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Third Quarter 2026
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$762 $784 $580 $255 $2,381 
Cost of sales574 572 514 183 1,843 
Selling, general, and administrative expenses70 47 25 17 159 
Other segment items (1)
15 11 6 3 35 
Adjusted EBIT103 154 35 52 344 
Reconciliation of segment Adjusted EBIT to consolidated earnings before income taxes ("EBT"):
"Other" Adjusted EBIT (2)
(39)
Net interest expense(56)
Consolidated EBT$249 
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 EBIT53 128 1 67 249 
Reconciliation of segment Adjusted EBIT to consolidated 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 
First Nine Months 2026
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$2,294 $2,330 $1,718 $723 $7,065 
Cost of sales1,747 1,702 1,543 529 5,521 
Selling, general, and administrative expenses215 147 83 51 496 
Other segment items (1)
51 34 17 10 112 
Adjusted EBIT281 447 75 133 936 
Reconciliation of segment Adjusted EBIT to consolidated EBT:
"Other" Adjusted EBIT (2)
(111)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(3)
Asset impairments, restructuring, and other charges, net (3)
(10)
Environmental and other costs (4)
(8)
Net interest expense(163)
Consolidated EBT$641 
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 
Gross profit558 604 81 299 
Selling, general, and administrative expenses198 137 71 50 456 
Other segment items (1)
70 45 20 13 148 
Adjusted EBIT290 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 
(1)Other segment items for each reportable segment included 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" included sales and costs from growth initiatives and businesses, R&D costs, pension and other postretirement benefit plans income (expense), net, and other income (charges), net that are not identifiable to an operating segment.
(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.
Third Quarter 2026
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOtherTotal Consolidated
Depreciation and amortization expense$55 $36 $26 $16 $133 $1 $134 
Capital expenditures37 13 34 6 90 5 95 

Third Quarter 2025
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOtherTotal Consolidated
Depreciation and amortization expense$52 $36 $24 $16 $128 $1 $129 
Capital expenditures84 18 23 10 135 2 137 
First Nine Months 2026
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOtherTotal Consolidated
Depreciation and amortization expense$162 $109 $76 $47 $394 $3 $397 
Capital expenditures151 47 60 23 $281 17 298 
First Nine Months 2025
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOtherTotal Consolidated
Depreciation and amortization expense$153 $107 $72 $48 $380 $2 $382 
Capital expenditures273 57 56 30 416 18 434 
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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, 2026
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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareEMNNew 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, 2026
Common Stock, par value $0.01 per share114,380,456
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1
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TABLE OF CONTENTS
ITEMPAGE

PART I.  FINANCIAL INFORMATION

PART II.  OTHER INFORMATION

SIGNATURES

2
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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 currencies 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, including impacts from the conflict in the Middle East; 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; a weakening of global credit markets or changes to our 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
AND COMPREHENSIVE INCOME
Third QuarterFirst Nine Months
(Dollars in millions, except per share amounts)2026202520262025
Sales$2,385 $2,202 $7,075 $6,779 
Cost of sales1,853 1,769 5,552 5,273 
Gross profit532 433 1,523 1,506 
Selling, general, and administrative expenses171 160 534 499 
Research and development expenses63 63 188 197 
Asset impairments, restructuring, and other charges, net
— 20 10 42 
Other components of post-employment (benefit) cost, net(17)(1)(50)(4)
Other (income) charges, net10 3 37 60 
Earnings before interest and taxes305 188 804 712 
Net interest expense56 54 163 156 
Earnings before income taxes249 134 641 556 
(Benefit from) provision for income taxes(4)65 97 164 
Net earnings253 69 544 392 
Less: Net earnings attributable to noncontrolling interest1 — 2 1 
Net earnings attributable to Eastman$252 $69 $542 $391 
Basic earnings per share attributable to Eastman$2.21 $0.60 $4.75 $3.41 
Diluted earnings per share attributable to Eastman$2.19 $0.60 $4.70 $3.38 
Comprehensive Income
Net earnings including noncontrolling interest$253 $69 $544 $392 
Other comprehensive income (loss), net of tax:
Change in cumulative translation adjustment15 15 11 17 
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs
(7)— (22)— 
Derivatives and hedging:
Unrealized gain (loss) during period(3)1 15 (44)
Reclassification adjustment for (gains) losses included in net income, net3 6 4 10 
Total other comprehensive income (loss), net of tax8 22 8 (17)
Comprehensive income including noncontrolling interest261 91 552 375 
Less: Comprehensive income attributable to noncontrolling interest1 — 2 1 
Comprehensive income attributable to Eastman$260 $91 $550 $374 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30,December 31,
(Dollars in millions, except per share amounts)20262025
Assets
Current assets
Cash and cash equivalents$768 $566 
Trade receivables, net of allowance for credit losses1,062 737 
Miscellaneous receivables262 262 
Inventories2,186 1,980 
Other current assets87 100 
Total current assets4,365 3,645 
Properties
Properties and equipment at cost14,707 14,507 
Less: Accumulated depreciation9,061 8,776 
Net properties5,646 5,731 
Goodwill3,662 3,665 
Intangible assets, net of accumulated amortization905 970 
Other noncurrent assets888 848 
Total assets$15,466 $14,859 
Liabilities and Stockholders' Equity
Current liabilities
Payables and other current liabilities$2,008 $2,066 
Borrowings due within one year764 586 
Total current liabilities2,772 2,652 
Long-term borrowings4,454 4,201 
Deferred income tax liabilities740 669 
Post-employment obligations383 409 
Other long-term liabilities782 891 
Total liabilities9,131 8,822 
Stockholders' equity
Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 224,221,189 and 223,938,047 as of September 30, 2026 and December 31, 2025)
2 2 
Additional paid-in capital2,555 2,500 
Retained earnings10,357 10,105 
Accumulated other comprehensive income (loss)(152)(160)
12,762 12,447 
Less: Treasury stock at cost (109,891,531 and 109,891,531 shares as of September 30, 2026 and December 31, 2025)
6,486 6,486 
Total Eastman stockholders' equity6,276 5,961 
Noncontrolling interest59 76 
Total equity6,335 6,037 
Total liabilities and stockholders' equity$15,466 $14,859 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
First Nine Months
(Dollars in millions)20262025
Operating activities
Net earnings$544 $392 
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization397 382 
Provision for deferred income taxes65 39 
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables(332)(131)
(Increase) decrease in inventories(229)73 
Increase (decrease) in trade payables— (275)
Pension and other postretirement contributions (in excess of) less than expenses(67)(28)
Variable compensation payments (in excess of) less than expenses77 (60)
Other items, net(78)76 
Net cash provided by operating activities377 468 
Investing activities
Additions to properties and equipment(298)(434)
Government incentives
3 14 
Other items, net(4)5 
Net cash used in investing activities
(299)(415)
Financing activities
Net increase in commercial paper and other borrowings
— 290 
Proceeds from borrowings594 246 
Repayment of borrowings (150)(550)
Dividends paid to stockholders(288)(287)
Treasury stock purchases — (100)
Other items, net
(32)(14)
Net cash provided by (used in) financing activities
124 (415)
Effect of exchange rate changes on cash and cash equivalents— 14 
Net change in cash and cash equivalents202 (348)
Cash and cash equivalents at beginning of period566 837 
Cash and cash equivalents at end of period$768 $489 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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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 with the accounting policies stated in the Company's 2025 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 and policy elections noted below. The December 31, 2025 financial position data included herein was derived from the consolidated financial statements included in the 2025 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 and judgments. The unaudited consolidated financial statements include assets, liabilities, sales revenue, and expenses of all majority-owned subsidiaries and joint ventures in which a controlling interest is maintained. Eastman accounts for other joint ventures and investments in minority-owned companies where it exercises significant influence under the equity method. Intercompany transactions and balances are eliminated in consolidation.

