BORROWINGS



	September 30,		December 31,
(Dollars in millions)	2017		2016
Borrowings consisted of:
5.5% notes due November 2019	$	249	$	249
2.7% notes due January 2020	797		796
4.5% notes due January 2021	184		184
3.6% notes due August 2022	739		741
1.50% notes due May 2023 ⁽¹⁾	881		786
7 1/4% debentures due January 2024	197		197
7 5/8% debentures due June 2024	43		43
3.8% notes due March 2025	691		689
1.875% notes due November 2026 ⁽¹⁾	583		519
7.60% debentures due February 2027	195		195
4.8% notes due September 2042	493		493
4.65% notes due October 2044	871		870
Credit facilities borrowings	399		549
Commercial paper borrowings	366		280
Capital leases and other	6		3
Total borrowings	6,694		6,594
Borrowings due within one year	369		283
Long-term borrowings	$	6,325	$	6,311

⁽¹⁾

The carrying value of the euro-denominated 1.50% notes due May 2023 and 1.875% notes due November 2026 will fluctuate with changes in the euro exchange rate. The carrying value of these euro-denominated borrowings have been designated as non-derivative net investment hedges of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations. During the nine months ended September 30, 2017, pre-tax losses of $158 million were recognized in "Other comprehensive income (loss)" ("OCI") for revaluation of these notes.

Credit Facility and Commercial Paper Borrowings

In December 2014, Eastman borrowed $1 billion under a five-year term loan ("2019 Term Loan"). As of September 30, 2017, the 2019 Term Loan agreement balance outstanding was $20 million with an interest rate of 2.49 percent. In third quarter 2017, $230 million of the Company's borrowings under the 2019 Term Loan agreement were repaid using available cash. As of December 31, 2016, the 2019 Term Loan agreement balance outstanding was $250 million with an interest rate of 2.02 percent. In December 2016, the Company borrowed $300 million under a second five-year term loan ("2021 Term Loan"). As of September 30, 2017, the 2021 Term Loan agreement balance outstanding was $279 million with an interest rate of 2.49 percent. In third quarter 2017, $20 million of the Company's borrowings under the 2021 Term Loan agreement were repaid using available cash. As of December 31, 2016, the 2021 Term Loan agreement balance outstanding was $299 million with an interest rate of 1.95 percent. Borrowings under the 2019 Term Loan and 2021 Term Loan agreements are subject to interest at varying spreads above quoted market rates.

The Company has access to a $1.25 billion revolving credit agreement (the "Credit Facility") that expires October 2021. 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. At September 30, 2017 and December 31, 2016, the Company had no outstanding borrowings under the Credit Facility. At September 30, 2017, the Company's commercial paper borrowings were $366 million with a weighted average interest rate of 1.44 percent. At December 31, 2016, the Company's commercial paper borrowings were $280 million with a weighted average interest rate of 1.12 percent.

The Company has access to a $250 million accounts receivable securitization agreement (the "A/R Facility") that expires April 2019. Eastman Chemical Financial Corporation ("ECFC"), a subsidiary of the Company, has an agreement to sell interests in trade receivables under the A/R Facility to a third party purchaser. Third party creditors of ECFC have first priority claims on the assets of ECFC before those assets would be available to satisfy the Company's general obligations. Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and ECFC pays a fee to maintain availability of the A/R Facility. At September 30, 2017, the Company's borrowings under the A/R Facility were $100 million supported by trade receivables with an interest rate of 2.07 percent. At December 31, 2016, the Company had no borrowings under the A/R Facility.

The Credit and A/R Facilities and other borrowing arrangements contain customary covenants and events of default, some of which require the Company to maintain certain financial ratios that determine the amounts available and terms of borrowings. The Company was in compliance with all covenants at both September 30, 2017 and December 31, 2016.

Fair Value of Borrowings

The Company has classified its long-term borrowings at September 30, 2017 and December 31, 2016 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 2016 Annual Report on Form 10-K. The fair value for fixed-rate debt securities is based on current market prices and is classified as Level 1. The fair value for the Company's other borrowings under the Term Loans and the A/R Facility equals the carrying value and is classified as Level 2. The Company had no borrowings classified as Level 3 as of September 30, 2017 and December 31, 2016.



			Fair Value Measurements at September 30, 2017
(Dollars in millions)	Reported Amount September 30, 2017		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Long-term borrowings	$	6,325	$	6,735	$	6,333	$	402



			Fair Value Measurements at December 31, 2016
(Dollars in millions)	Reported Amount December 31, 2016		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Long-term borrowings	$	6,311	$	6,586	$	6,036	$	550