emn2011_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, 2011
 
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
   
 
   
32
   
33

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 have been omitted because they are not applicable.


 
 

 

 
Report of Independent Registered Public Accounting Firm

To the Participants and Administrator of the
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, 2011 and 2010 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.  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.



/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Charlotte, North Carolina
June 28, 2012

 

 
Eastman Investment and Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
December 31, 2011 and 2010
(in thousands)
 
       
2011
         
2010
   
       
Non-
         
Non-
   
   
Participant
 
participant
     
Participant
 
participant
   
   
Directed
 
Directed
 
Total
 
Directed
 
Directed
 
Total
                         
Assets
                       
                         
Investments at fair value
$
1,544,516
$
99,486
$
1,644,002
$
1,572,764
$
116,925
$
1,689,689
                         
Receivables:
                       
                         
Plan sponsor contributions
 
30,738
 
4,405
 
35,143
 
29,415
 
4,166
 
33,581
                         
Notes receivable from participants
 
37,240
 
0
 
37,240
 
37,063
 
0
 
37,063
                         
Other receivables
 
2,941
 
653
 
3,594
 
3,629
 
949
 
4,578
                         
Total assets
 
1,615,435
 
104,544
 
1,719,979
 
1,642,871
 
122,040
 
1,764,911
                         
                         
Liabilities
                       
                         
Accrued expenses
 
21
 
17
 
38
 
43
 
36
 
79
                         
Other liabilities
 
3,380
 
1,093
 
4,473
 
3,211
 
659
 
3,870
                         
Total liabilities
 
3,401
 
1,110
 
4,511
 
3,254
 
695
 
3,949
                         
Adjustment from fair value to contract value for fully benefit-responsive investment contracts
 
(23,935)
 
0
 
(23,935)
 
(14,577)
 
0
 
(14,577)
                         
Net assets available for plan benefits
$
1,588,099
$
103,434
$
1,691,533
$
1,625,040
$
121,345
$
1,746,385
                         


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 Years Ended December 31, 2011 and 2010
(in thousands)
 
       
2011
         
2010
   
       
Non-
         
Non-
   
   
Participant
 
participant
     
Participant
 
participant
   
   
Directed
 
Directed
 
Total
 
Directed
 
Directed
 
Total
                         
Additions to net assets:
                       
                         
Investment income
                       
Interest
$
13,320
$
0
$
13,320
$
13,645
$
0
$
13,645
Dividends
 
22,384
 
2,560
 
24,944
 
19,283
 
2,653
 
21,936
Net appreciation (depreciation) in fair value of investments
 
(35,313)
 
(18,476)
 
(53,789)
 
131,312
 
22,245
 
153,557
Net investment gain (loss)
 
391
 
(15,916)
 
(15,525)
 
164,240
 
24,898
 
189,138
Interest income from notes receivable
  1,597   0   1,597   1,756   0   1,756
Participant contributions
 
75,897
 
0
 
75,897
 
60,344
 
0
 
60,344
Plan sponsor contributions
 
33,315
 
4,405
 
37,720
 
31,115
 
4,166
 
35,281
Total additions
 
111,200
 
(11,511)
 
99,689
 
257,455
 
29,064
 
286,519
                         
Deductions from net assets:
                       
                         
Distributions to and withdrawals by participants
 
156,349
 
6,400
 
162,749
 
87,876
 
3,954
 
91,830
                         
Administrative expenses
 
168
 
0
 
168
 
170
 
0
 
170
                         
Total deductions
 
156,517
 
6,400
 
162,917
 
88,046
 
3,954
 
92,000
 
Net increase (decrease) in net assets
 
(45,317)
 
(17,911)
 
(63,228)
 
169,409
 
25,110
 
194,519
Plan transfer - Genovique   8,376  
0
  8,376  
0
 
0
 
0
Net assets available for benefits at beginning of year
 
1,625,040
 
121,345
 
1,746,385
 
1,455,631
 
96,235
 
1,551,866
Net assets available for plan benefits at end of year
$
1,588,099
$
103,434
$
1,691,533
$
1,625,040
$
121,345
$
1,746,385
                         


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

 

 
Eastman Investment and Employee Stock Ownership Plan
 
 
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 ("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.

Money in the forfeiture account of the Plan 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, 2011 and 2010 was $46,104 and $33,000, respectively.  There were no forfeitures used in 2011 or 2010.

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.  Plan participants may elect to enroll in an automatic annual increase program with an increase to deferral rates each year until the participant's deferral reaches 10%.

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

Contributions and vesting

Contributions to the Plan are made through two separate provisions: (1) deferral of qualifying compensation and (2) 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.

 

 
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 2011 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 2011 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.

For employees hired on or after January 1, 2007, each participant is 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.  Contributions are invested into other Plan funds, as directed by the participants.

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 Code ("IRC") requirements.

  5
 

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements
 
 
Notes receivable from participants

The IPCO may grant a note receivable (loan) of at least $1,000 to a participant provided that the aggregate of the participant's notes receivable does not exceed the lesser of (1) $50,000 reduced by the excess, if any, of (a) the participant's highest notes receivable balance from the preceding 12 months over (b) the outstanding total notes receivable balance from the Plan on the date on which the notes receivable was made, or (2) 50% of the non-forfeitable portion of the participant's account.  In accordance with the Plan provisions, the rate of interest on new participant notes receivable approximates current market rates.  The term of any notes receivable from participants is determined by IPCO and shall not exceed five years.  Notes receivable from participants transferred to the Plan from the Eastman Resins, Inc. Employees' Growth Sharing Plan carry terms applicable under that Plan.  At December 31, 2011, $37.2 million in notes receivable from participants were outstanding for terms of 3 to 62 months and interest rates ranging from 4.25% to 10.50%.  At December 31, 2010, $37.1 million in notes receivable from participants were outstanding for terms from 2 to 63 months and interest rates ranging from 4.25% 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 whose account value is less than or equal to $1,000.  Separated participants with accounts in excess of $1,000 may elect either (1) 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 (2) an 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 is still actively employed 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.

 

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements
 
 
·  
The Trustee is authorized to honor qualified domestic relation orders issued and served in accordance with Section 414(p) of the IRC.

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.

On August 5, 2011, the Plan Sponsor's Board of Directors declared a two-for-one split of the Company's common stock in the form of a 100 percent stock dividend.  Stockholders of record as of September 15, 2011, were issued one additional share of common stock on October 3, 2011, for each share held.  Treasury shares were treated as shares outstanding in the stock split.  All shares in these financial statements have been adjusted for all periods presented for the stock split.  

Certain items in prior year's financial statements have been reclassified to conform to the current year's presentation.

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.
 
8
 

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

The Managed Income Fund is reported at fair value as determined by the contract issuers.  The Managed Income Fund is comprised of synthetic 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 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.

Notes receivable from participants

Notes receivable from participants are valued at their unpaid principal balance plus any accrued but unpaid interest.

Payments to participants

Benefit payments to participants are recorded when paid.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board ("FASB") issued guidance, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements".  The guidance is intended to improve the comparability of fair value measurements presented and disclosed in financial statements.  The amendments are of two types: (1) those that clarify the Board's intent about the application of existing fair value measurement and disclosure requirements and (2) those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.  The update is effective for annual periods beginning after December 15, 2011.  Plan management has concluded that the new guidance will not have a material impact on the Plan's financial statements.

