8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934

Date of Report (Date of earliest event reported) July 24, 2003

EASTMAN CHEMICAL COMPANY

(Exact name of registrant as specified in its charter)

Delaware	1-12626	62-1539359
(State or other jurisdiction of	(Commission	(I.R.S. employer
incorporation or organization)	File Number)	identification No.)

100 N. Eastman Road, Kingsport, TN	37660
(Address of principal executive offices)	(Zip Code)

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

TABLE OF CONTENTS

PUBLIC RELEASE OF SECOND QUARTER 2003 FINANCIALS

Item 7. Financial Statements and Exhibits

(c) Exhibits

The following exhibit is furnished pursuant to Item 9 and Item 12:

     99.01 Public release by the registrant on July 24, 2003 of second quarter 2003 financial results.

Item 9. Regulation FD Disclosure (Information Being Furnished Under Item 12).

In accordance with Securities and Exchange Commission Release No. 33-8216, the following information, which is intended to be furnished under Item 12, “Results of Operations and Financial Condition,” is instead being furnished under Item 9, “Regulation FD Disclosure.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On July 24, 2003, the registrant publicly released the registrant’s financial results for the second quarter of 2003. The full text of the release is filed as Exhibit 99.01 to this Form 8-K, and is incorporated into Item 9 of this Form 8-K by reference.

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
	By:	/s/ James P. Rogers
	Name: Title:	James P. Rogers Senior Vice President and Chief Financial Officer
Date: July 24, 2003

EXHIBIT INDEX

EXHIBIT
NUMBER	DESCRIPTION
99.01	Public release by the registrant on July 24, 2003 of second quarter 2003 financial results

EX-99.1 3 g83951exv99w1.htm PUBLIC RELEASE OF SECOND QUARTER 2003 FINANCIALS

Exhibit 99.01

For Release July 24, 2003

5:30 p.m. EDT

Eastman Announces Second-Quarter Earnings

     Kingsport, Tenn., July 24, 2003 — Eastman Chemical Company (NYSE:EMN) today announced earnings of $0.46 per diluted share for second quarter 2003 versus $0.58 per diluted share for second quarter 2002. Included in results for second quarter 2003 are asset impairment and restructuring charges of $16 million ($12 million after tax) primarily related to the impairment of certain assets in Eastman’s performance chemicals and intermediates segment’s fine chemicals product lines.

     “We’re pleased that our operating earnings without the asset impairment and restructuring charges improved over the year-ago period. However, we continue to suffer from higher raw material and energy costs compared with 2002 and from a generally weak global economy, particularly for manufacturing,” said Brian Ferguson, chairman and CEO. “We are making progress on strategies to improve our performance, and we will continue to drive those strategies going forward.”

     Eastman’s operating performance in second quarter 2003 was the result of higher selling prices and cost reduction efforts that were partially offset by higher raw material and energy costs and lower sales volumes. Operating earnings were positively impacted approximately $12 million by the previously announced change in vacation policy. Operating earnings also reflected the impact of other cost reduction measures, including a reduction in employee pay.

     Second-quarter 2003 sales revenue was $1.5 billion, a 6 percent increase over sales revenue of $1.4 billion in second quarter 2002. The improved revenue was primarily due to higher selling prices and favorable foreign currency exchange rates, particularly for the euro, that were partially offset by lower sales volumes.

(In millions, except per share amounts)	2nd Quarter 2003		2nd Quarter 2002
Sales revenue	$	1,481	$	1,395
Earnings per diluted share	$	0.46	$	0.58
Net cash provided by operating activities	$	73	$	253

Division and Segment Results 2Q2003 versus 2Q2002

     Eastman Division’s second-quarter 2003 external sales revenue increased 5 percent compared with second quarter 2002 due to higher selling prices and favorable foreign currency exchange rates that more than offset lower sales volumes. Operating earnings for the division increased without the asset impairment and restructuring charges of $16 million as higher selling prices and cost reduction efforts were partially offset by lower sales volumes. Segments within Eastman Division had the following results:

     Coatings, Adhesives, Specialty Polymers and Inks – External sales revenue increased 1 percent compared with second quarter 2002 as favorable foreign currency exchange rates and improved product mix were offset by lower sales volumes. The lower sales volumes, primarily for coatings and inks, were attributed to an increasingly competitive global business environment and weaker end-market demand resulting from unseasonable weather conditions in the northeast United States. Operating earnings for the segment declined slightly as lower sales volumes and a restructuring charge of $1 million offset higher selling prices.