Recently Adopted Accounting Standards

Accounting Standards Update ("ASU") 2025-05 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets: On January 1, 2026, Eastman adopted this update which addresses the application of Topic 326 to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. The update provides a practical expedient permitting entities, when estimating expected credit losses for those balances, to assume that current conditions at the balance sheet date do not change over the remaining life of the asset. The Company elected the practical expedient upon adoption. The adoption did not have an impact on the Company's financial statements and related disclosures.

Accounting Standards Issued But Not Adopted as of September 30, 2026

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

ASU 2025-06 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. The update permits prospective application. Management is currently evaluating the impact of the changes required by the new standard on the Company's financial statements and related disclosures.

ASU 2026-02 Environmental Credits and Environmental Credit Obligations (Topic 818): The FASB issued this update in May 2026, which provides public companies specific guidelines for the recognition, measurement, presentation, and disclosure of tradable environmental assets and regulatory compliance liabilities. The ASU is effective for fiscal periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted. The update requires retrospective application. Management is currently evaluating the impact of the changes required by the new standard on the Company's financial statements and related disclosures.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

ASU 2025-10 Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities: The FASB issued this update in December 2025, which establishes authoritative guidance on the accounting for government grants, including grants related to an asset and grants related to income. The amendments, largely aligned with International Accounting Standards 20 Accounting for Government Grants and Disclosure of Government Assistance ("IAS 20"), require that a government grant not be recognized until it is probable the Company will comply with the conditions attached to the grant and that the grant will be received. The amendments further codify specific recognition approaches for asset-related grants and for income-related grants, with presentation as income or deducted from the related expense. The ASU is effective for fiscal periods beginning after December 15, 2028, including interim periods within those years, with early adoption permitted. The transition method may be modified prospective, modified retrospective, or retrospective. Management is currently evaluating the impact of the changes required by 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 2026 and 2025 were $647 million and $696 million and in both first nine months 2026 and 2025 were $2.0 billion.

The Company works with suppliers to optimize payment terms and conditions on accounts payable to enhance the timing of working capital and cash flows. As part of its supplier financing programs, 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, and the range of payment terms Eastman negotiates with suppliers is consistent regardless of whether a supplier participates in the program. Either Eastman or a participating financial institution may terminate a supplier finance program upon 90 days' notice. Within these programs, the Company maintains a structured payables program that utilizes a payables processing arrangement with a financial institution to support the processing and settlement of freight and logistics invoices, whereby the financial institution remits payments to certain freight service providers based on invoices approved by the Company, and the Company reimburses the financial institution. The Company pays fixed per‑transaction fees for the invoice processing and payment services for the structured payables program. Confirmed obligations in these programs of $135 million and $110 million at September 30, 2026 and December 31, 2025 are included in "Payables and other current liabilities" on the Unaudited Consolidated Balance Sheets.

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 received $3 million in reimbursements from the DOE during first quarter 2026 related to reimbursement requests from the prior year. All requested reimbursements were received as of March 31, 2026. The Company subsequently submitted an agency appeal seeking reinstatement of the award, which was reinstated in October 2026.

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 2025 Annual Report on Form 10-K.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Change in Laws and Regulations

Eastman recognizes the financial statement effects of changes in laws or regulations in the period in which the Company obtains a legal right to the related asset or incurs a legal obligation for the related liability. On February 20, 2026, the Supreme Court ruled that the tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were not sufficiently authorized and deemed invalid. Further, on March 4, 2026, the Court of International Trade ruled that U.S. Customs and Border Protection must refund IEEPA tariffs that were collected. As a result of these court rulings establishing the Company's legal right to a refund of IEEPA tariffs, the Company recognized a $24 million benefit in "Cost of sales" in the Unaudited Consolidated Statements of Earnings and Comprehensive Income and received $22 million in tariff refunds in the first nine months 2026. As of September 30, 2026, $2 million was reflected as "Miscellaneous receivables" on the Unaudited Consolidated Balance Sheets related to IEEPA tariff refunds.

Revision of Previously Issued Financial Statements

The Company identified an error in the previously issued third quarter 2025 financial statements related to the newly enacted One Big Beautiful Bill Act ("OBBBA") that impacted the provision for income tax. The revision did not affect the previously reported annual financial statements included in the Company's 2025 Annual Report on Form 10-K. The Company evaluated the impact of this item under the guidance of the Securities and Exchange Commission's Staff Accounting Bulletin No. 99, "Materiality," and determined that this error was not material to its previously issued financial statements. However, the Company revised the previously issued financial statements to correct the error. The impact of this revision to "Provision for income taxes" and "Payables and other current liabilities" increased net earnings by $22 million and decreased total current liabilities by $22 million as compared to what was previously reported. The revision also increased basic and diluted earnings per share by $0.19 and $0.20 for three months ended September 30, 2025, and both basic and diluted earnings per share by $0.20 for nine months ended September 30, 2025. The footnotes have also been updated.

2.INVENTORIES
September 30,December 31,
(Dollars in millions)20262025
Finished goods$1,471 $1,361 
Work in process322 300 
Raw materials and supplies716 657 
Total inventories at FIFO or average cost2,509 2,318 
Less: LIFO reserve323 338 
Total inventories$2,186 $1,980 

Inventories valued on the last-in, first-out ("LIFO") method were approximately 55 percent of total inventories at both September 30, 2026 and December 31, 2025.

3.INCOME TAXES
Third QuarterFirst Nine Months

2026202520262025
(Dollars in millions)
$%$%$%$%
(Benefit from) provision for income taxes and tax rate$(4)(2)%$65 49 %$97 15 %$164 30 %
Third quarter and first nine months 2026 (benefit from) provision for income taxes included a $61 million reduction in unrecognized tax benefits, inclusive of related interest, based on the evaluation of new external information arising during third quarter 2026. Additionally, third quarter and first nine months 2026 included the impact of transitional provisions of the OBBBA primarily related to the deductibility of previously capitalized research and development expenditures. Third quarter and first nine months 2025 provision for income taxes included an increase of $22 million driven by OBBBA. First nine months 2025 provision for income taxes also included an increase of $35 million related to unrecognized tax benefits.

At September 30, 2026 and December 31, 2025, Eastman had $132 million and $183 million in unrecognized tax benefits.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4.BORROWINGS
September 30,December 31,
(Dollars in millions)20262025
Borrowings consisted of:
1.875% notes due November 2026 (1)
$568 $586 
7.6% debentures due February 2027
196 196 
4.5% notes due December 2028
498 497 
5.0% notes due August 2029
744 743 
4.5% notes due February 2031
594 — 
5.75% notes due March 2033
497 496 
5.625% notes due February 2034
744 744 
4.8% notes due September 2042
496 495 
4.65% notes due October 2044
881 880 
2027 Term Loan— 150 
Total borrowings5,218 4,787 
Less: Borrowings due within one year764 586 
Long-term borrowings$4,454 $4,201 
(1)The carrying value of the euro-denominated 1.875% notes due November 2026 fluctuates with changes in the euro to U.S. dollar exchange rate. The carrying value of this euro-denominated borrowing has been designated as a non-derivative net investment hedge of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations.

