Financial Analysis

"LEASES AND OTHER COMMITMENTS Leases There are two types of leases: financing and operating. Both types of leases have associated right-to-use assets and lease liabilities that are valued at the net present value of the lease payments and recognized on the Consolidated Statements of Financial Position. The discount rate used in the measurement of a right-to-use asset and lease liability is the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, the collateralized incremental borrowing rate is used. The Company elected the accounting policy not to apply the recognition and measurement requirements to short-term leases with a term of 12 months or less and do not include a bargain purchase option. The Company has operating leases, as a lessee, with customary terms that do not include: significant variable lease payments; significant reasonably certain extensions or options required to be included in the lease term; restrictions; or other covenants for real property, rolling stock, and machinery and equipment. Real property leases primarily consist of office space and rolling stock leases primarily for railcars and fleet vehicles. At December 31, 2025 and 2024, right-to-use assets for operating leases of $ 191 million and $ 164 million , respectively, are included as a part of ""Other noncurrent assets"" on the Consolidated Statements of Financial Position. At both December 31, 2025 and 2024, the op …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"BORROWINGS December 31, (Dollars in millions) 2025 2024 Borrowings consisted of: 3.80% notes due March 2025 $ $ 450 1.875% notes due November 2026 (1) 586 518 7.60% debentures due February 2027 196 196 4.5% notes due December 2028 497 496 5.0% notes due August 2029 743 495 5.75% notes due March 2033 (2) 496 496 5.625% notes due February 2034 744 743 4.8% notes due September 2042 495 495 4.65% notes due October 2044 880 878 2027 Term Loan 150 250 Total borrowings 4,787 5,017 Less: Borrowings due within one year 586 450 Long-term borrowings $ 4,201 $ 4,567 (1) The carrying value of the euro-denominated 1.875% notes due November 2026 fluctuates with changes in the euro to U.S. dollar 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. (2) Net proceeds from the bond issuance have been used to finance or refinance existing and future eligible green investment initiatives which contribute to Eastman's environmental sustainability strategy (a green bond). In 2025, the Company issued an additional $250 million aggregate principal amount of the 5.0% notes due August 2029 in a registered public offering (the ""2029 Notes""), which was originally issued in August 2024, resulting in an aggregate principal amount of $750 million. The net proceeds from the 2025 issuance we …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"SHARE-BASED COMPENSATION PLANS AND AWARDS 2021 Omnibus Stock Compensation Plan Eastman's 2021 Omnibus Stock Compensation Plan (""2021 Omnibus Plan"") was approved by stockholders at the May 6, 2021 Annual Meeting of Stockholders and shall remain in effect until its fifth anniversary. The 2021 Omnibus Plan authorizes the Compensation and Management Development Committee of the Board of Directors to grant awards, designate participants, determine the types and numbers of awards, determine the terms and conditions of awards and determine the form of award settlement. Under the 2021 Omnibus Plan, the aggregate number of shares reserved and available for issuance is 10 million, which consist of shares not previously authorized for issuance under any other plan. The number of shares covered by an award is counted against this share reserve as of the grant date of the award. Shares covered by full value awards (e.g., performance shares and restricted stock awards) are counted against the total number of shares available for issuance or delivery under the plan as 2.5 shares for every one share covered by the award. Any stock distributed pursuant to an award may consist of, in whole or in part, authorized and unissued stock, treasury stock, or stock purchased on the open market. Under the 2021 Omnibus Plan and previous plans, the forms of awards have included restricted stock and restricted stock units, stock options, stock appreciation rights (""SARs""), and performance shares. The …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

"GOODWILL AND OTHER INTANGIBLE ASSETS Below is a summary of the change in goodwill during 2025 and 2024. (Dollars in millions) Advanced Materials Additives & Functional Products Chemical Intermediates Other Total Balance at December 31, 2023 $ 1,330 $ 2,182 $ 124 $ 10 $ 3,646 Acquisition (1) 4 4 Currency translation and other adjustments (3) (10) (5) (18) Balance at December 31, 2024 $ 1,331 $ 2,172 $ 119 $ 10 $ 3,632 Currency translation and other adjustments 6 19 8 33 Balance at December 31, 2025 $ 1,337 $ 2,191 $ 127 $ 10 $ 3,665 (1) Measurement period adjustments related to prior year acquisition. The reported balance of goodwill included accumulated impairment losses of $106 million, $12 million, and $14 million in the Additives & Functional Products (""AFP"") segment, Chemical Intermediates (""CI"") segment, and other segments, respectively, at both December 31, 2025 and 2024. The carrying amounts of intangible assets follow: December 31, 2025 December 31, 2024 (Dollars in millions) Estimated Useful Life in Years Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Amortizable intangible assets: Customer relationships 10 - 25 $ 1,125 $ 691 $ 434 $ 1,141 $ 649 $ 492 Technology 10 - 20 529 399 130 519 378 141 Other 16 - 37 95 40 55 86 36 50 Indefinite-lived intangible assets: Tradenames 351 351 349 349 Total identified intangible assets $ 2,100 $ 1,130 $ 970 $ 2,095 $ 1,063 $ 1,032 Amorti …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

