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Third Quarter 2025
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$728 $716 $499 $254 $2,197 
Cost of sales587 530 469 167 1,753 
Selling, general and administrative expenses65 43 22 15 145 
Other segment items (1)
23 15 7 5 50 
Adjusted EBIT
53 128 1 67 249 
Reconciliation of segment Adjusted EBIT to consolidated "Earnings before income taxes" ("EBT"):
Other adjusted EBIT (2)
(39)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(2)
Asset impairments, restructuring, and other charges, net (3)
(20)
Net interest expense(54)
Consolidated EBT$134 
Third Quarter 2024
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$787 $744 $593 $336 $2,460 
Cost of sales575 545 522 200 1,842 
Selling, general and administrative expenses71 52 28 19 170 
Other segment items (1)
19 17 — 5 41 
Adjusted EBIT122 130 43 112 407 
Reconciliation of segment Adjusted EBIT to consolidated EBT:
Other adjusted EBIT (2)
(41)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(7)
Asset impairments, restructuring, and other charges, net (3)
(30)
Net interest expense(49)
Consolidated EBT$280 
First Nine Months 2025
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$2,224 $2,218 $1,507 $816 $6,765 
Cost of sales1,666 1,614 1,426 517 5,223 
Selling, general and administrative expenses198 137 71 50 456 
Other segment items (1)
70 45 20 13 148 
Adjusted EBIT
290 422 (10)236 938 
Reconciliation of segment Adjusted EBIT to consolidated EBT:
Other adjusted EBIT (2)
(142)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(2)
Asset impairments, restructuring, and other charges, net (3)
(42)
Environmental and other costs (4)
(40)
Net interest expense(156)
Consolidated EBT$556 
First Nine Months 2024
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$2,330 $2,166 $1,631 $997 $7,124 
Cost of sales1,694 1,602 1,452 577 5,325 
Selling, general and administrative expenses220 155 86 57 518 
Other segment items (1)
59 47 12 12 130 
Adjusted EBIT357 362 81 351 1,151 
Reconciliation of segment Adjusted EBIT to consolidated EBT:
Other adjusted EBIT (2)
(158)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(7)
Asset impairments, restructuring, and other charges, net (3)
(41)
Environmental and other costs (4)
(16)
Net interest expense(148)
Consolidated EBT$781 
(1)Other segment items for each reportable segment includes R&D expenses, other components of post-employment (benefit) cost, net and other (income) charges, net.
(2)Other is not considered an operating segment. Other includes the following which are not allocated to operating segments: 1) sales and costs from growth initiatives and businesses, 2) pension and other postretirement benefit plans income (expense), net, and 3) other income (charges), net.
(3)See Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", for a description of included items.
(4)Environmental and other costs from previously divested or non-operational sites and product lines.
Third Quarter 2025
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibers
Total Operating Segments
Other
Total Consolidated
Depreciation and amortization expense$52 $36 $24 $16 $128 $1 $129 
Capital expenditures84 18 23 10 135 2 137 

Third Quarter 2024
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOtherTotal Consolidated
Depreciation and amortization expense$47 $37 $25 $16 $125 $2 $127 
Capital expenditures65 17 23 10 115 5 120 

First Nine Months 2025
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOther
Total Consolidated
Depreciation and amortization expense$153 $107 $72 $48 380 $2 $382 
Capital expenditures273 57 56 30 416 18 434 

First Nine Months 2024
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOtherTotal Consolidated
Depreciation and amortization expense$145 $109 $74 $47 $375 $5 $380 
Capital expenditures293 41 43 25 402 18 420 
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedSeptember 30, 2025
 OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ______________ to ______________

Commission file number 1-12626

EASTMAN CHEMICAL COMPANY
(Exact name of registrant as specified in its charter)
Delaware62-1539359
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification no.)
  
200 South Wilcox Drive 
KingsportTennessee37662
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (423) 229-2000

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per share EMNNew York Stock Exchange
1.875% Notes Due 2026EMN26New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐  No  ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
Number of Shares Outstanding at September 30, 2025
Common Stock, par value $0.01 per share114,069,800
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TABLE OF CONTENTS
ITEM PAGE

PART I.  FINANCIAL INFORMATION
 
   
 
 
 
 
   
   
   

PART II.  OTHER INFORMATION
   

SIGNATURES
 

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FORWARD-LOOKING STATEMENTS

Certain statements made or incorporated by reference in this Quarterly Report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act (Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). Forward-looking statements are all statements, other than statements of historical fact, that may be made by Eastman Chemical Company ("Eastman" or the "Company") from time to time. In some cases, you can identify forward-looking statements by terminology such as "anticipates", "believes", "estimates", "expects", "intends", "may", "plans", "projects", "forecasts", "will", "would", "could", and similar expressions, or expressions of the negative of these terms. Forward-looking statements may relate to, among other things, such matters as planned and expected capacity increases and utilization; anticipated capital spending; expected depreciation and amortization; environmental matters and opportunities (including potential risks associated with physical and transitional impacts of climate change and related voluntary and regulatory carbon requirements); exposure to and effects of hedging raw material and energy prices and costs and foreign currency exchange and interest rates; disruption or interruption of operations and of raw material or energy supply (including as a result of cyber-attacks or other breaches of the Company's information security systems); global and regional economic, political, and business conditions, including heightened inflation, capital market volatility, interest rate and currency fluctuations, and economic slowdown or recession; impacts from U.S. tariffs, reciprocal tariffs, and global trade disruption; competition; growth opportunities; supply and demand, volume, price, cost, margin and sales; pending and future legal proceedings; earnings, cash flow, dividends, stock repurchases and other expected financial results, events, decisions, and conditions; expectations, strategies, and plans for individual assets and products, businesses, and operating segments, as well as for the whole of Eastman; cash sources and requirements and uses of available cash; financing plans and activities; pension expenses and funding; credit ratings; anticipated and other future restructuring, acquisition, divestiture, and consolidation activities; cost reduction and control efforts and targets; the timing and costs of, benefits from the integration of, and expected business and financial performance of acquired businesses, as well as the subsequent impairment assessments of acquired long-lived assets; strategic, technology, and product innovation initiatives and development, production, commercialization and acceptance of new products, services and technologies and related costs; asset, business, and product portfolio changes; and expected tax rates and interest costs.

Forward-looking statements are based upon certain underlying assumptions as of the date such statements were made. Such assumptions are based upon internal estimates and other analyses of current market conditions and trends, management expectations, plans, and strategies, economic conditions, and other factors. Forward-looking statements and the assumptions underlying them are necessarily subject to risks and uncertainties inherent in projecting future conditions and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions and expectations proves to be inaccurate or is unrealized. The known material factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements are identified and discussed under "Risk Factors" in Part II, Item 1A of this Quarterly Report. Other factors, risks or uncertainties of which management is not aware, or presently deems immaterial, could also cause actual results to differ materially from those in the forward-looking statements.

The Company cautions you not to place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report. Except as may be required by law, the Company undertakes no obligation to publicly update or alter these forward-looking statements, whether as a result of new information, future events, or otherwise. Investors are advised, however, to consult any further public Company disclosures (such as filings with the Securities and Exchange Commission, Company press releases, or pre-noticed public investor presentations) on related subjects.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS,
COMPREHENSIVE INCOME AND RETAINED EARNINGS
 Third QuarterFirst Nine Months
(Dollars in millions, except per share amounts)2025202420252024
Sales$2,202 $2,464 $6,779 $7,137 
Cost of sales1,769 1,859 5,273 5,401 
Gross profit433 605 1,506 1,736 
Selling, general and administrative expenses160 183 499 554 
Research and development expenses63 65 197 184 
Asset impairments, restructuring, and other charges, net
20 30 42 41 
Other components of post-employment (benefit) cost, net(1)(5)(4)(14)
Other (income) charges, net3 3 60 42 
Earnings before interest and taxes188 329 712 929 
Net interest expense54 49 156 148 
Earnings before income taxes134 280 556 781 
Provision for income taxes
87 99 186 204 
Net earnings47 181 370 577 
Less: Net earnings attributable to noncontrolling interest— 1 1 2 
Net earnings attributable to Eastman$47 $180 $369 $575 
Basic earnings per share attributable to Eastman$0.41 $1.55 $3.21 $4.91 
Diluted earnings per share attributable to Eastman$0.40 $1.53 $3.18 $4.86 
Comprehensive Income  
Net earnings including noncontrolling interest$47 $181 $370 $577 
Other comprehensive income (loss), net of tax:  
Change in cumulative translation adjustment15 39 17 38 
Defined benefit pension and other postretirement benefit plans:  
Amortization of unrecognized prior service credits— (2)— (6)
Derivatives and hedging:  
Unrealized gain (loss) during period1 (13)(44)(6)
Reclassification adjustment for (gains) losses included in net income, net6 — 10 15 
Total other comprehensive income (loss), net of tax22 24 (17)41 
Comprehensive income including noncontrolling interest69 205 353 618 
Less: Comprehensive income attributable to noncontrolling interest— 1 1 2 
Comprehensive income attributable to Eastman$69 $204 $352 $616 
Retained Earnings    
Retained earnings at beginning of period$10,143 $9,694 $10,013 $9,490 
Net earnings attributable to Eastman47 180 369 575 
Cash dividends declared(95)(94)(287)(285)
Retained earnings at end of period$10,095 $9,780 $10,095 $9,780 

The accompanying notes are an integral part of these consolidated financial statements.
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UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
September 30,December 31,
(Dollars in millions, except per share amounts)20252024
Assets
Current assets
Cash and cash equivalents$489 $837 
Trade receivables, net of allowance for credit losses933 791 
Miscellaneous receivables341 381 
Inventories1,937 1,988 
Other current assets87 104 
Total current assets3,787 4,101 
Properties
Properties and equipment at cost14,454 13,985 
Less: Accumulated depreciation8,708 8,370 
Net properties5,746 5,615 
Goodwill3,665 3,632 
Intangible assets, net of accumulated amortization1,008 1,032 
Other noncurrent assets773 833 
Total assets$14,979 $15,213 
Liabilities and Stockholders' Equity
Current liabilities
Payables and other current liabilities$1,866 $2,258 
Borrowings due within one year290 450 
Total current liabilities2,156 2,708 
Long-term borrowings4,785 4,567 
Deferred income tax liabilities525 533 
Post-employment obligations607 630 
Other long-term liabilities1,063 923 
Total liabilities9,136 9,361 
Stockholders' equity
Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 223,910,533 and 223,588,347 as of September 30, 2025 and December 31, 2024, respectively)
2 2 
Additional paid-in capital2,491 2,463 
Retained earnings10,095 10,013 
Accumulated other comprehensive income (loss)(331)(314)
12,257 12,164 
Less: Treasury stock at cost (109,891,531 and 108,470,763 shares as of September 30, 2025 and December 31, 2024, respectively)
6,486 6,385 
Total Eastman stockholders' equity5,771 5,779 
Noncontrolling interest72 73 
Total equity5,843 5,852 
Total liabilities and stockholders' equity$14,979 $15,213 

The accompanying notes are an integral part of these consolidated financial statements.
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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
First Nine Months
(Dollars in millions)20252024
Operating activities
Net earnings$370 $577 
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization382 380 
Asset impairment charges— 5 
Provision for (benefit from) deferred income taxes39 (76)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables(131)(154)
(Increase) decrease in inventories73 (222)
Increase (decrease) in trade payables(275)36 
Pension and other postretirement contributions (in excess of) less than expenses(28)(39)
Variable compensation payments (in excess of) less than expenses(60)44 
Other items, net98 196 
Net cash provided by operating activities468 747 
Investing activities
Additions to properties and equipment(434)(420)
Government incentives
14 — 
Other items, net5 18 
Net cash used in investing activities
(415)(402)
Financing activities
Net increase in commercial paper and other borrowings
290 — 
Proceeds from borrowings246 1,237 
Repayment of borrowings (550)(1,039)
Dividends paid to stockholders(287)(285)
Treasury stock purchases (100)(200)
Other items, net
(14)14 
Net cash used in financing activities(415)(273)
Effect of exchange rate changes on cash and cash equivalents14 2 
Net change in cash and cash equivalents(348)74 
Cash and cash equivalents at beginning of period837 548 
Cash and cash equivalents at end of period$489 $622 

The accompanying notes are an integral part of these consolidated financial statements.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Page

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1.SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by Eastman Chemical Company ("Eastman" or the "Company") in accordance and consistent with the accounting policies stated in the Company's 2024 Annual Report on Form 10-K, and should be read in conjunction with the consolidated financial statements in Part II, Item 8 of that report, with the exception of recently adopted accounting standards noted below. The December 31, 2024 financial position data included herein was derived from the consolidated financial statements included in the 2024 Annual Report on Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP").

