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Form 8-K EASTMAN CHEMICAL CO For: Jul 28

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July 28, 2016 4:42 PM EDT



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K
CURRENT REPORT

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

Date of report (Date of earliest event reported):
July 28, 2016

EASTMAN CHEMICAL COMPANY
(Exact Name of Registrant as Specified in Its Charter)

 
 
 
 
 
Delaware
 
1-12626
 
62-1539359
(State or Other Jurisdiction
of Incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
 
 
 
 

 
 
 
200 South Wilcox Drive, Kingsport, TN
 
37662
(Address of Principal Executive Offices)
 
(Zip Code)

(423) 229-2000
(Registrant’s Telephone Number, Including Area Code)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
 
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
 
 
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
 
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




EASTMAN CHEMICAL COMPANY - EMN 
 
 

Item 2.02 Results of Operations and Financial Condition
 
On July 28, 2016 the registrant publicly released its financial results for second quarter 2016. The full text of the release is furnished as Exhibit 99.01 to this Current Report on Form 8-K, and is incorporated herein by reference. This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.





EASTMAN CHEMICAL COMPANY - EMN 
 
 

Item 9.01 Financial Statements and Exhibits:
 
(d) Exhibits
 
The following exhibit is furnished pursuant to Item 9.01:
 
99.01 Public release by the registrant on July 28, 2016 of second quarter 2016 financial results.




EASTMAN CHEMICAL COMPANY - EMN 
 
 
 
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, hereunto duly authorized.
 
 
 
Eastman Chemical Company 
 
 
By:
 /s/ Scott V. King                                                                                    
 
 
Scott V. King
 
 
Vice President, Corporate Controller and Chief Accounting Officer
 
 
 
Date: July 28, 2016




Eastman Announces Second-Quarter 2016 Financial Results

KINGSPORT, Tenn., July 28, 2016 - Eastman Chemical Company (NYSE: EMN) today announced reported earnings of $1.71 per diluted share for second quarter 2016 versus $1.98 per diluted share for second quarter 2015. Earnings excluding non-core items were $1.68 per diluted share for second quarter 2016 versus $2.01 per diluted share for second quarter 2015. For detail of the excluded non-core items and reconciliation to reported company and segment earnings, see Tables 3A and 4.

“The progress we have made executing our strategy to become a more specialty chemical company is enabling us to better navigate an especially challenging global economy,” said Mark Costa, Board Chair and CEO. “The actions we have taken to focus and accelerate our innovation and market development program and add attractive acquisitions, while also reducing costs, have mitigated the impact of slow global growth and volatile raw material and energy costs. We remain confident in the resiliency of our portfolio and the sustainability of our strong cash flow going forward.”

(In millions, except per share amounts)
2Q2016
2Q2015
Sales revenue
$2,297
$2,533
Operating earnings
$376
$469
Operating earnings excluding non-core items*
$376
$480
Earnings per diluted share
$1.71
$1.98
Earnings per diluted share excluding non-core items*
$1.68
$2.01
Net cash provided by operating activities
$494
$591
*For reconciliation to reported company and segment earnings, see Tables 3A and 4.


Corporate Results 2Q 2016 versus 2Q 2015

Sales revenue declined primarily due to lower selling prices particularly in Chemical Intermediates. Operating earnings and earnings per share declined primarily due to declines in Chemical Intermediates and Fibers.

Segment Results 2Q 2016 versus 2Q 2015

Additives & Functional Products - Sales revenue decreased due to lower selling prices attributed to lower raw material and energy costs. Operating earnings decreased primarily due to lower selling prices more than offsetting lower raw material and energy costs.
    

1


Advanced Materials - Sales revenue was relatively unchanged as increased sales volume of premium products including Saflex® acoustic interlayers and Eastman TritanTM copolyester was offset by lower selling prices, primarily for copolyesters, attributed to lower raw material and energy costs. Operating earnings were relatively unchanged.

Chemical Intermediates - Sales revenue decreased due to lower selling prices. The lower selling prices were mostly the result of the negative impact of lower market prices for propylene, ethylene, and methanol and continued competitive pressure from weak demand in Asia Pacific. Operating earnings decreased significantly due to lower selling prices more than offsetting lower raw material and energy costs, and higher planned maintenance costs.