"INCOME TAXES Components of earnings before income taxes and the provision for U.S. and other income taxes from operations follow: For years ended December 31, (Dollars in millions) 2025 2024 2023 Earnings before income taxes United States $ (24) $ 147 $ 357 Outside the United States 592 931 730 Total $ 568 $ 1,078 $ 1,087 Provision for income taxes United States Federal Current $ (146) $ 36 $ 133 Deferred 77 (80) (39) Outside the United States Current 113 176 153 Deferred 8 41 (35) State Current (15) 10 7 Deferred 56 (13) (28) Total $ 93 $ 170 $ 191 The following represents the deferred tax (benefit) charge recorded as a component of ""Accumulated other comprehensive income (loss)"" (""AOCI"") in the Consolidated Statements of Financial Position: For years ended December 31, (Dollars in millions) 2025 2024 2023 Cumulative translation adjustment $ (43) $ 19 $ 11 Defined benefit pension and other postretirement benefit plans 48 (3) (6) Derivatives and hedging (10) 11 (9) Total $ (5) $ 27 $ (4) Total income tax expense (benefit) included in the consolidated financial statements was composed of the following: For years ended December 31, (Dollars in millions) 2025 2024 2023 Earnings before income taxes $ 93 $ 170 $ 191 Other comprehensive income (5) 27 (4) Total $ 88 $ 197 $ 187 Differences between the provision for income taxes and income taxes computed using the U.S. Federal statutory income tax rate follow: For years ended December 31, (Dollars in millions) 2025 2024 2023 $ % …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

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 position, results of operations, or cash flows.

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"Recently Adopted Accounting Standards Accounting Standards Update (""ASU"") 2023-05 Business Combination - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement : On January 1, 2025, Eastman adopted this update, which requires that a joint venture must initially measure all contributions received upon its formation at fair value, largely consistent with Topic 805, Business Combinations . The guidance is intended to reduce diversity in practice and provide users of joint venture financial statements with more decision-useful information. This ASU is applied prospectively for all newly formed joint venture entities with a formation date on or after January 1, 2025. The adoption did not have a material impact on the Company's financial statements and related disclosures. ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures : On January 1, 2025, Eastman adopted this update on a prospective basis, which modifies annual income tax disclosure requirements. The updated guidance mandates entities to provide more detailed information including specific categories in the income tax rate reconciliation, and the breakdown of income or loss from continuing operations before income tax expense or benefit, for both domestic and foreign. Additionally, entities must disclose income tax expense or benefit from continuing operations, categorized by federal, state, and foreign taxes. The guidance further requires disclosure of income tax payments …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

"SEGMENT AND REGIONAL SALES INFORMATION Eastman's products and operations are managed and reported in four operating segments: Advanced Materials (""AM""), Additives & Functional Products (""AFP""), Chemical Intermediates (""CI""), and Fibers. The economic factors that impact the nature, amount, timing, and uncertainty of revenue and cash flows vary among the Company's operating segments and the geographical regions in which they operate. ""Other"" includes sales and costs related to growth initiatives, including the cellulosics biopolymer and circular economy platforms, research and development (""R&D"") costs, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment and is not included in operating segment results. This operating segment structure is used by the Chief Operating Decision Maker (""CODM""), who has been determined to be the Chief Executive Officer, to make key operating decisions and assess performance of the Company. The CODM evaluates segment operating performance, and makes resource allocation and performance evaluation decisions, based on Adjusted EBIT, defined as the GAAP measure earnings before interest and taxes (""EBIT""), adjusted for non-core, unusual, or non-recurring items. These adjustments allow the CODM to evaluate segment operating performance excluding the effect of transactions, costs, and losses or gains that do not directly result from Eastman's normal, o …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"SIGNIFICANT ACCOUNTING POLICIES Financial Statement Presentation The consolidated financial statements of Eastman Chemical Company (""Eastman"" or the ""Company"") and subsidiaries are prepared in conformity with accounting principles generally accepted (""GAAP"") in the United States and of necessity include some amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates and judgments. The 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 in minority-owned companies 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. Recently Adopted Accounting Standards Accounting Standards Update (""ASU"") 2023-05 Business Combination - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement : On January 1, 2025, Eastman adopted this update, which requires that a joint venture must initially measure all contributions received upon its formation at fair value, largely consistent with Topic 805, Business Combinations . The guidance is intended to reduce diversity in p …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