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

Recently Adopted Accounting Standards

Accounting Standards Update ("ASU") 2023-05 Business Combination - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement: On January 1, 2025, Eastman adopted this update, which requires that a joint venture must initially measure all contributions received upon its formation at fair value, largely consistent with Topic 805, Business Combinations. The guidance is intended to reduce diversity in practice and provide users of joint venture financial statements with more decision-useful information. This ASU is applied prospectively for all newly formed joint venture entities with a formation date on or after January 1, 2025. The adoption did not have a significant impact on the Company's financial statements and related disclosures.

ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures: On January 1, 2025, Eastman adopted this update on a prospective basis, which modifies annual income tax disclosure requirements. The updated guidance mandates entities to provide more detailed information including specific categories in the income tax rate reconciliation, and the breakdown of income or loss from continuing operations before income tax expense or benefit, for both domestic and foreign. Additionally, entities must disclose income tax expense or benefit from continuing operations, categorized by federal, state, and foreign taxes. The guidance further requires disclosure of income tax payments to various jurisdictions. The adoption did not have a significant impact on the Company's interim financial statements and related disclosures.

Accounting Standards Issued But Not Adopted as of September 30, 2025

ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses: The Financial Accounting Standards Board ("FASB") issued this update in November 2024, which requires public companies to provide additional disclosure of certain income statement expense line items. This guidance is intended to improve transparency around the nature of expenses and their impact on financial performance. The ASU is effective for fiscal periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. Management is currently evaluating the impact of the changes required by the new standard on the Company's financial statements and related disclosures.

ASU 2025-05 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets: The FASB issued this update in July 2025 to address the application of Topic 326 to current accounts receivables and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. The amendments provide a practical expedient permitting entities, when estimating expected credit losses for those balances, to assume that current conditions at the balance sheet date do not change over the remaining life of the asset. The ASU is effective for fiscal periods beginning after December 15, 2025, including interim periods within those years, with early adoption permitted. The Company expects to elect the practical expedient upon adoption. Management does not expect the changes under the new standard will have a material impact on the Company's financial statements and related disclosures.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
ASU 2025-06 Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software: The FASB issued this update in September 2025, which removes prescriptive development stages and establishes a probable-to-complete recognition threshold under which capitalization of software development costs begins when management has authorized and committed to funding the project and it is probable the project will be completed and used as intended. The ASU is effective for fiscal periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted. Management is currently evaluating the impact of the changes under the new standard on the Company's financial statements and related disclosures.

Working Capital Management and Off-Balance Sheet Arrangements

The Company engages in off-balance sheet, uncommitted accounts receivable factoring programs as a routine part of its ordinary business operations. Through these programs, entire invoices may be sold to third-party financial institutions, the vast majority of which are without recourse. Under these agreements, the Company sells the invoices at face value, less a transaction fee, which substantially equals the carrying value and fair value with no gain or loss recognized, and no credit loss exposure is retained. Available capacity under these programs, which the Company uses as a routine source of working capital funding, is dependent on the level of accounts receivable eligible to be sold and the financial institutions' willingness to purchase such receivables. In addition, certain programs also require that the Company continue to service, administer, and collect the sold accounts receivable at market rates. The total amounts sold under the program in third quarter 2025 and 2024 were $696 million and $703 million, respectively, and $2.0 billion in both first nine months 2025 and 2024.

The Company works with suppliers to optimize payment terms and conditions on accounts payable to enhance timing of working capital and cash flows. Under a supplier finance program, the Company's suppliers may voluntarily sell receivables due from Eastman to a participating financial institution. Eastman's responsibility is limited to making payments on the terms originally negotiated with suppliers, regardless of whether the suppliers sell their receivables to the financial institution. The range of payment terms Eastman negotiates with suppliers are consistent, regardless of whether a supplier participates in the program. No fees are paid by Eastman for the supplier finance program. Eastman or the financial institution may terminate the program at any time upon 90 days' notice. Confirmed obligations in the supplier finance program of $46 million and $56 million at September 30, 2025 and December 31, 2024, respectively, are included in "Payables and other current liabilities" on the Unaudited Consolidated Statements of Financial Position.

Government Grants

On May 29, 2025, the U.S. Department of Energy ("DOE") terminated an award related to the Company’s Polyethylene Terephthalate Recycling Decarbonization Project in Longview, Texas. The Company continues to record reimbursements for amounts incurred prior to the date of the award termination and for which the Company is contractually entitled to under an assistance agreement with the DOE. The Company requested $19 million in reimbursements related to activity prior to the date of the award termination and has received $14 million in reimbursements from the DOE during the first nine months of 2025. While waiting for a decision on reinstatement of the award, the Company is actively evaluating the impact of the termination on the project’s scope, timeline, and carrying values of associated assets. The Company has prepared a settlement proposal in the event reinstatement is not obtained.

For additional government grant information, see Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
2.INVENTORIES
 September 30,December 31,
(Dollars in millions)20252024
Finished goods$1,346 $1,321 
Work in process288 305 
Raw materials and supplies636 737 
Total inventories at FIFO or average cost2,270 2,363 
Less: LIFO reserve333 375 
Total inventories$1,937 $1,988 

Inventories valued on the last-in, first-out ("LIFO") method were approximately 50 percent of total inventories at both September 30, 2025 and December 31, 2024.

3.INCOME TAXES
 Third QuarterFirst Nine Months
(Dollars in millions)2025202420252024
$%$%$%$%
Provision for income taxes and tax rate
$87 65 %$99 35 %$186 34 %$204 26 %

Third quarter and first nine months 2025 provision for income taxes includes an increase of $22 million driven by the transitional provisions of the One Big Beautiful Bill Act (the "Act") primarily related to the deductibility of previously capitalized research and development expenditures. The Act was enacted into law in the United States on July 4, 2025. The legislation includes modifications to federal income tax law, including but not limited to, permanently reinstating full bonus depreciation on qualified property and the immediate deduction for domestic research and development expenditures, as well as changes to several international tax provisions that originated as part of the 2017 Tax Cuts and Jobs Act. First nine months 2025 provision for income taxes also includes an increase of $35 million related to uncertain tax positions. Third quarter and first nine months 2024 provision for income taxes includes an increase of $37 million and $60 million, respectively, related to uncertain tax positions.

At September 30, 2025 and December 31, 2024, Eastman had $353 million and $321 million, respectively, in unrecognized tax benefits.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4.BORROWINGS
 September 30,December 31,
(Dollars in millions)20252024
Borrowings consisted of:
3.80% notes due March 2025
$— $450 
1.875% notes due November 2026 (1)
586 518 
7.60% debentures due February 2027
196 196 
4.5% notes due December 2028
497 496 
5.0% notes due August 2029
742 495 
5.75% notes due March 2033
496 496 
5.625% notes due February 2034
743 743 
4.8% notes due September 2042
495 495 
4.65% notes due October 2044
880 878 
2027 Term Loan150 250 
Commercial paper and short-term borrowings290 — 
Total borrowings5,075 5,017 
Less: Borrowings due within one year290 450 
Long-term borrowings$4,785 $4,567 
(1)The carrying value of the euro-denominated 1.875% notes due November 2026 fluctuates with changes in the euro to U.S. dollar exchange rate. The carrying value of this euro-denominated borrowing has been designated as a non-derivative net investment hedge of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations.

In first quarter 2025, the Company issued an additional $250 million aggregate principal amount of the 5.0% notes due August 2029 in a registered public offering (the "2029 Notes"), which was originally issued in August 2024, resulting in an aggregate principal amount of $750 million. The net proceeds from first quarter 2025 issuance were $246 million. Also during first quarter 2025, the Company also repaid the $450 million 3.80% notes due March 2025. There were no debt extinguishment costs associated with the repayment of this debt. All proceeds from the issued notes and the redemption of the 3.80% notes are reported under financing activities on the Unaudited Consolidated Statements of Cash Flows.

Credit Facility, Term Loans, and Commercial Paper Borrowings

The Company has access to a $1.50 billion revolving credit agreement (the "Credit Facility") that matures in February 2029. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility includes sustainability-linked pricing terms, provides available liquidity for general corporate purposes, and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. At September 30, 2025 and December 31, 2024, the Company had no outstanding borrowings under the Credit Facility. At September 30, 2025, the Company's commercial paper borrowings were $290 million with a weighted interest rate of 4.33%. At December 31, 2024, the Company had no commercial paper borrowings.

In first quarter 2025, the Company repaid $100 million of the remaining $250 million five-year term loan (the "2027 Term Loan"). There were no extinguishment costs associated with the partial repayment of the 2027 Term Loan. The outstanding balance on the 2027 Term Loan was $150 million at September 30, 2025 and $250 million at December 31, 2024, with variable interest rates of 5.54% and 5.58%, respectively. The 2027 Term Loan is subject to interest at a spread above quoted market rates.

The Credit Facility and the 2027 Term Loan contain customary covenants, including requirements to maintain certain financial ratios, that determine the events of default, amounts available, and terms of borrowings. The Company was in compliance with all applicable covenants at both September 30, 2025 and December 31, 2024.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Fair Value of Borrowings

Eastman has classified its total borrowings at September 30, 2025 and December 31, 2024 under the fair value hierarchy as defined in the accounting policies in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K. The fair value for fixed-rate debt securities is based on quoted market prices for the same or similar debt instruments and is classified as Level 2. The fair value of the Company's other borrowings, including the 2027 Term Loan and commercial paper, equals the carrying value and is classified as Level 2. The Company's fair value of total borrowings was $5.0 billion at September 30, 2025 and $4.9 billion at December 31, 2024. The Company had no borrowings classified as Level 1 or Level 3 as of September 30, 2025 and December 31, 2024.

