emn2007_11k.htm

 
 
UNITED STATES
 
 
SECURITIES AND EXCHANGE COMMISSION
 
 
Washington, D. C. 20549
 
 
FORM 11-K
 
(Mark
One)
  
[X]
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
 
For the fiscal year ended December 31, 2007
 
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
 
For the transition period from _____________ to ______________
 

 
Commission file number 1-12626
A. Full Title of the plan and the address of the plan, if different from that of the issuer named below:
EASTMAN INVESTMENT AND EMPLOYEE STOCK OWNERSHIP PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
EASTMAN CHEMICAL COMPANY
200 S. Wilcox Drive
Kingsport, Tennessee 37660
 
 


 
 
 
 





Eastman Investment and Employee Stock Ownership Plan

Table of Contents

Report of Independent Registered Public Accounting Firm
1
   
Basic Financial Statements:
  
   
Statements of Net Assets Available for Benefits
2
Statements of Changes in Net Assets Available for Benefits
3
Notes to Financial Statements
4 – 16
   
Additional Information (Note A):
17
   
Schedule of Assets (Held at End of Year)
  
   
Signatures
47
   
Exhibits
48

Note A:
Other supplemental schedules required by Section 2520.10310 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 (“ERISA”) have been omitted because they are not applicable.


 
 
 

Report of Independent Registered Public Accounting Firm


To the Participants and Administrator of
Eastman Investment and Employee Stock Ownership Plan

In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Eastman Investment and Employee Stock Ownership Plan (the “Plan”) at December 31, 2007 and December 31, 2006, and the changes in net assets available for benefits for the periods then ended in conformity with accounting principles generally accepted in the United States of America.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  This supplemental schedule is the responsibility of the Plan's management.  The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 PricewaterhouseCoopers LLP
 Philadelphia, Pennsylvania
 June 30, 2008



1 
 
 
Eastman Investment and Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
December 31, 2007 and December 31, 2006
(in thousands)




                         
       
 December 31,
          
December 31,
    
       
2007
          
2006
    
       
Non-
          
Non-
    
   
Participant
  
participant
      
Participant
  
participant
    
   
Directed
  
Directed
  
Total
  
Directed
  
Directed
  
Total
                         
Assets
                        
                         
                         
Investments at fair value
$
1,485,704
$
95,025
$
1,580,729
$
1,379,266
$
102,961
$
1,482,227
                         
                         
Receivables:
                        
                         
Sponsor
  
29,415
  
3,869
  
33,284
  
31,009
  
3,382
  
34,391
                         
Other
  
1,435
  
1,352
  
2,787
  
1,394
  
802
  
2,196
                         
Total assets
  
1,516,554
  
100,246
  
1,616,800
  
1,411,669
  
107,145
  
1,518,814
                         
                         
Liabilities
                        
                         
                         
Accrued expenses
  
12
  
17
  
  29
  
13
  
16
  
29
                         
Other liabilities
  
2,339
  
1,370
  
3,709
  
987
  
879
  
1,866
                         
Total liabilities
  
2,351
  
1,387
  
3,738
  
1,000
  
895
  
1,895
                         
Adjustment from fair value to contract value for fully benefit-responsive investment contracts
  
 
(3,102)
  
--
  
(3,102)
  
8,231
  
--
  
8,231
                         
Net assets available
                        
for plan benefits
$
1,511,101
$
        98,859
$
1,609,960
$
1,418,900
$
106,250
$
1,525,150
                         


The accompanying notes are an integral part of these financial statements.

2 
 
 
Eastman Investment and Employee Stock Ownership Plan
Statements of Changes in Net Assets Available for Benefits
For the Periods Ended December 31, 2007 and December 31, 2006
(in thousands)




       
December 31, 2007
          
December 31, 2006
    
       
Non-
          
Non-
    
   
Participant
  
participant
      
Participant
  
participant
    
   
Directed
  
Directed
  
Total
  
Directed
  
Directed
  
Total
                         
Additions to net assets:
                        
                         
Investment income (loss)
                        
Interest
$
27,555
   $
-
   $
27,555
$
28,848
$
--
$
28,848
Dividends
  
67,710
  
2,840
  
70,550
  
58,845
  
3,324
  
62,169
Net appreciation (depreciation) in fair value of
                        
investments
  
34,503
  
4,074
  
38,577
  
27,345
  
14,469
  
41,814
Net investment gain (loss)
  
129,768
  
6,914
  
136,682
  
115,038
  
17,793
  
132,831
Participant contributions
  
80,729
  
-
  
80,729
  
69,396
  
-
  
69,396
Plan Sponsor contributions
  
29,415
  
3,869
  
33,284
  
31,009
  
3,382
  
34,391
                         
Total additions
  
239,912
  
10,783
  
250,695
  
215,443
  
21,175
  
236,618
                         
Deductions from net assets:
                        
                         
Distributions to and withdrawals
                        
by participants
  
159,653
  
6,052
  
165,705
  
187,168
  
5,213
  
192,381
Administrative expenses
  
180
  
-
  
180
  
164
  
-
  
164
                         
Total deductions
  
159,833
  
6,052
  
165,885
  
187,332
  
5,213
  
192,545
 
 
Interfund transfers, net
  
12,122
  
(12,122)
  
-
  
16,713
  
(16,713)
  
-
 
Net increase (decrease) in net assets
  
92,201
  
(7,391)
  
84,810
  
44,824
  
(751)
  
44,073
Net assets available for plan
                        
benefits at beginning of period
  
1,418,900
  
106,250
  
1,525,150
  
1,374,076
  
107,001
  
1,481,077
Net assets available for plan
                        
benefits at end of period
$
1,511,101
$
98,859
$
1,609,960
$
1,418,900
$
106,250
$
1,525,150

The accompanying notes are an integral part of these financial statements.

3 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements



1.  
DESCRIPTION OF PLAN

The Eastman Investment and Employee Stock Ownership Plan (the “Plan”) is a defined contribution plan of a controlled group of corporations consisting of Eastman Chemical Company and certain of its wholly-owned subsidiaries operating in the United States (“Eastman”, the “Company” or the "Plan Sponsor”).  The Plan is organized pursuant to Sections 401(a) and (k) and Section 4975(e) (7) of the Internal Revenue Code.  All United States employees of Eastman, with the exception of certain limited service and special program employees, and employees covered by a collective bargaining agreement with the Company, unless the collective bargaining agreement or the Plan specifically provides for participation, are eligible to participate in the Plan on their first day of employment with Eastman.  The Plan was adopted by Eastman, the Plan Sponsor, on January 1, 1994 and is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”).  The Plan is administered by the Investment Plan Committee (“IPCO”), which is the Plan Administrator and is comprised of Eastman employees.  The Plan has trusts which are administered by the Fidelity Management Trust Company (the “Trustee”).  The trusts include the Eastman Chemical Trust and the ESOP Trust.  Since the inception of the Plan, money in the forfeiture account has been used both to offset future Company contributions and for various administrative expenses of the Plan. The balance of the forfeiture account at December 31, 2007 and December 31, 2006 was $29,000 and $27,000, respectively. There were no forfeitures used in 2007 or 2006.

For additional information regarding the Plan, see the complete Plan documents.

As of December 31, 2006 the Plan's fiscal year end date was changed from December 30 to December 31. For purposes of comparability, the Statement of Changes in Net Assets Available for Benefits for the period ended December 31, 2006 presents the period December 31, 2005 through December 31, 2006.

Contributions and vesting

Contributions to the Plan are made through two separate provisions: (a) deferral of qualifying compensation and (b) contributions by the Plan Sponsor of cash or its common stock to the ESOP Fund as determined by the Compensation and Management Development Committee of the Board of Directors of Eastman.


4 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


The Plan includes a salary reduction provision allowing eligible employees to defer up to 40% of qualifying compensation, as defined in the Plan, up to the statutory limit of $15,500 for 2007 as permitted by the Internal Revenue Code.  For the catch-up salary deferral, an eligible employee who has attained age 50 before the close of the calendar year was allowed to defer up to 35% of qualifying compensation, as defined in the Plan, for 2007 up to certain Internal Revenue Code limitations.  Plan Sponsor contributions are also subject to certain other limitations.  Participants’ salary deferrals are contributed to the Plan by Eastman on behalf of the participants.  The Plan’s Trustee invests amounts contributed to the Plan, as designated by the participant, in common stock of Eastman, various growth and income mutual funds, and/or interest in a guaranteed investment contract fund (see Note 7).  Generally, participants may transfer amounts among the funds on any business day.  Additionally, participants may diversify amounts from their ESOP Fund account within the Plan (see Note 9).  Each participant is at all times 100% vested in their account, with the exception of amounts transferred from other plans, which continue to be subject to the former plans’ vesting requirements.  The Plan requires for the Retirement Savings Contribution (“RSC”) to be contributed either to the ESOP Fund for employees’ first five RSC contributions or into other Plan funds, as directed by the participant, for participants with more than five RSC contributions.  For participants with more than five RSC contributions, the RSC is allocated to participant-directed funds in accordance with each participant’s investment elections at such time as the RSC is made.