Fibers - Sales revenue decreased primarily due to lower sales volume, particularly for acetate tow and acetate flake, and lower selling prices, particularly for acetate tow. Lower acetate tow sales volume was due to customer inventory destocking in China and lower acetate flake sales volume was due to timing of shipments to Eastman's China acetate tow joint venture. Operating earnings declined due to lower sales volume.

Cash Flow

Eastman generated $494 million in cash from operating activities during second quarter 2016 primarily due to strong net earnings. In addition, the company sold 1.5% notes due 2023 in the principal amount of €550 million ($614 million), with net proceeds used to repay $500 million of the $1 billion 2.4% notes due June 2017 and other borrowings. Priorities for uses of available cash include payment of the quarterly dividend, repayment of debt, funding targeted growth initiatives, and repurchasing shares. Total borrowings decreased $274 million, and net debt, defined as total borrowings minus cash and cash equivalents, declined by $312 million during the second quarter. See Tables 5A, 5B, 6A, and 6B.

Outlook
    
Commenting on the outlook for full-year 2016, Costa said: “During the first half of the year, we delivered strong growth of high value, innovative specialty products and we expect that to continue. We are also benefitting from the actions we have taken to accelerate our innovation and market development activities and to significantly increase our cost reduction efforts. However, the challenges we face have intensified including increasing competitive pressures particularly from the Asia Pacific region and compressing olefin spreads. As a result, we expect a decline in adjusted 2016 earnings per share that approaches 10 percent below adjusted 2015 earnings per share compared with our previous expectation of a decline of approximately 5 percent.”


2


The full-year 2016 projected earnings exclude the non-core items in first six months 2016 detailed in Tables 3A and 4 and will exclude any non-core, unusual, or non-recurring items in second half 2016. Our second half 2016 financial results forecasts do not include non-core items (such as mark-to-market pension and other postretirement benefit gain or loss) or any unusual or non-recurring items, and we accordingly are unable to reconcile projected full-year 2016 earnings excluding non-core and any unusual or non-recurring items to reported GAAP earnings without unreasonable efforts.

Forward-Looking Statements

This news release includes forward-looking statements concerning current expectations for future global economic conditions; competitive position and acceptance of specialty products in key markets; mix of products sold; raw material and energy prices and costs, and other costs; and revenue, earnings, and cash flow for full year 2016. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company's filings with the Securities and Exchange Commission, including the Form 10-Q filed for first quarter 2016 available, and the Form 10-Q to be filed for second quarter 2016 and to be available, on the Eastman web site at www.eastman.com in the Investors, SEC filings section.

Conference call and webcast information

Eastman will host a conference call with industry analysts on July 29, 2016 at 8:00 a.m. ET. To listen to the live webcast of the conference call and view the accompanying slides, go to www.investors.eastman.com, Events & Presentations. To listen via telephone, the dial-in number is 913-312-6697, passcode number 7456708. A web replay, a replay in downloadable MP3 format, and the accompanying slides will be available at www.investors.eastman.com, Events & Presentations. A telephone replay will be available continuously from 11:00 a.m. ET, July 29, to 11:00 a.m. ET, August 8, at 888-203-1112 or 719-457-0820, passcode 7456708.


3


Eastman is a global specialty chemical company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in approximately 100 countries and had 2015 revenues of approximately $9.6 billion. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 15,000 people around the world. For more information, visit www.eastman.com.

# # #
Contacts:

Media:  Tracy Kilgore
423-224-0498 / [email protected]

Investors:  Greg Riddle
212-835-1620 / [email protected]



4


FINANCIAL INFORMATION
July 28, 2016


For Eastman Chemical Company Second Quarter 2016 Financial Results Release

Table of Contents



5


Table 1 – Statements of Earnings
 
Second Quarter
 
First Six Months
(Dollars in millions, except per share amounts; unaudited)
2016
 
2015
 
2016
 
2015
Sales
$
2,297

 
$
2,533

 
$
4,533

 
$
4,976

Cost of sales
1,692

 
1,813

 
3,294

 
3,600

Gross profit
605

 
720

 
1,239

 
1,376

Selling, general and administrative expenses
174

 
194

 
357

 
374

Research and development expenses
55

 
57

 
109

 
113

Asset impairments and restructuring (gains) charges, net
—

 
—

 
(2
)
 
