emn2009_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
 
For the fiscal year ended December 31, 2009
 
OR
[  ]
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
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  37662

 
 

 

 
 
 
 
Eastman Investment and Employee Stock Ownership Plan
 
Table of Contents
 
1
   
Basic Financial Statements:
 
   
2
3
4 – 18
   
19
   
 
   
35
   
36
 
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 Eastman Investment and Employee Stock Ownership Plan (the "Plan") at December 31, 2009 and December 31, 2008, and the changes in net assets available for benefits for the years 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.  The supplemental schedule is the responsibility of the Plan's management.  The supplemental schedule has been subjected to the auditing procedures applied in the audits 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.
 
 /s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Cincinnati, Ohio
June 29, 2010



 
1

 
Eastman Investment and Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
December 31, 2009 and December 31, 2008
(in thousands)
 
 
                         
                 
December 31,
   
       
2009
         
2008
   
       
Non-
         
Non-
   
   
Participant
 
participant
     
Participant
 
participant
   
   
Directed
 
Directed
 
Total
 
Directed
 
Directed
 
Total
                         
Assets
                       
                         
Investments at fair value
$
1,431,001
$
91,545
$
1,522,546
$
1,153,826
$
46,937
$
1,200,763
                         
Receivables:
                       
                         
Sponsor
 
27,375
 
4,538
 
31,913
 
30,425
 
4,787
 
35,212
                         
Other
 
3,534
 
872
 
4,406
 
5,209
 
648
 
5,857
                         
Total assets
 
1,461,910
 
96,955
 
1,558,865
 
1,189,460
 
52,372
 
1,241,832
                         
                         
Liabilities
                       
                         
Accrued expenses
 
60
 
37
 
97
 
15
 
14
 
29
                         
Other liabilities
 
1,357
 
683
 
2,040
 
3,910
 
684
 
4,594
                         
Total liabilities
 
1,417
 
720
 
2,137
 
3,925
 
698
 
4,623
                         
Adjustment from fair value to contract value for fully benefit-responsive investment contracts
 
(4,862)
 
--
 
(4,862)
 
10,728
 
--
 
10,728
                         
Net assets available for plan benefits
$
1,455,631
$
96,235
$
1,551,866
$
1,196,263
$
51,674
$
1,247,937
                         


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, 2009 and December 31, 2008
(in thousands)


                 
December 31, 2008
   
       
Non-
         
Non-
   
   
Participant
 
participant
     
Participant
 
participant
   
   
Directed
 
Directed
 
Total
 
Directed
 
Directed
 
Total
                         
Additions to net assets:
                       
                         
Investment income (loss)
                       
Interest
$
16,550
$
--
$
16,550
$
26,616
$
--
$
26,616
Dividends
 
17,643
 
2,776
 
20,419
 
27,171
 
2,658
 
29,829
Net appreciation (depreciation) in fair value of investments
 
231,178
 
39,609
 
270,787
 
(353,623)
 
(51,707)
 
(405,330)
Net investment gain (loss)
 
265,371
 
42,385
 
307,756
 
(299,836)
 
(49,049)
 
(348,885)
Participant contributions
 
66,061
 
--
 
66,061
 
70,138
 
--
 
70,138
Plan Sponsor contributions
 
28,754
 
4,537
 
33,291
 
31,574
 
4,776
 
36,350
Total additions
 
360,186
 
46,922
 
407,108
 
(198,124)
 
(44,273)
 
(242,397)
                         
Deductions from net assets:
                       
                         
Distributions to and withdrawals by participants
 
100,039
 
2,981
 
103,020
 
115,798
 
3,667
 
119,465
                         
Administrative expenses
 
159
 
--
 
159
 
161
 
--
 
161
                         
Total deductions
 
100,198
 
2,981
 
103,179
 
115,959
 
3,667
 
119,626
 
Interfund transfers, net
 
(620)
 
620
 
--
 
(755)
 
755
 
--
 
Net increase (decrease) in net assets
 
259,368
 
44,561
 
303,929
 
(314,838)
 
(47,185)
 
(362,023)
Net assets available for benefits at beginning of period
 
1,196,263
 
51,674
 
1,247,937
 
1,511,101
 
98,859
 
1,609,960
Net assets available for plan benefits at end of period
$
1,455,631
$
96,235
$
1,551,866
$
1,196,263
$
51,674
$
1,247,937

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

 
3

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


1.  

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 ("IRC").  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 Eastman Stock Ownership Plan ("ESOP") Trust.

Since the inception of the Plan, money in the forfeiture account is available to be used both to offset future Company contributions and for various administrative expenses of the Plan.  The balance of the forfeiture account at December 31, 2009 and 2008 was $31,000 and $26,000, respectively.  There were no forfeitures used in 2009 or 2008.

On or after January 1, 2007, each eligible employee hired by the Company will, in addition to the Retirement Savings Contribution ("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 each pay period 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.  An automatic 1% increase to deferral rates occurs each year on April 1 for all participants starting after January 1, 2007, until the participant's deferral reaches 10%.  Participants may opt out of this increase.
 
For additional information regarding the Plan, see the complete Plan documents.

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 participants' accounts 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 deferral provision allowing eligible employees to defer up to 40% of qualifying compensation, as defined in the Plan, up to the statutory limit of $16,500 for 2009 as permitted by the IRC.  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 2009 up to certain IRC 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 Notes 6 and 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 10).  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 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.

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 IRC.  All rollover contributions into the Plan must meet the applicable Internal Revenue Service requirements.

Loans

The 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.  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 Eastman Resins, Inc. Employees' Growth Sharing Plan carry terms applicable under that Plan.  At December 31, 2009, $32.8 million in loans were outstanding for terms of 5 to 119 months and interest rates ranging from 4.25% to 10.50%.  At December 31, 2008, $31.3 million in loans were outstanding for terms from 4 to 119 months and interest rates ranging from 4.25% to 10.50%.

 
5

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


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 whose account value is less than or equal to $1,000.  Separated participants with accounts in excess of $1,000 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 $1,000, 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.

·  
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 IRC.

 
6

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


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.

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.

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).
 

 
7

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements

 
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.
 
2.  
SUMMARY OF ACCOUNTING POLICIES

The following accounting policies, which conform to accounting principles generally accepted in the United States of America ("USGAAP"), 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 by USGAAP, 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 USGAAP, 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 USGAAP 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.  See Note 8 for discussion of fair value measurements.

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.

 
8

 
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 ("GICs") 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 Statements 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

Benefit payments to participants are recorded when paid.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board ("FASB") issued guidance, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles".  This codification became the source of authoritative USGAAP recognized by the FASB.  This guidance was adopted by the Plan effective July 1, 2009 and had no impact on the Plan's Statements of Net Assets Available for Benefits or Statements of Changes in Net Assets Available for Benefits.

In May 2009, subsequent events guidance was issued by the FASB, establishing the accounting of and disclosure standards for events that occur after the balance sheet date but before financial statements are issued or available to be issued.  An amendment was issued in February 2010 which clarified which entities are required to evaluate subsequent events and the scope of the disclosure requirements related to subsequent events.  The adoption of this accounting guidance did not have a material effect on the Plan's Statements of Net Assets Available for Benefits or Statements of Changes in Net Assets Available for Benefits.

In April 2009, the FASB issued guidance for determining fair value when the volume and level of activity for the asset or liability have significantly decreased and guidance on identifying circumstances that indicate a transaction is not orderly.  The Plan adopted the accounting guidance as of December 31, 2009.  The adoption of this guidance did not have a material effect on the Plan's Statements of Net Assets Available for Benefits or Statements of Changes in Net Assets Available for Benefits.