In first quarter 2026, the Company issued $600 million aggregate principal amount of 4.5% notes due February 2031 in a registered public offering (the "2026 Notes"). Proceeds from the sale of the 2026 Notes, net of original issue discounts and issuance costs, were $594 million. All proceeds from the 2026 Notes are reported under financing activities on the Unaudited Consolidated Statements of Cash Flows.

Credit Facility, Term Loans, and Commercial Paper Borrowings

The Company has access to a $1.50 billion revolving credit agreement (the "Credit Facility") that matures in February 2031. 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 provides available liquidity for general corporate purposes and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. In February 2026, the Credit Facility was amended to extend the maturity to February 2031 and to temporarily adjust the maximum leverage ratio covenant through fiscal quarter ending June 30, 2027 in the event of further macroeconomic uncertainty impacting operating results. All other material terms of the Credit Facility remained unchanged. At September 30, 2026 and December 31, 2025, the Company had no outstanding borrowings under the Credit Facility and no commercial paper borrowings.

In first quarter 2026, the remaining $150 million of the five-year term loan (the "2027 Term Loan") was repaid using available cash. There were no extinguishment costs associated with the repayment of the 2027 Term Loan. The outstanding balance on the 2027 Term Loan was $150 million at December 31, 2025 with a variable interest rate of 5.14%.

The Credit Facility contains 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, 2026 and December 31, 2025.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Fair Value of Borrowings

Eastman has classified its total borrowings at September 30, 2026 and December 31, 2025 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 2025 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 equals the carrying value and is classified as Level 2. The Company's fair value of total borrowings was $4.9 billion at September 30, 2026 and $4.7 billion at December 31, 2025. The Company had no borrowings classified as Level 1 or Level 3 as of September 30, 2026 and December 31, 2025.

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 2025 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 Balance Sheets 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 Balance Sheets 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 Balance Sheets. 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 Balance Sheets. 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 2026, the Company entered into fixed-to-fixed cross-currency swaps of $100 million (€86 million) maturing February 2031. Additionally, the Company amended and extended the terms of certain fixed-to-fixed cross-currency swaps of $235 million (€226 million) originally maturing December 2028 to maturing February 2031.

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, 2026 and December 31, 2025 associated with Eastman's hedging programs.
Notional OutstandingSeptember 30, 2026December 31, 2025
Derivatives designated as cash flow hedges:
Foreign Exchange Forward and Option Contracts (in millions)
EUR/USD (in EUR)€282€357
Commodity Forward and Collar Contracts
Energy (in million british thermal units)16 9 
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps (in millions)
EUR/USD (in EUR)€1,793€1,707
JPY/USD (in JPY)¥7,885¥7,885
Non-derivatives designated as net investment hedges:
Foreign Currency Net Investment Hedges (in millions)
EUR/USD (in EUR)€500€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, 2026 or December 31, 2025. 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 or first nine months 2026 or 2025.

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 Balance Sheets. 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 Balance Sheets as of September 30, 2026 and December 31, 2025.

The Financial Position and Fair Value Measurements of Hedging Instruments on a Gross Basis
(Dollars in millions)
Derivative TypeBalance Sheet ClassificationLevel 2
September 30, 2026December 31, 2025
Derivatives designated as cash flow hedges:
Foreign exchange contractsOther current assets$7 $1 
Foreign exchange contractsOther noncurrent assets2 — 
Derivatives designated as net investment hedges:
Cross-currency interest rate swapsOther current assets4 — 
Cross-currency interest rate swapsOther noncurrent assets2 1 
Total Derivative Assets$15 $2 
Derivatives designated as cash flow hedges:
Commodity contractsPayables and other current liabilities$9 $7 
Foreign exchange contractsPayables and other current liabilities2 19 
Foreign exchange contractsOther long-term liabilities— 2 
Derivatives designated as net investment hedges:
Cross-currency interest rate swapsOther long-term liabilities101 136 
Total Derivative Liabilities$112 $164 
Total Net Derivative Assets (Liabilities)$(97)$(162)
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In addition to the fair value associated with derivative instruments designated as cash flow hedges and net investment hedges, the Company had a carrying value of $568 million at September 30, 2026 and $586 million at December 31, 2025 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" on the Unaudited Consolidated Balance Sheets.

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 2025 Annual Report on Form 10-K.

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 2026 and 2025.
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 Relationships20262025202620252026202520262025
Derivatives in cash flow hedging relationships:
Commodity contracts$(4)$(3)$(1)$(1)$(2)$(2)$7 $(5)
Foreign exchange contracts3 9 18 (35)— (5)(8)(5)
Forward starting interest rate and treasury lock swap contracts1 1 2 2 (1)(1)(3)(3)
Non-derivatives in net investment hedging relationships (pre-tax):
Net investment hedges 2 (1)19 (67)— — — — 
Derivatives in net investment hedging relationships (pre-tax):
Cross-currency interest rate swaps12 4 71 (240)— — — — 
Cross-currency interest rate swaps excluded component (2)13 (32)69 — — — — 

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The following table presents the effect of fair value and cash flow hedge accounting in the Unaudited Consolidated Statements of Earnings and Comprehensive Income for third quarter and first nine months 2026 and 2025.

Location and Amount of Gain or (Loss) Recognized in Earnings from Fair Value and Cash Flow Hedging Relationships
Third Quarter
20262025
(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 and Comprehensive Income in which the effects of fair value or cash flow hedges are recognized$2,385 $1,853 $56 $2,202 $1,769 $54 
The effects of fair value and cash flow hedging:
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)(2)
Foreign Exchange Contracts:
Amount reclassified from AOCI into earnings— (5)
Location and Amount of Gain or (Loss) Recognized in Earnings from Fair Value and Cash Flow Hedging Relationships
First Nine Months
20262025
(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 and Comprehensive Income in which the effects of fair value or cash flow hedges are recognized$7,075 $5,552 $163 $6,779 $5,273 $156 
The effects of fair value and cash flow hedging:
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)(3)
Commodity Contracts:
Amount reclassified from AOCI into earnings7 (5)
Foreign Exchange Contracts:
Amount reclassified from AOCI into earnings(8)(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 and Comprehensive Income. As a result of these derivatives, the Company recognized a net loss of $1 million and $18 million during third quarter and first nine months 2026 and recognized a net loss of $6 million and a net gain of $11 million during third quarter and first nine months 2025.
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Pre-tax monetized positions and mark-to-market gains and losses from currency, raw materials and energy, and certain interest rate hedges that were included in AOCI resulted in a net unrealized loss of $35 million and a net unrealized loss of $119 million at September 30, 2026 and December 31, 2025. Unrealized losses in AOCI decreased between December 31, 2025 and September 30, 2026 primarily as a result of a decrease in euro to U.S. dollar exchange rates. If realized, approximately $5 million in pre-tax losses as of September 30, 2026, 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.