109

Operating earnings
376

 
469

 
775

 
780

Net interest expense
63

 
66

 
127

 
132

Early debt extinguishment costs
9

 
—

 
9

 
—

Other income, net (1)
(20
)
 
—

 
(8
)
 
(11
)
Earnings before income taxes
324

 
403

 
647

 
659

Provision for income taxes
67

 
104

 
139

 
188

Net earnings
257

 
299

 
508

 
471

Less: net earnings attributable to noncontrolling interest
2

 
2

 
2

 
3

Net earnings attributable to Eastman
$
255

 
$
297

 
$
506

 
$
468

 
 
 
 
 
 
 
 
Basic earnings per share attributable to Eastman
$
1.73

 
$
2.00

 
$
3.43

 
$
3.15

Diluted earnings per share attributable to Eastman
$
1.71

 
$
1.98

 
$
3.40

 
$
3.12

 
 
 
 
 
 
 
 
Shares (in millions) outstanding at end of period
147.7

 
148.7

 
147.7

 
148.7

Shares (in millions) used for earnings per share calculation
 
 
 
 
 
 
 
Basic
147.8

 
148.6

 
147.8

 
148.6

Diluted
148.9

 
149.8

 
148.9

 
149.8


(1) 
Second quarter and first six months 2016 included a gain of $17 million from the sale of the Company's 50 percent interest in the Primester joint venture.


6


Table 2A – Segment Sales Information
 
 
Second Quarter
 
First Six Months
(Dollars in millions, unaudited)
 
2016
 
2015
 
2016
 
2015
Sales by Segment
 
 
 
 
 
 
 
 
Additives & Functional Products
 
$
770

 
$
830

 
$
1,507

 
$
1,634

Advanced Materials
 
646

 
647

 
1,235

 
1,208

Chemical Intermediates
 
633

 
745

 
1,253

 
1,527

Fibers
 
234

 
299

 
514

 
583

Total Sales by Segment
 
2,283

 
2,521

 
4,509

 
4,952

Other
 
14

 
12

 
24

 
24

Total Eastman Chemical Company
 
$
2,297

 
$
2,533

 
$
4,533

 
$
4,976

 
Table 2B – Sales Revenue Change
 
Second Quarter 2016 Compared to Second Quarter 2015
 
 
Change in Sales Revenue Due To

(Unaudited)
Revenue
% Change
Volume / Product Mix Effect
Price Effect
Exchange
Rate
Effect
Additives & Functional Products
(7)
 %
—
 %
(8)
 %
1
 %
Advanced Materials
—
 %
2
 %
(2)
 %
—
 %
Chemical Intermediates
(15
)%
—
 %
(15)
 %
—
 %
Fibers
(22)
 %
(16)
 %
(6)
 %
—
 %
 
 
 
 
 
Total Eastman Chemical Company
(9)
 %
(1)
 %
(8)
 %
—
 %
 
 
 
 
 
 
 
 
Six Months 2016 Compared to Six Months 2015
 
 
Change in Sales Revenue Due To
(Unaudited)
Revenue
% Change
Volume / Product Mix Effect
Price Effect
Exchange
Rate
Effect
Additives & Functional Products
(8)
 %
1
 %
(8)
 %
(1)
 %
Advanced Materials
2
 %
5
 %
(2)
 %
(1)
 %
Chemical Intermediates

(18
)%
(2)
 %
(16)
 %
—
 %
Fibers
(12)
 %
(6)
 %
(5)
 %
(1)
 %
 
 
 
 
 
Total Eastman Chemical Company
(9)
 %
—
 %
(9)
 %
—
 %


7


Table 2C – Sales by Customer Location
 
 
Second Quarter
 
First Six Months
(Dollars in millions, unaudited)
 
2016
 
2015
 
2016
 
2015
Sales by Customer Location
 
 
 
 
 
 
 