 
9

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements



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 $27.4 million and $30.4 million and for the non-participant-directed ESOP Fund of $4.5 million and $4.8 million at December 31, 2009 and 2008, respectively.

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, 2009 and 2008 were approximately $32.8 million and $31.3 million, respectively.  Interest income earned on loans to participants is credited directly to the participants' accounts and was approximately $2.1 million and $2.5 million for 2009 and 2008, respectively.

 
10

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements

 
6.  

At December 31, 2009 and 2008, the Plan's assets were invested in Eastman Chemical Company common stock, mutual funds, and in synthetic investment contracts (see Note 7).  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 following table presents the fair value of investments by type.
         
(Dollars in thousands)
 
December 31, 2009
 
December 31, 2008
         
Cash
$
660
$
949
Eastman Chemical Company Common Stock
 
189,704
 
135,332
Mutual Funds
 
643,459
 
472,396
Participant Loans    32,779   31,254
Managed Income Fund
 
642,321
 
551,135
Self Directed Brokerage Account
 
13,623
 
9,697
         
Total
$
1,522,546
$
1,200,763

The following investment options, which invest primarily in common stock of the Plan sponsor, were available to participants in 2009 and 2008:

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 2009, the Trustee purchased 2,549,200 shares of Eastman stock for the fund at an average price of $36.46 per share, and sold 3,651,800 shares of Eastman stock for the fund at an average price of $46.40 per share.  During 2008, the Trustee purchased 3,208,000 shares of Eastman stock for the fund at an average price of $51.01 per share and sold 1,622,000 shares at an average price of $61.12 per share.  Dividends paid from the Eastman Stock Fund totaled $4.6 million and $2.9 million in 2009 and 2008, 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 2009, the Trustee purchased 209,200 shares of Eastman stock for the fund at an average price of $23.95 per share, and sold 149,400 shares of Eastman stock for the fund at an average price of $43.44 per share.  During 2008, the Trustee purchased 57,400 shares of Eastman stock for the fund at an average price of $66.69 per share, and sold 118,100 shares at an average price of $63.04 per share.

 
11

Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements

 
At December 31, 2009 and 2008, the following investments represented 5% or greater of ending net assets:

(in thousands)
   
December 31, 2009
     
Shares
 
Fair value
           
Eastman Chemical Company Common Stock, Participant Directed
   
7,149
$
98,819
Eastman Chemical Company Common Stock, Non Participant Directed
   
6,381
 
90,885
Fidelity Contrafund
   
1,930
 
112,405
US Treasury Note/Bond (USTN 1% 12/31/11)
   
110,876
 
110,567
           
(in thousands)
   
December 31, 2008
     
Shares
 
Fair value
           
Eastman Chemical Company Common Stock, Participant Directed
   
11,721
$
88,856
Eastman Chemical Company Common Stock, Non Participant Directed
   
6,202
 
46,476
Fidelity Contrafund
   
1,999
 
90,433

During 2009 and 2008, the Plan's investments (including investments bought, sold and held during the year) appreciated/(depreciated) as follows:

(Dollars in thousands)
 
Net Appreciation
 
Net Appreciation
   
(Depreciation)
 
(Depreciation)
   
December 31, 2009
 
December 31, 2008
         
Eastman Chemical Company Common Stock,   Non Participant Directed
$
39,609
$
(51,707)
Eastman Chemical Company Common Stock,   Participant Directed
 
89,858
 
(48,682)
Mutual Funds and Other
 
141,320
 
(304,941)
Total
$
270,787
$
(405,330)


 
12

Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


7.  

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 paid by the Fund for wrap contracts are a component of the Fund's expenses.

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 percent.

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.

 
13

Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


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 IRC.
·  
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.

The average yields for the Fund are as follows:
Average yields:
 
December 31,
2009
 
December 31,
2008
         
Based on actual earnings
 
2.10 %
 
4.28 %
Based on interest rate credited to participants
 
2.10 %
 
4.06 %

The weighted average crediting interest rate for the Fund was 2.12% and 3.98% at December 31, 2009 and 2008, 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, 2009 and 2008 was as follows:

(Dollars in thousands)
 
December 31,
2009
 
December 31,
2008
         
Security backed investments:
       
Underlying assets at fair value
$
642,321
$
551,135
Wrap contracts
 
(4,862)
 
10,728
Total contract value
$
637,459
$
561,863

 
14

Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements

 
8.  

USGAAP provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy under USGAAP are described below:
 
 Level 1 –  
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
 
Level 2 –  
Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

 Level 3 –  
Unobservable inputs based on the Plan's assumptions used to measure assets and liabilities at fair value.

A financial instrument's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for assets measured at fair value.

Common stock: Valued at the closing price reported on the active market on which the individual securities are traded.

Mutual funds: Valued at the net asset value ("NAV") of shares held by the plan at year end.

Synthetic guaranteed investment contract: Valued at fair value by discounting the related cash flows based on the current yields of similar instruments with comparable durations considering the credit-worthiness of the issuer.

Self directed brokerage account: Unit valuation based on the underlying NAV of the investments.

Participant loans: Valued at amortized cost, which approximates fair value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 
15

Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


The following table sets forth by level, within the fair value hierarchy, the Plan's assets at fair value as of December 31, 2009 and December 31, 2008:
 
(Dollars in thousands)
Fair Value Measurements at December 31, 2009
Description
 
December 31, 2009
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
Cash
$
660
$
660
$
--
$
--
Common Stock
 
189,704
 
189,704
 
--
 
--
Mutual Funds:
               
    Balanced/hybrid
 
45,546
 
45,546
 
--
 
--
    Bond funds
 
66,849
 
66,849
 
--
 
--
    International
 
73,100
 
73,100
 
--
 
--
    Large blend
 
76,652
 
76,652
 
--
 
--
    Large growth
 
192,508
 
192,508
 
--
 
--
    Mid blend
 
12,097
 
12,097
 
--
 
--
    Mid growth
 
21,650
 
21,650
 
--
 
--
    Small blend
 
86,044
 
86,044
 
--
 
--
    Target date funds
 
69,013
 
69,013
 
--
 
--
Managed Income Fund
 
642,321
 
--
 
642,321
 
--
Self Directed Brokerage Account
 
13,623
 
13,623
 
--
 
--
Participant Loans
 
32,779
 
--
 
--
 
32,779
Total
$
1,522,546
$
847,446
$
642,321
$
32,779
                 

(Dollars in thousands)
Fair Value Measurements at December 31, 2008
Description
 
December 31, 2008
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
Cash
$
949
$
949
$
--
$
--
Common Stock
 
135,332
 
135,332
 
--
 
--
Mutual Funds:
         
 
 
 
    Balanced/hybrid
 
36,817
 
36,817
 
--
 
--
    Bond funds
 
39,515
 
39,515
 
--
 
--
    International
 
52,463
 
52,463
 
--
 
--
    Large blend
 
60,168
 
60,168
 
--
 
--
    Large growth
 
143,606
 
143,606
 
--
 
--
    Mid blend
 
8,627
 
8,627
 
--
 
--
    Mid growth
 
14,192
 
14,192
 
--
 
--
    Money market
 
147
 
147
 
--
 
--
    Small blend
 
67,636
 
67,636
 
--
 
--
    Target date funds
 
49,225
 
49,225
 
--
 
--
Managed Income Fund
 
551,135
 
--
 
551,135
 
--
Self Directed Brokerage Account
 
9,697
 
9,697
 
--
 
--
Participant Loans
 
31,254
 
--
 
--
 
31,254
Total
$
1,200,763
$
618,374
$
551,135
$
31,254
                 
There are no redemption restrictions on the mutual fund investments.  They are fully liquid and can be redeemed on a daily basis.
 
The table below sets forth a summary of changes in the fair value of the Plan's level 3 assets for the year ended December 31, 2009.

(Dollars in thousands)
 
Level 3 Assets
Year Ended
December 31, 2009
Description
 
Participant Loans
Balance, beginning of year
$
31,254
Issuances, settlements and write-offs (net)
 
1,525
Balance, end of year
$
32,779
     

 
16

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements



9.  
OTHER RECEIVABLES AND OTHER LIABILITIES

Other receivables in the amount of $4.4 million and $5.9 million at December 31, 2009 and 2008, respectively, represent interest and dividends receivable, as well as receivables from the sale of investments.  Other liabilities in the amount of $2.0 million and $4.6 million at December 31, 2009 and 2008, respectively, represent liabilities from the purchase of investments.

10.  

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 2009 and 2008, $4.4 million and $6.0 million, respectively, were transferred from the ESOP Fund within the Plan in connection with this program.

11.  
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.

12.  
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 IRC.  The Plan Administrator believes the Plan qualifies and operates in compliance with the applicable requirements of the IRC.  Therefore, no provision for income taxes has been included in the Plan's financial statements.

13.  
PLAN EXPENSES

Reasonable expenses of administering the Plan, unless paid by the Company, shall be paid by the Plan.  For both 2009 and 2008, 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 incidental 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 2009 and 2008, the Company paid all other expenses of the Plan related to plan oversight and administration, including audit fees.

14.  
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.

 
17

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


15.  
RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

(Dollars in thousands)
 
December 31,
2009
 
December 31,
2008
         
Investments at fair value
$
1,522,546
$
1,200,763
Adjustment from fair value to contract value for full benefit-responsive investment contracts
 
(4,862)
 
10,728
Total investments per Form 5500
$
1,517,684
$
1,211,491


 
18

 





 








Supplemental Schedule
 
 
 
 
 
 
 
 
 
 





 
19

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(in thousands)

(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, 7,149 shares
**
98,819
*
Eastman Chemical Company
Common stock,  Non Participant directed, 6,381 shares
75,108
90,885
 
Subtotal - Common Stock
   
189,704
*
Fidelity Management Trust Company
Interest Bearing Cash, Non Participant directed
660
660
*
Participant Loans
Participant Loan Fund with terms ranging from 5 - 119 months and rates ranging from 4.25% to 10.5%
**
32,779
*
Fidelity Fund K
Registered Investment Company, 1,206 shares
**
34,158
*
Fidelity Puritan Fund K
Registered Investment Company, 2,836 shares
**
45,546
*
Fidelity Magellan® Fund K
Registered Investment Company, 962 shares
**
61,815
*
Fidelity Contrafund K
Registered Investment Company, 1,930 shares
**
112,405
*
Fidelity Spartan 500 Index Portfolio
Registered Investment Company, 824 shares
**
32,491
*
Fidelity International Discovery Fund K
Registered Investment Company, 1,494 shares
**
45,232
*
Fidelity Blue Chip Growth Fund K
Registered Investment Company, 401 shares
**
15,218
*
Fidelity Freedom Income Fund
Registered Investment Company, 225 shares
**
2,416
*
Fidelity Freedom 2000 Fund
Registered Investment Company, 162 shares
**
1,837
*
Fidelity Freedom 2010 Fund
Registered Investment Company, 875 shares
**
10,950
*
Fidelity Freedom 2020 Fund
Registered Investment Company, 1,694 shares
**
21,260
*
Fidelity Freedom 2030 Fund
Registered Investment Company, 1,082 shares
**
13,410
*
Fidelity Freedom 2040 Fund
Registered Investment Company, 1,012 shares
**
7,247
*
Fidelity Spartan Extended Market Index Portfolio
Registered Investment Company, 398 shares
**
12,097
*
Fidelity Spartan International Index Fund
Registered Investment Company, 343 shares
**
11,467
*
Clipper Fund
Registered Investment Company, 183 shares
**
10,003
*
PIMCO Total Return Institutional Class
Registered Investment Company, 6,190 shares
**
66,849
*
Franklin Small Mid Cap Growth Fund
Registered Investment Company, 726 shares
**
21,650
*
WFA Small Cap Val Inst
Registered Investment Company, 1,141 shares
**
31,355
*
TCW Select Equity I
Registered Investment Company, 207 shares
**
3,070
*
Neuberger and Berman Genesis Instl Cl
Registered Investment Company, 1,448 shares
**
54,689
*
Templeton Foreign Fund
Registered Investment Company, 2,531 shares
**
16,401
*
Fidelity Freedom 2005 Fund
Registered Investment Company, 15 shares
**
155
*
Fidelity Freedom 2015 Fund
Registered Investment Company, 409 shares
**
4,262
*
Fidelity Freedom 2025 Fund
Registered Investment Company, 260 shares
**
2,698
*
Fidelity Freedom 2035 Fund
Registered Investment Company, 130 shares
**
1,335
*
Fidelity Freedom 2045 Fund
Registered Investment Company, 142 shares
**
1,206
*
Fidelity Freedom 2050 Fund
Registered Investment Company, 268 shares
**
2,237
 
Sub-total Mutual Funds
   
643,459


 
20

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
**
3,742
 
ANZ National
Corporate Bond 6.2 7/19/13 144A
**
757
 
AT&T Wireless
Corporate Bond 7.875% 3/01/11
**
765
 
AXA Financial
Corporate Bond 7.75% 8/01/10
**
1,001
 
Abbey National
Corporate Bond 3.875 11/10/14 144A
**
1,544
 
American Express FDIC
Corporate Bond 3.15% 12/09/11
**
518
 
Americredit Automobile Receivable                AMCAR 04-DF A4
Mortgage backed security 3.43 7/11
**
122
 
Americredit Prime Automobile Receivable     APART 07-1 B
Mortgage backed security 5.35% 3/11
**
268
 
Americredit Prime Automobile Receivable     APART 07-1 C
Mortgage backed security  5.43 7/11
**
163
 
Americredit Prime Automobile Receivable     APART 07-2M A3A
Mortgage backed security 5.22% 4/10
**
243
 
Americredit Automobile Receivable               AMCAR 06-BG A4
Mortgage backed security 5.21% 9/13
**
655
 
Avon Products
Corporate Bond 4.8% 3/01/13
**
574
 
Bank of America Credit Card Trust                 BACCT 2006-A16 A16
Mortgage backed security 4.72 5/13
**
485
 
BBVA Banc
Corporate Bond 5.3795 7/22/15 144A
**
504
 
BHP Billiton
Corporate Bond 5.125% 3/29/12
**
1,368
 
BP Capital Markets
Corporate Bond 3.125% 3/12
**
1,476
 
BP Capital Markets
Corporate Bond 1.55% 8/11/11
**
349
 
BNP Paribas
Corporate Bond 2.125% 12/21/12
**
1,015
 
BTM Curacao
Corporate Bond 4.76% 7/21/15 144A
**
430
 
Baltimore G&E
Corporate Bond 6.125% 7/01/13
**
539
 
Bank of America Commercial Mortgage       BACM 04-6 XP
Interest Only Strip CSTR 12/42
**
39
 
Bank of America Commercial Mortgage       BACM 2003-2 A2
Mortgage backed security 4.342 3/41
**
525
 
Bank of America Commercial Mortgage       BACM 05-3 XP
Interest Only Strip CSTR 7/43
**
97
 
Bank of America Commercial Mortgage       BACM 04-4 A3
Mortgage backed security 4.128% 7/42
**
170
 
Bank of America Commercial Mortgage       BACM 05-4 A1
Mortgage backed security 4.432 7/45
**
99
 
Bank of America Commercial Mortgage       BACM 04-5 XP
Interest Only Strip CSTR 11/41
**
48
 
Bank of America Commercial Mortgage       BACM 05-4 XP
Interest Only Strip CSTR 7/45
**
33

 
21

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
Bank of America Commercial Mortgage   BACM 05-6 A1
Mortgage backed security 5.001 9/47
**
245
 
Bank of America Commercial Mortgage   BACM 06-5 A1
Mortgage backed security 5.185% 9/47
**
186
 
Bank of America FDIC GTD MTN
Corporate Bond 2.1% 4/30/12
**
1,030
 
Bank America
Corporate Bond 7.8% 2/15/10 GLBL
**
222
 
Bank America
Corporate Bond 5.375% 8/15/11
**
899
 
Bank America
Corporate Bond 4.9% 5/01/13
**
410
 
Bank of America GMTN
Corporate Bond 7.375 5/15/14
**
1,280
 
Bank of New York
Corporate Bond 4.95 1/14/11
**
170
 
Bank NY Mellon
Corporate Bond 4.95 11/12
**
429
 
Bank of New York MTN
Corporate Bond 4.3% 5/15/14
**
608
 
Bank One Corporation
Corporate Bond 7.875% 8/01/10
**
1,199
 
Bank of Tokyo Mit
Corporate Bond 8.4 4/15/10
**
1,106
 
Barclays MTN
Corporate Bond 2.5% 1/23/13
**
1,582
 
Bayview Commercial Asset Trust           BAYC 04-2 A
Mortgage backed security 1ML+43 8/34
**
116
 
Bayview Commercial Asset Trust           BAYC 04-2 M1
Mortgage backed security 1ML+58 8/34
**
36
 
Bayview Commercial Asset Trust           BAYC 04-3 M1
Mortgage backed security 1ML+50 1/35
**
27
 
Bayview Commercial Asset Trust           BAYC 04-3 M2
Mortgage backed security 1ML+100 1/35
**
15
 
Bear Stearns Commercial Mortgage        BSCMS 04-PWR5 A2
Mortgage backed security 4.254 7/42
**
343
 
Bear Stearns Commercial Mortgage        BSCMS 04-PWR5 X2
Interest Only Strip CSTR 7/42
**
67
 
Bear Stearns Commercial Mortgage        BSCMS 04-T16 A3
Mortgage backed security 4.03 2/46
**
182
 
Bear Stearns Commercial Mortgage        BSCMS 03-T12 X2
Interest Only Strip CSTR 8/39
**
15
 
Bear Stearns Commercial Mortgage        BSCMS 04-PWR6 X2
Interest Only Strip CSTR 11/41
**
45
 
Bear Stearns Commercial Mortgage        BSCMS 05-PWR9 A1
Mortgage backed security 4.498 9/42
**
242
 
Bear Stearns Commercial Mortgage        BSCMS 05-T20 A1
Mortgage backed security 4.94% 10/42
**
161
 
Bear Stearns Commercial Mortgage        BSCMS 2006-T24 X2
Interest Only Strip CSTR 10/41
**
109
 
Bear Stearns Commercial Mortgage        BSCMS 07-PW15 A1
Mortgage backed security 5.016% 2/44
**
42
 
Bear Stearns
Corporate Bond 4.245% 1/7/10
**
903
 
Brazos Higher Education Authority        BRHEA 06-A A2R
Mortgage backed security 3ML+75 12/41
**
1,010

 
22

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
British G Step
Corporate Bond 12/10 DT
**
1,312
 
Commercial Mortgage Pass-Through     COMM 05-C6 XP
Interest Only Strip CSTR 6/44
**
54
 
CPS Auto Trust                                          CPS 07-B A3
Mortgage backed security 5.47% 11/11
**
234
 
CPS Auto Trust                                          CPS 2007-C A3
Mortgage backed security 5.43% 5/12 144A
**
254
 
Canada Govt
Foreign Bond  2.375% 9/10/14
**
841
 
Capital Auto Receivables Asset            CARAT 07-1 B
Mortgage backed security 5.15% 9/12
**
492
 
Capital Auto Receivables Asset            CARAT 07-SN1 B
Mortgage backed security 5.52% 3/15/11
**
237
 
Capital Auto Receivables Asset            CARAT 07-SN1 C
Mortgage backed security 5.73% 3/15/11
**
135
 
Capital One Auto Finance Trust            COAFT 05-C A4A
Mortgage backed security 4.71 6/12
**
1,287
 
Capital One Multi-Asset Executive       COMET 07-B3 B3
Mortgage backed security 5.05% 3/13
**
3,125
 
Capital One Multi-Asset Executive       COMET 07-B5 B5
Mortgage backed security 5.4% 5/13
**
1,505
 
Capital One Multi-Asset Executive       COMET 09-A2 A2
Mortgage backed security 3.2% 4/14
**
1,844
 
Capital One Prime Auto Receivable      COPAR 06-2 A4
Mortgage backed security 4.94% 7/12
**
316
 
Capital One Prime Auto Receivable      COPAR 2007-1 B1
Mortgage backed security 5.76% 12/13
**
461
 
CARGILL INC
Corporate Bond 6.375% 6/12 144A
**
2,343
 
CarMax Auto Owner Trust                    CARMX 2009-2 A3
Mortgage backed security 1.74% 4/14
**
349
 
Cendant Timeshare Receivables           CDTIM 05-1A A1
Mortgage backed security 4.67 5/17
**
72
 
Chase Issuance Trust                             CHAIT 2008-A9 A9
Mortgage backed security 4.3% 5/13
**
698
 
Chase Issuance Trust                             CHAIT 2009-A3 A3
Mortgage backed security 2.4% 6/13
**
2,032
 
CHASE MANHATTAN
Corporate Bond 7.875% 6/15/10
**
1,030
 
Citigroup Inc
Corporate Bond 3ML +9 5/18/11
**
492
 
Citibank Credit Card Issuance              CCCIT 06-A4 A4
Mortgage backed security 5.45% 5/13
**
636
 
Citibank Credit Card Issuance              CCCIT 07-B2 B2
Mortgage backed security 5% 4/12
**
2,003
 
Citibank Credit Card Issuance              CCCIT 07-B6 B6
Mortgage backed security 5% 11/12
**
1,447

 
23

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
Citibank Credit Card Issuance       CCCIT 2009-A3 A3
Mortgage backed security 2.7 6/13
**
1,498
 
Citibank Credit Card Issuance       CCCIT 2009-A5 A5
Mortgage backed security 2.25% 12/14
**
593
 
Citigroup Commercial Mortgage   CGCMT 04-C2 XP
Interest Only Strip  CSTR 10/41
**
58
 
Citigroup Commercial Mortgage   CGCMT 05-EMG A2
Mortgage backed security 4.2211 9/51
**
1
 
Citigroup Funding Inc FDIC
Corporate Bond 1.875% 10/22/12
**
2,383
 
Citigroup Funding Inc FDIC
Corporate Bond 1.875 11/15/12
**
2,024
 
CITIBANK FDIC MTN
Corporate Bond 1.875 6/4/12
**
1,229
 
CITIBANK NA FDIC
Corporate Bond 1.5% 7/12/11
**
1,785
 
CW Capital Colbalt      CWCI 07-C2 A1
Mortgage backed security CSTR 4/15/47
**
248
 
Commercial Mortgage Pass-Through   COMM 06-C8 XP
Interest Only Strip CSTR 12/46
**
496
 
Commercial Mortgage Pass-Through   COMM 04-LB4A XP
Interest Only Strip CSTR 10/37
**
97
 
Commercial Mortgage Pass-Through   COMM 05-LP5 XP
Interest Only Strip CSTR 5/43
**
33
 
Greenwich Capital Commercial F            GCCFC 07-GG11 XP
Interest Only Strip .48% 12/49
**
451
 
Commonwealth Bank of Australia
Corporate Bond 3.75 10/14 144A
**
1,546
 
Commonwealth Bank of Australia MTN
Corporate Bond 2.9 9/17/14 144A
**
2,866
 
Continental Airlines Inc      CONTL AIR 991A
Mortgage backed security 6.545% 2/02/19
**
681
 
Countrywide MTN
Corporate Bond 4% 3/22/11
**
316
 
Countrywide MTN
Corporate Bond 5.8% 6/7/12
**
70
 
Covidien Int
Corporate Bond 5.15% 10/15/10
**
1,688
 
Covidien Int GLB
Corporate Bond 5.45% 10/12
**
426
 
Credit Suisse NY
Corporate Bond 5% 5/15/13
**
2,253
 
CS First Boston Mortgage Security  CSFB 03-C4 A3
Mortgage backed security CSTR 8/36
**
430
 
CS First Boston Mortgage Security  CSFB 04-C1 A3
Mortgage backed security 4.321 1/37
**
334
 
CS First Boston Mortgage Security  CSFB 04-C4 ASP
Interest Only Strip CSTR 10/39
**
50
 
Credit Suisse Mortgage Capital       CSMC 07-C3 A1
Mortgage backed security CSTR 6/39
**
151
 
Credit Suisse Mortgage Capital       CSMC 06-C5 ASP
Interest Only Strip CSTR 12/39
**
439
 
Credit Suisse Mortgage Capital       CSMC 07-C1 A1
Mortgage backed security 5.227 2/40
**
177
 
Credit Suisse Mortgage Capital       CSMC 07-C1 ASP
Interest Only Strip CSTR 2/40
**
495


 
24

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
Credit Suisse Mortgage Capital          CSMC 07-C2 A1
Mortgage backed security 5.237 1/49
**
144
 
CS First Boston Mortgage Security   CSFB 05-C1 ASP
Interest Only Strip CSTR 2/38
**
48
 
CS First Boston Mortgage Security   CSFB 05-C4 ASP
Interest Only Strip CSTR 8/38
**
135
 
CS First Boston Mortgage Security   CSFB 05-C2 ASP
Interest Only Strip CSTR 4/37
**
70
 
Credit Suisse Medium Term Note
Corporate Bond 3.45% 7/2/12
**
1,527
 
DBS Bank Ltd
Corporate Bond 5.125/VAR 5/17 144A
**
1,726
 
DLJ Commercial Mortgage Corp  DLJCM 00-CF1 A1B
Mortgage backed security 7.62 6/33
**
179
 
Daimler Chrysler Auto Trust         DCAT 2006-C B
Mortgage backed security 5.11% 4/13
**
837
 
Deutsche Telekom Int Fin
Corporate Bond 5.375% 3/23/11
**
285
 
Diageo Capital GLB
Corporate Bond 5.2 1/30/13
**
694
 
Diageo Fin GLBL
Corporate Bond 3.875% 4/01/11
**
615
 
EDP Finance BV
Corporate Bond 5.375 11/12 144A
**
1,248
 
ERP Operating LP
Corporate Bond 5.5% 10/1/12
**
348
 
Enel Finance International
Corporate Bond 5.7% 1/15/13144A
**
1,658
 
Freddie Mac
FHLG 15YR  5.00%  5/14 #E76434
**
12
 
Freddie Mac
FHLG 15YR  5.00%  6/14 #E77224
**
48
 
Freddie Mac
FHLM ARM  4.889%  3/33 #847126
**
8
 
Freddie Mac
FHLM ARM   4.69% 11/35 #1B2428
**
429
 
Freddie Mac
FHLM ARM  4.68%  1/36 #847584
**
91
 
Freddie Mac
FHLM ARM   4.305  6/35 #848083
**
63
 
Freddie Mac
FHLM ARM   3.88%  1/35 #848084
**
89
 
Freddie Mac
FHLM ARM  4.542%  4/35 #848085
**
238
 
Freddie Mac
FHLM ARM  3.479%  3/35 #848086
**
135
 
Freddie Mac
FHLM ARM  4.482%  4/35 #848088
**
1,822
 
Freddie Mac
FHLM ARM  4.485%  1/35 #848089
**
47
 
Freddie Mac
FHLM ARM  4.277%  2/35 #848090
**
329
 
Freddie Mac
FHLM ARM  5.084%  8/35 #1J0005
**
92
 
Freddie Mac
FHLG 15YR  5.00%  6/24 #G13598
**
2,098
 
Freddie Mac
FHLM ARM  4.941% 11/35 #1J1228
**
272
 
Freddie Mac
FHLM ARM   5.26%  1/36 #1J1274
**
210
 
Freddie Mac
FHLM ARM   4.93%  9/35 #1K1215
**
308
 
Freddie Mac
FHLM ARM   5.78% 10/35 #1N0063
**
74
 
Freddie Mac
FHLM ARM   5.62% 12/35 #1N0117
**
356
 
Freddie Mac
FHLM ARM 5.34% 6/35 #1L0097
**
149
 
Freddie Mac
FHLM ARM  4.486%  5/35 #1Q0758
**
407
 
Freddie Mac
FHLM ARM  4.199%  8/36 #848185
**
356
 
Freddie Mac
FHLM ARM  4.571%  3/35 #848186
**
346
 
Freddie Mac
FHLB 1.75% 8/22/12
**
1,160
 
Freddie Mac
FHLB 1.625% 11/21/12
**
7,972
 
Freddie Mac
FHLB 1% 12/28/11
**
4,213
 
Freddie Mac
FHLB 1.5% 1/16/13
**
5,541

 
25

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
Freddie Mac
FHLMC 2.125% 3/23/12
**
4,074
 
