emn2008_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, 2008
 
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

Report of Independent Registered Public Accounting Firm
1
   
Basic Financial Statements:
  
   
Statements of Net Assets Available for Benefits
2
Statements of Changes in Net Assets Available for Benefits
3
Notes to Financial Statements
4 – 16
   
Additional Information (Note A):
17
   
Schedule of Assets (Held at End of Year)
  
   
Signatures
37
   
Exhibits
38

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 (“ERISA”) have been omitted because they are not applicable.


 
 

Report of Independent Registered Public Accounting Firm


To the Participants and Administrator of
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, 2008 and December 31, 2007, and the changes in net assets available for benefits for the periods 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
 Cincinnati, Ohio
 June 29, 2009



  1
 
 
Eastman Investment and Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
December 31, 2008 and December 31, 2007
(in thousands)



                         
       
 December 31,
          
December 31,
    
       
2008
          
2007
    
       
Non-
          
Non-
    
   
Participant
  
participant
      
Participant
  
participant
    
   
Directed
  
Directed
  
Total
  
Directed
  
Directed
  
Total
                         
Assets
                        
                         
                         
Investments at fair value
$
1,153,826
$
46,937
$
1,200,763
$
1,485,704
$
95,025
$
1,580,729
                         
                         
Receivables:
                        
                         
Sponsor
  
30,425
  
4,787
  
35,212
  
29,415
  
3,869
  
33,284
                         
Other
  
5,209
  
648
  
5,857
  
1,435
  
1,352
  
2,787
                         
Total assets
  
1,189,460
  
52,372
  
1,241,832
  
1,516,554
  
100,246
  
1,616,800
                         
                         
Liabilities
                        
                         
                         
Accrued expenses
  
15
  
14
  
29
  
12
  
17
  
  29
                         
Other liabilities
  
3,910
  
684
  
4,594
  
2,339
  
1,370
  
3,709
                         
Total liabilities
  
3,925
  
698
  
4,623
  
2,351
  
1,387
  
3,738
                         
Adjustment from fair value to contract value for fully benefit-responsive investment contracts
  
10,728
  
--
  
10,728
  
(3,102)
  
--
  
(3,102)
                         
Net assets available
                        
for plan benefits
$
1,196,263
$
51,674
$
1,247,937
$
1,511,101
$
        98,859
$
1,609,960
                         


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 Periods Ended December 31, 2008 and December 31, 2007
(in thousands)



       
December 31, 2008
          
December 31, 2007
    
       
Non-
          
Non-
    
   
Participant
  
participant
      
Participant
  
participant
    
   
Directed
  
Directed
  
Total
  
Directed
  
Directed
  
Total
                         
Additions to net assets:
                        
                         
Investment income (loss)
                        
Interest
$
26,616
$
-
$
26,616
$
27,555
$
-
$
27,555
Dividends
  
27,171
  
2,658
  
29,829
  
67,710
  
2,840
  
70,550
Net appreciation (depreciation) in fair value of
                        
investments
  
(353,623)
  
(51,707)
  
(405,330)
  
34,503
  
4,074
  
38,577
Net investment gain (loss)
  
(299,836)
  
(49,049)
  
(348,885)
  
129,768
  
6,914
  
136,682
Participant contributions
  
70,138
  
--
  
70,138
  
80,729
  
-
  
80,729
Plan Sponsor contributions
  
31,574
  
4,776
  
36,350
  
29,415
  
3,869
  
33,284
                         
Total additions
  
(198,124)
  
(44,273)
  
(242,397)
  
239,912
  
10,783
  
250,695
                         
Deductions from net assets:
                        
                         
Distributions to and withdrawals
                        
by participants
  
115,798
  
3,667
  
119,465
  
159,653
  
6,052
  
165,705
                         
Administrative expenses
  
161
  
-
  
161
  
180
  
-
  
180
                         
Total deductions
  
115,959
  
3,667
  
119,626
  
159,833
  
6,052
  
165,885
 
 
Interfund transfers, net
  
(755)
  
755
  
-
  
12,122
  
(12,122)
  
-
 
Net increase (decrease) in net assets
  
(314,838)
  
(47,185)
  
(362,023)
  
92,201
  
(7,391)
  
84,810
Net assets available for plan
                        
    benefits at beginning of period
  
1,511,101
  
98,859
  
1,609,960
  
1,418,900
  
106,250
  
1,525,150
Net assets available for plan
                        
benefits at end of period
$
1,196,263
$
51,674
$
1,247,937
$
1,511,101
$
98,859
$
1,609,960

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

3 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


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.  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 ESOP Trust.  
 