5.DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS

Overview of Hedging Programs

Eastman is exposed to market risks, such as changes in foreign currency exchange rates, raw material and energy prices, and interest rates. To mitigate these market risks and their effects on the cash flows of the underlying transactions and investments in foreign subsidiaries, the Company uses various derivative and non-derivative financial instruments, when appropriate, in accordance with the Company's hedging strategy and policies. Designation is performed on a specific exposure basis to support hedge accounting. The Company does not enter into derivative transactions for speculative purposes.

For further information on the Company's hedging programs, see Note 10, "Derivative and Non-Derivative Financial Instruments", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K.

Cash Flow Hedges

Cash flow hedges are derivative instruments designated as and used to hedge the exposure to variability in expected future cash flows that are attributable to a particular risk. The derivative instruments that are designated and qualify as a cash flow hedge are reported on the balance sheet at fair value and the changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the anticipated cash flows of the underlying exposures being hedged. The change in the hedge instrument is reported as a component of "Accumulated other comprehensive income (loss)" ("AOCI") on the Unaudited Consolidated Statements of Financial Position and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Cash flows from cash flow hedges are classified as operating activities in the Unaudited Consolidated Statements of Cash Flows.

Fair Value Hedges

Fair value hedges are defined as derivative or non-derivative instruments designated as and used to hedge the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk. The derivative instruments that are designated and qualify as fair value hedges are reported as "Short-term borrowings" or "Long-term borrowings" on the Unaudited Consolidated Statements of Financial Position at fair value and the changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the anticipated fair value of the underlying exposures being hedged. The net of the change in the hedge instrument and item being hedged for qualifying fair value hedges is recognized in earnings in the same period or periods during which the hedged transaction affects earnings. Cash flows from fair value hedges are classified as operating activities in the Unaudited Consolidated Statements of Cash Flows.

Net Investment Hedges

Net investment hedges are defined as derivative or non-derivative instruments designated as and used to hedge the foreign currency exposure of the net investments in certain foreign operations. The net of the change in the hedge instrument and item being hedged for qualifying net investment hedges is reported as a component of the "Cumulative translation adjustment" ("CTA") within AOCI on the Unaudited Consolidated Statements of Financial Position. Cash flows from the CTA component are classified as operating activities in the Unaudited Consolidated Statements of Cash Flows. Recognition in earnings of amounts previously recognized in CTA is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation. In the event of a complete or substantially complete liquidation of the net investment, cash flows from net investment hedges are classified as investing activities in the Unaudited Consolidated Statements of Cash Flows.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Eastman enters into fixed-to-fixed cross-currency swaps and designates these swaps to hedge a portion of its net investment in a non-U.S. dollar functional currency denominated subsidiary against foreign currency fluctuations. These contracts involve the exchange of fixed U.S. dollars with fixed foreign currency interest payments periodically over the life of the contracts and an exchange of the notional amounts at maturity.

In first quarter 2025, the Company entered into fixed-to-fixed cross-currency swaps of $50 million (¥7.9 billion) maturing December 2028, $50 million (€48 million) maturing December 2028, $100 million (€97 million) maturing August 2029, and $100 million (€97 million) maturing February 2034.

Additionally, in first quarter 2025, Eastman voluntarily terminated and reentered into fixed-to-fixed cross-currency swaps of $245 million (€229 million terminated; €236 million reentered) maturing December 2028, and $300 million (€282 million terminated; €290 million reentered) maturing March 2033. The Company also voluntarily terminated fixed-to-fixed cross-currency swaps of $50 million (¥7.4 billion) maturing March 2025, and $375 million (€351 million) maturing March 2025. The termination of cross-currency swaps in first quarter 2025 resulted in a $2 million loss recognized in CTA. The related cash flows were classified as investing activities in the Unaudited Consolidated Statements of Cash Flows.


Summary of Financial Position and Financial Performance of Hedging Instruments

The following table presents the notional amounts outstanding at September 30, 2025 and December 31, 2024 associated with Eastman's hedging programs.
Notional OutstandingSeptember 30, 2025December 31, 2024
Derivatives designated as cash flow hedges:
Foreign Exchange Forward and Option Contracts (in millions)
EUR/USD (in EUR)€441€428
Commodity Forward and Collar Contracts
Energy (in million british thermal units)14 10 
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps (in millions)
EUR/USD (in EUR)€1,449€1,543
JPY/USD (in JPY)¥7,885¥7,385
Non-derivatives designated as net investment hedges:
Foreign Currency Net Investment Hedges (in millions)
EUR/USD (in EUR)€499€499

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Fair Value Measurements

All the Company's derivative assets and liabilities are currently classified as Level 2. Level 2 fair value is based on estimates using standard pricing models. These standard pricing models use inputs that are derived from or corroborated by observable market data such as interest rate yield curves and currency spot and forward rates. The fair value of commodity contracts is derived using forward curves supplied by an industry recognized and unrelated third party. In addition, on an ongoing basis, the Company compares a subset of its valuations against valuations received from the counterparties to validate the accuracy of its standard pricing models. The Company had no derivatives classified as Level 1 or Level 3 as of September 30, 2025 and December 31, 2024. Counterparties to these derivative contracts are highly rated financial institutions which the Company believes carry minimal risk of nonperformance, and the Company diversifies its positions among such counterparties to reduce its exposure to counterparty risk and credit losses. The Company monitors the creditworthiness of its counterparties on an ongoing basis. The Company did not realize a credit loss related to these counterparties during third quarter and first nine months 2025 or 2024.

All the Company's derivative contracts are subject to master netting arrangements, or similar agreements, which provide for the option to settle contracts on a net basis when they settle on the same day and in the same currency. In addition, these arrangements provide for a net settlement of all contracts with a given counterparty in the event that the arrangement is terminated due to the occurrence of default or a termination event. The Company does not have any cash collateral due under such agreements.

The Company has elected to present derivative contracts on a gross basis within the Unaudited Consolidated Statements of Financial Position. The following table presents the financial assets and liabilities valued on a recurring and gross basis and includes where the financial assets and liabilities are located within the Unaudited Consolidated Statements of Financial Position as of September 30, 2025 and December 31, 2024.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The Financial Position and Fair Value Measurements of Hedging Instruments on a Gross Basis
(Dollars in millions) 
Derivative TypeStatements of Financial
Position Classification		Level 2
September 30, 2025December 31, 2024
Derivatives designated as cash flow hedges:   
Foreign exchange contractsOther current assets$— $6 
Foreign exchange contractsOther noncurrent assets— 3 
Derivatives designated as net investment hedges:
Cross-currency interest rate swapsOther current assets— 19 
Cross-currency interest rate swapsOther noncurrent assets— 69 
Total Derivative Assets$— $97 
Derivatives designated as cash flow hedges:
Commodity contractsPayables and other current liabilities$6 $4 
Foreign exchange contractsPayables and other current liabilities26 — 
Foreign exchange contractsOther long-term liabilities5 — 
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps
Payables and other current liabilities— 4 
Cross-currency interest rate swapsOther long-term liabilities139 54 
Total Derivative Liabilities$176 $62 
Total Net Derivative Assets (Liabilities) $(176)$35 

In addition to the fair value associated with derivative instruments designated as cash flow hedges, fair value hedges, and net investment hedges, the Company had a carrying value of $586 million at September 30, 2025 and $518 million at December 31, 2024 associated with non-derivative instruments designated as foreign currency net investment hedges. The designated foreign currency-denominated borrowings are included as part of "Borrowings due within one year" and "Long-term borrowings" on the Unaudited Consolidated Statements of Financial Position.

For additional fair value measurement information, see Note 1, "Significant Accounting Policies", and Note 10, "Derivative and Non-Derivative Financial Instruments", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the effect of the Company's hedging instruments on "Other comprehensive income (loss), net of tax" ("OCI") and financial performance for third quarter and first nine months 2025 and 2024.
Change in amount of after tax gain (loss) recognized in OCI on derivativesPre-tax amount of gain (loss) reclassified from AOCI into earnings
(Dollars in millions)Third QuarterFirst Nine MonthsThird QuarterFirst Nine Months
Hedging Relationships20252024202520242025202420252024
Derivatives in cash flow hedging relationships:
Commodity contracts$(3)$(3)$(1)$10 $(2)$— $(5)$(23)
Foreign exchange contracts9 (11)(35)(3)(5)— (5)5 
Forward starting interest rate and treasury lock swap contracts1 1 2 2 (1)(1)(3)(2)
Non-derivatives in net investment hedging relationships (pre-tax):
Net investment hedges (1)(24)(67)(7)— — — — 
Derivatives in net investment hedging relationships (pre-tax):
Cross-currency interest rate swaps4 (73)(240)(18)— — — — 
Cross-currency interest rate swaps excluded component 13 5 69 7 — — — — 

The following table presents the effect of fair value and cash flow hedge accounting in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for third quarter and first nine months 2025 and 2024.

Location and Amount of Gain or (Loss) Recognized in Earnings from Fair Value and Cash Flow Hedging Relationships
Third Quarter
20252024
(Dollars in millions)SalesCost of SalesNet Interest ExpenseSalesCost of SalesNet Interest Expense
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized$2,202 $1,769 $54 $2,464 $1,859 $49 
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships:
Interest contracts (fixed-for-floating interest rate swaps):
Hedged items— — 
Derivatives designated as hedging instruments— — 
Gain or (loss) on cash flow hedging relationships:
Interest contracts (forward starting interest rate and treasury lock swap contracts):
Amount reclassified from AOCI into earnings(1)(1)
Commodity Contracts:
Amount reclassified from AOCI into earnings(2)— 
Foreign Exchange Contracts:
Amount reclassified from AOCI into earnings(5)— 
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Location and Amount of Gain or (Loss) Recognized in Earnings from Fair Value and Cash Flow Hedging Relationships
First Nine Months
20252024
(Dollars in millions)SalesCost of SalesNet Interest ExpenseSalesCost of SalesNet Interest Expense
Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized$6,779 $5,273 $156 $7,137 $5,401 $148 
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships:
Interest contracts (fixed-for-floating interest rate swaps):
Hedged items— 2 
Derivatives designated as hedging instruments— (2)
Gain or (loss) on cash flow hedging relationships:
Interest contracts (forward starting interest rate and treasury lock swap contracts):
Amount reclassified from AOCI into earnings(3)(2)
Commodity Contracts:
Amount reclassified from AOCI into earnings(5)(23)
Foreign Exchange Contracts:
Amount reclassified from AOCI into earnings(5)5 

The Company enters into foreign exchange derivatives denominated in multiple currencies which are transacted and settled in the same quarter. These derivatives are not designated as hedges due to the short-term nature and the gains or losses on these derivatives are marked-to-market in line item "Other (income) charges, net" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. As a result of these derivatives, the Company recognized a net loss of $6 million and a net gain of $11 million during third quarter and first nine months 2025, respectively, and recognized a net gain of $7 million and $4 million during third quarter and first nine months 2024, respectively.

Pre-tax monetized positions and mark-to-market gains and losses from raw materials and energy, currency, and certain interest rate hedges that were included in AOCI resulted in a net unrealized loss of $131 million and a net unrealized gain of $154 million at September 30, 2025 and December 31, 2024, respectively. Unrealized losses in AOCI increased between December 31, 2024 and September 30, 2025 primarily as a result of an increase in euro to U.S. dollar exchange rates. If realized, approximately $30 million in pre-tax losses as of September 30, 2025, would be reclassified into earnings during the next 12 months, including foreign exchange contracts prospectively dedesignated and monetized in 2024.

6.RETIREMENT PLANS

Defined Benefit Pension Plans and Other Postretirement Benefit Plans

Eastman maintains defined benefit pension plans that provide eligible employees with retirement benefits. In addition, Eastman provides life insurance for eligible retirees hired prior to January 1, 2007. Company funding is provided for eligible Medicare retirees hired prior to January 1, 2007 with a health reimbursement arrangement. Costs recognized for these benefits are estimated amounts, which may change as actual costs for the year are determined.

For additional information regarding retirement plans, see Note 11, "Retirement Plans", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Components of net periodic benefit (credit) cost were as follows:
Third Quarter
 Pension PlansOther Postretirement Benefit Plans
2025202420252024
(Dollars in millions)U.S.Non-U.S.U.S.Non-U.S.
Service cost$5 $1 $5 $2 $— $— 
Interest cost18 7 17 6 6 6 
Expected return on assets(23)(8)(24)(7)(1)(1)
Amortization of:
Prior service credit, net— — — — — (2)
Net periodic benefit (credit) cost$— $— $(2)$1 $5 $3 
First Nine Months
Pension PlansOther Postretirement Benefit Plans
2025202420252024
(Dollars in millions)U.S.Non-U.S.U.S.Non-U.S.
Service cost$14 $5 $16 $6 $— $— 
Interest cost54 19 54 18 17 18 
Expected return on assets(68)(23)(72)(21)(3)(4)
Amortization of:
Prior service credit, net— — — — — (7)
Net periodic benefit (credit) cost$— $1 $(2)$3 $14 $7 

In October 2025, the Company amended a U.S. other postretirement benefit plan. The plan will be remeasured in fourth quarter 2025 and included in the year-end remeasurement process.

7.ENVIRONMENTAL MATTERS AND ASSET RETIREMENT OBLIGATIONS

Certain Eastman manufacturing facilities generate hazardous and nonhazardous wastes, of which the treatment, storage, transportation, and disposal are regulated by various governmental agencies. In connection with the cleanup of various hazardous waste sites, the Company, along with many other entities, has been designated a potentially responsible party ("PRP") by the U.S. Environmental Protection Agency under the Comprehensive Environmental Response, Compensation and Liability Act, which potentially subjects PRPs to joint and several liability for certain cleanup costs. In addition, the Company will incur costs for environmental remediation and closure and post-closure under the federal Resource Conservation and Recovery Act. Reserves for environmental contingencies have been established in accordance with Eastman's policies described in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K. The resolution of uncertainties related to environmental matters may have a material adverse effect on the Company's consolidated financial statements and related disclosures in the period recognized. However, because of the availability of legal defenses, the Company's preliminary assessment of actions that may be required, and the extended period of time that the obligations are expected to be satisfied, management does not believe that the Company's liability for these environmental matters, individually or in the aggregate, will have a material adverse effect on the Company's future overall financial position, results of operations, or cash flows.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Environmental Remediation and Environmental Asset Retirement Obligations

The Company's net environmental reserve for environmental contingencies, including remediation costs and asset retirement obligations, is included as part of "Other noncurrent assets", "Payables and other current liabilities", and "Other long-term liabilities" on the Unaudited Consolidated Statements of Financial Position as follows:
(Dollars in millions)September 30, 2025December 31, 2024
Environmental contingencies, current$20 $15 
Environmental contingencies, long-term302 269 
Total$322 $284 

Environmental Remediation

Estimated future environmental expenditures for undiscounted remediation costs ranged from $289 million to $499 million and from $252 million to $495 million at September 30, 2025 and December 31, 2024, respectively. The best estimate or minimum estimated future environmental expenditures are considered to be probable and reasonably estimable.

Reserves for environmental remediation include liabilities expected to be paid within approximately 30 years. The amounts charged to pre-tax earnings for environmental remediation and related charges are recognized in "Cost of sales" and "Other (income) charges, net" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.

Changes in the reserves for environmental remediation liabilities during first nine months 2025 and full year 2024 are summarized below:
(Dollars in millions)Environmental Remediation Liabilities
Balance at December 31, 2023
$252 
Changes in estimates recognized in earnings and other13 
Cash reductions(13)
Balance at December 31, 2024
252 
Changes in estimates recognized in earnings and other47 
Cash reductions(10)
Balance at September 30, 2025$289 

Environmental Asset Retirement Obligations

An asset retirement obligation is an obligation for the retirement of a tangible long-lived asset that is incurred upon the acquisition, construction, development, or normal operation of that long-lived asset. Environmental asset retirement obligations primarily consist of closure and post-closure costs. For sites that have environmental asset retirement obligations, the best estimate recognized to date for these environmental asset retirement obligation costs were $33 million and $32 million at September 30, 2025 and December 31, 2024, respectively.

Non-Environmental Asset Retirement Obligations

The Company has contractual asset retirement obligations not associated with environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily associated with the future closure of leased manufacturing assets in Pace, Florida and Oulu, Finland. These non-environmental asset retirement obligations were $56 million and $53 million at September 30, 2025 and December 31, 2024, respectively, and are included in "Other long-term liabilities" on the Unaudited Consolidated Statements of Financial Position.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
8.LEGAL MATTERS

From time to time, Eastman and its operations are parties to, or targets of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which are primarily handled and defended in the ordinary course of business. While the Company is unable to predict the outcome of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial position, results of operations, or cash flows.

9.STOCKHOLDERS' EQUITY

Reconciliations of the changes in stockholders' equity for third quarter and first nine months 2025 and 2024 are provided below:
(Dollars in millions, except per share amount)Common Stock at Par ValueAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock at CostTotal Eastman Stockholders' EquityNoncontrolling InterestTotal Equity
Balance at June 30, 2025$2 $2,478 $10,143 $(353)$(6,435)$5,835 $71 $5,906 
Net Earnings— — 47 — — 47 — 47 
Cash Dividends Declared (1)
($0.83 per share)
— — (95)— — (95)— (95)
Other Comprehensive Income (Loss)— — — 22 — 22 — 22 
Share-Based Compensation Expense (2)
— 13 — — — 13 — 13 
Other
— — — — (1)(1)1 — 
Share Repurchases— — — — (50)(50)— (50)
Balance at September 30, 2025$2 $2,491 $10,095 $(331)$(6,486)$5,771 $72 $5,843 
(Dollars in millions, except per share amount)Common Stock at Par ValueAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock at CostTotal Eastman Stockholders' EquityNoncontrolling InterestTotal Equity
Balance at June 30, 2024$2 $2,417 $9,694 $(302)$(6,184)$5,627 $72 $5,699 
Net Earnings— — 180 — — 180 1 181 
Cash Dividends Declared (1)
($0.81 per share)
— — (94)— — (94)— (94)
Other Comprehensive Income (Loss)— — — 24 — 24 — 24 
Share-Based Compensation Expense (2)
— 14 — — — 14 — 14 
Stock Option Exercises— 4 — — — 4 — 4 
Other
— — — — (1)(1)1 — 
Share Repurchases
— — — — (100)(100)— (100)
Balance at September 30, 2024$2 $2,435 $9,780 $(278)$(6,285)$5,654 $74 $5,728 
(1)Cash dividends declared consists of cash dividends paid and dividends declared but unpaid.
(2)Share-based compensation expense is based on the fair value of share-based awards.


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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amount)Common Stock at Par ValueAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock at CostTotal Eastman Stockholders' EquityNoncontrolling InterestTotal Equity
Balance at December 31, 2024$2 $2,463 $10,013 $(314)$(6,385)$5,779 $73 $5,852 
Net Earnings— — 369 — — 369 1 370 
Cash Dividends Declared (1)
($2.49 per share)
— — (287)— — (287)— (287)
Other Comprehensive Income (Loss)— — — (17)— (17)— (17)
Share-Based Compensation Expense (2)
— 38 — — — 38 — 38 
Stock Option Exercises— 2 — — — 2 — 2 
Other (3)
— (12)— — (1)(13)1 (12)
Share Repurchases— — — — (100)(100)— (100)
Distributions to Noncontrolling Interest— — — — — — (3)(3)
Balance at September 30, 2025$2 $2,491 $10,095 $(331)$(6,486)$5,771 $72 $5,843 
(Dollars in millions, except per share amount)Common Stock at Par ValueAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock at CostTotal Eastman Stockholders' EquityNoncontrolling InterestTotal Equity
Balance at December 31, 2023$2 $2,368 $9,490 $(319)$(6,083)$5,458 $72 $5,530 
Net Earnings— — 575 — — 575 2 577 
Cash Dividends Declared (1)
($2.43 per share)
— — (285)— — (285)— (285)
Other Comprehensive Income (Loss)— — — 41 — 41 — 41 
Share-Based Compensation Expense (2)
— 49 — — — 49 — 49 
Stock Option Exercises— 26 — — — 26 — 26 
Other (3)
— (8)— — (2)(10)1 (9)
Share Repurchases
— — — — (200)(200)— (200)
Distributions to Noncontrolling Interest— — — — — — (1)(1)
Balance at September 30, 2024$2 $2,435 $9,780 $(278)$(6,285)$5,654 $74 $5,728 
(1)Cash dividends declared consists of cash dividends paid and dividends declared but unpaid.
(2)Share-based compensation expense is based on the fair value of share-based awards.
(3)Additional paid-in capital includes the value of shares withheld for employees' taxes on vesting of share-based compensation awards.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Accumulated Other Comprehensive Income (Loss), Net of Tax
(Dollars in millions)Cumulative Translation AdjustmentBenefit Plans Unrecognized Prior Service CreditsUnrealized Gains (Losses) on Derivative InstrumentsUnrealized Losses on InvestmentsAccumulated Other Comprehensive Income (Loss)
Balance at December 31, 2023
$(297)$11 $(32)$(1)$(319)
Period change(20)(8)33 — 5 
Balance at December 31, 2024
(317)3 1 (1)(314)
Period change17 — (34)— (17)
Balance at September 30, 2025$(300)$3 $(33)$(1)$(331)
Amounts of other comprehensive income (loss) are presented net of applicable taxes. Eastman recognizes deferred income taxes on the CTA related to branch operations and income from other entities included in the Company's consolidated U.S. tax return. No deferred income taxes are recognized on the CTA of other subsidiaries outside the United States because the CTA is considered to be a component of indefinitely invested, unremitted earnings of these foreign subsidiaries.

Components of OCI recognized in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects:
Third Quarter
20252024
(Dollars in millions)Before TaxNet of TaxBefore TaxNet of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment$19 $15 $26 $39 
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits— — (2)(2)
Derivatives and hedging:
Unrealized gain (loss) during period1 1 (17)(13)
Reclassification adjustment for (gains) losses included in net income, net8 6 — — 
Total other comprehensive income (loss)$28 $22 $7 $24 
First Nine Months
20252024
(Dollars in millions)Before TaxNet of TaxBefore TaxNet of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment$(25)$17 $37 $38 
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits— — (7)(6)
Derivatives and hedging:
Unrealized gain (loss) during period(59)(44)(8)(6)
Reclassification adjustment for (gains) losses included in net income, net13 10 19 15 
Total other comprehensive income (loss)$(71)$(17)$41 $41 

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
10.EARNINGS AND DIVIDENDS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share ("EPS") which are calculated using the treasury stock method:
 Third QuarterFirst Nine Months
(In millions, except per share amounts)2025202420252024
Numerator
Earnings attributable to Eastman, net of tax $47 $180 $369 $575 
Denominator
Weighted average shares used for basic EPS114.4116.4114.9117.0
Dilutive effect of stock options and other awards1.01.41.11.3
Weighted average shares used for diluted EPS115.4117.8116.0118.3
(Calculated using whole dollars and shares)
EPS
Basic$0.41 $1.55 $3.21 $4.91 
Diluted$0.40 $1.53 $3.18 $4.86 

Shares underlying stock options of 3,284,539 and 1,315,375 for third quarter 2025 and 2024, respectively, and 2,823,847 and 1,234,513 for first nine months 2025 and 2024, respectively, were excluded from the calculations of diluted EPS because the grant date exercise price of these options was greater than the average market price of the Company's common stock and the effect of including them in the calculations of diluted EPS would have been antidilutive. The Company repurchased 776,977 and 1,018,269 shares in third quarter 2025 and 2024, respectively, for $50 million and $100 million, respectively. The Company repurchased 1,420,768 and 2,018,274 shares in first nine months 2025 and 2024, respectively, for $100 million and $200 million, respectively.

The Company declared cash dividends of $0.83 and $0.81 per share for third quarter 2025 and 2024, respectively, and $2.49 and $2.43 per share for first nine months 2025 and 2024, respectively.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
11.ASSET IMPAIRMENTS, RESTRUCTURING, AND OTHER CHARGES, NET

(Dollars in millions)Third QuarterFirst Nine Months
2025202420252024
Asset impairments (1)
$— $5 $— $5 
Severance charges (1)(2)(3)(4)
14 10 25 21 
Restructuring and other charges (1)(2)(4)
6 15 17 15 
Total$20 $30 $42 $41 

(1)Third quarter and first nine months 2024 included asset impairment charges of $5 million, severance charges of $4 million, and site closure costs of $9 million related to the planned closure of a solvent-based resins production line at an advanced interlayers facility in North America in the Advanced Materials ("AM") segment. In addition, inventory adjustments of $4 million and $3 million in the AM segment and the Additives & Functional Products ("AFP") segment, respectively, were recognized in "Cost of sales" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in third quarter and first nine months 2024 related to this closure.
(2)Third quarter and first nine months 2025 included severance charges of $4 million, and restructuring charges of $6 million related to the decommissioning of certain assets at performance films facilities in North America in the AM segment. In addition, inventory adjustments of $2 million in the AM segment were recognized in "Cost of sales" in the Unaudited Consolidated Statement of Earnings, Comprehensive Income, and Retained Earnings in third quarter and first nine months 2025 related to this decommissioning.
(3)Third quarter and first nine months 2025 included severance charges of $10 million and $20 million, respectively, related to corporate cost reduction initiatives reported in "Other". Additionally, third quarter and first nine months 2024 included severance charges of $6 million and $17 million, respectively, related to corporate cost reduction initiatives which are reported in "Other".
(4)First nine months 2025 included severance charges of $1 million and restructuring charges of $3 million related to the closure of a heat-transfer fluids production line at a North America specialty fluids and energy facility in the AFP segment.
(5)First nine months 2025 included charges of $8 million and third quarter and first nine months 2024 included charges of $6 million related to profitability improvement initiatives which are reported in "Other".

Changes in Reserves

The following table summarizes the changes in asset impairments and restructuring reserves in first nine months 2025 and full year 2024:

(Dollars in millions)Balance at January 1, 2025Provision/ AdjustmentsNon-cash Reductions/
Additions		Cash ReductionsBalance at September 30, 2025
Severance charges$23 $25 $— $(26)$22 
Restructuring and other charges3 17 — (16)4 
Total$26 $42 $— $(42)$26 

(Dollars in millions)		Balance at January 1, 2024Provision/ AdjustmentsNon-cash Reductions/
Additions		Cash ReductionsBalance at December 31, 2024
Non-cash charges$— $5 $(5)$— $— 
Severance charges26 25 — (28)23 
Restructuring and other charges— 21 — (18)3 
Total$26 $51 $(5)$(46)$26 

Substantially all severance charges remaining as of September 30, 2025 are expected to be paid within one year.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
12.SHARE-BASED COMPENSATION AWARDS

The Company utilizes share-based awards under employee and non-employee director compensation programs. Awards include restricted and unrestricted stock, restricted stock units, stock options, and performance shares.

In third quarter 2025 and 2024, $13 million and $14 million, respectively, of compensation expense before tax were recognized in "Selling, general and administrative expenses" ("SG&A") in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards. The impact on third quarter 2025 and 2024 net earnings of $10 million and $11 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

In first nine months 2025 and 2024, $38 million and $49 million, respectively, of compensation expense before tax were recognized in SG&A in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards. The impact on first nine months 2025 and 2024 net earnings of $29 million and $37 million, respectively, is net of deferred tax expense related to share-based award compensation for each period.

For additional information regarding share-based compensation plans and awards, see Note 18, "Share-Based Compensation Plans and Awards", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K.

13.SEGMENT INFORMATION

Eastman's products and operations are managed and reported in four operating segments: Advanced Materials ("AM"), Additives & Functional Products ("AFP"), Chemical Intermediates ("CI"), and Fibers. The economic factors that impact the nature, amount, timing, and uncertainty of revenue and cash flows vary among the Company's operating segments and the geographical regions in which they operate. This operating segment structure is used by the Chief Operating Decision Maker ("CODM"), who has been determined to be the Chief Executive Officer, to make key operating decisions and assess performance of the Company. The CODM evaluates segment operating performance, and makes resource allocation and performance evaluation decisions, based on Adjusted EBIT, defined as the GAAP measure earnings before interest and taxes ("EBIT"), adjusted for non-core, unusual, or non-recurring items. These adjustments allow the CODM to evaluate segment operating performance excluding the effect of transactions, costs, and losses or gains that do not directly result from Eastman's normal, or "core", business and operations, or are otherwise of an unusual or non-recurring nature. For disaggregation of revenue by major product lines and regions for each operating segment, see Note 20, "Segment and Regional Sales Information", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K. For additional financial and product information for each operating segment, see Part I, Item 1, "Business - Business Segments", in the Company's 2024 Annual Report on Form 10-K.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Third Quarter 2025
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$728 $716 $499 $254 $2,197 
Cost of sales587 530 469 167 1,753 
Selling, general and administrative expenses65 43 22 15 145 
Other segment items (1)
23 15 7 5 50 
Adjusted EBIT
53 128 1 67 249 
Reconciliation of segment Adjusted EBIT to consolidated "Earnings before income taxes" ("EBT"):
Other adjusted EBIT (2)
(39)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(2)
Asset impairments, restructuring, and other charges, net (3)
(20)
Net interest expense(54)
Consolidated EBT$134 
Third Quarter 2025
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibers
Total Operating Segments
Other
Total Consolidated
Depreciation and amortization expense$52 $36 $24 $16 $128 $1 $129 
Capital expenditures84 18 23 10 135 2 137 
(1)Other segment items for each reportable segment includes research and development ("R&D") expenses, other components of post-employment (benefit) cost, net and other (income) charges, net.
(2)Other is not considered an operating segment. Other includes the following which are not allocated to operating segments: 1) sales and costs from growth initiatives and businesses, 2) pension and other postretirement benefit plans income (expense), net, and 3) other income (charges), net.
(3)See Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", for a description of included items.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Third Quarter 2024
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$787 $744 $593 $336 $2,460 
Cost of sales575 545 522 200 1,842 
Selling, general and administrative expenses71 52 28 19 170 
Other segment items (1)
19 17 — 5 41 
Adjusted EBIT122 130 43 112 407 
Reconciliation of segment Adjusted EBIT to consolidated EBT:
Other adjusted EBIT (2)
(41)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(7)
Asset impairments, restructuring, and other charges, net (3)
(30)
Net interest expense(49)
Consolidated EBT$280 
Third Quarter 2024
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOtherTotal Consolidated
Depreciation and amortization expense$47 $37 $25 $16 $125 $2 $127 
Capital expenditures65 17 23 10 115 5 120 
(1)Other segment items for each reportable segment includes R&D expenses, other components of post-employment (benefit) cost, net and other (income) charges, net.
(2)Other is not considered an operating segment. Other includes the following which are not allocated to operating segments: 1) sales and costs from growth initiatives and businesses, 2) pension and other postretirement benefit plans income (expense), net, and 3) other income (charges), net.
(3)See Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", for a description of included items.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
First Nine Months 2025
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$2,224 $2,218 $1,507 $816 $6,765 
Cost of sales1,666 1,614 1,426 517 5,223 
Selling, general and administrative expenses198 137 71 50 456 
Other segment items (1)
70 45 20 13 148 
Adjusted EBIT
290 422 (10)236 938 
Reconciliation of segment Adjusted EBIT to consolidated EBT:
Other adjusted EBIT (2)
(142)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(2)
Asset impairments, restructuring, and other charges, net (3)
(42)
Environmental and other costs (4)
(40)
Net interest expense(156)
Consolidated EBT$556 
First Nine Months 2025
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOther
Total Consolidated
Depreciation and amortization expense$153 $107 $72 $48 380 $2 $382 
Capital expenditures273 57 56 30 416 18 434 
(1)Other segment items for each reportable segment includes R&D expenses, other components of post-employment (benefit) cost, net and other (income) charges, net.
(2)Other is not considered an operating segment. Other includes the following which are not allocated to operating segments: 1) sales and costs from growth initiatives and businesses, 2) pension and other postretirement benefit plans income (expense), net, and 3) other income (charges), net.
(3)See Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", for a description of included items.
(4)Environmental and other costs from previously divested or non-operational sites and product lines primarily related to increased chemical costs for groundwater treatment and new and extended remediation costs reported in "Other" to be paid out over 30 years.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
First Nine Months 2024
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$2,330 $2,166 $1,631 $997 $7,124 
Cost of sales1,694 1,602 1,452 577 5,325 
Selling, general and administrative expenses220 155 86 57 518 
Other segment items (1)
59 47 12 12 130 
Adjusted EBIT357 362 81 351 1,151 
Reconciliation of segment Adjusted EBIT to consolidated EBT:
Other adjusted EBIT (2)
(158)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(7)
Asset impairments, restructuring, and other charges, net (3)
(41)
Environmental and other costs (4)
(16)
Net interest expense(148)
Consolidated EBT$781 
First Nine Months 2024
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOtherTotal Consolidated
Depreciation and amortization expense$145 $109 $74 $47 $375 $5 $380 
Capital expenditures293 41 43 25 402 18 420 
(1)Other segment items for each reportable segment includes R&D expenses, other components of post-employment (benefit) cost, net and other (income) charges, net.
(2)Other is not considered an operating segment. Other includes the following which are not allocated to operating segments: 1) sales and costs from growth initiatives and businesses, 2) pension and other postretirement benefit plans income (expense), net, and 3) other income (charges), net.
(3)See Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", for a description of included items.
(4)Environmental and other costs from previously divested or non-operational sites and product lines.

(Dollars in millions)Third QuarterFirst Nine Months
Sales by Segment2025202420252024
Advanced Materials$728 $787 $2,224 $2,330 
Additives & Functional Products716 744 2,218 2,166 
Chemical Intermediates499 593 1,507 1,631 
Fibers254 336 816 997 
Total Sales by Operating Segment2,197 2,460 6,765 7,124 
Other5 4 14 13 
Total Sales$2,202 $2,464 $6,779 $7,137 

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025December 31, 2024
(Dollars in millions)
Assets by Segment (1)
Advanced Materials$5,776 $5,735 
Additives & Functional Products
4,731 4,608 
Chemical Intermediates
1,652 1,586 
Fibers1,069 1,075 
Total Assets by Operating Segment13,228 13,004 
Corporate Assets1,751 2,209 
Total Assets$14,979 $15,213 
(1)Segment assets include accounts receivable, inventory, fixed assets, goodwill, and intangible assets.


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

Page
  
  
  
  
  
  

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is based upon the unaudited consolidated financial statements of Eastman Chemical Company ("Eastman" or the "Company"), which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), and should be read in conjunction with the Company's audited consolidated financial statements, including related notes, and MD&A contained in the Company's 2024 Annual Report on Form 10-K, and the unaudited consolidated financial statements, including related notes, included in Part I, Item 1, in this Quarterly Report. All references to earnings per share ("EPS") contained in this report are diluted EPS unless otherwise noted.
 
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

NON-GAAP FINANCIAL MEASURES

Non-GAAP financial measures, and the accompanying reconciliations of the non-GAAP financial measures to the most comparable GAAP measures, are presented 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.

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 third quarter and first nine months 2025, the Company recognized an unusual increase to the provision for income taxes resulting from the enactment of the One Big Beautiful Bill Act (the "Act"). Management considers this expense unusual because of the infrequent nature of the underlying change in tax law and the transition to the recently enacted Act and resulting impacts on earnings.

Because non-core, unusual, or non-recurring transactions, costs, and losses or gains may materially affect the Company's, or any particular operating segment's, financial condition or results in a specific period in which they are recognized, 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.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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.

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 Quarterly Report

The following non-core items are excluded by management in its evaluation of certain earnings results in this Quarterly Report:
•Asset impairments, restructuring, and other charges, net; and
•Environmental and other costs from previously divested or non-operational sites and product lines.

The following unusual items are excluded by management in its evaluation of certain earnings results in this Quarterly Report:
•Increase in the provision for income taxes resulting from tax law changes.

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

Non-GAAP Financial Measures - Non-Core Items Excluded from Earnings and Adjustments to Provision for Income Taxes
 Third QuarterFirst Nine Months
(Dollars in millions)2025202420252024
Non-core items impacting earnings before interest and taxes:
Cost of sales impact from restructuring activities$2 $7 $2 $7 
Asset impairments, restructuring, and other charges, net
20 30 42 41 
Environmental and other costs— — 40 16 
Total non-core items impacting earnings before interest and taxes
22 37 84 64 
Less: Items impacting provision for income taxes:
Tax effect of non-core items
6 10 21 16 
Adjustment from tax law changes(22)— (22)— 
Interim adjustment to tax provision(47)(59)(86)(89)
Total items impacting provision for income taxes(63)(49)(87)(73)
Total items impacting net earnings attributable to Eastman$85 $86 $171 $137 

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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

•Gross profit;
•Other (income) charges, net;
•Earnings before interest and taxes ("EBIT");
•Provision for income taxes;
•Net earnings attributable to Eastman;
•Diluted EPS; and
•Total borrowings.

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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, scale advantage, and sustainability macrotrends form the foundation of the Company's research and development ("R&D") and innovation initiatives. Molecular recycling technologies continue to be an area of investment focus for the Company and extends the level of differentiation afforded by our world class technology platforms. Eastman began operating one of the world's largest molecular recycling facilities in 2024. 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 items were as follows:
 Third QuarterFirst Nine Months
(Dollars in millions)2025202420252024
Sales$2,202 $2,464 $6,779 $7,137 
Earnings before interest and taxes188 329 712 929 
Earnings before interest and taxes excluding non-core items
210 366 796 993 

Sales revenue decreased in third quarter and first nine months 2025 compared to third quarter and first nine months 2024 due to lower sales volume primarily driven by continued weakness across key end markets.

EBIT excluding non-core items decreased in third quarter and first nine months 2025 compared to third quarter and first nine months 2024 primarily due to lower sales volume, and lower selling prices and higher raw material and energy costs, partially offset by lower manufacturing costs and lower variable compensation costs across the segments.

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

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Net earnings and EPS and adjusted net earnings and EPS were as follows:
Third Quarter
20252024
(Dollars in millions, except EPS)$EPS$EPS
Net earnings attributable to Eastman$47 $0.40 $180 $1.53 
Total non-core and unusual items, net of tax
38 0.34 27 0.23 
Interim adjustment to tax provision47 0.40 59 0.50 
Adjusted net earnings$132 $1.14 $266 $2.26 
First Nine Months
20252024
(Dollars in millions, except EPS)
 $
EPS
 $
EPS
Net earnings attributable to Eastman$369 $3.18 $575 $4.86 
Total non-core and unusual items, net of tax85 0.74 48 0.41 
Interim adjustment to tax provision86 0.74 89 0.75 
Adjusted net earnings$540 $4.66 $712 $6.02 
Cash provided by operating activities was $468 million in first nine months 2025 and $747 million in first nine months 2024.

RESULTS OF OPERATIONS

Sales
Third QuarterFirst Nine Months
ChangeChange
(Dollars in millions)20252024 $%20252024 $%
Sales$2,202 $2,464 $(262)(11)%$6,779 $7,137 $(358)(5)%
Volume / product mix effect(248)(10)%(344)(5)%
Price effect(34)(1)%(15)— %
Exchange rate effect20 — %1 — %

Sales revenue decreased in third quarter 2025 compared to third quarter 2024 due to decreases across all segments. Sales revenue decreased in first nine months 2025 compared to first nine months 2024 primarily due to decreases in all segments except the AFP segment.

Gross Profit
 Third QuarterFirst Nine Months
(Dollars in millions)20252024Change20252024Change
Gross profit$433 $605 (28)%$1,506 $1,736 (13)%
Cost of sales impact from restructuring activities2 7 2 7 
Gross profit excluding non-core and unusual items$435 $612 (29)%$1,508 $1,743 (13)%

Gross profit in third quarter and first nine months 2025 included inventory adjustments related to the decommissioning of certain assets at performance films facilities in North America. Gross profit in third quarter and first nine months 2024 included inventory adjustments related to the planned closure of a solvent-based resins production line at an advanced interlayers facility in North America. Excluding these non-core items, gross profit decreased in third quarter 2025 compared to third quarter 2024 in all segments. Gross profit decreased first nine months 2025 compared to first nine months 2024 due to decreases in the Fibers, CI, and AM segments, partially offset by increases in the AFP and Other segments. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS


Selling, General and Administrative Expenses
 Third QuarterFirst Nine Months
(Dollars in millions)20252024Change20252024Change
Selling, general and administrative expenses$160 $183 (13)%$499 $554 (10)%

Selling, general and administrative ("SG&A") expenses decreased in third quarter and first nine months 2025 compared to third quarter and first nine months 2024 primarily due to cost reduction initiatives and lower variable compensation costs.

Research and Development Expenses
 Third QuarterFirst Nine Months
(Dollars in millions)20252024Change20252024Change
Research and development expenses$63 $65 (3)%$197 $184 7 %

R&D expenses decreased in third quarter 2025 compared to third quarter 2024 primarily due to targeted cost reduction initiatives across the Company. R&D expenses increased in first nine months 2025 compared to first nine months 2024 primarily due to strategic investment in innovation in first six months 2025.

Asset Impairments, Restructuring, and Other Charges, Net

(Dollars in millions)Third QuarterFirst Nine Months
2025202420252024
Asset impairments
$— $5 $— $5 
Severance charges
14 10 25 21 
Restructuring and other charges
6 15 17 15 
Total$20 $30 $42 $41 

For detailed information regarding asset impairments, restructuring, and other charges, net see Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Other Components of Post-employment (Benefit) Cost, Net
 Third QuarterFirst Nine Months
(Dollars in millions)2025202420252024
Other components of post-employment (benefit) cost, net$(1)$(5)$(4)$(14)

For more information regarding other components of post-employment (benefit) cost, net see Note 6, "Retirement Plans", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Other (Income) Charges, Net
 Third QuarterFirst Nine Months
(Dollars in millions)2025202420252024
Foreign exchange transaction losses, net
$2 $3 $6 $12 
(Income) loss from equity investments and other investment (gains) losses, net— (3)2 (4)
Environmental and other costs— — 40 16 
Other, net1 3 12 18 
Other (income) charges, net$3 $3 $60 $42 
Environmental and other costs— — (40)(16)
Other (income) charges, net excluding non-core item$3 $3 $20 $26 

Other (income) charges, net in first nine months 2025 and 2024 included environmental and other costs related to previously divested businesses or non-operational sites and product lines. Excluding this non-core item, Other (income) charges, net remained unchanged in third quarter 2025 compared to third quarter 2024, and decreased in first nine months 2025 compared to first nine months 2024 primarily due to lower foreign exchange transaction losses and lower factoring fees, partially offset by losses from equity investments. For more information regarding components of foreign exchange transaction losses, see Note 5, "Derivative and Non-Derivative Financial Instruments", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Earnings Before Interest and Taxes
 Third QuarterFirst Nine Months
(Dollars in millions)20252024Change20252024Change
Earnings before interest and taxes$188 $329 (43)%$712 $929 (23)%
Cost of sales impact from restructuring activities2 7 2 7 
Asset impairments, restructuring, and other charges, net
20 30 42 41 
Environmental and other costs— — 40 16 
Earnings before interest and taxes excluding non-core items
$210 $366 (43)%$796 $993 (20)%

Net Interest Expense
 Third QuarterFirst Nine Months
(Dollars in millions)20252024Change20252024Change
Gross interest costs$60 $58 3 %$177 $174 2 %
Less: Capitalized interest4 5 12 14 
Interest expense56 53 165 160 
Less: Interest income2 4  9 12  
Net interest expense$54 $49 10 %$156 $148 5 %

Net interest expense increased in third quarter and first nine months 2025 compared to third quarter and first nine months 2024 due to higher borrowings, less capitalized interest, and less interest income.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Provision for Income Taxes
Third QuarterFirst Nine Months
2025202420252024
(Dollars in millions)$%$%$%$%
Provision for income taxes and effective tax rate
$87 65 %$99 35 %$186 34 %$204 26 %
Tax provision for non-core items (1)
6 10 21 16 
Adjustment from tax law changes (2)
(22)— (22)— 
Interim adjustment to tax provision (3)
(47)(59)(86)(89)
Adjusted provision for income taxes and effective tax rate$24 16 %$50 16 %$99 16 %$131 16 %
(1)Provision for income taxes for non-core items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
(2)Resulting from the enactment of the One Big Beautiful Bill Act (the "Act").
(3)Third quarter 2025 provision for income taxes was adjusted to reflect the current forecasted full year effective tax rate. Third quarter 2024 provision for income taxes was adjusted to reflect the then current forecasted full year effective tax rate.

First Nine Months (1)
20252024
Effective tax rate34 %26 %
Tax impact of current year non-core items (2)
(1)%2 %
Changes in tax contingencies and valuation allowances(1)%(1)%
Forecasted full year impact of expected tax events (3)
(16)%(11)%
Forecasted full year adjusted effective tax rate16 %16 %
(1)Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rates are 15.5 percent in both first nine months 2025 and 2024, respectively.
(2)Provision for income taxes for non-core items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
(3)Expected future tax events may include finalization of tax returns; federal, state, and foreign examinations or the expiration of statutes of limitation; and corporate restructurings.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Net Earnings Attributable to Eastman and Diluted Earnings per Share
Third Quarter
20252024
(Dollars in millions, except EPS)$EPS$EPS
Net earnings and diluted earnings per share attributable to Eastman$47 $0.40 $180 $1.53 
Cost of sales impact from restructuring activities1 0.01 5 0.04 
Asset impairments, restructuring, and other charges, net
15 0.13 22 0.19 
Unusual items, net of tax: (1)
Adjustment from tax law changes22 0.20 — — 
Interim adjustment to tax provision47 0.40 59 0.50 
Adjusted net earnings and diluted earnings per share attributable to Eastman$132 $1.14 $266 $2.26 
First Nine Months
20252024
(Dollars in millions, except EPS)$EPS$EPS
Net earnings and diluted earnings per share attributable to Eastman$369 $3.18 $575 $4.86 
Non-core items, net of tax: (1)
Cost of sales impact from restructuring activities1 0.01 5 0.04 
Asset impairments, restructuring, and other charges, net
31 0.27 30 0.27 
Environmental and other costs31 0.26 13 0.10 
Unusual items, net of tax: (1)
Adjustment from tax law changes22 0.20 — — 
Interim adjustment to tax provision86 0.74 89 0.75 
Adjusted net earnings and diluted earnings per share attributable to Eastman$540 $4.66 $712 $6.02 
(1)Provision for income taxes for non-core items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

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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 Part I, Item 1, "Business - Business Segments" and Part II, Item 8, Note 20, "Segment and Regional Sales Information", in the Company's 2024 Annual Report on Form 10-K.
Advanced Materials Segment
Third QuarterFirst Nine Months
Change  Change
20252024 $%20252024 $%
(Dollars in millions)
Sales$728 $787 $(59)(7)%$2,224 $2,330 $(106)(5)%
Volume / product mix effect(58)(7)%  (77)(4)%
Price effect(7)(1)%  (27)(1)%
Exchange rate effect6 1 %  (2)— %
Earnings before interest and taxes$41 $100 $(59)(59)%$278 $335 $(57)(17)%
Cost of sales impact from restructuring activities
2 4 (2)2 4 (2)
Asset impairments, restructuring, and other charges, net10 18 (8)10 18 (8)
Earnings before interest and taxes excluding non-core items
53 122 (69)(57)%290 357 (67)(19)%
Sales revenue decreased in third quarter and first nine months 2025 compared to third quarter and first nine months 2024 primarily due to lower sales volume resulting from continued weakness in demand in the building and construction and consumer durables end markets. Third quarter 2025 demand in specialty plastics was negatively impacted by customer caution resulting from uncertainty surrounding global trade policy.

EBIT in third quarter and first nine months 2025 included inventory adjustments, and asset impairments, restructuring, and other charges, net related to the decommissioning of certain assets at performance films facilities in North America. EBIT in third quarter and first nine months 2024 included inventory adjustments, and asset impairments, restructuring, and other charges, net related to the planned closure of a solvent-based resins production line. For more information see Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

EBIT decreased in third quarter and first nine months 2025 compared to third quarter and first nine months 2024 due to $83 million and $94 million, respectively, lower sales volume and higher manufacturing costs primarily due to lower capacity utilization and reduction of inventory. These unfavorable costs were partially offset by lower SG&A expenses.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Additives & Functional Products Segment
Third QuarterFirst Nine Months
Change  Change
20252024 $%20252024 $%
(Dollars in millions)
Sales$716 $744 $(28)(4)%$2,218 $2,166 $52 2 %
Volume / product mix effect(59)(8)%  (28)(1)%
Price effect20 3 %  75 3 %
Exchange rate effect11 1 %  5 — %
Earnings before interest and taxes$128 $127 $1 1 %$418 $359 $59 16 %
Cost of sales impact from restructuring activities— 3 (3)— 3 (3)
Asset impairments, restructuring, and other charges, net— — — 4 — 4 
Earnings before interest and taxes excluding non-core items
128 130 (2)(2)%422 362 60 17 %

Sales revenue decreased in third quarter 2025 compared to third quarter 2024 primarily due to lower sales volume across the segment, partially offset by higher selling prices driven by cost-pass-through contracts.

Sales revenue increased in first nine months 2025 compared to first nine months 2024 primarily due to higher selling prices driven by cost-pass-through contracts, partially offset by lower sales volume in coatings additives product line and heat transfer fluid project fulfillments.

EBIT in first nine months 2025 included asset impairments, restructuring, and other charges, net related to the closure of a heat-transfer fluids production line at a specialty fluids and energy facility in North America. EBIT in third quarter and first nine months 2024 included inventory adjustments related to the planned closure of a solvent-based resins production line. For more information see Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Excluding these non-core items, EBIT decreased in third quarter 2025 compared to third quarter 2024 due to $26 million unfavorable sales volume, mostly offset by lower manufacturing costs and lower SG&A expenses.

Excluding these non-core items, EBIT increased in first nine months 2025 compared to first nine months 2024 due to $15 million higher selling prices, net of higher raw material and energy costs, lower manufacturing costs, and lower SG&A expenses.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Chemical Intermediates Segment
Third QuarterFirst Nine Months
Change  Change
20252024 $%20252024 $%
(Dollars in millions)
Sales$499 $593 $(94)(16)%$1,507 $1,631 $(124)(8)%
Volume / product mix effect(50)(8)%  (67)(4)%
Price effect(47)(8)%  (57)(4)%
Exchange rate effect3 — %  — — %
Earnings before interest and taxes$1 $43 $(42)(98)%$(10)$81 $(91)(112)%
Sales revenue decreased in third quarter 2025 compared to third quarter 2024 due to lower sales volume attributed to continued weak market demand in the industrial and building and construction end markets and lower selling prices attributed to unfavorable commodity market conditions.

Sales revenue decreased in first nine months 2025 compared to first nine months 2024 due to lower sales volume and lower selling prices primarily in the industrial end market as well as an unplanned outage during second quarter 2025 resulting in a lack of available volume.

EBIT decreased in third quarter 2025 compared to third quarter 2024 due to $47 million lower selling prices and higher raw material and energy costs, partially offset by lower SG&A expenses.

EBIT decreased in first nine months 2025 compared to first nine months 2024 primarily due to $63 million lower selling prices and higher raw material and energy costs and $33 million lower sales volume. Higher manufacturing costs were offset by lower SG&A expenses.

Fibers Segment
Third QuarterFirst Nine Months
Change  Change
20252024 $%20252024 $%
(Dollars in millions)
Sales$254 $336 $(82)(24)%$816 $997 $(181)(18)%
Volume / product mix effect(82)(24)%  (175)(18)%
Price effect— — %  (4)— %
Exchange rate effect— — %  (2)— %
Earnings before interest and taxes$67 $112 $(45)(40)%$236 $351 $(115)(33)%
Sales revenue decreased in third quarter and first nine months 2025 compared to third quarter and first nine months 2024 primarily due to lower sales volume in the acetate tow product line attributed to destocking and industry capacity share adjustments, and lower textiles sales into China due to impacts of tariff risk on demand within the value chain.

EBIT decreased in third quarter and first nine months 2025 compared to third quarter and first nine months 2024 primarily due to $36 million and $92 million, respectively, lower sales volume. Higher raw material and energy costs and lower selling prices were partially offset by lower SG&A expenses.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Other
Third QuarterFirst Nine Months
2025202420252024
(Dollars in millions)
Sales$5 $4 $14 $13 
Loss before interest and taxes
Growth initiatives and businesses not allocated to operating segments$(41)$(43)$(139)$(155)
Pension and other postretirement benefits income (expense), net not allocated to operating segments2 2 4 6 
Asset impairments, restructuring, and other charges, net(10)(12)(28)(23)
Other income (charges), net not allocated to operating segments— — (47)(25)
Loss before interest and taxes$(49)$(53)$(210)$(197)
Asset impairments, restructuring, and other charges, net10 12 28 23 
Environmental and other costs— — 40 16 
Loss before interest and taxes excluding non-core items
(39)(41)(142)(158)
Sales and costs related to growth initiatives, including the cellulosic biopolymer and circular economy platforms, 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". First quarter 2024 also included pre-production costs for the Kingsport methanolysis facility.

Loss before interest and taxes in third quarter and first nine months 2025 and third quarter and first nine months 2024 included severance charges related to corporate cost reduction initiatives. In addition, first nine months 2025 and first nine months 2024 included environmental and other costs from previously divested or non-operational sites and product lines. First nine months 2025 and third quarter and first nine months 2024 included profitability improvement initiatives. For more information, see "Non-GAAP Financial Measures" in this MD&A. For more information regarding asset impairments, restructuring, and other charges, net, see Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

SALES BY CUSTOMER LOCATION
Sales Revenue
 Third QuarterFirst Nine Months
ChangeChange
(Dollars in millions)20252024$%20252024 $%
United States and Canada$972 $1,032 $(60)(6)%$2,955 $2,995 $(40)(1)%
Europe, Middle East, and Africa563 640 (77)(12)%1,783 1,949 (166)(9)%
Asia Pacific534 653 (119)(18)%1,656 1,807 (151)(8)%
Latin America133 139 (6)(4)%385 386 (1)— %
Total Eastman
$2,202 $2,464 $(262)(11)%$6,779 $7,137 $(358)(5)%

Sales revenue decreased 11 percent in third quarter 2025 compared to third quarter 2024. Lower sales revenue was due to lower sales volume and unfavorable product mix across all regions, as well as lower selling prices in the Asia Pacific; United States and Canada; and Latin America regions. These decreases were partially offset by favorable selling prices and foreign currency impacts in the Europe, Middle East, and Africa region.
Sales revenue decreased 5 percent in first nine months 2025 compared to first nine months 2024. Lower sales revenue was due to lower sales volume and unfavorable product mix in the Europe, Middle East, and Africa; Asia Pacific; and United States and Canada regions.
Further discussion by operating segment is presented in "Summary by Operating Segment" in this MD&A.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND OTHER FINANCIAL INFORMATION

Cash Flows

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 II, Item 1A of this Quarterly Report. Management believes maintaining a financial profile that supports an investment grade credit rating is important to its long-term strategy and financial flexibility.
First Nine Months
(Dollars in millions)20252024
Net cash provided by (used in)
Operating activities$468 $747 
Investing activities(415)(402)
Financing activities(415)(273)
Effect of exchange rate changes on cash and cash equivalents14 2 
Net change in cash and cash equivalents(348)74 
Cash and cash equivalents at beginning of period837 548 
Cash and cash equivalents at end of period$489 $622 
 
Cash provided by operating activities decreased $279 million in first nine months 2025 compared to first nine months 2024 primarily due to lower accounts payable, lower net earnings, and higher variable compensation payout partially offset by lower inventories.

Cash used in investing activities in first nine months 2025 was relatively unchanged compared to first nine months 2024.

Cash used in financing activities increased $142 million in first nine months 2025 compared to first nine months 2024 primarily due to lower net borrowings activity partially offset by lower treasury stock repurchases. For additional information, see "Liquidity and Other Financial Information - Debt and Other Commitments" in this MD&A.

Priorities for uses of available cash include capital expenditures, payment of the quarterly dividend, net debt reduction, and share repurchases.

Working Capital Management and Off-Balance Sheet Arrangements

Eastman applies a proactive and disciplined approach to working capital management to optimize cash flow and to enable a full range of capital allocation options in support of the Company's strategy. Eastman expects to continue utilizing the programs described below to support operating cash flow consistent with past practices.

The Company engages in off-balance sheet, uncommitted accounts receivable factoring programs as a routine part of its ordinary business operations. Through these programs, entire invoices may be sold to third-party financial institutions, the vast majority of which are without recourse. Under these agreements, the Company sells the invoices at face value, less a transaction fee, which substantially equals the carrying value and fair value with no gain or loss recognized, and no credit loss exposure is retained. Available capacity under these programs, which the Company uses as a routine source of working capital funding, is dependent on the level of accounts receivable eligible to be sold and the financial institutions' willingness to purchase such receivables. The total amounts sold were $696 million and $703 million in third quarter 2025 and 2024, respectively, and $2.0 billion in both first nine months 2025 and 2024. Based on the original terms of receivables sold for certain programs and actual outstanding balance of receivables under servicing agreements, the Company estimates that $385 million of these receivables would have been outstanding as of both September 30, 2025 and December 31, 2024, had they not been sold under these factoring programs.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Eastman works with suppliers to optimize payment terms and conditions on accounts payable to enhance timing of working capital and cash flows. The Company has a voluntary supplier finance program to provide suppliers with the opportunity to sell receivables due from Eastman to a participating financial institution. For additional information, see Note 1, "Significant Accounting Policies", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Debt and Other Commitments

At September 30, 2025, the Company's borrowings totaled $5.1 billion with various maturities. In first quarter 2025, the Company issued an additional $250 million aggregate principal amount of the 5.0% notes due August 2029 in a registered public offering (the "2029 Notes"), which was originally issued in August 2024, resulting in an aggregate principal amount of $750 million. The net proceeds from the 2025 issuance were $246 million. The Company also repaid the $450 million 3.80% notes due March 2025. There were no debt extinguishment costs associated with the repayment of this debt.

See Note 4, "Borrowings", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Other Financial Information - Debt and Other Commitments" in Part II, Item 7 of the Company's 2024 Annual Report on Form 10-K for information on other commitments.

Credit Facility, Term Loans, and Commercial Paper Borrowings

The Company has access to a $1.50 billion revolving credit agreement (the "Credit Facility") that matures in February 2029. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility includes sustainability-linked pricing terms, provides available liquidity for general corporate purposes, and supports commercial paper borrowings. At September 30, 2025 and December 31, 2024, the Company had no outstanding borrowings under the Credit Facility. The Company's commercial paper borrowings were $290 million at September 30, 2025 with a weighted interest rate of 4.33%. The Company had no commercial paper borrowings at December 31, 2024.

In first quarter 2025, the Company repaid $100 million of the remaining $250 million five-year term loan (the "2027 Term Loan"). There were no extinguishment costs associated with the partial repayment of the loan. The outstanding balance on the 2027 Term Loan was $150 million at September 30, 2025 and $250 million at December 31, 2024, with variable interest rates of 5.54% and 5.58%, respectively. The 2027 Term Loan is subject to interest at a spread above quoted market rates.

The Credit Facility and the 2027 Term Loan contain customary covenants, including requirements to maintain certain financial ratios, that determine the events of default, amounts available, and terms of borrowings. The Company was in compliance with all applicable covenants at both September 30, 2025 and December 31, 2024. The total amount of available borrowings under the Credit Facility was $1.50 billion as of September 30, 2025.

See Note 4, "Borrowings", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information.

Net Debt
 September 30,December 31,
(Dollars in millions)20252024
Total borrowings$5,075 $5,017 
Less: Cash and cash equivalents489 837 
Net debt (1)
$4,586 $4,180 
(1)Includes non-cash increase of $68 million in 2025 and non-cash decrease of $32 million in 2024 resulting from foreign currency exchange rates.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Capital Expenditures

Capital expenditures were $434 million and $420 million in first nine months 2025 and 2024, respectively. Capital expenditures in first nine months 2025 were primarily for the AM segment methanolysis plastic-to-plastic molecular recycling manufacturing facilities, other targeted growth initiatives, and site modernization projects. The Company expects that 2025 capital expenditures will be approximately $550 million, primarily for targeted growth initiatives, including the AM segment methanolysis plastic-to-plastic molecular recycling manufacturing facilities, and site modernization projects.

Stock Repurchases

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 September 30, 2025, a total of 13,032,926 shares have been repurchased under the 2021 authorization for $1.2 billion. Both dividends and share repurchases are key strategies employed by the Company to return value to its stockholders. The Company repurchased 776,977 shares of common stock during third quarter 2025 for $50 million, and repurchased 1,420,768 shares of common stock during first nine months 2025 for $100 million.

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, litigation and contingent liabilities, and income taxes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes the critical accounting estimates described in Part II, Item 7 of the Company's 2024 Annual Report on Form 10-K are the most important to the fair presentation of the Company's financial condition and results. These estimates require management's most significant judgments in the preparation of the Company's consolidated financial statements.

Impairment of Long-Lived Assets

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. As of September 30, 2025, the goodwill balance as reported on the Unaudited Consolidated Statements of Financial Position is $3.7 billion. 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. As a result of the impact of forecasted decreases in revenue and earnings, the Company considered whether these conditions indicated that it was more likely than not that goodwill was impaired for each of its reporting units during third quarter 2025. Management does not believe it is more likely than not that goodwill was impaired for each of its reporting units as of September 30, 2025. However, the performance films reporting unit (part of the AM operating segment as described in Part I, Item 1, "Business", of the Company's 2024 Annual Report on Form 10-K), which has a goodwill balance of $811 million at September 30, 2025, has experienced near-term declines in revenue and earnings as a result of the combination of weakness in the macro environment, historically low automotive builds, and the impact of global trade. Additional declines in the market conditions or forecasted revenue and earnings or changes in other assumptions used to estimate fair value of the performance films reporting unit could result in an impairment of goodwill.

RECENTLY ISSUED ACCOUNTING STANDARDS

For information regarding the impact of recently issued accounting standards, see Note 1, "Significant Accounting Policies", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

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ITEM 3.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. For more information regarding exposures, refer to Part II, Item 7A of the Company's 2024 Annual Report on Form 10-K.

At September 30, 2025, the market risk associated with certain cash flows under foreign currency derivative transactions assuming a 10 percent adverse move in the U.S. dollar relative to these foreign currencies was $50 million, with an additional $5 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 September 30, 2025, a 10 percent fluctuation in the euro currency rate would have had an impact of $229 million 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 I, Item 1 of this Quarterly 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.

Other than the foreign currency risk discussed above, there have been no material changes to the Company's market risks from those disclosed in Part II, Item 7A of the Company's 2024 Annual Report on Form 10-K.

ITEM 4.CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures

Eastman maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures. Based on that evaluation, the CEO and CFO have concluded that as of September 30, 2025, the Company's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed was accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company's internal control over financial reporting that occurred during third quarter 2025 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

General

From time to time, Eastman and its operations are parties to, or targets of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which are handled and defended in the ordinary course of business. While the Company is unable to predict the outcome of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations, or cash flows. 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 1A.RISK FACTORS

For information regarding the Company's material known risk factors which could materially adversely affect the Company, its business, financial condition, or results of operations, see "Risk Factors" in Part I, Item 1A of the Company's 2024 Annual Report on Form 10-K.
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ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Purchases of Equity Securities by the Issuer

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 September 30, 2025, a total of 13,032,926 shares have been repurchased under the 2021 authorization for $1.2 billion. Both dividends and share repurchases are key strategies employed by the Company to return value to its stockholders. The Company repurchased 776,977 shares of common stock during third quarter 2025 for $50 million, and repurchased 1,420,768 shares of common stock during first nine months 2025 for $100 million. For additional information, see Note 9, "Stockholders' Equity", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.
PeriodTotal Number
of Shares
Purchased
Average Price Paid Per Share (1)
Total Number of Shares Purchased as Part of Publicly Announced Plan
or Program 		Approximate Dollar
Value that May Yet Be Purchased Under the Plan or Program
July 1-31, 2025— $— — $1.365  billion
August 1-31, 2025776,977 $64.34 776,977 $1.315  billion
September 1-30, 2025— $— — $1.315  billion
Total776,977 $64.34 776,977 

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ITEM 5.    OTHER INFORMATION

(c) Director and Officer Trading Arrangements

A portion of our directors’ and officers’ compensation is in the form of equity awards and, from time to time, they may engage in open-market transactions involving Company securities for diversification or other personal reasons. All such transactions in Company securities by directors and officers must comply with the Company’s Insider Trading Policy, which requires that transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables directors and officers to prearrange transactions in the Company’s securities in a manner that avoids concerns about initiating transactions while in possession of material nonpublic information. The Company’s Insider Trading Policy permits our directors and executive officers to enter into trading plans designed to comply with Rule 10b5-1.

No Rule 10b5-1 trading arrangements or "non-Rule 10b5-1 trading arrangements" (as defined by Regulation S-K Item 408(c)) were entered into, modified, or terminated by the Company's directors or officers during the quarterly period covered by this Report.

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ITEM 6.EXHIBITS

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

EXHIBIT INDEX
Exhibit NumberDescription
  
3.01
3.02
4.01
10.01 *
31.01 *
31.02 *
32.01 *
32.02 *
101.INSInline 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
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*     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.

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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Eastman Chemical Company
Date:November 4, 2025By:/s/ William T. McLain, Jr.
William T. McLain, Jr.
Executive Vice President and Chief Financial Officer

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