the "A/R Facility") to extend the maturity to April 2020. Eastman Chemical Financial Corporation ("ECFC"), a subsidiary of the Company, has an agreement to sell interests in trade receivables under the A/R Facility to a third party purchaser. Third party creditors of ECFC have first priority claims on the assets of ECFC before those assets would be available to satisfy the Company's general obligations. Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and ECFC pays a fee to maintain availability of the A/R Facility. In first quarter 2018, $100 million available under the A/R Facility was borrowed and repaid in second quarter2018. In second quarter2018, $25 million available under the A/R Facility was borrowed and remained outstanding at June 30, 2018 with an interest rate of 3.01 percent. At December 31, 2017, the Company had no borrowings under the A/R Facility.

The Credit and A/R Facilities and other borrowing agreements contain customary covenants and events of default, some of which require the Company to maintain certain financial ratios that determine the amounts available and terms of borrowings. The Company was in compliance with all covenants at both June 30, 2018 and December 31, 2017.

The Company has access to borrowings of up to €150 million ($175 million) under a receivables facility based on the discounted value of selected customer accounts receivable. This facility expires December 2020 and renews for another one year period if not terminated with 90 days notice by either party. These arrangements include receivables in the United States, Belgium, and Finland, and are subject to various eligibility requirements. Borrowings under this facility are subject to interest at an agreed spread above EURIBOR for euro denominated drawings and the counterparty's cost of funds for drawings in any other currencies, plus administration and insurance fees and are classified as short-term. At June 30, 2018, the Company's amount of outstanding borrowings under this facility were $117 million with a weighted average interest rate of 1.52 percent. At December 31, 2017, the Company's amount of outstanding borrowings under this facility were $109 million with a weighted average interest rate of 1.31 percent.

Fair Value of Borrowings

Eastman has classified its total borrowings at June 30, 2018 and December 31, 2017 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 2017 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 primarily under the 2021 Term Loan, commercial paper, A/R Facility, and a receivables facility equals the carrying value and is classified as Level 2. The Company had no borrowings classified as Level 3 as of June 30, 2018 and December 31, 2017.

			Fair Value Measurements at June 30, 2018
(Dollars in millions)	Recorded Amount June 30, 2018		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Total borrowings	$	6,695	$	6,886	$	6,098	$	788

			Fair Value Measurements at December 31, 2017
(Dollars in millions)	Recorded Amount December 31, 2017		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Total borrowings	$	6,540	$	6,980	$	6,386	$	594

13

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS

Overview of Hedging Programs

Eastman is exposed to market risks, such as changes in foreign currency exchange rates, commodity prices, and interest rates. To mitigate these market risks and their effects on the cash flows of the underlying transactions and investments in foreign subsidiaries, the Company uses various derivative and non-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 Company does not enter into derivative transactions for speculative purposes.

For further information on hedging programs, see Note 9, "Derivative and Non-Derivative Financial Instruments", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K.

Cash Flow Hedges

Cash flow hedges are derivative instruments designated and used to hedge the exposure to variability in expected future cash flows that are attributable to a particular risk. The derivative instruments that are designated and qualify as a cash flow hedge are reported on the balance sheet at fair value and 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 net of the change in the hedge instrument and item being hedged for qualifying cash flow hedges is reported as a component of AOCI located in the Unaudited Consolidated Statements of Financial Position and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

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. The derivative instruments that are designated and qualify as fair value hedges are recorded on the balance sheet at fair value and 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 net of the change in the hedge instrument and item being hedged for qualifying fair value hedges is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Net Investment Hedges

Net investment hedges are defined as derivative or non-derivative instruments designated as and used to hedge the foreign currency exposure of the net investments in certain foreign operations. The net of the change in the hedge instrument and item being hedged for qualifying net investment hedges is reported as a component of the "Cumulative Translation Adjustment" ("CTA") within AOCI located in the Unaudited Consolidated Statements of Financial Position. Recognition in earnings of amounts previously recorded to CTA is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation.

For derivative cross-currency interest rate swap net investment hedges, gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in CTA within AOCI and recognized in earnings through the periodic swap interest accruals. The cross-currency interest rate swaps designated as net investment hedges are included as part of "Other long-term liabilities" or "Other noncurrent assets" within the Unaudited Consolidated Statements of Financial Position.

In January 2018, Eastman entered into fixed-to-fixed cross-currency swaps and designated these swaps to hedge a portion of its net investment in a euro functional currency denominated subsidiary against foreign currency fluctuations. These contracts involve the exchange of fixed U.S. dollars with fixed euro interest payments periodically over the life of the contracts and an exchange of the notional amounts at maturity. The fixed-to-fixed cross-currency swaps include €150 million ($180 million) maturing January 2021 and €266 million ($320 million) maturing August 2022.

14

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Summary of Financial Position and Financial Performance of Hedging Instruments

The following table presents the notional amounts outstanding atJune 30, 2018 and December 31, 2017associated with Eastman's hedging programs.

Notional Outstanding		June 30, 2018	December 31, 2017
Derivatives designated as cash flow hedges:
Foreign Exchange Forward and Option Contracts (in millions)
	EUR/USD (in EUR)	€419	€525
Commodity Forward and Collar Contracts
	Feedstock (in million barrels)	8	7
	Energy (in million million british thermal units)	25	23
Derivatives designated as fair value hedges:
Fixed-for-floating interest rate swaps (in millions)		$75	$75
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps (in millions)
	EUR/USD (in EUR)	€416	—
Non-derivatives designated as net investment hedges:
Foreign Currency Net Investment Hedges (in millions)
	EUR/USD (in EUR)	€1,241	€1,240

Fair Value Measurements

All the Company's derivative assets and liabilities are currently classified as Level 2. Level 2 fair value is based on estimates using standard pricing models. These standard pricing models use inputs that 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, and the Company diversifies its positions among such counterparties to reduce its exposure to counterparty risk and credit losses. The Company monitors the creditworthiness of its counterparties on an on-going basis. The Company did not recognize a credit loss during second quarter2018 and 2017.

All 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. The Company does not have any cash collateral due under such agreements.

The Company has elected to present derivative contracts on a gross basis within the Unaudited Consolidated Statements of Financial Position. The following table presents the financial assets and liabilities valued on a recurring and gross basis and includes where the financial assets and liabilities are located within the Unaudited Consolidated Statements of Financial Position as ofJune 30, 2018 and December 31, 2017.

15

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Financial Position and Fair Value Measurements of Hedging Instruments on a Gross Basis
(Dollars in millions)
Derivative Type	Statements of Financial Position Classification	June 30, 2018 Level 2		December 31, 2017 Level 2
Derivatives designated as cash flow hedges:
Commodity contracts	Other current assets	$	22	$	9
Commodity contracts	Other noncurrent assets	9		4
Foreign exchange contracts	Other current assets	22		23
Foreign exchange contracts	Other noncurrent assets	4		2
Derivatives designated as fair value hedges:
Fixed-for-floating interest rate swap	Other current assets	1		1
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps	Other noncurrent assets	4		—
Total Derivative Assets		$	62	$	39
Derivatives designated as cash flow hedges:
Commodity contracts	Payables and other current liabilities	$	10	$	28
Commodity contracts	Other long-term liabilities	4		10
Foreign exchange contracts	Payables and other current liabilities	1		6
Foreign exchange contracts	Other long-term liabilities	—		4
Derivatives designated as fair value hedges:
Fixed-for-floating interest rate swap	Long-term borrowings	6		4
Total Derivative Liabilities		$	21	$	52
Total Net Derivative Assets (Liabilities)		$	41	$	(13	)

In addition to the fair value associated with derivative instruments designated as cash flow hedges and fair value hedges noted in the table above, the Company had a carrying value of $1.4 billion and $1.5 billion associated with non-derivative instruments designated as foreign currency net investment hedges at June 30, 2018 and December 31, 2017, respectively. The designated foreign currency-denominated borrowings are included in the "Long-term borrowings" line item of the Unaudited Consolidated Statements of Financial Position.

For additional fair value measurement information, see Note 1, "Significant Accounting Policies", and Note 9, "Derivative and Non-Derivative Financial Instruments", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K.

16

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2018 and December 31, 2017, the following amounts were included on the Unaudited Consolidated Statements of Financial Position related to cumulative basis adjustments for fair value hedges.

(Dollars in millions)	Carrying amount of the hedged liabilities				Cumulative amount of fair value hedging loss adjustment included in the carrying amount of the hedged liability
Line item in the Unaudited Consolidated Statements of Financial Position in which the hedged item is included	June 30, 2018		December 31, 2017		June 30, 2018			December 31, 2017
Long-term borrowings (1)	$	757	$	760	$	(13	)	$	(10	)

⁽¹⁾  At June 30, 2018and December 31, 2017, the cumulative amount of fair value hedging loss adjustment remaining for hedged liabilities for which hedge accounting has been discontinued was $7 million and $6 million, respectively.

The following table presents the effect of cash flow and net investment hedge accounting on OCI for second quarter and first six months2018 and 2017:

	Change in amount of after tax gain (loss) recognized in OCI on derivatives											Pre-tax amount of gain (loss) reclassified from OCI into earnings
(Dollars in millions)	Second Quarter					First Six Months						Second Quarter						First Six Months
Hedging Relationships	2018		2017			2018			2017			2018			2017			2018			2017
Derivatives in cash flow hedging relationships:
Commodity contracts	$	40	$	9		$	29		$	(7	)	$	(3	)	$	(20	)	$	(5	)	$	(27	)
Foreign exchange contracts	20		(20		)	7			(30		)	8			10			11			22
Forward starting interest rate and treasury lock swap contracts	1		1			2			2			(1		)	(1		)	(2		)	(2		)
Non-derivatives in net investment hedging relationships (pre-tax):
Net investment hedges	81		(91		)	39			(109		)	—			—			—			—
Derivatives in net investment hedging relationships (pre-tax):
Cross-currency interest rate swaps	26		—			15			—			—			—			—			—
Cross-currency interest rate swaps excluded component	—		—			(11		)	—			—			—			—			—

17

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the effect of fair value and cash flow hedge accounting on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for second quarter2018 and 2017.

Location and Amount of Gain or (Loss) Recognized in Earnings on Fair Value and Cash Flow Hedging Relationships
	Second Quarter
	2018								2017
(Dollars in millions)	Sales		Cost of Sales			Net Interest Expense			Sales		Cost of Sales			Net Interest Expense
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized	$	2,621	$	1,917		$	61		$	2,419	$	1,789		$	61
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships:
Interest contracts (fixed-for-floating interest rate swaps):
Hedged items						—								(1		)
Derivatives designated as hedging instruments						—								1
Gain or (loss) on cash flow hedging relationships:
Interest contracts (forward starting interest rate and treasury lock swap contracts):
Amount of loss reclassified from AOCI into earnings						(1		)						(1		)
Commodity Contracts:
Amount of loss reclassified from AOCI into earnings			(3		)						(20		)
Foreign Exchange Contracts:
Amount of gain reclassified from AOCI into earnings	8								10

18

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the effect of fair value and cash flow hedge accounting on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for first six months2018 and 2017.

Location and Amount of Gain or (Loss) Recognized in Earnings on Fair Value and Cash Flow Hedging Relationships
	First Six Months
	2018								2017
(Dollars in millions)	Sales		Cost of Sales			Net Interest Expense			Sales		Cost of Sales			Net Interest Expense
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized	$	5,228	$	3,943		$	120		$	4,722	$	3,487		$	121
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships:
Interest contracts (fixed-for-floating interest rate swaps):
Hedged items						—								(2		)
Derivatives designated as hedging instruments						—								2
Gain or (loss) on cash flow hedging relationships:
Interest contracts (forward starting interest rate and treasury lock swap contracts):
Amount of loss reclassified from AOCI into earnings						(2		)						(2		)
Commodity Contracts:
Amount of loss reclassified from AOCI into earnings			(5		)						(27		)
Foreign Exchange Contracts:
Amount of gain reclassified from AOCI into earnings	11								22

The Company enters into foreign exchange derivatives denominated in multiple currencies which are transacted and settled in the same quarter. These derivatives are not designated as hedges due to the short-term nature and the gains or losses on these derivatives are marked-to-market in line item "Other (income) charges, net" of the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. The Company recognized a net gain on these derivatives of $2 million and $10 million during second quarter2018 and 2017, respectively, and recognized a net loss of $6 million and net gain of $4 million during first six months2018 and 2017, respectively.

Pre-tax monetized positions and mark-to-market gains and losses from raw materials and energy, currency, and certain interest rate hedges that were included in AOCI included net losses of $120 million and $214 million at June 30, 2018 and December 31, 2017, respectively. Losses in AOCI decreased June 30, 2018 compared to December 31, 2017 primarily as a result of a decrease in foreign currency exchange rates associated with the euro and an increase in commodity prices, particularly propane. If realized, approximately $25 million in pre-tax gains, as of June 30, 2018, would be reclassified into earnings during the next 12 months.

19

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7. 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 life insurance for eligible retirees hired prior to January 1, 2007. Eastman provides a subsidy for pre-Medicare health care and dental benefits to eligible retirees hired prior to January 1, 2007 that will end on December 31, 2021. Company funding is also provided for eligible Medicare retirees hired prior to January 1, 2007 with a health reimbursement arrangement. Costs recognized for these benefits are estimated amounts, which may change as actual costs derived for the year are determined.

For additional information regarding retirement plans, see Note 10, "Retirement Plans", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K.

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

	Second Quarter
	Pension Plans												Other Postretirement Benefit Plans
	2018						2017						2018			2017
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	8		$	4		$	9		$	4		$	—		$	1
Interest cost	17			5			16			4			5			6
Expected return on assets	(37		)	(10		)	(35		)	(9		)	—			(1		)
Amortization of:
Prior service credit, net	—			—			(1		)	—			(10		)	(10		)
Net periodic benefit (credit) cost	$	(12	)	$	(1	)	$	(11	)	$	(1	)	$	(5	)	$	(4	)
	First Six Months
	Pension Plans												Other Postretirement Benefit Plans
	2018						2017						2018			2017
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	17		$	8		$	18		$	7		$	—		$	2
Interest cost	34			10			33			9			11			12
Expected return on assets	(74		)	(19		)	(70		)	(17		)	(2		)	(3		)
Amortization of:
Prior service credit, net	—			—			(2		)	—			(20		)	(20		)
Net periodic benefit (credit) cost	$	(23	)	$	(1	)	$	(21	)	$	(1	)	$	(11	)	$	(9	)

On January 1, 2018, the Company adopted ASU 2017-07 resulting in non-service cost components of the net periodic pension and other postretirement benefit plans being presented in "Other components of post-employment (benefit) cost, net" line item of the Unaudited Consolidated Statement of Earnings, Comprehensive Income and Retained Earnings. See Note 1, "Significant Accounting Policies", for additional information.

20

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. COMMITMENTS AND OFF BALANCE SHEET ARRANGEMENTS

Purchase Obligations and Lease Commitments

The Company had various purchase obligations at June 30, 2018, totaling approximately $2.9 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 noncancelable operating leases totaling $268 million over a period of approximately 40 years. Of the total lease commitments, approximately 50 percent relate to real property, including office space, storage facilities, and land; approximately 40 percent relate to railcars; and approximately 10 percent relate to machinery and equipment, including computer and communications equipment and production equipment.

Guarantees

The Company has operating leases with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease as well as other guarantees. Disclosures about each group of similar guarantees are provided below.

Residual Value Guarantees

The Company has operating leases with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease. These residual value guarantees totaled $71 million at June 30, 2018 and consist primarily of leases for railcars that will expire beginning in third quarter 2018. Residual guarantee payments that become probable and estimable are recognized as rent expense over the remaining life of the applicable lease. Management's current expectation is that the likelihood of material residual guarantee payments is remote.

Other Guarantees

Guarantees and claims also arise during the ordinary course of business from relationships with customers, suppliers, joint venture partners, and other parties when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur. Non-performance under a contract could trigger an obligation of the Company. The Company's current other guarantees include guarantees relating to intellectual property, environmental matters, and other indemnifications and have arisen through the normal course of business. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these claims, if they were to occur. These other guarantees have terms up to 30 years with maximum potential future payments of approximately $35 million in the aggregate, with none of these guarantees being individually significant to the Company's operating results, financial position, or liquidity. Management's current expectation is that future payment or performance related to non-performance under other guarantees is remote.

Other Off Balance Sheet Arrangements

The Company has off balance sheet non-recourse factoring facilities with various commitment dates. These arrangements include customer specific receivables in the United States and Europe. The Company sells the receivables at face value which equals the carrying value and fair value, and, thus, no gain or loss is recognized. There is no continuing involvement with these receivables once sold and no credit loss exposure. The total amount of cumulative receivables sold in second quarter2018 and 2017 were $44 million and $2 million, respectively. The total amount of cumulative receivables sold in first six months 2018 and 2017 were $85 million and $5 million, respectively.

21

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

9. 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 certain cleanup costs. In addition, the Company will incur costs for environmental remediation and closure and post-closure under the federal Resource Conservation and Recovery Act. Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K. 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, results of operations, or cash flows. The Company's total reserve for environmental loss contingencies was $301 million and $304 million at June 30, 2018 and December 31, 2017, respectively. The environmental reserve includes costs 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 of $7 million at both June 30, 2018 and December 31, 2017.

Environmental Remediation and Environmental Asset Retirement Obligations

The Company's total environmental reserve that management believes to be probable and reasonably estimable for environmental contingencies, including remediation costs and asset retirement obligations, is included as part of "Payables and other current liabilities" and "Other long-term liabilities" in the Unaudited Consolidated Statements of Financial Position as follows:

(Dollars in millions)	June 30, 2018		December 31, 2017
Environmental contingent liabilities, current	$	25	$	25
Environmental contingent liabilities, long-term	276		279
Total	$	301	$	304

Environmental Remediation

Estimated future environmental expenditures for undiscounted remediation costs ranged from the best estimate or minimum of $276 million to the maximum of $517 million at June 30, 2018 and from the best estimate or minimum of $280 million to the maximum of $483 million at December 31, 2017. The best estimate or minimum estimated future environmental expenditures are considered to be probable and reasonably estimable and include the amounts recognized at both June 30, 2018 and December 31, 2017.

Reserves for environmental remediation include liabilities expected to be paid within approximately 30 years. The amounts charged to pre-tax earnings for environmental remediation and related charges are included within "Cost of sales" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. Changes in the reserves for environmental remediation liabilities during first six months 2018 are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2017	$	280
Changes in estimates recognized in earnings and other	5
Cash reductions	(9		)
Balance at June 30, 2018	$	276

22

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Environmental Asset Retirement Obligations

An asset retirement obligation is an obligation for the retirement of a tangible long-lived asset that is incurred upon the acquisition, construction, development, or normal operation of that long-lived asset. The Company recognizes asset retirement obligations in the period in which they are incurred if a reasonable estimate of fair value can be made. The asset retirement obligations are discounted to expected present value and subsequently adjusted for changes in fair value. The associated estimated asset retirement costs are capitalized as part of the carrying value of the long-lived assets and depreciated over their useful life. Environmental asset retirement obligations consist primarily of closure and post-closure costs. For sites that have environmental asset retirement obligations, the best estimate recognized to date for these environmental asset retirement obligation costs was $25 million and $24 million at June 30, 2018 and December 31, 2017, respectively. 

Non-Environmental Asset Retirement Obligations

The Company has contractual asset retirement obligations not associated with environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily associated with the future closure of leased manufacturing assets at Pace, Florida and Oulu, Finland. These recognized non-environmental asset retirement obligations were $45 million and $49 million at June 30, 2018 and December 31, 2017, respectively, and is included as part of "Other long-term liabilities" in the Unaudited Consolidated Statements of Financial Position.

10. LEGAL MATTERS

From time to time, Eastman 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 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.

23

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

11. STOCKHOLDERS' EQUITY

A reconciliation of the changes in stockholders' equity for first six months 2018 is provided below:

(Dollars in millions)	Common Stock at Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Total Eastman Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance at December 31, 2017	$	2	$	1,983		$	6,802		$	(209	)	$	(3,175	)	$	5,403		$	77		$	5,480
Cumulative Effect of Adoption of New Accounting Standards (1)	—		—			16			—			—			16			—			16
Net Earnings	—		—			634			—			—			634			2			636
Cash Dividends Declared (2) ($1.12 per share)	—		—			(160		)	—			—			(160		)	—			(160		)
Other Comprehensive Income	—		—			—			16			—			16			—			16
Share-Based Compensation Expense (3)	—		38			—			—			—			38			—			38
Stock Option Exercises	—		16			—			—			—			16			—			16
Other (4)	—		(16		)	—			—			—			(16		)	1			(15		)
Share Repurchases	—		—			—			—			(250		)	(250		)	—			(250		)
Distributions to Noncontrolling Interest	—		—			—			—			—			—			(3		)	(3		)
Balance at June 30, 2018	$	2	$	2,021		$	7,292		$	(193	)	$	(3,425	)	$	5,697		$	77		$	5,774

⁽¹⁾  On January 1, 2018, the Company adopted new accounting standards for revenue recognition, income taxes, and derivatives and hedging, which resulted in adjustments to beginning retained earnings. See Note 1, "Significant Accounting Policies", for specific amounts related to each standard.

⁽²⁾  Cash dividends declared includes cash dividends paid and dividends declared but unpaid.

⁽³⁾  Share-based compensation expense is the fair value of share-based awards.

⁽⁴⁾  Additional paid-in capital includes value of shares withheld for employees' taxes on vesting of share-based compensation awards.

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, 2016	$	(381	)	$	163		$	(62	)	$	(1	)	$	(281	)
Period change	85			(27		)	14			—			72
Balance at December 31, 2017	(296		)	136			(48		)	(1		)	(209		)
Period change	(7		)	(15		)	38			—			16
Balance at June 30, 2018	$	(303	)	$	121		$	(10	)	$	(1	)	$	(193	)

Amounts of other comprehensive income (loss) are presented net of applicable taxes. Eastman records deferred income taxes

on the CTA 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 CTA of other subsidiaries outside the United States, as the CTA is considered to be a component of indefinitely invested, unremitted earnings of these foreign subsidiaries.

24

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:

	Second Quarter
	2018						2017
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(34	)	$	(34	)	$	36		$	36
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(10		)	(8		)	(11		)	(6		)
Derivatives and hedging:
Unrealized gain (loss) during period	85			64			(28		)	(18		)
Reclassification adjustment for (gains) losses included in net income, net	(4		)	(3		)	13			8
Total other comprehensive income (loss)	$	37		$	19		$	10		$	20

	First Six Months
	2018						2017
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(7	)	$	(7	)	$	43		$	43
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(20		)	(15		)	(22		)	(13		)
Derivatives and hedging:
Unrealized gain (loss) during period	55			41			(62		)	(39		)
Reclassification adjustment for (gains) losses included in net income, net	(4		)	(3		)	7			4
Total other comprehensive income (loss)	$	24		$	16		$	(34	)	$	(5	)

25

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

12. EARNINGS AND DIVIDENDS PER SHARE

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

	Second Quarter				First Six Months
(In millions, except per share amounts)	2018		2017		2018		2017
Numerator
Earnings attributable to Eastman, net of tax	$	344	$	292	$	634	$	570
Denominator
Weighted average shares used for basic EPS	141.9		145.3		142.3		145.7
Dilutive effect of stock options and other awards	2.1		1.1		2.1		1.1
Weighted average shares used for diluted EPS	144.0		146.4		144.4		146.8
(Calculated using whole dollars and shares)
EPS
Basic	$	2.42	$	2.01	$	4.45	$	3.91
Diluted	$	2.39	$	2.00	$	4.39	$	3.89

In both second quarter and first six months 2018, options to purchase 407,573 shares of common stock were excluded from the shares treated as outstanding for computation of diluted EPS because the market value of option exercises for these awards were less than the cash proceeds that would be received from these exercises. Second quarter and first six months 2018 reflect the impact of share repurchases of 1,415,539 and 2,409,774, respectively.

In second quarter and first six months2017, options to purchase 850,970 and 1,008,667 shares of common stock, respectively, were excluded from the shares treated as outstanding for computation of diluted EPS because the market value of option exercises for these awards were less than the cash proceeds that would be received from these exercises. Second quarter and first six months2017 reflect the impact of share repurchases of 1,232,977 and 2,176,676, respectively.

The Company declared cash dividends of $0.56 and $0.51 per share in second quarter2018 and 2017, respectively, and $1.12 and $1.02 per share in first six months 2018 and 2017, respectively.

13. ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET

In second quarter and first six months 2018, the Company recognized restructuring charges of $4 million and $6 million, respectively, for corporate severance costs. There were no asset impairments and restructuring charges in second quarter and first six months 2017.