Since the inception of the Plan, money in the forfeiture account has been used both to offset future Company contributions and for various administrative expenses of the Plan.  The balance of the forfeiture account at December 31, 2008 and December 31, 2007 was $26,000 and $29,000, respectively.  There were no forfeitures used in 2008 or 2007.

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

Contributions and vesting

Contributions to the Plan are made through two separate provisions: (a) deferral of qualifying compensation and (b) contributions by the Plan Sponsor of cash or its common stock to the ESOP Fund as determined by the Compensation and Management Development Committee of the Board of Directors of Eastman.

The Plan includes a salary reduction provision allowing eligible employees to defer up to 40% of qualifying compensation, as defined in the Plan, up to the statutory limit of $15,500 for 2008 as permitted by the Internal Revenue Code.  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 2008 up to certain Internal Revenue Code 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 Retirement Savings Contribution (“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.

4 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


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 and are 100% vested in their account balance at all times.

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 Internal Revenue Code.  All rollover contributions into the Plan must meet the applicable Internal Revenue Service requirements.

Loans

The Investment Plan Committee (“IPCO”) may grant a loan of at least $1,000 to a participant provided that the aggregate of the participants’ loans outstanding does not exceed the lesser of (i) $50,000 reduced by the excess, if any, of (a) the participant’s highest outstanding loan balance from the preceding 12 months over (b) the outstanding total loan balance of loans from the Plan on the date on which the loan was made, or (ii) 50% of the non-forfeitable portion of the participant’s account, excluding amounts in a participant’s ESOP Fund account.  In accordance with the Plan provisions, the rate of interest on new participant loans approximates current market rates.  The term of any loan is determined by IPCO and shall not exceed five years.  Loans transferred to the Plan from the Hercules Incorporated Savings and Investment Plan, the ABCO Industries, Inc. 401(k) Profit Sharing Plan, and the Eastman Resins, Inc. Employees’ Growth Sharing Plan carry terms applicable under those Plans.  At December 31, 2008, $31.3 million in loans were outstanding for terms of 4 to 119 months and interest rates ranging from 4.25% to 10.50%.  At December 31, 2007, $30.0 million in loans were outstanding for terms from 6 to 121 months and interest rates ranging from 4% 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 who are not retirement-eligible and the participant account value is less than or equal to $1,000.  Separated participants with accounts in excess of $1,000 or who are retirement-eligible may elect either (i) 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 (ii) 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.

  5
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


·  
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 $5,000, 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 has terminated his or her service 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.

·  
The Trustee is authorized to honor qualified domestic relation orders issued and served in accordance with Section 414(p) of the Internal Revenue Code.

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.

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.


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

 
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).
 
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.
 
Actions taken in connection with the completion of certain corporate transactions
 
In the fourth quarter of 2006, the Company sold its Batesville, Arkansas manufacturing facility and related assets in its performance chemicals and intermediates segment and also its polyethylene-related assets at the Longview, Texas facility in the performance polymers and coatings, adhesives, specialty polymers and inks segments.  In February 2007, the Company made a discretionary contribution to the account of each participant whose employment was terminated in connection with these sales equal to 5% of the compensation paid to each participant for the period January 1, 2006 to the dates of the respective sales.
 
On or after January 1, 2007, each eligible employee hired by the Company will, in addition to the 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 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.
 