"STOCKHOLDERS' EQUITY A reconciliation of the changes in stockholders' equity for 2025, 2024, and 2023 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, 2022 $ 2 $ 2,315 $ 8,973 $ (205) $ (5,932) $ 5,153 $ 83 $ 5,236 Net Earnings 894 894 2 896 Cash Dividends (1) (377) (377) (377) Other Comprehensive (Loss) (114) (114) (114) Share-Based Compensation Expense (2) 64 64 64 Stock Option Exercises 3 3 3 Other (3) (14) (1) (15) 2 (13) Share Repurchase (150) (150) (150) Distributions to noncontrolling interest (15) (15) Balance at December 31, 2023 $ 2 $ 2,368 $ 9,490 $ (319) $ (6,083) $ 5,458 $ 72 $ 5,530 Net Earnings 905 905 3 908 Cash Dividends (1) (382) (382) (382) Other Comprehensive Income 5 5 5 Share-Based Compensation Expense (2) 63 63 63 Stock Option Exercises 41 41 41 Other (3) (9) (2) (11) (1) (12) Share Repurchase (300) (300) (300) Distributions to noncontrolling interest (1) (1) Balance at December 31, 2024 $ 2 $ 2,463 $ 10,013 $ (314) $ (6,385) $ 5,779 $ 73 $ 5,852 Net Earnings 474 474 1 475 Cash Dividends (1) (382) (382) (382) Other Comprehensive Income 154 154 154 Share-Based Compensation Expense (2) 48 48 48 Stock Option Exercises 2 2 2 Other (3)(4) (13) (1) (14) 5 (9) Share Repurchase (100) (100) (100) Distributions to noncontrolling interest …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

"BORROWINGS June 30, December 31, (Dollars in millions) 2026 2025 Borrowings consisted of: 1.875% notes due November 2026 (1) $ 569 $ 586 7.6% debentures due February 2027 196 196 4.5% notes due December 2028 498 497 5.0% notes due August 2029 744 743 4.5% notes due February 2031 594 5.75% notes due March 2033 497 496 5.625% notes due February 2034 744 744 4.8% notes due September 2042 495 495 4.65% notes due October 2044 880 880 2027 Term Loan 150 Total borrowings 5,217 4,787 Less: Borrowings due within one year 765 586 Long-term borrowings $ 4,452 $ 4,201 (1) The carrying value of the euro-denominated 1.875% notes due November 2026 fluctuates with changes in the euro to U.S. dollar exchange rate. The carrying value of this euro-denominated borrowing has been designated as a non-derivative net investment hedge of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations. In first quarter 2026, the Company issued $600 million aggregate principal amount of 4.5% notes due February 2031 in a registered public offering (the ""2026 Notes""). Proceeds from the sale of the 2026 Notes, net of original issue discounts and issuance costs, were $594 million. All proceeds from the 2026 Notes are reported under financing activities on the Unaudited Consolidated Statements of Cash Flows. Credit Facility, Term Loans, and Commercial Paper Borrowings The Company has access to a $1.50 billion revolving credit agreeme …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"SHARE-BASED COMPENSATION AWARDS The Company utilizes share-based awards under employee and non-employee director compensation programs. Share-based awards include restricted and unrestricted stock, restricted stock units, stock options, stock appreciation rights, and performance share awards. In second quarter 2026 and 2025, $19 million and $2 million of compensation expense before tax was recognized in ""Selling, general and administrative expense"" in the Unaudited Consolidated Statements of Earnings and Comprehensive Income for all share-based awards. The related impact on net earnings for second quarter 2026 and 2025 was $15 million and $2 million net of deferred tax expense related to share-based award compensation for each period. In first six months 2026 and 2025, $46 million and $25 million of compensation expense before tax was recognized in ""Selling, general and administrative expense"" in the Unaudited Consolidated Statements of Earnings and Comprehensive Income for all share-based awards. The related impact on net earnings for first six months 2026 and 2025 was $35 million and $19 million net of deferred tax expense related to share-based award compensation for each period. For additional information regarding share-based compensation plans and awards, see Note 18, ""Share-Based Compensation Plans and Awards"", to the consolidated financial statements in Part II, Item 8 of the Company's 2025 Annual Report on Form 10-K ."

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INCOME TAXES Second Quarter First Six Months 2026 2025 2026 2025 (Dollars in millions) $ % $ % $ % $ % Provision for income taxes and tax rate $ 72 28 % $ 29 17 % $ 101 26 % $ 99 23 % Second quarter and first six months 2026 provision for income taxes included the impact of transitional provisions of the One Big Beautiful Bill Act primarily related to the deductibility of previously capitalized research and development expenditures. Second quarter and first six months 2025 provision for income taxes included an increase related to uncertain tax positions offset by a decrease related to the foreign rate variance due to the Company's mix of earnings. At June 30, 2026 and December 31, 2025, Eastman had $185 million and $183 million in unrecognized tax benefits.

