Further actions taken by Eastman to reduce costs

Whereas the first reduction involved an elimination of salary increases, reduction in carry-over vacation, overtime, and use of contractors, the new announcement reports a reduction of base pay for U.S. employees by 5% effective March 30, with equivalent cost reductions in bargaining unit sites and locations outside the U.S. A reduction of management staff was completed at the end of last year, but an additional global targeted reduction in force of between 200 and 300 employees will be implemented within the next four to six weeks. The remainder of the cost savings will be achieved through a reduction of noncritical maintenance costs, logistics costs, and discretionary spending.

“The severity of the current economic environment led to the actions we are announcing today,” says Brian Ferguson, chairman and CEO of Eastman. “Despite our expectation that sales volume will continue to be at depressed levels, we remain committed to taking the necessary actions to deliver solid operating cash flow in 2009 that will more than support both our dividend and capital expenditures.”

In addition to reducing 2009 capital expenditure budgets to between $300 million and $350 million, the company also expects to generate approximately $100 million in cash from working capital in 2009, assuming continued difficult economic conditions and raw material and energy costs similar to current levels. —[email protected]