     Performance Chemicals and Intermediates – External sales revenue increased 12 percent versus the year-ago period primarily due to higher selling prices that were increased to keep pace with higher raw material and energy costs, particularly for propane. Operating earnings increased as higher selling prices more than offset the asset impairment and restructuring charges of $15 million and an unfavorable shift in product mix.

     Specialty Plastics – External sales revenue increased 3 percent as favorable foreign currency exchange rates and improved product mix more than offset lower sales volumes. The lower sales volumes were primarily due to lower film sales attributed to weakness in the travel and leisure markets. Operating earnings increased slightly as higher selling prices more than offset higher raw material and energy costs, particularly for ethylene glycol and paraxylene.

     Voridian Division’s second-quarter 2003 external sales revenue increased 5 percent compared with second quarter 2002 as higher selling prices and favorable foreign currency exchange rates were partially offset by lower sales volumes. Operating earnings declined $11 million year-over-year as higher raw material and energy costs and lower sales volumes were partially offset by higher selling prices and cost reduction efforts. Segments within Voridian Division had the following results:

     Polymers – External sales revenue increased 9 percent compared with second quarter 2002 as higher selling prices and favorable foreign currency exchange rates were partially offset by lower sales volumes. The decline in sales volumes for PET polymers was primarily in Europe and Latin America as Asian imports increased into these regions, recent environmental legislation for recycle content became effective in certain countries in Western Europe and additional industry capacity came online in Mexico. Sales volumes for PET polymers were also lower in North America in second quarter, a decline attributed to weaker end-market demand resulting from unseasonable weather conditions. However, sales volumes for PET polymers in North America for the first half of 2003 were slightly higher than the same period last year. Sales volumes for polyethylene declined due to weak industry demand that began in early second quarter 2003 compared with second quarter 2002, which was the company’s strongest sales volume quarter for polyethylene last year. Operating earnings for the polymers segment declined $6 million compared with second quarter 2002 as higher raw material and energy costs and lower sales volumes were partially offset by higher selling prices and cost improvement projects.

     Fibers – External sales revenue declined 4 percent year-over-year mainly due to a negative shift in product mix. The segment’s second-quarter 2003 operating earnings declined $5 million due to lower sales volumes of acetate tow, primarily to China, versus second quarter 2002. Acetate tow sales to China were particularly strong in the first half of 2002 due to the timing of customer buying patterns.

     The Developing Businesses Division’s second-quarter 2003 external sales revenue was $16 million compared with $2 million for second quarter 2002. The increase was primarily due to the continued implementation of customer contracts by Cendian Corporation. Operating results for the division improved slightly reflecting increased revenues that more than offset higher costs associated with efforts to increase external sales.

Other (Income) Charges

     Other (income) charges for second quarter 2003 and second quarter 2002 reflected gains of approximately $6 million and $15 million respectively due to favorable foreign currency exchange rates, particularly for the euro.

Cash Flow

     Eastman generated $73 million in cash from operating activities during second quarter 2003. The company contributed $50 million to its U.S. defined benefit pension plans in the second quarter and expects to fund its U.S. defined benefit pension plans by a total of $238 million in 2003 versus the previously announced $220 million. The additional $18 million in funding will allow the company to significantly reduce or eliminate its required funding in 2004.

     In June 2003, the company issued notes in the principal amount of $250 million due in 2008 bearing interest at 3.25 percent per annum. Net proceeds from the sale of the notes were $248 million and were used to repay portions of the company’s commercial paper borrowings. The company expects that its net debt at the end of 2003 will be similar to its net debt at the end of 2002.

Outlook

     Commenting on the outlook for the remainder of the year, Ferguson said: “In a typical year, Eastman generates about 60 percent of our net earnings in the first half of the year and about 40 percent in the second half. For us to change this pattern in 2003, we will need to maintain our selling prices despite the fact that we face a difficult market environment. While we expect that sales volumes will improve in second half, our profitability will be driven by our relative success in pricing. In addition, we are focused on taking appropriate cost reduction actions to improve our performance.”

     Eastman will host a conference call with industry analysts on July 25, 2003, at 8:00 a.m. Eastern Daylight Time. To access the conference call via the live webcast, go to www.eastman.com, investors, event information, audio archives. To listen to the conference call via teleconference, call 800-289-0579 to register and ask for reservation #130684. You will be given a special telephone number to call to listen to the conference call. Following the conference call, supplemental information for second quarter 2003 will be available at www.eastman.com, investors, financial information section.

