Growing With Confidence

Presenter’s NamePresenter’s Title

Name of ConferenceDate

Brian FergusonChairman & CEOMorgan Stanley Global Basic Materials ConferenceFebruary 19, 2008

2

Forward-Looking Statements

• During this presentation, we make certain forward-looking statements concerning plans and expectations for Eastman Chemical Company. We caution you that actual events or results may differ materially from our plans and expectations. Please see our Form 10-Q for first quarter 2007 and our 10-K for 2006 filed with the Securities and Exchange Commission for risks and uncertainties which could cause actual results to differ materially from current expectations.

During this presentation, we make certain forward-looking statements concerning plans and expectations for Eastman Chemical Company. We caution you that actual events or results may differ materially from our plans and expectations. Please see our Form 10-Q for third quarter 2007, our 10-K for 2006 filed with the Securities and Exchange Commission and our 10-K for 2007 that will be filed with the Securities and Exchange Commission for risks and uncertainties which could cause actual results to differ materially from current expectations.

Agenda

• We’re a More Profitable Company

• Positioned to Remain Strong Through the Cycle

• Doubling EPS by 2012

• Summary

3

More Than Doubled Operating Margins & Earnings ’03–’07

Operating Margins Operating Earnings

In M

illio

ns

4Note: Excludes contract ethylene sales resulting from the divestiture of the polyethylene business, asset impairments and restructuring charges, accelerated depreciation and other operating (income) charges; for reconciliation to GAAP operating earnings and margins, see slide 32

Performance Chemicals & Intermediates Significantly Improved Profitability

• Long-term supply arrangements with key customers

• Targeted technology licensing in acetyls

• Industry restructuring and cyclical upturn in end markets

• Continues to benefit from coal as a raw material

• 2006 – divested Arkansas manufacturing facility

Ope

ratin

g Ea

rnin

gs ($

M)

Ope

ratin

g M

argi

n (%

)

Actions Resulting in 5% - 10% Operating Margins5Note: Excludes contract ethylene sales resulting from the divestiture of the polyethylene business, asset impairments and restructuring charges,

accelerated depreciation and other operating (income) charges; for reconciliation to GAAP operating earnings and margins, see slide 32

Coatings, Adhesives, Specialty Polymers & Inks –

Focused on Profitability

Actions Resulting in Consistent 15% - 20% Operating MarginsO

pera

ting

Mar

gins

(%)

• 2004 – Divested ~$700M in sales revenue of underperforming commodity product lines and restructured assets

• Re-focused on strengthening uniquely positioned specialty coatings products

• Leading innovator and second largest global supplier of adhesives products

Ope

ratin

g Ea

rnin

gs ($

M)

Continuing Product LinesWith Divested Product Lines

6Note: Excludes asset impairments and restructuring charges and other operating (income) charges; for reconciliation to GAAP operating earnings and margins, see slide 33

Fibers – Positioned for Strong Profitability

• Increase in demand for acetate tow – particularly in Asia and Eastern Europe

• 2004 – Competitor exited acetate yarn market

• Continues to benefit from coal as a raw material

$128$155

$216 $228 $238

Ope

ratin

g Ea

rnin

gs ($

M)

Ope

ratin

g M

argi

n (%

)Delivering Consistent 20% - 25% Operating Margins

7Note: Excludes asset impairments and restructuring charges and other operating (income) charges; for reconciliation to GAAP operating earnings and margins, see slide 33

Best 3 Years of Earnings in History

• Fibers: FY 2007 operating earnings best in history, surpassing 2006• PCI: FY 2007 operating earnings best in a decade• CASPI: 2006 operating earnings best in history, 2007 second best

8Note: Excludes asset impairments and restructuring charges, accelerated depreciation, other operating (income) charges, early extinguishment of debt costs, gain on sale of Genencor, and cumulative effect of change in accounting principle; for reconciliation to GAAP operating earnings and margins, see slide 34

Strongest Financial Position in Eastman’s History

$0 

$500 

$1,000 

$1,500 

$2,000 

$2,500 

2003 2004 2005 2006 2007

Stockholder's EquityCash from Operating Activities

$0 

$200 

$400 

$600 

$800 

$1,000 

2003 2004 2005 2006 2007

66%59%

41%

24% 26%

0%

20%

40%

60%

80%

2003 2004 2005 2006 2007

Net Debt as a Percent of Total Capital

Well Positioned to Weather Storms and Fund Profitable Growth Initiatives

(In M

illio

ns)

(In M

illio

ns)

9Note: Net debt is defined as total debt less cash and cash equivalents

Agenda

• We’re a More Profitable Company

• Positioned to Remain Strong Through the Cycle

• Doubling EPS by 2012

• Summary

10

EPS Projected to Improve Every Year Between 2008 and 2012

Doubling EPS in 5 Years

$52008

projected EPS

$3Growth

Initiatives in Existing

Businesses

$2Industrial

Gasification Projects

$10 EPS by 2012

Supported by Solid Financial Position and Share Repurchase Program11

EPS Projected to Improve Every Year Between 2008 and 2012

2009 To Increase 10-15% Over 2008

$52008

projected EPS

$3Growth

Initiatives in Existing

Businesses

$2Industrial

Gasification Projects

$10 EPS by 2012

• Diverse geographic and end markets

• >$125M operating earnings improvement in PET

• Divestitures lead to reduced cyclicality and improved profitability

• Building on the core – Specialty Plastics and Fibers

• Improvements more than offset the risk of cyclicality in PCI and CASPI

2008to

2010

12

60% of Revenue

50% of Operating Earnings

20% of Revenue

25% of Operating Earnings

15% of Revenue

20% of Operating Earnings

5% of Revenue

5% of Operating Earnings

Geographic Diversity Makes Eastman Stronger

~50% of ‘07 Operating Earnings Outside U.S.

13Note: Sales revenue excludes contract ethylene sales resulting from the divestiture of the polyethylene business, and PET sales from Argentina and Mexico manufacturing facilities; for reconciliation to GAAP sales revenue, see slide 35. Operating earnings exclude asset impairments and restructuring charges and accelerated depreciation, and results from PET sales from Argentina and Mexico manufacturing facilities.

2007 Sales Revenue And Operating Earnings

~70% of Revenue Less Sensitive to GDP Variability

~30% of Revenue More Sensitive to GDP 

Variability

6% Durable Goods

14% Building & Construction

23% Packaging

15% Tobacco

8% Consumables

8% Graphic Imaging

6% Healthcare

3% Agriculture

2% Electronics

4% Distributed Resources

End-Market Diversity Makes Eastman Stronger

2007 Sales Revenue*

11% Transportation

14*2007 Sales revenue excludes contract ethylene sales and PET sales from Mexico and Argentina manufacturing facilities

Divestitures Lead to Reduced Cyclicality and Improved Profitability

2003 2007

Strategic Actions Result in Less CyclicalityN.A.

PETDivested

% o

f Sal

es R

even

ue

from

cyc

lical

bu

sine

sses

2

2004 – Divested underperforming product lines in CASPI ~$700M sales revenue

2006 – Divested PE, Epolenes, Arkansas manufacturing facility ~$800M sales revenue

2007 – Divested Spain, Argentina, Mexico PET facilities 1Q08 – On track to complete divestiture of Rotterdam and UK PET & PTA facilities

Combined ~$1B sales revenue

~$2.5 Billion in Sales Revenue with Low Single Digit Operating Margins Divested 2003 – 2008

2007 Sales

Revenue

Sales Revenue

2003 -20071

2 Includes olefin derivative product lines, PET product lines, and divested CASPI businesses

60%40%

151 Divested sales revenue includes results from discontinued operations

Reducing Olefins ExposureImproves Product Mix, Limits Cyclicality

Divested Polyethylene and Epolene Polymer Businesses and Shutting Down Older Crackers

Longview Derivatives

Older, Smaller Crackers Polyethylene and Epolene

Polymer Businesses

Ethylene

Propylene

Newer Cracker

Olefins

PurchasedPropylene

16

• Divesting ~$1 billion in sales revenue (over 50% of PET capacity)– All 5 PET sites outside the U.S.

• Divested in 2007: Spain, Argentina and Mexico sites• On track to divest 1Q08: Rotterdam and UK sites

Performance Polymers Getting Better by Getting Smaller

2006 Corporate Sales Revenue 2008 Corporate Sales Revenue

Performance Polymers = 17% of corporate sales revenue

Performance Polymers = 35% of corporate sales revenue

17Note: 2006 corporate sales revenue includes discontinued operations; 2008 corporate sales revenue projected

Significantly Improving PET Profitability>$125M Operating Earnings Improvement Projected ‘07-’09

• IntegRex – Best PET technology in the industry

New 350KMT facilityConversion costs <½ of conventional facilityDebottlenecking facility by 50% year end ’08

• Rationalization of higher cost assets100 KMT PET shutdown in ‘07300 KMT PET to be shutdown by mid-’08Shutdown of DMT assets by mid-’08

• Remove ~$30M of annual costs at S.C. site by mid-’08

2006 2007 2008

IntegRex‐Based PET Assets

Conventional PET Assets

40%

65%

675KMT

925 KMT800 KMT

525 KMT New IntegRex Capacity400 KMT Rationalized125 KMT Net Capacity Increase

Aggressively Pursuing Licensing Strategy for IntegRex PET and PTA18

Specialty Plastics and Fibers Building on the Core

Specialty Plastics: Projected ~$100M in operating earnings in '09

• Core growth– 6-8% volume growth– Converting PET assets to copolyesters

• Cellulose esters in LCDs– Doubling ‘07 revenue to $100M in ‘09 and it

gets better from there– Proprietary technology and manufacturing

position

Fibers: • 9 KMT acetate tow expansion in U.K.

– ~5% addition to Eastman's capacity– Will be completed by year-end 2008

19

Agenda

• We’re a More Profitable Company

• Positioned to Remain Strong Through the Cycle

• Doubling EPS by 2012

• Summary

20

EPS Projected to Improve Every Year Between 2008 and 2012

Growth Initiatives Deliver Significant Value

$52008

projected EPS

$3Growth

Initiatives in Existing

Businesses

$2Industrial

Gasification Projects

$10 EPS by 2012

• Eastman Tritan™ copolyester• Acetate tow Asia manufacturing option• Two industrial gasification projects• More growth initiatives in the pipeline

2011to

2012

21

Growing the BaseProfitable Growth Initiatives

Specialty Plastics: • Eastman Tritan™ copolyester

– Launched in November ‘07– High temperature and chemical

resistant, durable– 1.5B lbs addressable market

opportunity

Fibers: • Asia option for acetate tow growth

– ~25-30 KMT facility– Details to be announced in ‘08

Other: • There are more growth initiatives in

the pipeline22

Exploiting the SpreadKey to Attractive Industrial Gasification Projects

Coal/Petcoke Prices vs. Comparable Raw Materials

Natural Gas, Coal and Pet Coke $ / MMBTU

Crude$ / bbl

Note: All prices are in constant 2007 dollarsSource: Eastman, Global Energy DecisionsNote: 2007 complete year

Crude (West Texas Intermediate) Natural Gas (Houston Ship Channel)Coal (Illinois Basin) Petroleum Coke

The spread is large and expected to increase …

23

Eastman’s Strategy for Growth Through Industrial Gasification

Coal

Petroleum Coke

Gasification

Removal of: Sulfur,Mercury, Arsenic & Other Components

Carbon Dioxide

Ultra-CleanSyngas

Methanol

Enhanced Oil Recovery (EOR)or other sequestration options

EMN Strategic Chemicals

HydrogenBaseload

Hydrogen

Ammonia

24

Industrial GasificationEastman Participating in Two

Announced Projects

Location Beaumont, TX St. James Parish, LA

Feedstock Petroleum Coke Petroleum Coke

Gasification Technology GE Energy GE Energy

Project Capital Estimate $1.6 Billion $1.6 Billion

Capital Structure ~30% equity; ~70% debt ~30% equity; ~70% debt

% EMN Equity Ownership 50% 25%

Equity Partner(s) Green Rock* Green Rock*, Denbury

Products Hydrogen, methanol,ammonia

Ammonia, methanol

Announced Off-takers Eastman, Air Products Eastman, Mosaic, Denbury, Agrium

Expected Start-up 2011 2010

Projects Projected to Contribute $2 EPS in 2012*A company formed by D.E. Shaw and Goldman Sachs 25

Two Announced Industrial Gasification Projects

We’ve Made Progress, More to Come

Milestones

Agreement with preferred equity partners

Land and all key technology licenses secured

Exercised option to buy Terra Industries methanol and ammonia assets and scheduled to close on the sale by year end 2008

Front-end engineering design (FEED) to be completed by mid-2008

Complete contracts for inputs and outputs of projects by mid-2008

Obtain non-recourse project financing by end of 2008

Construction to begin early 2009

Facilities to be online by 2011 26

Making the Future Better Than the PastStrategic Actions and Growth Initiatives Are

Improving Profitability

Earn

ings

Per

Sha

re

$10

$5

Actual Projected $0

27Note: Excludes asset impairments and restructuring charges, accelerated depreciation and other operating (income) charges; for reconciliation to GAAP earnings per share, see slide 34

Doubling EPS by 2012Aggressive and Achievable Goals

$52008

projected EPS

$3Growth Initiatives

in Existing Businesses

$2Industrial

Gasification Projects

$10 EPS by 2012

28

Agenda

• We’re a More Profitable Company

• Positioned to Remain Strong Through the Cycle

• Doubling EPS by 2012

• Summary

29

Summary

• We have strengthened our portfolio

• We are positioned for growth…through the cycle

• We will double EPS by 2012

30

Presenter’s NamePresenter’s Title

Name of ConferenceDate

Questions?

32

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

Eastman Chemical and PCI Segment

33

Reconciliation of Non-GAAP Financial Measures to GAAP MeasuresCASPI and Fibers Segments

34

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

Earnings Per Share

*2007 earnings per share from continuing operations

35

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

Sales Revenue by Region