 
United States and Canada
 
$
1,030

 
$
1,142

 
$
2,036

 
$
2,302

Asia Pacific
 
530

 
624

 
1,025

 
1,141

Europe, Middle East, and Africa
 
603

 
625

 
1,215

 
1,250

Latin America
 
134

 
142

 
257

 
283

Total Eastman Chemical Company
 
$
2,297

 
$
2,533

 
$
4,533

 
$
4,976


8


Table 3A - Segment, Other, and Company Non-GAAP Operating Earnings (Loss) Reconciliations(1) 
 
 
Second Quarter
 
First Six Months
(Dollars in millions, unaudited)
 
2016
 
2015
 
2016
 
2015
Additives & Functional Products
 
 
 
 
 
 
 
 
Operating earnings
 
$
168

 
$
178

 
$
321

 
$
335

Asset impairments and restructuring gains, net
 
—

 
—

 
(2
)
 
—

Excluding non-core items
 
168

 
178

 
319

 
335

Advanced Materials
 
 

 
 

 
 

 
 

Operating earnings
 
132

 
135

 
240

 
203

Additional costs of acquired inventories
 
—

 
—

 
—

 
7

Excluding non-core item
 
132

 
135

 
240

 
210

Chemical Intermediates
 
 
 
 
 
 
 
 
Operating earnings
 
15

 
87

 
82

 
205

Fibers
 
 

 
 

 
 

 
 

Operating earnings
 
72

 
93

 
158

 
86

Asset impairments and restructuring (gains) charges, net
 
—

 
(2
)
 
—

 
95

Excluding non-core items
 
72

 
91

 
158

 
181

Other
 
 
 
 
 
 
 
 
Operating earnings
 
(11
)
 
(24
)
 
(26
)
 
(49
)
Mark-to-market pension and other postretirement benefit plans loss
 
—

 
2

 
—

 
2

Acquisition integration and transaction costs
 
—

 
9

 
9

 
17

Asset impairments and restructuring charges, net
 
—

 
2

 
—

 
14

Excluding non-core items
 
(11
)
 
(11
)
 
(17
)
 
(16
)
 
 
 
 
 
 
 
 
 
Total Eastman Chemical Company
 
 
 
 
 
 
 
 
Operating earnings
 
376

 
469

 
775

 
780

Mark-to-market pension and other postretirement benefit plans loss
 
—

 
2

 
—

 
2

Acquisition integration and transaction costs
 
—

 
9

 
9

 
17

     Asset impairments and restructuring (gains) charges, net
 
—

 
—

 
(2
)
 
109

Additional costs of acquired inventories
 
—

 
—

 
—

 
7

Total operating earnings excluding non-core items
 
$
376

 
$
480

 
$
782

 
$
915

 
 
 
 
 
 
 
 
 
Company Non-GAAP Operating Earnings Reconciliations by Line Items
 
 
 
 
 
 
 
 
Operating earnings
 
$
376

 
$
469

 
$
775

 
$
780

Costs of sales
 
—

 
2

 
—

 
9

Selling, general and administrative expenses
 
—

 
9

 
9

 
17

Asset impairment and restructuring (gains) charges, net
 
—

 
—

 
(2
)
 
109

Total operating earnings excluding non-core items
 
$
376

 
$
480

 
$
782

 
$
915

 

(1) 
See "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Quarterly Reports on Form 10-Q for first quarter 2016, second quarter 2015, and first quarter 2015 for description of non-core items.

9


Table 3B - Segment, Other, and Company Non-GAAP Operating Earnings (Loss) (1) 
 
 
Second Quarter
 
First Six Months
(Dollars in millions, unaudited)
 
2016
 
2015
 
2016
 
2015
Additives & Functional Products

 
$
168

 
$
178

 
$
319

 
$
335

Advanced Materials

 
132

 
135

 
240

 
210

Chemical Intermediates

 
15

 
87

 
82

 
205

Fibers

 
72

 
91

 
158

 
181

Total segment operating earnings excluding non-core items
 
$
387

 
$
491

 
$
799

 
$
931

Total Other
 
(11
)
 
(11
)
 
(17
)
 
(16
)
Total operating earnings excluding non-core items
 
$
376

 
$
480

 
$
782

 
$
915

 

(1) 
For identification of excluded non-core items and reconciliations to GAAP operating earnings, see Table 3A.