     Headquartered in Kingsport, Tenn., Eastman manufactures and markets chemicals, fibers and plastics worldwide. The company has approximately 15,800 employees in more than 30 countries and had 2002 sales of $5.3 billion. To learn more about Eastman and its products, visit www.eastman.com. To learn more about Voridian Division and its products, visit www.voridian.com.

##

Forward-looking Statements:  This news release includes forward-looking statements concerning current expectations for future global, regional, industry, and specific product and market economic and business conditions; selling prices and raw material and energy costs; company strategies, actions and efforts to control and reduce costs and to increase overall selling prices and improve financial performance; cash flows and uses of available cash, and future pension plan funding and future debt levels; and overall sales volumes, selling prices, cost reductions, and net earnings in the second half of 2003. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company’s filings with the Securities and Exchange Commission, including the Form 10-K filed for 2002, the Form 10-Q filed for the first quarter 2003, the Form 10-Q to be filed for the second quarter 2003, and the supplemental information for second quarter 2003 on the Eastman Web site at www.eastman.com in the investors, financial information section.

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
	5:30 PM EDT

FINANCIAL INFORMATION
July 25, 2003

For use in the Eastman Chemical Company Conference Call
at 8:00 AM (EDT), July 25, 2003.

Table of Contents

Item	Page
TABLE 1 - Statements of Earnings		1
TABLE 2 - Other Sales Information		2-3
TABLE 3 - Operating Earnings (Loss) Information		4-5
TABLE 4 - Sales Revenue Change – External Sales		6
TABLE 5 - Percentage Growth in Sales Volume		7-8
TABLE 6 - Statements of Cash Flows		9
TABLE 7 - Selected Balance Sheet Items		10

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
	5:30 PM EDT
	Page 1

TABLE 1 – STATEMENTS OF EARNINGS

				Second Quarter						First Six Months
(Dollars in millions, except per share amounts)				2003			2002			2003			2002
Sales				$	1,481		$	1,395		$	2,922		$	2,631
Cost of sales					1,240			1,166			2,497			2,197
Gross profit					241			229			425			434
Selling and general administrative expenses					108			110			208			200
Research and development expenses					42			38			85			76
Asset impairments and restructuring charges, net					16			—			18			—
Other operating income					—			—			(20	)		—
Operating earnings					75			81			134			158
Interest expense, net					31			31			62			61
Other (income) charges, net					(5	)		(10	)		(6	)		4
Earnings before income taxes and cumulative effect of changes in accounting principle					49			60			78			93
Provision for income taxes					14			16			25			25
Earnings before cumulative effect of changes in accounting principle					35			44			53			68
Cumulative effect of changes in accounting principle, net					—			—			3			(18	)
			Net earnings	$	35		$	44		$	56		$	50
Earnings per share
	Basic
		Before cumulative effect of changes in accounting principle		$	0.46		$	0.58		$	0.69		$	0.88
		Cumulative effect of changes in accounting principle, net			—			—			0.04			(0.23	)
			Net earnings per share	$	0.46		$	0.58		$	0.73		$	0.65
	Diluted
		Before cumulative effect of changes in accounting principle		$	0.46		$	0.58		$	0.69		$	0.88
		Cumulative effect of changes in accounting principle, net			—			—			0.04			(0.23	)
			Net earnings per share	$	0.46		$	0.58		$	0.73		$	0.65
Shares (in millions) outstanding at end of period					77.4			77.3			77.4			77.3
Shares (in millions) used for earnings per share calculation:
		Basic			77.1			77.1			77.1			77.0
		Diluted			77.3			77.3			77.3			77.2

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
	5:30 PM EDT
	Page 2

TABLE 2 — OTHER SALES INFORMATION

(Dollars in millions)						Second Quarter, 2003
						Interdivisional
				External Sales		Sales		Total Sales
Sales by Division and Segment
	Eastman Division
		Coatings, Adhesives, Specialty Polymers, and Inks		$	417	$	—	$	417
		Performance Chemicals and Intermediates			310		115		425
		Specialty Plastics			138		12		150
			Total Eastman Division		865		127		992
	Voridian Division
		Polymers			434		19		453
		Fibers			166		19		185
			Total Voridian Division		600		38		638
	Developing Businesses Division
		Developing Businesses			16		94		110
			Total Developing Businesses Division		16		94		110
	Total Eastman Chemical Company			$	1,481	$	259	$	1,740