7 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


2.  
SUMMARY OF ACCOUNTING POLICIES

The following accounting policies, which conform to accounting principles generally accepted in the United States of America, 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 in Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1 , Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans ("the FSP"), 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 the FSP, 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.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

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.  Participant loans are valued at amortized cost, which represents fair value.  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 guaranteed investment contracts ("GICs") 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).

8 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


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 statement 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.

Payments to participants

Benefits payments to participants are recorded when paid.

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 sponsor contributions for participant-directed funds of $30.4 million and $29.4 million and for the non-participant-directed ESOP Fund of $4.8 million and $3.9 million at December 31, 2008 and 2007, respectively.

5.  
LOANS TO PARTICIPANTS

The Plan Trustee makes loans to participants in accordance with Plan provisions.  Loans made are accounted for as a transfer from the fund directed by the participant to the Loan Fund.  The principal portion of loan repayments reduces the Loan 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 Loan 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.
 
Unless otherwise specified by the participant, loan proceeds will be withdrawn from the investment funds on a pro-rata basis.  Outstanding loans at December 31, 2008 and 2007 were approximately $31.3 million and $30.0 million, respectively.  Interest income earned on loans to participants is credited directly to the participants' accounts and was approximately $2.5 million and $2.4 million for 2008 and 2007, respectively.
 
 
9 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements
 

6.  
INVESTMENTS

At December 31, 2008 and 2007, the Plan's assets were invested in synthetic investment contracts (see Note 7), mutual funds, and in Eastman Chemical Company common stock.  Subject to certain limitations, participants are provided the option of directing their contributions among these 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.
         
(in thousands)
  
December 31, 2008
  
December 31, 2007
         
Cash
$
949
$
 
2,901
Common Stock
  
135,332
  
169,904
Mutual Funds
  
503,650
  
806,027
Managed Income Fund
  
551,135
  
588,884
Self Directed Brokerage Account
  
9,697
  
 13,013
         
Total
$
1,200,763
$
1,580,729

The following investment options, which invest primarily in common stock of the Plan sponsor, were available to participants in 2008 and 2007:

Eastman Stock Fund
This participant-directed fund consists primarily of Eastman Class A common stock.  Purchases and sales of Eastman stock are generally made on the open market on behalf of and as elected by Plan participants.  During 2008, the Trustee purchased 3,208,000 shares of Eastman stock for the fund at an average price of $51.01 per share, and sold 1,622,000 shares of Eastman stock for the fund at an average price of $61.12 per share.  During 2007, the Trustee purchased 1,528,100 shares of Eastman stock for the fund at an average price of $64.12 per share and sold 1,320,400 shares at an average price of $65.27 per share.  Dividends paid from the Eastman Stock Fund totaled $2.9 million and $1.9 million in 2008 and 2007, respectively.

10 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements

 
Eastman ESOP Fund
 
This non-participant directed fund consists primarily of Eastman Class A common stock.  Purchases and sales of Eastman stock are generally made on the open market, on behalf of its participants and as directed by the Plan’s guidelines.  During 2008, the Trustee purchased 57,400 shares of Eastman stock for the fund at an average price of $66.69 per share, and sold 118,100 shares of Eastman stock for the fund at an average price of $63.04 per share.  During 2007, the Trustee purchased 63,900 shares of Eastman stock for the fund at an average price of $59.76 per share, and sold 236,200 shares at an average price of $64.12 per share.

At December 31, 2008 and December 31, 2007, the following investments represented 5% or greater of ending net assets, (in thousands):

     
December 31, 2008
     
Shares
  
Fair value
           
Eastman Chemical Company Common Stock, Participant Directed
    
11,721
$
88,856
Eastman Chemical Company Common Stock, Non Participant Directed     6,202   46,476
Fidelity Magellan® Fund
    
930
  
42,616
Fidelity Contrafund
    
1,999
  
90,433
           
     
December 31, 2007
     
Shares
  
Fair value
           
Eastman Chemical Company Common Stock, Participant Directed
    
5,425
$
75,794
Eastman Chemical Company Common Stock, Non Participant Directed     6,560   94,110
Fidelity Magellan® Fund
    