Plan Sponsor contributions may be paid at any time during the plan year and subsequent to such plan year through the due date for filing the Company's federal income tax return, including any extensions. Contributions may be paid to the ESOP Fund in cash or shares of Eastman common stock and are deposited in the Company contribution account.  Allocations to the participants' accounts from the Company contribution account will be made each plan year to participants who are eligible employees on the date designated by the Company.  Participants are not permitted to make contributions to the ESOP Fund and are 100% vested in their account balance at all times.

Employees may elect to transfer, into any of the Plan's fund options, balances received from (1) lump sum payouts from the Eastman Retirement Assistance Plan, a qualified defined benefit plan also sponsored by Eastman Chemical Company, (2) a former employer’s 401(a) and 401(k) plan, or (3) an employee’s individual retirement account containing amounts received from a qualified defined contribution plan under Section 401(a) and 401(k) of the Internal Revenue Code.  All rollover contributions into the Plan must meet the applicable Internal Revenue Service requirements.
 
On or after January 1, 2007, each eligible employee hired by the Company will, in addition to the RSC, be automatically enrolled as a participant in the Eastman Investment Plan (“EIP”) portion of the Plan. The participants will be deemed to have elected to defer 7% of their qualifying compensation to the EIP portion of the Plan, unless they affirmatively decline or they elect to contribute a percentage other than 7%. Each participant will also be eligible to receive a matching contribution from the Company equal to 50% of the first 7% of their pay that they contribute to the Plan each pay period.

5 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


Loans

The Investment Plan Committee (“IPCO”) may grant a loan of at least $1,000 to a participant provided that the aggregate of the participants’ loans outstanding does not exceed the lesser of (i) $50,000 reduced by the excess, if any, of (a) the participant’s highest outstanding loan balance from the preceding 12 months over (b) the outstanding total loan balance of loans from the Plan on the date on which the loan was made, or (ii) 50% of the non-forfeitable portion of the participant’s account, excluding amounts in a participant’s ESOP Fund account.  In accordance with the Plan provisions, the rate of interest on new participant loans approximates current market rates.  The term of any loan is determined by IPCO and shall not exceed five years.  Loans transferred to the Plan from the Hercules Incorporated Savings and Investment Plan, the ABCO Industries, Inc. 401(k) Profit Sharing Plan, and the Eastman Resins, Inc. Employees’ Growth Sharing Plan continue to carry terms applicable under those Plans.  At December 31, 2007, $30.0 million in loans were outstanding for terms of 6 to 121 months and interest rates ranging from 4% to 10.50%.   At December 31, 2006, $29.5 million in loans were outstanding for terms from 3 to 122 months and interest rates ranging from 4% to 10.50%.

Distributions

Distributions from the Plan require the approval of IPCO or its designee and are made under the following circumstances:

·  
Upon attaining age 59½, a participant may elect to receive a lump sum cash distribution of their total or partial account value while still actively employed.

·  
Upon separation of service from Eastman for any reason except death, the full value of a participant’s account is distributed in a lump sum payment for those participants who are not retirement-eligible and the participant account value is less than or equal to $1,000.  Separated participants with accounts in excess of $1,000 or who are retirement-eligible may elect either (i) to defer distribution until a later date but, in no event, later than April 1 of the calendar year following the year a participant attains age 70½ or (ii) immediate lump-sum distribution of the participant’s account or, at the election of the participant, distributions in monthly or annual installments.  Participants in the Eastman Stock Fund or ESOP Fund may elect a lump sum distribution in Eastman common stock.

·  
In the event of death, the value of a participant’s account is paid in a lump sum if the designated beneficiary is not the surviving spouse or if the account value is less than or equal to $1,000.  If the beneficiary is a surviving spouse and the participant account value exceeds $5,000, payment will be made in either a lump-sum amount or, at the election of the surviving spouse, in monthly or annual installments.

·  
Distributions to participants shall commence in the year following the year a participant attains age 70½, unless the participant has terminated his or her service with the Company.


6 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


·  
Approval of hardship withdrawals will only be granted in order to meet obligations relating to the payment of substantial out-of-pocket medical expenses, the purchase of a primary residence, the payment of tuition or other post-secondary educational expenses, or payments to prevent eviction or foreclosure. They are also granted for payment of funeral expenses for a deceased parent, spouse or child of the participant, or payment of expenses for repair or damage to the participants' principal residence. Hardship withdrawals may not exceed the value of the participant’s accounts in the Plan on the date of withdrawal.

·  
The Trustee is authorized to honor qualified domestic relation orders issued and served in accordance with Section 414(p) of the Internal Revenue Code.


Dividends attributable to the ESOP Fund

IPCO may direct that Eastman common stock dividends attributable to the non-participant directed ESOP Fund be (a) allocated to the accounts of participants, (b) paid in cash to the participants on a nondiscriminatory basis, or (c) paid by the Company directly to participants.  Alternatively, dividends received from Eastman common stock maintained in the Loan Suspense Account may be applied to reduce the related loan balance.

Investment of ESOP Fund Assets

ESOP Fund assets are invested primarily in Eastman common stock. However, at IPCO's discretion, funds may also be invested in other securities or held in cash.

Investment assets can be acquired by the ESOP Fund in three ways:

·  
The Company may make a direct contribution of cash to the ESOP Fund, which would then be used to purchase Eastman common stock or other securities.
 
·  
The Company may contribute shares of Eastman common stock directly to the ESOP Fund.
 
·  
The Company may direct the Trustee to obtain a loan to purchase securities (i.e., leveraged ESOP).  Until the loan is repaid, securities acquired with the respective loan process are not available to be allocated to participants' accounts and are maintained in a “Loan Suspense Account”.  On the last day of each plan year, a proportionate share of securities relating to loan amounts which have been repaid will be transferred out of the Loan Suspense Account and allocated to the accounts of ESOP Fund participants.  The ESOP Fund currently is not a leveraged ESOP.


7 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


Allocations to participants' ESOP Fund accounts

Separate participant accounts are established to reflect each participant's interest in the ESOP Fund and are maintained under the unit value method of accounting.  The ESOP Fund account maintained for each participant consists of:

·  
Plan Sponsor contributions made or invested in shares of Eastman common stock.
 
·  
Shares of Eastman common stock purchased with assets transferred to the ESOP Fund pursuant to the spin-off from Eastman Kodak Company and/or acquired with the proceeds of a loan released from the Loan Suspense Account.
 
·  
An allocable share of short-term interest and money market funds held in the ESOP Fund for purposes of payment of expenses and similar purposes.
 
·  
After-tax contributions transferred to the ESOP Fund pursuant to the spin-off from Eastman Kodak Company (such after-tax contributions are no longer permitted under the ESOP provisions).
 
The number of units allocated to a participant's account in any year is based on the ratio of the participant's compensation to the total compensation of all eligible employees entitled to share in the allocation for that plan year.  In any year in which a Company contribution is made, a participant's allocation will not be less than one share of stock.
 
Federal law limits the total annual contributions that may be made on a participant's behalf to all defined contribution and defined benefit plans offered by the Company.  Participants will be notified if their total annual contribution is limited by this legal maximum.
 
Actions taken in connection with the completion of certain corporate transactions
 
In the fourth quarter of 2006, the Company sold its Batesville, Arkansas manufacturing facility and related assets in its Performance Chemicals and Intermediates segment and also its polyethylene-related assets at the Longview, Texas facility in the Performance Polymers and Coatings, Adhesives, Specialty Polymers and Inks segments. In February 2007, the Company made a discretionary contribution to the account of each participant whose employment was terminated in connection with these sales equal to 5% of the compensation paid to each participant for the period January 1, 2006 to the dates of the respective sales.
 
 
8 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


New accounting pronouncements
 
In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No.157 (“SFAS 157”), Fair Value Measurements. SFAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurement. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Plan does not believe the adoption of SFAS 157 will have a material impact on the financial statements.
 
2.  
SUMMARY OF ACCOUNTING POLICIES

The following accounting policies, which conform to accounting principles generally accepted in the United States of America, have been used consistently in the preparation of the Plan’s financial statements.

Basis of accounting

The Plan’s financial statements are prepared on the accrual basis of accounting.

As described in FASB Staff Position, FSP AAG INV-1 and SOP 94-4-1 , Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans ("the FSP"), investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. As required by the FSP, the Statement of Net Assets Available for Benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosures of contingent assets and liabilities.  Actual results could differ from those estimates.

