EASTMAN CHEMICAL CO - Annual Report: 2024 (Form 10-K)

The Company maintains cybersecurity policies, standards, and procedures, which include cyber incident response plans. These policies and procedures are continually refined to adapt to changes in regulations, identify potential and emerging security risks, and develop mitigation strategies and protocols for those risks. Regular exercises, tests, incident simulations, and system assessments are conducted to discover and address potential vulnerabilities, and improve decision-making, prioritization, monitoring, and reporting. The Company also engages external parties, such as consultants, independent assessors, computer security firms, and risk management and governance experts, to enhance its cybersecurity oversight and mitigate third-party risks.

Governance

, which consists of non-employee independent directors, receives updates from the Chief Information Officer ("CIO") on cybersecurity performance and recent industry trends at least quarterly. In addition to regular cybersecurity briefings from the Audit Committee, the Board also receives periodic, but at least annual, updates from management regarding cybersecurity, including prompt notice of cybersecurity threats or incidents that could materially impact the Company. The Board is informed about risk profile status, adversary assessments, training initiatives, cybersecurity projects, emerging global policies and regulations, cybersecurity technologies and best practices, cyber readiness, third-party assessments, mitigation efforts, and response plans.


INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Certain information about Eastman's executive officers is provided below:

Mark J. Costa, age 58, is Chair of the Eastman Chemical Company Board of Directors and Chief Executive Officer. Mr. Costa joined the Company in June 2006 as Chief Marketing Officer and leader of corporate strategy and business development; was appointed Executive Vice President, Specialty Plastics and Performance Polymers Head and Chief Marketing Officer in August 2008; was appointed Executive Vice President, Specialty Products and Chief Marketing Officer in May 2009; and became President and a member of the Board of Directors in May 2013. Prior to joining Eastman, Mr. Costa was a senior partner with Monitor Group, a global management consulting firm. He joined Monitor in 1988, and his experience included corporate and business unit strategies, asset portfolio strategies, innovation and marketing, and channel strategies across a wide range of industries. Mr. Costa was appointed Chief Executive Officer in January 2014 and named Board Chair effective July 2014. Mr. Costa also serves on the Board of Directors of International Flavors & Fragrances Inc.

William T. McLain, Jr., age 52, is Executive Vice President and Chief Financial Officer. Mr. McLain joined Eastman in 2000 and has served in high-level finance and accounting roles throughout the organization in the United States, Asia, and Europe. In 2011, Mr. McLain served as Director, Asia Pacific Finance, and in 2013 was appointed to International Controller. In 2014, Mr. McLain was appointed Corporate Controller until 2016 when he became Vice President of Finance. Prior to Eastman, Mr. McLain worked for the public accounting firm PricewaterhouseCoopers LLP. Mr. McLain was appointed to his current position effective February 2020.

Stephen G. Crawford, age 60, is Executive Vice President, Methanolysis Operations and Worldwide Engineering & Construction Transformation, with executive responsibility for overseeing methanolysis operations in Kingsport, and leading efforts to strengthen Eastman's engineering processes and disciplines and building capabilities for large projects. Mr. Crawford joined Eastman in 1984 and held leadership positions of increasing responsibility in both the manufacturing and technology organizations. From 2007 until January 2014 he served as Vice President of Global R&D in the AM and AFP segments. He was appointed Senior Vice President and Chief Technology Officer effective January 2014, Senior Vice President, Chief Technology and Sustainability Officer effective October 2019, and Executive Vice President, Manufacturing and Chief Sustainability Officer effective October 2022. Mr. Crawford was appointed to his current position effective January 2025.

Brad A. Lich, age 57, is Executive Vice President and Chief Commercial Officer, with responsibility for the AM segment, including the circular platform, as well as leadership of marketing, sales, supply chain, corporate strategy, and regional leadership. Mr. Lich joined Eastman in 2001 as Director of Global Product Management and Marketing for the Coatings business. Other positions of increasing responsibility followed, including General Manager of Emerging Markets of the former Coatings, Adhesives, Specialty Polymers, and Inks ("CASPI") segment. In 2006, Mr. Lich became Vice President of Global Marketing with direct responsibility for company-wide global marketing functions. In 2008, Mr. Lich was appointed Vice President and General Manager of the former CASPI segment, and in 2012 was appointed Vice President and General Manager of the AFP segment. In January 2014, Mr. Lich was appointed Executive Vice President, with responsibility for the AFP and AM segments and the marketing, sales, and pricing organizations. In March 2016, Mr. Lich assumed executive responsibility for outside-U.S. regional business leadership. Mr. Lich was appointed to his current position effective July 2016.

Travis Smith, age 51, is Executive Vice President, Additives & Functional Products, Manufacturing, WWE&C and HSE with responsibility for the global manufacturing and Worldwide Engineering and Construction ("WWE&C") in addition to leadership of the AFP segment and Health, Safety and Environment ("HSE"). Mr. Smith joined the Company in December 1992 as a chemical engineer and has held various positions of increasing responsibility within manufacturing, the chemicals business, corporate innovation, specialty plastics, and advance materials during his career at Eastman. Mr. Smith assumed the position of Vice President and General Manager, Performance Films in July 2012 and for both Performance Films and Advance Interlayers in April 2018, and was appointed Senior Vice President with responsibility for the AFP segment effective October 2022. Mr. Smith was appointed to his current position effective January 2025.

Iké Adeyemi, age 47, is Senior Vice President, Chief Legal Officer and Corporate Secretary. Ms. Adeyemi has leadership responsibility for Eastman's legal organization, which includes corporate governance, commercial law, litigation management and intellectual property, as well as responsibility for product stewardship and regulatory affairs, global business conduct, global trade compliance, and global public affairs. Before joining Eastman, Ms. Adeyemi served as vice president, corporate secretary, and associate general counsel of The Clorox Company. Prior to that, Ms. Adeyemi's work experience includes serving as the head of legal, corporate/M&A at BHP Billiton, and working at the law firms of Skadden, Arps, Slate, Meagher & Flom in the U.S. and White & Case LLP in London. Ms. Adeyemi was appointed to her current position effective September 2024.

Michelle H. Caveness, age 51, is Senior Vice President and Chief Manufacturing Officer overseeing global manufacturing and operations support. Ms. Caveness joined Eastman in 1996 and has held leadership roles of increasing responsibility in engineering, technology and manufacturing as well as on cross-functional business teams. Prior to her current role, she was vice president, Tennessee operations site leader and global operations support, leading one of the largest manufacturing sites in the United States and associated sites across the globe. Ms. Caveness was appointed to her current position effective January 2025.

Adrian J. Holt, age 55, is Senior Vice President and Chief Human Resources Officer. Mr. Holt is responsible for human resources strategy and services worldwide, which includes employee engagement, total rewards, learning and leadership development, and global talent acquisition and management. Mr. Holt joined Eastman in 2016 as Vice President, Global Talent Acquisition and HR Client Support, Americas and EMEA. Prior to Eastman, Mr. Holt served as Chief Human Resources Officer for WireCo World Group and as Vice President of Corporate Human Resources for BASF North America. Mr. Holt was appointed to his current position effective May 2023.

Christopher M. Killian, age 55, is Senior Vice President, Chief Technology Officer, and Sustainability Officer. Dr. Killian has responsibility for Eastman's global technology and innovation organization, and leadership of Eastman's sustainability strategy. Dr. Killian joined Eastman in 1996 as a research chemist. During his career at Eastman, he has held various leadership positions in technology and the business including Director, Tritan Growth Platform early in his career. Prior June 2021 Dr. Killian served as Vice President of Technology for the AFP, CI, and AM segments and was appointed Senior Vice President and Chief Technology Officer effective June 2021. Dr. Killian was appointed to his current position effective January 2025.

Julie A. McAlindon, age 57, is Senior Vice President, Regions and Chief Supply Chain Officer. Ms. McAlindon has responsibility for overseeing global supply chain, sourcing and procurement, and regional leadership outside of North America. Ms. McAlindon also leads the transformation of Eastman, building the capabilities and culture required to support Eastman's strategy. Prior to this role, Ms. McAlindon was Chief Procurement Officer and Vice President, Transformation. Ms. McAlindon joined Eastman in 2016. Before joining Eastman, Ms. McAlindon was with Avient Corporation as senior vice president, designed structures and solutions; and vice president of marketing. Prior to that, Ms. McAlindon's work experience includes a variety of leadership positions with The Dow Chemical Company. Ms. McAlindon was appointed to her current position effective June 2021.

Michelle R. Stewart, age 53, is Vice President, Chief Accounting Officer and Corporate Controller. Since joining Eastman in 1995, Ms. Stewart has served in a number of positions with increasing responsibility in the finance organization. Prior to joining Eastman, Ms. Stewart worked for the public accounting firm KPMG Peat Marwick. Ms. Stewart was appointed to her current position effective October 2021.

ITEM 2.PROPERTIES

At December 31, 2024, Eastman owned or operated 36 manufacturing facilities and had equity interests in three manufacturing joint ventures in a total of 12 countries. Utilization of these sites may vary with product mix and economic, seasonal, and other business conditions; however, none of the principal plants is substantially idle. The Company's plants, including approved expansions, generally have sufficient capacity for existing needs and expected near-term growth. These plants are generally well maintained, in good operating condition, and suitable and adequate for their use. Unless otherwise indicated, all properties are owned. Corporate headquarters are in Kingsport, Tennessee. The Company has major business offices in Shanghai, China; Rotterdam, the Netherlands; Singapore; and Zug, Switzerland.

The locations and general character of the Company's manufacturing facilities are:

Segment using manufacturing location

Location

Advanced Materials

Additives & Functional Products

Chemical Intermediates

Fibers

USA

Alvin, Texas (1)

Anniston, Alabama

Axton, Virginia

Chestertown, Maryland

Columbia, South Carolina (1)

Fieldale, Virginia

Kingsport, Tennessee

Linden, New Jersey

Longview, Texas

Martinsville, Virginia

Pace, Florida (2)

Springfield, Massachusetts

St. Gabriel, Louisiana

Sun Prairie, Wisconsin

Texas City, Texas (1)

Watertown, New York

Europe

Antwerp, Belgium (1)

Ghent, Belgium (3)

Kohtla-Järve, Estonia

Oulu, Finland (2)

Dresden, Germany

Leuna, Germany

Marl, Germany (2)

Avila, Spain

Newport, Wales

(1)Eastman maintains an operating agreement with a third party that operates Eastman's manufacturing assets at the site.

(2)Eastman leases from a third party and operates the site.

(3)Eastman has more than one manufacturing facility at this location.

Segment using manufacturing location

Location

Advanced Materials

Additives & Functional Products

Chemical Intermediates

Fibers

Asia Pacific

Dalian, China

Nanjing, China

Suzhou, China (1)(2)(3)

Wuhan, China (4)

Zibo, China (5)

Ulsan, Korea (6)

Kuantan, Malaysia (1)

Latin America

Mauá, Brazil

Santo Toribio, Mexico

(1)Eastman leases from a third party and operates the site.

(2)Eastman has more than one manufacturing facility at this location.

(3)Eastman holds a 60 percent share of Solutia Therminol Co., Ltd. Suzhou in the Additives and Functional Products segment.

(4)Eastman holds a 51 percent share of Eastman Specialties Wuhan Youji Chemical Co., Ltd.

(5)Eastman holds a 51 percent share of Qilu Eastman Specialty Chemical, Ltd.

(6)Eastman holds an 80 percent share of Eastman Fibers Korea Limited.

Eastman has 50 percent or less ownership in joint ventures that have manufacturing facilities at the following locations:

Segment using manufacturing location

Location

Advanced Materials

Additives & Functional Products

Chemical Intermediates

Fibers

USA

Kingsport, Tennessee

Asia Pacific

Hefei, China

Shenzhen, China

Eastman has distribution facilities at all of its plant sites. In addition, the Company owns or leases approximately 200 stand-alone distribution facilities in approximately 30 countries. The Company also maintains technical service centers around the world.

A summary of properties, classified by type, is included in Note 4, "Properties and Accumulated Depreciation", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

ITEM 3.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. Consistent with the requirements of Regulation S-K, Item 103, the Company's threshold for disclosing any environmental legal proceeding involving a governmental authority is potential monetary sanctions that management believes will meet or exceed $1 million.

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, which was acquired by Bayer AG in June 2018, 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 4.MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.MARKET FOR REGISTRANT'S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a)Eastman's common stock is traded on the New York Stock Exchange (the "NYSE") under the symbol "EMN".

As of December 31, 2024, there were 115,168,382 shares of Eastman's common stock issued and outstanding, which shares were held by 10,132 stockholders of record. These shares include 50,798 shares held by the Company's charitable foundation.

See "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters - Securities Authorized for Issuance Under Equity Compensation Plans" in Part III, Item 12 of this Annual Report for the information required by Item 201(d) of Regulation S-K.

(b)Not applicable.

In December 2021, the Company's Board of Directors authorized the repurchase of up to $2.5 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 interest of the Company and its stockholders (the "2021 authorization"). As of December 31, 2024, a total of 11,612,158 shares have been repurchased under the 2021 authorization for $1.1 billion. Both dividends and share repurchases are key strategies employed by the Company to return value to its stockholders.

During 2024, the Company repurchased 3,001,409 shares of common stock for $300 million.

For additional information, see Note 15, "Stockholders' Equity", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.


Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of the Publicly Announced Plan or Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plan or Program
October 1-31, 2024	—	$—	—	$1.515	billion
November 1-30, 2024	554,243	$102.39	554,243	$1.458	billion
December 1-31, 2024	428,892	$100.98	428,892	$1.415	billion
Total	983,135	$101.72	983,135

ITEM 6.RESERVED

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


			Page

Critical Accounting Estimates			34

Non-GAAP Financial Measures			37

Overview			42

Results of Operations			42

Summary by Operating Segment			46

Sales by Customer Location			49

Liquidity and Other Financial Information			50



Inflation			53

Recently Issued Accounting Standards			53

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is based upon the consolidated financial statements of Eastman Chemical Company ("Eastman" or the "Company"), which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), and should be read in conjunction with the Company's consolidated financial statements and related notes, included in Part II, Item 8 of this Annual Report on Form 10-K (this "Annual Report"). All references to earnings per share ("EPS") contained in this report are to diluted EPS unless otherwise noted. EBIT is the GAAP measure earnings before interest and taxes. For a discussion of the year ended December 31, 2023, compared to the year ended December 31, 2022, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of Eastman's Annual Report on Form 10-K for the year ended December 31, 2023.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, fair value of disposal groups, 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, 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 below are the most important to the fair presentation of the Company's financial condition and results. These estimates require management's most significant judgments in the preparation of the Company's consolidated financial statements.

Impairment of Long-Lived Assets

Definite-lived Assets

Properties and equipment and definite-lived intangible assets to be held and used by Eastman are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of properties and equipment and the review of definite-lived intangible assets is performed at the asset group level, which is the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If the carrying amount is not considered to be recoverable, an analysis of potential impairment is triggered. An impairment is recognized for the excess of the carrying amount of the asset over the estimated fair value. The Company's assumptions to estimate cash flows in the evaluation of impairment related to long-lived assets are subject to change and impairments may be required in the future resulting in a charge to earnings.

Goodwill

Goodwill is an asset determined as the residual of the purchase price over the fair value of identified assets and liabilities

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

An impairment is recognized when the reporting unit's estimated fair value is less than its carrying value. The Company elected to perform a qualitative impairment assessment of goodwill in 2024. The qualitative assessment identified three reporting units where a quantitative assessment was needed to confirm that goodwill was not impaired. For those reporting units, the Company used an income approach, specifically a discounted cash flow model, in testing the carrying value of goodwill for each reporting unit for impairment. Key assumptions and estimates used in the Company's 2024 goodwill impairment testing included projections of revenues and EBIT determined using the Company's annual multi-year strategic plan, the estimated weighted average cost of capital ("WACC"), and projected long-term growth rates. The Company believes these assumptions are consistent with those a hypothetical market participant would use given circumstances that were present at the time the estimates were made. However, actual results and amounts may be significantly different from the Company's estimates. In addition, the use of different estimates or assumptions could result in materially different estimated fair values of reporting units. The WACC is calculated incorporating weighted average returns on debt and equity from market participants. Therefore, changes in the market, which are beyond the control of the Company, may have an impact on future estimates of fair value.

The Company had $3.6 billion of goodwill as of December 31, 2024. As a result of the goodwill impairment testing performed during fourth quarter 2024, fair values were determined to exceed the carrying values for each reporting unit tested. Declines in market conditions or forecasted revenue and EBIT could result in a future impairment of goodwill.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Indefinite-lived Intangible Assets

Indefinite-lived intangible assets, consisting primarily of tradenames, are tested for potential impairment by comparing the estimated fair value to the carrying amount. The Company elected to perform a qualitative impairment assessment of indefinite-lived intangible assets in 2024. The qualitative assessment did not identify indicators of impairment, and it was determined that it is more likely than not the fair value of indefinite-lived intangible assets was greater than their carrying value. When a quantitative impairment assessment is performed, the Company uses an income approach, specifically the relief from royalty method, to test indefinite-lived intangible assets for potential impairment. The estimated fair value of tradenames is determined based on projections of revenue and an assumed royalty rate savings, discounted by the calculated market participant WACC plus a risk premium. The Company had $349 million in indefinite-lived intangible assets at December 31, 2024. There was no impairment of the Company's indefinite-lived intangible assets as a result of the tests performed during fourth quarter 2024. Declines in market conditions or forecasted revenue could result in a future impairment of indefinite-lived intangible assets.

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

For additional information related to impairment of long-lived assets, see Note 1, "Significant Accounting Policies", Note 4, "Properties and Accumulated Depreciation", Note 5, "Goodwill and Other Intangible Assets", and Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Environmental Costs

Eastman recognizes environmental remediation costs when it is probable that the Company has incurred a liability at a contaminated site and the amount can be reasonably estimated. When a single amount cannot be reasonably estimated but the cost can be estimated within a range, the Company recognizes the minimum undiscounted amount. This undiscounted amount reflects liabilities expected to be paid within approximately 30 years and the Company's assumptions about remediation requirements at the contaminated site, the nature of the remedy, the outcome of discussions with regulatory agencies and other potentially responsible parties at multi-party sites, and the number and financial viability of other potentially responsible parties. Changes in the estimates on which the accruals are based, unanticipated government enforcement action, or changes in health, safety, environmental, and chemical control regulations and testing requirements could result in higher or lower costs. Estimated future environmental expenditures for undiscounted remediation costs ranged from $252 million to $495 million with a best estimate or minimum of $252 million at December 31, 2024. The best estimate or minimum estimated future environmental expenditures are considered to be probable and reasonably estimable and include the amounts recognized at December 31, 2024.

For additional information, see Note 13, "Environmental Matters and Asset Retirement Obligations", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Pension and Other Postretirement Benefits

Eastman maintains defined benefit pension and other postretirement benefit plans that provide eligible employees with retirement benefits. The estimated amounts of the costs and obligations related to these benefits primarily reflect the Company's assumptions related to discount rates and expected return on plan assets. For the Company's U.S. and non-U.S. defined benefit pension plans, the Company assumed weighted average discount rates of 5.64 percent and 4.40 percent, respectively, and weighted average expected returns on plan assets of 7.50 percent and 5.01 percent, respectively, at December 31, 2024. The Company assumed a weighted average discount rate of 5.60 percent for its other postretirement benefit plans at December 31, 2024. The estimated cost of providing plan benefits also depends on demographic assumptions including retirements, mortality, turnover, and plan participation.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The projected benefit obligation as of December 31, 2024 and expense for 2025 are affected by year-end 2024 assumptions. The following table illustrates the sensitivity to changes in the Company's long-term assumptions in the assumed discount rate and expected return on plan assets for all pension and other postretirement benefit plans. The sensitivities below are specific to the time periods noted. They also may not be additive, so the impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities shown.

Change in
Assumption

Impact on

2025 Pre-tax

Benefits Expense

(Excludes mark-to-market impact)

for Pension Plans

Impact on December 31, 2024 Projected Benefit Obligation for Pension Plans

Impact on 2025 Pre-tax Benefits Expense (Excludes mark-to-market impact) for Other Postretirement Benefit Plans

Impact on December 31, 2024 Benefit Obligation for Other Postretirement Benefit Plans

U.S.

Non-U.S.

25 basis point
decrease in discount
rate

$-1 Million

$+28 Million

$+21 Million

$-1 Million

$+8 Million

25 basis point
increase in discount
rate

$+1 Million

$-27 Million

$-19 Million

$+1 Million

$-8 Million

25 basis point
decrease in expected return on plan assets

$+4 Million

No Impact

<+$0.5 Million

No Impact

25 basis point
increase in expected
return on plan assets

$-4 Million

No Impact

<-$0.5 Million

No Impact

The assumed discount rate and expected return on plan assets used to calculate the Company's pension and other postretirement benefit obligations are established each December 31. The assumed discount rate is based upon a portfolio of high-grade corporate bonds, which are used to develop a yield curve. This yield curve is applied to the expected cash flows of the pension and other postretirement benefit obligations. Because future health care benefits under the U.S. benefit plan have been fixed at a certain contribution amount, changes in the health care cost trend assumptions do not have a material impact on results of operations. The expected return on plan assets is based upon prior performance and the long-term expected returns in the markets in which the plans invest their funds, primarily in U.S. and non-U.S. fixed income securities, U.S. and non-U.S. public equity securities, private equity, and real estate. Moreover, the expected return on plan assets is a long-term assumption and on average is expected to approximate the actual return on plan assets. Actual returns will be subject to year-to-year variances and could vary materially from assumptions.

The Company calculates service and interest cost components of net periodic benefit costs for its significant defined benefit pension and other postretirement benefit plans by applying the specific spot rates along the yield curve to the plans' projected cash flows. This cost approach does not affect the measurement of the total benefit obligation or the annual net periodic benefit cost or credit of the plans because the change in the service and interest costs will be offset in the mark-to-market ("MTM") actuarial gain or loss. The MTM gain or loss, as described in the next paragraph, is typically recognized in the fourth quarter of each year or in any other quarters in which an interim remeasurement is triggered.

The Company uses fair value accounting for plan assets. If actual experience differs from actuarial assumptions, primarily discount rates and long-term assumptions for asset returns which were used in determining the current year expense, the difference is recognized as part of the MTM net gain or loss in fourth quarter each year, and any other quarter in which an interim remeasurement is triggered. See the calculation of the MTM pension and other post-retirement benefits (gain) loss table below in "NON-GAAP FINANCIAL MEASURES - Non-GAAP Financial Measures - Non-Core and Unusual Items Excluded from Earnings".

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

While changes in obligations do not correspond directly to cash funding requirements, it is an indication of the amount the Company will be required to contribute to the plans in future years. The amount and timing of such cash contributions is dependent upon interest rates, actual returns on plan assets, retirements, attrition rates of employees, and other factors.

For further information regarding pension and other postretirement benefit obligations, see Note 11, "Retirement Plans", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Income Taxes

Amounts of deferred tax assets and liabilities on Eastman's Consolidated Statements of Financial Position are based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. The ability to realize deferred tax assets is evaluated through the forecasting of taxable income, using historical and projected future operating results, the reversal of existing temporary differences, and the availability of tax planning opportunities. Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In the event that the actual outcome of future tax consequences differs from management estimates and assumptions, the resulting change to the provision for income taxes could have a material impact on the consolidated results of operations and statements of financial position. As of December 31, 2024, valuation allowances of $686 million have been provided against certain deferred tax assets.

The calculation of income tax liabilities involves uncertainties in the application of complex tax laws and regulations, which are subject to legal interpretation and management judgment. Eastman's income tax returns are regularly examined by federal, state and foreign tax authorities, and those audits may result in proposed adjustments which could result in additional income tax liabilities and income tax expense. Income tax expense could be materially impacted to the extent the Company prevails in a tax position, when the statute of limitations expires for a tax position for which there is an established liability for unrecognized tax benefits, or to the extent payments are required in excess of the established liability for unrecognized tax benefits.

For further information, see Note 8, "Income Taxes", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

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 below in this section and in "Overview", "Results of Operations", "Summary by Operating Segment", and "Liquidity and Other Financial Information - Cash Flows" in this MD&A.

Management discloses non-GAAP financial 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 financial 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 financial measure, but to consider such measures alongside the most directly comparable GAAP financial measure.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Company Use of Non-GAAP Financial Measures

Non-Core Items and any Unusual or Non-Recurring Items Excluded from Non-GAAP Earnings

In addition to evaluating Eastman's financial condition, results of operations, liquidity, and cash flows as reported in accordance with GAAP, management 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, changes in businesses and assets, and other events outside of the Company's core business operations, and have included asset impairments, restructuring, and other charges and gains, costs of and related to acquisitions, gains and losses from and costs related to dispositions, closures, or shutdowns of businesses or assets, financing transaction costs, environmental and other costs related to previously divested businesses or non-operational sites and product lines, and mark-to-market losses or gains for pension and other postretirement benefit plans.

•In 2023, the Company recognized unusual insurance proceeds, net of costs, from the previously reported January 31, 2022 operational incident at its Kingsport site as a result of a steam line failure (the "steam line incident"). Management considered the operational incident unusual because of the Company's operational and safety history and the magnitude of the unplanned disruption.

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, management believes it is appropriate to evaluate the financial measures prepared and calculated in accordance with both 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.

Non-GAAP Debt Measure

Eastman from time to time evaluates and discloses to investors and securities and credit analysts the non-GAAP debt measure "net debt", which management defines as total borrowings less cash and cash equivalents. Management believes this metric is useful to investors and securities and credit analysts to provide them with information similar to that used by management in evaluating the Company's overall financial position, liquidity, and leverage and because management believes investors, securities analysts, credit analysts and rating agencies, and lenders often use a similar measure to assess and compare companies' relative financial position and liquidity.

Non-GAAP Measures in this Annual Report

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

•Asset impairments, restructuring, and other charges, net;

•Cost of sales impact from restructuring activities;

•Mark-to-market pension and other postretirement benefit plans gains and losses resulting from the changes in discount rates and other actuarial assumptions and the difference between actual and expected returns on plan assets during the period;

•Environmental and other costs from previously divested or non-operational sites and product lines; and

•Net gain on divested business.

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

•Steam line incident (insurance proceeds) costs, net; and

•Income tax expense associated with a previously divested business.

As described above, the alternative non-GAAP measure of debt, "net debt", is also presented in this Annual Report.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Non-GAAP Financial Measures - Non-Core and Unusual Items Excluded from Earnings


(Dollars in millions)	2024		2023
Non-core items impacting EBIT:
Cost of sales impact from restructuring activities	$	7	$	23
Asset impairments, restructuring, and other charges, net	51		37
Mark-to-market pension and other postretirement benefits (gain) loss, net	(54)		53
Environmental and other costs	16		13
Net gain on divested business	—		(323)

Unusual item impacting EBIT:
Steam line incident (insurance proceeds) costs, net	—		(8)
Total non-core and unusual items impacting EBIT	20		(205)



Less: Items impacting provision for income taxes:
Tax effect for non-core and unusual items	1		(74)
Tax expense associated with previously divested business	(7)		—
Total items impacting provision for income taxes	(6)		(74)
Total items impacting net earnings attributable to Eastman	$	26	$	(131)

Below is the calculation of the "Other components of post-employment (benefit) cost, net" that are not included in the above non-core item "mark-to-market pension and other postretirement benefits loss (gain), net" and that are included in the non-GAAP results.


(Dollars in millions)	2024		2023
Other components of post-employment (benefit) cost, net	$	(72)	$	41
Service cost	30		30
Net periodic benefit (credit) cost	(42)		71
Less: Mark-to-market pension and other postretirement benefits (gain) loss, net	(54)		53
Components of post-employment (benefit) cost, net included in non-GAAP earnings measures	$	12	$	18

Below is the calculation of the MTM pension and other post-retirement benefits (gain) loss disclosed above.


(Dollars in millions)	2024					2023
Actual return and percentage of return on assets	$	81		4	%	$	140		7	%
Less: expected return on assets	128			6	%	114			6	%
Mark-to-market gain (loss) on assets	(47)					26
Actuarial (loss) gain (1)	101					(79)

Total mark-to-market (loss) gain	$	54				$	(53)
Global weighted-average assumed discount rate for year ended December 31:	5.33		%			4.87		%

(1)Actuarial (loss) gain resulted primarily from the change in discount rates from the prior year and changes in other actuarial assumptions.

For more detail about MTM pension and other postretirement benefit plans net gains and losses, including actual and expected return on plan assets and the components of the net gain or loss, see "Critical Accounting Estimates - Pension and Other Postretirement Benefits" above, and Note 11, "Retirement Plans", "Summary of Changes - Actuarial (gain) loss, Actual return on plan assets, and Reserve for third party contributions", and "Summary of Benefit Costs and Other Amounts Recognized in Other Comprehensive Income - Mark-to-market pension and other postretirement benefits (gain) loss, net" to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

•Gross profit,

•Other components of post-employment (benefit) cost, net,

•Other (income) charges, net,

•EBIT,

•Provision for income taxes,

•Net earnings attributable to Eastman,

•Diluted EPS, and

•Total borrowings.

Other Non-GAAP Financial Measures

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.

Alternative Non-GAAP Cash Flow Measures

In addition to the non-GAAP measures presented in this Annual Report and other periodic reports, management may occasionally evaluate and disclose to investors and securities analysts the non-GAAP measure cash provided by or used in 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 or used in 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 or used in operating activities because it believes it is an 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 and unusual activities and decisions of management that it does not consider 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, securities analysts, credit analysts and rating agencies, and lenders 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.

From time to time, Eastman may evaluate and disclose to investors and securities analysts an alternative non-GAAP measure of "free cash flow", which management defines as net cash provided by or used in operating activities less the amount of net capital expenditures (typically the GAAP measure additions to properties and equipment, net of government incentives). 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, and "free cash flow conversion", which management defines as annual free cash flow divided by adjusted net income. Management believes these metrics can be useful to investors and securities analysts in comparing cash flow generation with that of peer and other companies.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Alternative Non-GAAP Earnings Measures

From time to time, Eastman may also disclose to investors and securities analysts the non-GAAP earnings measures "Adjusted EBIT Margin", "Adjusted EBITDA", "Adjusted EBITDA Margin", "Return on Invested Capital" (or "ROIC"), and "Adjusted ROIC". Management defines Adjusted EBIT Margin as the GAAP measure EBIT 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 divided by the GAAP measure sales revenue in the Company's Consolidated Statement of Earnings, Comprehensive Income and Retained Earnings for the same periods. Adjusted EBITDA is EBITDA (net earnings 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. Adjusted EBITDA Margin is Adjusted EBITDA divided by the GAAP measure sales revenue in the Company's Consolidated Statement of Earnings, Comprehensive Income and Retained Earnings 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. Adjusted ROIC is ROIC adjusted to exclude from net earnings 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. Management believes that Adjusted EBIT Margin, Adjusted EBITDA, Adjusted EBITDA Margin, ROIC, and Adjusted 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 EBIT Margin, Adjusted EBITDA, Adjusted EBITDA Margin, ROIC, and Adjusted ROIC to compare the results, returns, and value of the Company with those of peer and other companies.

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: Advanced Materials ("AM"), Additives & Functional Products ("AFP"), 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. Molecular recycling technologies continue to be an area of investment focus for the Company and extends the level of differentiation afforded by its world class technology platforms. 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 conversion, functional films, coatings formulations, textiles, and personal and home care formulations. The Company engages the market by working directly with customers and downstream users, targeting attractive niche markets, and leveraging disruptive macro trends. 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 from operations.

Sales, EBIT, and EBIT excluding non-core and unusual items were as follows:


(Dollars in millions)	2024		2023
Sales	$	9,382	$	9,210
Earnings before interest and taxes	1,278		1,302
Earnings before interest and taxes excluding non-core and unusual items	1,298		1,097

Sales revenue increased in 2024 compared to 2023 due to higher sales volume partially offset by lower selling prices. Higher sales volume was primarily attributed to the end of customer inventory destocking in most end-markets and innovation-driven growth above end-market demand. Lower selling prices were primarily attributed to lower raw material and energy prices. EBIT excluding non-core and unusual items increased in 2024 compared to 2023 primarily due to higher sales volume, including higher capacity utilization, and lower raw material and energy costs, net of lower selling prices.

Further discussion of sales revenue and EBIT changes is presented in "Results of Operations" and "Summary by Operating Segment" in this MD&A.

Net earnings and EPS and adjusted net earnings and EPS were as follows:


	2024				2023
(Dollars in millions, except diluted EPS)	$		EPS		$		EPS
Net earnings attributable to Eastman	$	905	$	7.67	$	894	$	7.49
Total non-core and unusual items, net of tax	26		0.22		(131)		(1.09)
Net earnings attributable to Eastman excluding non-core and unusual items	$	931	$	7.89	$	763	$	6.40

The Company generated $1.3 billion and $1.4 billion of cash from operating activities in 2024 and 2023, respectively.

RESULTS OF OPERATIONS

Eastman's results of operations as presented in the Company's consolidated financial statements in Part II, Item 8 of this Annual Report are summarized and analyzed below.

Sales



(Dollars in millions)	2024		2023		Change
Sales	$	9,382	$	9,210	2	%
Volume / product mix effect					4	%
Price effect					(2)	%
Exchange rate effect					—	%

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Sales revenue increased as a result of increases in the AM, AFP, and Fibers segments, partially offset by a decrease in the CI segment. Further discussion by operating segments is presented in "Summary of Operating Segment" in this MD&A.

Gross Profit


(Dollars in millions)	2024		2023		Change
Gross profit	$	2,290	$	2,061	11	%
Costs of sales impact from restructuring activities	7		23
Steam line incident (insurance proceeds) costs, net	—		(8)


Gross profit excluding non-core and unusual items	$	2,297	$	2,076	11	%

Gross profit in 2024 included inventory adjustments related to the planned closure of a solvent-based resins production line at an advanced interlayers facility in North America. Gross profit in 2023 included insurance proceeds from the steam line incident, and accelerated depreciation resulting from the closure of an acetate yarn manufacturing facility in Europe.

Excluding these non-core and unusual items, gross profit increased as a result of increases in the AM, AFP, and Fibers segments, partially offset by a decrease in the CI segment. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.

Selling, General and Administrative Expenses



(Dollars in millions)	2024		2023		Change
Selling, general and administrative expenses	$	736	$	727	1	%

Selling, general and administrative ("SG&A") expense increased in 2024 compared to 2023 primarily as a result of higher variable compensation costs, partially offset by cost reduction initiatives.

Research and Development Expenses



(Dollars in millions)	2024		2023		Change
Research and development expenses	$	250	$	239	5	%

R&D expenses increased in 2024 compared to 2023 primarily due to strategic investment in innovation.

Asset Impairments. Restructuring, and Other Charges, Net


(Dollars in millions)	2024		2023





Asset impairments	5		—
























Severance charges	25		31










Site closure and other charges	21		6

Total	$	51	$	37

For detailed information regarding asset impairments, restructuring, and other charges, net see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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



(Dollars in millions)	2024		2023		Change
Other components of post-employment (benefit) cost, net	$	(72)	$	41	>100%
Mark-to-market pension and other postretirement benefit gain (loss), net	54		(53)
Other components of post-employment (benefit) cost, net excluding non-core item	$	(18)	$	(12)	50	%

For more information regarding "Other components of post-employment (benefit) cost, net" see Note 1, "Significant Accounting Policies", and Note 11, "Retirement Plans", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Other (Income) Charges, Net


(Dollars in millions)	2024		2023
Foreign exchange transaction losses (gains), net	$	11	$	11
(Income) loss from equity investments and other investment (gains) losses, net	—		(10)
Other, net	36		37
Other (income) charges, net	$	47	$	38
Environmental and other costs	(16)		(13)

Other (income) charges, net excluding non-core items	$	31	$	25

Other (income) charges, net in 2024 and 2023 included environmental and other costs related to previously divested businesses or non-operational sites and product lines. Excluding these non-core items, Other (income) charges, net increased in 2024 compared to 2023 primarily due to the absence of gains on investments in 2024. For more information regarding components of foreign exchange transaction losses, see Note 10, "Derivative and Non-Derivative Financial Instruments", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Earnings Before Interest and Taxes


(Dollars in millions)	2024		2023		Change
EBIT	$	1,278	$	1,302	(2)	%
Cost of sales impact from restructuring activities	7		23
Steam line incident (insurance proceeds) costs, net	—		(8)
Asset impairments, restructuring, and other charges, net	51		37
Mark-to-market pension and other postretirement benefit (gain) loss, net	(54)		53
Environmental and other costs	16		13

Net gain on divested business	—		(323)



EBIT excluding non-core and unusual items	$	1,298	$	1,097	18	%

For more information regarding items that impact EBIT, see "Overview", and items described above in "Results of Operations".

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net Interest Expense



(Dollars in millions)	2024		2023		Change
Gross interest expense	$	233	$	243
Less: Capitalized interest	17		18
Interest Expense	216		225
Less: Interest income	16		10
Net interest expense	$	200	$	215	(7)	%

Net interest expense decreased in 2024 compared to 2023 primarily as a result of lower average interest rates on outstanding debt and higher interest income.

Provision for Income Taxes


(Dollars in millions)	2024				2023
	$		%		$		%
Provision for income taxes and effective tax rate	$	170	16	%	$	191	18	%
Tax provision for non-core and unusual items (1)	1				(74)

Tax expense associated with previously divested business	(7)				—

Adjusted provision for income taxes and effective tax rate	$	164	15	%	$	117	13	%

(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.

Provision for income taxes and effective tax rate in 2024 included tax expense associated with previously divested business. The tax effect of non-core and unusual items were included in both 2024 and 2023. Excluding these items, adjusted provision for income taxes increased in 2024 compared to 2023 primarily as a result of the tax effect of increased adjusted earnings and the foreign rate variance due to the Company's mix of earnings, partially offset by a decrease in the reserves for tax contingencies.

For more information, see Note 8, "Income Taxes", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Net Earnings Attributable to Eastman and Diluted Earnings per Share


	2024				2023
(Dollars in millions, except per share amounts)	$		EPS		$		EPS
Net earnings and diluted earnings per share attributable to Eastman	$	905	$	7.67	$	894	$	7.49
Non-core items, net of tax: (1)
Cost of sales impact from restructuring activities	5		0.04		20		0.17
Asset impairments, restructuring, and other charges, net	41		0.36		32		0.26
Mark-to-market pension and other postretirement benefit (gain) loss, net	(40)		(0.34)		39		0.33

Environmental and other costs	13		0.10		9		0.08
Net gain on divested business	—		—		(225)		(1.88)



Unusual items, net of tax: (1)
Steam line incident (insurance proceeds) costs, net	—		—		(6)		(0.05)
Tax expense associated with previously divested business	7		0.06		—		—

Adjusted net earnings and diluted earnings per share attributable to Eastman	$	931	$	7.89	$	763	$	6.40

(1)The 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.

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: Advanced Materials ("AM"), Additives & Functional Products ("AFP"), Chemical Intermediates ("CI"), and Fibers. For additional financial and product information for each operating segment, see "Business - Business Segments" in Part I, Item 1 of this Annual Report and Note 20, "Segment and Regional Sales Information", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.


Advanced Materials Segment


					Change
(Dollars in millions)	2024		2023		$		%

Sales	$	3,050	$	2,932	$	118	4	%

Volume / product mix effect					227		8	%
Price effect					(103)		(4)	%
Exchange rate effect					(6)		—	%

Earnings before interest and taxes	$	442	$	343	$	99	29	%
Cost of sales impact from restructuring activities	4		—		4
Asset impairments, restructuring, and other charges, net	18		—		18


Earnings before interest and taxes excluding non-core item	464		343		121		35	%

EBIT in 2024 included asset impairments, restructuring, and other charges, net, and inventory adjustments, related to the planned closure of a solvent-based resins production line. For more information regarding asset impairments, restructuring, and other charges, net, see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding these non-core items, EBIT increased in 2024 compared to 2023 primarily due to $162 million of higher sales volume, including improved capacity utilization, partially offset by $38 million of higher manufacturing costs associated with Kingsport methanolysis and continued investment in growth.

Initiatives

In 2024, the AM segment:

•achieved key milestones within the Circular Economy platform (see "Corporate Overview - Business Strategy - Sustainability and Circular Economy - Circularity" in Part I, Item 1 of this Annual Report);

•continued adoption of polyester renewal technology for products, including Tritan™ Renew, Cristal™ Renew, and Cristal™ One Renew across several end-markets, including cosmetic packaging, eyewear, and power tools;

•continued to expand portfolio of differentiated post-applied window films and protective films for automotive and architectural applications, including LLumar™ Protective Wrap Film which integrates the look of car wraps with the resilience of paint protection film, helping elevate vehicle protection; and

•launched Saflex™ LiteCarbon Clear, a premium polyvinyl butyral interlayer that reduces the embodied carbon of laminated glass elements while maintaining the construction of safe buildings, and Saflex Evoca™, a new platform designed to upgrade the glazing potential in electric vehicles that offers acoustic, solar or color options to assist in electric vehicle design.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Additives & Functional Products Segment


					Change
(Dollars in millions)	2024		2023		$		%

Sales	$	2,862	$	2,834	$	28	1	%

Volume / product mix effect					115		4	%
Price effect					(89)		(3)	%
Exchange rate effect					2		—	%

Earnings before interest and taxes	$	487	$	436	$	51	12	%
Cost of sales impact from restructuring activities	3		—		3
Earnings before interest and taxes excluding non-core item	490		436		54		12	%

Sales revenue increased in 2024 compared to 2023 primarily due to higher sales volume, mostly offset by lower selling prices. Higher sales volume was primarily attributed to the end of destocking in the agriculture end-market and growth in certain end-markets, including personal care, aviation, and water treatment. Lower selling prices were primarily attributable to lower raw material prices.

EBIT in 2024 included inventory adjustments related to the planned closure of a solvent-based resins production line. For more information see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding this non-core item, EBIT increased in 2024 compared to 2023 primarily due to $32 million lower raw material and energy costs and distribution costs, net of lower selling prices and $25 million higher sales volume.

Initiatives

In 2024, the AFP segment:

•launched electronic grade isopropyl alcohol ("IPA"), the latest addition to the EastaPure™ electronic chemicals line, that offers U.S. semiconductor manufacturers a domestically made solvent as reliable in quality as it is in supply;

•introduced Eastman Esmeri™, a biodegradable cellulosic biopolymer non-persistence personal care ingredient delivering consumer expectations with enhanced performance and ecofriendly benefits;

•introduced Solus™, a biodegradable paper coating additive that enhances the end of life of packaging in food service, by co-creating a flexible, food-safe packaging solution with a specialty papers producer; and

•invested in manufacturing capabilities in Europe, Middle East, and Africa and Asia Pacific regions to support market growth for pharmaceutical applications and wastewater treatment market growth, respectively.


Chemical Intermediates Segment


					Change
(Dollars in millions)	2024		2023		$		%

Sales	$	2,134	$	2,143	$	(9)	—	%

Volume / product mix effect					53		3	%
Price effect					(63)		(3)	%
Exchange rate effect					1		—	%

Earnings before interest and taxes	$	101	$	434	$	(333)	(77)	%


Net gain on divested business	—		(323)		323
Earnings before interest and taxes excluding non-core items	101		111		(10)		(9)	%

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Sales revenue was relatively unchanged in 2024 compared to 2023 primarily due to lower selling prices being mostly offset by higher sales volume. Lower selling prices were driven by changes in raw material and energy prices. Higher sales volume was primarily attributed to the end of customer inventory destocking across most end-markets.

EBIT in 2023 included a gain on a divested business. For more information regarding the divested business, see Note 2, "Divestitures", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding this non-core item, EBIT decreased in 2024 compared to 2023 primarily due to $46 million lower selling prices and higher raw material costs, net of lower energy costs partially offset by $28 million lower manufacturing and operating costs, and $4 million higher sales volume.

In 2023, the Company completed the sale of its operations located in Texas City, Texas, excluding its plasticizer operations. The total estimated consideration, after post-closing adjustments, was $498 million, which included approximately $415 million in cash at closing, $38.5 million received in 2024, and an additional $38.5 million to be received on the second anniversary of the closing date of the transaction. The final purchase price is subject to working capital and other adjustments post-closing.


Fibers Segment


(Dollars in millions)					Change
	2024		2023		$		%

Sales	$	1,318	$	1,295	$	23	2	%
Volume / product mix effect					(6)		—	%
Price effect					30		2	%
Exchange rate effect					(1)		—	%

Earnings before interest and taxes	$	454	$	393	$	61	16	%
Cost of sales impact from restructuring activities	—		23		(23)
Asset impairments, restructuring, and other charges, net	—		6		(6)


Earnings before interest and taxes excluding non-core items	454		422		32		8	%

Sales revenue increased in 2024 compared to 2023 primarily due to higher selling prices in the acetate tow product line. Higher sales volume for textiles, attributed to strong growth in Naia™, was offset by a modest decline in acetate tow.

