STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2019

Stockholders' Equity Note [Abstract]

A reconciliation of the changes in stockholders' equity for 2019, 2018, and 2017 is provided below:



(Dollars in millions)	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, 2016	$	2	$	1,915		$	5,721		$	(281	)	$	(2,825	)	$	4,532		$	76		$	4,608
Net Earnings	—		—			1,384			—			—			1,384			4			1,388
Cash Dividends ⁽¹⁾	—		—			(303		)	—			—			(303		)	—			(303		)
Other Comprehensive Income	—		—			—			72			—			72			—			72
Share-Based Compensation Expense ⁽²⁾	—		52			—			—			—			52			—			52
Stock Option Exercises	—		22			—			—			—			22			—			22
Other	—		(6		)	—			—			—			(6		)	1			(5		)
Share Repurchase	—		—			—			—			(350		)	(350		)	—			(350		)
Distributions to noncontrolling interest	—		—			—			—			—			—			(4		)	(4		)
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 ⁽³⁾	—		—			16			—			—			16			—			16
Net Earnings	—		—			1,080			—			—			1,080			4			1,084
Cash Dividends ⁽¹⁾	—		—			(325		)	—			—			(325		)	—			(325		)
Other Comprehensive (Loss)	—		—			—			(36		)	—			(36		)	—			(36		)
Share-Based Compensation Expense ⁽²⁾	—		64			—			—			—			64			—			64
Stock Option Exercises	—		18			—			—			—			18			—			18
Other ⁽⁴⁾	—		(17		)	—			—			—			(17		)	(1		)	(18		)
Share Repurchase	—		—			—			—			(400		)	(400		)	—			(400		)
Distributions to noncontrolling interest	—		—			—			—			—			—			(5		)	(5		)
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 ⁽⁵⁾	—		—			(20		)	20			—			—			—			—
Net Earnings	—		—			759			—			—			759			3			762
Cash Dividends ⁽¹⁾	—		—			(347		)	—			—			(347		)	—			(347		)
Other Comprehensive Income	—		—			—			11			—			11			—			11
Share-Based Compensation Expense ⁽²⁾	—		59			—			—			—			59			—			59
Stock Option Exercises	—		9			—			—			—			9			—			9
Other ⁽⁴⁾	—		(11		)	—			—			—			(11		)	—			(11		)
Share Repurchase	—		—			—			—			(325		)	(325		)	—			(325		)
Distributions to noncontrolling interest	—		—			—			—			—			—			(4		)	(4		)
Balance at December 31, 2019	$	2	$	2,105		$	7,965		$	(214	)	$	(3,900	)	$	5,958		$	74		$	6,032


⁽¹⁾	Cash dividends includes cash dividends paid and dividends declared, but unpaid.


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


⁽³⁾	On January 1, 2018, the Company adopted new accounting standards for revenue recognition and derivatives and hedging, which resulted in increases to beginning retained earnings of $53 million and $2 million, respectively. The Company also adopted a new accounting standard for income taxes, which resulted in a decrease to beginning retained earnings of $39 million.


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


⁽⁵⁾	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.

Eastman is authorized to issue 400 million shares of all classes of stock, of which 50 million may be preferred stock, par value $0.01 per share, and 350 million may be common stock, par value $0.01 per share. The Company declared dividends per share of $2.52 in 2019, $2.30 in 2018, and $2.09 in 2017.

The Company established a benefit security trust in 1997 to provide a degree of financial security for unfunded obligations under certain unfunded plans and contributed to the trust a warrant to purchase up to 6 million shares of common stock of the Company for par value. The warrant, which remains outstanding, is exercisable by the trustee if the Company does not meet certain funding obligations, which obligations would be triggered by certain occurrences, including a change in control or potential change in control, as defined, or failure by the Company to meet its payment obligations under certain covered unfunded plans. Such warrant is excluded from the computation of diluted EPS because the conditions upon which the warrant becomes exercisable have not been met.

The additions to paid-in capital in 2019, 2018, and 2017 are primarily for compensation expense of equity awards and employee stock option exercises.

In February 2014, the Company's Board of Directors authorized repurchase of up to $1 billion of the Company's outstanding common stock. The Company completed the $1 billion repurchase authorization in May 2018, acquiring a total of 12,215,950 shares. In February 2018, the Company's Board of Directors authorized the repurchase of up to $2 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. As of December 31, 2019, a total of 6,753,164 shares have been repurchased under this authorization for a total of $573 million. During 2019, the Company repurchased 4,282,409 shares of common stock for a cost of approximately $325 million. During 2018, the Company repurchased 3,959,878 shares of common stock for a cost of approximately $400 million. During 2017, the Company repurchased 4,184,637 shares of common stock for a cost of approximately $350 million.

The Company's charitable foundation held 50,798 issued and outstanding shares of the Company's common stock at December 31, 2019, 2018, and 2017 which are included in treasury stock in the Consolidated Statements of Financial Position and excluded from calculations of diluted EPS.

The following table sets forth the computation of basic and diluted EPS:



	For years ended December 31,
(In millions, except per share amounts)	2019		2018		2017
Numerator
Net earnings attributable to Eastman	$	759	$	1,080	$	1,384

Denominator
Weighted average shares used for basic EPS	137.4		141.2		144.8
Dilutive effect of stock options and other award plans	1.1		1.7		1.3
Weighted average shares used for diluted EPS	138.5		142.9		146.1

EPS⁽¹⁾
Basic	$	5.52	$	7.65	$	9.56
Diluted	$	5.48	$	7.56	$	9.47


⁽¹⁾	EPS is calculated using whole dollars and shares.

Shares underlying stock options excluded from the 2019, 2018, and 2017 calculations of diluted EPS were 2,183,875, 619,706, and 204,978, respectively, because the grant 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 calculation of diluted EPS would have been antidilutive.

Shares of common stock issued, including shares held in treasury, are presented below:



	For years ended December 31,
	2019	2018	2017

Balance at beginning of year	219,140,523	218,369,992	217,707,600
Issued for employee compensation and benefit plans	498,123	770,531	662,392
Balance at end of year	219,638,646	219,140,523	218,369,992

Accumulated Other Comprehensive Income (Loss)



(Dollars in millions)	Cumulative Translation Adjustment			Benefit Plans Unrecognized Prior Service Credits			Unrealized Gains (Losses) on Cash Flow Hedges			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⁾	45			—			(14		)	—			31
Balance at December 31, 2019	$	(264	)	$	106		$	(55	)	$	(1	)	$	(214	)


⁽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 records deferred income taxes on the cumulative translation adjustment 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 cumulative translation adjustment of other subsidiaries outside the United States, as the cumulative translation adjustment is considered to be a component of indefinitely invested, unremitted earnings of these foreign subsidiaries.

Components of total other comprehensive income (loss) recorded in the Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings are presented below, before tax and net of tax effects:



	For years ended December 31,
	2019						2018						2017
(Dollars in millions)	Before Tax			Net of Tax			Before Tax			Net of Tax			Before Tax			Net of Tax
Change in cumulative translation adjustment	$	45		$	45		$	(13	)	$	(13	)	$	85		$	85
Defined benefit pension and other postretirement benefit plans:
Amortization of unrecognized prior service credits included in net periodic costs	(39		)	(29		)	(40		)	(30		)	(43		)	(27		)
Derivatives and hedging:
Unrealized gain (loss) during period	(27		)	(20		)	30			22			11			7
Reclassification adjustment for (gains) losses included in net income, net	20			15			(20		)	(15		)	11			7
Total other comprehensive income (loss)	$	(1	)	$	11		$	(43	)	$	(36	)	$	64		$	72

For additional information regarding the impact of reclassifications into earnings, refer to Note 9, "Derivative and Non-Derivative Financial Instruments", and Note 10, "Retirement Plans".