Investment policy and valuation

The plan's investments are stated at fair value. If available, quoted market prices are used to value investments. Investments in regulated investment companies are valued at the net asset value per share on the valuation date.  Accrued interest, if any, on the underlying investments is added to the fair value of the investments for presentation purposes.  Participant loans are valued at amortized cost, which represents fair value.

For investments in the ESOP fund and the Eastman Stock Fund, the Trustee may keep any portion of participant and Plan Sponsor contributions temporarily in cash or liquid investments as it may deem advisable.  All dividends, interest or gains derived from investment in each fund are reinvested in the respective fund by the Trustee.

9 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements



The Managed Income Fund is reported at fair value as determined by the contract issuers.  The Managed Income Fund is comprised of synthetic guaranteed investment contracts that include interests in commingled trusts or individual fixed income securities that are held in trust for the Plan.  The Plan then enters into a benefit responsive wrapper contract with a third party such as a financial institution or an insurance company which guarantees the Plan a specific value and rate of return.  The underlying securities are valued at quoted market prices. The wrap contracts are valued using the market value method. (See Note 7).

Purchases and sales of investments are recorded on a trade-date basis. Interest income is accrued when earned.  Dividend income is recorded at the ex-dividend date.

The Plan presents in the statement of changes in net assets available for benefits the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments.

Payments to participants

Benefits payments to participants are recorded when paid.

Reclassifications

Certain items in 2006 have been reclassified to conform to the 2007 presentation.
 
3.  
RISKS AND UNCERTAINTIES
 
Investment securities are exposed to various risks, such as interest rate risk, market risk, and credit risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participant account balances and the amounts reported in the financial statements.

4.  
CONTRIBUTIONS

Participant contributions represent qualifying compensation and other qualifying employee bonuses withheld from participating employees by Eastman and contributed to the Plan.
Contributions are invested in the Plan’s funds as directed by the participants, with the exception of the ESOP Fund, subject to ERISA funding limitations.  The Plan has accrued sponsor contributions for participant-directed funds of $29.4 million and $31.0 million and for the non-participant-directed ESOP Fund of $3.9 million and $3.4 million at December 31, 2007 and 2006, respectively.


10 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements

 

5.  
LOANS TO PARTICIPANTS

The Plan Trustee makes loans to participants in accordance with Plan provisions.  Loans made are accounted for as a transfer from the fund directed by the participant to the Loan Fund.  The principal portion of loan repayments reduces the Loan Fund receivable.  The principal and interest repaid are directed to funds to which the participant’s current contributions are directed; the principal is accounted for as a transfer and the interest accounted for as income in the fund to which the participant’s current contributions are directed.  The Loan Fund’s net assets and other
changes in net assets are included in the participant-directed funds in the Statements of Net Assets and Changes in Net Assets Available for Benefits, respectively.

Unless otherwise specified by the participant, loan proceeds will be withdrawn from the investment funds on a pro-rata basis.  Outstanding loans at December 31, 2007 and 2006 were approximately $30.0 million and $29.5 million, respectively. Interest income earned on loans to participants is credited directly to the participants' accounts and was approximately $2.4 million and $2.0 million for 2007 and 2006.

6.  
INVESTMENTS

At December 31, 2007 and 2006, the Plan's assets were invested in synthetic investment contracts (see Note 7), mutual funds, and in Eastman Chemical Company common stock.  Subject to certain limitations, participants are provided the option of directing their contributions among these investment options. The Plan also holds an interest in the non-participant directed Eastman ESOP Fund, which invests in Eastman Chemical Company common stock and short-term interest funds. The Trustee manages investments in all funds.
         
         
  (in thousands)  
December 31, 2007
  
December 31, 2006
         
Cash
$
 
2,900
$
 
2,100
Common Stock
  
169,904
  
162,744
Mutual Funds
  
806,027
  
707,193
Synthetic GIC
  
588,885
  
601,745
Self Directed Brokerage Account
  
 13,013
  
 8,445
         
Investments, at fair value
$
1,580,729
$
1,482,227



11 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


The following investment options, which invest primarily in common stock of the Plan sponsor, were available to participants in 2007 and 2006:

Eastman Stock Fund
This participant-directed fund consists primarily of Eastman Class A common stock. Purchases and sales of Eastman stock are generally made on the open market on behalf of and as elected by Plan participants. During 2007, the Trustee purchased 1,528,100 shares of Eastman stock for the fund at an average price of $64.12 per share, and sold 1,320,400 shares of Eastman stock for the fund at an average price of $65.27 per share. During 2006, the Trustee purchased 1,087,600 shares of Eastman stock for the fund at an average price of $51.71 per share and sold 1,552,000 shares at an average price of $54.80 per share. Dividends paid from the Eastman Stock Fund totaled $1.9 million and $2.5 million in 2007 and 2006, respectively.

Eastman ESOP Fund
 
This non-participant directed fund consists primarily of Eastman Class A common stock.  Purchases and sales of Eastman stock are generally made on the open market, on behalf of its participants and as directed by the Plan’s guidelines. During 2007, the Trustee purchased 63,900 shares of Eastman stock for the fund at an average price of $59.76 per share, and sold 236,200 shares of Eastman stock for the fund at an average price of $64.12 per share.  During 2006, the Trustee purchased 63,800 shares of Eastman stock for the fund at an average price of $50.90 per share, and sold 311,700 shares at an average price of $55.52 per share.

At December 31, 2007 and December 31, 2006, the following investments represented 5% or greater of ending net assets, (in thousands):
 
     
December 31, 2007
     
Shares
  
Fair value
           
Eastman Chemical Company Common Stock,
    
6,560
$
95,025
Non Participant Directed
          
Fidelity Magellan® Fund
    
935
  
87,727
Fidelity Contrafund
    
2,064
  
150,903
           
     
December 31, 2006
     
Shares
  
Fair value
           
Eastman Chemical Company Common Stock,
    
7,316
$
102,961
Non Participant Directed
          
Fidelity Magellan® Fund
    
908
  
81,298
Fidelity Contrafund
    
2,005
  
130,694


12 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


During 2007 and 2006, the Plan’s investments (including investments bought, sold and held during the year) appreciated in value by $38.6 million and $41.8 million, respectively, as follows (in thousands):

   
Net Appreciation
  
Net Appreciation
   
(Depreciation)
  
(Depreciation)
   
December 31, 2007
  
December 31, 2006
         
Eastman Chemical Company Common Stock, Non Participant Directed
$
 
4,074
$
 
14,469
Eastman Chemical Company Common Stock, Participant Directed
  
 3,875
  
 13,930
Mutual Funds   30,628   13,415
Total  $ 38,577  $ 41,814
 
7.  
INSURANCE CONTRACTS

The Plan invests in the Managed Income Fund (the "Fund"), which invests in synthetic guaranteed investment contracts ("GICs"). The term “synthetic” investment contract is used to describe a variety of investment contracts under which a Plan retains ownership of the invested assets, or owns units of an account or trust which holds the invested assets. A “synthetic” investment contract, also referred to as a “wrap” contract, is negotiated with an independent financial institution. Under the terms of these investment contracts, the contract issuer ensures the Plan’s ability to pay eligible employee benefits at book value. The investment performance of a synthetic investment contract may be a function of the investment performance of the invested assets.

A wrap contract is an agreement by another party, such as a bank or insurer, to make payments to the Fund in certain circumstances. Wrap contracts are designed to allow a stable value fund, such as the Fund, to maintain a constant net asset value ("NAV") and to protect the Fund in extreme circumstances. In a typical wrap contract, the wrap issuer agrees to pay the Fund the difference between the contract value and the market value of the covered assets once the market value has been totally exhausted. Though relatively unlikely, this could happen if the Fund experiences significant redemptions (redemption of most of the Fund’s shares) during a time when the market value of the Fund’s covered assets are below their contract value, and market value is ultimately reduced to zero. If that occurs, the wrap issuer agrees to pay the Fund an amount sufficient to cover shareholder redemptions and certain other payments (such as fund expenses), provided all the terms of the wrap contract have been met. Purchasing wrap contracts is similar to buying insurance, in that the Fund pays a relatively small amount to protect against a relatively unlikely event (the redemption of most of the shares of the Fund). Fees the Fund pays for wrap contracts are a component of the Fund’s expenses.
 


13 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


Wrap contracts accrue interest using a formula called the “crediting rate.” Wrap contracts use the crediting rate formula to convert market value changes in the covered assets into income distributions in order to minimize the difference between the market and contract value of the covered assets over time. Using the crediting rate formula, an estimated future market value is calculated by compounding the Fund’s current market value at the Fund’s current yield to maturity for a period equal to the Fund’s duration.  The crediting rate is the discount rate that equates that estimated future market value with the Fund’s current contract value. Crediting rates are reset quarterly. The wrap contracts provide a guarantee that the crediting rate will not fall below 0%.

The crediting rate, and hence the Fund’s return, may be affected by many factors, including purchases and redemptions by shareholders. The precise impact on the Fund depends on whether the market value of the covered assets is higher or lower than the contract value of those assets. If the market value of the covered assets is higher than their contract value, the crediting rate will ordinarily be higher than the yield of the covered assets. Under these circumstances, cash from new investors will tend to lower the crediting rate and the Fund’s return, and redemptions by existing shareholders will tend to increase the crediting rate and the Fund’s return.

The Fund and the wrap contracts purchased by the Fund are designed to pay all participant-initiated transactions at contract value. Participant-initiated transactions are those transactions allowed by the underlying defined contribution plan (typically this would include withdrawals for benefits, loans, or transfers to non-competing funds within the Plan). However, the wrap contracts limit the ability of the Fund to transact at contract value upon the occurrence of certain events. These events include:
 
·  
The Plan’s failure to qualify under Section 401(a) or Section 401(k) of the Internal Revenue Code.
·  
The establishment of a defined contribution plan that competes with the Plan for employee contributions.
·  
Any substantive modification of the Plan or the administration of the Plan that is not consented to by the wrap issuer.
·  
Complete or partial termination of the Plan.
·  
Any change in law, regulation or administrative ruling applicable to the Plan that could have a material adverse effect on the Fund's cash flow.
·  
Merger or consolidation of the Plan with another plan, the transfer of Plan assets to another plan, or the sale, spin-off or merger of a subsidiary or division of the Plan Sponsor.
·  
Any communication given to participants by the Plan Sponsor or any other Plan fiduciary that is designed to induce or influence participants not to invest in the Fund or to transfer assets out of the Fund.
·  
Exclusion of a group of previously eligible employees from eligibility in the Plan.
·  
Any early retirement program, group termination, group layoff, facility closing, or similar program.
·  
Any transfer of assets from the Fund directly to a competing option.

At this time, the occurrence of any of these events is not considered probable by IPCO.


14 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements



Average yields:
  
December 31,
2007
  
December 31,
2006
         
Based on actual earnings
  
5.02%
  
4.96%
Based on interest rate credited to participants
  
4.65%
  
4.37%
         

The weighted average crediting interest rate for the Fund was 4.67% and 4.32% at December 31, 2007 and 2006, respectively.

The value of the Fund reflected in these financial statements is based upon the principal invested and the interest credited. The fair value of the Fund, by investment type, as of December 31, 2007 and 2006 was as follows:

(in thousands)
  
December 31,
2007
  
December 31,
2006
         
Security backed investments:
        
Underlying assets at fair value
$
588,884
$
601,745
Wrap contracts
  
(3,102)
  
8,231
Total contract value
$
585,782
$
609,976

8.  
OTHER RECEIVABLES AND OTHER LIABILITIES
 
Other receivables in the amount of $2.8 million and $2.2 million at both December 31, 2007 and 2006, respectively, represent interest and dividends receivable, as well as receivables from the sale of stock. Other liabilities in the amount of $3.7 million and $1.9 million at both December 31, 2007 and 2006, respectively, represent liabilities from the purchase of stock.

9.  
DIVERSIFICATION FROM ESOP FUND

A participant may direct that all or any portion of his ESOP Fund account be transferred to other funds in the Plan without restrictions. During 2007 and 2006, $9.9 million and $13.9 million, respectively, were transferred from the ESOP Fund within the Plan in connection with this program.
 
10.  
PLAN TERMINATION

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.  In the event of termination, participant accounts will be distributed to individual participants in accordance with the Plan document and ERISA provisions.


15 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


11.  
FEDERAL INCOME TAX STATUS

The Plan obtained its latest determination letter in May 2003, in which the Internal Revenue Service stated that the Plan is in compliance with the applicable requirements of the Internal Revenue Code.  The Plan Administrator believes the Plan qualifies and operates in compliance with the applicable requirements of the Internal Revenue Code.  Therefore, no provision for income taxes has been included in the Plan’s financial statements.

12.  
PLAN EXPENSES

Reasonable expenses of administering the Plan, unless paid by the Company, shall be paid by the Plan.  For both 2007 and 2006, trustee fees associated with the Eastman Stock Fund and the Eastman ESOP Fund were paid with assets of those individual funds. Brokerage fees, transfer taxes, investment fees and other expenses incident to the purchase and sale of securities and investments shall be included in the cost of such securities or investments or deducted from the sales proceeds, as the case may be. Loan administration fees are deducted quarterly from the accounts of participants with outstanding loan balances.  Loan origination fees are deducted from the participants account at the inception of the loan.  For 2007 and 2006, the Company paid all other expenses of the Plan related to plan oversight and administration, including audit fees.

13.  
RELATED PARTIES

Certain plan investments are shares of mutual funds managed by Fidelity Management Trust Company, (“FMTC”).  FMTC is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions, which are exempt from prohibited transaction rules.  The Plan also invests in the common stock of the Plan Sponsor as well as loans to Plan participants, both of which qualify as parties-in-interest to the Plan and are exempt from prohibited transaction rules.

14.  
RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500


(in thousands)
  
December 31,
2007
  
         
Investments at fair value
$
1,580,729
 
Adjustment from fair value to contract value for full benefit-responsive investment contracts
  
(3,102)
  
 
Total investments per Form 5500
$
1,577,627
 


16 
 
 


















Supplemental Schedule
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
(in thousands)


(a)
(b) 
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical cost
(e)
Current Value
*     Eastman Chemical Company Common stock, Participant directed, 5,425 shares    ** 75,794
*
Fidelity Management Trust Company
Interest Bearing Cash, Participant directed
**
1,985
*
Eastman Chemical Company
Common stock,  Non Participant directed, 6,560 shares
81,215
94,110
*
Fidelity Management Trust Company
Interest Bearing Cash, Non Participant directed
915
915
*
Fidelity Fund
Registered Investment Company, 1,252 shares
**
49,899
*
Fidelity Puritan Fund
Registered Investment Company, 3,098 shares
**
58,959
*
Fidelity Magellan Fund
Registered Investment Company, 935 shares
**
87,727
*
Fidelity Contrafund
Registered Investment Company, 2,064 shares
**
150,903
*
Fidelity Spartan U.S. Equity Index Portfolio
Registered Investment Company, 764 shares
**
39,670
*
Fidelity International Discovery Fund
Registered Investment Company, 1,767 shares
**
76,122
*
Fidelity Blue Chip Growth Fund
Registered Investment Company, 344 shares
**
15,137
*
Fidelity Freedom Income Fund
Registered Investment Company, 185 shares
**
2,118
*
Fidelity Freedom 2000 Fund
Registered Investment Company, 182 shares
**
2,246
*
Fidelity Freedom 2010 Fund
Registered Investment Company, 1,212 shares
**
17,969
*
Fidelity Freedom 2020 Fund
Registered Investment Company, 1,420 shares
**
22,449
*
Fidelity Freedom 2030 Fund
Registered Investment Company, 877 shares
**
14,482
*
Fidelity Freedom 2040 Fund
Registered Investment Company, 683 shares
**
6,650
*
Fidelity Spartan Extended Market Index Portfolio
Registered Investment Company, 419 shares
**
16,073
*
Fidelity Spartan International Index Fund
Registered Investment Company, 429 shares
**
20,291
*
Participant Loans
Participant Loan Fund with terms ranging from 6-121 months and rates ranging from 4% to 10.5%
**
29,973
*
Fidelity Retirement Money Market
Registered Investment Company, 124 shares
**
124
*
Clipper Fund
Registered Investment Company, 174 shares
**
14,077
*
PIMCO Total Return
Registered Investment Company, 3,187 shares
**
34,071
*
Franklin Small Mid Cap Growth Fund
Registered Investment Company, 750 shares
**
27,122
*
WFA Small Cap Val Z
Registered Investment Company, 1,293 shares
**
38,036
*
TCW Select Equity I
Registered Investment Company, 103 shares
**
2,031
*
Neuberger and Berman Genesis Instl Cl
Registered Investment Company, 1,375 shares
**
64,842
*
Templeton Foreign Fund
Registered Investment Company, 1,208 shares
**
15,056


17 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
(in thousands)



(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Fidelity short term cash fund
CASH
**
296
 
Ace Securities Corp. 
ACE 03-NC1 M1
Mortgage backed security 1ML+78 7/33
**
                  156
 