IncomeTaxDisclosureTextBlock

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 primarily 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 position, results of operations, or cash flows.

LegalMattersAndContingenciesTextBlock

"Recently Adopted Accounting Standards Accounting Standards Update (""ASU"") 2025-05 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets: On January 1, 2026, Eastman adopted this update which addresses the application of Topic 326 to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers . The update provides a practical expedient permitting entities, when estimating expected credit losses for those balances, to assume that current conditions at the balance sheet date do not change over the remaining life of the asset. The Company elected the practical expedient upon adoption. The adoption did not have an impact on the Company's financial statements and related disclosures. Accounting Standards Issued But Not Adopted as of June 30, 2026 ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses: The Financial Accounting Standards Board (""FASB"") issued this update in November 2024, which requires public companies to provide additional disclosure of certain income statement expense line items. This guidance is intended to improve transparency around the nature of expenses and their impact on financial performance. The ASU is effective for fiscal periods beginning after December 15, 2026, and interim periods be …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

"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. Company funding is 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 for the year are determined. Components of net periodic benefit (credit) cost were as follows: Second Quarter Pension Plans Other Postretirement Benefit Plans 2026 2025 2026 2025 (Dollars in millions) U.S. Non-U.S. U.S. Non-U.S. Service cost $ 4 $ 2 $ 5 $ 2 $ $ Interest cost 15 7 18 6 2 6 Expected return on assets (22) (8) (23) (8) (1) (1) Amortization of: Prior service credit, net (9) Net periodic benefit (credit) cost $ (3) $ 1 $ $ $ (8) $ 5 First Six Months Pension Plans Other Postretirement Benefit Plans 2026 2025 2026 2025 (Dollars in millions) U.S. Non-U.S. U.S. Non-U.S. Service cost $ 8 $ 4 $ 9 $ 4 $ $ Interest cost 30 14 36 12 5 11 Expected return on assets (45) (16) (45) (15) (2) (2) Amortization of: Prior service credit, net (19) Net periodic benefit (credit) cost $ (7) $ 2 $ $ 1 $ (16) $ 9 For additional information regarding retirement plans, see Note 11, ""Retirement Plans"", to the consolidated financial statements in Part II, Item 8 of the Company's 2025 A …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

"SEGMENT INFORMATION Eastman's products and operations are managed and reported in four operating segments: Advanced Materials (""AM""), Additives & Functional Products (""AFP""), Chemical Intermediates (""CI""), and Fibers. The economic factors that impact the nature, amount, timing, and uncertainty of revenue and cash flows vary among the Company's operating segments and the geographical regions in which they operate. This operating segment structure is used by the Chief Operating Decision Maker (""CODM""), who has been determined to be the Chief Executive Officer, to make key operating decisions and assess performance of the Company. The CODM evaluates segment operating performance, and makes resource allocation and performance evaluation decisions, based on Adjusted EBIT, defined as the GAAP measure earnings before interest and taxes (""EBIT""), adjusted for non-core, unusual, or non-recurring items. These adjustments allow the CODM to evaluate segment operating performance 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. For disaggregation of revenue by major product lines and regions for each operating segment, see Note 20, ""Segment and Regional Sales Information"", to the consolidated financial statements in Part II, Item 8 of the Company's 2025 Annual Report on Form 10-K . For additional financial and pro …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

STOCKHOLDERS' EQUITY Reconciliations of the changes in stockholders' equity for second quarter and first six months 2026 and 2025 are provided below: (Dollars in millions, except per share amount) 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 March 31, 2026 $ 2 $ 2,520 $ 10,114 $ (141) $ (6,486) $ 6,009 $ 77 $ 6,086 Net Earnings 183 183 1 184 Cash Dividends Declared (1) ($0.84 per share) (96) (96) (96) Other Comprehensive Income (Loss) (19) (19) (19) Share-Based Compensation Expense (2) 19 19 19 Stock Option Exercises 1 1 1 Other (1) (1) 3 2 Distributions to Noncontrolling Interest (2) (2) Balance at June 30, 2026 $ 2 $ 2,539 $ 10,201 $ (160) $ (6,486) $ 6,096 $ 79 $ 6,175 (Dollars in millions, except per share amount) 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 March 31, 2025 $ 2 $ 2,476 $ 10,099 $ (321) $ (6,385) $ 5,871 $ 73 $ 5,944 Net Earnings 140 140 140 Cash Dividends Declared (1) ($0.83 per share) (96) (96) (96) Other Comprehensive Income (Loss) (32) (32) (32) Share-Based Compensation Expense (2) 2 2 2 Share Repurchases (50) (50) (50) Distributions to Noncontrolling Interest (2) (2) Balance at June 30, 2025 $ 2 $ 2,478 …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing