BORROWINGS



	June 30,		December 31,
(Dollars in millions)	2018		2017
Borrowings consisted of:
5.5% notes due November 2019	$	250	$	250
2.7% notes due January 2020	798		797
4.5% notes due January 2021	185		185
3.6% notes due August 2022	738		738
1.50% notes due May 2023 ⁽¹⁾	872		895
7 1/4% debentures due January 2024	197		197
7 5/8% debentures due June 2024	43		43
3.8% notes due March 2025	688		690
1.875% notes due November 2026 ⁽¹⁾	577		592
7.60% debentures due February 2027	195		195
4.8% notes due September 2042	493		493
4.65% notes due October 2044	871		871
Commercial paper and short-term borrowings	661		389
Credit facilities borrowings	125		200
Capital leases and other	2		5
Total borrowings	6,695		6,540
Borrowings due within one year	662		393
Long-term borrowings	$	6,033	$	6,147

⁽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 six months ended June 30, 2018, pre-tax gains of $39 million were recognized in other comprehensive income ("OCI") for revaluation of these notes.

Credit Facilities and Commercial Paper Borrowings

In December 2016, the Company borrowed $300 million under a five-year term loan agreement ("2021 Term Loan"). As of June 30, 2018, the 2021 Term Loan agreement balance outstanding was $100 million with an interest rate of 3.34 percent. In second quarter 2018, $100 million of the Company's borrowings under the 2021 Term Loan were repaid using available cash. As of December 31, 2017, the 2021 Term Loan agreement balance outstanding was $200 million with an interest rate of 2.60 percent. Borrowings under the 2021 Term Loan agreement 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") expiring 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 June 30, 2018 and December 31, 2017, the Company had no outstanding borrowings under the Credit Facility. At June 30, 2018, the Company's commercial paper borrowings were $544 million with a weighted average interest rate of 2.37 percent. At December 31, 2017, the Company's commercial paper borrowings were $280 million with a weighted average interest rate of 1.61 percent.

In April 2018 the Company amended its $250 million accounts receivable securitization agreement (the "A/R Facility") to extend the maturity to April 2020. 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. In first quarter 2018, $100 million available under the A/R Facility was borrowed and repaid in second quarter 2018. In second quarter 2018, $25 million available under the A/R Facility was borrowed and remained outstanding at June 30, 2018 with an interest rate of 3.01 percent. At December 31, 2017, the Company had no borrowings under the A/R Facility.

The Credit and A/R Facilities and other borrowing agreements 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 June 30, 2018 and December 31, 2017.

The Company has access to borrowings of up to €150 million ($175 million) under a receivables facility based on the discounted value of selected customer accounts receivable. This facility expires December 2020 and renews for another one year period if not terminated with 90 days notice by either party. These arrangements include receivables in the United States, Belgium, and Finland, and are subject to various eligibility requirements. Borrowings under this facility are subject to interest at an agreed spread above EURIBOR for euro denominated drawings and the counterparty's cost of funds for drawings in any other currencies, plus administration and insurance fees and are classified as short-term. At June 30, 2018, the Company's amount of outstanding borrowings under this facility were $117 million with a weighted average interest rate of 1.52 percent. At December 31, 2017, the Company's amount of outstanding borrowings under this facility were $109 million with a weighted average interest rate of 1.31 percent.

Fair Value of Borrowings

Eastman has classified its total borrowings at June 30, 2018 and December 31, 2017 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 2017 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 primarily under the 2021 Term Loan, commercial paper, A/R Facility, and a receivables facility equals the carrying value and is classified as Level 2. The Company had no borrowings classified as Level 3 as of June 30, 2018 and December 31, 2017.



			Fair Value Measurements at June 30, 2018
(Dollars in millions)	Recorded Amount June 30, 2018		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Total borrowings	$	6,695	$	6,886	$	6,098	$	788



			Fair Value Measurements at December 31, 2017
(Dollars in millions)	Recorded Amount December 31, 2017		Total Fair Value		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)
Total borrowings	$	6,540	$	6,980	$	6,386	$	594