Ace Securities Corp.                                              
ACE 02-HE1 M1
Mortgage backed security 1ML+65 6/32
**
                    66
 
Ace Securities Corp.                                              
ACE 03-HS1 M1
Mortgage backed security 1ML+75 6/33
**
                    26
 
Ace Securities Corp.           
ACE 03-HS1 M2
Mortgage backed security 1ML+175 6/33
**
                    97
 
Ace Securities Corp.                                              
ACE 03-HE1 M1
Mortgage backed security 1ML+65 11/33
**
                  166
 
Ace Securities Corp.                                              
ACE 04-FM1 M1
Mortgage backed security 1ML+60 9/33
**
                  118
 
Advanta Business Card Master                                              
ABCMT 07-A2 A2
Mortgage backed security 5% 3/13
**
               2,995
 
Advanta Business Card Master                                              
ABCMT 07-B2 B
Mortgage backed security 5.5% 6/32
**
               1,246
 
Aesop Funding Ii Llc                                              
AESOP 05-1A A1
Mortgage backed security  3.95% 4/08
**
                  666
 
America Movil Sab De Cv
Corporate Bond 4.125 3/1/09
**
               1,310
 
American Express Centurion                                              
AMEX CENTURION
Corporate Bond 5.55% 10/17/12
**
                  576
 
American Express Centurion                                              
AMEX CEMTN
Corporate Bond 5.2% 11/26/10
**
               1,202
 
American General Finance
Corporate Bond 4.625% 9/01/10
**
                  324
 
American General Finance
Corporate Bond 4.625 5/15/09
**
                  186
 
American General Finance
Corporate Bond 4.875 5/15/10
**
               2,142
 
American Honda Finance
Corporate Bond 4.5 5/ 144A
**
               1,189
 
Americredit Automobile Receiva                                              
AMCAR 04-CA A4
Mortgage backed security 3.61% 5/11
**
                  205
 
Americredit Automobile Receiva                                              
AMCAR 04-1 C
Mortgage backed security 4.22% 7/09
**
                    23
 
Americredit Automobile Receiva                                              
AMCAR 04-DF A4
Mortgage backed security 3.43 7/11
**
                  693

18 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
(in thousands)


(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Americredit Automobile Receiva 
AMCAR 06-1 B
Mortgage backed security 5.2 3/11
**
                    70
 
Americredit Automobile Receiva                                              
AMCAR 06-BG A3
Mortgage backed security 5.21 10/11
**
                  356
 
Americredit Automobile Receiva                                              
AMCAR 06-BG A4
Mortgage backed security 5.21 9/13
**
                  716
 
Americredit Automobile Receiva                                              
AMCAR 05-CF A4
Mortgage backed security 4.63 6/12
**
               1,404
 
Americredit Automobile Receiva                                              
AMCAR 2007-CM A3A
Mortgage backed security 5.42% 5/12
**
               1,537
 
Americredit Automobile Receiva                                              
AMCAR 07-DF A3A
Mortgage backed security 5.49% 7/12
**
               1,096
 
Americredit Prime Automobile Receiva                                              
APART 07-1 B
Mortgage backed security 5.35% 03/11
**
                  262
 
Americredit Prime Automobile Receiva                                              
APART 07-1C
Mortgage backed security 5.43% 07/11
**
                  158
 
Americredit Prime Automobile Receiva                                              
APART 07-2M A3A
Mortgage backed security 5.22% 4/10
**
                  532
 
Ameriquest Mortgage Securities                                              
AMSI 04-R2 M1
Mortgage backed security 1ML+43 4/34
**
                  118
 
Ameriquest Mortgage Securities                                              
AMSI 04-R2 M2
Mortgage backed security 1ML+48 4/34
**
                    95
 
Ameritech Capital Funding
Corporate Bond 6.25 5/18/09
**
                  865
 
Amortizing Residential Collate                                              
ARC 02-BC1 M2
Mortgage backed security 1ML+110 1/3
**
                    28
 
Arg Funding Corp                                              
ARGF 05-2A A1
Mortgage Backed Security 4.54% 5/09
**
               1,067
 
Asset Backed Securities Corp H                                              
ABSHE 03-HE6 M1
Mortgage backed security 1ML+65 11/33
**
                  343
 
Asset Backed Securities Corp H                                              
ABSHE 04-HE3 M1
Mortgage backed security 1ML+54 6/34
**
                  127
 
AT&T Inc / Sbc Communications
Corporate Bond 6.25 3/15/11
**
                  429
 
AT&T Inc / Sbc Communications
Corporate Bond 4.125 9/15/09
**
                  614
 
Augusta Ga Wtr & Swr Rev
Corporate Bond 5.25  10/1/22PRE
**
               3,237
 
Axa Financial Inc
Corporate Bond  7.75 8/01/10
**
               1,034
 
Bhp Billiton Finance
Corporate Bond 5.125% 3/29/12
**
               1,297
 
Banc Of America Commercial Mor                                              
BACM 05-4 XP
Interest Only Strip CSTR 7/45
**
                    63
 
Banc Of America Commercial Mor                                              
BACM 07-2 A1
Interest Only Strip 5.421% 1/12
**
                    467
 
19
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
(in thousands)
 
(a)
(b)  
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Banc Of America Commercial Mor  
BACM 2006-5 XP
Interest Only Strip .832% 9/47
**
                  278
 
Banc Of America Commercial Mor   
BACM 04-5 XP
Interest Only Strip CSTR 11/41
**
                  129
 
Banc Of America Commercial Mor    
BACM 05-4 A1
Mortgage backed security 4.432 7/45
**
                  524
 
Banc Of America Commercial Mor    
BACM 04-6 XP
Interest Only Strip CSTR 12/42
**
                    90
 
Banc Of America Commercial Mor     
BACM 05-3 XP
Interest Only Strip CSTR 7/43
**
                  216
 
Banc Of America Commercial Mor   
BACM 2003-2 A2
Mortgage backed security 4.342 3/41
**
               1,333
 
Banc Of America Commercial Mor    
BACM 06-5 A1
Mortgage backed security  5.185% 7/11
**
                  303
 
Banc Of America Commercial Mor    
BACM 05-5 A1
Mortgage backed security 4.716 8/10
**
                  831
 
Banc Of America Commercial Mor     
BACM 06-6 XP
Interest Only Strip CSTR 10/45
**
                  326
 
Banc Of America Commercial Mor     
BACM 05-6 A1
Mortgage backed security  5.001 9/47
**
                  515
 
Banc Of America Commercial Mor   
BACM 04-4 A3
Mortgage backed security 4.128% 7/42
**
                  682
 
Banc Of America Commercial Mor     
BACM 05-1 A2
Mortgage backed security 4.64% 11/42
**
                  908
 
Banc Of America Mortgage Secur    
BOAMS 04-J 2A1
Mortgage backed security CSTR 11/34
**
                  340
 
Banc Of America Mortgage Secur     
BOAMS 05-E 2A7
Mortgage backed security CSTR 6/35
**
                  652
 
Banc Of America Mortgage Secur    
BOAMS 05-J 2A4
Mortgage backed security 12ML 11/35
**
               2,069
 
Bank Of New York Co Inc
Corporate Bond  4.95%  1/14/11
**
                  644
 
Bank Of New York Co Inc
Corporate Bond  4.95% 11/12
**
                  903
 
Bank Of New York Co Inc
Corporate Bond 3.4/3ML+148 3/15/13
**
               2,144
 
Bank One Corp
Corporate Bond 7.875% 8/01/10
**
               1,095
 
Bank One Issuance Trust      
BOIT 04-B2 B2
Mortgage backed security  4.37% 4/12
**
               1,372
 
Bayview Commercial Asset Trust     
BAYC 04-3 M1
Mortgage backed security  1ML+50 1/35
**
                    71
 
Bayview Commercial Asset Trust     
BAYC 04-2 A
Mortgage backed security  1ML+43 8/34
**
                  300
 
Bayview Commercial Asset Trust       
BAYC 04-2 M1
Mortgage backed security 1ML+58 8/34
**
                    95
 
20
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
(in thousands)
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e) 
Current Value
 
Bayview Commercial Asset Trust  
BAYC 04-3 M2
Mortgage backed security 1ML+100 1/35
**
                    46
 
Bayview Financial Acquisition  
BAYV 04-C A1
Mortgage backed security 1ML+42 5/44
**
                  266
 
Bbva Bancomer Sa
Corporate Bond 5.3795 7/21/15 144A
**
522
 
Bear Stearns Adjustable Rate M   
BSARM 05-6 1A1
Mortgage backed security CSTR 8/35
**
                  956
 
Bear Stearns Asset Backed Secu  
BSABS 04-BO1 M4
Mortgage backed security 1ML+120 9/34
**
                  121
 
