Eastman Updates Fourth-Quarter Outlook.

Business Editors

KINGSPORT, Tenn.--(BUSINESS WIRE)--Jan. 9, 2003

Eastman Chemical Company (NYSE:EMN) today announced that sales volume for full-year 2002 is estimated to be 8 percent higher compared with 2001 sales volume. "Although we are pleased that our sales volume was strong in 2002, our estimated fourth-quarter results reflect a persistently difficult economic environment," said Brian Ferguson, chairman and CEO. "This is reflected in larger than expected seasonal declines in sales volume and selling prices across most of our businesses for fourth quarter 2002, particularly in December."

The company said it expects to announce a loss of approximately $0.10 to $0.20 per share for fourth quarter 2002, pending the completion of its year-end close. The company's fourth-quarter 2002 results include certain nonrecurring items consisting of asset impairments and restructuring charges that are expected to be approximately $0.07 to $0.09 per share. For fourth quarter 2001, Eastman reported a loss of $1.20 per share including certain nonrecurring charges of $1.04 per share. Fourth-quarter 2001 results also included amortization of goodwill and indefinite lived intangible assets of approximately $0.06 per share that ceased Jan. 1, 2002, upon the adoption of Statement of Financial Accounting Standard No. 142.

The company's fourth-quarter 2002 results are expected to be negatively impacted by approximately $11 million in expenses related to the previously announced operational disruption at its Columbia, S.C. facility. The company indicated that insurance reimbursements for the operational disruptions at its Columbia, S.C., and its Rotterdam facilities were not resolved by year-end; it is expected that the insurance claims process, including a decision regarding the amount of reimbursements, should be completed in 2003.

Fourth-quarter results are also expected to be impacted by approximately $16 to $18 million of assets charges relating primarily to equipment dismantlements and other write-offs and approximately $7 million of additional benefits costs relating to a change in the estimate for projected actuarial calculations for the company's long-term disability plan. The company's fourth-quarter 2002 results were favorably impacted by approximately $13 million as a result of the resolution of certain income tax contingencies.

In addition, the company took advantage of its continued strong cash position to terminate an operating lease of machinery and equipment and to purchase the related assets for $163 million. This action will have a slightly positive impact on future cash flows and net earnings beginning in 2003 as the company brings these assets onto its balance sheet and reduces its off-balance sheet commitments.

Eastman will announce fourth-quarter and year-end 2002 sales and earnings on Jan. 30, 2003, at approximately 6:30 p.m. EST. The company will host a conference call with industry analysts on Jan. 31 at 8:00 a.m. EST. To listen to the live webcast of the conference call, go to www.eastman.com, investors, event information, audio archives. To listen via telephone, call 800-289-0579 prior to Jan. 31 to register and ask for reservation #792460. You will be given a special telephone number to call on the day of the teleconference.

Headquartered in Kingsport, Tenn., Eastman manufactures and markets chemicals, fibers and plastics. The company has approximately 15,800 employees in more than 30 countries and had 2001 sales of $5.4 billion. For more information about Eastman and its products, visit www.eastman.com.

Forward-Looking Statements: The statements in this release concerning expected fourth-quarter and full-year 2002 sales volumes, expected fourth-quarter 2002 selling prices, the amount of the loss per share expected to be reported for fourth quarter 2002, the nature and amount of nonrecurring items expected to be recognized for the fourth quarter of 2002, and the nature and amounts of certain other charges and gains expected to be recognized for fourth quarter 2002, as well as some of the significant reasons for the results that are expected to be reported, are forward-looking. Such statements are based upon preliminary information, internal estimates, and management assumptions and expectations and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Important factors that could cause actual results to differ materially from the expectations expressed in the forward-looking statements, in addition to those identified with such forward-looking statements, are detailed in the company's reports filed with the Securities and Exchange Commission, including the Form 10-Q for the quarter ended September 30, 2002.