Changes in Reserves

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 six months2018 and full year 2017:

(Dollars in millions)	Balance at January 1, 2018		Provision/ Adjustments		Non-cash Reductions/ Additions		Cash Reductions			Balance at June 30, 2018
Severance costs	$	19	$	6	$	—	$	(9	)	$	16
Site closure and restructuring costs	10		—		—		(1		)	9
Total	$	29	$	6	$	—	$	(10	)	$	25

26

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)	Balance at January 1, 2017		Provision/ Adjustments		Non-cash Reductions/ Additions			Cash Reductions			Balance at December 31, 2017
Non-cash charges	$	—	$	1	$	(1	)	$	—		$	—
Severance costs	42		6		—			(29		)	19
Site closure and restructuring costs	13		1		1			(5		)	10
Total	$	55	$	8	$	—		$	(34	)	$	29

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

14. SHARE-BASED COMPENSATION AWARDS

The Company utilizes share-based awards under employee and non-employee director compensation programs. These share-based awards have included restricted and unrestricted stock, restricted stock units, stock options, and performance shares. In second quarter2018 and 2017, $14 million and $13 million, respectively, of compensation expense before tax were recognized in "Selling, general and administrative expenses" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards. The impact on second quarter2018 and 2017 net earnings of $10 million and $8 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

In first six months 2018 and 2017, $38 million and $27 million, respectively, of compensation expense before tax were recognized in "Selling, general and administrative expenses" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards. The impact on first six months 2018 and 2017 net earnings of $28 million and $17 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 17, "Share-Based Compensation Plans and Awards", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K.

15. OTHER (INCOME) CHARGES, NET

	Second Quarter						First Six Months
(Dollars in millions)	2018			2017			2018			2017
Foreign exchange transaction (gains) losses, net	$	7		$	3		$	7		$	2
Costs resulting from tax law changes and outside-U.S. entity reorganizations	5			—			13			—
(Income) loss from equity investments and other investment (gains) losses, net	(7		)	(3		)	(12		)	(6		)
Coal gasification incident property insurance proceeds	(15		)	—			(65		)	—
Other, net	—			1			1			1
Other (income) charges, net	$	(10	)	$	1		$	(56	)	$	(3	)

Second quarter and first six months 2018 include proceeds from insurance for property damage from the disruption of the Kingsport site's coal gasification operations area resulting from the previously reported October 4, 2017 incident of $15 million and $65 million, respectively. Second quarter and first six months 2018 also include currency translation costs resulting from fourth quarter 2017 tax law changes and related outside-U.S. entity reorganizations as part of the transition to an international treasury services center of $5 million and $13 million, respectively.

27

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 Statements of Financial Position:

(Dollars in millions)	First Six Months
	2018			2017
Other current assets	$	(53	)	$	(3	)
Other noncurrent assets	19			7
Payables and other current liabilities	31			(30		)
Long-term liabilities and equity	18			—
Total	$	15		$	(26	)

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

Eastman's products and operations are managed and reported in four operating segments: Additives & Functional Products ("AFP"), Advanced Materials ("AM"), Chemical Intermediates ("CI"), and Fibers. Beginning January 1, 2018:

• Eastman's primary measure of operating performance for all periods presented is EBIT on a consolidated and segment basis. Previously, the Company's primary measure of operating performance was operating earnings;

• As a result of recent changes in the management of products and operations to better align resources for growth initiatives, certain products previously reported in the CI operating segment are reported in the AFP operating segment; and

• Sales revenue and innovation costs from the textiles and nonwovens innovation platform products previously reported in "Other" are reported in the Fibers operating segment due to accelerating commercial progress of growth initiatives.

For additional financial and product information for each segment, see Part I, Item 1, "Business - Business Segments" and Part II, Item 8, Note 19, "Segment Information", in the Company's 2017 Annual Report on Form 10-K.

(Dollars in millions)	Second Quarter				First Six Months
Sales by Segment	2018		2017		2018		2017
Additives & Functional Products	$	942	$	830	$	1,881	$	1,603
Advanced Materials	729		657		1,422		1,291
Chemical Intermediates	709		703		1,439		1,373
Fibers	241		215		486		428
Total Sales by Operating Segment	2,621		2,405		5,228		4,695
Other	—		14		—		27
Total Sales	$	2,621	$	2,419	$	5,228	$	4,722

28

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)	Second Quarter						First Six Months
Earnings Before Interest and Taxes by Segment	2018			2017			2018			2017
Additives & Functional Products	$	192		$	161		$	368		$	314
Advanced Materials	150			137			285			258
Chemical Intermediates	85			83			155			165
Fibers	83			56			126			108
Total Earnings Before Interest and Taxes by Operating Segment	510			437			934			845
Other
Growth initiatives and businesses not allocated to operating segments	(27		)	(32		)	(53		)	(60		)
Pension and other postretirement benefits income (expense), net not allocated to operating segments	20			18			41			36
Asset impairments and restructuring charges, net	(4		)	—			(6		)	—
Other income (charges), net not allocated to operating segments	(8		)	(3		)	(16		)	—
Total Earnings Before Interest and Taxes	$	491		$	420		$	900		$	821

(Dollars in millions)	June 30,		December 31,
Assets by Segment(1)	2018		2017
Additives & Functional Products	$	6,703	$	6,648
Advanced Materials	4,512		4,379
Chemical Intermediates	2,993		3,000
Fibers	1,004		929
Total Assets by Operating Segment	15,212		14,956
Corporate Assets	1,048		1,043
Total Assets	$	16,260	$	15,999

⁽¹⁾  Segment assets include accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

(Dollars in millions)	Second Quarter				First Six Months
Sales by Customer Location	2018		2017		2018		2017
United States and Canada	$	1,108	$	1,088	$	2,208	$	2,154
Asia Pacific	639		581		1,281		1,093
Europe, Middle East, and Africa	725		624		1,452		1,224
Latin America	149		126		287		251
Total Sales	$	2,621	$	2,419	$	5,228	$	4,722

18. REVENUE RECOGNITION

On January 1, 2018, Eastman adopted ASU 2014-09 Revenue Recognition (ASC 606). Under this standard, the Company recognizes revenue when performance obligations of the sale are satisfied. Eastman sells to customers through master sales agreements or standalone purchase orders. The majority of the Company's terms of sale have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when control has been transferred to the customer, generally at the time of shipment of products. Under the previous revenue recognition accounting standard, the Company recognized revenue upon the transfer of title and risk of loss, generally upon delivery of goods. For further information see Note 1, "Significant Accounting Policies".

29

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company's arrangement with a customer may include the act of shipping product to customers after the performance obligation related to that product has been satisfied. The Company has elected to account for shipping and handling as activities to fulfill the promise to transfer the good and has not allocated revenue to the shipping activity. All related shipping and handling costs are recognized at the time of shipment. Further, the Company's sales arrangements may include the collection of sales and other similar taxes that are then remitted to the related taxing authority. The Company has elected to present the amounts collected for these taxes net of the related tax expense rather than presenting them as additional revenue.

The Company has elected to adopt several practical expedients as part of the adoption of ASU 2014-09 / ASC 606. The Company has elected the practical expedient to recognize the incremental cost of obtaining a sale (selling expense) as an expense when incurred given the potential amortization period for such asset is one year or less. Further, the Company has elected to use the practical expedient that allows the Company to ignore the possible existence of a significant financing component within sales arrangements where the time between cash collection and performance is less than one year. Finally, the Company has elected the practical expedient to not disclose unfulfilled obligations as customer purchase order commitments have an original expected duration of one year or less and no consideration from customers was excluded from the transaction price.

The timing of billings do not always match the timing of revenue recognition. When the Company is entitled to bill a customer in advance of the recognition of revenue, deferred revenue is recognized. When the Company is not entitled to bill a customer until a period after the related recognition of revenue, a contract asset is recognized. Contract assets represent the Company's right to consideration for completed performance obligations under a contract but which are not yet billable to a customer for consignment inventory or pursuant to certain shipping terms. Deferred revenue was not material as of January 1, 2018 or June 30, 2018. Contract assets were $42 million as of January 1, 2018 and $56 million as of June 30, 2018 and are included as a component of "Miscellaneous receivables" in the Unaudited Consolidated Statement of Financial Position.

The economic factors that impact the nature, amount, timing, and uncertainty of revenue and cash flows vary between the Company's business operating segments and the geographical regions in which they serve. For disaggregation of revenue by major product lines for each business operating segment, see "Business - Business Segments" in Part I, Item 1 of the Company's 2017 Annual Report on Form 10-K.

The tables below summarize the impact of adopting the new standard on second quarter and first six months2018 financial statements:

	Second Quarter 2018							First Six Months 2018
(Dollars in millions, except per share amounts)	Current Standard		Change			Previous Standard		Current Standard		Change			Previous Standard
Sales	$	2,621	$	(5	)	$	2,616	$	5,228	$	(35	)	$	5,193
Cost of sales	1,917		(1		)	1,916		3,943		(14		)	3,929
Gross profit	704		(4		)	700		1,285		(21		)	1,264
Earnings before interest and taxes	491		(4		)	487		900		(21		)	879
Net earnings attributable to Eastman	344		(2		)	342		634		(16		)	618
Basic earnings per share attributable to Eastman	$	2.42	$	(0.01	)	$	2.41	$	4.45	$	(0.11	)	$	4.34
Diluted earnings per share attributable to Eastman	$	2.39	$	(0.01	)	$	2.38	$	4.39	$	(0.11	)	$	4.28

30

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Second Quarter 2018									First Six Months 2018
(Dollars in millions)	Current Standard			Change			Previous Standard			Current Standard			Change			Previous Standard
Additives & Functional Products
Sales	$	942		$	(9	)	$	933		$	1,881		$	(6	)	$	1,875
Earnings before interest and taxes	192			(6		)	186			368			(9		)	359
Advanced Materials
Sales	729			1			730			1,422			(19		)	1,403
Earnings before interest and taxes	150			—			150			285			(10		)	275
Chemical Intermediates
Sales	709			3			712			1,439			20			1,459
Earnings before interest and taxes	85			2			87			155			8			163
Fibers
Sales	241			—			241			486			(30		)	456
Earnings before interest and taxes	83			—			83			126			(10		)	116
Other
Sales	—			—			—			—			—			—
Earnings before interest and taxes	(19		)	—			(19		)	(34		)	—			(34		)

	As of June 30, 2018
(Dollars in millions)	Current Standard		Change			Previous Standard
Trade receivables, net of allowance for doubtful accounts	$	1,393	$	(181	)	$	1,212
Miscellaneous receivables	314		(41		)	273
Inventories	1,532		140			1,672
Total current assets	3,498		(82		)	3,416

31

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

	Page
Critical Accounting Estimates	32
Non-GAAP Financial Measures	33
Overview	36
Results of Operations	37
Summary by Operating Segment	42
Sales by Customer Location	45
Liquidity, Capital Resources, and Other Financial Information	46
Recently Issued Accounting Standards	48
Outlook	49
Risk Factors	49

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 in the United States ("GAAP"), and should be read in conjunction with the Company's audited consolidated financial statements, including related notes, and MD&A contained in the Company's 2017 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 EPS unless otherwise noted. Eastman's primary measure of operating performance for all periods presented is earnings before interest and taxes ("EBIT") on a consolidated and segment basis. Previously, the Company's primary measure of operating performance was operating earnings.

CRITICAL ACCOUNTING ESTIMATES

In preparing the consolidated financial statements in conformity with GAAP, 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, Eastman evaluates its estimates, including those related to impairment of long-lived assets, environmental costs, pension and other postretirement benefits, litigation and contingent liabilities, and income taxes. 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. Management believes the critical accounting estimates described in Part II, Item 7 of the Company's 2017 Annual Report on Form 10-K 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.

32

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 this section and in "Overview", "Results of Operations", "Summary by Operating Segment", and "Outlook" in this MD&A.

Company Use of Non-GAAP Financial Measures

Non-Core Items and any Unusual or Non-Recurring Items

In addition to evaluating Eastman's financial condition, results of operations, liquidity, and cash flows as reported in accordance with GAAP, 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 result from Eastman's normal, or "core", business and operations or are otherwise of an unusual or non-recurring nature.

• Non-core transactions, costs, and losses or gains relate to, among other things, cost reductions, growth and profitability improvement initiatives, and other events outside of core business operations, and have included asset impairments and restructuring charges and gains, costs of and related to acquisitions, gains and losses from and costs related to dispositions of businesses, financing transaction costs, and mark-to-market losses or gains for pension and other postretirement benefit plans.

• In second quarter and first six months 2018, the Company recognized an unusual net gain from insurance proceeds in excess of costs of the disruption, repairs, and reconstruction of the Kingsport site's coal gasification operations area resulting from the previously reported October 4, 2017 explosion (the "coal gasification incident"). Management considers the coal gasification incident unusual because of the Company's operational and safety history and the magnitude of the unplanned disruption.

• In second quarter and first six months 2018, the Company recognized unusual costs resulting from fourth quarter 2017 tax law changes and related outside-U.S. entity reorganizations as part of the transition to an international treasury services center. Additionally, in second quarter 2018, the Company recognized an unusual decrease to earnings from an adjustment of the provisional net tax benefit recognized in fourth quarter 2017 resulting from the 2017 "Tax Cuts and Jobs Act" ("Tax Reform Act") and tax impact of the related outside-U.S. entity reorganizations as part of the transition to an international treasury services center. Management considers these actions and associated costs and resulting benefits unusual because of the infrequent nature of such changes in tax law and resulting actions and the significant one-time impact on earnings.

Because non-core, unusual, 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 the Company's results of these non-core, unusual, 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.

Adjusted Tax Rate and Provision for Income Taxes

In interim periods, Eastman discloses non-GAAP earnings with an adjusted effective tax rate and a resulting adjusted provision for income taxes using the Company's forecasted tax rate for the full year as of the end of the interim period. The adjusted effective tax rate and resulting adjusted provision for income taxes are equal to the Company's projected full year effective tax rate and provision for income taxes on earnings excluding non-core, unusual, or non-recurring items for completed periods. The adjusted effective tax rate and resulting adjusted provision for income taxes may fluctuate during the year for changes in events and circumstances that change the Company's forecasted annual effective tax rate and resulting provision for income taxes excluding non-core, unusual, or non-recurring items. Management discloses this adjusted effective tax rate, and the related reconciliation to the GAAP effective tax rate, to provide investors more complete and consistent comparisons of the Company's operational performance on a period-over-period interim basis and on the same basis as management evaluates quarterly financial results to provide a better indication of expected full year results.

33

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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', performances, make resource allocation decisions and evaluate organizational and individual performances 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 item is excluded by management in its evaluation of certain results in this Quarterly Report:

• Asset impairments and restructuring charges, net.

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

• Gain from coal gasification incident insurance proceeds in excess of costs,

• Costs of currency translation and professional fees resulting from fourth quarter 2017 tax law changes and related outside-U.S. entity reorganizations, and

• Decrease to earnings from an adjustment of the provisional net tax benefit recognized in fourth quarter 2017 resulting from the Tax Reform Act and tax impact of related outside-U.S. entity reorganizations.

Excluded Non-Core and Unusual Items and Adjustments to Provision for Income Taxes

	Second Quarter						First Six Months
(Dollars in millions)	2018			2017			2018			2017
Non-core item impacting earnings before interest and taxes:
Asset impairments and restructuring charges, net	$	4		$	—		$	6		$	—
Unusual items impacting earnings before interest and taxes:
Coal gasification incident insurance proceeds in excess of costs	(56		)	—			(19		)	—
Costs resulting from tax law changes and outside-U.S. entity reorganizations	8			—			19			—
Total non-core and unusual items impacting earnings before interest and taxes	(44		)	—			6			—
Less: Items impacting provision for income taxes:
Tax effect of non-core and unusual items	(9		)	—			2			—
Adjustment to estimated net tax benefit from tax law changes	(10		)	—			(10		)	—
Adjustment to tax provision	—			3			5			12
Total items impacting provision for income taxes	(19		)	3			(3		)	12
Total items impacting net earnings attributable to Eastman	$	(25	)	$	(3	)	$	9		$	(12	)

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

• Gross profit,

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

• Asset impairments and restructuring charges, net,

• Other (income) charges, net,

• EBIT,

• Provision for income taxes,

• Net earnings attributable to Eastman, and

• Diluted EPS.

34

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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, management occasionally has evaluated and disclosed to investors and securities analysts the non-GAAP measure cash provided by operating activities excluding certain non-core, unusual, or non-recurring sources or uses of cash or including cash from or used by activities that are managed as part of core business operations ("adjusted cash provided by operating activities") when analyzing, among other things, business performance, liquidity and financial position, and performance-based compensation. Management has used 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 for organic and inorganic growth initiatives and because it allows for a more consistent period-over-period presentation of such amounts. In its evaluation, 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, and generally includes cash from or used in activities that are managed as operating activities and in business operating decisions. Management has disclosed 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.

Eastman regularly evaluates and discloses to investors and securities analysts an alternative non-GAAP measure of "free cash flow", which management defines as cash provided by operating activities (or adjusted cash provided by operating activities, described above), less the amount of capital expenditures (typically the GAAP measure additions to properties and equipment, and in second quarter and first six months 2018, net of proceeds from property insurance). Such net capital expenditures are generally funded from available cash and, as such, management believes they should be considered in determining free cash flow. Management believes this is an appropriate metric to assess the Company's ability to fund priorities for uses of available cash. The priorities for cash after funding operations include payment of quarterly dividends, repayment of debt, funding targeted growth opportunities, and repurchasing shares. 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 financial performance and potential future cash available for various initiatives and assessing organizational performance in determining certain performance-based compensation 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 annual free cash flow divided by the Company's market capitalization. Management believes this metric is useful to investors and securities analysts in comparing cash flow generation with that of peer and other companies.

Alternative Non-GAAP Earnings Measures

From time to time, Eastman may also disclose to investors and securities analysts the non-GAAP earnings measures "Adjusted EBITDA", "EBITDA Margin", 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, unusual, or 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 earnings 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, EBITDA Margin, 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, EBITDA Margin, and ROIC to compare the results, returns, and value of the Company with those of peer and other companies.

35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Eastman's products and operations are managed and reported in four operating segments: Additives & Functional Products ("AFP"), Advanced Materials ("AM"), Chemical Intermediates ("CI"), and Fibers. Eastman uses an innovation-driven growth model which consists of leveraging world class scalable technology platforms, delivering differentiated application development capabilities, and relentlessly engaging the market. The Company's world class technology platforms form the foundation of sustainable growth by differentiated products through significant scale advantages in research and development ("R&D") and advantaged global market access. Differentiated application development converts market complexity into opportunities for growth and accelerates innovation by enabling a deeper understanding of the value of Eastman's products and how they perform within customers' and end user products. Key areas of application development include thermoplastic processing, functional films, coatings formulations, rubber additive formulations, adhesives formulations, non-wovens and textiles, and animal nutrition. The Company engages the market by working directly with customers and downstream users, targeting attractive niche markets, and leveraging disruptive macro trends such as health and wellness, natural resource efficiency, an increasing middle class in emerging economies, and feeding a growing population. Management believes that these elements of the Company's innovation-driven growth model combined with disciplined portfolio management and balanced capital deployment will result in consistent, sustainable earnings growth and strong cash flow.

The Company generated sales revenue of $2.6 billion and $2.4 billion in second quarter2018 and 2017, respectively, and sales revenue of $5.2 billion and $4.7 billion in first six months2018 and 2017, respectively. Sales revenue increased $202 million and $506 million in second quarter and first six months2018 compared to second quarter and first six months2017, respectively, as a result of increases in all operating segments.

EBIT was $491 million and $420 million in second quarter2018 and 2017, respectively, and $900 million and $821 million in first six months2018 and 2017, respectively. Excluding the non-core and unusual items identified in "Non-GAAP Financial Measures", adjusted EBIT was $447 million and $420 million in second quarter2018 and 2017, respectively, and $906 million and $821 million in first six months2018 and 2017, respectively. Adjusted EBIT increased in second quarter and first six months2018 as increases in the AFP, AM, and Fibers operating segments more than offset a decline in the CI operating segment.

Net earnings and EPS attributable to Eastman and adjusted net earnings and EPS attributable to Eastman were as follows:

	Second Quarter
	2018						2017
(Dollars in millions, except EPS)	$			EPS			$			EPS
Net earnings attributable to Eastman	$	344		$	2.39		$	292		$	2.00
Total non-core and unusual items, net of tax (1)(2)	(25		)	(0.17		)	—			—
Adjustment to tax provision(1)	—			—			(3		)	(0.02		)
Adjusted net earnings	$	319		$	2.22		$	289		$	1.98
	First Six Months
	2018						2017
(Dollars in millions, except diluted EPS)	$			EPS			$			EPS
Net earnings attributable to Eastman	$	634		$	4.39		$	570		$	3.89
Total non-core and unusual items, net of tax (1)(2)	14			0.10			—			—
Adjustment to tax provision (1)	(5		)	(0.04		)	(12		)	(0.09		)
Adjusted net earnings	$	643		$	4.45		$	558		$	3.80

⁽¹⁾  See "Results of Operations - Provision for Income Taxes" for adjusted provision for income taxes for second quarter and first six months2018 and 2017.

⁽²⁾  Provision for income taxes for non-core and unusual items are calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

Cash provided by operating activities was $408 million in first six months2018.

36

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

As previously reported, in fourth quarter 2017 an explosion in the Kingsport site's coal gasification area disrupted manufacturing operations, primarily for the Fibers and CI segments which are significant internal users of cellulose and acetyl stream intermediates. The coal gasification incident, net of insurance recoveries, is expected to reduce earnings by a total of between $25 million and $50 million spread across 2017 and 2018. As of June 30, 2018, the cumulative net costs of the coal gasification incident were $93 million, with additional insurance recoveries expected in the remainder of 2018. The insurance proceeds in excess of costs of the disruption, repairs, and reconstruction of coal gasification operations in second quarter and first six months 2018 were $56 million and $19 million, respectively, impacting "Cost of sales" and "Other (income) charges, net" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.

RESULTS OF OPERATIONS

Sales

	Second Quarter								First Six Months
					Change								Change
(Dollars in millions)	2018		2017		$		%		2018		2017		$		%
Sales	$	2,621	$	2,419	$	202	8	%	$	5,228	$	4,722	$	506	11	%
Volume / product mix effect					103		4	%					223		5	%
Price effect					48		2	%					154		3	%
Exchange rate effect					51		2	%					129		3	%

Sales revenue increased in second quarter and first six months 2018 compared to second quarter and first six months2017 as a result of increases in all operating segments.

Gross Profit

	Second Quarter							First Six Months
(Dollars in millions)	2018			2017		Change		2018		2017		Change
Gross profit	$	704		$	630	12	%	$	1,285	$	1,235	4	%
Net (insurance proceeds) costs of coal gasification incident	(41		)	—				46		—
Gross profit excluding unusual item	$	663		$	630	5	%	$	1,331	$	1,235	8	%

Gross profit included $41 million of insurance proceeds for business interruption in excess of costs and $46 million of costs in excess of insurance proceeds for business interruption in second quarter and first six months 2018, respectively, from the coal gasification incident. Excluding this unusual item, gross profit increased in second quarter and first six months 2018 compared to second quarter and first six months2017 as increases in the AFP, AM, and Fibers operating segments more than offset a decline in the CI operating segment.

37

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Selling, General and Administrative Expenses

	Second Quarter							First Six Months
(Dollars in millions)	2018			2017		Change		2018			2017		Change
Selling, general and administrative expenses	$	189		$	181	4	%	$	379		$	360	5	%
Costs resulting from tax law changes and outside-U.S. entity reorganizations	(3		)	—				(6		)	—
Selling, general and administrative expenses excluding unusual item	$	186		$	181	3	%	$	373		$	360	4	%

SG&A expenses included $3 million of costs in second quarter2018 of professional fees resulting from fourth quarter 2017 tax law changes and related outside-U.S. entity reorganizations as part of the transition to an international treasury services center. Excluding this unusual item, SG&A expenses increased in second quarter2018 compared to second quarter2017 primarily due to higher costs of growth initiatives.

SG&A expenses included $6 million of costs in first six months 2018 of professional fees resulting from fourth quarter 2017 tax law changes and related outside-U.S. entity reorganizations as part of the transition to an international treasury services center. Excluding this unusual item, SG&A expenses increased in first six months 2018 compared to first six months2017 primarily due to higher costs of growth initiatives and performance-based variable compensation costs.

Research and Development Expenses

	Second Quarter						First Six Months
(Dollars in millions)	2018		2017		Change		2018		2017		Change
Research and development expenses	$	60	$	58	3	%	$	116	$	115	1	%

R&D expenses increased in second quarter 2018 compared to second quarter 2017 primarily due to higher costs of growth initiatives.

Asset Impairments and Restructuring Charges, Net

In second quarter and first six months 2018, the Company recognized restructuring charges of $4 million and $6 million, respectively, for corporate severance costs. There were no asset impairments and restructuring charges in second quarter and first six months 2017.

For more information regarding asset impairments and restructuring charges and gains see Note 13, "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.

Other Components of Post-employment (Benefit) Cost, Net

	Second Quarter								First Six Months
(Dollars in millions)	2018			2017			Change		2018			2017			Change
Other components of post-employment (benefit) cost, net	$	(30	)	$	(30	)	—	%	$	(60	)	$	(58	)	3	%

For more information regarding other components of post-employment (benefit) cost, net see Note 1, "Significant Accounting Policies", and Note 7, "Retirement Plans", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

38

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Other (Income) Charges, Net

	Second Quarter						First Six Months
(Dollars in millions)	2018			2017			2018			2017
Foreign exchange transaction (gains) losses, net	$	7		$	3		$	7		$	2
Costs resulting from tax law changes and outside-U.S. entity reorganizations (1)	5			—			13			—
(Income) loss from equity investments and other investment (gains) losses, net	(7		)	(3		)	(12		)	(6		)
Coal gasification incident property insurance proceeds	(15		)	—			(65		)	—
Other, net	—			1			1			1
Other (income) charges, net	$	(10	)	$	1		$	(56	)	$	(3	)
Costs resulting from tax law changes and outside-U.S. entity reorganizations	(5		)	—			(13		)	—
Coal gasification incident property insurance proceeds	15			—			65			—
Other (income) charges, net excluding unusual items	$	—		$	1		$	(4	)	$	(3	)

⁽¹⁾  Currency translation costs.