 
 
 
 
 
 
 
 

10


Table 4 – Operating Earnings, Earnings, and Earnings Per Share Non-GAAP Reconciliations
 
 
Second Quarter 2016
 
 
Operating
Earnings
 
Earnings Before Income Taxes
 
Net Earnings
 Attributable to Eastman
(Dollars in millions, except per share amounts, unaudited)
 
 
After Tax
 
Per Diluted Share
As reported
 
$
376

 
$
324

 
$
255

 
$
1.71

Non-Core Items:
 
 

 
 

 
 
 
 
Early debt extinguishment costs (1)
 
—

 
9

 
6

 
0.04

Gain from sale of equity investment in Primester joint venture (2)
 
—

 
(17
)
 
(11
)
 
(0.07
)
Excluding non-core items
 
$
376

 
$
316

 
$
250

 
$
1.68


 
 
Second Quarter 2015
 
 
Operating
Earnings
 
Earnings
 Before Income Taxes
 
Net Earnings
 Attributable to Eastman
(Dollars in millions, except per share amounts, unaudited)
 
 
After Tax
 
Per Diluted Share
As reported
 
$
469

 
$
403

 
$
297

 
$
1.98

Non-Core Items: (3)
 
 
 
 
 
 
 
 
Asset impairments and restructuring gains, net
 
—

 
—

 
(4
)
 
(0.02
)
Acquisition integration and transaction costs 
 
9

 
9

 
6

 
0.04

Mark-to-market pension and other postretirement benefit plans loss 
 
2

 
2

 
1

 
0.01

Excluding non-core items
 
$
480

 
$
414

 
$
300

 
$
2.01


(1) 
Cost resulting from early repayment of $500 million of the 2.4% notes due June 2017.
(2) 
Gain from the sale of the Company's 50 percent interest in the Primester joint venture.
(3) 
See "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Quarterly Report on Form 10-Q for second quarter 2015 for description of non-core items.


11


Table 4 – Operating Earnings, Earnings, and Earnings Per Share Non-GAAP Reconciliations (continued)
 
 
First Six Months 2016
 
 
Operating
Earnings
 
Earnings
 Before Income Taxes
 
Net Earnings
 Attributable to Eastman
(Dollars in millions, except per share amounts, unaudited)
 
 
After Tax
 
Per Diluted Share
As reported
 
$
775

 
$
647

 
$
506

 
$
3.40

Non-Core Items: (1)
 
 

 
 

 
 
 
 
Asset impairments and restructuring gains, net
 
(2
)
 
(2
)
 
(4
)
 
(0.03
)
Acquisition integration and transaction costs
 
9

 
9

 
5

 
0.03

Early debt extinguishment costs (2)
 
—

 
9

 
6

 
0.04

Cost of disposition of claims against discontinued Solutia operations 
 
—

 
5

 
3

 
0.02

Gain from sale of equity investment in Primester joint venture (3)
 
—

 
(17
)
 
(11
)
 
(0.07
)
Excluding non-core items
 
$
782

 
$
651

 
$
505

 
$
3.39


 
 
First Six Months 2015
 
 
Operating
Earnings
 
Earnings
 Before Income Taxes
 
Net Earnings
 Attributable to Eastman
(Dollars in millions, except per share amounts, unaudited)
 
 
After Tax
 
Per Diluted Share
As reported
 
$
780

 
$
659

 
$
468

 
$
3.12

Non-Core Items: (1)
 
 
 
 
 
 
 
 
Asset impairments and restructuring charges, net
 
109

 
109

 
92

 
0.62

Acquisition integration and transaction costs
 
17

 
17

 
11

 
0.07

Additional costs of acquired inventories
 
7

 
7

 
4

 
0.03

Mark-to-market pension and other postretirement benefit plans loss 
 
2

 
2

 
1

 
0.01

Excluding non-core items
 
$
915

 
$
794

 
$
576

 
$
3.85


(1) 
See "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Quarterly Reports on Form 10-Q for first quarter 2016, second quarter 2015, and first quarter 2015 for description of non-core items.
(2) 
Cost resulting from early repayment of $500 million of the 2.4% notes due June 2017.
(3) 
Gain from the sale of the Company's 50 percent interest in the Primester joint venture.