 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 Company contributions for participant-directed funds of $30.7 million and $29.4 million and for the non-participant-directed ESOP Fund of $4.4 million and $4.2 million at December 31, 2011 and 2010, respectively.

5.  
NOTES RECEIVABLE FROM PARTICIPANTS

The Plan Trustee makes loans to participants in accordance with Plan provisions.  The loans are reflected as notes receivable from participants.  Notes receivable from participants are accounted for as a transfer from the fund directed by the participant to the Notes Receivable from Participants Fund.  The principal portion of participant repayments reduces the Notes Receivable from Participants 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 Notes Receivable from Participants 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.  Notes receivable from participants are valued at their unpaid principal balance plus any accrued but unpaid interest.

Unless otherwise specified by the participant, the proceeds of new notes receivable will be withdrawn from the investment funds on a pro-rata basis.  Outstanding notes receivable from participants at December 31, 2011 and 2010 were approximately $37.2 million and $37.1 million, respectively.  Interest income earned on notes receivable from participants is credited directly to the participants' accounts and was approximately $1.6 million and $1.8 million for 2011 and 2010, respectively.

10
 

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

At December 31, 2011 and 2010, the Plan's assets were invested in Eastman Chemical Company common stock, mutual funds, and synthetic investment contracts (see Note 7).  Subject to certain limitations, participants are provided the option of directing their contributions among the 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 at December 31, 2011 and 2010, respectively.
         
(in thousands)
 
2011
 
2010
         
Cash
$
4,166
$
2,062
Eastman Chemical Company common stock
 
259,151
 
212,601
Mutual funds
 
690,435
 
755,106
Managed income fund
 
672,791
 
702,826
Self-directed brokerage account
 
17,459
 
17,094
         
Total
$
1,644,002
$
1,689,689

The following investment options, which invest primarily in common stock of the Plan Sponsor, were available to participants in 2011 and 20101:
 
Eastman Stock Fund
This participant-directed fund consists primarily of Eastman Class A common stock.  Purchases and sales of Eastman common stock are generally made on the open market on behalf of and as elected by Plan participants.  During 2011, the Trustee purchased 6,316,400 shares of Eastman common stock for the fund at an average price of $44.35 per share, and sold 4,470,800 shares of Eastman common stock for the fund at an average price of $46.31 per share.  During 2010, the Trustee purchased 4,960,200 shares of Eastman common stock for the fund at an average price of $31.22 per share and sold 5,932,600 shares at an average price of $33.02 per share.  Dividends paid from the Eastman Stock Fund totaled $3.3 million and $2.9 million in 2011 and 2010, respectively.

Eastman ESOP Fund
 
This non-participant directed fund consists primarily of Eastman Class A common stock.  Purchases and sales of Eastman common stock are generally made on the open market, on behalf of its participants and as directed by the Plan's guidelines.  During 2011, the Trustee purchased 93,800 shares of Eastman common stock for the fund at an average price of $45.86 per share, and sold 307,900 shares of Eastman common stock for the fund at an average price of $46.71 per share.  During 2010, the Trustee purchased 148,600 shares of Eastman common stock for the fund at an average price of $29.41 per share, and sold 381,800 shares at an average price of $35.12 per share.

 

 
1 Shares and share prices have been retrospectively adjusted for all periods presented for the two-for-one stock split on October 3, 2011.  For additional information, see Note 2, "Summary of Accounting Policies", to the Plan's financial statements.

11
 

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements
 
 
At December 31, 2011 and 2010, the following investments represented 5% or greater of ending net assets:

(in thousands)
   
December 31, 2011
     
Shares
 
Fair value
           
Eastman Chemical Company Common Stock, Participant Directed
   
4,110
$
160,520
Eastman Chemical Company Common Stock, Non Participant Directed
   
2,525
 
98,631
Fidelity Contrafund
   
1,639
 
110,461
PIMCO Total Return Institutional Class
   
8,135
 
88,426
           
(in thousands)
   
December 31, 2010
     
Shares1
 
Fair value
           
Eastman Chemical Company Common Stock, Participant Directed
   
10,148
$
96,403
Eastman Chemical Company Common Stock, Non Participant Directed
   
11,730
 
116,198
Fidelity Contrafund
   
1,858
 
125,766
Fidelity Short-term MM fund
   
--
 
94,333
PIMCO Total Return Institutional Class
   
8,388
 
91,010

During 2011 and 2010, the Plan's investments (including investments bought, sold and held during the year) appreciated (depreciated) as follows:

(in thousands)
     
 
   
2011
 
2010
         
Eastman Chemical Company Common Stock, Non Participant Directed
$
(18,476)
$
22,245
Eastman Chemical Company Common Stock, Participant Directed
 
(7,717)
 
39,068
Mutual Funds and Other
 
(27,596)
 
92,244
Total
$
(53,789)
$
153,557


 
 
1 Shares and share prices have been retrospectively adjusted for all periods presented for the two-for-one stock split on October 3, 2011.  For additional information, see Note 2, "Summary of Accounting Policies", to the Plan's financial statements.

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 investment contracts.  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 the 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 zero 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 for the years ended December 31, 2011 and 2010 are as follows:
 
Average yields:
 
2011
 
2010
         
Based on actual earnings
 
1.91 %
 
2.20 %
Based on interest rate credited to participants
 
2.13 %
 
1.94 %

The weighted average crediting interest rate for the Fund was 2.21% and 1.98% at December 31, 2011 and 2010, 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, 2011 and 2010 was as follows:

(in thousands)
 
2011
 
2010
         
Security backed investments:
       
Underlying assets at fair value
$
672,791
$
702,826
Wrap contracts
 
(23,935)
 
(14,577)
Total contract value
$
648,856
$
688,249

 
14

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements
 
 
8.  
FAIR VALUE MEASUREMENT

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 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.

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, 2011 and December 31, 2010:
 
 
(in thousands)
 
Description
 
December 31, 2011
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs
(Level 2)
Cash
$
4,166
$
4,166
$
--
Common stock
 
259,151
 
259,151
 
--
Mutual funds:
           
    Balanced/hybrid
 
46,865
 
46,865
 
--
    Bond funds
 
88,426
 
88,426
 
--
    International
 
56,057
 
56,057
 
--
    Large blend
 
77,096
 
77,096
 
--
    Large growth
 
184,650
 
184,650
 
--
    Mid blend
 
17,024
 
17,024
 
--
    Mid growth
 
26,213
 
26,213
 
--
    Small blend
 
88,656
 
88,656
 
--
    Target date funds
 
105,448
 
105,448
 
--
Managed income fund
 
672,791
 
--
 
672,791
Self-directed brokerage account
 
17,459
 
17,459
 
--
Total
$
1,644,002
$
971,211
$
672,791
             

(in thousands)
 
Description
 
December 31, 2010
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 Significant Other Observable Inputs
(Level 2)
Cash
$
2,062
$
2,062
$
--
Common stock
 
212,601
 
212,601
 
--
Mutual funds:
           
    Balanced/hybrid
 
49,910
 
49,910
 
--
    Bond funds
 
91,010
 
91,010
 
--
    International
 
72,904
 
72,904
 
--
    Large blend
 
83,275
 
83,275
 
--
    Large growth
 
212,326
 
212,326
 
--
    Mid blend
 
19,113
 
19,113
 
--
    Mid growth
 
30,010
 
30,010
 
--
    Money market
 
19
 
19
 
---
    Small blend
 
102,231
 
102,231
 
--
    Target date funds
 
94,308
 
94,308
 
--
Managed income fund
 
702,826
 
--
 
702,826
Self-directed brokerage account
 
17,094
 
17,094
 
--
Total
$
1,689,689
$
986,863
$
702,826
             

There are no redemption restrictions on the mutual fund investments.  They are fully liquid and can be redeemed on a daily basis.  Also, there are no Level 3 investments at December 31, 2011 and 2010.