Components of net periodic benefit (credit) cost were as follows:
Third Quarter
Pension PlansOther Postretirement Benefit Plans
2026202520262025
(Dollars in millions)U.S.Non-U.S.U.S.Non-U.S.
Service cost$4 $2 $5 $1 $— $— 
Interest cost15 7 18 7 3 6 
Expected return on assets(23)(8)(23)(8)(1)(1)
Amortization of:
Prior service credit, net— — — — (10)— 
Net periodic benefit (credit) cost$(4)$1 $— $— $(8)$5 
First Nine Months
Pension PlansOther Postretirement Benefit Plans
2026202520262025
(Dollars in millions)U.S.Non-U.S.U.S.Non-U.S.
Service cost$12 $6 $14 $5 $— $— 
Interest cost45 21 54 19 8 17 
Expected return on assets(68)(24)(68)(23)(3)(3)
Amortization of:
Prior service credit, net— — — — (29)— 
Net periodic benefit (credit) cost$(11)$3 $— $1 $(24)$14 

For additional information regarding retirement plans, see Note 11, "Retirement Plans", to the consolidated financial statements in Part II, Item 8 of the Company's 2025 Annual Report on Form 10-K.

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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 2025 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.

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 "Payables and other current liabilities", and "Other long-term liabilities" on the Unaudited Consolidated Balance Sheets as follows:
(Dollars in millions)September 30, 2026December 31, 2025
Environmental contingencies, current$35 $20 
Environmental contingencies, long-term283 298 
Total$318 $318 

Environmental Remediation

Estimated future environmental expenditures for undiscounted remediation costs ranged from $284 million to $518 million and from $285 million to $509 million at September 30, 2026 and December 31, 2025. 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 and Comprehensive Income.

Changes in the reserves for environmental remediation liabilities during first nine months 2026 are summarized below:
(Dollars in millions)Environmental Remediation Liabilities
Balance at December 31, 2025
$285 
Changes in estimates recognized in earnings and other12 
Cash reductions(13)
Balance at September 30, 2026$284 

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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 $34 million and $33 million at September 30, 2026 and December 31, 2025.

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 $58 million and $56 million at September 30, 2026 and December 31, 2025, and are included in "Other long-term liabilities" on the Unaudited Consolidated Balance Sheets.

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.

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9.STOCKHOLDERS' EQUITY

Reconciliations of the changes in stockholders' equity for third quarter and first nine months 2026 and 2025 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, 2026$2 $2,539 $10,201 $(160)$(6,486)$6,096 $79 $6,175 
Net Earnings— — 252 — — 252 1 253 
Cash Dividends Declared (1)
($0.84 per share)
— — (96)— — (96)— (96)
Other Comprehensive Income (Loss)— — — 8 — 8 — 8 
Share-Based Compensation Expense (2)
— 16 — — — 16 — 16 
Other (3)
— — — — — — (21)(21)
Balance at September 30, 2026$2 $2,555 $10,357 $(152)$(6,486)$6,276 $59 $6,335 
(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— — 69 — — 69 — 69 
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 $10,117 $(331)$(6,486)$5,793 $72 $5,865 
(1)Cash dividends declared may consist of both paid and unpaid dividends.
(2)Share-based compensation expense is based on the fair value of share-based awards.
(3)Included a $20 million payment to acquire the remaining noncontrolling interest in a consolidated joint venture.


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(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, 2025$2 $2,500 $10,105 $(160)$(6,486)$5,961 $76 $6,037 
Net Earnings— — 542 — — 542 2 544 
Cash Dividends Declared (1)
($2.52 per share)
— — (290)— — (290)— (290)
Other Comprehensive Income (Loss)— — — 8 — 8 — 8 
Share-Based Compensation Expense (2)
— 62 — — — 62 — 62 
Stock Option Exercises— 2 — — — 2 — 2 
Other (3)(4)
— (9)— — — (9)(16)(25)
Distributions to Noncontrolling Interest— — — — — — (3)(3)
Balance at September 30, 2026$2 $2,555 $10,357 $(152)$(6,486)$6,276 $59 $6,335 
(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— — 391 — — 391 1 392 
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 $10,117 $(331)$(6,486)$5,793 $72 $5,865 
(1)Cash dividends declared may consist of both paid and unpaid dividends.
(2)Share-based compensation expense is based on the fair value of share-based awards.
(3)Additional paid-in capital included the value of shares withheld for employees' taxes on vesting of share-based compensation awards.
(4)Noncontrolling interest included a $20 million payment to acquire the remaining noncontrolling interest in a consolidated joint venture.

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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, 2025
$(283)$152 $(28)$(1)$(160)
Period change11 (22)19 — 8 
Balance at September 30, 2026$(272)$130 $(9)$(1)$(152)
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 U.S. 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 and Comprehensive Income are presented below, before tax and net of tax effects:
Third Quarter
20262025
(Dollars in millions)Before TaxNet of TaxBefore TaxNet of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment$17 $15 $19 $15 
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs
(10)(7)— — 
Derivatives and hedging:
Unrealized gain (loss) during period(4)(3)1 1 
Reclassification adjustment for (gains) losses included in net income, net4 3 8 6 
Total other comprehensive income (loss)$7 $8 $28 $22 
First Nine Months
20262025
(Dollars in millions)Before TaxNet of TaxBefore TaxNet of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment$20 $11 $(25)$17 
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs(29)(22)— — 
Derivatives and hedging:
Unrealized gain (loss) during period20 15 (59)(44)
Reclassification adjustment for (gains) losses included in net income, net5 4 13 10 
Total other comprehensive income (loss)$16 $8 $(71)$(17)

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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)2026202520262025
Numerator
Earnings attributable to Eastman, net of tax $252 $69 $542 $391 
Denominator
Weighted average shares used for basic EPS114.3114.4114.3114.9
Dilutive effect of stock options and other awards1.01.01.01.1
Weighted average shares used for diluted EPS115.3115.4115.3116.0
(Calculated using whole dollars and shares)
EPS
Basic$2.21 $0.60 $4.75 $3.41 
Diluted$2.19 $0.60 $4.70 $3.38 

Shares underlying stock options of 4,025,912 and 3,284,539 for third quarter 2026 and 2025, and 4,025,912 and 2,823,847 for first nine months 2026 and 2025 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. No shares were repurchased in third quarter and first nine months 2026, and 776,977 and 1,420,768 shares were repurchased in third quarter and first nine months 2025.

The Company declared cash dividends of $0.84 and $0.83 per share for third quarter 2026 and 2025, and $2.52 and $2.49 for first nine months 2026 and 2025.
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11.ASSET IMPAIRMENTS, RESTRUCTURING, AND OTHER CHARGES, NET

(Dollars in millions)Third QuarterFirst Nine Months
2026202520262025
Severance charges (1)(2)(3)(4)
$— $14 $7 $25 
Restructuring and other charges (2)(3)(4)(5)
— 6 3 17 
Total$— $20 $10 $42 

(1)First nine months 2026 included severance charges of $4 million and third quarter and first nine months 2025 included severance charges of $10 million and $20 million related to corporate cost reduction initiatives reported in "Other".
(2)First nine months 2026 included severance charges of $3 million and restructuring charges of $3 million related to the closure of a production line at a German performance films facility in the Advanced Materials ("AM") segment. In addition, inventory adjustments of $3 million in the AM segment were recognized in "Cost of sales" in the Unaudited Consolidated Statement of Earnings and Comprehensive Income in first nine months 2026 related to this closure.
(3)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 and Comprehensive Income in third quarter and first nine months 2025 related to this decommissioning.
(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 Additives & Functional Products segment.
(5)First nine months 2025 included charges of $8 million related to profitability improvement initiatives reported in "Other."

