EASTMAN CHEMICAL COEMN
EASTMAN CHEMICAL CO Commitments Disclosure
LEASES AND OTHER COMMITMENTS
Leases
There are two types of leases: financing and operating. Both types of leases have associated right-to-use assets and lease liabilities that are valued at the net present value of the lease payments and recognized on the Consolidated Statements of Financial Position. The discount rate used in the measurement of a right-to-use asset and lease liability is the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, the collateralized incremental borrowing rate is used. The Company elected the accounting policy not to apply the recognition and measurement requirements to short-term leases with a term of 12 months or less and do not include a bargain purchase option.
The Company has operating leases, as a lessee, with customary terms that do not include: significant variable lease payments; significant reasonably certain extensions or options required to be included in the lease term; restrictions; or other covenants for real property, rolling stock, and machinery and equipment. Real property leases primarily consist of office space and rolling stock leases primarily for railcars and fleet vehicles. At December 31, 2025 and 2024, right-to-use assets for operating leases of $ and $, respectively, are included as a part of "Other noncurrent assets" on the Consolidated Statements of Financial Position. At both December 31, 2025 and 2024, the operating right-to-use assets include $3 million of assets previously classified as lease intangibles and $6 million and $7 million of prepaid lease assets, respectively. Operating lease liabilities are included as a part of "Payables and other current liabilities" and "Other long-term liabilities" on the Consolidated Statements of Financial Position. As of December 31, 2025, financing leases were not material to the Company's financial statements.
As of December 31, 2025, reconciliation of lease payments and operating lease liabilities is provided below:
| (Dollars in millions) | Operating lease liabilities | |||||||
| 2026 | $ | 56 | ||||||
| 2027 | 44 | |||||||
| 2028 | 33 | |||||||
| 2029 | 21 | |||||||
| 2030 | 12 | |||||||
| 2031 and beyond | 22 | |||||||
| Total lease payments | 188 | |||||||
| Less: amounts of lease payments representing interest | 15 | |||||||
| Present value of future lease payments | ||||||||
| Less: current obligations under leases | ||||||||
| Long-term lease obligations | $ | |||||||
The Company has operating leases, primarily leases for railcars, with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease that will expire beginning first quarter 2026. Residual guarantee payments that become probable and estimable are recognized as rent expense over the remaining life of the applicable lease. Management's current expectation is that the likelihood of material residual guarantee payments is remote.
Lease costs during the period and other information is provided below:
| (Dollars in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Lease costs: | ||||||||||||||||||||
| Operating lease costs | $ | 90 | $ | 83 | $ | 86 | ||||||||||||||
| Short-term lease costs | 36 | 31 | 23 | |||||||||||||||||
| Sublease income | (9) | (8) | (4) | |||||||||||||||||
| Total | $ | 117 | $ | 106 | $ | 105 | ||||||||||||||
| December 31, | ||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Other operating lease information: | ||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | 88 | $ | 82 | $ | 85 | ||||||||||||||
| Right-to-use assets obtained in exchange for new lease liabilities | $ | 48 | $ | 32 | $ | 28 | ||||||||||||||
| Weighted-average remaining lease term, in years | 4 | 6 | 6 | |||||||||||||||||
| Weighted-average discount rate | 3.0 | % | 3.0 | % | 3.0 | % | ||||||||||||||
Debt and Other Commitments
Eastman's obligations are summarized in the following table.
| (Dollars in millions) | Payments Due for | |||||||||||||||||||||||||||||||||||||||||||
| Period | Debt Securities | Credit Facilities and Other | Interest Payable | Purchase Obligations | Operating Leases | Other Liabilities | Total | |||||||||||||||||||||||||||||||||||||
| 2026 | $ | 586 | $ | — | $ | 205 | $ | 265 | $ | 56 | $ | 241 | $ | 1,353 | ||||||||||||||||||||||||||||||
| 2027 | 196 | 150 | 183 | 245 | 44 | 83 | 901 | |||||||||||||||||||||||||||||||||||||
| 2028 | 497 | — | 177 | 202 | 33 | 74 | 983 | |||||||||||||||||||||||||||||||||||||
| 2029 | 743 | — | 162 | 129 | 21 | 75 | 1,130 | |||||||||||||||||||||||||||||||||||||
| 2030 | — | — | 129 | 109 | 12 | 75 | 325 | |||||||||||||||||||||||||||||||||||||
| 2031 and beyond | 2,615 | — | 1,068 | 884 | 22 | 741 | 5,330 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 4,637 | $ | 150 | $ | 1,924 | $ | 1,834 | $ | 188 | $ | 1,289 | $ | 10,022 | ||||||||||||||||||||||||||||||
Estimated future payments of debt securities assumes the repayment of principal upon stated maturity, and actual amounts and the timing of such payments may differ materially due to repayment or other changes in the terms of such debt prior to maturity.
Eastman had various purchase obligations at December 31, 2025 totaling $1.8 billion over a period of approximately 25 years for materials, supplies, and energy incident to the ordinary conduct of business.
Amounts in other liabilities represent the current estimated cash payments required to be made by the Company primarily for pension and other postretirement benefits, accrued compensation benefits, environmental loss contingency estimates, uncertain tax liabilities, and commodity and foreign exchange hedging in the periods indicated. Due to uncertainties in the timing of the effective settlement of tax positions with respect to taxing authorities, management is unable to determine the timing of payments related to uncertain tax liabilities and these amounts are included in the "2031 and beyond" line item.
The amount and timing of pension and other postretirement benefit payments included in other liabilities is dependent upon interest rates, health care cost trends, actual returns on plan assets, retirement and attrition rates of employees, continuation or modification of the benefit plans, and other factors. Such factors can significantly impact the amount and timing of any future contributions by the Company. Excess contributions are periodically made by management in order to keep the plans' funded status above 80 percent under the funding provisions of the Pension Protection Act to avoid partial benefit restrictions on accelerated forms of payment. The Company's U.S. defined benefit pension plans are not currently under any benefit restrictions. See Note 11, "Retirement Plans", for more information regarding pension and other postretirement benefit obligations.
The resolution of uncertainties related to environmental matters included in other liabilities may have a material adverse effect on the Company's consolidated results of operations in the period recognized, however, because of the availability of legal defenses, the Company's preliminary assessment of actions that may be required, and, if applicable, the expected sharing of costs, management does not believe that the Company's liability for these environmental matters, individually or in the aggregate, will be material to the Company's consolidated financial position, results of operations, or cash flows. See "Environmental Costs" in Note 1, "Significant Accounting Policies", and see Note 13, "Environmental Matters and Asset Retirement Obligations", for more information regarding outstanding environmental matters and asset retirement obligations.
Guarantees and claims also arise during the ordinary course of business from relationships with customers, suppliers, joint venture partners, and other parties when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur. Non-performance under a contract could trigger an obligation of the Company. The Company's current other guarantees include guarantees relating to intellectual property, third-party debt, and other indemnifications and have arisen through the normal course of business. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these claims, if they were to occur. These other guarantees have remaining terms up to 15 years with maximum potential future payments of approximately $146 million in the aggregate, with none of these guarantees being individually significant to the Company's operating results, financial position, or liquidity. Management's current expectation is that future payment or performance related to non-performance under other guarantees is remote. Eastman has letters of credit and surety bonds of approximately $95 million as of December 31, 2025 to support commitments made in the ordinary course of business. The Company does not expect that any claims against or draws on these instruments would have a material adverse effect on the Company.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 15, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 25, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.