Eastman Announces Fourth-Quarter and Full-Year 2009 Results

KINGSPORT, Tenn., Jan. 28, 2010 – Eastman Chemical Company (NYSE:EMN) today announced a loss of $0.44 per diluted share for fourth quarter 2009 versus a loss of $0.03 per diluted share for fourth quarter 2008.  Excluding the items described below for both periods, fourth-quarter 2009 earnings were $1.14 per diluted share, while fourth-quarter 2008 earnings were $0.05 per diluted share.  For reconciliations to reported company and segment earnings, see Tables 3 and 5 in the accompanying financial tables.

Included in results for fourth quarter 2009 were non-cash asset impairments and restructuring charges, net, of $177 million, primarily for the discontinued Beaumont, Texas, industrial gasification project.  Fourth-quarter 2008 results included asset impairments and restructuring charges, net, of $24 million, accelerated depreciation costs of $1 million, and other operating income of $16 million.

Corporate FY 2009 versus FY 2008

Performance Polymers – Sales revenue declined by 17 percent, and excluding contract polymer intermediates sales to divested manufacturing facilities in fourth quarter 2008 declined by 7 percent, due to lower selling prices.  The lower selling prices were due to lower raw material and energy costs, particularly for paraxylene.  Operating results in fourth quarter 2009 were a loss of $34 million compared to a loss of $32 million in fourth quarter 2008, excluding asset impairments and restructuring charges, net, in fourth quarter 2008.  Fourth quarter 2009 operating results included the unfavorable impact on sales revenue and manufacturing costs of continued operational challenges with the South Carolina PET manufacturing facility, a shutdown of the South Carolina facility to address the operational challenges, and the impact of depressed demand due to continued difficult market conditions.  Fourth-quarter 2008 operating results were negatively impacted by depressed demand due to the global recession and the impact of the shutdown for the debottleneck of the PET facility based on IntegRex™ technology.

Specialty Plastics – Sales revenue increased by 6 percent as higher sales volume more than offset lower selling prices.  The increase in sales volume was due to improved demand compared to the depressed level in fourth quarter 2008 while selling prices declined due to the global recession.  Operating earnings in fourth quarter 2009 were $11 million compared to a loss of $3 million in fourth quarter 2008, excluding other operating income in fourth quarter 2008.  Operating results improved due to lower raw material and energy costs, higher sales volume and the favorable impact of higher capacity utilization, and cost reduction actions, which more than offset lower selling prices.

Segment Results FY 2009 versus FY 2008

Performance Polymers – Sales revenue declined by 33 percent, and excluding contract polymer intermediates sales declined by 23 percent, due to lower selling prices.  The lower selling prices were primarily due to lower raw material and energy costs.  Excluding asset impairments and restructuring charges, net, in both periods, and accelerated depreciation costs in 2008, operating results were a loss of $62 million in 2009 compared to a loss of $29 million in 2008.  Operating results declined due to lower selling prices and the unfavorable impact on sales revenue and manufacturing costs of operational challenges with the South Carolina PET manufacturing facility partially offset by lower raw material and energy costs.

Specialty Plastics – Sales revenue declined by 19 percent due to lower sales volume and lower selling prices.  The decline in sales volume was due to the global recession which weakened demand for plastic resins, including copolyester products sold into the consumer and durable goods markets, and for cellulosic plastics sold into various markets.  The lower selling prices were due to lower raw material and energy costs, particularly for paraxylene.  Excluding asset impairments and restructuring charges, net, in 2009 and other operating income in 2008, operating earnings were $18 million in 2009 compared to $33 million in 2008.  The decline in operating earnings was due to lower sales volume and lower capacity utilization resulting in higher unit costs, and lower selling prices, partially offset by lower raw material and energy costs and cost reduction actions.

Outlook

Commenting on the outlook for first quarter and full year 2010, Rogers said:  “We move forward into 2010 with positive momentum given the solid earnings we delivered in the second half of 2009.  We are in the early stages of a recovery in our sales volume, which we expect will continue through the year as the global economy improves.  We also will continue to benefit in 2010 from the cost reduction actions we took in 2009.  However, we expect raw material and energy costs to increase in 2010 compared with 2009.  As a result, we expect first quarter 2010 earnings per share to be slightly higher than fourth quarter 2009 earnings per share of $1.14.  In addition, we remain confident in our ability to deliver 20 percent higher earnings per share in 2010 compared with 2009.”  Charges related to restructuring and cost reduction actions are excluded from earnings per share.  Read full report at eastman.com

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