Changes in Reserves

The following table summarizes the changes in asset impairments and restructuring reserves in first nine months 2026:
(Dollars in millions)Balance at January 1, 2026Provision/ AdjustmentsNon-cash Reductions/
Additions		Cash ReductionsBalance at September 30, 2026
Severance costs$26 $7 $— $(19)$14 
Restructuring and other charges8 3 — (7)4 
Total$34 $10 $— $(26)$18 
Substantially all severance costs remaining as of September 30, 2026 are expected to be paid within one year.

12.SHARE-BASED COMPENSATION AWARDS

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

Share-based compensation expense is recognized in "Selling, general, and administrative expenses" in the Unaudited Consolidated Statements of Earnings and Comprehensive Income and the related impact on net earnings was as follows:

(Dollars in millions)Third QuarterFirst Nine Months
2026202520262025
Share-based compensation expense, pre-tax$16 $13 $62 $38 
Share-based compensation expense, net of tax12 10 47 29 

For additional information regarding share-based compensation plans and awards, see Note 18, "Share-Based Compensation Plans and Awards", to the consolidated financial statements in Part II, Item 8 of the Company's 2025 Annual Report on Form 10-K.

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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. Assets by segment are not disclosed because such information is not regularly provided to, or used by, the CODM.

For disaggregation of revenue by major product lines and regions for each operating segment, see Note 20, "Segment and Regional Sales Information", to the consolidated financial statements in Part II, Item 8 of the Company's 2025 Annual Report on Form 10-K. For additional financial and product information for each operating segment, see Part I, Item 1, "Business - Business Segments", in the Company's 2025 Annual Report on Form 10-K.
Third Quarter 2026
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$762 $784 $580 $255 $2,381 
Cost of sales574 572 514 183 1,843 
Selling, general, and administrative expenses70 47 25 17 159 
Other segment items (1)
15 11 6 3 35 
Adjusted EBIT
103 154 35 52 344 
Reconciliation of segment Adjusted EBIT to consolidated earnings before income taxes ("EBT"):
"Other" Adjusted EBIT (2)
(39)
Net interest expense(56)
Consolidated EBT$249 
Third Quarter 2026
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibers
Total Operating Segments
Other
Total Consolidated
Depreciation and amortization expense$55 $36 $26 $16 $133 $1 $134 
Capital expenditures37 13 34 6 90 5 95 
(1)Other segment items for each reportable segment included 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" included sales and costs from growth initiatives and businesses, R&D costs, pension and other postretirement benefit plans income (expense), net, and other income (charges), net that are not identifiable to an operating segment.
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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 EBIT53 128 1 67 249 
Reconciliation of segment Adjusted EBIT to consolidated 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 IntermediatesFibersTotal Operating SegmentsOtherTotal 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 included 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" included sales and costs from growth initiatives and businesses, R&D costs, pension and other postretirement benefit plans income (expense), net, and other income (charges), net that are not identifiable to an operating segment.
(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 2026
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$2,294 $2,330 $1,718 $723 $7,065 
Cost of sales1,747 1,702 1,543 529 5,521 
Selling, general, and administrative expenses215 147 83 51 496 
Other segment items (1)
51 34 17 10 112 
Adjusted EBIT
281 447 75 133 936 
Reconciliation of segment Adjusted EBIT to consolidated EBT:
"Other" Adjusted EBIT (2)
(111)
Non-core items impacting EBIT
Cost of sales impact from restructuring activities (3)
(3)
Asset impairments, restructuring, and other charges, net (3)
(10)
Environmental and other costs (4)
(8)
Net interest expense(163)
Consolidated EBT$641 
First Nine Months 2026
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibers
Total Operating Segments
Other
Total Consolidated
Depreciation and amortization expense$162 $109 $76 $47 $394 $3 $397 
Capital expenditures151 47 60 23 $281 17 298 
(1)Other segment items for each reportable segment included 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" included sales and costs from growth initiatives and businesses, R&D costs, pension and other postretirement benefit plans income (expense), net, and other income (charges), net that are not identifiable to an operating segment.
(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, which included associated gains and losses.

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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 IntermediatesFibers
Total Operating Segments
Other
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 included 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" included sales and costs from growth initiatives and businesses, R&D costs, pension and other postretirement benefit plans income (expense), net, and other income (charges), net that are not identifiable to an operating segment.
(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.

(Dollars in millions)Third QuarterFirst Nine Months
Sales by Segment2026202520262025
Advanced Materials$762 $728 $2,294 $2,224 
Additives & Functional Products784 716 2,330 2,218 
Chemical Intermediates580 499 1,718 1,507 
Fibers255 254 723 816 
Total Sales by Operating Segment2,381 2,197 7,065 6,765 
Other4 5 10 14 
Total Sales$2,385 $2,202 $7,075 $6,779 

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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 2025 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, unusual, or non-recurring items include transactions, costs, and losses or gains relating to, among other things, cost reduction initiatives, 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, non-operational sites and product lines, and discontinued programs; mark-to-market losses or gains for pension and other postretirement benefit plans; the impact from significant tax law changes; and unusual or non-recurring income tax reserves or adjustments.

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.

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


Non-GAAP Debt Measure

Eastman, from time to time, evaluates and discloses to investors, securities analysts, 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, securities analysts, 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:

•Cost of sales impact from restructuring activities,
•Asset impairments, restructuring, and other charges, net, and
•Environmental and other costs from previously divested or non-operational sites and product lines, which included associated gains and losses.

The following unusual item is excluded by management in its evaluation of certain earnings results in this Quarterly Report:

•Income tax related item resulting from enactment of the One Big Beautiful Bill Act ("OBBBA").

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 and Unusual Items Excluded from Earnings and Adjustments to Provision for Income Taxes
Third QuarterFirst Nine Months
(Dollars in millions)2026202520262025
Non-core items impacting earnings before interest and taxes:
Cost of sales impact from restructuring activities$— $2 $3 $2 
Asset impairments, restructuring, and other charges, net
— 20 10 42 
Environmental and other costs— — 8 40 
Total non-core items impacting earnings before interest and taxes
— 22 21 84 
Less: Items impacting provision for income taxes:
Tax effect of non-core items
— 6 3 21 
Income tax related item
— (22)(13)(22)
Interim adjustment to tax provision39 (25)8 (64)
Total items impacting provision for income taxes39 (41)(2)(65)
Total items impacting net earnings attributable to Eastman$(39)$63 $23 $149 

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");
•(Benefit from) 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 extend the level of differentiation afforded by our world class technology platforms. Eastman began operating the world's largest polyester molecular recycling facility 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 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)2026202520262025
Sales$2,385 $2,202 $7,075 $6,779 
Earnings before interest and taxes305 188 804 712 
Earnings before interest and taxes excluding non-core items
305 210 825 796 

Sales revenue increased in third quarter 2026 compared to third quarter 2025 due to higher selling prices and higher sales volume mix. Higher selling prices were primarily driven by higher raw material and distribution costs as well as tight market conditions in the CI segment due to the ongoing conflict in the Middle East.