16
 

 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements
 
 
9.  
OTHER RECEIVABLES AND OTHER LIABILITIES

Other receivables in the amount of $3.6 million and $4.6 million at December 31, 2011 and 2010, respectively, represent interest and dividends receivable, as well as receivables from the sale of investments.  Other liabilities in the amount of $4.5 million and $3.9 million at December 31, 2011 and 2010, 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 2011 and 2010, $9.6 million and $10.2 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 IRS stated that the Plan is in compliance with the applicable requirements of the IRC.  A new determination letter request for the Plan was filed with the IRS in January 2010.  The Plan has received acknowledgement from the IRS, but as of the filing date a new determination letter has not been received.  Although the Plan has been amended since receiving the determination letter, the Plan Administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC and therefore believe that the Plan is qualified and the related trust is tax-exempt.  Therefore, no provision for income taxes has been included in the Plan's financial statements.

USGAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS.  The Plan administrator has analyzed the tax positions by the Plan, and has concluded that as of December 31, 2011 and 2010, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements.  The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.  The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2007.

17
 

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

Reasonable expenses of administering the Plan, unless paid by the Company, shall be paid by the Plan.  For both 2011 and 2010, 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.  Administration fees for notes receivable from participants are deducted quarterly from the accounts of participants with outstanding notes receivable balances.  Origination fees from notes receivable from participants are deducted from the participant's account at the inception of the note receivable.  For 2011 and 2010, 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 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 notes receivable from Plan participants, both of which qualify as parties-in-interest to the Plan and are exempt from prohibited transaction rules.

15.  
RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

(in thousands)
 
December 31,
2011
 
December 31,
2010
         
Investments at fair value
$
1,644,002
$
1,689,689
Notes receivable from participants
 
37,240
 
37,063
Adjustment from fair value to contract value for full benefit-responsive investment contracts
 
(23,935)
 
(14,577)
Total investments per Form 5500
$
1,657,307
$
1,712,175
 
16.  
SUBSEQUENT EVENTS
 
Eastman Chemical Company had previously acquired Eastman Chemical Texas City, Inc., formerly Sterling Chemicals, Inc., which adopted the Sterling Chemicals, Inc. Savings and Investment Plan (the "Sterling Plan") effective June 1, 2010.  The Sterling Plan was originally established effective August 1, 1986 and effective April 2, 2012, is being merged with and into the Eastman Investment and Employee Stock Ownership Plan.  The Sterling Plan had net assets of approximately $45.8 million as of December 31, 2011.

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, 2011
(in thousands)

(a)
(b)
(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, 8,984 shares **  $160,520
*
Eastman Chemical Company
Common stock,  Non Participant directed, 5,333 shares
$65,123
98,631
 
Subtotal - Common Stock
   
259,151
*
Fidelity Management Trust Company
Interest Bearing Cash, Participant directed
3,311
3,311
*
Fidelity Management Trust Company
Interest Bearing Cash, Non Participant directed
855
855
 
Subtotal – Cash
   
4,166
*
Fidelity Fund K
Registered Investment Company, 1,025 shares
**
31,911
*
Fidelity Puritan Fund K
Registered Investment Company, 2,651 shares
**
46,865
*
Fidelity Magellan® Fund K
Registered Investment Company, 770 shares
**
48,457
*
Fidelity Contrafund K
Registered Investment Company, 1,639 shares
**
110,461
*
Fidelity Spartan 500 Index Portfolio
Registered Investment Company, 776 shares
**
34,524
*
Fidelity International Discovery Fund K
Registered Investment Company, 1,192 shares
**
32,812
*
Fidelity Blue Chip Growth Fund K
Registered Investment Company, 474 shares
**
20,140
*
Fidelity Freedom Income Fund
Registered Investment Company, 325 shares
**
3,672
*
Fidelity Freedom K 2000 Fund
Registered Investment Company, 223 shares
**
2,550
*
Fidelity Freedom K 2005 Fund
Registered Investment Company, 78 shares
**
931
*
Fidelity Freedom K 2010 Fund
Registered Investment Company, 759 shares
**
9,186
*
Fidelity Freedom K 2015 Fund
Registered Investment Company, 802 shares
**
9,725
*
Fidelity Freedom K 2020 Fund
Registered Investment Company, 2,145 shares
**
26,667
*
Fidelity Freedom K 2025 Fund
Registered Investment Company, 833 shares
**
10,358
*
Fidelity Freedom K 2030 Fund
Registered Investment Company, 1544 shares
**
19,363
*
Fidelity Freedom K 2035 Fund
Registered Investment Company, 337 shares
**
4,223
*
Fidelity Freedom K 2040 Fund
Registered Investment Company, 797 shares
**
10,024
*
Fidelity Freedom K 2045 Fund
Registered Investment Company, 256 shares
**
3,242
*
Fidelity Freedom K 2050 Fund
Registered Investment Company, 435 shares
**
5,508
*
Fidelity Retirement Money Market
Registered Investment Company, 20 shares
**
0
*
Fidelity Spartan Extended Market Index Portfolio
Registered Investment Company, 480 shares
**
17,024
*
Fidelity Spartan International Index Fund
Registered Investment Company, 280 shares
**
8,332
*
Clipper Fund
Registered Investment Company, 171 shares
**
10,660
*
PIMCO Total Return Institutional Class
Registered Investment Company, 8,135 shares
**
88,426
*
Franklin Small Mid Cap Growth Fund
Registered Investment Company, 750 shares
**
26,213
*
WFA Small Cap Val Inst
Registered Investment Company, 816 shares
**
24,370
*
TCW Select Equity I
Registered Investment Company, 315 shares
**
5,592
*
Neuberger and Berman Genesis Instl Cl
Registered Investment Company, 1,385 shares
**
64,286
*
Templeton Foreign Fund
Registered Investment Company, 2,549 shares
**
14,913
 
Sub-total Mutual Funds
   
690,435


20
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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
**
2,689
 
AT&T Inc
Corporate Bond 2.5% 8/15/15
**
1,913
 
AT&T Inc
Corporate Bond 2.95% 5/15/16
**
727
 
AT&T Inc
Corporate Bond 2.4% 8/15/16
**
686
 
Abbey National
Corporate Bond 3.875% 11/10/14 144A
**
1,445
 
ALABAMA POWER
Corporate Bond 4.85% 12/15/12
**
642
 
ALLYA2010-1 A3
Mortgage backed security 1.45% 5/14
**
550
 
ALLYA 2011-3 A3
Mortgage backed security 0.97% 8/15
**
868
 
ALLYA 10-4 A3 ABS
Mortgage backed security .91% 11/17/14
**
950
 
ALLYA 2010-5 A3
Mortgage backed security 1.11 1/15
**
842
 
ALLYA 2011-1 A3
Mortgage backed security 1.45 1/15
**
794
 
ALLYA 2011-2 A3
Mortgage backed security 1.18% 4/15
**
692
 
ALLYA 2011-5 A2
Mortgage backed security 0.8% 6/14
**
600
 
ALLYA  2011-4 A2
Mortgage backed security  .65% 3/14
**
250
 
American Express CC
Corporate Bond 2.75% 9/15/15
**
1,318
 
American Honda
Corporate Bond 2.375% 3/13 144A
**
306
 
American Honda
Corporate Bond 2.5% 9/21/15 144A
**
667
 
AIG INTL
Corporate Bond 4.25% 9/15/14
**
984
 
Americredit Prime Automobile Receivable APART 2007-1 C
Mortgage backed security 5.43% 2/14
**
141
 