						Second Quarter, 2002*
						Interdivisional
				External Sales		Sales		Total Sales
Sales by Division and Segment
	Eastman Division
		Coatings, Adhesives, Specialty Polymers, and Inks		$	412	$	—	$	412
		Performance Chemicals and Intermediates			276		98		374
		Specialty Plastics			133		12		145
			Total Eastman Division		821		110		931
	Voridian Division
		Polymers			400		11		411
		Fibers			172		17		189
			Total Voridian Division		572		28		600
	Developing Businesses Division
		Developing Businesses			2		78		80
			Total Developing Businesses Division		2		78		80
	Total Eastman Chemical Company			$	1,395	$	216	$	1,611

* Sales revenues for 2002 have been reclassified to reflect the Company’s new organizational structure and segments effective in the first quarter 2003.

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
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	Page 3

TABLE 2 — OTHER SALES INFORMATION (Continued)

(Dollars in millions)						First Six Months, 2003
						Interdivisional
				External Sales		Sales		Total Sales
Sales by Division and Segment
	Eastman Division			$	809	$	—	$	809
		Coatings, Adhesives, Specialty Polymers, and Inks		$	809	$	—	$	809
		Performance Chemicals and Intermediates			626		240		866
		Specialty Plastics			282		26		308
			Total Eastman Division		1,717		266		1,983
	Voridian Division
		Polymers			864		40		904
		Fibers			312		40		352
			Total Voridian Division		1,176		80		1,256
	Developing Businesses Division
		Developing Businesses			29		192		221
			Total Developing Businesses Division		29		192		221
	Total Eastman Chemical Company			$	2,922	$	538	$	3,460

						First Six Months, 2002*
						Interdivisional
				External Sales		Sales		Total Sales
Sales by Division and Segment
	Eastman Division
		Coatings, Adhesives, Specialty Polymers, and Inks		$	777	$	—	$	777
		Performance Chemicals and Intermediates			535		179		714
		Specialty Plastics			253		24		277
			Total Eastman Division		1,565		203		1,768
	Voridian Division
		Polymers			741		23		764
		Fibers			321		38		359
			Total Voridian Division		1,062		61		1,123
	Developing Businesses Division
		Developing Businesses			4		147		151
			Total Developing Businesses Division		4		147		151
	Total Eastman Chemical Company			$	2,631	$	411	$	3,042

* Sales revenues for 2002 have been reclassified to reflect the Company’s new organizational structure and segments effective in the first quarter 2003.

		Second Quarter				First Six Months
(Dollars in millions)		2003		2002		2003		2002
Sales by Region – External Sales
	United States and Canada	$	849	$	794	$	1,673	$	1,515
	Europe, Middle East, and Africa		355		314		697		586
	Asia Pacific		162		167		321		303
	Latin America		115		120		231		227
		$	1,481	$	1,395	$	2,922	$	2,631

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
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	Page 4

TABLE 3 — OPERATING EARNINGS (LOSS) INFORMATION

				Second			Second			First
				Quarter			Quarter			Quarter
(Dollars in millions)				2003			2002 (2)			2003
Operating Earnings (Loss) by Division and Segment
	Eastman Division
		Coatings, Adhesives, Specialty Polymers, and Inks (1) (3)		$	19		$	21		$	—
		Performance Chemicals and Intermediates (1)			3			2			3
		Specialty Plastics (3)			9			8			32
			Total Eastman Division		31			31			35
	Voridian Division
		Polymers			26			32			28
		Fibers			36			41			25
			Total Voridian Division		62			73			53
	Developing Businesses Division
		Developing Businesses			(16	)		(18	)		(23	)
			Total Developing Businesses Division		(16	)		(18	)		(23	)
		Eliminations			(2	)		(5	)		(6	)
Total Eastman Chemical Company				$	75		$	81		$	59

(1)	Second quarter 2003 operating earnings for the Coatings, Adhesives, Specialty Polymers, and Inks segment included restructuring charges of approximately $1 million. Second quarter 2003 operating earnings for the Performance Chemicals and Intermediates segment included asset impairment and restructuring charges of approximately $15 million.
(2)	Operating earnings (loss) for 2002 have been reclassified to reflect the Company’s new organizational structure and segments effective in the first quarter 2003.
(3)	First quarter 2003 operating earnings for the Coatings, Adhesives, Specialty Polymers, and Inks segment included restructuring charges of approximately $2 million. Operating earnings for the Specialty Plastics segment for the first quarter 2003 included a gain of approximately $20 million for the sale of the Company’s high-performance crystalline plastics assets.