Sales revenue increased in first nine months 2026 compared to first nine months 2025 due to higher selling prices, higher sales volume mix, and a favorable foreign currency exchange impact.

EBIT excluding non-core items increased in third quarter 2026 compared to third quarter 2025 primarily due to improved asset utilization including lower planned maintenance expense and higher selling prices, net of higher raw material and distribution costs. These impacts were partially offset by higher variable compensation expense.

EBIT excluding non-core items increased in first nine months 2026 compared to first nine months 2025 primarily due to a favorable foreign currency exchange impact and higher selling prices, net of higher raw material, energy, and distribution costs. These impacts were partially offset by lower sales volume mix. The benefit from continued cost reduction initiatives more than offset higher variable compensation expense.

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
20262025
(Dollars in millions, except EPS)$EPS$EPS
Net earnings attributable to Eastman$252 $2.19 $69 $0.60 
Total non-core and unusual items, net of tax— — 38 0.34 
Interim adjustment to tax provision(39)(0.35)25 0.20 
Adjusted net earnings attributable to Eastman$213 $1.84 $132 $1.14 
First Nine Months
20262025
(Dollars in millions, except EPS)
 $
EPS
 $
EPS
Net earnings attributable to Eastman$542 $4.70 $391 $3.38 
Total non-core and unusual items, net of tax31 0.27 85 0.74 
Interim adjustment to tax provision(8)(0.07)64 0.54 
Adjusted net earnings$565 $4.90 $540 $4.66 
Cash provided by operating activities was $377 million in first nine months 2026 compared to $468 million in first nine months 2025.

RESULTS OF OPERATIONS

Sales
Third QuarterFirst Nine Months
ChangeChange
(Dollars in millions)20262025 $%20262025 $%
Sales$2,385 $2,202 $183 8 %$7,075 $6,779 $296 4 %
Volume / product mix effect30 1 %68 1 %
Price effect144 7 %136 2 %
Exchange rate effect9 — %92 1 %

Sales revenue increased in third quarter 2026 compared to third quarter 2025 due to increases in all segments, except the Fibers segment. Sales revenue increased in first nine months 2026 compared to first nine months 2025 due to increases in the AM, AFP, and CI segments, partially offset by a decrease in the Fibers segment. Further discussion by operating segments 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


Gross Profit
Third QuarterFirst Nine Months
(Dollars in millions)20262025Change20262025Change
Gross profit$532 $433 23 %$1,523 $1,506 1 %
Cost of sales impact from restructuring activities— 2 3 2 
Gross profit excluding non-core item$532 $435 22 %$1,526 $1,508 1 %

Gross profit increased in third quarter 2026 compared to third quarter 2025 due to increases in the AM, CI, and AFP segments partially offset by a decrease in the Fibers segment. Gross profit in first nine months 2026 included inventory adjustments related to the closure of a production line at a German performance films facility in the AM segment. Gross profit in first nine months 2025 included inventory adjustments related to the decommissioning of certain assets at performance films facilities in North America in the AM segment. Excluding these non-core items, gross profit increased in first nine months 2026 compared to first nine months 2025 due to increases in the CI and AFP segments, partially offset by decreases in the Fibers and AM segments. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.

Selling, General, and Administrative Expenses
Third QuarterFirst Nine Months
(Dollars in millions)20262025Change20262025Change
Selling, general, and administrative expenses$171 $160 7 %$534 $499 7 %

Selling, general, and administrative expenses increased in third quarter and first nine months 2026 compared to third quarter and first nine months 2025 primarily due to higher variable compensation costs partially offset by cost reduction initiatives.

Research and Development Expenses
Third QuarterFirst Nine Months
(Dollars in millions)20262025Change20262025Change
Research and development expenses$63 $63 — %$188 $197 (5)%

Research and development expenses decreased in first nine months 2026 compared to first nine months 2025 primarily due to targeted R&D project reductions as we focused on the top corporate programs.

Asset Impairments, Restructuring, and Other Charges, Net


Third QuarterFirst Nine Months
(Dollars in millions)2026202520262025
Severance charges
$— $14 $7 $25 
Restructuring and other charges
— 6 3 17 
Total$— $20 $10 $42 

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.

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

Other Components of Post-employment (Benefit) Cost, Net
Third QuarterFirst Nine Months
(Dollars in millions)2026202520262025
Other components of post-employment (benefit) cost, net$(17)$(1)$(50)$(4)

Other components of post-employment (benefit) cost, net were more favorable in third quarter and first nine months 2026 compared to third quarter and first nine months 2025 due to a prior service credit related to the Company's 2025 other postretirement benefit plan amendment. 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.

Other (Income) Charges, Net
Third QuarterFirst Nine Months
(Dollars in millions)2026202520262025
Foreign exchange transaction losses, net
$3 $2 $4 $6 
(Income) loss from equity investments and other investment (gains) losses, net1 — 2 2 
Environmental and other costs— — 8 40 
Other, net6 1 23 12 
Other (income) charges, net$10 $3 $37 $60 
Environmental and other costs— — (8)(40)
Other (income) charges, net excluding non-core items$10 $3 $29 $20 

Other (income) charges, net in first nine months 2026 and 2025 included environmental and other costs related to previously divested businesses or non-operational sites and product lines, and in first nine months 2026 also included associated gains and losses. Excluding these non-core items, Other (income) charges, net was unfavorable in third quarter and first nine months 2026 compared to third quarter and first nine months 2025 due to sales of catalysts in 2025 and additionally in first nine months 2026 compared to first nine months 2025 due to an increase of indirect taxes. 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)20262025Change20262025Change
Earnings before interest and taxes$305 $188 62 %$804 $712 13 %
Cost of sales impact from restructuring activities— 2 3 2 
Asset impairments, restructuring, and other charges, net
— 20 10 42 
Environmental and other costs— — 8 40 
Earnings before interest and taxes excluding non-core items
$305 $210 45 %$825 $796 4 %

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

Net Interest Expense
Third QuarterFirst Nine Months
(Dollars in millions)20262025Change20262025Change
Gross interest costs$61 $60 2 %$178 $177 1 %
Less: Capitalized interest3 4 9 12 
Interest expense58 56 169 165 
Less: Interest income2 2 6 9 
Net interest expense$56 $54 4 %$163 $156 4 %

Net interest expense increased slightly in third quarter 2026 compared to third quarter 2025 due to higher gross interest costs and less capitalized interest. Net interest expense increased in first nine months 2026 compared to first nine months 2025 due to less capitalized interest and less interest income.

(Benefit from) Provision for Income Taxes
Third QuarterFirst Nine Months
2026202520262025
(Dollars in millions)$%$%$%$%
(Benefit from) provision for income taxes and effective tax rate$(4)(2)%$65 49 %$97 15 %$164 30 %
Tax provision for non-core items (1)
— 6 3 21 
Income tax related item (2)
— (22)(13)(22)
Interim adjustment to tax provision (3)
39 (25)8 (64)
Adjusted provision for income taxes and effective tax rate$35 15 %$24 16 %$95 15 %$99 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 OBBBA.
(3)Third quarter 2026 provision for income taxes was adjusted to reflect the current forecasted full year effective tax rate. Third quarter 2025 provision for income taxes was adjusted to reflect the then current forecasted full year effective tax rate.