ANHEUSER BUSCH
Corporate Bond 1.5% 7/14/14
**
644
 
BB&T CORP MTN B/E
Corporate Bond 3.2% 3/15/16
**
705
 
BG ENERGY
Corporate Bond 2.875% 10/16 144A
**
668
 
BHP BILLITON FIN
Corporate Bond  1.125% 11/14
**
1,004
 
BP CAPITAL MARKET
Corporate Bond 3.2% 3/11/16
**
730
 
BMWLT 2010-1 A3
Mortgage backed security 1.18% 4/13
**
920
 
BNP Paribas
Corporate Bond 2.125% 12/21/12
**
409
 
BMWLT 2011-1 A3
Mortgage backed security 1.06% 2/14
**
1,011
 
BMWOT 2011-A A2
Mortgage backed security .63% 2/14
**
839
 
BALTIMORE G&E
Corporate Bond 6.125% 7/01/13
**
536
 
Bank of America Commercial Mortgage BACM 2005-3 XP
Interest Only Strip CSTR 7/43
**
18
 
Bank of America Commercial Mortgage BACM 2004-4 A5
Mortgage backed security 4.576% 7/42
**
226
 
Bank America
Corporate Bond 4.5% 4/1/15
**
1,782
 
Bank America FDG
Corporate Bond 3.7% 9/1/15
**
1,843
 
BAAT 2010-2 A3
Mortgage backed security 2.4% 7/14
**
796
 
Bank of New York MTN
Corporate Bond 4.3% 5/15/14
**
330
 
BONY MELLON MTN
Corporate Bond 1.7% 11/24/14
**
669

21
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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 NY MTN
Corporate Bond 2.4% 1/17/17
**
1,001
 
Bank of NOVA SC
Corporate Bond 2.05% 10/07/15
**
3,168
 
BANK TOKYO
Corporate Bond 2.6% 1/22/13 144A
**
256
 
BARCLAYS BANK
Corporate Bond 2.375% 1/13/14
**
1,564
 
Bayview Commercial Asset Trust BAYC 2004-2 A
Mortgage backed security 1ML+43 8/34
**
94
 
Bayview Commercial Asset Trust BAYC 2004-3 M1
Mortgage backed security 1ML+50 1/35
**
27
 
BSCMS 06-PW11 AAB
Mortgage backed security CSTR 3/39
**
544
 
BSCMS 2007-PW17 A2
Mortgage backed security 5.574 6/50
**
174
 
BERK HATH INC
Corporate Bond  2.2% 8/15/16
**
716
 
Commercial Mortgage Pass-Through COMM 2005-C6 XP
Interest Only Strip CSTR 6/44
**
14
 
CIBC
Corporate Bond 1.45% 9/13/13
**
577
 
Capital Auto Receivables Asset CARAT 2007-1 B
Mortgage backed security 5.15% 9/12
**
139
 
CAPITAL ONE FIN
Corporate Bond 2.125% 7/15/14
**
1,512
 
Capital One Multi-Asset Execution Trust COMET 2008-A3 A3
Mortgage backed security 5.05% 2/16
**
422
 
Caterpillar FIN 2.75% 6/24/15
Corporate Bond  2.75% 6/24/15
**
349
 
CATERPILR FIN MTN
Corporate Bond 1.375% 5/14
**
700
 
CATERPILR FIN MTN
Corporate Bond 1.125% 12/14
**
494
 
Chase Issuance Trust CHAIT 2007-A17 A
Mortgage backed security 5.12% 10/14
**
2,396
 
Chase Issuance Trust CHAIT 2008-A4 A4
Mortgage backed security 4.65% 3/15
**
1,700
 
Chase Issuance Trust CHAIT 2011-A2 A2
Mortgage backed security 1ML+9 5/15
**
2,589
 
CFAST 2010-A A3
Mortgage backed security .91% 8/13
**
671
 
Citigroup Inc
Corporate Bond  5.5% 4/11/13
**
1,963
 
Citigroup Inc
Corporate Bond 6.5% 8/13 SNR DT
**
2,077
 
Citigroup Inc
Corporate Bond 4.75% 5/19/15
**
1,031
 
Citigroup Inc
Corporate Bond 3.953% 6/15/16
**
339
 
CCCIT 2009-A5 A5
Mortgage backed security 2.25% 12/14
**
812
 
Citigroup Funding Inc FDIC
Corporate Bond 1.875% 11/15/12
**
2,054
 
Coca-Cola Ent
Corporate Bond 1.125% 11/12/13
**
727
 
Comerica Inc
Corporate Bond 3% 9/16/15
**
77
 
Greenwich Capital Commercial Funding Corp  GCCFC 2006-GG7 A1 CSTR
Mortgage backed security CSTR 7/38
**
6
 
CMMNWLTH BK
Corporate Bond 2.125% 3/17/14 144
**
692

22
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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
 
Commonwealth Bank of Australia MTN
Corporate Bond 2.9 9/17/14 144A
**
3,043
 
COMWLTH EDISON
Corporate Bond 1.625% 1/15/14
**
1,094
 
CON Edison NY
Corporate Bond 5.55 4/1/14
**
712
 
RABOBANK NL UTREC MTN
Corporate Bond 1.85 1/14
**
2,743
 
Covidien Intl
Corporate Bond 1.875% 6/15/13
**
626
 
CS First Boston Mortgage Security CSFB 2003-C4 A3
Mortgage backed security CSTR 8/36
**
20
 
CS First Boston Mortgage Security CSFB 2003-C4 A4
Mortgage backed security 5.137 8/36
**
679
 
CS First Boston Mortgage Security CSFB 2004-C1 A3
Mortgage backed security 4.321% 1/37
**
69
 
Credit Suisse Mortgage Capital CSMC 2007-C3 A2
Mortgage backed security CSTR 6/39
**
330
 
CS First Boston Mortgage Security CSFB 2005-C4 ASP
Interest Only Strip CSTR 8/38
**
32
 