Earnings Before Interest and Taxes

	Second Quarter							First Six Months
(Dollars in millions)	2018			2017		Change		2018			2017		Change
Earnings before interest and taxes	$	491		$	420	17	%	$	900		$	821	10	%
Costs resulting from tax law changes and outside-U.S. entity reorganizations	8			—				19			—
Asset impairments and restructuring charges, net	4			—				6			—
Coal gasification incident insurance proceeds in excess of costs	(56		)	—				(19		)	—
Earnings before interest and taxes excluding non-core and unusual items	$	447		$	420	6	%	$	906		$	821	10	%

Net Interest Expense

	Second Quarter						First Six Months
(Dollars in millions)	2018		2017		Change		2018		2017		Change
Gross interest costs	$	64	$	64			$	125	$	126
Less: Capitalized interest	1		3				2		4
Interest expense	63		61				123		122
Less: Interest income	2		—				3		1
Net interest expense	$	61	$	61	—	%	$	120	$	121	(1	)%

39

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Provision for Income Taxes

	Second Quarter									First Six Months
	2018					2017				2018					2017
(Dollars in millions)	$			%		$		%		$			%		$		%
Provision for income taxes and effective tax rate	$	84		20	%	$	65	18	%	$	144		19	%	$	127	18	%
Tax provision for non-core and unusual items(1)	(9		)			—				2					—
Adjustment to estimated net tax benefit from tax law changes	(10		)			—				(10		)			—
Adjustment to tax provision (2)	—					3				5					12
Adjusted provision for income taxes and effective tax rate	$	65		17	%	$	68	19	%	$	141		18	%	$	139	20	%

⁽¹⁾  Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

⁽²⁾  Second quarter and first six months2018 provision for income taxes were adjusted to reflect the current forecasted full year effective tax rate. Second quarter and first six months2017 provision for income taxes were adjusted to reflect the then forecasted full year effective tax rate. The adjusted provision for income taxes for first six months2018 and 2017 are calculated applying the forecasted full year effective tax rate as shown below.

	First Six Months
	2018		2017
Effective tax rate	19	%	18	%
Discrete tax items (1)	—	%	3	%
Tax impact of non-core and unusual items (2)	(1	)%	—	%
Forecasted full year impact of expected tax events	—	%	(1	)%
Forecasted full year effective tax rate	18	%	20	%

⁽¹⁾  "Discrete tax items" are items that are excluded from a company's estimated annual effective tax rate and recognized entirely in the quarter in which the item occurs. First six months 2017 discrete items consisted of planned amendments to and finalization of prior years' income tax returns.

⁽²⁾  Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

40

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Net Earnings Attributable to Eastman and Diluted Earnings per Share

	Second Quarter
	2018						2017
(Dollars in millions, except EPS)	$			EPS			$			EPS
Net earnings and diluted earnings per share attributable to Eastman	$	344		$	2.39		$	292		$	2.00
Non-core item, net of tax:(1)
Asset impairments and restructuring charges, net	2			0.02			—			—
Unusual items, net of tax:(1)
Coal gasification incident insurance proceeds in excess of costs	(43		)	(0.30		)	—			—
Costs resulting from tax law changes and outside-U.S. entity reorganizations	6			0.04			—			—
Adjustment to estimated net tax benefit from tax law changes	10			0.07			—			—
Adjustment to tax provision	—			—			(3		)	(0.02		)
Adjusted net earnings and diluted earnings per share attributable to Eastman	$	319		$	2.22		$	289		$	1.98

	First Six Months
	2018						2017
(Dollars in millions, except EPS)	$			EPS			$			EPS
Net earnings and diluted earnings per share attributable to Eastman	$	634		$	4.39		$	570		$	3.89
Non-core item, net of tax:(1)
Asset impairments and restructuring charges, net	4			0.03			—			—
Unusual items, net of tax:(1)
Coal gasification incident insurance proceeds in excess of costs	(14		)	(0.10		)	—			—
Costs resulting from tax law changes and outside-U.S. entity reorganizations	14			0.10			—			—
Adjustment to estimated net tax benefit from tax law changes	10			0.07			—			—
Adjustment to tax provision	(5		)	(0.04		)	(12		)	(0.09		)
Adjusted net earnings and diluted earnings per share attributable to Eastman	$	643		$	4.45		$	558		$	3.80

⁽¹⁾  Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

41

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

SUMMARY BY OPERATING SEGMENT

Eastman's products and operations are managed and reported in four operating segments: Additives & Functional Products ("AFP"), Advanced Materials ("AM"), Chemical Intermediates ("CI"), and Fibers. For additional financial and product information for each operating segment, see Part I, Item 1, "Business - Business Segments" and Part II, Item 8, Note 19, "Segment Information", in the Company's 2017 Annual Report on Form 10-K.

Additives & Functional Products Segment

	Second Quarter										First Six Months
						Change										Change
	2018			2017		$			%		2018			2017		$			%
(Dollars in millions)
Sales	$	942		$	830	$	112		13	%	$	1,881		$	1,603	$	278		17	%
Volume / product mix effect						68			8	%						150			9	%
Price effect						18			2	%						61			4	%
Exchange rate effect						26			3	%						67			4	%
Earnings before interest and taxes	$	192		$	161	$	31		19	%	$	368		$	314	$	54		17	%
Coal gasification incident insurance proceeds in excess of costs	(4		)	—		(4		)			(2		)	—		(2		)
Earnings before interest and taxes excluding unusual item	188			161		27			17	%	366			314		52			17	%

Sales revenue in second quarter and first six months 2018 increased compared to second quarter and first six months 2017 due to higher sales volume, a favorable shift in foreign currency exchange rates, and higher selling prices. The higher sales volume and higher selling prices for most product lines, particularly animal nutrition and coatings and inks additives, were primarily attributed to improved market conditions and enhanced commercial execution.

EBIT included insurance proceeds in excess of costs resulting from the coal gasification incident in second quarter and first six months 2018. Excluding this unusual item, EBIT increased in second quarter and first six months 2018 compared to second quarter and first six months 2017 primarily due to higher sales volume of $24 million and $48 million, respectively, and a favorable shift in foreign exchange rates in both periods, partially offset by higher costs of growth initiatives in both periods.

42

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Advanced Materials Segment

	Second Quarter										First Six Months
						Change										Change
	2018			2017		$			%		2018			2017		$			%
(Dollars in millions)
Sales	$	729		$	657	$	72		11	%	$	1,422		$	1,291	$	131		10	%
Volume / product mix effect						58			9	%						85			7	%
Price effect						(2		)	—	%						6			—	%
Exchange rate effect						16			2	%						40			3	%
Earnings before interest and taxes	$	150		$	137	$	13		9	%	$	285		$	258	$	27		10	%
Coal gasification incident insurance proceeds in excess of costs	(6		)	—		(6		)			(3		)	—		(3		)
Earnings before interest and taxes excluding unusual item	144			137		7			5	%	282			258		24			9	%

Sales revenue in second quarter and first six months 2018 increased compared to second quarter and first six months 2017 primarily due to higher sales volume across the segment, including for premium products such as Tritan^™ copolyester, Saflex^® head-up displays, and automotive performance films and a favorable shift in foreign currency exchange rates.

EBIT included insurance proceeds in excess of costs resulting from the coal gasification incident in second quarter and first six months 2018. Excluding this unusual item, EBIT increased second quarter and first six months 2018 compared to second quarter and first six months 2017 primarily due to the combined impact of higher sales volume and improved product mix of premium products of $30 million and $59 million, respectively, and a favorable shift in foreign currency exchange rates in both periods. The increase was partially offset by higher raw material and energy costs of $11 million and $22 million, respectively, and higher costs of growth initiatives in both periods.

Chemical Intermediates Segment

	Second Quarter										First Six Months
						Change										Change
	2018			2017		$			%		2018			2017		$			%
(Dollars in millions)
Sales	$	709		$	703	$	6		1	%	$	1,439		$	1,373	$	66		5	%
Volume / product mix effect						(43		)	(6	)%						(57		)	(4	)%
Price effect						41			6	%						103			8	%
Exchange rate effect						8			1	%						20			1	%
Earnings before interest and taxes	$	85		$	83	$	2		2	%	$	155		$	165	$	(10	)	(6	)%
Coal gasification incident insurance proceeds in excess of costs	(21		)	—		(21		)			(2		)	—		(2		)
Earnings before interest and taxes excluding unusual item	64			83		(19		)	(23	)%	153			165		(12		)	(7	)%

43

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Sales revenue in second quarter and first six months 2018 increased compared to second quarter and first six months 2017 due to higher selling prices across most product lines, particularly for acetyl derivatives attributed to favorable market conditions and for olefin derivatives due to higher raw material and energy prices. Lower sales volume was primarily due to lower merchant ethylene sales resulting from a planned manufacturing shutdown and supplier operational disruptions at the Texas City and Longview, Texas manufacturing sites, partially offset by higher functional amines sales attributed to improvement in the agriculture and energy markets.

EBIT included insurance proceeds in excess of costs resulting from the coal gasification incident in second quarter and first six months 2018. Excluding this unusual item, EBIT decreased second quarter and first six months 2018 compared to second quarter and first six months 2017 primarily due to increased costs of $23 million in second quarter 2018 resulting from supplier operational disruptions at the Texas City and Longview, Texas manufacturing sites and $18 million and $21 million, respectively, of higher planned manufacturing site maintenance shutdown costs. The decrease was partially offset by the reduced negative impact of hedges of commodity prices on raw material costs, primarily for propane, of $13 million and $18 million, respectively, and higher selling prices exceeding higher raw material and energy costs by $4 million and $12 million, respectively.

As previously announced, the Company is making changes to its Longview, Texas manufacturing site's olefins cracking units to allow for the use of refinery-grade propylene as a feedstock beginning in 2019 to increase polymer grade propylene production and decrease ethylene production and propane purchases.    

Fibers Segment

	Second Quarter										First Six Months
						Change										Change
	2018			2017		$			%		2018			2017		$			%
(Dollars in millions)
Sales	$	241		$	215	$	26		12	%	$	486		$	428	$	58		14	%
Volume / product mix effect						34			16	%						72			17	%
Price effect						(9		)	(4	)%						(16		)	(4	)%
Exchange rate effect						1			—	%						2			1	%
Earnings before interest and taxes	$	83		$	56	$	27		48	%	$	126		$	108	$	18		17	%
Coal gasification incident insurance proceeds in excess of costs	(25		)	—		(25		)			(12		)	—		(12		)
Earnings before interest and taxes excluding unusual item	58			56		2			4	%	114			108		6			6	%

Sales revenue in second quarter 2018 increased compared to second quarter 2017 primarily due to higher sales volume for acetate tow, primarily attributed to customer buying patterns, and sales of textiles and nonwovens innovation platform products previously reported in "Other" of $16 million. See Note 17, "Segment Information", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. The higher sales volume was partially offset by lower acetate tow selling prices attributed to lower industry capacity utilization.

Sales revenue in first six months 2018 increased compared to first six months 2017 primarily due to higher sales volume, particularly for acetate tow, and sales of textiles and nonwovens innovation platform products previously reported in "Other" of $30 million. The higher sales volume for acetate tow was primarily a result of both the timing of recognition of revenue under the new revenue recognition accounting standard of $30 million and customer buying patterns. See Note 18, "Revenue Recognition", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. The higher sales revenue was partially offset by lower acetate tow selling prices attributed to lower industry capacity utilization.

44

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

EBIT included insurance proceeds in excess of costs resulting from the coal gasification incident in second quarter and first six months 2018. Excluding this unusual item, adjusted EBIT increased second quarter and first six months 2018 compared to second quarter and first six months 2017 primarily due to the net impact of $1 million and $11 million, respectively, of higher sales volume, particularly for acetate tow, and earnings from nonwovens innovation platform products, mostly offset by lower selling prices, particularly for acetate tow.

Other

	Second Quarter						First Six Months
	2018			2017			2018			2017
(Dollars in millions)
Sales	$	—		$	14		$	—		$	27
Loss before interest and taxes
Growth initiatives and businesses not allocated to operating segments	$	(27	)	$	(32	)	$	(53	)	$	(60	)
Pension and other postretirement benefits income (expense), net not allocated to operating segments	20			18			41			36
Asset impairments and restructuring charges, net	(4		)	—			(6		)	—
Other income (charges), net not allocated to operating segments	(8		)	(3		)	(16		)	—
Loss before interest and taxes before non-core and unusual items	$	(19	)	$	(17	)	$	(34	)	$	(24	)
Costs resulting from tax law changes and outside-U.S. entity reorganizations	8			—			19			—
Asset impairments and restructuring charges, net	4			—			6			—
Loss before interest and taxes excluding non-core and unusual items	(7		)	(17		)	(9		)	(24		)

Sales revenue and costs related to growth initiatives, R&D costs, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in operating segment results for any of the periods presented and are included in "Other".

Sales revenue in second quarter and first six months 2017 is primarily sales from the textiles and nonwovens innovation platform products. Beginning first quarter 2018, sales revenue and innovation costs from the textiles and nonwovens innovation platform products previously reported in "Other" are now reported in the Fibers operating segment due to accelerating commercial progress of growth initiatives. See Note 17, "Segment Information", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

SALES BY CUSTOMER LOCATION

	Sales Revenue
	Second Quarter								First Six Months
					Change								Change
(Dollars in millions)	2018		2017		$		%		2018		2017		$		%
United States and Canada	$	1,108	$	1,088	$	20	2	%	$	2,208	$	2,154	$	54	3	%
Asia Pacific	639		581		58		10	%	1,281		1,093		188		17	%
Europe, Middle East, and Africa	725		624		101		16	%	1,452		1,224		228		19	%
Latin America	149		126		23		18	%	287		251		36		14	%
Total Eastman Chemical Company	$	2,621	$	2,419	$	202	8	%	$	5,228	$	4,722	$	506	11	%

Sales revenue in United States and Canada increased in second quarter 2018 compared to second quarter 2017 primarily due to higher AFP, AM, and Fibers segments sales volume and higher CI segment selling prices, partially offset by lower CI segment sales volume.

45

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Sales revenue in United States and Canada increased in first six months 2018 compared to first six months 2017 primarily due to higher CI and AFP segments selling prices and higher AFP, AM, and Fibers segments sales volume partially offset by lower CI segment sales volume.

Sales revenue in Asia Pacific increased in second quarter 2018 compared to second quarter 2017 primarily due to higher AM and AFP segments sales volume and higher CI and AFP segments selling prices partially offset by lower Fibers segment sales volume.

Sales revenue in Asia Pacific increased in first six months 2018 compared to first six months 2017 primarily due to higher AFP, AM, and CI segments sales volume and higher AFP and CI segments selling prices.

Sales revenue in Europe, Middle East, and Africa increased in second quarter 2018 compared to second quarter 2017 primarily due to higher sales volume across the operating segments and a favorable shift in foreign exchange rates across the operating segments.

Sales revenue in Europe, Middle East, and Africa increased in first six months 2018 compared to first six months 2017 primarily due to a favorable shift in foreign exchange rates across the operating segments, higher sales volume across the operating segments, and higher AFP and CI segments selling prices.

Sales revenue in Latin America increased in second quarter 2018 compared to second quarter 2017 primarily due to higher sales volume across the operating segments.

Sales revenue in Latin America increased in first six months 2018 compared to first six months 2017 primarily due to higher sales volume across the operating segments and higher CI segment selling prices.

LIQUIDITY, CAPITAL RESOURCES, AND OTHER FINANCIAL INFORMATION

Cash Flows

	First Six Months
(Dollars in millions)	2018			2017
Net cash provided by (used in)
Operating activities	$	408		$	483
Investing activities	(179		)	(283		)
Financing activities	(223		)	(158		)
Effect of exchange rate changes on cash and cash equivalents	(4		)	(1		)
Net change in cash and cash equivalents	2			41
Cash and cash equivalents at beginning of period	191			181
Cash and cash equivalents at end of period	$	193		$	222

Cash provided by operating activities decreased $75 million in first six months 2018 compared with first six months 2017. The decrease in cash provided was partially due to increased working capital primarily from higher trade receivables and inventories offset by lower trade payables. Net cash of $70 million was used in operating activities related to the coal gasification incident, primarily decreasing net earnings and payables.

Cash used in investing activities decreased $104 million in first six months2018 compared with first six months2017 primarily due to $65 million net proceeds from insurance for property damage from the coal gasification incident and lower additions to properties and equipment.

Cash used in financing activities increased $65 million in first six months2018 compared with first six months2017. The increase was primarily due to increases in share repurchases and dividend payments partially offset by a $35 million increase in net proceeds from borrowings.

46

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

The Company has access to a $1.25 billion revolving credit agreement (the "Credit Facility") that expires October 2021. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility provides available liquidity for general corporate purposes and supports commercial paper borrowings. See Note 5, "Borrowings", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In April 2018, the Company amended its $250 million accounts receivable securitization agreement (the "A/R Facility") to extend the maturity to April 2020. Eastman Chemical Financial Corporation ("ECFC"), a subsidiary of the Company, has an agreement to sell interests in trade receivables under the A/R Facility to a third party purchaser. Third party creditors of ECFC have first priority claims on the assets of ECFC before those assets would be available to satisfy the Company's general obligations. Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and ECFC pays a fee to maintain availability of the A/R Facility. See Note 5, "Borrowings", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The Credit and A/R Facilities and other borrowing arrangements contain customary covenants and events of default, some of which require the Company to maintain certain financial ratios that determine the amounts available and terms of borrowings. The Company was in compliance with all covenants at both June 30, 2018 and December 31, 2017. The amount of available borrowings under the A/R and Credit Facilities was approximately $1.0 billion as of June 30, 2018. The amount of available borrowings was limited by a financial ratio covenant under the Credit Facility. For additional information, see Section 5.03 of the Credit Facility at Exhibit 10.02 to the Company's 2016 Annual Report on Form 10-K.

The Company has access to borrowings of up to €150 million ($175 million) under a receivables facility based on the discounted value of selected customer accounts receivable. This facility expires December 2020 and renews for another one year period if not terminated with 90 days notice by either party. These arrangements include receivables in the United States, Belgium, and Finland, and are subject to various eligibility requirements. Borrowings under this facility are subject to interest at an agreed spread above EURIBOR for euro denominated drawings and the counterparty's cost of funds for drawings in any other currencies, plus administration and insurance fees and are classified as short-term. See Note 5, "Borrowings", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Cash flows from operations, cash and cash equivalents, and other sources of liquidity 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" in this MD&A. Eastman management believes maintaining a financial profile consistent with an investment grade credit rating is important to its long-term strategic and financial flexibility.

Debt and Other Commitments

At June 30, 2018, the Company's borrowings totaled $6.7 billion with various maturities. See Note 5, "Borrowings", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In December 2016, the Company borrowed $300 million under a five-year term loan agreement ("2021 Term Loan"). As of June 30, 2018, the 2021 Term Loan agreement balance outstanding was $100 million with an interest rate of 3.34 percent. In second quarter2018, $100 million of the Company's borrowings under the 2021 Term Loan were repaid using available cash. As of December 31, 2017, the 2021 Term Loan agreement balance outstanding was $200 million with an interest rate of 2.60 percent. Borrowings under the 2021 Term Loan agreement are subject to interest at varying spreads above quoted market rates.

47

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The resolution of uncertainties related to environmental matters included in other liabilities may have a material adverse effect on the Company's consolidated results of operations in the period recognized, however, 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, results of operations, or cash flows. See Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K for the Company's accounting policy for environmental costs and see Note 9, "Environmental Matters and Asset Retirement Obligations", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding outstanding environmental matters and asset retirement obligations.

Off Balance Sheet Arrangements

For information about off balance sheet arrangements, see Note 8, "Commitments and Off Balance Sheet Arrangements", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. Management's current expectation is that the likelihood of material residual guarantee payments or future payment or performance related to non-performance under other guarantees is remote.

Capital Expenditures

Capital expenditures were $244 million and $279 million in first six months2018 and 2017, respectively. Capital expenditures in 2018 were primarily for an AM operating segment expansion of Tritan^™ copolyester capacity in Kingsport, Tennessee, and manufacturing capacity debottlenecking and site modernization projects. The Company expects that 2018 capital expenditures will be approximately $550 million.

Stock Repurchases and Dividends

In February 2014, the Company's Board of Directors authorized the repurchase of up to $1 billion of the Company's outstanding common stock. The Company completed the $1 billion repurchase authorization in May 2018, acquiring a total of 12,215,950 shares. In February 2018, the Company's Board of Directors authorized the repurchase of up to an additional $2 billion of the Company's outstanding common stock at such times, in such amounts, and on such terms, as determined by management to be in the best interests of the Company. As of June 30, 2018, a total of 920,651 shares have been repurchased under the February 2018 authorization for a total amount of $98 million.

The Board of Directors declared a cash dividend of $0.56 per share during the third quarter of 2018, payable on October 5, 2018 to stockholders of record on September 14, 2018.

Other

Eastman did not have any material relationships with unconsolidated entities or financial partnerships, including special purpose entities, for the purpose of facilitating off balance sheet arrangements with contractually narrow or limited purposes. Thus, the Company is not materially exposed to any financing, liquidity, market, or credit risk related to any such relationships.

RECENTLY ISSUED ACCOUNTING STANDARDS

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

48

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

OUTLOOK

Eastman uses an innovation-driven growth model which consists of leveraging world class scalable technology platforms, delivering differentiated application development capabilities, and relentlessly engaging the market. The Company's world class technology platforms form the foundation of sustainable growth by differentiated products through significant scale advantages in R&D and advantaged global market access. Differentiated application development converts market complexity into opportunities for growth and accelerates innovation by enabling a deeper understanding of the value of Eastman's products and how they perform within customers' and end user products. Key areas of application development include thermoplastic processing, functional films, coatings formulations, rubber additive formulations, adhesives formulations, non-wovens and textiles, and animal nutrition. The Company engages the market by working directly with customers and downstream users, targeting attractive niche markets, and leveraging disruptive macro trends such as health and wellness, natural resource efficiency, an increasing middle class in emerging economies, and feeding a growing population. Management believes that these elements of the Company's innovation-driven growth model combined with disciplined portfolio management and balanced capital deployment will result in consistent, sustainable earnings growth and strong cash flow.

For 2018, management expects:

• earnings to benefit from a robust portfolio of specialty businesses in attractive niche end-markets, strong growth in high margin, innovative products, and a lower tax rate;

• earnings to be negatively impacted by higher costs of strategic growth initiatives, higher scheduled maintenance costs, volatile market prices for commodity products and raw materials and energy, particularly for ethylene, and planned and possible tariff and trade actions;

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

• capital spending of approximately $550 million; and

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

The coal gasification incident, net of insurance recoveries, is expected to reduce earnings by a total of between $25 million and $50 million spread across 2017 and 2018. The Company anticipates that in 2018 insurance recoveries will more than offset costs of the incident recognized in 2018.

Based on the foregoing expectations and assumptions, management expects adjusted 2018 EPS, excluding any non-core, unusual, or non-recurring items in the last two quarters of 2018 and assuming an actual tax rate for full-year 2018 equal to the adjusted tax rate detailed in "Results of Operations - Provision for Income Taxes", to be ten to fourteen percent higher than adjusted 2017 EPS excluding non-core and unusual items of $7.61. The Company's 2018 financial results forecasts do not include non-core, unusual, or non-recurring items. Accordingly, management is unable to reconcile projected full-year 2018 earnings excluding non-core, unusual, or non-recurring items to projected reported GAAP earnings without unreasonable efforts.

See "Risk Factors" below.

RISK FACTORS

In addition to 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".

49

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 Eastman's results of operations, financial condition, and cash flows. The Company's business and operating results were affected by the impact of the last global recession, and its related impacts, such as, the credit market crisis, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, and other challenges that affected the global economy. Continuing uncertainty in the global economy and financial markets and uncertainty over timing and extent of recovery may adversely affect the Company's results of operations, financial condition, and cash flows. 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 the Company's financial results.

Eastman is reliant on certain strategic raw material and energy commodities for its operations and utilizes risk management tools, including hedging, as appropriate, to mitigate market fluctuations in raw material and energy costs. These risk mitigation measures do not eliminate all exposure to market fluctuations and may limit the Company fully benefiting from lower raw material costs and, conversely, offset the impact of higher raw material costs. 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.

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

Although Eastman has an extensive customer base, loss of, or material financial weakness of, certain of the Company's 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.

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, Eastman's business is subject to operating risks common to chemical manufacturing, storage, handling, and transportation including explosions, fires, inclement weather, natural disasters, mechanical failure, unscheduled downtime, transportation interruptions, remediation, chemical spills, discharges or releases of toxic or hazardous substances or gases. 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, credit ratings, 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 have 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. Unplanned disruptions of manufacturing operations or related infrastructure 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. As previously reported, in fourth quarter 2017 the Company had an operational incident in the Kingsport manufacturing site coal gasification operations area that negatively impacted manufacturing operations and earnings.