Bear Stearns Asset Backed Secu  
BSABS 04-BO1 M3
 Mortgage backed security 1ML+105 9/34
**
                  221
 
Bear Stearns Commercial Mortga  
BSCMS 04-ESA A3
Mortgage backed security 4.741 5/16
**
               1,140
 
Bear Stearns Commercial Mortga   
BSCMS 04-ESA D
Mortgage backed security  4.986 5/16
**
                  142
 
Bear Stearns Commercial Mortga    
BSCMS 2007-PW15 X2
Interest Only Strip CSTR 2/44
**
                  543
 
Bear Stearns Commercial Mortga    
BSCMS 07-T26 X2
Interest Only Strip CSTR 1/12/45
**
                  220
 
Bear Stearns Commercial Mortga    
BSCMS 2006-T24 X2
Interest Only Strip CSTR 10/41
**
                  183
 
Bear Stearns Commercial Mortga   
BSCMS 04-ESA C
Mortgage backed security 4.937 5/16
**
                  396
 
Bear Stearns Commercial Mortga    
BSCMS 04-ESA F
Mortgage backed security 5.182 5/16
**
                  107
 
Bear Stearns Commercial Mortga    
BSCMS 04-PWR5 A2
Mortgage backed security 4.254 7/42
**
                  644
 
Bear Stearns Commercial Mortga    
BSCMS 04-T16 A3
Mortgage backed security 4.03 2/46
**
               1,550
 
Bear Stearns Commercial Mortga     
BSCMS 07-T26 A1
Mortgage backed security CSTR 1/45
**
                  870
 
Bear Stearns Commercial Mortga     
BSCMS 07-PW16 A1
Mortgage backed security 5.593% 6/40
**
                  949
 
Bear Stearns Commercial Mortga    
SCMS 07-PW15 A1
Mortgage backed security 5.016% 2/44
**
                    56
 
Bear Stearns Commercial Mortga     
BSCMS 06-PW13 X2
Interest Only Strip CSTR 9/41
**
                  183
 
Bear Stearns Commercial Mortga     
BSCMS 03-T12 X2
Interest Only Strip CSTR 8/39
**
                    35
 
Bear Stearns Commercial Mortga    
BSCMS 04-PWR5 X2
Interest Only Strip CSTR 7/42
**
                  127
 
Bear Stearns Commercial Mortga      
BSCMS 05-PWR9 A1
Mortgage backed security  4.498 9/42
**
                  839
 
Bear Stearns Commercial Mortga       
BSCMS 06-PW13 A1
Mortgage backed security 5.294 09/41
**
                  851
 
21
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
(in thousands)
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c) 
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Bear Stearns Commercial Mortga   
BSCMS 04-ESA B
Mortgage backed security 4.888 5/16
**
                  350
 
Bear Stearns Commercial Mortga    
BSCMS 05-T20 A1
Mortgage backed security  4.94 10/42
**
                  863
 
Bear Stearns Commercial Mortga   
BSCMS 04-ESA E
Mortgage backed security  5.064 5/16
**
                  448
 
Bear Stearns Commercial Mortga    
BSCMS 04-PWR6 X2
Interest Only Strip CSTR 11/41
**
                    82
 
Bear Stearns Co Inc
Corporate Bond 4.245% 1/7/10
**
                  875
 
Bear Stearns Co Inc
Corporate Bond 5.85% 7/19/10
**
               2,402
 
Bear Stearns Co Inc
Corporate Bond 6.95% 8/10/12
**
               1,409
 
Bellsouth Corp
Corporate Bond 4.2 9/15/09 DT
**
                  871
 
Bk Tokyo-Mitsubishi Ufj
Corporate Bond 8.4 4/15/10
**
               1,166
 
Brazos Higher Education Author  
BRHEA 06-A A2R
Mortgage backed security  5.03 12/41
**
               1,575
 
British Telecom Plc
Corporate Bond 12/10 DT
**
               1,343
 
Btm (Curacao) Hldg Nv
Corporate Bond 4.76 7/21/15 144A
**
                  422
 
Capital Auto Receivables Asset   
CARAT 2006-SN1A C
Mortgage backed security 5.77 5/10
**
                    95
 
Capital Auto Receivables Asset   
CARAT 07-1 B
Mortgage backed security 5.15% 9/12
**
                  471
 
Capital Auto Receivables Asset     
CARAT 2006-SN1A B
Mortgage backed security  5.5 4/10
**
                  101
 
Capital Auto Receivables Asset    
CARAT 07-SN1 B
Mortgage backed security 5.52% 3/15/11
**
                  234
 
Capital Auto Receivables Asset   
CARAT 2006-SN1A A4A
Mortgage backed security 5.32  3/10
**
               1,083
 
Capital Auto Receivables Asset     
CARAT 06-1 B
Mortgage backed security  5.26 10/10
**
                  233
 
Capital Auto Receivables Asset     
CARAT 07-SN1 C
Mortgage backed security  5.73% 3/15/11
**
                  136
 
Capital One Auto Finance Trust     
COAFT 05-BSS C
Mortgage backed security  4.48 12/10
**
                  966
 
Capital One Auto Finance Trust     
COAFT 05-C A4A
Mortgage backed security 4.71 6/12
**
               2,929
 
Capital One Multi-Asset Execut     
COMET 2003-B3 B3
Mortgage backed security  4.5 6/11
**
               1,866
 
Capital One Multi-Asset Execut     
COMET 2006-A6 A6
Mortgage backed security 5.3 2/14
**
                  774
 
Capital One Multi-Asset Execut      
COMET 07-B3 B3
Mortgage backed security  5.05% 3/13
**
               3,045
 
22
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Capital One Multi-Asset Execut
COMET 07-B5 B5
Mortgage backed security  5.4% 5/13
**
               1,475
 
Capital One Multi-Asset Execut
COMET 04-B6 B6
Mortgage backed security 4.155 7/12
**
               1,144
 
Capital One Prime Auto Receiva
COPAR 2007-1 B1
Mortgage backed security  5.76% 12/13
**
                  458
 
Capital One Prime Auto Receiva
COPAR 06-2 A4
Mortgage backed security  4.94% 7/12
**
                  787
 
Capital Trust Re Cdo Ltd
CTCDO 04-1A C
Mortgage backed security  1ML+110 7/39
**
                  123
 
Capital Trust Re Cdo Ltd
CTCDO 04-1A A2
Mortgage backed security 1ML+45 7/39
**
                  241
 
Capital Trust Re Cdo Ltd
CTCDO 04-1A B
Mortgage backed security 1ML+75 7/39
**
                  120
 
Cargill Inc
Corporate Bond 6.375% 6/12 144A
**
               2,259
 
Cdc Financial Products
Synthetic GIC - Global Wrap - 4.85%
**
                (775)
 
Cdc Mortgage Capital Trust
CDCMC 03-HE3 M1
Mortgage backed security 1ML+70 11/33
**
                  154
 
Cendant Timeshare Receivables
CDTIM 05-1A A1
Mortgage backed security  4.67 5/17
**
                  185
 
Chase Issuance Trust
CHAIT 07-A15 A
Mortgage backed security  4.96% 9/12
**
               2,801
 
Chase Issuance Trust
CHAIT 05-B2 B2
Mortgage backed security 4.52 12/10
**
               6,350
 
Chase Mortgage Finance Corporation
CHASE 07-A2 3A1
Mortgage backed security CSTR 7/37
**
               1,581
 
Cit Equipment Collateral
CITEC 05-VT1 A4
Mortgage backed security 4.36 11/12
**
                  202
 
Citibank Credit Card Issuance
CCCIT 05-B1 B1
Mortgage backed security 4.4 9/10
**
               3,508
 
Citibank Credit Card Issuance
CCCIT 07-B2 B2
Mortgage backed security 5% 4/12
**
               1,989
 
Citibank Credit Card Issuance
CCCIT 07-A5 A5
Mortgage backed security 5.5% 6/12
**
               3,499
 
Citibank Credit Card Issuance
CCCIT 07-B6 B6
Mortgage backed security 5% 11/12
**
               1,425
 
Citibank Credit Card Issuance
CCCIT 06-B2 B2
Mortgage backed security 5.15% 3/11
**
               1,369
 
Citigroup Commercial Mortgage
CGCMT 05-EMG A2
Mortgage backed security 4.2211 9/51
**
                  480
 
Citigroup Commercial Mortgage
CGCMT 04-C2 XP
Interest Only Strip CSTR 10/41
**
                  127
 
Citigroup Commercial Mortgage
CGCMT 2007-C6 A1
Mortgage backed security CSTR 12/49
**
                  356
 
23
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Citigroup/Deutsche Bank Commer
CD 2007-CD4 A1
Mortgage backed security 4.977% 12/49
**
                  659
 