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
	5:30 PM EDT
	Page 5

TABLE 3 — OPERATING EARNINGS (LOSS) INFORMATION (Continued)

				First Six Months			First Six Months
(Dollars in millions)				2003			2002 (2)
Operating Earnings (Loss) by Division and Segment
	Eastman Division
		Coatings, Adhesives, Specialty Polymers, and Inks (1)		$	19		$	50
		Performance Chemicals and Intermediates (1)			6			1
		Specialty Plastics (1)			41			18
			Total Eastman Division		66			69
	Voridian Division
		Polymers			54			52
		Fibers			61			73
			Total Voridian Division		115			125
	Developing Businesses Division
		Developing Businesses			(39	)		(33	)
			Total Developing Businesses Division		(39	)		(33	)
		Eliminations			(8	)		(3	)
Total Eastman Chemical Company				$	134		$	158

(1)

First six months 2003 operating earnings for the Coatings, Adhesives, Specialty Polymers, and Inks segment included restructuring charges of approximately $3 million. First six months 2003 operating earnings for the Performance Chemicals and Intermediates segment included asset impairment and restructuring charges of approximately $15 million. First six months 2003 operating earnings for the Specialty Plastics segment included a gain of approximately $20 million for the sale of the Company’s high-performance crystalline plastics assets.

(2)

Operating earnings (loss) for 2002 have been reclassified to reflect the Company’s new organizational structure and segments effective in the first quarter 2003.

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
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	Page 6

TABLE 4 – SALES REVENUE CHANGE – EXTERNAL SALES

			Second Quarter, 2003 Compared to Second Quarter, 2002
						Change in External Sales Revenue Due To
												Product			Exchange
			Revenue			Volume			Price			Mix			Rate
			% Change			Effect			Effect			Effect			Effect
Eastman Division
	Coatings, Adhesives, Specialty Polymers, and Inks			1	%		(11	)%		2	%		4	%		6	%
	Performance Chemicals and Intermediates			12	%		(2	)%		14	%		(3	)%		3	%
	Specialty Plastics			3	%		(4	)%		1	%		2	%		4	%
		Total Eastman Division		5	%		(7	)%		6	%		1	%		5	%
Voridian Division
	Polymers			9	%		(11	)%		15	%		0	%		5	%
	Fibers			(4	)%		2	%		2	%		(11	)%		3	%
		Total Voridian Division		5	%		(7	)%		11	%		(3	)%		4	%
Developing Businesses Division
	Developing Businesses			>100	%		0	%		0	%		>100	%		0	%
		Total Developing Businesses Division		>100	%		0	%		0	%		>100	%		0	%
Total Eastman Chemical Company				6	%		(7	)%		8	%		1	%		4	%

			First Six Months, 2003 Compared to First Six Months, 2002
						Change in External Sales Revenue Due To
												Product			Exchange
			Revenue			Volume			Price			Mix			Rate
			% Change			Effect			Effect			Effect			Effect
Eastman Division
	Coatings, Adhesives, Specialty Polymers, and Inks			4	%		(6	)%		0	%		4	%		6	%
	Performance Chemicals and Intermediates			17	%		3	%		12	%		(1	)%		3	%
	Specialty Plastics			11	%		7	%		(1	)%		0	%		5	%
		Total Eastman Division		10	%		0	%		4	%		2	%		4	%
Voridian Division
	Polymers			17	%		(3	)%		16	%		1	%		3	%
	Fibers			(3	)%		(4	)%		1	%		(3	)%		3	%
		Total Voridian Division		11	%		(3	)%		11	%		0	%		3	%
Developing Businesses Division
	Developing Businesses			>100	%		0	%		0	%		>100	%		0	%
		Total Developing Businesses Division		>100	%		0	%		0	%		>100	%		0	%
Total Eastman Chemical Company				11	%		(2	)%		7	%		2	%		4	%

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
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	Page 7