50

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.

Eastman continues to identify and pursue growth opportunities through both organic and inorganic initiatives. These growth opportunities include development and commercialization or licensing of innovative new products and technologies and related employee leadership, expertise, skill development and retention, expansion into new markets and geographic regions, 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 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.

The Company's substantial global operations subject it to risks of doing business in other countries, which could adversely affect its business, financial condition, and results of operations.

More than half of Eastman's sales for 2017 were to customers outside of North America. The Company expects sales from international markets to continue to represent a significant portion of its sales. Also, a significant portion of manufacturing capacity is located outside of the United States. Accordingly, the Company's business is subject to risks related to the differing legal, political, cultural, social and regulatory requirements and economic conditions of many jurisdictions. Fluctuations in exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars of products and services provided in foreign countries. In addition, the U.S. or foreign countries may impose additional taxes or otherwise tax Eastman's foreign income, or adopt or increase restrictions on foreign trade or investment, including currency exchange controls, tariffs or other taxes, or limitations on imports or exports. Certain legal and political risks are also inherent in the operation of a company with Eastman's global scope. For example, it may be more difficult for Eastman to enforce its agreements or collect receivables through foreign legal systems, and the laws of some countries may not protect the Company's intellectual property rights to the same extent as the laws of the U.S. Failure of foreign countries to have laws to protect Eastman's intellectual property rights or an inability to effectively enforce such rights in foreign countries could result in loss of valuable proprietary information. There is also risk that foreign governments may nationalize private enterprises in certain countries where Eastman operates. Social and cultural norms in certain countries may not support compliance with Eastman's corporate policies including those that require compliance with substantive laws and regulations. Also, changes in general economic and political conditions in countries where Eastman operates are a risk to the Company's financial performance. As Eastman continues to operate its business globally, its success will depend, in part, on its ability to anticipate and effectively manage these and other related risks. There can be no assurance that the consequences of these and other factors relating to its multinational operations will not have an adverse effect on Eastman's business, financial condition, or results of operations.

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

Eastman and its facilities and businesses are subject to complex health, safety, and environmental laws and regulations, both in the U.S. and internationally, 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 of 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, future changes in U.S. Federal legislation and regulation may 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.

51

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 Eastman's growth strategy, acquisitions of large companies (such as the previous acquisitions of Taminco Corporation and Solutia, Inc.) 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.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

In January 2018, Eastman entered into fixed-to-fixed cross-currency swaps and designated these swaps to hedge a portion of its net investment in a euro functional currency denominated subsidiary against foreign currency fluctuations. These contracts involve the exchange of fixed U.S. dollars with fixed euro interest payments periodically over the life of the contracts and an exchange of the notional amounts at maturity. The fixed-to-fixed cross-currency swaps include €150 million ($180 million) maturing January 2021 and €266 million ($320 million) maturing August 2022.

At June 30, 2018, a 10% fluctuation in the euro currency rate would have an approximately $50 million impact on the designated net investment value in the foreign subsidiary. As a result of the designation of the cross-currency interest rate swaps as a hedge of the net investment, foreign currency translation gains and losses are recognized as a component of the "Change in cumulative translation adjustment" within "Other comprehensive income (loss), net of tax" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. Therefore, a foreign currency change in the designated investment value of the foreign subsidiary will generally be offset by the foreign currency change in the designated cross-currency interest rate swaps.

Other than the derivative cross-currency interest rate swaps designated as net investment hedges discussed above, there have been no material changes to the Company's market risks from those disclosed in Part II, Item 7A of the Company's 2017 Annual Report on Form 10-K.

52

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 June 30, 2018 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 second quarter of 2018 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

53

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

General

From time to time, Eastman 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 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.

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 for the defense and indemnification of Solutia against any Legacy Tort Claims (as defined in the Monsanto Settlement Agreement) and Solutia has 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 upon Eastman's acquisition of Solutia in July 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

In February 2014, the Board of Directors authorized the repurchase of up to $1 billion of the Company's outstanding common stock. The Company completed the $1 billion repurchase authorization in May 2018, acquiring a total of 12,215,950 shares. In February 2018, the Company's Board of Directors authorized the repurchase of up to an additional $2 billion of Company's outstanding common stock at such times, in such amounts, and on such terms, as determined by management to be in the best interests of the Company. As of June 30, 2018, a total of 920,651 shares have been repurchased under the February 2018 authorization for a total amount of $98 million. During first six months2018, the Company repurchased 2,409,774 shares of common stock for a cost of $250 million. For additional information, see Note 11, "Stockholders' Equity", to the Company's unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Period	Total Number of Shares Purchased	Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value (in millions) that May Yet Be Purchased Under the Plans or Programs
April 1 - 30, 2018	456,000	$	105.58	456,000	$	2,004
May 1 - 31, 2018	483,582	$	105.51	483,582	$	1,953
June 1 - 30, 2018	475,957	$	106.80	475,957	$	1,902
Total	1,415,539	$	105.97	1,415,539

⁽¹⁾  Average price paid per share reflects the weighted average purchase price paid for shares.

54

ITEM 6. EXHIBITS

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

	EXHIBIT INDEX
Exhibit Number	Description
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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2017)
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 (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, 1996)
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 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)
4.11	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)
4.12	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)
4.13	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)

55

	EXHIBIT INDEX
Exhibit Number	Description
4.14	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)
4.15	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)
4.16	Form of 1.50% Note due 2023 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated May 26, 2016 and Exhibit 1.1 to the Company's Current Report on Form 8-K dated November 21, 2016)
4.17	Form of 1.875% Note due 2026 (incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K dated November 21, 2016)
12.01 *	Statement re: Computation of Ratios of Earnings to Fixed Charges
31.01 *	Rule 13a – 14(a) Certification by Mark J. Costa, Chief Executive Officer, for the quarter ended June 30, 2018
31.02 *	Rule 13a – 14(a) Certification by Curtis E. Espeland, Executive Vice President and Chief Financial Officer, for the quarter ended June 30, 2018
32.01 *	Section 1350 Certification by Mark J. Costa, Chief Executive Officer, for the quarter ended June 30, 2018
32.02 *	Section 1350 Certification by Curtis E. Espeland, Executive Vice President and Chief Financial Officer, for the quarter ended June 30, 2018
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

* Denotes exhibit filed or furnished herewith.

56

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:	August 3, 2018	By:	/s/ Curtis E. Espeland
			Curtis E. Espeland
			Executive Vice President and Chief Financial Officer

57

EX-12.01

Exhibit 12.01

EASTMAN CHEMICAL COMPANY AND SUBSIDIARIES

Computation of Ratios of Earnings to Fixed Charges

		Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)		2018		2017		2018		2017
Earnings before income taxes excluding noncontrolling interest	$	428	$	357	$	778	$	697
Add:
Interest expense		63		61		123		122
Appropriate portion of rental expense (1)		8		8		16		15
Amortization of capitalized interest		1		1		2		2
Earnings as adjusted	$	500	$	427	$	919	$	836
Fixed charges:
Interest expense	$	63	$	61	$	123	$	122
Appropriate portion of rental expense (1)		8		8		16		15
Capitalized interest		1		2		2		4
Total fixed charges	$	72	$	71	$	141	$	141
Ratio of earnings to fixed charges		6.9x		6.0x		6.5x		5.9x

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

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:  August 3, 2018

/s/ Mark J. Costa

Mark J. Costa

Chief Executive Officer

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:  August 3, 2018

/s/ Curtis E. Espeland

Curtis E. Espeland

Executive Vice President and Chief Financial Officer

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 June 30, 2018, 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:  August 3, 2018

/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.

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 June 30, 2018, 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:  August 3, 2018

/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.

XML

Document and Entity Information - USD ($)	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	EASTMAN CHEMICAL CO
Entity Central Index Key	0000915389
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	141,280,046
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float		$ 11,960,005,248

XML

UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND RETAINED EARNINGS - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018		Jun. 30, 2017
Income Statement [Abstract]
Sales	$ 2,621	$ 2,419	$ 5,228		$ 4,722
Cost of sales	1,917	1,789	3,943		3,487
Gross profit	704	630	1,285		1,235
Selling, general and administrative expenses	189	181	379		360
Research and development expenses	60	58	116		115
Asset impairments and restructuring charges, net	4	0	6		0
Other components of post-employment (benefit) cost, net	(30)	(30)	(60)		(58)
Other (income) charges, net	(10)	1	(56)		(3)
Earnings before interest and taxes	491	420	900		821
Net interest expense	61	61	120		121
Earnings before income taxes	430	359	780		700
Provision for income taxes	84	65	144		127
Net earnings	346	294	636		573
Less: Net earnings attributable to noncontrolling interest	2	2	2		3
Net earnings attributable to Eastman	$ 344	$ 292	$ 634		$ 570
Basic earnings per share attributable to Eastman
Basic earnings per share attributable to Eastman	$ 2.42	$ 2.01	$ 4.45		$ 3.91
Diluted earnings per share attributable to Eastman
Diluted earnings per share attributable to Eastman	$ 2.39	$ 2.00	$ 4.39		$ 3.89
Comprehensive Income
Net earnings including noncontrolling interest	$ 346	$ 294	$ 636		$ 573
Other comprehensive income (loss), net of tax:
Change in cumulative translation adjustment	(34)	36	(7)		43
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(8)	(6)	(15)		(13)
Derivatives and hedging:
Unrealized gain (loss) during period	64	(18)	41		(39)
Reclassification adjustment for (gains) losses included in net income, net	(3)	8	(3)		4
Total other comprehensive income (loss), net of tax	19	20	16		(5)
Comprehensive income including noncontrolling interest	365	314	652		568
Less: Net earnings attributable to noncontrolling interest	2	2	2		3
Comprehensive income attributable to Eastman	363	312	650		565
Retained Earnings
Retained earnings at beginning of period	7,026	5,925	6,802		5,721
Cumulative effect adjustment resulting from adoption of new accounting standards	0	0	16		0
Net earnings attributable to Eastman	344	292	634		570
Cash dividends declared	(78)	(75)	(160)	[1]	(149)
Retained earnings at end of period	$ 7,292	$ 6,142	$ 7,292		$ 6,142

[1] Cash dividends declared includes cash dividends paid and dividends declared but unpaid.

XML

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Millions		Jun. 30, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents		$ 193	$ 191
Trade receivables, net of allowance for doubtful accounts		1,393	1,026
Miscellaneous receivables		314	360
Inventories		1,532	1,509
Other current assets		66	57
Total current assets		3,498	3,143
Properties
Properties and equipment at cost		12,513	12,370
Less: Accumulated depreciation		6,943	6,763
Net properties		5,570	5,607
Goodwill		4,514	4,527
Intangible assets, net of accumulated amortization		2,278	2,373
Other noncurrent assets		400	349
Total assets	[1]	16,260	15,999
Current liabilities
Payables and other current liabilities		1,406	1,589
Borrowings due within one year		662	393
Total current liabilities		2,068	1,982
Long-term borrowings		6,033	6,147
Deferred income tax liabilities		933	893
Post-employment obligations		924	963
Other long-term liabilities		528	534
Total liabilities		10,486	10,519
Stockholders' equity
Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 219,093,133 and 218,369,992 for 2018 and 2017, respectively)		2	2
Additional paid-in capital		2,021	1,983
Retained earnings		7,292	6,802
Accumulated other comprehensive income (loss)		(193)	(209)
Stockholder's Equity before Treasury Stock		9,122	8,578
Less: Treasury stock at cost (77,863,885 shares for 2018 and 75,454,111 shares for 2017)		3,425	3,175
Total Eastman stockholders' equity		5,697	5,403
Noncontrolling interest		77	77
Total equity		5,774	5,480
Total liabilities and stockholders' equity		$ 16,260	$ 15,999

[1] Segment assets include accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

XML

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
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)	219,093,133	218,369,992
Treasury stock at cost (in shares)	77,863,885	75,454,111

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net earnings	$ 636	$ 573
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	300	292
Gain from property insurance	(65)	0
Provision for deferred income taxes	5	36
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables	(213)	(166)
(Increase) decrease in inventories	(158)	(108)
Increase (decrease) in trade payables	(10)	(28)
Pension and other postretirement contributions (in excess of) less than expenses	(78)	(56)
Variable compensation (in excess of) less than expenses	(24)	(34)
Other items, net	15	(26)
Net cash provided by operating activities	408	483
Investing activities
Additions to properties and equipment	(244)	(279)
Proceeds from property insurance	65	0
Proceeds from sale of assets	0	1
Acquisitions, net of cash acquired	0	(4)
Other items, net	0	(1)
Net cash used in investing activities	(179)	(283)
Financing activities
Net increase (decrease) in commercial paper and other borrowings	268	(95)
Proceeds from borrowings	350	500
Repayment of borrowings	(428)	(250)
Dividends paid to stockholders	(160)	(149)
Treasury stock purchases	(250)	(175)
Dividends paid to noncontrolling interest	(2)	(1)
Other items, net	(1)	12
Net cash used in financing activities	(223)	(158)
Effect of exchange rate changes on cash and cash equivalents	(4)	(1)
Net change in cash and cash equivalents	2	41
Cash and cash equivalents at beginning of period	191	181
Cash and cash equivalents at end of period	$ 193	$ 222

XML

SIGNIFICANT ACCOUNTING POLICIES SIGNIFICANT ACCOUNTING POLICIES (Notes)

6 Months Ended

Jun. 30, 2018

Significant Accounting Policies [Abstract]

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company ("Eastman" or the "Company") in accordance and consistent with the accounting policies stated in the Company's 2017 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 2017 Annual Report on Form 10-K, with the exception of the items noted below. The December 31, 2017 financial position data included herein was derived from the audited consolidated financial statements included in the 2017 Annual Report on Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP").

In the opinion of management, the unaudited consolidated financial statements include all normal recurring adjustments necessary for fair statement of the interim financial information in conformity with GAAP. These statements contain some amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. The unaudited consolidated financial statements include assets, liabilities, sales revenue, and expenses of all majority-owned subsidiaries and joint ventures in which a controlling interest is maintained. Eastman accounts for other joint ventures and investments where it exercises significant influence on the equity basis. Intercompany transactions and balances are eliminated in consolidation.

Certain prior period data has been reclassified in the consolidated financial statements and accompanying footnotes to conform to current period presentation. As of January 1, 2018:

• Eastman's primary measure of operating performance for all periods presented is earnings before interest and taxes ("EBIT") on a consolidated and segment basis. Previously, the Company's primary measure of operating performance was operating earnings.

• As discussed below, the new accounting standard for the presentation of net periodic benefit costs requires the Company to present non-service cost components of net periodic benefit costs (interest cost, expected return on plan assets, curtailment gains or losses, amortization of prior service costs or credits, and mark-to-market gains or losses) separately from service cost. These non-service cost components were reclassified from "Cost of sales", "Selling, general and administrative expenses", and "Research and development expenses" line items and are now included in a new line item, "Other components of post-employment (benefit) cost, net" on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all periods presented. This reclassification does not change prior period EBIT and, accordingly, management does not consider this change to have a material impact on the Company's financial statements and related disclosures.

Recently Adopted Accounting Standards

Accounting Standards Update ("ASU") 2014-09 Revenue Recognition (Accounting Standards Codification "ASC" 606): On January 1, 2018, Eastman adopted this standard under the modified retrospective method, such that revenue for all periods prior to January 1, 2018 continue to be reported under the previous standard, which resulted in an increase to retained earnings of $53 million after tax for products shipped but not delivered as of December 31, 2017.

Under the new standard, the Company recognizes revenue when performance obligations of the sale are satisfied. The majority of the Company's terms of sale have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when control has been transferred to the customer, generally at the time of shipment of products. Under the previous revenue recognition accounting standard, the Company recognized revenue upon transfer of title and risk of loss, generally upon the delivery of goods.

Management does not expect that changes in its accounting required by this new standard will materially impact the Company's financial statements and related disclosures when comparing 2018 under the new revenue standard to previous years under the prior standard. However, the difference in timing of revenue recognition under the current and former accounting standards is expected to have some impact on seasonal revenue and EBIT trends during 2018 compared to previous years. For further information, see Note 18, "Revenue Recognition".

ASU 2016-01 Financial Instruments: On January 1, 2018, Eastman adopted this standard relating to the recognition and measurement of financial assets and financial liabilities. This standard requires equity investments (except equity method and consolidated investments) to be measured at fair value with changes in fair value recognized in net income. Management has concluded that changes in its accounting required by the new standard will not materially impact the Company's financial statements and related disclosures. In February 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-03 as an update to the standard described above which is effective for the Company July 1, 2018. Management has concluded that changes in its accounting required by the update will not materially impact the Company's financial statements and related disclosures.

ASU 2016-16 Income Taxes - Intra-Entity Transfers: On January 1, 2018, Eastman adopted this standard under the modified retrospective method resulting in a beginning retained earnings decrease of $39 million. Under this standard, the Company is required to recognize the income tax consequence of an intra-entity transfer of an asset other than inventory when the transfer occurs.

ASU 2017-05 Other Income - Gains and Losses from Derecognition of Nonfinancial Assets: On January 1, 2018, Eastman adopted this standard in conjunction with the revenue recognition standard mentioned above. This standard clarifies the scope of nonfinancial asset derecognition and the accounting for partial sales of nonfinancial assets. This adoption had no impact on the Company's financial statements and related disclosures in the current period.

ASU 2017-07 Compensation - Retirement Benefits: On January 1, 2018, Eastman adopted this standard retrospectively for income statement effects and prospectively for balance sheet effects. This standard is intended to improve the presentation of net periodic pension and postretirement benefit costs by requiring the reporting of the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit costs (interest cost, expected return on plan assets, curtailment gains or losses, amortization of prior service costs or credits, and mark-to-market gains or losses) are to be presented in the income statement separately from the service cost component and outside the subtotal of income from operations, if presented. Management has concluded that changes in its accounting required by this new standard will not materially impact the Company's financial statements and related disclosures.

ASU 2017-12 Derivatives and Hedging: On January 1, 2018, Eastman adopted this standard on a modified retrospective basis for income statement impacts and prospectively for presentation and disclosure resulting in a beginning retained earnings increase of $2 million related to ineffectiveness recognized in "Accumulated other comprehensive income (loss)" ("AOCI") which was recognized in the Unaudited Consolidated Statements of Financial Position under the previous standard. This standard is intended to simplify the application of hedge accounting and improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in the financial statements. Management has included the additional disclosures required by this standard in Note 6, "Derivative and Non-Derivative Financial Instruments".

Accounting Standards Issued But Not Adopted as of June 30, 2018

ASU 2016-02 Leases: In February 2016, the FASB issued a standard on lease accounting. The new standard establishes two types of leases for lessees: finance and operating. Both finance and operating leases will have associated right-of-use assets and liabilities initially measured at the present value of the lease payments. This standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and early adoption is permitted. The new standard is to be applied under a modified retrospective approach wherein practical expedients have been allowed that will not require reassessment of current leases at the effective date. In January 2018, the FASB issued an update to the new standard above in ASU 2018-01 that sets forth the requirement to assess land easements to determine if the arrangement should be accounted for as a lease. The effective date for this amended standard is the same as that of the lease standard stated above. Management is currently evaluating implementation options and impact on the Company's financial statements and related disclosures.

ASU 2016-13 Financial Instruments - Credit Losses: In June 2016, the FASB issued a standard relating to credit losses. The amendments require a financial asset (including trade receivables) to be presented at the net amount expected to be collected through the use of allowances for credit losses valuation account. The income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period and early adoption is permitted, including adoption in an interim period, beginning after December 15, 2018. The new standard application is mixed among the various elements that include modified retrospective and prospective transition methods. Management does not expect that changes in its accounting required by the new standard will materially impact the Company's financial statements and related disclosures.

ASU 2017-04 Intangibles - Goodwill and Other: In January 2017, the FASB issued a standard as a part of its simplification initiative that bases the impairment of goodwill on any difference for which the carrying value is greater than the fair value of the reporting unit. This standard is effective for annual reporting periods, or interim period testing performed, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment testing performed after January 1, 2017. This standard is to be applied on a prospective basis for goodwill testing that occur after the effective date. Management does not expect that changes in its accounting required by the new standard will materially impact the Company's financial statements and related disclosures.

ASU 2018-02 Income Statement - Reporting Comprehensive Income: In February 2018, the FASB issued a standard that allows the reclassification from AOCI to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act ("Tax Reform Act"). The amount of the reclassification is the difference between the historical corporate income tax rate and the newly enacted tax rate. This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The new standard is to be applied either in the period of adoption or retrospectively to each period (or periods) in which the effects of the change in the income tax rate in the Tax Reform Act is recognized. Management is currently evaluating implementation options and impact on the Company's financial statements and related disclosures.

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INVENTORIES

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

	June 30,		December 31,
(Dollars in millions)	2018		2017
Finished goods	$	1,044	$	1,114
Work in process	241		213
Raw materials and supplies	549		470
Total inventories at FIFO or average cost	1,834		1,797
Less: LIFO reserve	302		288
Total inventories	$	1,532	$	1,509

Inventories valued on the last-in, first-out ("LIFO") method were approximately 55 percent and 60 percent of total inventories at June 30, 2018 and December 31, 2017, respectively.

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PAYABLES AND OTHER CURRENT LIABILITIES

6 Months Ended

Jun. 30, 2018

Payables and Accruals [Abstract]

PAYABLES AND OTHER CURRENT LIABILITIES

PAYABLES AND OTHER CURRENT LIABILITIES

	June 30,		December 31,
(Dollars in millions)	2018		2017
Trade creditors	$	811	$	842
Accrued payrolls, vacation, and variable-incentive compensation	135		199
Accrued taxes	79		111
Other	381		437
Total payables and other current liabilities	$	1,406	$	1,589

"Other" consists primarily of accruals for post-employment obligations, dividends payable, interest payable, the current portion of environmental liabilities, and miscellaneous accruals.

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INCOME TAXES

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

PROVISION FOR INCOME TAXES

INCOME TAXES

	Second Quarter								First Six Months
(Dollars in millions)	2018				2017				2018				2017
	$		%		$		%		$		%		$		%
Provision for income taxes and tax rate	$	84	20	%	$	65	18	%	$	144	19	%	$	127	18	%

In second quarter and first six months 2018, the Company recognized an increase to the provision for income taxes of $10 million from an adjustment of the provisional net tax benefit recognized in fourth quarter 2017 resulting from the Tax Reform Act and tax impact of outside-U.S. entity reorganizations as part of the transition to an international treasury services center. The adjustment increased the one-time transition tax on deferred foreign income resulting from the Tax Reform Act. The first six months 2018 effective tax rate also includes the impact of the U.S. corporate tax rate reduction resulting from the Tax Reform Act.

The second quarter and first six months 2017 effective tax rates included a $22 million tax benefit to reflect finalization of prior years' income tax returns. The first six months 2017 effective tax rate also reflected a $22 million tax benefit due to planned amendments to prior years' income tax returns.

As previously reported, the Company recognized an estimated net tax benefit for the year ended December 31, 2017, primarily resulting from the Tax Reform Act. The net tax benefit included a benefit from the one-time revaluation of deferred tax liabilities, partially offset by a one-time transition tax on deferred foreign income and changes in valuation of deferred tax assets. The provisional benefit was updated in second quarter 2018, as described above. As of June 30, 2018, the Company continues to consider the accounting for the following impacts of the Tax Reform Act to be provisional and, accordingly, subject to adjustment in future periods: the transition tax on deferred foreign income (which consists of post-1986 accumulated earnings and profits of controlled foreign corporations and the determination of cash versus non-cash balances), the impact of the change in income tax rates on deferred tax assets and liabilities, and the evaluation of gross foreign tax credit carryforwards and related valuation allowances. In preparing the provisional estimates as of June 30, 2018, the Company has considered notices and revenue procedures issued by the Internal Revenue Service and authoritative accounting guidance.

Certain of the provisional amounts will be finalized in conjunction with the filing of the Company's U.S. federal income tax return for the year ended December 31, 2017 that will not be finalized until later in 2018. While historically differences between amounts reported in the Company's consolidated financial statements and the Company's U.S. federal income tax return have resulted in offsetting changes in estimates in current and deferred taxes for items which are timing related, the reduction of the U.S. tax rate will result in adjustments to the Company's income tax provision when recognized. The Company also considers it likely that further technical guidance regarding certain aspects of the new provisions included in the Tax Reform Act, as well as clarity regarding state income tax conformity to current federal tax code, may be issued which could result in changes to the provisional amounts reported as of June 30, 2018 and related state income tax effects.

Additionally, the Company continues to consider the future impact of the Tax Reform Act for the year beginning January 1, 2018, including the new provisions known as the base erosion anti-abuse tax ("BEAT") and global intangible low-tax income ("GILTI") tax, as well as other provisions. Under U.S. GAAP, companies can make an accounting policy election to either treat taxes resulting from GILTI as a current-period expense when incurred or factor such amounts into the measurement of deferred taxes. The Company has not completed its analysis of the effects of the GILTI provisions and will further consider the accounting policy election within the measurement period as provided under Staff Accounting Bulletin No. 118, "Income Tax Accounting Implications of the Tax Cuts and Jobs Act".

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BORROWINGS

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS

	June 30,		December 31,
(Dollars in millions)	2018		2017
Borrowings consisted of:
5.5% notes due November 2019	$	250	$	250
2.7% notes due January 2020	798		797
4.5% notes due January 2021	185		185
3.6% notes due August 2022	738		738
1.50% notes due May 2023 (1)	872		895
7 1/4% debentures due January 2024	197		197
7 5/8% debentures due June 2024	43		43
3.8% notes due March 2025	688		690
1.875% notes due November 2026(1)	577		592
7.60% debentures due February 2027	195		195
4.8% notes due September 2042	493		493
4.65% notes due October 2044	871		871
Commercial paper and short-term borrowings	661		389
Credit facilities borrowings	125		200
Capital leases and other	2		5
Total borrowings	6,695		6,540
Borrowings due within one year	662		393
Long-term borrowings	$	6,033	$	6,147

⁽¹⁾  The carrying value of the euro-denominated 1.50% notes due May 2023 and 1.875% notes due November 2026 will fluctuate with changes in the euro exchange rate. The carrying value of these euro-denominated borrowings have been designated as non-derivative net investment hedges of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations. During thesix months endedJune 30, 2018, pre-tax gains of $39 million were recognized in other comprehensive income ("OCI") for revaluation of these notes.

Credit Facilities and Commercial Paper Borrowings

In December 2016, the Company borrowed $300 million under a five-year term loan agreement ("2021 Term Loan"). As of June 30, 2018, the 2021 Term Loan agreement balance outstanding was $100 million with an interest rate of 3.34 percent. In second quarter2018, $100 million of the Company's borrowings under the 2021 Term Loan were repaid using available cash. As of December 31, 2017, the 2021 Term Loan agreement balance outstanding was $200 million with an interest rate of 2.60 percent. Borrowings under the 2021 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") expiring October 2021. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility provides available liquidity for general corporate purposes and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. At June 30, 2018 and December 31, 2017, the Company had no outstanding borrowings under the Credit Facility. At June 30, 2018, the Company's commercial paper borrowings were $544 million with a weighted average interest rate of 2.37 percent. At December 31, 2017, the Company's commercial paper borrowings were $280 million with a weighted average interest rate of 1.61 percent.

In April 2018 the Company amended its $250 million accounts receivable securitization agreement (the "A/R Facility") to extend the maturity to April 2020. Eastman Chemical Financial Corporation ("ECFC"), a subsidiary of the Company, has an agreement to sell interests in trade receivables under the A/R Facility to a third party purchaser. Third party creditors of ECFC have first priority claims on the assets of ECFC before those assets would be available to satisfy the Company's general obligations. Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and ECFC pays a fee to maintain availability of the A/R Facility. In first quarter 2018, $100 million available under the A/R Facility was borrowed and repaid in second quarter2018. In second quarter2018, $25 million available under the A/R Facility was borrowed and remained outstanding at June 30, 2018 with an interest rate of 3.01 percent. At December 31, 2017, the Company had no borrowings under the A/R Facility.

The Credit and A/R Facilities and other borrowing agreements contain customary covenants and events of default, some of which require the Company to maintain certain financial ratios that determine the amounts available and terms of borrowings. The Company was in compliance with all covenants at both June 30, 2018 and December 31, 2017.

The Company has access to borrowings of up to €150 million ($175 million) under a receivables facility based on the discounted value of selected customer accounts receivable. This facility expires December 2020 and renews for another one year period if not terminated with 90 days notice by either party. These arrangements include receivables in the United States, Belgium, and Finland, and are subject to various eligibility requirements. Borrowings under this facility are subject to interest at an agreed spread above EURIBOR for euro denominated drawings and the counterparty's cost of funds for drawings in any other currencies, plus administration and insurance fees and are classified as short-term. At June 30, 2018, the Company's amount of outstanding borrowings under this facility were $117 million with a weighted average interest rate of 1.52 percent. At December 31, 2017, the Company's amount of outstanding borrowings under this facility were $109 million with a weighted average interest rate of 1.31 percent.

Fair Value of Borrowings

Eastman has classified its total borrowings at June 30, 2018 and December 31, 2017 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 2017 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 primarily under the 2021 Term Loan, commercial paper, A/R Facility, and a receivables facility equals the carrying value and is classified as Level 2. The Company had no borrowings classified as Level 3 as of June 30, 2018 and December 31, 2017.

			Fair Value Measurements at June 30, 2018
(Dollars in millions)	Recorded Amount June 30, 2018		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Total borrowings	$	6,695	$	6,886	$	6,098	$	788

			Fair Value Measurements at December 31, 2017
(Dollars in millions)	Recorded Amount December 31, 2017		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Total borrowings	$	6,540	$	6,980	$	6,386	$	594

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DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS

Overview of Hedging Programs

Eastman is exposed to market risks, such as changes in foreign currency exchange rates, commodity prices, and interest rates. To mitigate these market risks and their effects on the cash flows of the underlying transactions and investments in foreign subsidiaries, the Company uses various derivative and non-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 Company does not enter into derivative transactions for speculative purposes.

For further information on hedging programs, see Note 9, "Derivative and Non-Derivative Financial Instruments", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K.

Cash Flow Hedges

Cash flow hedges are derivative instruments designated and used to hedge the exposure to variability in expected future cash flows that are attributable to a particular risk. The derivative instruments that are designated and qualify as a cash flow hedge are reported on the balance sheet at fair value and 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 net of the change in the hedge instrument and item being hedged for qualifying cash flow hedges is reported as a component of AOCI located in the Unaudited Consolidated Statements of Financial Position and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

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. The derivative instruments that are designated and qualify as fair value hedges are recorded on the balance sheet at fair value and 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 net of the change in the hedge instrument and item being hedged for qualifying fair value hedges is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Net Investment Hedges

Net investment hedges are defined as derivative or non-derivative instruments designated as and used to hedge the foreign currency exposure of the net investments in certain foreign operations. The net of the change in the hedge instrument and item being hedged for qualifying net investment hedges is reported as a component of the "Cumulative Translation Adjustment" ("CTA") within AOCI located in the Unaudited Consolidated Statements of Financial Position. Recognition in earnings of amounts previously recorded to CTA is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation.

For derivative cross-currency interest rate swap net investment hedges, gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in CTA within AOCI and recognized in earnings through the periodic swap interest accruals. The cross-currency interest rate swaps designated as net investment hedges are included as part of "Other long-term liabilities" or "Other noncurrent assets" within the Unaudited Consolidated Statements of Financial Position.

In January 2018, Eastman entered into fixed-to-fixed cross-currency swaps and designated these swaps to hedge a portion of its net investment in a euro functional currency denominated subsidiary against foreign currency fluctuations. These contracts involve the exchange of fixed U.S. dollars with fixed euro interest payments periodically over the life of the contracts and an exchange of the notional amounts at maturity. The fixed-to-fixed cross-currency swaps include €150 million ($180 million) maturing January 2021 and €266 million ($320 million) maturing August 2022.

Summary of Financial Position and Financial Performance of Hedging Instruments

The following table presents the notional amounts outstanding atJune 30, 2018 and December 31, 2017associated with Eastman's hedging programs.

Notional Outstanding		June 30, 2018	December 31, 2017
Derivatives designated as cash flow hedges:
Foreign Exchange Forward and Option Contracts (in millions)
	EUR/USD (in EUR)	€419	€525
Commodity Forward and Collar Contracts
	Feedstock (in million barrels)	8	7
	Energy (in million million british thermal units)	25	23
Derivatives designated as fair value hedges:
Fixed-for-floating interest rate swaps (in millions)		$75	$75
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps (in millions)
	EUR/USD (in EUR)	€416	—
Non-derivatives designated as net investment hedges:
Foreign Currency Net Investment Hedges (in millions)
	EUR/USD (in EUR)	€1,241	€1,240

Fair Value Measurements

All the Company's derivative assets and liabilities are currently classified as Level 2. Level 2 fair value is based on estimates using standard pricing models. These standard pricing models use inputs that 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, and the Company diversifies its positions among such counterparties to reduce its exposure to counterparty risk and credit losses. The Company monitors the creditworthiness of its counterparties on an on-going basis. The Company did not recognize a credit loss during second quarter2018 and 2017.

All 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. The Company does not have any cash collateral due under such agreements.

The Company has elected to present derivative contracts on a gross basis within the Unaudited Consolidated Statements of Financial Position. The following table presents the financial assets and liabilities valued on a recurring and gross basis and includes where the financial assets and liabilities are located within the Unaudited Consolidated Statements of Financial Position as ofJune 30, 2018 and December 31, 2017.

The Financial Position and Fair Value Measurements of Hedging Instruments on a Gross Basis
(Dollars in millions)
Derivative Type	Statements of Financial Position Classification	June 30, 2018 Level 2		December 31, 2017 Level 2
Derivatives designated as cash flow hedges:
Commodity contracts	Other current assets	$	22	$	9
Commodity contracts	Other noncurrent assets	9		4
Foreign exchange contracts	Other current assets	22		23
Foreign exchange contracts	Other noncurrent assets	4		2
Derivatives designated as fair value hedges:
Fixed-for-floating interest rate swap	Other current assets	1		1
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps	Other noncurrent assets	4		—
Total Derivative Assets		$	62	$	39
Derivatives designated as cash flow hedges:
Commodity contracts	Payables and other current liabilities	$	10	$	28
Commodity contracts	Other long-term liabilities	4		10
Foreign exchange contracts	Payables and other current liabilities	1		6
Foreign exchange contracts	Other long-term liabilities	—		4
Derivatives designated as fair value hedges:
Fixed-for-floating interest rate swap	Long-term borrowings	6		4
Total Derivative Liabilities		$	21	$	52
Total Net Derivative Assets (Liabilities)		$	41	$	(13	)

In addition to the fair value associated with derivative instruments designated as cash flow hedges and fair value hedges noted in the table above, the Company had a carrying value of $1.4 billion and $1.5 billion associated with non-derivative instruments designated as foreign currency net investment hedges at June 30, 2018 and December 31, 2017, respectively. The designated foreign currency-denominated borrowings are included in the "Long-term borrowings" line item of the Unaudited Consolidated Statements of Financial Position.

For additional fair value measurement information, see Note 1, "Significant Accounting Policies", and Note 9, "Derivative and Non-Derivative Financial Instruments", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K.

As of June 30, 2018 and December 31, 2017, the following amounts were included on the Unaudited Consolidated Statements of Financial Position related to cumulative basis adjustments for fair value hedges.

(Dollars in millions)	Carrying amount of the hedged liabilities				Cumulative amount of fair value hedging loss adjustment included in the carrying amount of the hedged liability
Line item in the Unaudited Consolidated Statements of Financial Position in which the hedged item is included	June 30, 2018		December 31, 2017		June 30, 2018			December 31, 2017
Long-term borrowings (1)	$	757	$	760	$	(13	)	$	(10	)

⁽¹⁾  At June 30, 2018and December 31, 2017, the cumulative amount of fair value hedging loss adjustment remaining for hedged liabilities for which hedge accounting has been discontinued was $7 million and $6 million, respectively.

The following table presents the effect of cash flow and net investment hedge accounting on OCI for second quarter and first six months2018 and 2017:

	Change in amount of after tax gain (loss) recognized in OCI on derivatives											Pre-tax amount of gain (loss) reclassified from OCI into earnings
(Dollars in millions)	Second Quarter					First Six Months						Second Quarter						First Six Months
Hedging Relationships	2018		2017			2018			2017			2018			2017			2018			2017
Derivatives in cash flow hedging relationships:
Commodity contracts	$	40	$	9		$	29		$	(7	)	$	(3	)	$	(20	)	$	(5	)	$	(27	)
Foreign exchange contracts	20		(20		)	7			(30		)	8			10			11			22
Forward starting interest rate and treasury lock swap contracts	1		1			2			2			(1		)	(1		)	(2		)	(2		)
Non-derivatives in net investment hedging relationships (pre-tax):
Net investment hedges	81		(91		)	39			(109		)	—			—			—			—
Derivatives in net investment hedging relationships (pre-tax):
Cross-currency interest rate swaps	26		—			15			—			—			—			—			—
Cross-currency interest rate swaps excluded component	—		—			(11		)	—			—			—			—			—

The following table presents the effect of fair value and cash flow hedge accounting on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for second quarter2018 and 2017.

Location and Amount of Gain or (Loss) Recognized in Earnings on Fair Value and Cash Flow Hedging Relationships
	Second Quarter
	2018								2017
(Dollars in millions)	Sales		Cost of Sales			Net Interest Expense			Sales		Cost of Sales			Net Interest Expense
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized	$	2,621	$	1,917		$	61		$	2,419	$	1,789		$	61
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships:
Interest contracts (fixed-for-floating interest rate swaps):
Hedged items						—								(1		)
Derivatives designated as hedging instruments						—								1
Gain or (loss) on cash flow hedging relationships:
Interest contracts (forward starting interest rate and treasury lock swap contracts):
Amount of loss reclassified from AOCI into earnings						(1		)						(1		)
Commodity Contracts:
Amount of loss reclassified from AOCI into earnings			(3		)						(20		)
Foreign Exchange Contracts:
Amount of gain reclassified from AOCI into earnings	8								10

The following table presents the effect of fair value and cash flow hedge accounting on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for first six months2018 and 2017.

Location and Amount of Gain or (Loss) Recognized in Earnings on Fair Value and Cash Flow Hedging Relationships
	First Six Months
	2018								2017
(Dollars in millions)	Sales		Cost of Sales			Net Interest Expense			Sales		Cost of Sales			Net Interest Expense
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized	$	5,228	$	3,943		$	120		$	4,722	$	3,487		$	121
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships:
Interest contracts (fixed-for-floating interest rate swaps):
Hedged items						—								(2		)
Derivatives designated as hedging instruments						—								2
Gain or (loss) on cash flow hedging relationships:
Interest contracts (forward starting interest rate and treasury lock swap contracts):
Amount of loss reclassified from AOCI into earnings						(2		)						(2		)
Commodity Contracts:
Amount of loss reclassified from AOCI into earnings			(5		)						(27		)
Foreign Exchange Contracts:
Amount of gain reclassified from AOCI into earnings	11								22

The Company enters into foreign exchange derivatives denominated in multiple currencies which are transacted and settled in the same quarter. These derivatives are not designated as hedges due to the short-term nature and the gains or losses on these derivatives are marked-to-market in line item "Other (income) charges, net" of the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. The Company recognized a net gain on these derivatives of $2 million and $10 million during second quarter2018 and 2017, respectively, and recognized a net loss of $6 million and net gain of $4 million during first six months2018 and 2017, respectively.

Pre-tax monetized positions and mark-to-market gains and losses from raw materials and energy, currency, and certain interest rate hedges that were included in AOCI included net losses of $120 million and $214 million at June 30, 2018 and December 31, 2017, respectively. Losses in AOCI decreased June 30, 2018 compared to December 31, 2017 primarily as a result of a decrease in foreign currency exchange rates associated with the euro and an increase in commodity prices, particularly propane. If realized, approximately $25 million in pre-tax gains, as of June 30, 2018, would be reclassified into earnings during the next 12 months.

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RETIREMENT PLANS

6 Months Ended

Jun. 30, 2018

Retirement Benefits [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 life insurance for eligible retirees hired prior to January 1, 2007. Eastman provides a subsidy for pre-Medicare health care and dental benefits to eligible retirees hired prior to January 1, 2007 that will end on December 31, 2021. Company funding is also provided for eligible Medicare retirees hired prior to January 1, 2007 with a health reimbursement arrangement. Costs recognized for these benefits are estimated amounts, which may change as actual costs derived for the year are determined.

For additional information regarding retirement plans, see Note 10, "Retirement Plans", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K.

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

	Second Quarter
	Pension Plans												Other Postretirement Benefit Plans
	2018						2017						2018			2017
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	8		$	4		$	9		$	4		$	—		$	1
Interest cost	17			5			16			4			5			6
Expected return on assets	(37		)	(10		)	(35		)	(9		)	—			(1		)
Amortization of:
Prior service credit, net	—			—			(1		)	—			(10		)	(10		)
Net periodic benefit (credit) cost	$	(12	)	$	(1	)	$	(11	)	$	(1	)	$	(5	)	$	(4	)
	First Six Months
	Pension Plans												Other Postretirement Benefit Plans
	2018						2017						2018			2017
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	17		$	8		$	18		$	7		$	—		$	2
Interest cost	34			10			33			9			11			12
Expected return on assets	(74		)	(19		)	(70		)	(17		)	(2		)	(3		)
Amortization of:
Prior service credit, net	—			—			(2		)	—			(20		)	(20		)
Net periodic benefit (credit) cost	$	(23	)	$	(1	)	$	(21	)	$	(1	)	$	(11	)	$	(9	)

On January 1, 2018, the Company adopted ASU 2017-07 resulting in non-service cost components of the net periodic pension and other postretirement benefit plans being presented in "Other components of post-employment (benefit) cost, net" line item of the Unaudited Consolidated Statement of Earnings, Comprehensive Income and Retained Earnings. See Note 1, "Significant Accounting Policies", for additional information.

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COMMITMENTS

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS

COMMITMENTS AND OFF BALANCE SHEET ARRANGEMENTS

Purchase Obligations and Lease Commitments

The Company had various purchase obligations at June 30, 2018, totaling approximately $2.9 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 noncancelable operating leases totaling $268 million over a period of approximately 40 years. Of the total lease commitments, approximately 50 percent relate to real property, including office space, storage facilities, and land; approximately 40 percent relate to railcars; and approximately 10 percent relate to machinery and equipment, including computer and communications equipment and production equipment.

Guarantees

The Company has operating leases with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease as well as other guarantees. Disclosures about each group of similar guarantees are provided below.

Residual Value Guarantees

The Company has operating leases with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease. These residual value guarantees totaled $71 million at June 30, 2018 and consist primarily of leases for railcars that will expire beginning in third quarter 2018. Residual guarantee payments that become probable and estimable are recognized as rent expense over the remaining life of the applicable lease. Management's current expectation is that the likelihood of material residual guarantee payments is remote.

Other Guarantees

Guarantees and claims also arise during the ordinary course of business from relationships with customers, suppliers, joint venture partners, and other parties when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur. Non-performance under a contract could trigger an obligation of the Company. The Company's current other guarantees include guarantees relating to intellectual property, environmental matters, and other indemnifications and have arisen through the normal course of business. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these claims, if they were to occur. These other guarantees have terms up to 30 years with maximum potential future payments of approximately $35 million in the aggregate, with none of these guarantees being individually significant to the Company's operating results, financial position, or liquidity. Management's current expectation is that future payment or performance related to non-performance under other guarantees is remote.

Other Off Balance Sheet Arrangements

The Company has off balance sheet non-recourse factoring facilities with various commitment dates. These arrangements include customer specific receivables in the United States and Europe. The Company sells the receivables at face value which equals the carrying value and fair value, and, thus, no gain or loss is recognized. There is no continuing involvement with these receivables once sold and no credit loss exposure. The total amount of cumulative receivables sold in second quarter2018 and 2017 were $44 million and $2 million, respectively. The total amount of cumulative receivables sold in first six months 2018 and 2017 were $85 million and $5 million, respectively.

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ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS

6 Months Ended

Jun. 30, 2018

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 certain cleanup costs. In addition, the Company will incur costs for environmental remediation and closure and post-closure under the federal Resource Conservation and Recovery Act. Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K. 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, results of operations, or cash flows. The Company's total reserve for environmental loss contingencies was $301 million and $304 million at June 30, 2018 and December 31, 2017, respectively. The environmental reserve includes costs 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 of $7 million at both June 30, 2018 and December 31, 2017.

Environmental Remediation and Environmental Asset Retirement Obligations

The Company's total environmental reserve that management believes to be probable and reasonably estimable for environmental contingencies, including remediation costs and asset retirement obligations, is included as part of "Payables and other current liabilities" and "Other long-term liabilities" in the Unaudited Consolidated Statements of Financial Position as follows:

(Dollars in millions)	June 30, 2018		December 31, 2017
Environmental contingent liabilities, current	$	25	$	25
Environmental contingent liabilities, long-term	276		279
Total	$	301	$	304

Environmental Remediation

Estimated future environmental expenditures for undiscounted remediation costs ranged from the best estimate or minimum of $276 million to the maximum of $517 million at June 30, 2018 and from the best estimate or minimum of $280 million to the maximum of $483 million at December 31, 2017. The best estimate or minimum estimated future environmental expenditures are considered to be probable and reasonably estimable and include the amounts recognized at both June 30, 2018 and December 31, 2017.

Reserves for environmental remediation include liabilities expected to be paid within approximately 30 years. The amounts charged to pre-tax earnings for environmental remediation and related charges are included within "Cost of sales" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. Changes in the reserves for environmental remediation liabilities during first six months 2018 are summarized below:

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2017	$	280
Changes in estimates recognized in earnings and other	5
Cash reductions	(9		)
Balance at June 30, 2018	$	276

Environmental Asset Retirement Obligations

An asset retirement obligation is an obligation for the retirement of a tangible long-lived asset that is incurred upon the acquisition, construction, development, or normal operation of that long-lived asset. The Company recognizes asset retirement obligations in the period in which they are incurred if a reasonable estimate of fair value can be made. The asset retirement obligations are discounted to expected present value and subsequently adjusted for changes in fair value. The associated estimated asset retirement costs are capitalized as part of the carrying value of the long-lived assets and depreciated over their useful life. Environmental asset retirement obligations consist primarily of closure and post-closure costs. For sites that have environmental asset retirement obligations, the best estimate recognized to date for these environmental asset retirement obligation costs was $25 million and $24 million at June 30, 2018 and December 31, 2017, respectively. 

Non-Environmental Asset Retirement Obligations

The Company has contractual asset retirement obligations not associated with environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily associated with the future closure of leased manufacturing assets at Pace, Florida and Oulu, Finland. These recognized non-environmental asset retirement obligations were $45 million and $49 million at June 30, 2018 and December 31, 2017, respectively, and is included as part of "Other long-term liabilities" in the Unaudited Consolidated Statements of Financial Position.

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LEGAL MATTERS

6 Months Ended

Jun. 30, 2018

Loss Contingency, Information about Litigation Matters [Abstract]

LEGAL MATTERS

LEGAL MATTERS

From time to time, Eastman 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 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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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

A reconciliation of the changes in stockholders' equity for first six months 2018 is provided below:

(Dollars in millions)	Common Stock at Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Total Eastman Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance at December 31, 2017	$	2	$	1,983		$	6,802		$	(209	)	$	(3,175	)	$	5,403		$	77		$	5,480
Cumulative Effect of Adoption of New Accounting Standards (1)	—		—			16			—			—			16			—			16
Net Earnings	—		—			634			—			—			634			2			636
Cash Dividends Declared (2) ($1.12 per share)	—		—			(160		)	—			—			(160		)	—			(160		)
Other Comprehensive Income	—		—			—			16			—			16			—			16
Share-Based Compensation Expense (3)	—		38			—			—			—			38			—			38
Stock Option Exercises	—		16			—			—			—			16			—			16
Other (4)	—		(16		)	—			—			—			(16		)	1			(15		)
Share Repurchases	—		—			—			—			(250		)	(250		)	—			(250		)
Distributions to Noncontrolling Interest	—		—			—			—			—			—			(3		)	(3		)
Balance at June 30, 2018	$	2	$	2,021		$	7,292		$	(193	)	$	(3,425	)	$	5,697		$	77		$	5,774

⁽¹⁾  On January 1, 2018, the Company adopted new accounting standards for revenue recognition, income taxes, and derivatives and hedging, which resulted in adjustments to beginning retained earnings. See Note 1, "Significant Accounting Policies", for specific amounts related to each standard.

⁽²⁾  Cash dividends declared includes cash dividends paid and dividends declared but unpaid.

⁽³⁾  Share-based compensation expense is the fair value of share-based awards.

⁽⁴⁾  Additional paid-in capital includes value of shares withheld for employees' taxes on vesting of share-based compensation awards.

