STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Reconciliations of the changes in stockholders' equity for third quarter 2019 and 2018 are provided below:



(Dollars in millions, except per share amount)	Common Stock at Par Value		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Total Eastman Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance at June 30, 2019	$	2	$	2,079	$	7,848		$	(235	)	$	(3,825	)	$	5,869		$	77		$	5,946
Net Earnings	—		—		266			—			—			266			1			267
Cash Dividends Declared⁽¹⁾ ($0.62 per share)	—		—		(85		)	—			—			(85		)	—			(85		)
Other Comprehensive Income (Loss)	—		—		—			32			—			32			—			32
Share Based Compensation Expense ⁽²⁾	—		13		—			—			—			13			—			13
Other	—		—		—			—			—			—			(1		)	(1		)
Share Repurchase	—		—		—			—			(75		)	(75		)	—			(75		)
Balance at September 30, 2019	$	2	$	2,092	$	8,029		$	(203	)	$	(3,900	)	$	6,020		$	77		$	6,097



(Dollars in millions, except per share amount)	Common Stock at Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Total Eastman Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance at June 30, 2018	$	2	$	2,021		$	7,292		$	(193	)	$	(3,425	)	$	5,697		$	77		$	5,774
Net Earnings	—		—			412			—			—			412			1			413
Cash Dividends Declared⁽¹⁾($0.56 per share)	—		—			(78		)	—			—			(78		)	—			(78		)
Other Comprehensive Income (Loss)	—		—			—			(1		)	—			(1		)	—			(1		)
Share Based Compensation Expense ⁽²⁾	—		15			—			—			—			15			—			15
Stock Option Exercises	—		1			—			—			—			1			—			1
Other	—		(1		)	—			—			—			(1		)	(1		)	(2		)
Share Repurchase	—		—			—			—			(125		)	(125		)	—			(125		)
Distributions to noncontrolling interest	—		—			—			—			—			—			(2		)	(2		)
Balance at September 30, 2018	$	2	$	2,036		$	7,626		$	(194	)	$	(3,550	)	$	5,920		$	75		$	5,995


⁽¹⁾	Cash dividends declared consists of cash dividends paid and dividends declared but unpaid.


⁽²⁾	Share-based compensation expense is the fair value of share-based awards.

Reconciliations of the changes in stockholders' equity for first nine months 2019 and 2018 are provided below:



(Dollars in millions, except per share amount)	Common Stock at Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Total Eastman Stockholders' Equity			Noncontrolling Interest		Total Equity
Balance at December 31, 2018	$	2	$	2,048		$	7,573		$	(245	)	$	(3,575	)	$	5,803		$	75	$	5,878
Cumulative Effect of Adoption of New Accounting Standards ⁽¹⁾	—		—			(20		)	20			—			—			—		—
Net Earnings	—		—			733			—			—			733			2		735
Cash Dividends Declared ⁽²⁾ ($1.86 per share)	—		—			(257		)	—			—			(257		)	—		(257		)
Other Comprehensive Income (Loss)	—		—			—			22			—			22			—		22
Share-Based Compensation Expense ⁽³⁾	—		46			—			—			—			46			—		46
Stock Option Exercises	—		8			—			—			—			8			—		8
Other ⁽⁴⁾	—		(10		)	—			—			—			(10		)	—		(10		)
Share Repurchases	—		—			—			—			(325		)	(325		)	—		(325		)
Balance at September 30, 2019	$	2	$	2,092		$	8,029		$	(203	)	$	(3,900	)	$	6,020		$	77	$	6,097



(Dollars in millions, except per share amount)	Common Stock at Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Total Eastman Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance at December 31, 2017	$	2	$	1,983		$	6,802		$	(209	)	$	(3,175	)	$	5,403		$	77		$	5,480
Cumulative Effect of Adoption of New Accounting Standards ⁽⁵⁾	—		—			16			—			—			16			—			16
Net Earnings	—		—			1,046			—			—			1,046			3			1,049
Cash Dividends Declared ⁽²⁾ ($1.68 per share)	—		—			(238		)	—			—			(238		)	—			(238		)
Other Comprehensive Income (Loss)	—		—			—			15			—			15			—			15
Share-Based Compensation Expense ⁽³⁾	—		53			—			—			—			53			—			53
Stock Option Exercises	—		17			—			—			—			17			—			17
Other ⁽⁴⁾	—		(17		)	—			—			—			(17		)	—			(17		)
Share Repurchases	—		—			—			—			(375		)	(375		)	—			(375		)
Distributions to Noncontrolling Interest	—		—			—			—			—			—			(5		)	(5		)
Balance at September 30, 2018	$	2	$	2,036		$	7,626		$	(194	)	$	(3,550	)	$	5,920		$	75		$	5,995


⁽¹⁾	On January 1, 2019, the Company adopted a new accounting standard for reporting comprehensive income, which resulted in a reclassification of stranded tax effects from the Tax Reform Act from AOCI to retained earnings. See Note 1, "Significant Accounting Policies", for additional information.


⁽²⁾	Cash dividends declared consists of cash dividends paid and dividends declared but unpaid.


⁽³⁾	Share-based compensation expense is the fair value of share-based awards.


⁽⁴⁾	Additional paid-in capital includes value of shares withheld for employees' taxes on vesting of share-based compensation awards.


⁽⁵⁾	On January 1, 2018, the Company adopted new accounting standards for revenue recognition, income taxes, and derivatives and hedging, which resulted in adjustments to beginning retained earnings. See Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2018 Annual Report on Form 10-K for specific amounts related to each standard.

Accumulated Other Comprehensive Income (Loss), Net of Tax



(Dollars in millions)	Cumulative Translation Adjustment			Benefit Plans Unrecognized Prior Service Credits			Unrealized Gains (Losses) on Derivative Instruments			Unrealized Losses on Investments			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2017	$	(296	)	$	136		$	(48	)	$	(1	)	$	(209	)
Period change	(13		)	(30		)	7			—			(36		)
Balance at December 31, 2018	(309		)	106			(41		)	(1		)	(245		)
Period change ⁽¹⁾	40			7			(5		)	—			42
Balance at September 30, 2019	$	(269	)	$	113		$	(46	)	$	(1	)	$	(203	)


⁽¹⁾	Benefit plans unrecognized prior service credits includes $29 million reclassification of stranded tax expense from AOCI to retained earnings and unrealized gains (losses) on derivative instruments includes $9 million reclassification of stranded tax benefit from AOCI to retained earnings. See Note 1, "Significant Accounting Policies", for additional information.

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 United States, because the CTA is considered to be a component of indefinitely invested, unremitted earnings of these foreign subsidiaries.

Components of other comprehensive income recognized in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects:



	Third Quarter
	2019						2018
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	23		$	23		$	(21	)	$	(21	)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(9		)	(7		)	(10		)	(7		)
Derivatives and hedging:
Unrealized gain (loss) during period	13			10			50			37
Reclassification adjustment for (gains) losses included in net income, net	8			6			(14		)	(10		)
Total other comprehensive income (loss)	$	35		$	32		$	5		$	(1	)

	First Nine Months
	2019						2018
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax
Other comprehensive income (loss)
Change in cumulative translation adjustment	$	40		$	40		$	(28	)	$	(28	)
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits	(29		)	(22		)	(30		)	(22		)
Derivatives and hedging:
Unrealized gain (loss) during period	(3		)	(2		)	103			78
Reclassification adjustment for (gains) losses included in net income, net	8			6			(17		)	(13		)
Total other comprehensive income (loss)	$	16		$	22		$	28		$	15