TABLE 5 – PERCENTAGE GROWTH IN SALES VOLUME

				Second Quarter, 2003 Compared to
				Second Quarter, 2002
										Total
				External			Interdivisional			Including
				Volume			Volume			Interdivisional
Eastman Division
	Coatings, Adhesives, Specialty Polymers, and Inks				(10	)%		0	%		(10	)%
	Performance Chemicals and Intermediates				(4	)%		(10	)%		(6	)%
	Specialty Plastics				(4	)%		3	%		(3	)%
			Total Eastman Division		(7	)%		(9	)%		(7	)%
Voridian Division
	Polymers				(12	)%		55	%		(10	)%
	Fibers				2	%		5	%		3	%
			Total Voridian Division		(10	)%		12	%		(6	)%
Developing Businesses Division
	Developing Businesses				0	%		0	%		0	%
			Total Developing Businesses Division		0	%		0	%		0	%
Total Eastman Chemical Company					(8	)%
Regional sales volume growth United States and Canada
		United States and Canada			(6	)%
		Europe, Middle East, and Africa			(6	)%
		Asia Pacific			(11	)%
		Latin America			(23	)%

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
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	Page 8

TABLE 5 – PERCENTAGE GROWTH IN SALES VOLUME (Continued)

				First Six Months, 2003 Compared to
				First Six Months, 2002
										Total
				External			Interdivisional			Including
				Volume			Volume			Interdivisional
Eastman Division
	Coatings, Adhesives, Specialty Polymers, and Inks				(7	)%		(50	)%		(7	)%
	Performance Chemicals and Intermediates				3	%		3	%		3	%
	Specialty Plastics				7	%		18	%		9	%
			Total Eastman Division		(1	)%		4	%		0	%
Voridian Division
	Polymers				(3	)%		58	%		(1	)%
	Fibers				(4	)%		9	%		3	%
			Total Voridian Division		(3	)%		17	%		0	%
Developing Businesses Division
	Developing Businesses				0	%		0	%		0	%
			Total Developing Businesses Division		0	%		0	%		0	%
Total Eastman Chemical Company					(2	)%
Regional sales volume growth
		United States and Canada			0	%
		Europe, Middle East, and Africa			(3	)%
		Asia Pacific			1	%
		Latin America			(15	)%

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
	5:30 PM EDT
	Page 9

TABLE 6 – STATEMENTS OF CASH FLOWS

			First Six Months
(Dollars in millions)			2003			2002
Cash flows from operating activities
	Net earnings		$	56		$	50
Adjustments to reconcile net earnings to net cash provided by operating activities:
	Depreciation and amortization			193			199
	Cumulative effect of changes in accounting principle, net of tax			(3	)		18
	Write-off of impaired assets			18			—
	Gain recognized on sale of assets			(20	)		—
	Provision for deferred income taxes			18			23
Changes in operating assets and liabilities, net of effect of acquisitions:
	Increase in receivables			(146	)		(66	)
	Increase in inventories			(18	)		(19	)
	Increase (decrease) in trade payables			(44	)		72
	Increase (decrease) in liabilities for employee benefits and incentive pay			(164	)		19
	Other items, net			15			37
		Net cash provided by (used in) operating activities		(95	)		333
Cash flows from investing activities
	Additions to properties and equipment			(100	)		(96	)
	Proceeds from sale of assets			28			6
	Acquisitions, net of cash acquired			—			(6	)
	Additions to capitalized software			(8	)		(9	)
	Other items, net			18			(7	)
		Net cash used in investing activities		(62	)		(112	)
Cash flows from financing activities
	Net decrease in commercial paper and other short-term borrowings			(32	)		(537	)
	Proceeds from long-term borrowings			248			394
	Bank overdrafts			2			2
	Repayment of borrowings			(3	)		(4	)
	Dividends paid to stockholders			(68	)		(68	)
	Other items			2			—
		Net cash provided by (used in) financing activities		149			(213	)
		Net change in cash and cash equivalents		(8	)		8
Cash and cash equivalents at beginning of period				77			66
Cash and cash equivalents at end of period			$	69		$	74

EASTMAN CHEMICAL COMPANY — EMN	July 24, 2003
	5:30 PM EDT
	Page 10

TABLE 7 – SELECTED BALANCE SHEET ITEMS

		June 30,		December 31,
(Dollars in millions)		2003		2002
Current Assets		$	1,664	$	1,529
Net Properties			3,697		3,753
Other Assets			994		991
	Total Assets	$	6,355	$	6,273
Payables and Other Current Liabilities		$	998	$	1,221
Short-term Borrowings			511		3
Long-term Borrowings			1,754		2,054
Other Liabilities			1,764		1,724
Stockholders’ Equity			1,328		1,271
	Total Liabilities and Stockholders’ Equity	$	6,355	$	6,273

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EX-99.1

PUBLIC RELEASE OF SECOND QUARTER 2003 FINANCIALS