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, 2016	$	(381	)	$	163		$	(62	)	$	(1	)	$	(281	)
Period change	85			(27		)	14			—			72
Balance at December 31, 2017	(296		)	136			(48		)	(1		)	(209		)
Period change	(7		)	(15		)	38			—			16
Balance at June 30, 2018	$	(303	)	$	121		$	(10	)	$	(1	)	$	(193	)

Amounts of other comprehensive income (loss) are presented net of applicable taxes. Eastman records deferred income taxes

on the CTA 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 CTA of other subsidiaries outside the United States, as the CTA 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:

	Second Quarter
	2018						2017
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(34	)	$	(34	)	$	36		$	36
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(10		)	(8		)	(11		)	(6		)
Derivatives and hedging:
Unrealized gain (loss) during period	85			64			(28		)	(18		)
Reclassification adjustment for (gains) losses included in net income, net	(4		)	(3		)	13			8
Total other comprehensive income (loss)	$	37		$	19		$	10		$	20

	First Six Months
	2018						2017
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(7	)	$	(7	)	$	43		$	43
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(20		)	(15		)	(22		)	(13		)
Derivatives and hedging:
Unrealized gain (loss) during period	55			41			(62		)	(39		)
Reclassification adjustment for (gains) losses included in net income, net	(4		)	(3		)	7			4
Total other comprehensive income (loss)	$	24		$	16		$	(34	)	$	(5	)

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EARNINGS AND DIVIDENDS PER SHARE

6 Months Ended

Jun. 30, 2018

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"):

	Second Quarter				First Six Months
(In millions, except per share amounts)	2018		2017		2018		2017
Numerator
Earnings attributable to Eastman, net of tax	$	344	$	292	$	634	$	570
Denominator
Weighted average shares used for basic EPS	141.9		145.3		142.3		145.7
Dilutive effect of stock options and other awards	2.1		1.1		2.1		1.1
Weighted average shares used for diluted EPS	144.0		146.4		144.4		146.8
(Calculated using whole dollars and shares)
EPS
Basic	$	2.42	$	2.01	$	4.45	$	3.91
Diluted	$	2.39	$	2.00	$	4.39	$	3.89

In both second quarter and first six months 2018, options to purchase 407,573 shares of common stock were excluded from the shares treated as outstanding for computation of diluted EPS because the market value of option exercises for these awards were less than the cash proceeds that would be received from these exercises. Second quarter and first six months 2018 reflect the impact of share repurchases of 1,415,539 and 2,409,774, respectively.

In second quarter and first six months2017, options to purchase 850,970 and 1,008,667 shares of common stock, respectively, were excluded from the shares treated as outstanding for computation of diluted EPS because the market value of option exercises for these awards were less than the cash proceeds that would be received from these exercises. Second quarter and first six months2017 reflect the impact of share repurchases of 1,232,977 and 2,176,676, respectively.

The Company declared cash dividends of $0.56 and $0.51 per share in second quarter2018 and 2017, respectively, and $1.12 and $1.02 per share in first six months 2018 and 2017, respectively.

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ASSETS IMPAIRMENTS AND RESTRUCTURING

6 Months Ended

Jun. 30, 2018

Restructuring Costs and Asset Impairment Charges [Abstract]

ASSET IMPAIRMENTS AND RESTRUCTURING

ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET

In second quarter and first six months 2018, the Company recognized restructuring charges of $4 million and $6 million, respectively, for corporate severance costs. There were no asset impairments and restructuring charges in second quarter and first six months 2017.

Changes in Reserves

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 six months2018 and full year 2017:

(Dollars in millions)	Balance at January 1, 2018		Provision/ Adjustments		Non-cash Reductions/ Additions		Cash Reductions			Balance at June 30, 2018
Severance costs	$	19	$	6	$	—	$	(9	)	$	16
Site closure and restructuring costs	10		—		—		(1		)	9
Total	$	29	$	6	$	—	$	(10	)	$	25

(Dollars in millions)	Balance at January 1, 2017		Provision/ Adjustments		Non-cash Reductions/ Additions			Cash Reductions			Balance at December 31, 2017
Non-cash charges	$	—	$	1	$	(1	)	$	—		$	—
Severance costs	42		6		—			(29		)	19
Site closure and restructuring costs	13		1		1			(5		)	10
Total	$	55	$	8	$	—		$	(34	)	$	29

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

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SHARE-BASED COMPENSATION AWARDS

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

SHARE-BASED COMPENSATION AWARDS

The Company utilizes share-based awards under employee and non-employee director compensation programs. These share-based awards have included restricted and unrestricted stock, restricted stock units, stock options, and performance shares. In second quarter2018 and 2017, $14 million and $13 million, respectively, of compensation expense before tax were recognized in "Selling, general and administrative expenses" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards. The impact on second quarter2018 and 2017 net earnings of $10 million and $8 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

In first six months 2018 and 2017, $38 million and $27 million, respectively, of compensation expense before tax were recognized in "Selling, general and administrative expenses" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards. The impact on first six months 2018 and 2017 net earnings of $28 million and $17 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 17, "Share-Based Compensation Plans and Awards", to the consolidated financial statements in Part II, Item 8 of the Company's 2017 Annual Report on Form 10-K.

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OTHER (INCOME) CHARGES, NET (Notes)

6 Months Ended

Jun. 30, 2018

Other Income and Expenses [Abstract]

Other Income and Other Expense Disclosure [Text Block]

OTHER (INCOME) CHARGES, NET

	Second Quarter						First Six Months
(Dollars in millions)	2018			2017			2018			2017
Foreign exchange transaction (gains) losses, net	$	7		$	3		$	7		$	2
Costs resulting from tax law changes and outside-U.S. entity reorganizations	5			—			13			—
(Income) loss from equity investments and other investment (gains) losses, net	(7		)	(3		)	(12		)	(6		)
Coal gasification incident property insurance proceeds	(15		)	—			(65		)	—
Other, net	—			1			1			1
Other (income) charges, net	$	(10	)	$	1		$	(56	)	$	(3	)

Second quarter and first six months 2018 include proceeds from insurance for property damage from the disruption of the Kingsport site's coal gasification operations area resulting from the previously reported October 4, 2017 incident of $15 million and $65 million, respectively. Second quarter and first six months 2018 also include currency translation costs resulting from fourth quarter 2017 tax law changes and related outside-U.S. entity reorganizations as part of the transition to an international treasury services center of $5 million and $13 million, respectively.

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SUPPLEMENTAL CASH FLOW INFORMATION

6 Months Ended

Jun. 30, 2018

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 Statements of Financial Position:

(Dollars in millions)	First Six Months
	2018			2017
Other current assets	$	(53	)	$	(3	)
Other noncurrent assets	19			7
Payables and other current liabilities	31			(30		)
Long-term liabilities and equity	18			—
Total	$	15		$	(26	)

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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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Eastman's products and operations are managed and reported in four operating segments: Additives & Functional Products ("AFP"), Advanced Materials ("AM"), Chemical Intermediates ("CI"), and Fibers. Beginning January 1, 2018:

• Eastman's primary measure of operating performance for all periods presented is EBIT on a consolidated and segment basis. Previously, the Company's primary measure of operating performance was operating earnings;

• As a result of recent changes in the management of products and operations to better align resources for growth initiatives, certain products previously reported in the CI operating segment are reported in the AFP operating segment; and

• Sales revenue and innovation costs from the textiles and nonwovens innovation platform products previously reported in "Other" are reported in the Fibers operating segment due to accelerating commercial progress of growth initiatives.

For additional financial and product information for each segment, see Part I, Item 1, "Business - Business Segments" and Part II, Item 8, Note 19, "Segment Information", in the Company's 2017 Annual Report on Form 10-K.

(Dollars in millions)	Second Quarter				First Six Months
Sales by Segment	2018		2017		2018		2017
Additives & Functional Products	$	942	$	830	$	1,881	$	1,603
Advanced Materials	729		657		1,422		1,291
Chemical Intermediates	709		703		1,439		1,373
Fibers	241		215		486		428
Total Sales by Operating Segment	2,621		2,405		5,228		4,695
Other	—		14		—		27
Total Sales	$	2,621	$	2,419	$	5,228	$	4,722

(Dollars in millions)	Second Quarter						First Six Months
Earnings Before Interest and Taxes by Segment	2018			2017			2018			2017
Additives & Functional Products	$	192		$	161		$	368		$	314
Advanced Materials	150			137			285			258
Chemical Intermediates	85			83			155			165
Fibers	83			56			126			108
Total Earnings Before Interest and Taxes by Operating Segment	510			437			934			845
Other
Growth initiatives and businesses not allocated to operating segments	(27		)	(32		)	(53		)	(60		)
Pension and other postretirement benefits income (expense), net not allocated to operating segments	20			18			41			36
Asset impairments and restructuring charges, net	(4		)	—			(6		)	—
Other income (charges), net not allocated to operating segments	(8		)	(3		)	(16		)	—
Total Earnings Before Interest and Taxes	$	491		$	420		$	900		$	821

(Dollars in millions)	June 30,		December 31,
Assets by Segment(1)	2018		2017
Additives & Functional Products	$	6,703	$	6,648
Advanced Materials	4,512		4,379
Chemical Intermediates	2,993		3,000
Fibers	1,004		929
Total Assets by Operating Segment	15,212		14,956
Corporate Assets	1,048		1,043
Total Assets	$	16,260	$	15,999

⁽¹⁾  Segment assets include accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

(Dollars in millions)	Second Quarter				First Six Months
Sales by Customer Location	2018		2017		2018		2017
United States and Canada	$	1,108	$	1,088	$	2,208	$	2,154
Asia Pacific	639		581		1,281		1,093
Europe, Middle East, and Africa	725		624		1,452		1,224
Latin America	149		126		287		251
Total Sales	$	2,621	$	2,419	$	5,228	$	4,722

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REVENUE RECOGNITION (Notes)

6 Months Ended

Jun. 30, 2018

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

Revenue from Contract with Customer [Text Block]

REVENUE RECOGNITION

On January 1, 2018, Eastman adopted ASU 2014-09 Revenue Recognition (ASC 606). Under this standard, the Company recognizes revenue when performance obligations of the sale are satisfied. Eastman sells to customers through master sales agreements or standalone purchase orders. The majority of the Company's terms of sale have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when control has been transferred to the customer, generally at the time of shipment of products. Under the previous revenue recognition accounting standard, the Company recognized revenue upon the transfer of title and risk of loss, generally upon delivery of goods. For further information see Note 1, "Significant Accounting Policies".

The Company's arrangement with a customer may include the act of shipping product to customers after the performance obligation related to that product has been satisfied. The Company has elected to account for shipping and handling as activities to fulfill the promise to transfer the good and has not allocated revenue to the shipping activity. All related shipping and handling costs are recognized at the time of shipment. Further, the Company's sales arrangements may include the collection of sales and other similar taxes that are then remitted to the related taxing authority. The Company has elected to present the amounts collected for these taxes net of the related tax expense rather than presenting them as additional revenue.

The Company has elected to adopt several practical expedients as part of the adoption of ASU 2014-09 / ASC 606. The Company has elected the practical expedient to recognize the incremental cost of obtaining a sale (selling expense) as an expense when incurred given the potential amortization period for such asset is one year or less. Further, the Company has elected to use the practical expedient that allows the Company to ignore the possible existence of a significant financing component within sales arrangements where the time between cash collection and performance is less than one year. Finally, the Company has elected the practical expedient to not disclose unfulfilled obligations as customer purchase order commitments have an original expected duration of one year or less and no consideration from customers was excluded from the transaction price.

The timing of billings do not always match the timing of revenue recognition. When the Company is entitled to bill a customer in advance of the recognition of revenue, deferred revenue is recognized. When the Company is not entitled to bill a customer until a period after the related recognition of revenue, a contract asset is recognized. Contract assets represent the Company's right to consideration for completed performance obligations under a contract but which are not yet billable to a customer for consignment inventory or pursuant to certain shipping terms. Deferred revenue was not material as of January 1, 2018 or June 30, 2018. Contract assets were $42 million as of January 1, 2018 and $56 million as of June 30, 2018 and are included as a component of "Miscellaneous receivables" in the Unaudited Consolidated Statement of Financial Position.

The economic factors that impact the nature, amount, timing, and uncertainty of revenue and cash flows vary between the Company's business operating segments and the geographical regions in which they serve. For disaggregation of revenue by major product lines for each business operating segment, see "Business - Business Segments" in Part I, Item 1 of the Company's 2017 Annual Report on Form 10-K.

The tables below summarize the impact of adopting the new standard on second quarter and first six months2018 financial statements:

	Second Quarter 2018							First Six Months 2018
(Dollars in millions, except per share amounts)	Current Standard		Change			Previous Standard		Current Standard		Change			Previous Standard
Sales	$	2,621	$	(5	)	$	2,616	$	5,228	$	(35	)	$	5,193
Cost of sales	1,917		(1		)	1,916		3,943		(14		)	3,929
Gross profit	704		(4		)	700		1,285		(21		)	1,264
Earnings before interest and taxes	491		(4		)	487		900		(21		)	879
Net earnings attributable to Eastman	344		(2		)	342		634		(16		)	618
Basic earnings per share attributable to Eastman	$	2.42	$	(0.01	)	$	2.41	$	4.45	$	(0.11	)	$	4.34
Diluted earnings per share attributable to Eastman	$	2.39	$	(0.01	)	$	2.38	$	4.39	$	(0.11	)	$	4.28

	Second Quarter 2018									First Six Months 2018
(Dollars in millions)	Current Standard			Change			Previous Standard			Current Standard			Change			Previous Standard
Additives & Functional Products
Sales	$	942		$	(9	)	$	933		$	1,881		$	(6	)	$	1,875
Earnings before interest and taxes	192			(6		)	186			368			(9		)	359
Advanced Materials
Sales	729			1			730			1,422			(19		)	1,403
Earnings before interest and taxes	150			—			150			285			(10		)	275
Chemical Intermediates
Sales	709			3			712			1,439			20			1,459
Earnings before interest and taxes	85			2			87			155			8			163
Fibers
Sales	241			—			241			486			(30		)	456
Earnings before interest and taxes	83			—			83			126			(10		)	116
Other
Sales	—			—			—			—			—			—
Earnings before interest and taxes	(19		)	—			(19		)	(34		)	—			(34		)

	As of June 30, 2018
(Dollars in millions)	Current Standard		Change			Previous Standard
Trade receivables, net of allowance for doubtful accounts	$	1,393	$	(181	)	$	1,212
Miscellaneous receivables	314		(41		)	273
Inventories	1,532		140			1,672
Total current assets	3,498		(82		)	3,416

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SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2018

Basis of Presentation [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company ("Eastman" or the "Company") in accordance and consistent with the accounting policies stated in the Company's 2017 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 2017 Annual Report on Form 10-K, with the exception of the items noted below. The December 31, 2017 financial position data included herein was derived from the audited consolidated financial statements included in the 2017 Annual Report on Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP").

In the opinion of management, the unaudited consolidated financial statements include all normal recurring adjustments necessary for fair statement of the interim financial information in conformity with GAAP. These statements contain some amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. The unaudited consolidated financial statements include assets, liabilities, sales revenue, and expenses of all majority-owned subsidiaries and joint ventures in which a controlling interest is maintained. Eastman accounts for other joint ventures and investments where it exercises significant influence on the equity basis. Intercompany transactions and balances are eliminated in consolidation.

Certain prior period data has been reclassified in the consolidated financial statements and accompanying footnotes to conform to current period presentation. As of January 1, 2018:

• Eastman's primary measure of operating performance for all periods presented is earnings before interest and taxes ("EBIT") on a consolidated and segment basis. Previously, the Company's primary measure of operating performance was operating earnings.

• As discussed below, the new accounting standard for the presentation of net periodic benefit costs requires the Company to present non-service cost components of net periodic benefit costs (interest cost, expected return on plan assets, curtailment gains or losses, amortization of prior service costs or credits, and mark-to-market gains or losses) separately from service cost. These non-service cost components were reclassified from "Cost of sales", "Selling, general and administrative expenses", and "Research and development expenses" line items and are now included in a new line item, "Other components of post-employment (benefit) cost, net" on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all periods presented. This reclassification does not change prior period EBIT and, accordingly, management does not consider this change to have a material impact on the Company's financial statements and related disclosures.

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SIGNIFICANT ACCOUNTING POLICIES Recently Issued Accounting Standards (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Changes and Error Corrections [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Standards

Accounting Standards Update ("ASU") 2014-09 Revenue Recognition (Accounting Standards Codification "ASC" 606): On January 1, 2018, Eastman adopted this standard under the modified retrospective method, such that revenue for all periods prior to January 1, 2018 continue to be reported under the previous standard, which resulted in an increase to retained earnings of $53 million after tax for products shipped but not delivered as of December 31, 2017.

Under the new standard, the Company recognizes revenue when performance obligations of the sale are satisfied. The majority of the Company's terms of sale have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when control has been transferred to the customer, generally at the time of shipment of products. Under the previous revenue recognition accounting standard, the Company recognized revenue upon transfer of title and risk of loss, generally upon the delivery of goods.

Management does not expect that changes in its accounting required by this new standard will materially impact the Company's financial statements and related disclosures when comparing 2018 under the new revenue standard to previous years under the prior standard. However, the difference in timing of revenue recognition under the current and former accounting standards is expected to have some impact on seasonal revenue and EBIT trends during 2018 compared to previous years. For further information, see Note 18, "Revenue Recognition".

ASU 2016-01 Financial Instruments: On January 1, 2018, Eastman adopted this standard relating to the recognition and measurement of financial assets and financial liabilities. This standard requires equity investments (except equity method and consolidated investments) to be measured at fair value with changes in fair value recognized in net income. Management has concluded that changes in its accounting required by the new standard will not materially impact the Company's financial statements and related disclosures. In February 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-03 as an update to the standard described above which is effective for the Company July 1, 2018. Management has concluded that changes in its accounting required by the update will not materially impact the Company's financial statements and related disclosures.

ASU 2016-16 Income Taxes - Intra-Entity Transfers: On January 1, 2018, Eastman adopted this standard under the modified retrospective method resulting in a beginning retained earnings decrease of $39 million. Under this standard, the Company is required to recognize the income tax consequence of an intra-entity transfer of an asset other than inventory when the transfer occurs.

ASU 2017-05 Other Income - Gains and Losses from Derecognition of Nonfinancial Assets: On January 1, 2018, Eastman adopted this standard in conjunction with the revenue recognition standard mentioned above. This standard clarifies the scope of nonfinancial asset derecognition and the accounting for partial sales of nonfinancial assets. This adoption had no impact on the Company's financial statements and related disclosures in the current period.

ASU 2017-07 Compensation - Retirement Benefits: On January 1, 2018, Eastman adopted this standard retrospectively for income statement effects and prospectively for balance sheet effects. This standard is intended to improve the presentation of net periodic pension and postretirement benefit costs by requiring the reporting of the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit costs (interest cost, expected return on plan assets, curtailment gains or losses, amortization of prior service costs or credits, and mark-to-market gains or losses) are to be presented in the income statement separately from the service cost component and outside the subtotal of income from operations, if presented. Management has concluded that changes in its accounting required by this new standard will not materially impact the Company's financial statements and related disclosures.

ASU 2017-12 Derivatives and Hedging: On January 1, 2018, Eastman adopted this standard on a modified retrospective basis for income statement impacts and prospectively for presentation and disclosure resulting in a beginning retained earnings increase of $2 million related to ineffectiveness recognized in "Accumulated other comprehensive income (loss)" ("AOCI") which was recognized in the Unaudited Consolidated Statements of Financial Position under the previous standard. This standard is intended to simplify the application of hedge accounting and improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in the financial statements. Management has included the additional disclosures required by this standard in Note 6, "Derivative and Non-Derivative Financial Instruments".

Accounting Standards Issued But Not Adopted as of June 30, 2018

ASU 2016-02 Leases: In February 2016, the FASB issued a standard on lease accounting. The new standard establishes two types of leases for lessees: finance and operating. Both finance and operating leases will have associated right-of-use assets and liabilities initially measured at the present value of the lease payments. This standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and early adoption is permitted. The new standard is to be applied under a modified retrospective approach wherein practical expedients have been allowed that will not require reassessment of current leases at the effective date. In January 2018, the FASB issued an update to the new standard above in ASU 2018-01 that sets forth the requirement to assess land easements to determine if the arrangement should be accounted for as a lease. The effective date for this amended standard is the same as that of the lease standard stated above. Management is currently evaluating implementation options and impact on the Company's financial statements and related disclosures.

ASU 2016-13 Financial Instruments - Credit Losses: In June 2016, the FASB issued a standard relating to credit losses. The amendments require a financial asset (including trade receivables) to be presented at the net amount expected to be collected through the use of allowances for credit losses valuation account. The income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period and early adoption is permitted, including adoption in an interim period, beginning after December 15, 2018. The new standard application is mixed among the various elements that include modified retrospective and prospective transition methods. Management does not expect that changes in its accounting required by the new standard will materially impact the Company's financial statements and related disclosures.

ASU 2017-04 Intangibles - Goodwill and Other: In January 2017, the FASB issued a standard as a part of its simplification initiative that bases the impairment of goodwill on any difference for which the carrying value is greater than the fair value of the reporting unit. This standard is effective for annual reporting periods, or interim period testing performed, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment testing performed after January 1, 2017. This standard is to be applied on a prospective basis for goodwill testing that occur after the effective date. Management does not expect that changes in its accounting required by the new standard will materially impact the Company's financial statements and related disclosures.

ASU 2018-02 Income Statement - Reporting Comprehensive Income: In February 2018, the FASB issued a standard that allows the reclassification from AOCI to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act ("Tax Reform Act"). The amount of the reclassification is the difference between the historical corporate income tax rate and the newly enacted tax rate. This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The new standard is to be applied either in the period of adoption or retrospectively to each period (or periods) in which the effects of the change in the income tax rate in the Tax Reform Act is recognized. Management is currently evaluating implementation options and impact on the Company's financial statements and related disclosures.

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Schedule of inventories

	June 30,		December 31,
(Dollars in millions)	2018		2017
Finished goods	$	1,044	$	1,114
Work in process	241		213
Raw materials and supplies	549		470
Total inventories at FIFO or average cost	1,834		1,797
Less: LIFO reserve	302		288
Total inventories	$	1,532	$	1,509

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PAYABLES AND OTHER CURRENT LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2018

Payables and Accruals [Abstract]

Schedule of payables and other current liabilities

	June 30,		December 31,
(Dollars in millions)	2018		2017
Trade creditors	$	811	$	842
Accrued payrolls, vacation, and variable-incentive compensation	135		199
Accrued taxes	79		111
Other	381		437
Total payables and other current liabilities	$	1,406	$	1,589

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

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

	Second Quarter								First Six Months
(Dollars in millions)	2018				2017				2018				2017
	$		%		$		%		$		%		$		%
Provision for income taxes and tax rate	$	84	20	%	$	65	18	%	$	144	19	%	$	127	18	%

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BORROWINGS (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Long-term Borrowings

	June 30,		December 31,
(Dollars in millions)	2018		2017
Borrowings consisted of:
5.5% notes due November 2019	$	250	$	250
2.7% notes due January 2020	798		797
4.5% notes due January 2021	185		185
3.6% notes due August 2022	738		738
1.50% notes due May 2023 (1)	872		895
7 1/4% debentures due January 2024	197		197
7 5/8% debentures due June 2024	43		43
3.8% notes due March 2025	688		690
1.875% notes due November 2026(1)	577		592
7.60% debentures due February 2027	195		195
4.8% notes due September 2042	493		493
4.65% notes due October 2044	871		871
Commercial paper and short-term borrowings	661		389
Credit facilities borrowings	125		200
Capital leases and other	2		5
Total borrowings	6,695		6,540
Borrowings due within one year	662		393
Long-term borrowings	$	6,033	$	6,147

⁽¹⁾  The carrying value of the euro-denominated 1.50% notes due May 2023 and 1.875% notes due November 2026 will fluctuate with changes in the euro exchange rate. The carrying value of these euro-denominated borrowings have been designated as non-derivative net investment hedges of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations. During thesix months endedJune 30, 2018, pre-tax gains of $39 million were recognized in other comprehensive income ("OCI") for revaluation of these notes.

Fair Value of Borrowings

			Fair Value Measurements at June 30, 2018
(Dollars in millions)	Recorded Amount June 30, 2018		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Total borrowings	$	6,695	$	6,886	$	6,098	$	788

			Fair Value Measurements at December 31, 2017
(Dollars in millions)	Recorded Amount December 31, 2017		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Total borrowings	$	6,540	$	6,980	$	6,386	$	594

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DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments, Gain (Loss) [Line Items]

Cumulative basis adjustments for fair value hedges on balance sheet [Table Text Block]

As of June 30, 2018 and December 31, 2017, the following amounts were included on the Unaudited Consolidated Statements of Financial Position related to cumulative basis adjustments for fair value hedges.

(Dollars in millions)	Carrying amount of the hedged liabilities				Cumulative amount of fair value hedging loss adjustment included in the carrying amount of the hedged liability
Line item in the Unaudited Consolidated Statements of Financial Position in which the hedged item is included	June 30, 2018		December 31, 2017		June 30, 2018			December 31, 2017
Long-term borrowings (1)	$	757	$	760	$	(13	)	$	(10	)

⁽¹⁾  At June 30, 2018and December 31, 2017, the cumulative amount of fair value hedging loss adjustment remaining for hedged liabilities for which hedge accounting has been discontinued was $7 million and $6 million, respectively.

Derivative Instruments, Gain (Loss) [Table Text Block]

The following table presents the effect of fair value and cash flow hedge accounting on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for second quarter2018 and 2017.

Location and Amount of Gain or (Loss) Recognized in Earnings on Fair Value and Cash Flow Hedging Relationships
	Second Quarter
	2018								2017
(Dollars in millions)	Sales		Cost of Sales			Net Interest Expense			Sales		Cost of Sales			Net Interest Expense
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized	$	2,621	$	1,917		$	61		$	2,419	$	1,789		$	61
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships:
Interest contracts (fixed-for-floating interest rate swaps):
Hedged items						—								(1		)
Derivatives designated as hedging instruments						—								1
Gain or (loss) on cash flow hedging relationships:
Interest contracts (forward starting interest rate and treasury lock swap contracts):
Amount of loss reclassified from AOCI into earnings						(1		)						(1		)
Commodity Contracts:
Amount of loss reclassified from AOCI into earnings			(3		)						(20		)
Foreign Exchange Contracts:
Amount of gain reclassified from AOCI into earnings	8								10

The following table presents the effect of fair value and cash flow hedge accounting on the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for first six months2018 and 2017.