Credit Suisse NY MTN
Corporate Bond 3.5% 3/23/15
**
600
 
CREDIT SUISSE NY
Corporate Bond 2.2% 1/14/14
**
3,080
 
DBS Bank Ltd
Corporate Bond 5.125/VAR 5/17 144A
**
1,697
 
DBUBS 2011-LC3A A1
Mortgage backed security  2.238 8/44
**
235
 
Daimler Chrysler
Corporate Bond 6.5% 11/15/13
**
928
 
DAIMLER FIN
Corporate Bond 1.875% 9/15/14144A
**
660
 
DANSKE BANK
Corporate Bond 3.875% 4/14/16 144
**
974
 
Deere J Cap Mtn
Corporate Bond 1.875% 6/17/13
**
632
 
John Deere Cap
Corporate Bond 2.95% 3/9/15
**
316
 
Deutsche BK AG 2.375% 1/11/13
Corporate Bond 2.375% 1/11/13
**
954
 
Diageo Capital GLB
Corporate Bond 5.2 1/30/13
**
679
 
Dominion Resources
Corporate Bond 2.25% 9/1/15
**
434
 
DOMINION RESOURCE
Corporate Bond 1.8% 3/15/14
**
258
 
DUKE ENERGY CAR
Corporate Bond 1.75% 12/15/16
**
224
 
EDP Finance BV
Corporate Bond 5.375 11/12 144A
**
748
 
ERP Operating LP
ERP OPERAT LP 5.5% 10/1/12
**
342
 
Enel Finance International
Corporate Bond 5.7% 1/15/13 144A
**
697
 
EXPORT DEV CANADA
Corporate Bond 1.5% 5/15/14
**
471
 
Fidelity
FID INST CASH PORT: MM FUND CLASS I SHS F/N/A
**
40,159
 
Freddie Mac
FHLG 15YR  5.00%  5/14 #E76434
**
7
 
Freddie Mac
FHLG 15YR  5.00%  6/14 #E77224
**
18
 
Freddie Mac
FHLM ARM  4.889%  3/33 #847126
**
5
 
Freddie Mac
FHLG 15YR  4.50%  8/18 #E98688
**
702
 
Freddie Mac
FHLG 15YR  4.50%  9/18 #E99205
**
220
 
Freddie Mac
FHLG 15YR  4.50% 10/18 #E99833
**
318
 
Freddie Mac
FHLM ARM   3.53%  4/40 #1B4657
**
348
 
Freddie Mac
FHLM ARM   3.58%  4/40 #1B4702
**
305
 
 
23
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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
FHLM ARM   4.68%  1/36 #847584
**
65
 
Freddie Mac
FHLM ARM   3.88%  1/35 #848084
**
51
 
Freddie Mac
FHLM ARM  5.084%  8/35 #1J0005
**
60
 
Freddie Mac
FHLG 15YR  5.00%  6/24 #G13598
**
1,102
 
Freddie Mac
FHLM ARM  4.941% 11/35 #1J1228
**
192
 
Freddie Mac
FHLG 10YR  3.00%  8/21 #J16393
**
788
 
Freddie Mac
FHLG 10YR  3.00%  8/21 #J16442
**
854
 
Freddie Mac
FHLM ARM   5.78% 10/35 #1N0063
**
28
 
Freddie Mac
FHLM ARM   3.21%  7/41 #1B8477
**
436
 
Freddie Mac
FHLM ARM   2.98%  8/41 #1B8533
**
549
 
Freddie Mac
FHLM ARM   2.99%  8/41 #1B8556
**
262
 
Freddie Mac
FHLM ARM   3.07%  9/41 #1B8608
**
339
 
Freddie Mac
FHLG 15YR  4.50% 11/18 #B10931
**
186
 
Freddie Mac
FHLM ARM  4.199%  8/36 #848185
**
245
 
Freddie Mac
FHLB .375% 11/27/13
**
13,217
 
Fannie Mae
FNMA 0.875% 8/28/14
**
3,845
 
Fannie Mae
FNMA .625% 10/30/14
**
5,682
 
Fannie Mae
FNMA 0.75% 12/19/14
**
1,796
 
Fannie Mae
FNMA 4.625% 10/15/13
**
729
 
FHR 3943 EF 1ML+25 2/26
FHR 3943 EF 1ML+25 2/26
**
853
 
Freddie Mac
FHLMC 1.75% 9/10/15
**
666
 
Freddie Mac
FHLMC 1% 7/30/14
**
6,189
 
Freddie Mac
FHLMC 1% 8/27/14
**
28,283
 
Freddie Mac
FHLMC 0.375% 10/30/13
**
22,963
 
Freddie Mac
FHLMC 0.75% 11/25/14
**
4,725
 
Freddie Mac
FHLMC .625% 12/29/14
**
2,116
 
Fannie Mae
FNMA 15YR  7.00%  1/13 #251428
**
0
 
Fannie Mae
FNMA 15YR  6.50% 11/13 #323755
**
32
 
Fannie Mae
FNMA 15YR  7.00%  8/14 #323877
**
10
 
Fannie Mae
FNMA ARM   3.01%  8/41 #AI4358
**
283
 
Fannie Mae
FNMA ARM   3.37%  9/41 #AI8935
**
282
 
Fannie Mae
FNMA ARM   2.74%  8/41 #AH5259
**
897
 
Fannie Mae
FNMA 10YR  3%  9/21 #AL0576
**
1,847
 
Fannie Mae
FNMA 10YR  3%  9/21 #AL0579
**
2,170
 
Fannie Mae
FNMA 15YR  6.50%  9/14 #514373
**
0
 
Fannie Mae
FNMA 15YR  6.50% 10/13 #535234
**
54
 
Fannie Mae
FNMA 15YR  7.00%  6/16 #545122
**
5
 
Fannie Mae
FNMA 15YR  7.00%  2/16 #569915
**
14
 
Fannie Mae
FNMA 15YR  6.00% 10/16 #589129
**
13
 
Fannie Mae
FNMA 15YR  7.00%  8/16 #599602
**
51
 
Fannie Mae
FNMA 15YR  7.00%  4/17 #636135
**
90
 
Fannie Mae
FNMA 15YR  6.50%  4/17 #637244
**
67
 
Fannie Mae
FNMA 15YR  6.00% 11/17 #671380
**
50
 
Fannie Mae
FNMA 15YR  6.00% 11/17 #672789
**
17
 
Fannie Mae
FNMA 15YR  6.00% 12/17 #673965
**
34
 
Fannie Mae
FNR 2004-3 HA 4% 7/17
**
86
 
Fannie Mae
FNR 2004-15 AB 4% 9/17
**
56
 
Fannie Mae
FHR 2866 XE 4 12/18
**
597
 
Fannie Mae
FHR 2915 DC 4.5% 3/19
**
307


24
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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
FNR 2008-95 AD 4.5% 12/23
**
1,136
 