Freddie Mac
FHLMC    1.125% 12/15/11
**
6,794
 
Fannie Mae
FNMA 15YR  7.00%  1/13 #251428
**
2
 
Fannie Mae
FNMA 15YR  6.50% 11/13 #323755
**
119
 
Fannie Mae
FNMA 15YR  7.00%  8/14 #323877
**
24
 
Fannie Mae
FNMA 15YR  6.50%  9/14 #514373
**
1
 
Fannie Mae
FNMA 15YR  7.00% 11/14 #522277
**
9
 
Fannie Mae
FNMA 15YR  6.50% 10/13 #535234
**
206
 
Fannie Mae
FNMA 15YR  7.00%  6/16 #545122
**
10
 
Fannie Mae
FNMA 15YR  7.00%  2/16 #569915
**
27
 
Fannie Mae
FNMA 15YR  6.00% 10/16 #589129
**
17
 
Fannie Mae
FNMA 15YR  7.00%  8/16 #599602
**
67
 
Fannie Mae
FNMA 15YR  7.00%  4/17 #636135
**
140
 
Fannie Mae
FNMA 15YR  6.50%  4/17 #637244
**
97
 
Fannie Mae
FNMA 15YR  6.00% 11/17 #671380
**
93
 
Fannie Mae
FNMA 15YR  6.00% 11/17 #672789
**
34
 
Fannie Mae
FNMA 15YR  6.00% 12/17 #673965
**
43
 
Fannie Mae
FNR 04-3 HA 4 7/17
**
318
 
Fannie Mae
FNR 2004-15 AB 4% 9/17
**
207
 
Fannie Mae
FHR 2867 EA 4.5% 11/18
**
328
 
Fannie Mae
FNR 2008-29 CA 4.5% 9/35
**
2,170
 
Fannie Mae
FNR 2008-95 AD 4.5% 12/23
**
2,180
 
Fannie Mae
FNMA 2% 1/9/12
**
5,192
 
Fannie Mae
FNMA 2.75% 3/13/14
**
2,054
 
Fannie Mae
FNMA 2.5% 5/15/14
**
1,422
 
Fannie Mae
FHR 3555 CM 4% 12/14
**
4,621
 
Fannie Mae
FHR 3555 KH 4% 12/14
**
4,695
 
Fannie Mae
FNMA 15YR  6.00%  2/18 #684153
**
11
 
Fannie Mae
FNMA 15YR  7.00%  2/18 #693327
**
191
 
Fannie Mae
FNMA ARM 4.318% 3/33 #694530
**
15
 
Fannie Mae
FNMA ARM 4.801% 2/33 #695019
**
39
 
Fannie Mae
FNMA ARM 3.984% 5/33 #703915
**
8
 
Fannie Mae
FNMA ARM   4.57%  6/33 #712321
**
343
 
Fannie Mae
FNMA 15YR  4.00%  8/18 #727438
**
879
 
Fannie Mae
FNMA ARM   4.68% 11/34 #735011
**
260
 
Fannie Mae
FNMA 15YR  4.50%  7/20 #745874
**
345
 
Fannie Mae
FNMA ARM  5.541% 11/36 #745972
**
285
 
Fannie Mae
FNMA ARM 3.753% 10/33 #746320
**
49
 
Fannie Mae
FNMA ARM 4.358% 10/33 #754672
**
15
 
Fannie Mae
FNMA ARM 3.752% 10/33 #755148
**
35
 
Fannie Mae
FNMA ARM 4.455% 3/35 #773281
**
68
 
Fannie Mae
FNMA ARM 4.499% 3/35 #783587
**
154
 
Fannie Mae
FNMA ARM 5.05% 7/34 #801635
**
21
 
Fannie Mae
FNMA ARM   4.53% 12/34 #802852
**
269
 
Fannie Mae
FNMA ARM 4.293% 3/35 #815586
**
22
 
Fannie Mae
FNMA ARM   4.75%  5/35 #815626
**
76
 
Fannie Mae
FNMA ARM   5.12%  6/35 #823810
**
89

 
26

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
Fannie Mae
FNMA ARM   4.58%  7/35 #826362
**
657
 
Fannie Mae
FNMA ARM  4.520%  8/35 #829603
**
88
 
Fannie Mae
FNMA ARM  4.555% 7/35 #832099
**
156
 
Fannie Mae
FNMA ARM  5.344%  7/35 #834917
**
17
 
Fannie Mae
FNMA ARM  5.349% 12/34 #843013
**
55
 
Fannie Mae
FNMA ARM   5.280% 3/35 #843014
**
19
 
Fannie Mae
FNMA ARM  4.893% 10/35 #847787
**
88
 
Fannie Mae
FNMA ARM   6.25%  6/36 #886983
**
43
 
Fannie Mae
FNMA ARM   4.86%  7/35 #888382
**
473
 
Fannie Mae
FNMA ARM   5.07%  9/36 #888398
**
1,044
 
Fannie Mae
FNMA 15YR  4.50% 12/18 #888889
**
1,558
 
Fannie Mae
FNMA 15YR  4.50%  6/18 #889335
**
1,291
 
Fannie Mae
FNMA 15YR  4.50% 12/18 #889336
**
1,495
 
Fannie Mae
FNMA ARM   4.36% 10/37 #889704
**
217
 
Fannie Mae
FNMA ARM   4.21%  5/35 #889946
**
418
 
Fannie Mae
FNMA ARM   4.90%  2/36 #995015
**
4,227
 
Fannie Mae
FNMA ARM   4.59%  7/35 #995016
**
312
 
Fannie Mae
FNMA ARM   4.30%  2/35 #995017
**
484
 
Fannie Mae
FNMA ARM   4.987%   #995269
**
3,038
 
Fannie Mae
FNMA ARM  4.785% 2/36 #995271
**
726
 
Fannie Mae
FNMA ARM  4.898%  5/35 #995272
**
49
 
Fannie Mae
FNMA ARM  4.58%  7/35 #995273
**
171
 
Fannie Mae
FNMA ARM  4.765% 1/34 #995274
**
11
 
Fannie Mae
FNMA ARM 4.53% 10/35 #995414
**
378
 
Fannie Mae
FNMA ARM 4.55% 10/35 #995415
**
1,215
 
Fannie Mae
FNMA ARM 4.715% 11/35 #995604
**
525
 
Fannie Mae
FNMA ARM 4.647% 4/35  #995605
**
451
 
Fannie Mae
FNMA ARM 4.512% 12/36 #995606
**
446
 
Fannie Mae
FNMA ARM 4.545% 12/36 #995607
**
284
 
Fannie Mae
FNMA ARM 5.075% 7/34 #995609
**
183
 
Fannie Mae
FNMA 15YR  5.00% 12/18 #995756
**
636
 
Fannie Mae
FNMA 15YR  5.00%   #995836
**
2,277
 
Fannie Mae
FNMA 15YR  5.00%  1/21 #995861
**
1,011
 
Fannie Mae
FNMA 15YR  5.00%  6/24 #995902
**
933
 
Fannie Mae
FNMA ARM   3.92%  2/39 #AC0036
**
1,647
 
Fannie Mae
FNMA ARM   4.807%  1/35#AD0064
**
1,723
 
Fannie Mae
FNMA ARM   5.129%  9/35#AD0065
**
1,403
 
Fannie Mae
FNMA ARM   4.285%  7/33#AD0066
**
758
 
Fannie Mae
FNMA ARM   3.206%  4/36#AD0068
**
174
 
Fannie Mae
FNMA 15YR  4.50%  8/24 #AD0116
**
3,316
 
Fannie Mae
FNMA 15YR  4.50%  8/24 #AD0117
**
5,591
 
Fannie Mae
FNMA 15YR  4.50%  7/18 #AD0118
**
2,935
 
Fannie Mae
FNMA ARM   4.82%  2/36 #AD0175
**
118
 
Fannie Mae
FNMA ARM    4.49% 4/35 #AD0176
**
1,039
 
Fannie Mae
FNMA ARM   3.32% 9/34 #AD0177
**
109
 
Fannie Mae
FNMA ARM   3.334% 4/36 #AD0178
**
110


 
27

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
FID INST CASH PORT: MM FUND CLASS I SHS F/N/A
**
54,374
 
Ford Credit Auto Owner Trust    FORDO 2006-B B
Mortgage backed security 5.43% 2/12
**
814
 
Ford Credit Auto Owner Trust    FORDO 2006-C B
Mortgage backed security 5.3% 6/12
**
378
 
Ford Credit Auto Owner Trust    FORDO 07-A B
Mortgage backed security 5.6% 10/12
**
223
 
Ford Credit Auto Owner Trust    FORDO 2009-B A2
Mortgage backed security 2.46 11/11TALF
**
252
 
Ford Credit Auto Owner Trust    FORDO 2009-B A3
Mortgage backed security 2.79 8/13TALF
**
510
 
Ford Credit Auto Owner Trust    FORDO 09-D A3
Mortgage backed security 2.17% 10/15/13
**
303
 
Ford Credit Auto Owner Trust    FORDO 2009-E A3
Mortgage backed security 1.51% 1/14
**
697
 
France Tele MTN
Corporate Bond 4.375% 7/14 DT
**
776
 
Franklin Auto Trust     FRNK 06-1 A4
Mortgage backed security 5.03% 7/14
**
1,353
 
Franklin Auto Trust     FRNK 06-1 B1
Mortgage backed security 5.14% 7/14
**
136
 
Franklin Auto Trust     FRNK 07-1 B
Mortgage backed security 5.13 2/15
**
499
 
Fuji Fin
Corporate Bond 8.625% 4/15/10 144A
**
1,194
 
GE Capital Credit Card Master   GEMNT 07-1 B
Mortgage backed security 4.95% 3/13
**
1,350
 