12


Table 5A – Statements of Cash Flows
 
Second Quarter
 
First Six Months
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Operating activities
 
 
 
 
 
 
 
Net earnings
$
257

 
$
299

 
$
508

 
$
471

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
144

 
142

 
291

 
287

Asset impairment charges
—

 
—

 
—

 
89

Gain on sale of equity investment
(17
)
 
—

 
(17
)
 
—

Early debt extinguishment costs
9

 
—

 
9

 
—

Provision (benefit) for deferred income taxes
38

 
(46
)
 
47

 
(30
)
Mark-to-market loss on pension and other postretirement benefit plans
—

 
2

 
—

 
2

Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
 
 
 
 
 
 
 
Increase in trade receivables
(7
)
 
(12
)
 
(151
)
 
(103
)
Decrease in inventories
43

 
22

 
41

 
43

Decrease in trade payables
(14
)
 
(1
)
 
(76
)
 
(109
)
Pension and other postretirement contributions in excess of expenses
(24
)
 
(16
)
 
(43
)
 
(39
)
Variable compensation less than (in excess of) expenses
42

 
56

 
(67
)
 
(24
)
Other items, net
23

 
145

 
(1
)
 
95

Net cash provided by operating activities
494

 
591

 
541

 
682

Investing activities
 
 
 
 
 
 
 
Additions to properties and equipment
(124
)
 
(141
)
 
(234
)
 
(266
)
Proceeds from sale of assets and equity investment
35

 
—

 
41

 
4

Acquisitions, net of cash acquired
(1
)
 
—

 
(22
)
 
—

Other items, net
4

 
(2
)
 
3

 
(3
)
Net cash used in investing activities
(86
)
 
(143
)
 
(212
)
 
(265
)
Financing activities
 
 
 
 
 
 
 
Net (decrease) increase in commercial paper borrowings
(290
)
 
64

 
(208
)
 
157

Proceeds from borrowings
807

 
250

 
807

 
250

Repayment of borrowings
(797
)
 
(625
)
 
(807
)
 
(625
)
Dividends paid to stockholders
(68
)
 
(60
)
 
(136
)
 
(119
)
Treasury stock purchases
(25
)
 
(5
)
 
(45
)
 
(31
)
Dividends paid to noncontrolling interest
(4
)
 
(1
)
 
(4
)
 
(3
)
Proceeds from stock option exercises and other items, net
8

 
1

 
12

 
12

Net cash used in financing activities
(369
)
 
(376
)
 
(381
)
 
(359
)
Effect of exchange rate changes on cash and cash equivalents
(1
)
 
—

 
(1
)
 
(4
)
Net change in cash and cash equivalents
38

 
72

 
(53
)
 
54

Cash and cash equivalents at beginning of period
202

 
196

 
293

 
214

Cash and cash equivalents at end of period
$
240

 
$
268

 
$
240

 
$
268


Table 5B – Net Cash Provided By Operating Activities to Free Cash Flow Reconciliations
 
 
Second Quarter
 
First Six Months
(Dollars in millions, unaudited)
 
2016
 
2015
 
2016
 
2015
Net cash provided by operating activities
 
$
494

 
$
591

 
$
541

 
$
682

Additions to properties and equipment
 
(124
)
 
(141
)
 
(234
)
 
(266
)
Free cash flow
 
$
370

 
$
450

 
$
307

 
$
416


13


Table 6A – Selected Balance Sheet Items
 
 
June 30,
 
March 31,
 
December 31,
(Dollars in millions, unaudited)
 
2016
 
2016
 
2015
Cash and cash equivalents
 
$
240

 
$
202

 
$
293

Total borrowings
 
6,804

 
7,078

 
7,008

Total Eastman stockholders' equity
 
4,375

 
4,204

 
3,941

 

Table 6B – Total Borrowings to Net Debt Reconciliations
 
 
June 30,
 
March 31,
 
December 31,
(Dollars in millions, unaudited)
 
2016
 
2016
 
2015
Total borrowings
 
$
6,804

 
$
7,078

 
$
7,008

Less: Cash and cash equivalents
 
240

 
202

 
293

Net debt
 
$
6,564

 
$
6,876

 
$
6,715






14


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