Fannie Mae
FHR 3540 CD 2% 6/14
**
1,388
 
Fannie Mae
FHR 3560 LA 2% 8/14
**
322
 
Fannie Mae
FHR 3573 LC 1.85% 8/14
**
585
 
Fannie Mae
FNR 2010-123 DL 3.5% 11/25
**
482
 
Fannie Mae
FNR 2010-135 DE 2.25% 4/24
**
921
 
Fannie Mae
FNR 2010-143 B 3.5% 12/25
**
760
 
Fannie Mae
FHR 3659 EJ 3% 6/18
**
1,254
 
Fannie Mae
FNMA 15YR  6.00%  2/18 #684153
**
7
 
Fannie Mae
FNMA 15YR  7.00%  2/18 #693327
**
156
 
Fannie Mae
FNMA ARM 4.801% 2/33 #695019
**
28
 
Fannie Mae
FNMA ARM 3.984% 5/33 #703915
**
7
 
Fannie Mae
FNMA 15YR  4.50% 11/18 #725857
**
146
 
Fannie Mae
FNMA 15YR  4.00%  8/18 #727438
**
397
 
Fannie Mae
FNMA 15YR  4.50%  8/18 #730721
**
99
 
Fannie Mae
FNMA ARM   4.68% 11/34 #735011
**
165
 
Fannie Mae
FNMA 15YR  4.50%  6/19 #745278
**
363
 
Fannie Mae
FNMA 15YR  4.50%  7/20 #745874
**
192
 
Fannie Mae
FNMA ARM 3.753% 10/33 #746320
**
37
 
Fannie Mae
FNMA ARM 4.358% 10/33 #754672
**
13
 
Fannie Mae
FNMA ARM 3.752% 10/33 #755148
**
25
 
Fannie Mae
FNMA ARM 5.05% 7/34 #801635
**
16
 
Fannie Mae
FNMA ARM   4.53% 12/34 #802852
**
189
 
Fannie Mae
FNMA ARM 4.293% 3/35 #815586
**
15
 
Fannie Mae
FNMA ARM   5.12%  6/35 #823810
**
58
 
Fannie Mae
FNMA ARM   4.58%  7/35 #826362
**
335
 
Fannie Mae
FNMA ARM  5.344%  7/35 #834917
**
12
 
Fannie Mae
FNMA ARM  4.198% 11/34 #841068
**
1,091
 
Fannie Mae
FNMA ARM  5.349% 12/34 #843013
**
26
 
Fannie Mae
FNMA ARM   5.280% 3/35 #843014
**
17
 
Fannie Mae
FNMA ARM  4.893% 10/35 #847787
**
43
 
Fannie Mae
FNMA ARM   6.25%  6/36 #886983
**
19
 
Fannie Mae
FNMA 15YR  4.50%  7/20 #888653
**
169
 
Fannie Mae
FNMA ARM   4.21%  5/35 #889946
**
292
 
Fannie Mae
FNMA ARM   4.30%  2/35 #995017
**
345
 
Fannie Mae
FNMA ARM  4.898%  5/35 #995272
**
29
 
Fannie Mae
FNMA ARM  4.58%  7/35 #995273
**
126
 
Fannie Mae
FNMA ARM 4.53% 10/35 #995414
**
279
 
Fannie Mae
FNMA ARM 4.55% 10/35 #995415
**
831
 
Fannie Mae
FNMA ARM 4.512% 12/36 #995606
**
285
 
Fannie Mae
FNMA ARM 5.075% 7/34 #995609
**
129
 
Fannie Mae
FNMA ARM   3.20%  1/40 #AC0599
**
525
 
Fannie Mae
FNMA 10YR  3.00%  7/21 #MA0803
**
1,043
 
Fannie Mae
FNMA 10YR  3.00%   #MA0833
**
1,571
 
Fannie Mae
FNMA 10YR  3.00%   #MA0865
**
2,255

25
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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 10YR  3.00% 10/21 #MA0909
**
1,233
 
Fannie Mae
FNMA 10YR  3.00%   #MA3892
**
1,680
 
Fannie Mae
FNMA ARM   4.285%  7/33#AD0066
**
500
 
Fannie Mae
FNMA 15YR  4.50%  8/24 #AD0117
**
2,953
 
Fannie Mae
FNMA ARM   2.94% 8/35  #AD0710
**
56
 
Fannie Mae
FNMA ARM   3.47%  3/40 #AD0820
**
479
 
Fannie Mae
FNMA ARM   3.60%  3/40 #AD1555
**
574
 
Fannie Mae
FNMA ARM   3.69%  5/40 #AE0064
**
1
 
Fannie Mae
FNMA ARM   3.79%  6/40 #AE0065
**
301
 
Fannie Mae
FNMA 15YR  3.50% 12/25 #AE0368
**
10,863
 
FIFTH THIRD BAN
Corporate Bond 3.625% 1/25/16
**
398
 
Ford Credit Auto Owner Trust FORDO 2009-B A3
Mortgage backed security 2.79 8/13 TALF
**
186
 
Ford Credit Auto Owner Trust FORDO 2009-C A4
Mortgage backed security 4.43% 11/14
**
520
 
Ford Credit Auto Owner Trust FORDO 2009-D A3
Mortgage backed security 2.17% 10/13
**
111
 
Ford Credit Auto Owner Trust FORDO 2009-E A3
Mortgage backed security 1.51% 1/14
**
352
 
Ford Credit Auto Owner Trust FORDO 2010-B A3
Mortgage backed security 0.98% 10/14
**
540
 
FORDL 2011-A A3
Mortgage backed security 1% 7/14
**
1,210
 
FORDO 2011-B A3
Mortgage backed security .84% 6/15
**
570
 
France Tele MTN
Corporate Bond 4.375% 7/14 DT
**
784
 
FRANCE TELECOM
Corporate Bond 2.125% 9/16/15
**
214
 
Franklin Auto Trust FRNK 2007-1 B
Mortgage backed security 5.13% 2/15
**
359
 
GECMC 2007-C1 XP
Interest Only Strip CSTR 12/49
**
70
 
GMACC 2004-C2 A2
Mortgage backed security CSTR 8/38
**
140
 
GMACC 2004-C2 A4
Mortgage backed security 5.301% 8/38
**
674
 
GE Capital Credit Card Master GMACC 2005-C1 X2
Interest Only Strip CSTR CSTR 5/43
**
10
 
GMACC 2003-C2 A2
Mortgage backed security CSTR 5/40
**
360
 
General Motors Acceptance Corporation INC FDIC
Corporate Bond 1.75% 10/30/12
**
1,554
 
GSMS 2011-GC5 A1
Mortgage backed security CSTR 8/44
**
569
 
GSMS 04-GG2 A6
Mortgage backed security CSTR 8/38
**
753
 
GS Mortgage Securities Corporation GSMS 2005-GG4 A3
Mortgage backed security 4.607 7/39
**
413
 
GS Mortgage Securities Corporation GSMS 2006-GG6 A2
Mortgage backed security 5.506% 4/38
**
204
 
GS Mortgage Securities Corporation GSMS 2006-GG8 A2
Mortgage backed security 5.479 11/39
**
706
 
GCO Slims Trust GCOSL 2006-1A NOTE
Mortgage backed security 5.72% 3/22
**
192
 
GEN ELEC CAP MTN
Corporate Bond 5.4 9/20/13
**
2,526
 
General Electric Capital Corp MTN
Corporate Bond 3.5% 6/29/15
**
511
 
General Electric MTN
Corporate Bond 1.875% 9/13
**
1,821
 
General Electric Capital Corp
Corporate Bond 2.25% 11/9/15
**
522
 
GE ELEC CAP CORP
Corporate Bond 2.1% 1/07/14
**
1,903


 26
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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 ELEC
Corporate Bond  2.95% 5/09/16
**
158
 
GENERAL ELEC MTN
Corporate Bond 3.35% 10/17/16
**
671
 
General Electric Capital Corp FDIC MTN
Corporate Bond 2.625 12/28/12
**
1,792
 
General Electric Capital Corp FDIC GMTN
Corporate Bond 2% 9/28/12
**
886
 
Goldman Sachs MTN
Corporate Bond 3.7% 8/1/15
**
963
 
GOLDMAN SAC GRP
Corporate Bond 3.625% 2/07/16
**
1,344
 
GCCFC 2005-GG3 A2
Mortgage backed security CSTR 8/42
**
282
 
HEWLETT-PACKARD
Corporate Bond  2.625% 12/9/14
**
667
 
HAROT 2011-3 A2
Mortgage backed security 1 4/14
**
770
 
Honda Auto Receivables Owner Trust HAROT 2010-1 A4
Mortgage backed security 1.98% 5/23/16
**
253
 