935
  
87,727
Fidelity Contrafund
    
2,064
  
150,903

During 2008 and 2007, the Plan’s investments (including investments bought, sold and held during the year) depreciated and appreciated respectively in value by $405.3 million and $38.6 million, respectively, as follows (in thousands):

   
Net Appreciation
  
Net Appreciation
   
(Depreciation)
  
(Depreciation)
   
December 31, 2008
  
December 31, 2007
         
Eastman Chemical Company Common Stock, Non Participant Directed
$
(51,707)
$
4,074
Eastman Chemical Company Common Stock, Participant Directed
  
(48,682)
  
 3,875
Mutual Funds
  
(304,941)
  
30,628
Total
$
(405,330)
$
38,577


11 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements


7.  
INSURANCE CONTRACTS

The Plan invests in the Managed Income Fund (the "Fund"), which invests in synthetic guaranteed investment contracts ("GICs").  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 that 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 0%.

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.

12 
 
 
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 Internal Revenue Code.
·  
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 are as follows:

Average yields:
  
December 31,
2008
  
December 31,
2007
         
Based on actual earnings
  
4.28 %
  
5.02 %
Based on interest rate credited to participants
  
4.06 %
  
4.65 %

The weighted average crediting interest rate for the Fund was 3.98% and 4.67% at December 31, 2008 and 2007, 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, 2008 and 2007 was as follows:

(in thousands)
  
December 31,
2008
  
December 31,
2007
         
Security backed investments:
        
Underlying assets at fair value
$
551,135
$
588,884
Wrap contracts
  
10,728
  
(3,102)
Total contract value
$
561,863
$
585,782

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

 
8.  
FAIR VALUE MEASUREMENT

Financial Accounting Standards Board Statement No. 157, Fair Value Measurements (“FASB Statement No. 157”), establishes a framework for measuring fair value.  The framework 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 FASB Statement No. 157 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 guaranteed investment contract: Valued at fair value by discounting the related cash flows based on the current yields of similar instrument with comparable durations considering the credit-worthiness of the issuer.

Self directed brokerage account: Unit valuation based on the underlying NAV of the investments.

Participant loans: Valued at amortized cost, which approximates fair value.

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.


14
 
 
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, 2008:

(Dollars in thousands)
Fair Value Measurements at December 31, 2008
Description
  
December 31, 2008
  
Quoted Prices in Active Markets for Identical Assets (Level 1)
  
Significant Other Observable Inputs (Level 2)
  
Significant Unobservable Inputs (Level 3)
Cash
$
949
$
949
$
--
$
--
Common Stock
  
135,332
  
135,332
  
--
  
--
Mutual Funds
  
472,396
  
472,396
  
--
  
--
Managed Income Fund
  
551,135
  
--
  
551,135
  
--
Self Directed Brokerage Account
  
9,697
  
9,697
  
--
  
--
Participant Loans
  
31,254
  
--
  
--
  
31,254
Total
$
1,200,763
$
618,374
$
551,135
$
31,254
                 

The table below sets forth a summary of changes in the fair value of the Plan’s level 3 assets for the year ended December 31, 2008.

(Dollars in thousands)
  
Level 3 Assets
Year Ended December 31, 2008
Description
  
Participant Loans
Balance, beginning of year
$
29,973
Issuances, settlements and write-offs (net)
  
1,281
Balance, end of year
$
31,254
     

9.  
OTHER RECEIVABLES AND OTHER LIABILITIES

Other receivables in the amount of $5.6 million and $2.8 million at December 31, 2008 and 2007, respectively, represent interest and dividends receivable, as well as receivables from the sale of investments.  Other liabilities in the amount of $4.6 million and $3.7 million at December 31, 2008 and 2007, respectively, represent liabilities from the purchase of investments.

10.  
DIVERSIFICATION FROM ESOP FUND

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 2008 and 2007, $6.0 million and $9.9 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.

15 
 
 
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements



12.  
FEDERAL INCOME TAX STATUS

The Plan obtained its latest determination letter in May 2003, in which the Internal Revenue Service stated that the Plan is in compliance with the applicable requirements of the Internal Revenue Code.  The Plan Administrator believes the Plan qualifies and operates in compliance with the applicable requirements of the Internal Revenue Code.  Therefore, no provision for income taxes has been included in the Plan’s financial statements.

13.  
PLAN EXPENSES

Reasonable expenses of administering the Plan, unless paid by the Company, shall be paid by the Plan.  For both 2008 and 2007, 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, as the case may be.  Loan administration fees are deducted quarterly from the accounts of participants with outstanding loan balances.  Loan origination fees are deducted from the participants account at the inception of the loan.  For 2008 and 2007, 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 Fidelity Management Trust Company, (“FMTC”).  FMTC is 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 loans to 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,
2008
  
December 31,
2007
         
Investments at fair value
$
1,200,763
$
1,580,729
Adjustment from fair value to contract value for full benefit-responsive investment contracts
  
10,728
  
(3,102)
Total investments per Form 5500
$
1,211,491
$
1,577,627


16 
 
 






 






Supplemental Schedule
 
 
 
 
 
 
 
 
 
 
 
 


 
17 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
* Eastman Chemical Company
Common stock, Participant directed, 11,721 shares
 ** 88,856
*
Fidelity Management Trust Company
Interest Bearing Cash, Participant directed
**
488
*
Eastman Chemical Company
Common stock,  Non Participant directed, 6,202 shares
77,481
46,476
*
Fidelity Management Trust Company
Interest Bearing Cash, Non Participant directed
461
461
*
Fidelity Fund K
Registered Investment Company, 1,222 shares
**
27,807
*
Fidelity Puritan Fund K
Registered Investment Company, 2,821 shares
**
36,817
*
Fidelity Magellan Fund K
Registered Investment Company, 930 shares
**
42,616
*
Fidelity Contrafund K
Registered Investment Company, 1,999 shares
**
90,433
*
Fidelity Spartan U.S. Equity Index Portfolio
Registered Investment Company, 806 shares
**
25,712
*
Fidelity International Discovery Fund K
Registered Investment Company, 1,521 shares
**
35,850
*
Fidelity Blue Chip Growth Fund K
Registered Investment Company, 359 shares
**
9,444
*
Fidelity Freedom Income Fund
Registered Investment Company, 284 shares
**
2,714
*
Fidelity Freedom 2000 Fund
Registered Investment Company, 156 shares
**
1,569
*
Fidelity Freedom 2010 Fund
Registered Investment Company, 1,011 shares
**
10,472
*
Fidelity Freedom 2020 Fund
Registered Investment Company, 1,469 shares
**
14,763
*
Fidelity Freedom 2030 Fund
Registered Investment Company, 980 shares
**
9,566
*
Fidelity Freedom 2040 Fund
Registered Investment Company, 823 shares
**
4,603
*
Fidelity Spartan Extended Market Index Portfolio
Registered Investment Company, 383 shares
**
8,627
*
Fidelity Spartan International Index Fund
Registered Investment Company, 326 shares
**
8,706
*
Participant Loans
Participant Loan Fund with terms ranging from 4 - 119 months and rates ranging from 4.25% to 10.5%
**
31,254
*
Fidelity Retirement Money Market
Registered Investment Company, 148 shares
**
147
*
Clipper Fund
Registered Investment Company, 166 shares
**
6,649
*
PIMCO Total Return Institutional Class
Registered Investment Company, 3,897 shares
**
39,515
*
Franklin Small Mid Cap Growth Fund
Registered Investment Company, 683 shares
**
14,192
*
WFA Small Cap Val Inst
Registered Investment Company, 1,093 shares
**
19,842
*
TCW Select Equity I
Registered Investment Company, 108 shares
**
1,113
*
Neuberger and Berman Genesis Instl Cl
Registered Investment Company, 1,602 shares
**
47,794
*
Templeton Foreign Fund
Registered Investment Company, 1,801 shares
**
7,907


18 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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 Freedom 2005 Fund
Registered Investment Company, 16 shares
**
132
 
Fidelity Freedom 2015 Fund
Registered Investment Company, 331 shares
**
                  2,836
 
Fidelity Freedom 2025 Fund
Registered Investment Company, 122 shares
**
                    1,008
 
Fidelity Freedom 2035 Fund
Registered Investment Company, 63 shares
**
                    504
 
Fidelity Freedom 2045 Fund
Registered Investment Company, 56 shares
**
                    366
 
Fidelity Freedom 2050 Fund
Registered Investment Company, 107 shares
**
                  692

19 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
**
306
 
ANZ National
Corporate Bond 6.2 7/19/13 144A
**
682
 
AT&T Wireless
Corporate Bond 7.875% 3/01/11
**
738
 
AXA Financial
Corporate Bond 7.75% 8/01/10
**
961
 
Ace Securities Corp.                                                                ACE 03-HS1 M1
Mortgage backed security 1ML+75 6/33
**
1
 
Advanta Business Card Master                                              ABCMT 07-A2 A2
Mortgage backed security  5% 3/13
**
2,318
 
Advanta Business Card Master                                            ABCMT 07-B2 B
Mortgage backed security 5.5% 6/20/13
**
617
 
America Movl
Corporate Bond 4.125 3/1/09
**
1,324
 
American Honda
Corporate Bond 4.5 5/26/09 144A
**
1,214
 
Americredit Automobile Receivable                                    AMCAR 04-DF A4
Mortgage backed security 3.43 7/11
**
313
 
Americredit Automobile Receivable                                     AMCAR 05-CF A4
Mortgage backed security 4.63 6/12
**
794
 
Americredit Automobile Receivable                                    AMCAR 06-1 B
Mortgage backed security 5.2 3/11
**
69
 
Americredit Prime Automobile Receivable                         APART 07-1 B
Mortgage backed security 5.35% 3/11
**
196
 
Americredit Prime Automobile Receivable                         APART 07-1 C
Mortgage backed security  5.43 7/11
**
115
 
Americredit Prime Automobile Receivable                        APART 07-2M A3A
Mortgage backed security 5.22% 4/10
**
452
 
Americredit Automobile Receivable                                   AMCAR 06-BG A4
Mortgage backed security 5.21% 9/13
**
553
 
Avon Products
Corporate Bond 4.8% 3/01/13
**
519
 
BBVA Banc
Corporate Bond 5.3795 7/22/15 144A
**
463
 
BHP Billiton
Corporate Bond 5.125% 3/29/12
**
1,211
 
BTM Curacao
Corporate Bond 4.76% 7/21/15 144A
**
412
 
Baltimore G&E
Corporate Bond 6.125% 7/01/13
**
464
 
Bank of America Commercial Mortgage                            BACM 04-6 XP
Interest Only Strip CSTR 12/42
**
54
 
Bank of America Commercial Mortgage                            BACM 2003-2 A2
Mortgage backed security 4.342 3/41
**
706
 
Bank of America Commercial Mortgage                            BACM 05-3 XP
Interest Only Strip CSTR 7/43
**
135
 
Bank of America Commercial Mortgage                            BACM 04-4 A3
Mortgage backed security 4.128% 7/42
**
675
 
Bank of America Commercial Mortgage                            BACM 05-4 A1
Mortgage backed security 4.432 7/45
**
271
 
Bank of America Commercial Mortgage                            BACM 04-5 XP
Interest Only Strip CSTR 11/41
**
74
 
Bank of America Commercial Mortgage                            BACM 05-4 XP
Interest Only Strip CSTR 7/45
**
41
 
Bank of America Commercial Mortgage                            BACM 05-5 A1
Mortgage backed security 4.716 8/10
**
604

20 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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 America Commercial Mortgage                          BACM 05-6 A1
Mortgage backed security 5.001 9/47
**
377
 
Bank of America Mortgage Security                               BOAMS 04-J 2A1
Mortgage backed security CSTR 11/34
**
240
 
Bank of America Mortgage Security                               BOAMS 05-E 2A7
Mortgage backed security CSTR 6/35
**
374
 