Citigroup/Deutsche Bank Commer
CD 06-CD3 XP
Interest Only Strip CSTR 10/48
**
                  646
 
Cnh Equipment Trust
CNH 05-B B
Mortgage backed security  4.57 7/12
**
                  383
 
Commercial Mortgage Asset Trus
CMAT 99-C1 A3
Mortgage backed security  6.64 1/32
**
                  326
 
Commercial Mortgage Pass-Throu
COMM 06-C8 A1
Mortgage backed security  5.11% 12/46
**
                  656
 
Commercial Mortgage Pass-Throu
COMM 06-CN2A D
Mortgage backed security  5.52861 2/19
**
                  191
 
Commercial Mortgage Pass-Throu
COMM 06-CN2A E
Mortgage backed security CSTR 2/19
**
                  360
 
Commercial Mortgage Pass-Throu
COMM 06-CN2A CFX
Mortgage backed security 5.47945 2/19
**
                  117
 
Commercial Mortgage Pass-Throu
COMM 06-CN2A F
Mortgage backed security  CSTR 2/19
**
                    82
 
Commercial Mortgage Pass-Throu
COMM 04-LB4A XP
Interest Only Strip CSTR 10/37
**
                  216
 
Commercial Mortgage Pass-Throu
COMM 05-LP5 A2
Mortgage backed security 4.63 5/43
**
               1,310
 
Commercial Mortgage Pass-Throu
COMM 05-LP5 XP
Interest Only Strip CSTR 5/43
**
                    87
 
Commercial Mortgage Pass-Throu
COMM 06-C8 XP
Interest Only Strip CSTR 12/46
**
                  825
 
Commercial Mortgage Pass-Throu
COMM 06-CN2A BFX
Mortgage backed security  5.537 2/19
**
                  275
 
Commercial Mortgage Pass-Throu
COMM 05-C6 XP
Interest Only Strip CSTR 6/44
**
                    99
 
Constellation Energy Grp
Corporate Bond 6.125 9/01/09
**
                  562
 
Continental Airlines Inc
CONTL AIR 98-3A2
Mortgage backed security  6.32 11/1/08
**
                  191
 
Continental Airlines Inc
CONTL AIR 991A
Mortgage backed security 6.545 2/02/19
**
                  900
 
Countrywide Asset-Backed Certi
CWL 04-3 M1
Mortgage backed security 1ML+50 6/34
**
                  133
 
Countrywide Asset-Backed Certi
CWL 04-4 A
Mortgage backed security 1ML+37.5 8/34
**
                    28
 
Countrywide Home Loans
CWHL 05-HYB3 2A6B
Mortgage backed security CSTR 6/35
**
                  362
 
Countrywide Home Loans
CWHL 02-25 2A1
Mortgage backed security  5.5 11/17
**
                  198
 
Covidien International F
Corporate Bond 5.45 10/15/12 144A
**
                  406
 
Covidien International F
Corporate Bond 5.15% 10/10 144A
**
1,673
 
 
24
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Cps Auto Trust
CPS 06-C A3
Mortgage backed security  5.14% 1/11
**
                  336
 
Cps Auto Trust
CPS 07-B A3
Mortgage backed security  5.47% 11/11
**
                  562
 
Cps Auto Trust
CPS 2007-C A3
Mortgage backed security  5.45% 5/12 144A
**
                  396
 
Credit Suisse Mortgage Capital
CSMC 06-C4 ASP
Interest Only Strip CSTR 9/39
**
               1,237
 
Credit Suisse Mortgage Capital
CSMC 07-C3 A1
Mortgage backed security CSTR 6/39
**
                  277
 
Credit Suisse Mortgage Capital
CSMC 07-C1 A1
Mortgage backed security 5.227 2/40
**
                  296
 
Credit Suisse Mortgage Capital
CSMC 07-C1 ASP
Interest Only Strip CSTR 2/40
**
                  809
 
Credit Suisse Mortgage Capital
CSMC 07-C2 A1
Mortgage backed security 5.237 1/49
**
                  240
 
Credit Suisse Mortgage Capital
CSMC 06-C5 ASP
Interest Only Strip CSTR 12/39
**
                  719
 
Crown Castle Towers Llc
CCI 05-1A B
Mortgage backed security  4.878% 6/35
**
                  524
 
Crown Castle Towers Llc
CCI 05-1A C
Mortgage backed security  5.074% 6/35
**
                  472
 
Cs First Boston Mortgage Secur
CSFB 04-C4 ASP
Interest Only Strip CSTR 10/39
**
                  121
 
Cs First Boston Mortgage Secur
CSFB 05-C1 ASP
Interest Only Strip CSTR 2/38
**
                  103
 
Cs First Boston Mortgage Secur
CSFB 03-C4 A3
Mortgage backed security CSTR 8/36
**
                  572
 
Cs First Boston Mortgage Secur
CSFB 03-C5 A3
Mortgage backed security  4.429 12/36
**
                  974
 
Cs First Boston Mortgage Secur
CSFB 04-C1 A3
Mortgage backed security 4.321 1/37
**
                  523
 
Cs First Boston Mortgage Secur
CSFB 05-C4 ASP
Interest Only Strip CSTR 8/38
**
                  261
 
Cs First Boston Mortgage Secur
CSFB 05-C2 ASP
Interest Only Strip CSTR 4/37
**
                  144
 
Cwcapital Cobalt
CWCI 07-C2 A1
Mortgage backed security CSTR 9/11
**
                  370
 
Daimler Chrysler Na Hldg
Corporate Bond 5.75 8/10/09
**
               3,018
 
Daimler Chrysler Auto Trust
DCAT 2006-C A4
Mortgage backed security 4.98% 11/11
**
               1,022
 
Daimler Chrysler Auto Trust
DCAT 2006-C B
Mortgage backed security 5.11% 4/13
**
                  840
 
Dbs Back Ltd/Singapore
Corporate Bond 5.125/VAR 5/17 144A
**
               1,673
 
Deutsche Bank Ag London
Corporate Bond 5% 10/12/10
**
4,640
 
25
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Deutsche Telekom Int Fin
Corporate Bond 5.375 3/23/11
**
 276
 
Diageo Capital Plc
Corporate Bond 5.2  1/30/13
**
                  644
 
Diversified Reit Trust
DRT 00-1A A2
Mortgage backed security  6.971% 3/10
**
                  289
 
Dlj Commercial Mortgage Corp
DLJCM 00-CF1 A1B
Mortgage backed security 7.62 6/33
**
                  874
 
Dlj Commercial Mortgage Corp
DLJCM 1999-CG1 A3
Mortgage backed security 6.77 3/32
**
               1,385
 
Donnelley (R.R.) & Sons
Corporate Bond 3.75% 4/1/09
**
               1,909
 
Drive Auto Receivables Trust
DRIVE 06-2 A-2
Mortgage backed security  5.3% 7/11
**
                  828
 
Drive Auto Receivables Trust
DRIVE 06-2 A-3
Mortgage backed security  5.33% 4/14
**
               1,134
 
Drivetime Auto Owner Trust
DRVT 2006-A A3
Mortgage backed security  5.501 11/11
**
                  788
 
Drivetime Auto Owner Trust
DRVT 2006-B A2
Mortgage backed security 5.32% 3/10
**
                  651
 
Drivetime Auto Owner Trust
DRVT 2006-B A3
Mortgage backed security  5.23% 8/12
**
                  779
 
Dt Auto Owner Trust
STAOT 07-A A3 XCLA
Mortgage backed security 5.60% 3/13
**
               1,047
 
E.I. Du Pont De Nemours
Corporate Bond 5% 1/15/13
**
                  283
 
Edp Finance Bv
Corporate Bond 5.375  11/12 144A
**
               1,161
 
Erp Operating Lp
Corporate Bond 5.5% 10/1/12
**
                  332
 
Enel Finance International
Corporate Bond 5.7% 1/15/13 144A
**
               1,547
 
Exelon Generation Co Llc
Corporate Bond 6.95 6/15
**
               1,324
 
Fannie Mae
FNMA  7.00 6/08 #050751
**
                    43
 
Fannie Mae
FNMA  7.00 1/13 #251428
**
                      6
 
Fannie Mae
FNMA  7.00 8/08 #252068
**
                      7
 
Fannie Mae
FNMA ARM 5.04%  7/35 #834931
**
780
 
Fannie Mae
FNMA ARM 4.99%  11/35 #745064
**
3,823
 
Fannie Mae
FNMA ARM 4.25 2/35 255658
**
                    78
 
Fannie Mae
FNMA  6.50 11/13 #323755
**
                  251
 
Fannie Mae
FNMA  7.00 8/14 #323877
**
                    46
 
Fannie Mae
FNMA  6.00 3/14 #487614
**
                    35
 
26
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Fannie Mae
FNMA  6.50 9/14 #514373
**
                      2
 