Location and Amount of Gain or (Loss) Recognized in Earnings on Fair Value and Cash Flow Hedging Relationships
	First Six Months
	2018								2017
(Dollars in millions)	Sales		Cost of Sales			Net Interest Expense			Sales		Cost of Sales			Net Interest Expense
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized	$	5,228	$	3,943		$	120		$	4,722	$	3,487		$	121
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships:
Interest contracts (fixed-for-floating interest rate swaps):
Hedged items						—								(2		)
Derivatives designated as hedging instruments						—								2
Gain or (loss) on cash flow hedging relationships:
Interest contracts (forward starting interest rate and treasury lock swap contracts):
Amount of loss reclassified from AOCI into earnings						(2		)						(2		)
Commodity Contracts:
Amount of loss reclassified from AOCI into earnings			(5		)						(27		)
Foreign Exchange Contracts:
Amount of gain reclassified from AOCI into earnings	11								22

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

The following table presents the notional amounts outstanding atJune 30, 2018 and December 31, 2017associated with Eastman's hedging programs.

Notional Outstanding		June 30, 2018	December 31, 2017
Derivatives designated as cash flow hedges:
Foreign Exchange Forward and Option Contracts (in millions)
	EUR/USD (in EUR)	€419	€525
Commodity Forward and Collar Contracts
	Feedstock (in million barrels)	8	7
	Energy (in million million british thermal units)	25	23
Derivatives designated as fair value hedges:
Fixed-for-floating interest rate swaps (in millions)		$75	$75
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps (in millions)
	EUR/USD (in EUR)	€416	—
Non-derivatives designated as net investment hedges:
Foreign Currency Net Investment Hedges (in millions)
	EUR/USD (in EUR)	€1,241	€1,240

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

The following table presents the effect of cash flow and net investment hedge accounting on OCI for second quarter and first six months2018 and 2017:

	Change in amount of after tax gain (loss) recognized in OCI on derivatives											Pre-tax amount of gain (loss) reclassified from OCI into earnings
(Dollars in millions)	Second Quarter					First Six Months						Second Quarter						First Six Months
Hedging Relationships	2018		2017			2018			2017			2018			2017			2018			2017
Derivatives in cash flow hedging relationships:
Commodity contracts	$	40	$	9		$	29		$	(7	)	$	(3	)	$	(20	)	$	(5	)	$	(27	)
Foreign exchange contracts	20		(20		)	7			(30		)	8			10			11			22
Forward starting interest rate and treasury lock swap contracts	1		1			2			2			(1		)	(1		)	(2		)	(2		)
Non-derivatives in net investment hedging relationships (pre-tax):
Net investment hedges	81		(91		)	39			(109		)	—			—			—			—
Derivatives in net investment hedging relationships (pre-tax):
Cross-currency interest rate swaps	26		—			15			—			—			—			—			—
Cross-currency interest rate swaps excluded component	—		—			(11		)	—			—			—			—			—

Financial assets and liabilities valued on a recurring basis

The following table presents the financial assets and liabilities valued on a recurring and gross basis and includes where the financial assets and liabilities are located within the Unaudited Consolidated Statements of Financial Position as ofJune 30, 2018 and December 31, 2017.

The Financial Position and Fair Value Measurements of Hedging Instruments on a Gross Basis
(Dollars in millions)
Derivative Type	Statements of Financial Position Classification	June 30, 2018 Level 2		December 31, 2017 Level 2
Derivatives designated as cash flow hedges:
Commodity contracts	Other current assets	$	22	$	9
Commodity contracts	Other noncurrent assets	9		4
Foreign exchange contracts	Other current assets	22		23
Foreign exchange contracts	Other noncurrent assets	4		2
Derivatives designated as fair value hedges:
Fixed-for-floating interest rate swap	Other current assets	1		1
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps	Other noncurrent assets	4		—
Total Derivative Assets		$	62	$	39
Derivatives designated as cash flow hedges:
Commodity contracts	Payables and other current liabilities	$	10	$	28
Commodity contracts	Other long-term liabilities	4		10
Foreign exchange contracts	Payables and other current liabilities	1		6
Foreign exchange contracts	Other long-term liabilities	—		4
Derivatives designated as fair value hedges:
Fixed-for-floating interest rate swap	Long-term borrowings	6		4
Total Derivative Liabilities		$	21	$	52
Total Net Derivative Assets (Liabilities)		$	41	$	(13	)

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RETIREMENT PLANS (Tables)

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Components of net periodic benefit cost

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

	Second Quarter
	Pension Plans												Other Postretirement Benefit Plans
	2018						2017						2018			2017
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	8		$	4		$	9		$	4		$	—		$	1
Interest cost	17			5			16			4			5			6
Expected return on assets	(37		)	(10		)	(35		)	(9		)	—			(1		)
Amortization of:
Prior service credit, net	—			—			(1		)	—			(10		)	(10		)
Net periodic benefit (credit) cost	$	(12	)	$	(1	)	$	(11	)	$	(1	)	$	(5	)	$	(4	)
	First Six Months
	Pension Plans												Other Postretirement Benefit Plans
	2018						2017						2018			2017
(Dollars in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	17		$	8		$	18		$	7		$	—		$	2
Interest cost	34			10			33			9			11			12
Expected return on assets	(74		)	(19		)	(70		)	(17		)	(2		)	(3		)
Amortization of:
Prior service credit, net	—			—			(2		)	—			(20		)	(20		)
Net periodic benefit (credit) cost	$	(23	)	$	(1	)	$	(21	)	$	(1	)	$	(11	)	$	(9	)

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ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS (Tables)

6 Months Ended

Jun. 30, 2018

Accrual for Environmental Loss Contingencies Disclosure [Abstract]

Schedule of environmental liabilities, current and non-current

(Dollars in millions)	June 30, 2018		December 31, 2017
Environmental contingent liabilities, current	$	25	$	25
Environmental contingent liabilities, long-term	276		279
Total	$	301	$	304

Schedule of changes to environmental remediation liabilities

(Dollars in millions)	Environmental Remediation Liabilities
Balance at December 31, 2017	$	280
Changes in estimates recognized in earnings and other	5
Cash reductions	(9		)
Balance at June 30, 2018	$	276

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STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

Reconciliation of the changes in stockholders' equity

A reconciliation of the changes in stockholders' equity for first six months 2018 is provided below:

(Dollars in millions)	Common Stock at Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Total Eastman Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance at December 31, 2017	$	2	$	1,983		$	6,802		$	(209	)	$	(3,175	)	$	5,403		$	77		$	5,480
Cumulative Effect of Adoption of New Accounting Standards (1)	—		—			16			—			—			16			—			16
Net Earnings	—		—			634			—			—			634			2			636
Cash Dividends Declared (2) ($1.12 per share)	—		—			(160		)	—			—			(160		)	—			(160		)
Other Comprehensive Income	—		—			—			16			—			16			—			16
Share-Based Compensation Expense (3)	—		38			—			—			—			38			—			38
Stock Option Exercises	—		16			—			—			—			16			—			16
Other (4)	—		(16		)	—			—			—			(16		)	1			(15		)
Share Repurchases	—		—			—			—			(250		)	(250		)	—			(250		)
Distributions to Noncontrolling Interest	—		—			—			—			—			—			(3		)	(3		)
Balance at June 30, 2018	$	2	$	2,021		$	7,292		$	(193	)	$	(3,425	)	$	5,697		$	77		$	5,774

⁽¹⁾  On January 1, 2018, the Company adopted new accounting standards for revenue recognition, income taxes, and derivatives and hedging, which resulted in adjustments to beginning retained earnings. See Note 1, "Significant Accounting Policies", for specific amounts related to each standard.

⁽²⁾  Cash dividends declared includes cash dividends paid and dividends declared but unpaid.

⁽³⁾  Share-based compensation expense is the fair value of share-based awards.

⁽⁴⁾  Additional paid-in capital includes value of shares withheld for employees' taxes on vesting of share-based compensation awards.

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, 2016	$	(381	)	$	163		$	(62	)	$	(1	)	$	(281	)
Period change	85			(27		)	14			—			72
Balance at December 31, 2017	(296		)	136			(48		)	(1		)	(209		)
Period change	(7		)	(15		)	38			—			16
Balance at June 30, 2018	$	(303	)	$	121		$	(10	)	$	(1	)	$	(193	)

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:

	Second Quarter
	2018						2017
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(34	)	$	(34	)	$	36		$	36
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(10		)	(8		)	(11		)	(6		)
Derivatives and hedging:
Unrealized gain (loss) during period	85			64			(28		)	(18		)
Reclassification adjustment for (gains) losses included in net income, net	(4		)	(3		)	13			8
Total other comprehensive income (loss)	$	37		$	19		$	10		$	20

	First Six Months
	2018						2017
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	(7	)	$	(7	)	$	43		$	43
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(20		)	(15		)	(22		)	(13		)
Derivatives and hedging:
Unrealized gain (loss) during period	55			41			(62		)	(39		)
Reclassification adjustment for (gains) losses included in net income, net	(4		)	(3		)	7			4
Total other comprehensive income (loss)	$	24		$	16		$	(34	)	$	(5	)

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EARNINGS AND DIVIDENDS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2018

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"):

	Second Quarter				First Six Months
(In millions, except per share amounts)	2018		2017		2018		2017
Numerator
Earnings attributable to Eastman, net of tax	$	344	$	292	$	634	$	570
Denominator
Weighted average shares used for basic EPS	141.9		145.3		142.3		145.7
Dilutive effect of stock options and other awards	2.1		1.1		2.1		1.1
Weighted average shares used for diluted EPS	144.0		146.4		144.4		146.8
(Calculated using whole dollars and shares)
EPS
Basic	$	2.42	$	2.01	$	4.45	$	3.91
Diluted	$	2.39	$	2.00	$	4.39	$	3.89

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ASSETS IMPAIRMENTS AND RESTRUCTURING (Tables)

6 Months Ended

Jun. 30, 2018

Restructuring Costs and Asset Impairment Charges [Abstract]

Restructuring and Related Costs [Table Text Block]

Schedule of Restructuring Reserve by Type of Cost [Table Text Block]

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 six months2018 and full year 2017:

(Dollars in millions)	Balance at January 1, 2018		Provision/ Adjustments		Non-cash Reductions/ Additions		Cash Reductions			Balance at June 30, 2018
Severance costs	$	19	$	6	$	—	$	(9	)	$	16
Site closure and restructuring costs	10		—		—		(1		)	9
Total	$	29	$	6	$	—	$	(10	)	$	25

(Dollars in millions)	Balance at January 1, 2017		Provision/ Adjustments		Non-cash Reductions/ Additions			Cash Reductions			Balance at December 31, 2017
Non-cash charges	$	—	$	1	$	(1	)	$	—		$	—
Severance costs	42		6		—			(29		)	19
Site closure and restructuring costs	13		1		1			(5		)	10
Total	$	55	$	8	$	—		$	(34	)	$	29

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OTHER (INCOME) CHARGES, NET (Tables)

6 Months Ended

Jun. 30, 2018

Other Income and Expenses [Abstract]

Schedule of Other Nonoperating Income (Expense) [Table Text Block]

	Second Quarter						First Six Months
(Dollars in millions)	2018			2017			2018			2017
Foreign exchange transaction (gains) losses, net	$	7		$	3		$	7		$	2
Costs resulting from tax law changes and outside-U.S. entity reorganizations	5			—			13			—
(Income) loss from equity investments and other investment (gains) losses, net	(7		)	(3		)	(12		)	(6		)
Coal gasification incident property insurance proceeds	(15		)	—			(65		)	—
Other, net	—			1			1			1
Other (income) charges, net	$	(10	)	$	1		$	(56	)	$	(3	)

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

6 Months Ended

Jun. 30, 2018

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 Statements of Financial Position:

(Dollars in millions)	First Six Months
	2018			2017
Other current assets	$	(53	)	$	(3	)
Other noncurrent assets	19			7
Payables and other current liabilities	31			(30		)
Long-term liabilities and equity	18			—
Total	$	15		$	(26	)

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SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment Information Disclosure

(Dollars in millions)	Second Quarter				First Six Months
Sales by Segment	2018		2017		2018		2017
Additives & Functional Products	$	942	$	830	$	1,881	$	1,603
Advanced Materials	729		657		1,422		1,291
Chemical Intermediates	709		703		1,439		1,373
Fibers	241		215		486		428
Total Sales by Operating Segment	2,621		2,405		5,228		4,695
Other	—		14		—		27
Total Sales	$	2,621	$	2,419	$	5,228	$	4,722

(Dollars in millions)	Second Quarter						First Six Months
Earnings Before Interest and Taxes by Segment	2018			2017			2018			2017
Additives & Functional Products	$	192		$	161		$	368		$	314
Advanced Materials	150			137			285			258
Chemical Intermediates	85			83			155			165
Fibers	83			56			126			108
Total Earnings Before Interest and Taxes by Operating Segment	510			437			934			845
Other
Growth initiatives and businesses not allocated to operating segments	(27		)	(32		)	(53		)	(60		)
Pension and other postretirement benefits income (expense), net not allocated to operating segments	20			18			41			36
Asset impairments and restructuring charges, net	(4		)	—			(6		)	—
Other income (charges), net not allocated to operating segments	(8		)	(3		)	(16		)	—
Total Earnings Before Interest and Taxes	$	491		$	420		$	900		$	821

(Dollars in millions)	June 30,		December 31,
Assets by Segment(1)	2018		2017
Additives & Functional Products	$	6,703	$	6,648
Advanced Materials	4,512		4,379
Chemical Intermediates	2,993		3,000
Fibers	1,004		929
Total Assets by Operating Segment	15,212		14,956
Corporate Assets	1,048		1,043
Total Assets	$	16,260	$	15,999

⁽¹⁾  Segment assets include accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

(Dollars in millions)	Second Quarter				First Six Months
Sales by Customer Location	2018		2017		2018		2017
United States and Canada	$	1,108	$	1,088	$	2,208	$	2,154
Asia Pacific	639		581		1,281		1,093
Europe, Middle East, and Africa	725		624		1,452		1,224
Latin America	149		126		287		251
Total Sales	$	2,621	$	2,419	$	5,228	$	4,722

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REVENUE RECOGNITION (Tables)

6 Months Ended

Jun. 30, 2018

Revenue, Initial Application Period Cumulative Effect Transition [Abstract]

Quarterly Financial Information [Table Text Block]

	Second Quarter 2018							First Six Months 2018
(Dollars in millions, except per share amounts)	Current Standard		Change			Previous Standard		Current Standard		Change			Previous Standard
Sales	$	2,621	$	(5	)	$	2,616	$	5,228	$	(35	)	$	5,193
Cost of sales	1,917		(1		)	1,916		3,943		(14		)	3,929
Gross profit	704		(4		)	700		1,285		(21		)	1,264
Earnings before interest and taxes	491		(4		)	487		900		(21		)	879
Net earnings attributable to Eastman	344		(2		)	342		634		(16		)	618
Basic earnings per share attributable to Eastman	$	2.42	$	(0.01	)	$	2.41	$	4.45	$	(0.11	)	$	4.34
Diluted earnings per share attributable to Eastman	$	2.39	$	(0.01	)	$	2.38	$	4.39	$	(0.11	)	$	4.28

	Second Quarter 2018									First Six Months 2018
(Dollars in millions)	Current Standard			Change			Previous Standard			Current Standard			Change			Previous Standard
Additives & Functional Products
Sales	$	942		$	(9	)	$	933		$	1,881		$	(6	)	$	1,875
Earnings before interest and taxes	192			(6		)	186			368			(9		)	359
Advanced Materials
Sales	729			1			730			1,422			(19		)	1,403
Earnings before interest and taxes	150			—			150			285			(10		)	275
Chemical Intermediates
Sales	709			3			712			1,439			20			1,459
Earnings before interest and taxes	85			2			87			155			8			163
Fibers
Sales	241			—			241			486			(30		)	456
Earnings before interest and taxes	83			—			83			126			(10		)	116
Other
Sales	—			—			—			—			—			—
Earnings before interest and taxes	(19		)	—			(19		)	(34		)	—			(34		)

	As of June 30, 2018
(Dollars in millions)	Current Standard		Change			Previous Standard
Trade receivables, net of allowance for doubtful accounts	$	1,393	$	(181	)	$	1,212
Miscellaneous receivables	314		(41		)	273
Inventories	1,532		140			1,672
Total current assets	3,498		(82		)	3,416

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SIGNIFICANT ACCOUNTING POLICIES Recently Issued Accounting Standards (Details) $ in Millions	Jan. 31, 2018 USD ($)
Accounting Standards Update 2014-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets	$ 53
Accounting Standards Update 2016-16 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets	(39)
Accounting Standards Update 2017-12 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets	$ 2

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INVENTORIES (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
At FIFO or average cost (approximates current cost) [Abstract]
Finished goods	$ 1,044	$ 1,114
Work in process	241	213
Raw materials and supplies	549	470
Total inventories	1,834	1,797
Less: LIFO Reserve	302	288
Total inventories	$ 1,532	$ 1,509
Inventories valued on the LIFO method	55.00%	60.00%

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PAYABLES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Trade creditors	$ 811	$ 842
Accrued payrolls, vacation, and variable-incentive compensation	135	199
Accrued taxes	79	111
Other	381	437
Total payables and other current liabilities	$ 1,406	$ 1,589

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INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Tax Examination [Line Items]
Provision for income taxes	$ 84	$ 65	$ 144	$ 127
Effective Income Tax Rate Reconciliation, Income Tax Expense (Benefit) Resulting from Tax Reform	$ 10		$ 10
Effective Income Tax Rate Reconciliation, Percent	20.00%	18.00%	19.00%	18.00%
Effective Income Tax Rate Reconciliation, Prior Year Income Taxes, Amount		$ 22		$ 22
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount				$ 22

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BORROWINGS Part 1 (Details) Schedule of Long-term Debt Instruments - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Debt Instrument [Line Items]
Total Borrowings		$ 6,695		$ 6,695		$ 6,540
Borrowings due within one year		662		662		393
Long-term borrowings		6,033		6,033		6,147
Change in cumulative translation adjustment, before tax		(34)	$ 36	(7)	$ 43
5.5% notes due November 2019 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 250		$ 250		250
Debt Instrument, Interest Rate, Stated Percentage		5.50%		5.50%
Debt Instrument, Maturity Date				Nov. 30, 2019
2.7% notes due January 2020 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 798		$ 798		797
Debt Instrument, Interest Rate, Stated Percentage		2.70%		2.70%
Debt Instrument, Maturity Date				Jan. 31, 2020
4.5% notes due January 2021 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 185		$ 185		185
Debt Instrument, Interest Rate, Stated Percentage		4.50%		4.50%
Debt Instrument, Maturity Date				Jan. 31, 2021
3.6% notes due August 2022 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 738		$ 738		738
Debt Instrument, Interest Rate, Stated Percentage		3.60%		3.60%
Debt Instrument, Maturity Date				Aug. 31, 2022
1.5% notes due May 2023 [Member]
Debt Instrument [Line Items]
Long-term Debt	[1]	$ 872		$ 872		895
Debt Instrument, Interest Rate, Stated Percentage		1.50%		1.50%
Debt Instrument, Maturity Date				May 31, 2023
7 1/4% debentures due January 2024 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 197		$ 197		197
Debt Instrument, Interest Rate, Stated Percentage		7.25%		7.25%
Debt Instrument, Maturity Date				Jan. 31, 2024
7 5/8% debentures due June 2024 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 43		$ 43		43
Debt Instrument, Interest Rate, Stated Percentage		7.625%		7.625%
Debt Instrument, Maturity Date				Jun. 30, 2024
3.8% notes due March 2025 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 688		$ 688		690
Debt Instrument, Interest Rate, Stated Percentage		3.80%		3.80%
Debt Instrument, Maturity Date				Mar. 31, 2025
1.875% notes due 2026 [Member]
Debt Instrument [Line Items]
Long-term Debt	[1]	$ 577		$ 577		592
Debt Instrument, Interest Rate, Stated Percentage		1.875%		1.875%
Debt Instrument, Maturity Date				Nov. 30, 2026
7.60% debentures due February 2027 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 195		$ 195		195
Debt Instrument, Interest Rate, Stated Percentage		7.60%		7.60%
Debt Instrument, Maturity Date				Feb. 28, 2027
4.8% notes due September 2042 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 493		$ 493		493
Debt Instrument, Interest Rate, Stated Percentage		4.80%		4.80%
Debt Instrument, Maturity Date				Sep. 30, 2042
4.65% notes due October 2044 [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 871		$ 871		871
Debt Instrument, Interest Rate, Stated Percentage		4.65%		4.65%
Debt Instrument, Maturity Date				Oct. 31, 2044
Commercial paper and short-term borrowings [Member]
Debt Instrument [Line Items]
Borrowings due within one year		$ 661		$ 661		389
Credit Facility
Debt Instrument [Line Items]
Long-term Debt		125		125		200
Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Long-term Debt		2		2		$ 5
Cross Currency Interest Rate Contract [Member] | Net Investment Hedging [Member]
Debt Instrument [Line Items]
Change in cumulative translation adjustment, before tax		26	0	15	0
Foreign Exchange [Member] | Net Investment Hedging [Member]
Debt Instrument [Line Items]
Change in cumulative translation adjustment, before tax		$ 81	$ (91)	$ 39	$ (109)

[1] The carrying value of the euro-denominated 1.50% notes due May 2023 and 1.875% notes due November 2026 will fluctuate with changes in the euro exchange rate. The carrying value of these euro-denominated borrowings have been designated as non-derivative net investment hedges of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations. During the six months ended June 30, 2018, pre-tax gains of $39 million were recognized in other comprehensive income ("OCI") for revaluation of these notes.

