XML 41 R20.htm IDEA: XBRL DOCUMENT v3.22.0.1
STOCKHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2020
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY
A reconciliation of the changes in stockholders' equity for 2021, 2020, and 2019 is provided below:
(Dollars in millions)Common Stock at Par ValueAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock at CostTotal Eastman Stockholders' EquityNoncontrolling InterestTotal 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— — 759 — — 759 3 762 
Cash Dividends (2)
— — (347)— — (347)— (347)
Other Comprehensive (Loss)— — — 11 — 11 — 11 
Share-Based Compensation Expense (3)
— 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 
Net Earnings— — 478 — — 478 11 489 
Cash Dividends (2)
— — (363)— — (363)— (363)
Other Comprehensive Income— — — (59)— (59)— (59)
Share-Based Compensation Expense (3)
— 44 — — — 44 — 44 
Stock Option Exercises— 36 — — — 36 — 36 
Other (4)
— (11)— — — (11)2 (9)
Share Repurchase— — — — (60)(60)— (60)
Distributions to noncontrolling interest— — — — — — (2)(2)
Balance at December 31, 2020$2 $2,174 $8,080 $(273)$(3,960)$6,023 $85 $6,108 
Net Earnings— — 857 — — 857 10 867 
Cash Dividends (2)
— — (380)— — (380)— (380)
Other Comprehensive Income— — — 91 — 91 — 91 
Share-Based Compensation Expense (3)
— 70 — — — 70 — 70 
Stock Option Exercises— 62 — — — 62 — 62 
Other (4)
— (19)— — — (19)3 (16)
Share Repurchase (5)
— (100)— — (900)(1,000)— (1,000)
Distributions to noncontrolling interest— — — — — — (14)(14)
Balance at December 31, 2021$2 $2,187 $8,557 $(182)$(4,860)$5,704 $84 $5,788 
(1)On January 1, 2019, Eastman adopted ASU 2018-02 Income Statement - Reporting Comprehensive Income resulting in the reclassification of $20 million of stranded tax expense from AOCI to retained earnings.
(2)Cash dividends includes 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)Additional paid-in capital includes payment for repurchase of shares under the ASR which have not yet been delivered.

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 $2.83 in 2021, $2.67 in 2020, and $2.52 in 2019.
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.

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.

In December 2021, the Company entered into an accelerated share repurchase program ("ASR") to purchase $500 million of the Company's common stock under the 2018 authorization. In exchange for upfront payment totaling $500 million, the financial institutions committed to deliver shares during the ASR's purchase period, which will end in March 2022. The total number of shares ultimately delivered will be determined at the end of the applicable purchase period based on the volume-weighted average price of the Company's stock during the term of the ASR, less a discount. During the fourth quarter of 2021, 3,658,314 shares for a total of $400 million were delivered to the Company, representing approximately 80 percent of the expected share repurchases under the ASR. The remaining $100 million has been accounted for as a reduction to "Additional paid-in capital" in the Company's Consolidated Statements of Financial Position, as it has been paid, but shares have not yet been delivered.

As of December 31, 2021, a total of 15,948,995 shares have been repurchased under the 2018 authorization for a total of $1,533 million. During 2021, 2020, and 2019, the Company repurchased shares of common stock of 8,061,779, 1,134,052, and 4,282,409, respectively, for a cost of approximately $900 million, $60 million, and $325 million, respectively.

In December 2021, the Company's Board of Directors authorized the additional repurchase of up to $2.5 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. No shares have been repurchased under the December 2021 authorization.

The additions to paid-in capital in 2021, 2020, and 2019 are primarily for compensation expense of equity awards and employee stock option exercises, offset in 2021 by the ASR payment for which shares have not yet been delivered.

The Company's charitable foundation held 50,798 issued and outstanding shares of the Company's common stock at December 31, 2021, 2020, and 2019 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)202120202019
Numerator
Net earnings attributable to Eastman$857 $478 $759 
Denominator
Weighted average shares used for basic EPS134.9 135.5 137.4 
Dilutive effect of stock options and other award plans2.2 1.0 1.1 
Weighted average shares used for diluted EPS137.1 136.5 138.5 
EPS (1)
Basic$6.35 $3.53 $5.52 
Diluted$6.25 $3.50 $5.48 
(1)     EPS is calculated using whole dollars and shares.
Shares underlying stock options excluded from the 2021, 2020, and 2019 calculations of diluted EPS were 150,781, 2,424,826, and 2,183,875, 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,
202120202019
Balance at beginning of year220,641,506 219,638,646 219,140,523 
Issued for employee compensation and benefit plans1,167,803 1,002,860 498,123 
Balance at end of year221,809,309 220,641,506 219,638,646 

Accumulated Other Comprehensive Income (Loss)
 
(Dollars in millions)		Cumulative Translation AdjustmentBenefit Plans Unrecognized Prior Service CreditsUnrealized Gains (Losses) on Cash Flow HedgesUnrealized Losses on InvestmentsAccumulated Other Comprehensive Income (Loss)
Balance at December 31, 2019$(264)$106 $(55)$(1)$(214)
Period change(29)(19)(11)— (59)
Balance at December 31, 2020(293)87 (66)(1)(273)
Period change56 (28)63 — 91 
Balance at December 31, 2021$(237)$59 $(3)$(1)$(182)

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,
202120202019
(Dollars in millions)Before TaxNet of TaxBefore TaxNet of TaxBefore TaxNet of Tax
Change in cumulative translation adjustment$56 $56 $(29)$(29)$45 $45 
Defined benefit pension and other postretirement benefit plans:   
Prior service credit arising during the period— — 12 9 — — 
Amortization of unrecognized prior service credits included in net periodic costs(38)(28)(38)(28)(39)(29)
Derivatives and hedging:   
Unrealized gain (loss) during period88 66 (46)(34)(27)(20)
Reclassification adjustment for (gains) losses included in net income, net(4)(3)31 23 20 15 
Total other comprehensive income (loss)$102 $91 $(70)$(59)$(1)$11 

For additional information regarding the impact of reclassifications into earnings, refer to Note 10, "Derivative and Non-Derivative Financial Instruments", and Note 11, "Retirement Plans".