GE Capital Credit Card Master   GEMNT 2007-3 B
Mortgage backed security 5.49% 6/13
**
1,482
 
GE Capital Credit Card Master   GEMNT 2009-3 A
Mortgage backed security 2.54% 9/14
**
1,543
 
GE Capital Credit Card Master    GECMC 07-C1 XP
Interest Only Strip CSTR 12/49
**
159
 
GE Commercial Mortgage Security  GMACC 04-C2 A2
Mortgage backed Security CSTR 8/38
**
1,095
 
GE Commercial Mortgage Security  GMACC 04-C3 X2
Interest Only Strip  CSTR 12/41
**
38
 
GE Capital Credit Card Master          GMACC 05-C1 X2
Interest Only Strip CSTR 5/43
**
55
 
General Motors Acceptance Corporation INC FDIC
Corporate Bond 1.75% 10/30/12
**
1,525
 
GS Mortgage Securities Corporation  GSMS 05-GG4 XP
Interest Only Strip CSTR 7/39
**
240
 
GE Capital Commercial Mortgage        GECMC 04-C2 A2
Mortgage backed security 4.119% 3/40
**
239
 
GCO Slims Trust   GCOSL 06-1A
Mortgage backed security NOTE 5.72 3/22
**
297
 
General Electric Capital Corp
Corporate Bond 5.2% 2/01/11
**
2,007

 
28

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
General Electric Capital Corp MTN
Corporate Bond 5.9% 5/13/14
**
904
 
General Electric Capital Corp
Corporate Bond 3.5% 8/12
**
4,664
 
General Electric Capital Corp FDIC
Corporate Bond 3% 12/09/11
**
1,786
 
General Electric Capital Corp FDIC
Corporate Bond 1.8% 3/11/11
**
2,176
 
General Electric Capital Corp FDIC MTN
Corporate Bond 2.625 12/28/12
**
1,783
 
General Electric Capital Corp FDIC GMTN
Corporate Bond 2% 9/28/12
**
876
 
Glaxosmith Kline
Corporate Bond 4.85% 5/15/13
**
392
 
Goldman SA FDIC
Corporate Bond 2.15% 3/12
**
511
 
Greenwich Capital Commercial Funding Corp   GCCFC 05-GG3 XP
Interest Only Strip CSTR 8/42
**
222
 
Greenwich Capital Commercial Funding Corp   GCCFC 05-GG5
Interest Only Strip  CSTR 4/37
**
177
 
GS Auto Loan Trust   GSALT 07-1 B
Mortgage backed security 5.53% 12/14
**
109
 
HSBC USA FDIC
Corporate Bond 3.125% 12/16/11
**
492
 
Household Automotive Trust     HAT 2006-3 A3
Mortgage backed security  5.38% 9/11
**
192
 
Honda Auto Receivables Owner Trust   HAROT 2009-3 A3
Mortgage backed security 2.31% 5/13
**
507
 
Household Automotive Trust      HAT 07-1 A3
Mortgage backed security 5.3% 11/11/11
**
184
 
Household Automotive Trust      HAT 07-1 A4
Mortgage backed security  5.33% 11/18/13
**
892
 
Hutchinson Wham
Corporate Bond 5.45 11/24/10 144
**
699
 
Hyundai Auto Receivables Trust   HART 06-1 B
Mortgage backed security 5.29 11/12
**
20
 
Hyundai Auto Receivables Trust   HART 06-1 C
Mortgage backed security  5.34 11/12
**
27
 
Hyundai Auto Receivables Trust   HART 2007-A A3A
Mortgage backed security 5.04 1/12
**
378
 
Hyundai Auto Receivables Trust   HART 2009-A A3
Mortgage backed security 2.03% 8/13
**
343
 
JPMorgan Chase
Synthetic GIC – 2.393%
**
209
 
JPMorgan Chase and Company
Corporate Bond 6.75 2/1/11 DT
**
265
 
JPMorgan Chase and Company
Corporate Bond 4.891/VAR 9/15
**
524
 
JPMorgan Chase and Company
Corporate Bond 4.75% 5/1/13
**
1,490
 
JPMorgan Chase and Company MTN
Corporate Bond 4.65% 6/14
**
1,237
 
JP Morgan Chase Commercial Mortgage   JPMCC 2001-C1 A2
Mortgage backed security 5.464 10/35
**
107
 
JP Morgan Chase Commercial Mortgage   JPMCC 03-CB7 X2 CSTR 1/38
Interest Only Strip CSTR 1/38
**
9
 
JP Morgan Chase Commercial Mortgage   JPMCC 04-CBX X2
Interest Only Strip CSTR 1/37
**
121
 
JP Morgan Chase Commercial Mortgage   JPMCC 04-C3 A2
Mortgage backed security 4.223% 1/42
**
655
 
JP Morgan Chase Commercial Mortgage   JPMCC 05-LDP4 X2
Interest Only Strip CSTR 10/42
**
185
 
JP Morgan Chase Commercial Mortgage   JPMCC 2006-LDP9 A1
Mortgage backed security CSTR 5/47
**
359

 
29

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
JP Morgan Chase Commercial Mortgage   JPMCC 07-LDP10 A-1
Mortgage backed security 5.122% 1/49
**
168
 
Jackson National
Corporate Bond 5.375% 5/8/13 144
**
485
 
JP Morgan Auto Receivables Trust     JPMRT 2006-A A4
Mortgage backed security 5.14% 12/14
**
651
 
JP Morgan Auto Receivables Trust     JPMART 2006-A B
Mortgage backed security 5.36% 12/14
**
56
 
JPMorgan FDIC
Corporate Bond 3.125 12/1/11 DT
**
920
 
Keyspan Corp
Corporate Bond 7.625% 11/15/10
**
362
 
Kraft Foods Inc.
Corporate Bond 5.625% 8/11/10
**
1,245
 
KFW GLB
Corporate Bond 4.75 5/15/12
**
1,358
 
KFW GLB
Corporate Bond 3.5 5/16/13
**
1,612
 
LB-UBS Commercial Mortgage Trust   LBUBS 07-C1 A1
Mortgage backed security CSTR 2/15/40
**
148
 
LB-UBS Commercial Mortgage Trust   LBUBS 07-C2 A1
Mortgage backed security 5.226 2/40
**
118
 
LB-UBS Commercial Mortgage Trust   LBUBS 00-C3 A2
Mortgage backed security 7.95 5/25
**
125
 
LB-UBS Commercial Mortgage Trust   LBUBS 00-C5 A2
Mortgage backed security 6.51 12/26
**
442
 
LB-UBS Commercial Mortgage Trust   LBUBS 04-C6 A2
Mortgage backed security 4.187% 8/29
**
134
 
LB-UBS Commercial Mortgage Trust   LBUBS 04-C8 XCP
Interest Only Strip CSTR 12/39
**
22
 
LB-UBS Commercial Mortgage Trust   LBUBS 04-C2 A3
Mortgage backed security 3.973% 3/29
**
700
 
LB-UBS Commercial Mortgage Trust   LBUBS 05-C1 AAB
Mortgage backed security CSTR 2/30
**
574
 
LB-UBS Commercial Mortgage Trust   LBUBS 05-C5 XCP
Interest Only Strip CSTR 9/40
**
334
 
LB-UBS Commercial Mortgage Trust   LBUBS 05-C7 XCP
Interest Only Strip CSTR 11/40
**
144
 
LB-UBS Commercial Mortgage Trust   LBUBS 2006-C3 A1
Mortgage backed security 5.478 3/39
**
125
 