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BORROWINGS Part 2 (Details) Credit Facility and Commercial Paper Borrowings € in Millions, $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 30, 2018 EUR (€)	Dec. 31, 2016 USD ($)
Credit Facilities [Abstract]
Borrowings due within one year	$ 662	$ 662	$ 393
2021 Term Loan [Member]
Credit Facilities [Abstract]
Credit Facility, Borrowing Capacity					$ 300
Debt Instrument, Term		5 years
Line of Credit Facility, Maximum Month-end Outstanding Amount		$ 100	$ 200
Line of Credit Facility, Interest Rate During Period		3.34%	2.60%
Repayments of Lines of Credit	100
Revolving Credit Facility [Member]
Credit Facilities [Abstract]
Credit Facility, Borrowing Capacity	1,250	$ 1,250
Line of Credit Facility, Maximum Month-end Outstanding Amount		$ 0	$ 0
Line of Credit Facility, Expiration Date		Oct. 31, 2021
A/R Facility [Member]
Credit Facilities [Abstract]
Credit Facility, Borrowing Capacity	250	$ 250
Line of Credit Facility, Maximum Month-end Outstanding Amount		$ 25	0
Line of Credit Facility, Interest Rate During Period		3.01%
Repayments of Lines of Credit	100
Line of Credit Facility, Expiration Date		Apr. 30, 2020
Commercial Paper [Member]
Credit Facilities [Abstract]
Commercial Paper	$ 544	$ 544	$ 280
Debt, Weighted Average Interest Rate	2.37%	2.37%	1.61%	2.37%
Factoring facilities [Member]
Credit Facilities [Abstract]
Credit Facility, Borrowing Capacity	$ 175	$ 175
Borrowings due within one year	$ 117	$ 117	$ 109
Debt, Weighted Average Interest Rate	1.52%	1.52%	1.31%	1.52%
Transfers of Financial Assets Accounted for as Sale, Initial Fair Value of Assets Obtained as Proceeds | €				€ 150

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BORROWINGS Part 3 (Details) Fair Value - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Borrowings	$ 6,695,000,000	$ 6,540,000,000
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Instrument, Fair Value Disclosure	6,886,000,000	6,980,000,000
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Instrument, Fair Value Disclosure	6,098,000,000	6,386,000,000
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	788,000,000	594,000,000
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Instrument, Fair Value Disclosure	$ 0	$ 0

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DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS Part 1 (Details) - Designated as Hedging Instrument [Member] € in Millions, bbl in Millions, MMBTU in Millions, $ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2018 USD ($) bbl MMBTU	Jun. 30, 2018 EUR (€)	Dec. 31, 2017 USD ($) bbl MMBTU	Dec. 31, 2017 EUR (€)	Jun. 30, 2018 EUR (€) bbl MMBTU	Jan. 31, 2018 USD ($)	Jan. 31, 2018 EUR (€)	Dec. 31, 2017 EUR (€) bbl MMBTU
Foreign Exchange Contract [Member] | Euro Member Countries, Euro | Cash Flow Hedging [Member]
Derivative [Line Items]
Derivative, Notional Amount					€ 419			€ 525
Commodity Contract [Member] | Cash Flow Hedging [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount | bbl	8		7		8			7
Energy Related Derivative [Member] | Cash Flow Hedging [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount | MMBTU	25		23		25			23
Interest Rate Contract [Member] | Fair Value Hedging [Member]
Derivative [Line Items]
Derivative, Notional Amount | $	$ 75		$ 75
Notes Due January 2021 and Notes Due August 2022 [Member] | Cross Currency Interest Rate Contract [Member] | Euro Member Countries, Euro | Net Investment Hedging [Member]
Derivative [Line Items]
Derivative, Notional Amount					€ 416			€ 0
Notes Due January 2021 [Member] | Cross Currency Interest Rate Contract [Member] | Euro Member Countries, Euro | Net Investment Hedging [Member]
Derivative [Line Items]
Debt Instrument, Face Amount						$ 180	€ 150
Notes Due August 2022 [Member] [Member] | Cross Currency Interest Rate Contract [Member] | Euro Member Countries, Euro | Net Investment Hedging [Member]
Derivative [Line Items]
Debt Instrument, Face Amount						$ 320	€ 266
1.50% Notes Due 2023 and 1.875% Notes Due 2026 [Member] | Euro Member Countries, Euro | Net Investment Hedging [Member]
Derivative [Line Items]
Notional Amount of Nonderivative Instruments	$ 1,400	€ 1,241	$ 1,500	€ 1,240

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DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS Part 2 (Details) € in Millions, $ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2018 EUR (€)	Dec. 31, 2017 USD ($)	Dec. 31, 2017 EUR (€)
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Derivative Assets [Abstract]
Derivative Asset, Fair Value, Gross Asset	$ 62		$ 39
Derivative Liabilities [Abstract]
Derivative Liability, Fair Value, Gross Liability	21		52
Derivative, Fair Value, Net	41		(13)
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Derivative Assets [Abstract]
Cash Flow Hedge Derivative Instrument Assets at Fair Value	22		9
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member]
Derivative Assets [Abstract]
Cash Flow Hedge Derivative Instrument Assets at Fair Value	9		4
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Derivative Liabilities [Abstract]
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value	10		28
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Commodity Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member]
Derivative Liabilities [Abstract]
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value	4		10
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | 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	22		23
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | 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	4		2
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Derivative Assets [Abstract]
Cash Flow Hedge Derivative Instrument Assets at Fair Value	1		6
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member]
Derivative Assets [Abstract]
Cash Flow Hedge Derivative Instrument Assets at Fair Value	0		4
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Derivative Assets [Abstract]
Fair Value Hedge Assets	1		1
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member]
Derivative Liabilities [Abstract]
Fair Value Hedge Liabilities	6		4
Net Investment Hedging [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Cross Currency Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member]
Derivative Assets [Abstract]
Derivative Instruments in Hedges, Net Investment in Foreign Operations, Assets, Fair Value	4		0
Net Investment Hedging [Member] | Euro Member Countries, Euro | 1.50% Notes Due 2023 and 1.875% Notes Due 2026 [Member] | Designated as Hedging Instrument [Member]
Non-Derivatives, Carrying Value [Abstract]
Notional Amount of Nonderivative Instruments	1,400	€ 1,241	1,500	€ 1,240
Fair Value Hedging [Member] | Interest Rate Contract [Member]
Derivatives, Fair Value [Line Items]
Hedged Liability, Fair Value Hedge	757		760
Derivative Liabilities [Abstract]
Hedged Liability, Discontinued Fair Value Hedge, Cumulative Increase (Decrease)	7		6
Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease)	$ (13)		$ (10)

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DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS Part 3 (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Sales	$ 2,621	$ 2,419	$ 5,228	$ 4,722
Cost of sales	1,917	1,789	3,943	3,487
Interest Income (Expense), Net	(61)	(61)	(120)	(121)
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax			38		$ 14
Other Comprehensive Income (Loss), Derivatives and Non-derivatives Qualifying as Hedges, before Tax [Abstract]
Change in cumulative translation adjustment, before tax	(34)	36	(7)	43
Summary of Derivative Instruments [Abstract]
Monetized positions and mark to market in accumulated other comprehensive income before tax	(120)		(120)		$ (214)
Price Risk Cash Flow Hedge Unrealized Gain to be Reclassified During Next 12 Months	25		25
Commodity Contract [Member] | Cash Flow Hedging [Member]
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax	40	9	29	(7)
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	(3)	(20)	(5)	(27)
Foreign Exchange Contract [Member] | Cash Flow Hedging [Member]
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax	20	(20)	7	(30)
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	8	10	11	22
Interest Rate Swap [Member] | Cash Flow Hedging [Member]
Amount After Tax of Gain (Loss) Recognized in Other Comprehensive Income On Derivatives, Effective Portion [Abstract]
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax	1	1	2	2
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)	(1)	(2)	(2)
Interest Rate Contract [Member] | Fair Value Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	(1)	0	(2)
Interest Rate Contract [Member] | Fair Value Hedging [Member] | Net Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) on Fair Value Hedges Recognized in Earnings	0	1	0	2
Foreign Exchange [Member] | Net Investment Hedging [Member]
Other Comprehensive Income (Loss), Derivatives and Non-derivatives Qualifying as Hedges, before Tax [Abstract]
Change in cumulative translation adjustment, before tax	81	(91)	39	(109)
Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	2	10	(6)	4
Cross Currency Interest Rate Contract [Member] | Net Investment Hedging [Member]
Other Comprehensive Income (Loss), Derivatives and Non-derivatives Qualifying as Hedges, before Tax [Abstract]
Change in cumulative translation adjustment, before tax	26	0	15	0
AOCI, Derivative Qualifying as Hedge, Excluded Component	$ 0	$ 0	$ (11)	$ 0

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RETIREMENT PLANS (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Other Postretirement Benefits Plan [Member]
Components of net periodic benefit cost [Abstract]
Service cost	$ 0	$ 1	$ 0	$ 2
Interest cost	5	6	11	12
Expected return on assets	0	(1)	(2)	(3)
Prior service credit, net	(10)	(10)	(20)	(20)
Net periodic benefit (credit) cost	(5)	(4)	(11)	(9)
Foreign Plan [Member] | Pension Plan [Member]
Components of net periodic benefit cost [Abstract]
Service cost	4	4	8	7
Interest cost	5	4	10	9
Expected return on assets	(10)	(9)	(19)	(17)
Prior service credit, net	0	0	0	0
Net periodic benefit (credit) cost	(1)	(1)	(1)	(1)
Domestic Plan [Member] | Pension Plan [Member]
Components of net periodic benefit cost [Abstract]
Service cost	8	9	17	18
Interest cost	17	16	34	33
Expected return on assets	(37)	(35)	(74)	(70)
Prior service credit, net	0	(1)	0	(2)
Net periodic benefit (credit) cost	$ (12)	$ (11)	$ (23)	$ (21)

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COMMITMENTS (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Other Commitments [Line Items]
Unrecorded Unconditional Purchase Obligation, Purchases			$ 2,900
Unrecorded Unconditional Purchase Obligation, Term			30 years
Leases, Operating [Abstract]
Operating Lease Commitments, Cancelable Noncancelable and Month-to-month	$ 268		$ 268
Lessee, Operating Lease, Term of Contract	40 years		40 years
Guarantees [Abstract]
Operating Lease Residual Value Guarantees	$ 71		$ 71
Term, other guarantees			30 years
Maximum potential future payment, other guarantees	35		$ 35
Transfers and Servicing of Financial Assets [Abstract]
Receivable Sold Under Factoring Arrangement	$ 44	$ 2	$ 85	$ 5
Real Property [Member]
Leases, Operating [Abstract]
Percent of total lease commitments	50.00%		50.00%
Railcars [Member]
Leases, Operating [Abstract]
Percent of total lease commitments	40.00%		40.00%
Machinery and Equipment [Member]
Leases, Operating [Abstract]
Percent of total lease commitments	10.00%		10.00%

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ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Site Contingency [Line Items]
Portion Of Environmental Reserve Related To Previously Closed, Impaired, And Divested Sites	$ 7	$ 7
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning of period	304
End of period	301
Accrual for Environmental Loss Contingencies, Balance Sheet Classification [Abstract]
Accrued Environmental Loss Contingencies, Current	25	25
Accrued Environmental Loss Contingencies, Noncurrent	276	279
Environmental Remediation [Member]
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning of period	280
Changes in estimates recognized in earnings and other	5
Cash reductions	(9)
End of period	$ 276
Expected Payment Period of Environmental Contingencies	approximately 30 years
Environmental Remediation [Member] | Minimum [Member]
Site Contingency [Line Items]
Loss Contingency, Estimate of Possible Loss	$ 276	280
Environmental Remediation [Member] | Maximum [Member]
Site Contingency [Line Items]
Loss Contingency, Estimate of Possible Loss	517	483
Environmental ARO [Member]
Site Contingency [Line Items]
Best Estimate Accrued to-date For Asset Retirement Obligation	25	24
Non Environmental ARO [Member]
Site Contingency [Line Items]
Best Estimate Accrued to-date For Asset Retirement Obligation	$ 45	$ 49

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STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 1 (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended			12 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018		Jun. 30, 2017	Dec. 31, 2017	Jan. 31, 2018
Stockholders' Equity Note [Abstract]
Dividends, Per Share		$ 0.56	$ 0.51	$ 1.12		$ 1.02
Stockholders' Equity Attributable to Parent		$ 5,697		$ 5,697			$ 5,403
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		5,774		5,774			5,480
Cumulative Effect of New Accounting Principle in Period of Adoption								$ 16
Net earnings attributable to Eastman		344	$ 292	634		$ 570
Net earnings attributable to noncontrolling interest		2	2	2		3
Net earnings including noncontrolling interest		346	294	636		573
Cash dividends declared		(78)	(75)	(160)	[1]	(149)
Other Comprehensive Income		19	$ 20	16		$ (5)	72
Share-based Compensation Expense	[2]			38
Stock Option Exercises				16
Other (4)				(15)
Share Repurchases				(250)
Distributions to Noncontrolling Interest				(3)
Common Stock [Member]
Stockholders' Equity Attributable to Parent		2		2			2
Cumulative Effect of New Accounting Principle in Period of Adoption								0
Net earnings attributable to Eastman				0
Cash dividends declared	[1]			0
Other Comprehensive Income				0
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other (4)				0
Share Repurchases				0
Distributions to Noncontrolling Interest				0
Additional Paid-in Capital [Member]
Stockholders' Equity Attributable to Parent		2,021		2,021			1,983
Cumulative Effect of New Accounting Principle in Period of Adoption								0
Net earnings attributable to Eastman				0
Cash dividends declared	[1]			0
Other Comprehensive Income				0
Share-based Compensation Expense	[2]			38
Stock Option Exercises				16
Other (4)	[3]			(16)
Share Repurchases				0
Distributions to Noncontrolling Interest				0
Retained Earnings [Member]
Stockholders' Equity Attributable to Parent		7,292		7,292			6,802
Cumulative Effect of New Accounting Principle in Period of Adoption	[4]							16
Net earnings attributable to Eastman				634
Cash dividends declared	[1]			(160)
Other Comprehensive Income				0
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other (4)				0
Share Repurchases				0
Distributions to Noncontrolling Interest				0
Accumulated Other Comprehensive Income (Loss) [Member]
Stockholders' Equity Attributable to Parent		(193)		(193)			(209)
Cumulative Effect of New Accounting Principle in Period of Adoption								0
Net earnings attributable to Eastman				0
Cash dividends declared	[1]			0
Other Comprehensive Income				16
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other (4)				0
Share Repurchases				0
Distributions to Noncontrolling Interest				0
Treasury Stock [Member]
Stockholders' Equity Attributable to Parent		(3,425)		(3,425)			(3,175)
Cumulative Effect of New Accounting Principle in Period of Adoption								0
Net earnings attributable to Eastman				0
Cash dividends declared	[1]			0
Other Comprehensive Income				0
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other (4)				0
Share Repurchases				(250)
Distributions to Noncontrolling Interest				0
Parent [Member]
Stockholders' Equity Attributable to Parent		5,697		5,697			5,403
Cumulative Effect of New Accounting Principle in Period of Adoption								16
Net earnings attributable to Eastman				634
Cash dividends declared	[1]			(160)
Other Comprehensive Income				16
Share-based Compensation Expense	[2]			38
Stock Option Exercises				16
Other (4)				(16)
Share Repurchases				(250)
Distributions to Noncontrolling Interest				0
Noncontrolling Interest [Member]
Stockholders' Equity Attributable to Parent		$ 77		77			$ 77
Cumulative Effect of New Accounting Principle in Period of Adoption								$ 0
Net earnings attributable to noncontrolling interest				2
Cash dividends declared	[1]			0
Other Comprehensive Income				0
Share-based Compensation Expense	[2]			0
Stock Option Exercises				0
Other (4)				1
Share Repurchases				0
Distributions to Noncontrolling Interest				$ (3)

[1] Cash dividends declared includes cash dividends paid and dividends declared but unpaid.

[2] Share-based compensation expense is the fair value of share-based awards.

[3] Additional paid-in capital includes value of shares withheld for employees' taxes on vesting of share-based compensation awards.

[4] On January 1, 2018, the Company adopted new accounting standards for revenue recognition, income taxes, and derivatives and hedging, which resulted in adjustments to beginning retained earnings. See Note 1, "Significant Accounting Policies", for specific amounts related to each standard.

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STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 2 AOCI (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cumulative Translation Adjustment	$ (303)		$ (303)		$ (296)	$ (381)
Change in cumulative translation adjustment	(34)	$ 36	(7)	$ 43	85
Benefit Plans Unrecognized Prior Service Credits	121		121		136	163
Change in Benefit Plans Unrecognized Prior Service Credits			(15)		(27)
Unrealized Gains (Losses) on Derivative Instruments	(10)		(10)		(48)	(62)
Change in Unrealized Gains (Losses) on Derivative Instruments			38		14
Unrealized Losses on Investments	(1)		(1)		(1)	(1)
Change in Unrealized Losses on Investments			0		0
Accumulated Other Comprehensive Income (Loss), Net of Tax	(193)		(193)		(209)	$ (281)
Total other comprehensive income (loss), net of tax	$ 19	$ 20	$ 16	$ (5)	$ 72

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STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Part 3 OCI (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Other Comprehensive Income (Loss), before Tax [Abstract]
Change in cumulative translation adjustment, before tax	$ (34)	$ 36	$ (7)	$ 43
Amortization of unrecognized prior service credits included in net periodic costs, before tax	(10)	(11)	(20)	(22)
Unrealized gain (loss), before tax	85	(28)	55	(62)
Reclassification adjustment for (gain) loss included in net income, before tax	(4)	13	(4)	7
Total other comprehensive income (loss), before tax	37	10	24	(34)
Other comprehensive income (loss), net of tax:
Change in cumulative translation adjustment	(34)	36	(7)	43	$ 85
Amortization of unrecognized prior service credits	(8)	(6)	(15)	(13)
Unrealized gain (loss)	64	(18)	41	(39)
Reclassification adjustment for (gains) losses included in net income, net	(3)	8	(3)	4
Total other comprehensive income (loss), net of tax	$ 19	$ 20	$ 16	$ (5)	$ 72

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EARNINGS AND DIVIDENDS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Earnings Per Share [Abstract]
Net earnings attributable to Eastman	$ 344	$ 292	$ 634	$ 570
Weighted average shares used for basic EPS (in shares)	141,900,000	145,300,000	142,300,000	145,700,000
Dilutive effect of stock options and other awards	2,100,000	1,100,000	2,100,000	1,100,000
Weighted average shares used for diluted EPS (in shares)	144,000,000	146,400,000	144,400,000	146,800,000
Earnings Per Share, Basic	$ 2.42	$ 2.01	$ 4.45	$ 3.91
Earnings Per Share, Diluted	$ 2.39	$ 2.00	$ 4.39	$ 3.89
Underlying options excluded from the computation of diluted earnings per share (in shares)	407,573	850,970	407,573	1,008,667
Shares repurchased (in shares)	1,415,539	1,232,977	2,409,774	2,176,676
Cash dividends declared (per share)	$ 0.56	$ 0.51	$ 1.12	$ 1.02

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ASSETS IMPAIRMENTS AND RESTRUCTURING (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Restructuring Cost and Reserve [Line Items]
Total	$ 4	$ 0	$ 6	$ 0
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			29	55	$ 55
Provision / Adjustments			6		8
Restructuring Reserve, Accrual Adjustment			0
Non-cash Reductions					0
Cash Reductions			(10)		(34)
Balance at End of Period	25		25		29
Facility Closing [Member]
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			10	13	13
Provision / Adjustments			0		1
Restructuring Reserve, Accrual Adjustment			0		1
Cash Reductions			(1)		(5)
Balance at End of Period	9		9		10
Employee Severance [Member]
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			19	42	42
Provision / Adjustments			6		6
Restructuring Reserve, Accrual Adjustment			0		0
Cash Reductions			(9)		(29)
Balance at End of Period	$ 16		16		19
Non-Cash Charges [Member]
Restructuring Charge [Roll Forward]
Balance at Beginning of Period			$ 0	$ 0	0
Provision / Adjustments					1
Non-cash Reductions					(1)
Cash Reductions					0
Balance at End of Period					$ 0

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SHARE-BASED COMPENSATION AWARDS (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense before tax	$ 14	$ 13	$ 38	$ 27
Share-based compensation net of deferred tax expense	$ 10	$ 8	$ 28	$ 17

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OTHER (INCOME) CHARGES, NET (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Other Income and Expenses [Abstract]
Foreign exchange transaction (gains) losses, net	$ 7	$ 3	$ 7	$ 2
Costs resulting from tax law changes and outside-U.S. entity reorganizations	5	0	13	0
(Income) loss from equity investments and other investment (gains) losses, net	(7)	(3)	(12)	(6)
Coal gasification incident property insurance proceeds	(15)	0	(65)	0
Other, net	0	1	1	1
Other (income) charges, net	$ (10)	$ 1	$ (56)	$ (3)

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SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Supplemental Cash Flow Information [Abstract]
Other current assets	$ (53)	$ (3)
Other noncurrent assets	19	7
Payables and other current liabilities	31	(30)
Long-term liabilities and equity	18	0
Total	$ 15	$ (26)

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SEGMENT INFORMATION (Details) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) Segment	Jun. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Segment Reporting Information [Line Items]
Number of Operating Segments | Segment				4
Sales [Abstract]
Sales		$ 2,621	$ 2,419	$ 5,228	$ 4,722
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		491	420	900	821
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	16,260		16,260		$ 15,999
Operating Segments [Member]
Sales [Abstract]
Sales		2,621	2,405	5,228	4,695
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		510	437	934	845
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	15,212		15,212		14,956
Corporate, Non-Segment [Member]
Sales [Abstract]
Sales		0	14	0	27
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		(19)		(34)
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	1,048		1,048		1,043
Growth Initiatives and Businesses not Allocated to Segments [Member] | Corporate, Non-Segment [Member]
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		(27)	(32)	(53)	(60)
Pension and OPEB Costs Not Allocated to Operating Segments [Member] | Corporate, Non-Segment [Member]
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		20	18	41	36
Restructuring and acquisition integration and transaction costs [Member] | Corporate, Non-Segment [Member]
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		(4)	0	(6)	0
Other Nonoperating Income (Expense) [Member] | Corporate, Non-Segment [Member]
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		(8)	(3)	(16)	0
Additives And Functional Products [Member] | Operating Segments [Member]
Sales [Abstract]
Sales		942	830	1,881	1,603
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		192	161	368	314
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	6,703		6,703		6,648
Advanced Materials [Member] | Operating Segments [Member]
Sales [Abstract]
Sales		729	657	1,422	1,291
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		150	137	285	258
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	4,512		4,512		4,379
Chemical Intermediates [Member] | Operating Segments [Member]
Sales [Abstract]
Sales		709	703	1,439	1,373
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		85	83	155	165
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	2,993		2,993		3,000
Fibers [Member] | Operating Segments [Member]
Sales [Abstract]
Sales		241	215	486	428
Earnings (Loss) Before Interest and Taxes [Abstract]
Earnings before interest and taxes		83	56	126	108
Segment Reporting Information, Additional Information [Abstract]
Assets by Segment	[1]	1,004		1,004		$ 929
North America [Member]
Sales [Abstract]
Sales		1,108	1,088	2,208	2,154
Asia Pacific [Member]
Sales [Abstract]
Sales		639	581	1,281	1,093
EMEA [Member]
Sales [Abstract]
Sales		725	624	1,452	1,224
Latin America [Member]
Sales [Abstract]
Sales		$ 149	$ 126	$ 287	$ 251

[1] Segment assets include accounts receivable, inventory, fixed assets, goodwill, and intangible assets.

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REVENUE RECOGNITION (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract with Customer, Asset, Net	$ 56		$ 56		$ 42
Income Statement [Abstract]
Sales	2,621	$ 2,419	5,228	$ 4,722
Cost of sales	1,917	1,789	3,943	3,487
Gross Profit	704	630	1,285	1,235
Earnings before interest and taxes	491	420	900	821
Net earnings attributable to Eastman	$ 344	$ 292	$ 634	$ 570
Basic earnings per share attributable to Eastman	$ 2.42	$ 2.01	$ 4.45	$ 3.91
Diluted earnings per share attributable to Eastman	$ 2.39	$ 2.00	$ 4.39	$ 3.89
Balance Sheet Related Disclosures [Abstract]
Trade receivables, net of allowance for doubtful accounts	$ 1,393		$ 1,393		1,026
Miscellaneous receivables	314		314		360
Inventories	1,532		1,532		1,509
Assets, Current	3,498		3,498		$ 3,143
Difference between Revenue Guidance in Effect before and after Topic 606 [Member]
Income Statement [Abstract]
Sales	(5)		(35)
Cost of sales	(1)		(14)
Gross Profit	(4)		(21)
Earnings before interest and taxes	(4)		(21)
Net earnings attributable to Eastman	$ (2)		$ (16)
Basic earnings per share attributable to Eastman	$ (0.01)		$ (0.11)
Diluted earnings per share attributable to Eastman	$ (0.01)		$ (0.11)
Balance Sheet Related Disclosures [Abstract]
Trade receivables, net of allowance for doubtful accounts	$ (181)		$ (181)
Miscellaneous receivables	(41)		(41)
Inventories	140		140
Assets, Current	(82)		(82)
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Additives And Functional Products [Member]
Income Statement [Abstract]
Sales	(9)		(6)
Earnings before interest and taxes	(6)		(9)
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Advanced Materials [Member]
Income Statement [Abstract]
Sales	1		(19)
Earnings before interest and taxes	0		(10)
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Chemical Intermediates [Member]
Income Statement [Abstract]
Sales	3		20
Earnings before interest and taxes	2		8
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Fibers [Member]
Income Statement [Abstract]
Sales	0		(30)
Earnings before interest and taxes	0		(10)
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Corporate, Non-Segment [Member]
Income Statement [Abstract]
Earnings before interest and taxes	0		0
Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Income Statement [Abstract]
Sales	2,616		5,193
Cost of sales	1,916		3,929
Gross Profit	700		1,264
Earnings before interest and taxes	487		879
Net earnings attributable to Eastman	$ 342		$ 618
Basic earnings per share attributable to Eastman	$ 2.41		$ 4.34
Diluted earnings per share attributable to Eastman	$ 2.38		$ 4.28
Balance Sheet Related Disclosures [Abstract]
Trade receivables, net of allowance for doubtful accounts	$ 1,212		$ 1,212
Miscellaneous receivables	273		273
Inventories	1,672		1,672
Assets, Current	3,416		3,416
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Additives And Functional Products [Member]
Income Statement [Abstract]
Sales	933		1,875
Earnings before interest and taxes	186		359
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Advanced Materials [Member]
Income Statement [Abstract]
Sales	730		1,403
Earnings before interest and taxes	150		275
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Chemical Intermediates [Member]
Income Statement [Abstract]
Sales	712		1,459
Earnings before interest and taxes	87		163
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Fibers [Member]
Income Statement [Abstract]
Sales	241		456
Earnings before interest and taxes	83		116
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Corporate, Non-Segment [Member]
Income Statement [Abstract]
Earnings before interest and taxes	(19)		(34)
Operating Segments [Member]
Income Statement [Abstract]
Sales	2,621	$ 2,405	5,228	$ 4,695
Earnings before interest and taxes	510	437	934	845
Operating Segments [Member] | Additives And Functional Products [Member]
Income Statement [Abstract]
Sales	942	830	1,881	1,603
Earnings before interest and taxes	192	161	368	314
Operating Segments [Member] | Advanced Materials [Member]
Income Statement [Abstract]
Sales	729	657	1,422	1,291
Earnings before interest and taxes	150	137	285	258
Operating Segments [Member] | Chemical Intermediates [Member]
Income Statement [Abstract]
Sales	709	703	1,439	1,373
Earnings before interest and taxes	85	83	155	165
Operating Segments [Member] | Fibers [Member]
Income Statement [Abstract]
Sales	241	215	486	428
Earnings before interest and taxes	83	56	126	108
Corporate, Non-Segment [Member]
Income Statement [Abstract]
Sales	0	$ 14	0	$ 27
Earnings before interest and taxes	(19)		(34)
Corporate, Non-Segment [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member]
Income Statement [Abstract]
Sales	0		0
Corporate, Non-Segment [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Income Statement [Abstract]
Sales	$ 0		$ 0