Fannie Mae
FNMA  7.00 11/14 #522277
**
25
 
Fannie Mae
FNMA  6.50 10/13 #535234
**
                  452
 
Fannie Mae
FNMA  7.00 6/16 #545122
**
                    17
 
Fannie Mae
FNMA ARM 4.305 8/3 555696
**
                  118
 
Fannie Mae
FNMA ARM 4.38% 7/33 #555702
**
                  351
 
Fannie Mae
FNMA  7.00 2/16 #569915
**
                    48
 
Fannie Mae
FNMA  6.00 10/16 #589129
**
                    37
 
Fannie Mae
FNMA  7.00 8/16 #599602
**
                    80
 
Fannie Mae
FNMA  7.00 4/17 #636135
**
                  176
 
Fannie Mae
FNMA  6.50 4/17 #637244
**
                  153
 
Fannie Mae
FNMA  6.00 11/17 #671380
**
                  172
 
Fannie Mae
FNMA  6.00 11/17 #672789
**
                    48
 
Fannie Mae
FNMA  6.00 12/17 #673965
**
                    48
 
Fannie Mae
FNMA  6.00 2/18 #684153
**
                    15
 
Fannie Mae
FNMA ARM 3.828 4/3 688969
**
                  180
 
Fannie Mae
FNMA  7.00 2/18 #693327
**
                  210
 
Fannie Mae
FNMA ARM 4.318 3/3 694530
**
                    31
 
Fannie Mae
FNMA ARM 4.801 2/3 695019
**
                    91
 
Fannie Mae
FNMA ARM 4.292 3/3 701296
**
                    58
 
Fannie Mae
FNMA ARM 3.984 5/3 703915
**
                    17
 
Fannie Mae
FNMA ARM 4.079 4/3 708221
**
                    14
 
Fannie Mae
FNMA ARM 4.57% 6/33 712321
**
                  123
 
Fannie Mae
FNMA ARM 4.351 6/3 720921
**
                    31
 
Fannie Mae
FNMA ARM 3.878 6/3 723633
**
                  252
 
Fannie Mae
FNMA ARM 3.836 6/3 723760
**
                    51
 
27
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Fannie Mae
FNMA ARM 5.12 1/34 725109
**
                    36
 
Fannie Mae
FNMA ARM 4.862 9/3 725855
**
98
 
Fannie Mae
FNMA ARM 4.832 8/3 725858
**
                    48
 
Fannie Mae
FNMA ARM 4.30% 11/34 725966
**
                  437
 
Fannie Mae
FNMA ARM 4.409 10/ 725968
**
                  345
 
Fannie Mae
FNMA  4.00 8/18 #727438
**
               1,153
 
Fannie Mae
FNMA ARM 5.229 8/3 735030
**
                    83
 
Fannie Mae
FNMA ARM 4.115 2/3 735343
**
                    30
 
Fannie Mae
FNMA ARM 4.493 8/3 735360
**
                  188
 
Fannie Mae
FNMA ARM 4.62 2/35 735433
**
                  255
 
Fannie Mae
FNMA ARM 4.53 3/35 735448
**
                  236
 
Fannie Mae
FNMA ARM 4.319 5/3 735538
**
                    64
 
Fannie Mae
FNMA ARM 4.66 7/35 #735942
**
                  322
 
Fannie Mae
FNMA ARM 4.78% 10/35 745030
**
                  313
 
Fannie Mae
FNMA ARM 4.898 10/ 745060
**
                  160
 
Fannie Mae
FNMA ARM 5.01 11/35 745124
**
                  292
 
Fannie Mae
FNMA ARM 3.941 6/3 745335
**
                  429
 
Fannie Mae
FNMA ARM 5.33 2/36 745391
**
                  238
 
Fannie Mae
FNMA ARM 5.45 5/36 745676
**
                  385
 
Fannie Mae
FNMA ARM 5.541 11/ 745972
**
                  474
 
Fannie Mae
FNMA ARM 3.753 10/ 746320
**
                    60
 
Fannie Mae
FNMA ARM 4.155 7/3 747270
**
                  280
 
Fannie Mae
FNMA ARM 4.055 10/ 749296
**
                    44
 
Fannie Mae
FNMA ARM 4.358 10/ 754672
**
                    27
 
Fannie Mae
FNMA ARM 3.752 10/ 755148
**
                    59
 
Fannie Mae
FNMA ARM 4.294 1/3 759264
**
                    68
 
28
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Fannie Mae
FNMA ARM 3.750 1/3 761058
**
61
 
Fannie Mae
FNMA ARM 4.250 1/3 765659
**
                    91
 
Fannie Mae
FNMA ARM 4.25 2/34 765660
**
                    71
 
Fannie Mae
FNMA ARM 4.30 1/34 766886
**
                  421
 
Fannie Mae
FNMA ARM 4.368 2/3 769940
**
                  138
 
Fannie Mae
FNMA ARM 4.321 2/35 773246
**
                  421
 
Fannie Mae
FNMA ARM 4.38 3/35 773264
**
                  223
 
Fannie Mae
FNMA ARM 4.455 3/3 773281
**
                  108
 
Fannie Mae
FNMA ARM 3.791 6/3 783545
**
                  337
 
Fannie Mae
FNMA ARM 4.351 1/3 783580
**
                    87
 
Fannie Mae
FNMA ARM 4.499 3/3 783587
**
                  242
 
Fannie Mae
FNMA ARM 4.4 2/35 #783588
**
                  116
 
Fannie Mae
FNMA ARM 4.876 7/3 785318
**
                  278
 
Fannie Mae
FNMA ARM 5.019 9/3 790458
**
                    86
 
Fannie Mae
FNMA ARM 5.106 9/3 790762
**
                    71
 
Fannie Mae
FNMA ARM 4.748 7/3 793028
**
                  188
 
Fannie Mae
FNMA ARM 4.82 8/34 793420
**
                  294
 
Fannie Mae
FNMA ARM 4.96 8/34 796987
**
                  561
 
Fannie Mae
FNMA ARM 4.96 8/34 796988
**
                  198
 
Fannie Mae
FNMA ARM 4.202 1/3 797418
**
                  146
 
Fannie Mae
FNMA ARM 4.67 11/3 799727
**
                  193
 
Fannie Mae
FNMA ARM 4.85 11/3 799812
**
                  166
 
Fannie Mae
FNMA ARM 4.825 12/ 800297
**
                  149
 
Fannie Mae
FNMA ARM 4.845 12/ 800335
**
                    55
 
Fannie Mae
FNMA ARM 5.00 9/34 801341
**
                  825
 
Fannie Mae
FNMA ARM 5.05 7/34 801635
**
31
         
 
29
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2007
 
(a)
(b)
Identity of issue, borrower, lessor, or similar party
(c)
Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d)
Historical Cost
(e)
Current Value
 
Fannie Mae
FNMA ARM 4.118 1/3 807221
**
98
 
Fannie Mae
FNMA ARM 4.79 1/35 809271
**
                  271
 
Fannie Mae
FNMA ARM 4.5 2/35 #809429
**
                  650
 
Fannie Mae
FNMA ARM 4.38 2/35 809593
**
                  461
 
Fannie Mae
FNMA ARM 4.80 3/35 809925
**
                  254
 
Fannie Mae
FNMA ARM 4.625 2/3 809931
**
                  189
 
Fannie Mae
FNMA ARM 4.80 3/35 810061
**
                  209
 
Fannie Mae
FNMA ARM 4.872 1/3 810896
**
               1,173
 
Fannie Mae
FNMA ARM 4.57 2/35 811803
**
                    56
 
Fannie Mae
FNMA ARM 4.694 11/ 813184
**
                  233
 
Fannie Mae
FNMA ARM 5.01 4/35 814954
**
                  141
 
Fannie Mae
FNMA ARM 4.76 1/35 815321
**
                  383
 
Fannie Mae
FNMA ARM 4.790 1/3 815323
**
                  238
 
Fannie Mae
FNMA ARM 4.293 3/3 815586
**
                    53
 
Fannie Mae
FNMA ARM 4.75 5/35 815626
**
                  130
 
Fannie Mae
FNMA ARM 4.653 3/3 816322
**
                    18
 
Fannie Mae
FNMA ARM 4.639 2/3 816599
**
                    26
 
Fannie Mae
FNMA ARM 4.934 3/3 819648
**
                  128
 
Fannie Mae
FNMA ARM 4.928 2/3 820356
**
                  607
 
Fannie Mae
FNMA ARM 4.372 4/3 820407
**