First Nine Months (1)
20262025
Effective tax rate15 %30 %
Discrete tax items (2)
(1)%— %
Tax impact of current year non-core and unusual items (3)
(1)%(1)%
Changes in tax contingencies and valuation allowances3 %(1)%
Forecasted full year impact of expected tax events (4)
(1)%(12)%
Forecasted full year adjusted effective tax rate15 %16 %
(1)Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rates are 14.5 percent and 15.5 percent for first nine months 2026 and 2025.
(2)"Discrete tax items" are items that are excluded from the Company's estimated annual effective tax rate and recognized entirely in the quarter in which the item occurs. Discrete tax items for first nine months 2026 are related to share based compensation expense and adjustments to certain prior year tax returns.
(3)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.
(4)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
20262025
(Dollars in millions, except EPS)$EPS$EPS
Net earnings and diluted earnings per share attributable to Eastman$252 $2.19 $69 $0.60 
Non-core items, net of tax: (1)
Cost of sales impact from restructuring activities— — 1 0.01 
Asset impairments, restructuring, and other charges, net
— — 15 0.13 
Unusual item:
Income tax related item— — 22 0.20 
Interim adjustment to tax provision(39)(0.35)25 0.20 
Adjusted net earnings and diluted earnings per share attributable to Eastman$213 $1.84 $132 $1.14 

First Nine Months
20262025
(Dollars in millions, except EPS)$EPS$EPS
Net earnings and diluted earnings per share attributable to Eastman$542 $4.70 $391 $3.38 
Non-core items, net of tax: (1)
Cost of sales impact from restructuring activities2 0.02 1 0.01 
Asset impairments, restructuring, and other charges, net
7 0.06 31 0.27 
Environmental and other costs9 0.08 31 0.26 
Unusual item:
Income tax related item13 0.11 22 0.20 
Interim adjustment to tax provision(8)(0.07)64 0.54 
Adjusted net earnings and diluted earnings per share attributable to Eastman$565 $4.90 $540 $4.66 
(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 2025 Annual Report on Form 10-K.
Advanced Materials Segment
Third QuarterFirst Nine Months
ChangeChange
20262025 $%20262025 $%
(Dollars in millions)
Sales$762 $728 $34 5 %$2,294 $2,224 $70 3 %
Volume / product mix effect3 — %29 1 %
Price effect25 4 %2 — %
Exchange rate effect6 1 %39 2 %
Earnings before interest and taxes$103 $41 $62 151 %$272 $278 $(6)(2)%
Cost of sales impact from restructuring activities
— 2 (2)3 2 1 
Asset impairments, restructuring, and other charges, net— 10 (10)6 10 (4)
Earnings before interest and taxes excluding non-core items
103 53 50 94 %281 290 (9)(3)%
Sales revenue increased in third quarter 2026 compared to third quarter 2025 due to higher selling prices and a favorable foreign currency exchange impact. Higher selling prices in the specialty plastics product line were due to higher raw material and distribution prices.

Sales revenue increased in first nine months 2026 compared to first nine months 2025 due to a favorable foreign currency exchange impact and higher sales volume mix.

EBIT increased in third quarter 2026 compared to third quarter 2025 primarily due to approximately $60 million improved asset utilization and lower planned maintenance costs.

EBIT in first nine months 2026 included inventory adjustments and asset impairments, restructuring, and other charges, net related to the closure of a production line at a German performance films facility. 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. 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 first nine months 2026 compared to first nine months 2025 due to $35 million lower selling prices, net of higher raw material and energy costs, which were mostly offset by a favorable foreign currency exchange impact.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Additives & Functional Products Segment
Third QuarterFirst Nine Months
ChangeChange
20262025 $%20262025 $%
(Dollars in millions)
Sales$784 $716 $68 9 %$2,330 $2,218 $112 5 %
Volume / product mix effect(4)(1)%(16)(1)%
Price effect71 10 %90 4 %
Exchange rate effect1 — %38 2 %
Earnings before interest and taxes$154 $128 $26 20 %$447 $418 $29 7 %
Asset impairments, restructuring, and other charges, net— — — — 4 (4)
Earnings before interest and taxes excluding non-core item154 128 26 20 %447 422 25 6 %

Sales revenue increased in third quarter 2026 compared to third quarter 2025 due to higher selling prices which were mostly driven by cost-pass-through contracts.

Sales revenue increased in first nine months 2026 compared to first nine months 2025 primarily due to higher selling prices and a favorable foreign currency exchange impact. Higher selling prices were driven by cost-pass-through contracts.

EBIT increased in third quarter 2026 compared to third quarter 2025 due to $21 million higher selling prices, net of higher raw material and distribution costs and improved asset utilization

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. 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 this non-core item, EBIT increased in first nine months 2026 compared to first nine months 2025 due to $14 million higher selling prices, net of higher raw material, energy, and distribution costs and a favorable foreign currency exchange impact.

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

Chemical Intermediates Segment
Third QuarterFirst Nine Months
ChangeChange
20262025 $%20262025 $%
(Dollars in millions)
Sales$580 $499 $81 16 %$1,718 $1,507 $211 14 %
Volume / product mix effect22 4 %126 8 %
Price effect58 12 %73 5 %
Exchange rate effect1 — %12 1 %
Earnings (loss) before interest and taxes
$35 $1 $34 >100%$75 $(10)$85 >100%
Sales revenue increased in third quarter and first nine months 2026 compared to third quarter and first nine months 2025 due to higher sales volume mix and higher selling prices, particularly for olefin and derivative products. These increases were driven by increased volume availability compared to the prior year period and tight market conditions due to the ongoing conflict in the Middle East.
EBIT increased in third quarter and first nine months 2026 compared to third quarter and first nine months 2025 primarily due to higher selling prices, net of higher raw material and distribution costs.

Fibers Segment
Third QuarterFirst Nine Months
ChangeChange
20262025 $%20262025 $%
(Dollars in millions)
Sales$255 $254 $1 — %$723 $816 $(93)(11)%
Volume / product mix effect9 4 %(66)(7)%
Price effect(9)(4)%(30)(4)%
Exchange rate effect1 — %3 — %
Earnings before interest and taxes$52 $67 $(15)(22)%$133 $236 $(103)(44)%
Sales revenue remained relatively unchanged in third quarter 2026 compared to third quarter 2025 as higher sales volume mix was offset by lower selling prices. Higher sales volume mix was due to increased sales of textiles and acetyl chemical products. Lower selling prices were due to lower acetate tow contract pricing.

Sales revenue decreased in first nine months 2026 compared to first nine months 2025 due to lower sales volume mix and lower selling prices.