Long Beach Auto Receivables Trust    LBART 2006-B A4
Mortgage backed security 5.18% 9/13
**
561
 
Merrill Lynch/Countrywide Commercial   MLCFC 07-6 A1
Mortgage backed security 5.175% 3/12/51
**
146
 
Manufacturers & Traders Trust Co
Corporate Bond 3.85/VAR 4/1/13
**
1,386
 
Marriott Vacation Club Owner Trust    MVCOT 05-2 A
Mortgage backed security 4.6% 10/27
**
190
 
Marriott Vacation Club Owner Trust    MVCOT 06-2A A
Mortgage backed security 5.417% 10/28
**
150
 
Marriott Vacation Club Owner Trust    MVCOT 06-2A B
Mortgage backed security 5.467% 10/28
**
32
 
Marriott Vacation Club Owner Trust    MVCOT 06-2A C
Mortgage backed security 5.766% 10/28
**
13
 
MassMutual GL
Corporate Bond 3.625% 7/12 144A
**
418
 
Master Adjustable Rate Mortgage      MARM 04-11 1A4
Mortgage backed security 1ML+49 11/34
**
1
 
Mercedes-Benz Auto Receivables Trust      MBART 2009-1 A3
Mortgage backed security 1% 1/15/14
**
480
 
Merrill Lynch & Co
Corporate Bond 6.05% 8/15/12
**
514

 
30

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
Merrill Lynch & Co
Corporate Bond 5.45% 2/05/13
**
170
 
Merrill Lynch & Co
Corporate Bond 6.15% 4/25/13
**
414
 
Merrill Lynch Mortgage Trust    MLMT 04-MKB1 A2
Mortgage backed security 4.353% 2/42
**
1,241
 
Merrill Lynch Mortgage Trust    MLMT 04-KEY2 A2
Mortgage backed security 4.166% 8/39
**
812
 
Merrill Lynch Mortgage Trust    MLMT 04-BPC1 XP
Interest Only Strip CSTR 9/41
**
156
 
Merrill Lynch Mortgage Trust    MLMT 05-MKB2 XP
Interest Only Strip CSTR 9/42
**
17
 
Merrill Lynch Mortgage Trust    MLMT 05-MCP1 XP
Interest Only Strip CSTR 6/43
**
95
 
Met Life GLBL
Corporate Bond 5.75 7/25/11 144
**
710
 
Met Life MTN
Corporate Bond 5.125 6/14 144A
**
547
 
Met Life GBL
Corporate Bond 2.875 9/17/12 144
**
1,156
 
Midamerican Energy Co.
Corporate Bond 5.65% 7/15/12
**
1,222
 
Merrill Lynch/Countrywide Commercial   MLCFC 06-3 XP
Interest Only Strip CSTR 7/46
**
298
 
Monumental Global
Corporate Bond 5.5% 4/13 144A
**
228
 
MSTDW Global
Corporate Bond 6.75% 4/15/11
**
408
 
Morgan Stanley
Corporate Bond 5.25% 11/02/12
**
676
 
Morgan Stanley Capital     MSC 04-HQ4 X2
Interest Only Strip CSTR 4/40
**
43
 
Morgan Stanley Capital     MSC 04-HQ3 A2
Mortgage backed security 4.05 1/41
**
298
 
Morgan Stanley Capital     MSC 05-TOP17 X2
Interest Only Strip CSTR 12/41
**
64
 
Morgan Stanley Capital     MSC 05-IQ9 X2
Interest Only Strip  CSTR 7/56
**
108
 
Morgan Stanley Capital     MSC 05-HQ5 X2
Interest Only Strip CSTR 1/42
**
36
 
Morgan Stanley Capital     MSC 06-T21 A1
Mortgage backed security 4.925 10/52
**
464
 
Morgan Stanley
Corporate Bond 6% 5/13/14
**
672
 
Morgan Stanley Capital     MSC 2006-HQ10 X2
Interest Only Strip CSTR 11/41
**
253
 
Morgan Stanley Capital     MSC 2007-HQ11 A1
Mortgage backed security 5.246% 2/44
**
266
 
Morgan Stanley FDIC
Corporate Bond 3.25% 12/1/11
**
1,279
 
National Australia Bank
Corporate Bond 5.35% 6/12/13 144
**
270
 
National Australia Bank
Corporate Bond 2.35 11/16/12 144A
**
1,495
 
National Collegiate Student Loan    NCSLT 2007-2 AIO
Interest Only Strip 6.7% 7/12
**
235
 
National Collegiate Student Loan    NCSLT 2006-2 AIO
Interest Only Strip 6% 8/11
**
23

 
31

Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2009
(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
 
National Collegiate Student Loan   NCSLT 04-2 AIO
Interest Only Strip 9.75% 10/14
**
135
 
National Collegiate Student Loan   NCSLT 05-2 AIO
Interest Only Strip 7.73 3/12
**
11
 
National Collegiate Student Loan   NCSLT 06-1 A-IO
Interest Only Strip 5.5 4/11
**
72
 
National Collegiate Student Loan   NCSLT 2006-3 AIO
Interest Only Strip 7.1% 1/12
**
301
 
National Collegiate Student Loan   NCSLT 06-4 AIO
Interest Only Strip 6.35% 02/12
**
215
 
National Collegiate Student Loan   NCSLT 2007-1 AIO
Interest Only Strip 7.27% 4/12
**
317
 
NATIXIS
Synthetic GIC – 2.344%
**
154
 
NY Life
Corporate Bond 2.25% 12/14/12 144A
**
919
 
NYLife Global
Corporate Bond 4.65% 5/9/13 144A
**
1,078
 
Nissan Auto Lease Trust   NALT 2009-B A3
Mortgage backed security 1 1/15
**
544
 
NALT 2009-A A2
Mortgage backed security 2.01% 4/11
**
362
 
Nissan Auto Lease Trust    NALT 2009-A A3
Mortgage backed security 2.92% 12/11
**
663
 
Nordstrom Private Label Credit   NORD 07-1A A
Mortgage backed security 4.92 5/13 144A
**
2,269
 
Northern Trust Co
Corporate Bond 5.5% 8/15/13
**
195
 
Northern Trust Co
Corporate Bond 4.625% 5/1/14
**
150
 
Northstar Education Finance  NEF 05-1 A5
Mortgage backed security 4.74 10/45
**
623
 
Orix Corp
Corporate Bond 5.48% 11/22/11
**
146
 
Peco Energy
Corporate Bond 5.6% 10/15/13
**
681
 
PNC Funding MTN
Corporate Bond 5.4% 6/10/14
**
922
 
Pacific Gas & Electric
Corporate Bond 6.25% 12/13
**
548
 
Petroleum Export
Corporate Bond 4.623% 6/15/10 144A
**
82
 
Petroleum Export
Corporate Bond 4.633% 6/15/10 144A
**
49
 
Pfizer
Corporate Bond 4.45% 3/15/12
**
1,072
 
Philip Morris
Corporate Bond 4.875% 5/16/13
**
276
 
Prime Property Funding
Corporate Bond 5.6% 6/15/11
**
505
 
Proctor & Gamble Intl
Corporate Bond 1.35% 8/11
**
1,119
 
Rabobank Nederland
Synthetic GIC – 2.4645%
**
99
 
Rabobank Nederland
Corporate Bond 2.65% 8/12 144A
**
4,045
 
Ras Laffan
Mortgage backed security 8.294 3/15/14 144A
**
563
 
Rio Tinto Fin
Corporate Bond 5.875% 7/15/13
**
1,571
 
Royal Bank of Canada NY$CD
Certificate of Deposit 2.25% 3/15/13
**
2,027
 
Royal Bank of Scotland
Corporate Bond 1.5% 3/30/12 144A
**
1,567