EBIT in 2023 included accelerated depreciation and asset impairments, restructuring, and other charges, net, from a manufacturing facility closure. For more information regarding asset impairments, restructuring, and other charges, net, see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding this non-core item, EBIT increased in 2024 compared to 2023 primarily due to $48 million higher selling prices, net of lower raw material and energy costs, partially offset by $15 million lower sales volume.

Initiatives

In 2024, the Fibers segment:

•continued to benefit from and execute multi-year raw material and energy cost pass-through contracts across the acetate tow customer base;

•commercialized Naia™ Renew Enhanced Sustainability, an offering sourced from 60 percent recycled content with a global fashion brand known for its sustainability focus; and

•reached over 70 signed trademark licensing agreements with high profile brands ranging from major multinational fashion brands to sustainable champions in outdoor clothing.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Other
(Dollars in millions)	2024		2023
Sales	$	18	$	6

Loss before interest and taxes
Growth initiatives and businesses not allocated to operating segments	$	(208)	$	(198)
Steam line incident insurance proceeds (costs), net	—		8
Asset impairments, restructuring, and other charges, net	(33)		(31)
Pension and other postretirement benefit plans income (expense), net not allocated to operating segments	62		(68)
Other income (charges), net not allocated to operating segments	(27)		(15)
Loss before interest and taxes	$	(206)	$	(304)
Steam line incident (insurance proceeds) costs, net	—		(8)
Asset impairments, restructuring, and other charges, net	33		31
Mark-to-market pension and other postretirement benefits (gain) loss, net	(54)		53
Environmental and other costs	16		13
Loss before interest and taxes excluding non-core and unusual items	(211)		(215)

Sales and costs related to growth initiatives, including the cellulosics biopolymer platform and circular economy, R&D costs, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are included in "Other".

EBIT in 2024 included growth and profitability improvement initiatives, severance charges as part of corporate cost reduction initiatives, and environmental and other costs from previously divested or non-operational sites. EBIT excluding non-core items in 2023 included corporate cost reduction initiatives, insurance proceeds from the steam line incident, and environmental and other costs from previously divested or non-operational sites. For more information regarding Non-GAAP items, see "Non-GAAP Financial Measures" in this MD&A. For more information regarding asset impairments, restructuring, and other charges, net, see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

SALES BY CUSTOMER LOCATION


	Sales Revenue

					Change
(Dollars in millions)	2024		2023		$		%
United States and Canada	$	3,937	$	3,938	$	(1)	—	%
Europe, Middle East, and Africa	2,571		2,558		13		1	%
Asia Pacific	2,363		2,227		136		6	%
Latin America	511		487		24		5	%
Total	$	9,382	$	9,210	$	172	2	%

Sales revenue increased 2 percent primarily due to higher sales revenue in the Asia Pacific region. Sales revenue increased in the Asia Pacific region due to higher sales volume partially offset by lower selling prices, primarily within the AM segment.

See Note 20, "Segment and Regional Sales Information", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report for segment sales revenues by customer location.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND OTHER FINANCIAL INFORMATION

Cash Flows

The Company had cash and cash equivalents as follows:


(Dollars in millions)	December 31,
	2024		2023
Cash and cash equivalents	$	837	$	548

Cash flows from operations, cash and cash equivalents, and other sources of liquidity are expected to be available and sufficient to meet known short and long-term 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 Part I, Item 1A of this Annual Report. Management believes maintaining a financial profile that supports a solid investment grade credit rating is important to its long-term strategy and financial flexibility.


	For years ended December 31,
(Dollars in millions)	2024		2023
Net cash provided by (used in):
Operating activities	$	1,287	$	1,374
Investing activities	(534)		(432)
Financing activities	(454)		(888)
Effect of exchange rate changes on cash and cash equivalents	(10)		1
Net change in cash and cash equivalents	289		55
Cash and cash equivalents at beginning of period	548		493
Cash and cash equivalents at end of period	$	837	$	548

4,298

(1)Includes non-cash decrease of $32 million in 2024 and non-cash increase of $20 million in 2023 resulting from foreign currency exchange rates.

Capital Expenditures

Capital expenditures were $599 million and $828 million in 2024 and 2023, respectively. Capital expenditures in 2024 were primarily for the methanolysis plastic-to-plastic molecular recycling manufacturing facilities, other targeted growth initiatives, and site modernization projects.

The Company expects that 2025 capital spending will be between $700 million and $800 million, primarily for targeted growth initiatives, including the AM segment methanolysis plastic-to-plastic molecular recycling manufacturing facilities, and site modernization projects.

The Company had capital expenditures related to environmental protection and improvement of approximately $70 million and $65 million in 2024 and 2023, respectively. The Company does not currently expect near term environmental capital expenditures arising from requirements of environmental laws and regulations to materially impact the Company's planned level of annual capital expenditures for environmental control facilities.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Dividends and Stock Repurchases

During 2024, the Company repurchased 3,001,409 shares of common stock for $300 million. During 2023, the Company repurchased 1,866,866 shares of common stock for $150 million.

The Board of Directors has declared a cash dividend of $0.83 per share during the first quarter of 2025, payable on April 7, 2025 to stockholders of record on March 14, 2025. Both dividends and share repurchases are key strategies employed by the Company to return value to its stockholders.

INFLATION

In recent years, Eastman has experienced significant volatility attributed to inflation, deflation, and other factors. The cost of raw materials is generally based on market prices, although derivative instruments are utilized, as appropriate, to mitigate short-term market price fluctuations. Management expects the volatility of raw material and energy prices and costs to continue and the Company will continue to pursue pricing and hedging strategies and ongoing cost control initiatives to offset the effects. For additional information, see "Risk Factors" in Part I, Item 1A, "Summary by Operating Segments" in this MD&A, and Note 10, "Derivative and Non-Derivative Financial Instruments", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

RECENTLY ISSUED ACCOUNTING STANDARDS

For information regarding the impact of recently issued accounting standards, see Note 1, "Significant Accounting Policies", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Eastman has exposure to various market risks principally due to changes in foreign currency exchange rates, the pricing of various commodities, and interest rates. In an effort to manage these risks, the Company employs various strategies, including pricing, inventory management, and hedging. The Company enters into derivative contracts which are governed by policies, procedures, and internal processes set forth by its Board of Directors.

The Company determines its exposures to market risk by utilizing sensitivity analyses, which measure the potential losses in fair value resulting from one or more selected hypothetical changes in foreign currency exchange rates, commodity prices, or interest rates.

Foreign Currency Risk

Due to a portion of the Company's operating cash flows and borrowings being denominated in foreign currencies, the Company is exposed to market risk from changes in foreign currency exchange rates. The Company continually evaluates its foreign currency exposure based on current market conditions and the locations in which the Company conducts business. The Company manages most foreign currency exposures on a consolidated basis, which allows the Company to net certain exposures and take advantage of natural offsets. To mitigate foreign currency risk, from time to time, the Company enters into derivative instruments to hedge the cash flows related to certain sales and purchase transactions expected within a rolling three year period and denominated in foreign currencies, and enters into forward exchange contracts to hedge certain firm commitments denominated in foreign currencies. The gains and losses on these contracts offset changes in the value of related exposures. Additionally, the Company, from time to time, enters into non-derivative and derivative instruments to hedge the foreign currency exposure of the net investment in certain foreign operations. The foreign currency change in the designated investment values of the foreign subsidiaries will generally be offset by a foreign currency change in the carrying value of the euro-denominated borrowings. It is the Company's policy to enter into foreign currency derivative and non-derivative instruments only to the extent considered necessary to meet its objectives as stated above. The Company does not enter into foreign currency derivative financial instruments for speculative purposes.

At December 31, 2024, the market risk associated with certain cash flows under these derivative transactions assuming a 10 percent adverse move in the U.S. dollar relative to these foreign currencies was $43 million, with an additional $4 million exposure for each additional one percentage point adverse change in those foreign currency rates. Since the Company utilizes currency-sensitive derivative instruments for hedging anticipated foreign currency transactions, a loss in fair value from those instruments is generally offset by an increase in the value of the underlying anticipated transactions.

At December 31, 2024, a 10 percent fluctuation in the euro and Japanese yen currency rates would have had an impact of $212 million and $5 million, respectively, on the designated net investment values in the foreign subsidiaries. As a result of the designation of the euro-denominated borrowings and designated cross-currency interest rate swaps as hedges of the net investments, foreign currency translation gains and losses on the borrowings and designated cross-currency interest rate swaps are recorded as a component of the "Change in cumulative translation adjustment" within "Other comprehensive income (loss), net of tax" in the Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in Part II, Item 8 of this Annual Report. Therefore, a foreign currency change in the designated investment values of the foreign subsidiaries will generally be offset by a foreign currency change in the carrying value of the euro-denominated borrowings or the foreign currency change in the designated cross-currency interest rate swaps.

Commodity Risk

The Company is exposed to fluctuations in market prices for certain of its raw materials and energy, as well as contract sales of certain commodity products. To mitigate short-term fluctuations in market prices for certain commodities, principally propane, ethane, natural gas, paraxylene, ethylene, and benzene, as well as selling prices for ethylene, the Company enters into derivative transactions, from time to time, to hedge the cash flows related to certain sales and purchase transactions expected within a rolling three year period. At December 31, 2024, the market risk associated with these derivative contracts, assuming an instantaneous parallel shift in the underlying commodity price of 10 percent and no corresponding change in the selling price of finished goods, was $4 million, with an additional $400 thousand of exposure at December 31, 2024 for each one percentage point move in closing price thereafter.

Interest Rate Risk

Eastman is exposed to interest rate risk primarily as a result of its borrowing and investing activities, which include long-term borrowings used to maintain liquidity and to fund its business operations and capital requirements. The nature and amount of the Company's long-term and short-term debt may vary from time to time as a result of business requirements, market conditions, and other factors. The Company manages global interest rate exposure as part of regular operational and financing strategies. The Company had $250 million variable interest rate borrowings at December 31, 2024. Eastman may also enter into interest rate swaps, collars, or similar instruments with the objective of reducing interest rate volatility relating to the Company's borrowing costs. As of December 31, 2024, the Company did not have outstanding interest rate swaps.

For purposes of calculating the market risks associated with interest-rate-sensitive instruments, the Company uses a hypothetical 10 percent increase in interest rates. The corresponding market risk was $1 million as of December 31, 2024.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


ITEM			Page
Management's Responsibility for Financial Statements			57

Report of Independent Registered Public Accounting Firm (PCAOB ID )			58

Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings			60

Consolidated Statements of Financial Position			61

Consolidated Statements of Cash Flows			62

Notes to the Audited Consolidated Financial Statements
Note 1. Significant Accounting Policies			63
Note 2. Divestitures			70
Note 3. Inventories			71
Note 4. Properties and Accumulated Depreciation			72
Note 5. Goodwill and Other Intangible Assets			72
Note 6. Equity Investments			73
Note 7. Payables and Other Current Liabilities			73
Note 8. Income Taxes			74
Note 9. Borrowings			78
Note 10. Derivative and Non-Derivative Financial Instruments			79
Note 11. Retirement Plans			86
Note 12. Leases and Other Commitments			93
Note 13. Environmental Matters and Asset Retirement Obligations			95
Note 14. Legal Matters			97
Note 15. Stockholders' Equity			98
Note 16. Asset Impairments , Restructuring , and Other Charges, Net			101
Note 17. Other (Income) Charges, Net			102
Note 18. Share-Based Compensation Plans and Awards			103
Note 19. Supplemental Cash Flow Information			105
Note 20. Segment and Regional Sales Information			106
Note 21. Reserve Rollforwards			113

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

Management is responsible for the preparation and integrity of the accompanying consolidated financial statements of Eastman Chemical Company ("Eastman" or the "Company"). Eastman has prepared these consolidated financial statements in accordance with accounting principles generally accepted in the United States, and the statements of necessity include some amounts that are based on management's best estimates and judgments.

Eastman's accounting systems include extensive internal controls designed to provide reasonable assurance of the reliability of its financial records and the proper safeguarding and use of its assets. Such controls are based on established policies and procedures, are implemented by trained, skilled personnel with an appropriate segregation of duties, and are monitored through a comprehensive internal audit program. The Company's policies and procedures prescribe that the Company and all employees are to maintain the highest ethical standards and that its business practices throughout the world are to be conducted in a manner that is above reproach.

The accompanying consolidated financial statements have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, who were responsible for conducting their audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Their report is included herein.

The Board of Directors exercises its responsibility for these financial statements through its Audit Committee, which consists entirely of non-management Board members. PricewaterhouseCoopers LLP and the Company's internal auditors have full and free access to the Audit Committee. The Audit Committee meets periodically with PricewaterhouseCoopers LLP and Eastman's Director of Corporate Audit Services, both privately and with management present, to discuss accounting, auditing, policies and procedures, internal controls, and financial reporting matters.


/s/ Mark J. Costa						/s/ William T. McLain, Jr.
Mark J. Costa						William T. McLain, Jr.
Chief Executive Officer						Executive Vice President and
						Chief Financial Officer
February 14, 2025						February 14, 2025

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Eastman Chemical Company

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of Eastman Chemical Company and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of earnings, comprehensive income, and retained earnings and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Annual Goodwill Impairment Assessments - Certain Reporting Units in the Additives & Functional Products and Advanced Materials Segments

As described in Notes 1 and 5 to the consolidated financial statements, the Company's consolidated goodwill balance was $ million as of December 31, 2024, and the goodwill associated with the Additives & Functional Products and Advanced Materials segments were $ million and $ million, respectively, of which a portion relates to certain reporting units in those segments. Management conducts testing of goodwill for impairment annually in the fourth quarter or more frequently when events and circumstances indicate an impairment may have occurred. Management uses an income approach, specifically a discounted cash flow model, when a quantitative analysis is used in testing the carrying value of goodwill of a reporting unit for impairment. As disclosed by management, key assumptions and estimates used in the Company's goodwill impairment testing included projections of revenues and earnings before interest and taxes (EBIT), the estimated weighted average cost of capital (WACC) and projected long-term growth rates.

The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessments for certain reporting units in the Additives & Functional Products and Advanced Materials segments is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's significant assumptions related to projections of revenues and EBIT, the estimated WACC, and projected long-term growth rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's goodwill impairment assessments, including controls over the valuation of certain reporting units in the Additives & Functional Products and Advanced Materials segments. These procedures also included, among others (i) testing management's process for developing the fair value estimate of certain reporting units in the Additives & Functional Products and Advanced Materials segments; (ii) evaluating the appropriateness of the discounted cash flow models used by management; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow models; and (iv) evaluating the reasonableness of the significant assumptions used by management related to projections of revenues and EBIT, the estimated WACC, and projected long-term growth rates. Evaluating management's assumptions related to projections of revenues and EBIT and projected long-term growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow models and (ii) the reasonableness of the estimated WACC assumptions.

/s/

February 14, 2025

We have served as the Company's auditor since 1993.

CONSOLIDATED STATEMENTS OF EARNINGS,

COMPREHENSIVE INCOME AND RETAINED EARNINGS


	For years ended December 31,
(Dollars in millions, except per share amounts)	2024	2023	2022
Sales	$	$	$
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development expenses
Asset impairments, restructuring, and other charges, net
Other components of post-employment (benefit) cost, net	()		()
Other (income) charges, net			()
Net (gain) loss on divested businesses	—	()
Earnings before interest and taxes
Net interest expense

Earnings before income taxes
Provision for income taxes
Net earnings
Less: Net earnings attributable to noncontrolling interest
Net earnings attributable to Eastman	$	$	$

Basic earnings per share attributable to Eastman	$	$	$
Diluted earnings per share attributable to Eastman	$	$	$

Comprehensive Income

Net earnings including noncontrolling interest

Other comprehensive income (loss), net of tax:

Change in cumulative translation adjustment

()

Defined benefit pension and other postretirement benefit plans:

Amortization of unrecognized prior service credits included in net periodic costs

()

Derivatives and hedging:

Unrealized gain (loss) during period

()

Reclassification adjustment for (gains) losses included in net income, net

()

Total other comprehensive income (loss), net of tax

()

Comprehensive income including noncontrolling interest

Less: Comprehensive income attributable to noncontrolling interest

Comprehensive income attributable to Eastman

Retained Earnings

Retained earnings at beginning of period

Net earnings attributable to Eastman

Cash dividends declared

()

Retained earnings at end of period

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

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


	December 31,	December 31,
(Dollars in millions, except per share amounts)	2024	2023
Assets
Current assets
Cash and cash equivalents	$	$
Trade receivables, net of allowance for credit losses
Miscellaneous receivables
Inventories
Other current assets

Total current assets
Properties
Properties and equipment at cost
Less: Accumulated depreciation
Net properties
Goodwill
Intangible assets, net of accumulated amortization
Other noncurrent assets
Total assets	$	$
Liabilities and Stockholders' Equity
Current liabilities
Payables and other current liabilities	$	$
Borrowings due within one year

Total current liabilities
Long-term borrowings
Deferred income tax liabilities
Post-employment obligations
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 12)
Stockholders' equity
Common stock ($ par value per share – shares authorized; shares issued – and on December 31, 2024 and 2023, respectively)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss	()	()

Less: Treasury stock at cost ( and shares on December 31, 2024 and 2023, respectively)
Total Eastman stockholders' equity
Noncontrolling interest
Total equity
Total liabilities and stockholders' equity	$	$

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

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For years ended December 31,
(Dollars in millions)	2024	2023	2022
Operating activities
Net earnings	$	$	$
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
Mark-to-market pension and other postretirement benefit plans (gain) loss, net	()
Asset impairment charges

(Gain) loss on sale of assets		()

(Gain) loss on divested businesses		()
Benefit from deferred income taxes	()	()	()
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables
(Increase) decrease in inventories	()		()
Increase (decrease) in trade payables		()
Pension and other postretirement contributions (in excess of) less than expenses	()	()	()
Variable compensation payments (in excess of) less than expenses			()
Other items, net
Net cash provided by operating activities
Investing activities
Additions to properties and equipment	()	()	()
Government incentives

Proceeds from sale of businesses
Acquisitions, net of cash acquired		()	()


Other items, net
Net cash (used in) provided by investing activities	()	()
Financing activities
Net increase (decrease) in commercial paper and other borrowings		()
Proceeds from borrowings
Repayment of borrowings	()	()	()
Dividends paid to stockholders	()	()	()
Treasury stock purchases	()	()	()

Other items, net		()	()
Net cash used in financing activities	()	()	()
Effect of exchange rate changes on cash and cash equivalents	()		()
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period	$	$	$

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

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS

million and $ million as of December 31, 2024 and 2023, respectively, and are included as a part of "Payables and other current liabilities" and "Other long-term liabilities" in the Consolidated Statements of Financial Position. Contract assets were $ million and $ million as of December 31, 2024 and 2023, respectively, and are included as a component of "Miscellaneous receivables" in the Consolidated Statements of Financial Position.


Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options (a)		Weighted-Average Exercise Price of Outstanding Options (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities reflected in Column (a)) (c)
Equity compensation plans approved by stockholders	3,468,800	(1)	$	89	5,008,575	(2)
Equity compensation plans not approved by stockholders	—		—		—
TOTAL	3,468,800		$	89	5,008,575


Exhibit Number						EXHIBIT INDEX
						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 3.2 to the Company's Current Report on Form 8-K dated December 1, 2022)
4.01						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)
4.02						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)
4.03						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)
4.04						Form of 4.65% Note due 2044 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated May 15, 2014)
4.05						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)
4.06						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)
4.07						Form of 4.5% Note due 2028 (incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K dated November 6, 2018)
4.08						Form of 5.750% Note due 2033 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated March 8, 2023)
4.09						F orm of 5.6 25% Note due 20 34 (incorporated here in by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated February 20, 2024)
4.10						Form of 5.0 % Note due 20 29 (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated August 1 , 2024)
4.11						Description of Securities (incorporated herein by reference to Exhibit 4.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019)
10.01						Second Amended and Restated Five-Year Credit Agreement dated as of December 3, 2021 among Eastman Chemical Company, the initial lenders named herein, and Citibank, N.A., as administrative agent, Citibank, N.A. and Mizuho Bank, LTD., as Co-Sustainability Structuring Agents, and Citibank, N.A., BOFA Securities, Inc., JPMorgan Chase Bank, N.A., and Mizuho Bank, LTD., as joint lead arrangers (incorporated herein by reference to Exhibit 10.01 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021)
10.02						Amendment No.1 to the Second Amended and Restated Five-Year Credit Agreement dated as of December 3, 2021 among Eastman Chemical Company, the initial lenders named herein, and Citibank, N.A., as administrative agent, Citibank, N.A. and Mizuho Bank, LTD., as Co-Sustainability Structuring Agents, and Citibank, N.A., BOFA Securities, Inc., JPMorgan Chase Bank, N.A., and Mizuho Bank, LTD., as joint lead arrangers (incorporated herein by reference to Exhibit 10.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023)
10.03						Third Amended and Restated Five-Year Credit Agreement dated as of February 14, 2024 among Eastman Chemical Company, the initial lenders named herein, and Citibank, N.A., as administrative agent, Citibank, N.A. and Mizuho Bank, LTD., as Co-Sustainability Structuring Agents, and Citibank, N.A., BOFA Securities, Inc., JPMorgan Chase Bank, N.A., and Mizuho Bank, LTD., as joint lead arrangers (incorporated herein by refe rence to the Exhibit 10.03 to the Company's Annual R eport on Form 10-K for the year ended December 31, 2023) **
10.04						Term Loan Agreement dated as of April 14, 2022 (incorporated herein by reference to Exhibit 10.02 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022)
10.05						Eastman Excess Retirement Income Plan (incorporated herein by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008) **
10.06						Form of Executive Change in Control Severance Agreements (incorporated herein by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the year ended December 31, 2010) **
10.07						Eastman Unfunded Retirement Income Plan (incorporated herein by reference to Exhibit 10.04 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008) **


Exhibit Number						EXHIBIT INDEX
						Description
10.08						Eastman Chemical Company Benefit Security Trust dated December 24, 1997, as amended May 1, 1998 and February 1, 2001 and Amendment Number Three to the Eastman Chemical Company Benefit Security Trust dated January 2, 2002 (incorporated herein by reference to Exhibit 10.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 and Exhibit 10.04 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002) **
10.09						Amended and Restated Warrant to Purchase Shares of Common Stock of Eastman Chemical Company, dated January 2, 2002 (incorporated herein by reference to Exhibit 10.02 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002) **
10.10						Amended and Restated Registration Rights Agreement, dated January 2, 2002 (incorporated herein by reference to Exhibit 10.03 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002) **
10.11						Amended and Restated Eastman Executive Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 2014) **
10.12						Amended and Restated Eastman Directors' Deferred Compensation Plan (incorporated herein by reference to 10.04 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016) **
10.13						Eastman Unit Performance Plan as amended and restated effective December 5, 2012 (incorporated herein by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012) **
10.14						Form of Indemnification Agreements with Directors and Executive Officers (incorporated herein by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended December 31, 2003) **
10.15*						Forms of Performance Share Awards to Executive Officers (2025 - 2027 Performance Period) **
10.16*						2025 Unit Performance Plan — Corporate Performance Measures and Named Executive Office Target Variable Pay Opportunities **
10.17						2012 Omnibus Stock Compensation Plan (incorporated herein by reference to Appendix A to the Company's 2012 Annual Meeting Proxy Statement dated March 21, 2012) **
10.18						2017 Omnibus Stock Compensation Plan (incorporated herein by reference to Appendix A of the Company's 2017 Annual Meeting Proxy Statement dated March 23, 2017) **
10.19						2021 Omnibus Stock Compensation Plan (incorporated herein by reference to Appendix A of the Company's 2021 Annual Meeting Proxy Statement dated March 25, 2021 as amended on April 13, 2021) **
10.20						Amended 2021 Director Stock Compensation Subplan of the 2021 Omnibus Stock Compensation Plan and Form of Restricted Stock Award Notice (incorporated herein by reference to Exhibit 10.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021) **
10.21						Amended 2021 Director Stock Compensation Subplan of the 2021 Omnibus Stock Compensation Plan and Form of Restricted Stock Award Notice (incorporated herein by reference to Exhibit 10.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023)
10.22						Form of Award Notice for Stock Options Granted to Executive Officers under the 2021 Omnibus Stock Compensation Plan (incorporated herein by reference to Exhibit 10.32 to the Company's Annual Report on Form 10-K for the year ended December 31, 2023) **
10.23						Form of Restricted Stock Unit Awards Granted to Executive Officers under the 2021 Omnibus Stock Compensation Plan (incorporated herein by reference to Exhibit 10.33 to the Company's Annual Report on Form 10-K for the year ended December 31, 2023) **
19.01*						E astman Chemical Company Insider Trading Policy
21.01*						Subsidiaries of the Company
23.01*						Consent of Independent Registered Public Accounting Firm
31.01*						Rule 13a – 14(a) Certification by Mark J. Costa, Chief Executive Officer, for the year ended December 31, 2024
31.02*						Rule 13a – 14(a) Certification by William T. McLain, Jr., Senior Vice President and Chief Financial Officer, for the year ended December 31, 202 4
32.01*						Section 1350 Certification by Mark J. Costa, Chief Executive Officer, for the year ended December 31, 2024
32.02*						Section 1350 Certification by William T. McLain, Jr., Executive Vice President and Chief Financial Officer, for the year ended December 31, 202 4


Exhibit Number						EXHIBIT INDEX
						Description
97.01						Eastman Chemical Company Incentive Pay Clawback Policy (incorporated herein by reference to Exhibit 97.01 to the C ompany's Annual Report on Form 10 -K for the year ended December 31, 202 3) **
99.01*						202 4 Company and Segment Revenue by End-Use Market
99.02*						Product and Raw Material Information
101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH*						Inline XBRL Taxonomy Extension Schema Document
101.CAL*						Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF*						Inline XBRL Definition Linkbase Document
101.LAB*						Inline XBRL Taxonomy Label Linkbase Document
101.PRE*						Inline XBRL Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


	Percentage of Total Segment Sales
Product Lines	2024	2023	2022
Advanced Interlayers	%	%	%
Performance Films	%	%	%
Specialty Plastics	%	%	%
Total	100%	100%	100%


			Page
(a)	1.	Consolidated Financial Statements:
		Management's Responsibility for Financial Statements	57
		Report of Independent Registered Public Accounting Firm	58
		Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings	60
		Consolidated Statements of Financial Position	61
		Consolidated Statements of Cash Flows	62
		Notes to the Audited Consolidated Financial Statements	63
	2.	Exhibits filed as part of this report are listed in the Exhibit Index beginning at page	119
(b)	The required Exhibits to this report are included subsequent to page		122


*			Denotes exhibit filed or furnished herewith.
**			Management contract or compensatory plan or arrangement filed pursuant to Item 601(b) (10) (iii) of Regulation S-K.


		Eastman Chemical Company

By:		/s/ Mark J. Costa
		Mark J. Costa
		Chief Executive Officer
Date:	February 14, 2025

EASTMAN CHEMICAL CO - Annual Report: 2024 (Form 10-K)

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