Honda Auto Receivables Owner Trust HAROT 2010-2 A3
Mortgage backed security 1.34% 3/14
**
552
 
Honda Auto Receivables Owner Trust HAROT 2009-3 A3
Mortgage backed security 2.31% 5/13
**
120
 
Honda Auto Receivables Owner Trust HAROT 2010-3 A3
Mortgage backed security .7% 4/14
**
1,340
 
HAROT 2011-1 A4
Mortgage backed security  1.8% 4/17
**
366
 
HAROT 2011-2 A3
Mortgage backed security  0.94% 3/15
**
892
 
HSBC BANK
Corporate Bond  3.1% 5/24/16 144A
**
1,395
 
HART 2011-A A3
Mortgage backed security  1.44 4/15
**
462
 
HYUNDAI 2 11-C ABS
Mortgage backed security  .57% 7/15/1
**
779
 
Hyundai Auto Receivables Trust HART 2009-A A3
Mortgage backed security 2.03% 8/13
**
137
 
HART 09-A A4
Mortgage backed security  3.15% 3/16
**
124
 
ING BANK MTN
Corporate Bond 2.65% 1/13 144A
**
959
 
IBM CORP
Corporate Bond  1.95% 7/22/16
**
964
 
JP Morgan Chase
Synthetic GIC – 2.411%
**
249
 
JPMorgan Chase Company MTN
Corporate Bond 4.65% 6/14
**
2,725
 
JPMC CO MTN
Corporate Bond 3.7% 1/20/15
**
495
 
JPMorgan Chase Company
Corporate Bond 3.4% 6/24/15
**
1,010
 
JPMORGAN CHASE
Corporate Bond 3.15% 7/05/16
**
933
 
JPMCC 03-CB7 A4
Mortgage backed security CSTR 1/38
**
282
 
JPMCC 2003-C1 A2
Mortgage backed security 4.985 1/37
**
557
 
JP Morgan Chase Commercial Mortgage JPMCC 2005-LDP2 A3
Mortgage backed security 4.697 7/42
**
604
 
JPMCC 2005-LDP5 A2
Mortgage backed security 5.198 12/44
**
627
 
JP Morgan Chase Commercial Mortgage JPMCC 2006-LDP7 A2
Mortgage backed security CSTR 4/45
**
17
 
JPMCC 2007-LDPX A2S
Mortgage backed security 5.305 1/49
**
245
 
JPMCC 2007-LD11 A2
Mortgage backed security CSTR 6/49
**
637
 
LBUBS 2003-C3 A4
Mortgage backed security 4.166 5/32
**
216
 
LBUBS 2004-C8
Mortgage backed security 4.799% 12/29
**
692
 
LB-UBS Commercial Mortgage Trust LBUBS 2004-C2 A3
Mortgage backed security 3.973% 3/29
**
309
 
LB-UBS Commercial Mortgage Trust LBUBS 2005-C1 AAB
Mortgage backed security CSTR 2/30
**
367


27
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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
 
LB-UBS Commercial Mortgage Trust LBUBS 2005-C5 XCP
Interest Only Strip CSTR 9/40
**
86
 
LB-UBS Commercial Mortgage Trust LBUBS 2005-C7 XCP
Interest Only Strip CSTR 11/40
**
44
 
LBUBS 2007-C6 A2
Mortgage backed security 5.845 7/40
**
390
 
Manufacturers & Traders Trust Co
Corporate Bond 3.85/VAR 4/1/13
**
1,492
 
Marriott Vacation Club Owner Trust MVCOT 2005-2 A
Mortgage backed security 4.6% 10/27
**
99
 
Marriott Vacation Club Owner Trust MVCOT 2006-2A A
Mortgage backed security 5.417% 10/28
**
83
 
Marriott Vacation Club Owner Trust MVCOT 2006-2A B
Mortgage backed security 5.467% 10/28
**
25
 
Marriott Vacation Club Owner Trust MVCOT 2006-2A C
Mortgage backed security 5.766% 10/28
**
11
 
MASSMUTUAL GL
Corporate Bond 3.625% 7/12 144A
**
413
 
MASSMUTUAL GLBL FRN
Corporate Bond 1/14 144A
**
1,010
 
MBART 2011-1 A3
Mortgage backed security 0.85% 3/15
**
841
 
Mercedes-Benz Auto Receivables Trust MBART 2009-1 A3
Mortgage backed security 1% 1/15/14
**
245
 
Merrill Lynch & Co
Corporate Bond 5.45% 7/15/14
**
1,193
 
Merrill Lynch Mortgage Trust MLMT 2004-KEY2 A2
Mortgage backed security 4.166% 8/39
**
258
 
Merrill Lynch Mortgage Trust MLMT 2005-MKB2 XP
Interest Only Strip CSTR 9/42
**
6
 
METROPOLITAN MTN
Corporate Bond 2.5 1/13 144A
**
1,165
 
MET LIFE GLBL
Corporate Bond 2.5 9/29/15 144A
**
1,903
 
Monumental Life Insurance Co
Synthetic GIC – 2.351%
**
249
 
Monumental Global
Corporate Bond 5.5% 4/13 144A
**
230
 
MSC 03-IQ4 A2
Mortgage backed security 4.07 5/40
**
240
 
Morgan Stanley Capital MSC 2004-HQ4 X2
Interest Only Strip CSTR 4/40
**
12
 
MSC 03-T11 A4
Mortgage backed security 5.15 6/41
**
303
 
MORGAN STANLEY
Corporate Bond 2.875% 1/25/14
**
1,504
 
MORGAN STANLEY
Corporate Bond 2.875% 7/28/14
**
767
 
MORGAN STANLEY
Corporate Bond 6% 5/13/14
**
1,272
 
MORGAN STANLEY
Corporate Bond 4.1% 1/26/15
**
740
 
MORGAN STANLEY
Corporate Bond 3.45% 11/2/15
**
170
 
MORGAN STANLEY
Corporate Bond 3.8% 4/29/16
**
603
 
NCUA GTD NTS MA 1.4% 6/12/15
NCUA GTD NTS MA 1.4% 6/12/15
**
943
 
National Australia Bank
Corporate Bond 2.35 11/16/12 144A
**
1,476
 
NY Life
Corporate Bond 2.25% 12/14/12 144A
**
933


28
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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
 
NY Life Global
Corporate Bond 4.65% 5/9/13 144A
**
1,076
 
Nissan Auto Lease Trust NALT 2010-B A3
Mortgage backed security 1% 12/15/13
**
792
 
NALT 2010-B A4
Mortgage backed security 1.27% 10/16
**
322
 
NALT 2 11-A ABS
Mortgage backed security 1.04% 8/15/14
**
1,061
 
NALT 2011-B A3
Mortgage backed security 0.92% 2/15
**
487
 
NAROT 2010-A A4
Mortgage backed security 1.31% 9/16
**
453
 
NAROT 2011-A A3
Mortgage backed security 1.18% 2/15
**
583
 
Natixis
Synthetic GIC – 2.371%
**
249
 
Nordea Bank AG
Corporate Bond 1.75 10/4/13 144A
**
991
 
Northstar Education Finance NEF 2005-1 A5
Mortgage backed security 4.74% 10/45
**
490
 
Peco Energy
Corporate Bond 5.6% 10/15/13
**
678
 
PG&E CORP
Corporate Bond 5.75% 4/01/14
**
364
 
PNC Funding MTN
Corporate Bond 3.625% 2/8/15
**
737
 
PNC Funding Corp MTN
Corporate Bond 3% 5/19/14
**
897
 
Pacific Gas & Electric
Corporate Bond 6.25% 12/13
**
937
 
PEPSICO INC
Corporate Bond 7.9% 11/01/18
**
889
 
Philip Morris
Corporate Bond 4.875% 5/16/13
**
276
 
Proctor & Gamble
Corporate Bond 1.8% 11/15/15
**
694
 
Public Service Electric & Gas Co
Corporate Bond 2.7% 5/01/15
**
535
 
Royal Bank of Canada
Corporate Bond 1.125 1/15/14
**
928
 
ROYAL BK CANADA
Corporate Bond 2.3% 7/20/16
**
354
 
ROYAL BK CANADA
Corporate Bond 1.45% 10/30/14
**
629
 
ROYAL BK SCOT
Corporate Bond 4.875 8/14 144A
**
996
 
Royal Bank of Scotland
Corporate Bond 1.5% 3/30/12 144A
**
1,585
 
SBC Communications Glbl
Corporate Bond 5.1 9/15/14
**
345
 
SLM Student Loan Trust SLMA 2004-A B
Mortgage backed security 3ML+58 6/33
**
110
 
SVO VOI Mortgage Corp SVOVM 2005-A A
Mortgage backed security A 5.25% 2/21
**
109
 
SANOFI
Corporate Bond 1.2% 9/30/14
**
450
 
SANTANDER US
Corporate Bond 2.485% 1/13 144A
**
886
 
SCHLUMBERGER
Corporate Bond 1.95 9/14/16 144A
**
672
 
SEMPRA ENERGY
Corporate Bond 2% 3/15/14
**
693
 
SHELL INTL MTN
Corporate Bond 1.875 3/25/13
**
1,321
 
Simon Property Group LP
Corporate Bond 5.3% 5/30/13
**
547
 
SIMON PROPERTY
Corporate Bond 2.8% 1/30/17
**
154
 
SOUTHERN CO
Corporate Bond 4.15% 5/14
**
222
 
State Street Bank & Trading Co. Boston
Synthetic GIC – 2.361%
**
249
 
STATE STREET
Corporate Bond 2.875% 3/07/16
**
1,184
 
Lahman Large Loan LLL 1997-LLI D
Mortgage backed security 7.15 10/34
**
120
 
SUMITOMO BK
Corporate Bond 1.95% 1/14/14 144A
**
1,399
 
SVENSKA MTN
Corporate Bond 2.875 9/14/12 144A
**
2,199
 
TARGET CORP
Corporate Bond 1.125% 7/18/14
**
337
 
Telefonica Emisiones
Corporate Bond 3.729% 4/27/15
**
908
 
TORONTO DOM BK
Corporate Bond 2.5% 7/14/16
**
1,443
 
TORONTO DOMINI
Corporate Bond 2.375% 10/19/16
**
665


29
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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
 
TOTAL CAP CDA
Corporate Bond  1.625% 1/28/14
**
686
 
TAOT 2010-A A3
Mortgage backed security 1.27% 12/13
**
216
 
TAOT 2010-B A3
Mortgage backed security 1.04% 2/14
**
330
 
Transcapit
Corporate Bond 5.67% 3/5/14 144A
**
1,109
 
USAA CAPITAL
Corporate Bond  1.05%  9/14 144A
**
761
 
USAA CAP CO
Corporate Bond  2.25% 12/13/16 144
**
664
 
USAA Auto Owner Trust USAOT 2009-1 A4
Mortgage backed security 4.77 9/14
**
429
 
USAA Auto Owner Trust USAOT 2009-2 A3
Mortgage backed security 1.54% 02/14
**
259
 
UNCREDIT LUX
Corporate Bond 5.584/VAR 1/13/17
**
1,130
 
UNION BK NA
Corporate Bond 3% 6/6/16
**
1,030
 
US BANCORP
Corporate Bond 3.15% 3/4/15
**
322
 
US BANK CORP MTN
Corporate Bond 2.2% 11/15/16
**
902
 
US Treasury Note/Bond
USTN 4.25% 8/15/15
**
6,793
 
US Treasury Note/Bond
USTN 2.375% 9/30/14
**
585
 
US Treasury Note/Bond
USTN 2.5% 3/31/15
**
57,127
 
US Treasury Note/Bond
USTN 2.5% 4/30/15
**
53,311
 
US Treasury Note/Bond
USTN 2.125% 5/31/15
**
1,991
 
US Treasury Note/Bond
USTN 1.875% 6/30/15
**
30,616
 
US Treasury Note/Bond
USTN .5% 5/31/13
**
2
 
US Treasury Note/Bond
USTN .375% 6/30/13
**
25,774
 
US Treasury Note/Bond
USTN 1% 9/30/16
**
43,381
 
US Treasury Note/Bond
USTN .375% 11/15/14
**
10,058
 
US Treasury Note/Bond
USTN .875% 11/30/16
**
49,066
 
US Treasury Note/Bond
USTN .875% 12/31/16
**
5,030
 
UNITEDHEALTH GRP
Corporate Bond  1.875% 11/16
**
501
 
VF CORP FRN
Corporate Bond  3ML+75 8/23/13
**
409
 
Verizon Communications Inc
Corporate Bond 5.25% 4/15/13
**
784
 
VERIZON COM
Corporate Bond  1.95% 3/28/14 144A
**
1,057
 
VERIZON COM
Corporate Bond  2% 11/1/16
**
1,348
 
VERIZON WIRELESS
Corporate Bond 5.25% 2/1/12
**
589
 
VERIZON WIRELESS
Corporate Bond 5.55% 2/1/14
**
1,487
 
Vodafone Group PLC
Corporate Bond 4.15% 6/10/14
**
359
 
VALET 2011-1 A3
Mortgage backed security 1.22%  6/15
**
1,498
 
Volkswagen Auto Lease Trust VWALT 2010-A A3
Mortgage backed security 0.99% 11/13
**
1,352
 
VWALT 2010-A A4
Mortgage backed security 1.18 10/15
**
201
 
VWALT 2011-A A2
Mortgage backed security 1% 2/14
**
470
 
VOLKSWAGEN
Corporate Bond  1.875% 4/1/14 144A
**
530
 
WFRBS 2011-C5 A1
Mortgage backed security 1.456 11/44
**
226
 
WBCMT 2003-C9 A4
Mortgage backed security 5.012 12/35
**
878
 
Wachovia Bank Commercial Mortgage Trust WBCMT 2004-C11 A3
Mortgage backed security 4.719 1/41
**
47
 
Wachovia Bank Commercial Mortgage Trust WBCMT 2005-C18 XP
Interest Only Strip CSTR 4/42
**
9
 
Wachovia Bank Commercial Mortgage WBCMT 2007-C30 XP
Interest Only Strip CSTR 12/43
**
179
 
Wachovia Bank Commercial Mortgage WBCMT 2007-C31A A2
Mortgage backed security 5.421% 4/47
**
679
 
Wal-Mart Stores MTN
Corporate Bond 3.2% 5/14
**
788


30
 

 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2011
(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
 
Wal-Mart Stores
Corporate Bond 2.25% 7/08/15
**
804
 
WAL MART STORES
Corporate Bond 2.8% 4/15/16
**
1,118
 
Wells Fargo
Corporate Bond 3.75% 10/1/14
**
408