EBIT decreased in third quarter 2026 compared to third quarter 2025 due to lower selling prices, net of higher raw material and distribution costs.
EBIT decreased in first nine months 2026 compared to first nine months 2025 due to lower sales volume mix and lower selling prices, net of higher raw material, energy, and distribution costs.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Other
Third QuarterFirst Nine Months
2026202520262025
(Dollars in millions)
Sales$4 $5 $10 $14 
Loss before interest and taxes
Growth initiatives and businesses not allocated to operating segments$(39)$(41)$(117)$(139)
Pension and other postretirement benefits income (expense), net not allocated to operating segments6 2 20 4 
Asset impairments, restructuring, and other charges, net— (10)(4)(28)
Other income (charges), net not allocated to operating segments(6)— (22)(47)
Loss before interest and taxes$(39)$(49)$(123)$(210)
Asset impairments, restructuring, and other charges, net— 10 4 28 
Environmental and other costs— — 8 40 
Loss before interest and taxes excluding non-core items
(39)(39)(111)(142)
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".

Loss before interest and taxes in first nine months 2026 and first nine months 2025 included environmental and other costs from previously divested or non-operational sites and product lines, and severance charges related to corporate cost reduction initiatives. First nine months 2026 also included associated gains and losses. Third quarter 2025 included severance charges related to corporate cost reduction initiatives. For more information regarding non-GAAP items, see "Non-GAAP Financial Measures" in this MD&A. For more information regarding asset impairments, restructuring, and other charges, net, see Note 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)20262025$%20262025 $%
United States and Canada$1,094 $972 $122 13 %$3,231 $2,955 $276 9 %
Europe, Middle East, and Africa609 563 46 8 %1,811 1,783 28 2 %
Asia Pacific535 534 1 — %1,613 1,656 (43)(3)%
Latin America147 133 14 11 %420 385 35 9 %
Total Eastman
$2,385 $2,202 $183 8 %$7,075 $6,779 $296 4 %

Sales revenue increased 8 percent in third quarter 2026 compared to third quarter 2025. Higher sales revenue was due to higher selling prices across all regions except the Asia Pacific region and higher sales volume across all regions.
Sales revenue increased 4 percent in first nine months 2026 compared to first nine months 2025. Higher sales revenue was primarily due to higher selling prices and higher sales volume in the United States and Canada and Latin America regions, as well as a favorable foreign currency exchange impact in the Europe, Middle East, and Africa ("EMEA") and Asia Pacific regions. These increases were partially offset by lower selling prices in the Asia Pacific region and lower sales volume in the EMEA region.
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)20262025
Net cash provided by (used in)
Operating activities$377 $468 
Investing activities(299)(415)
Financing activities124 (415)
Effect of exchange rate changes on cash and cash equivalents— 14 
Net change in cash and cash equivalents202 (348)
Cash and cash equivalents at beginning of period566 837 
Cash and cash equivalents at end of period$768 $489 
 
Cash provided by operating activities decreased $91 million in first nine months 2026 compared to first nine months 2025 primarily due to increased working capital requirements partially offset by lower variable compensation payout. Higher net earnings was offset by unfavorable Other items, net, which included lower provision for income taxes and non-cash environmental liabilities.

Cash used in investing activities decreased $116 million in first nine months 2026 compared to first nine months 2025 primarily due to lower capital spend.

Cash provided by financing activities was $124 million in first nine months 2026 compared to $415 million cash used in financing activities in first nine months 2025. This increase was primarily due to lower repayment of borrowings and treasury stock purchases. For additional information, see "Liquidity and Other Financial Information - Debt and Other Commitments" in this MD&A.

Priorities for uses of available cash include payment of the quarterly dividend, capital expenditures, and maintaining our solid investment-grade balance sheet.

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 $647 million and $696 million in third quarter 2026 and 2025, and $2.0 billion in both first nine months 2026 and 2025. 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 and $346 million of these receivables would have been outstanding as of September 30, 2026 and December 31, 2025 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. The Company also maintains a structured payables program that utilizes a payables processing arrangement with a financial institution to support the processing and settlement of freight and logistics invoices. See Note 1, "Significant Accounting Policies", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information regarding both programs.

Debt and Other Commitments

At September 30, 2026, the Company's borrowings totaled $5.2 billion with various maturities. In first quarter 2026, the Company issued $600 million aggregate principal amount of 4.5% notes due February 2031 in a registered public offering (the "2026 Notes"). Proceeds from the sale of the 2026 Notes, net of original issue discounts and issuance costs, were $594 million.

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 2025 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 2031. 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 provides available liquidity for general corporate purposes and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. In February 2026, the Credit Facility was amended to extend the maturity to February 2031 and to temporarily adjust the maximum leverage ratio covenant through fiscal quarter ending June 30, 2027 in the event of further macroeconomic uncertainty impacting operating results. All other material terms of the Credit Facility remain unchanged. At September 30, 2026 and December 31, 2025, the Company had no outstanding borrowings under the Credit Facility and no commercial paper borrowings.

In first quarter 2026, the remaining $150 million of the five-year term loan (the "2027 Term Loan") was repaid using available cash. There were no extinguishment costs associated with the repayment of the 2027 Term Loan. The outstanding balance on the 2027 Term Loan was $150 million at December 31, 2025 with a variable interest rate of 5.14%.

The Credit Facility contains 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, 2026 and December 31, 2025. The total amount of available borrowings under the Credit Facility was $1.50 billion as of September 30, 2026.

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)20262025
Total borrowings$5,218 $4,787 
Less: Cash and cash equivalents768 566 
Net debt (1)
$4,450 $4,221 
(1)Included a non-cash decrease of $18 million in 2026 and a non-cash increase of $68 million in 2025 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 $298 million and $434 million in first nine months 2026 and 2025. Capital expenditures in first nine months 2026 were primarily for maintenance capital and limited growth capital for projects already in progress. The Company expects that 2026 capital expenditures will be approximately $400 million, primarily for maintenance capital and limited growth capital for strategic 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, 2026, 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 did not repurchase shares of common stock in first nine months 2026.

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 2025 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, 2026, the goodwill balance as reported on the Unaudited Consolidated Balance Sheets 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. During the most recent annual impairment analysis, fair values were determined to significantly exceed the carrying values for each reporting unit tested with the exception of performance films (part of the AM operating segment as described in Part I, Item 1, "Business", of the Company's 2025 Annual Report on Form 10-K), which has a goodwill balance of $813 million at September 30, 2026. Declines in 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 future impairment of goodwill. No indicators of impairment were identified during the three and nine months ended September 30, 2026.

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 2025 Annual Report on Form 10-K.

At September 30, 2026, 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 $31 million, with an additional $3 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.

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 2025 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, 2026, 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 2026 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 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 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.

There have been no material changes to the legal proceedings previously disclosed in Part I, Item 3 of the Company's 2025 Annual Report on Form 10-K.

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 2025 Annual Report on Form 10-K.

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, 2026, 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 did not repurchase shares of common stock during third quarter or first nine months 2026. For additional information, see Note 9, "Stockholders' Equity", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.
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
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:October 30, 2026By:/s/ William T. McLain, Jr.
William T. McLain, Jr.
Executive Vice President and Chief Financial Officer

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ATTACHMENTS / EXHIBITS

ATTACHMENTS / EXHIBITS

RULE 13A 14(A) CERTIFICATION BY MARK J. COSTA

RULE 13A 14(A) CERTIFICATION BY WILLIAM T. MCLAIN, JR.

SECTION 1350 CERTIFICATION BY MARK J. COSTA

SECTION 1350 CERTIFICATION BY WILLIAM T. MCLAIN, JR.

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