Bank of America Mortgage Security                               BOAMS 05-J 2A4
Mortgage backed security 12ML 11/35
**
1,594
 
Bank of America Commercial Mortgage                         BACM 06-6 XP
Interest Only Strip CSTR 10/45
**
217
 
Bank of America Commercial Mortgage                         BACM 06-5 A1
Mortgage backed security  5.185% 7/11
**
249
 
Bank of America Commercial Mortgage                         BACM 2006-5 XP
Interest Only Strip .832% 9/47
**
183
 
Bank America
Corporate Bond 7.8% 2/15/10 GLBL
**
226
 
Bank America
Corporate Bond 4.9% 5/01/13
**
392
 
Bank of New York
Corporate Bond 4.95 1/14/11
**
166
 
Bank NY Mellon
Corporate Bond 4.95 11/12
**
753
 
Bank One Corporation
Corporate Bond 7.875% 8/01/10
**
1,205
 
Bank One Issuance Trust                                                    BOIT 04-B2 B2
Mortgage backed security  4.37% 4/12
**
1,229
 
Bank of Tokyo Mit
Corporate Bond 8.4 4/15/10
**
1,129
 
Bayview Commercial Asset Trust                                   BAYC 04-2 A
Mortgage backed security 1ML+43 8/34
**
173
 
Bayview Commercial Asset Trust                                   BAYC 04-2 M1
Mortgage backed security 1ML+58 8/34
**
48
 
Bayview Commercial Asset Trust                                 BAYC 04-3 M1
Mortgage backed security 1ML+50 1/35
**
36
 
Bayview Commercial Asset Trust                                    BAYC 04-3 M2
Mortgage backed security  1ML+100 1/35
**
21
 
Bear Stearns Commercial Mortgage                              BSCMS 04-ESA A3
Mortgage backed security 4.741% 5/16
**
1,128
 
Bear Stearns Commercial Mortgage                                BSCMS 04-ESA B
Mortgage backed security 4.888% 5/16
**
346
 
Bear Stearns Commercial Mortgage                                    BSCMS 04-ESA C
Mortgage backed security 4.937% 5/16
**
391
 
Bear Stearns Commercial Mortgage                                 BSCMS 04-ESA D
Mortgage backed security 4.986% 5/16
**
140
 
Bear Stearns Commercial Mortgage                              BSCMS 04-ESA E
Mortgage backed security 5.064% 5/16
**
442
 
Bear Stearns Commercial Mortgage                          BSCMS 04-ESA F
Mortgage backed security 5.182% 5/16
**
105
 
Bear Stearns Commercial Mortgage                         BSCMS 04-PWR5 A2
Mortgage backed security 4.254 7/42
**
551
 
Bear Stearns Commercial Mortgage                             BSCMS 04-PWR5 X2
Interest Only Strip CSTR 7/42
**
80
 
Bear Stearns Commercial Mortgage                           BSCMS 04-T16 A3
Mortgage backed security 4.03 2/46
**
1,289

21 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
Bear Stearns Commercial Mortgage                   BSCMS 03-T12 X2
Interest Only Strip CSTR 8/39
**
21
 
Bear Stearns Commercial Mortgage                   BSCMS 04-PWR6 X2
Interest Only Strip CSTR 11/41
**
53
 
Bear Stearns Commercial Mortgage                   BSCMS 05-PWR9 A1
Mortgage backed security 4.498 9/42
**
549
 
Bear Stearns Commercial Mortgage                   BSCMS 05-T20 A1 4.94% 10/42
Mortgage backed security 4.94% 10/42
**
435
 
Bear Stearns Commercial Mortgage                   BSCMS 06-PW13 X2
Interest Only Strip CSTR 9/41
**
121
 
Bear Stearns Commercial Mortgage                   BSCMS 2006-T24 X2
Interest Only Strip CSTR 10/41
**
122
 
Bear Stearns Commercial Mortgage                   BSCMS 07-PW15 A1
Mortgage backed security 5.016% 2/44
**
45
 
Bear Stearns Commercial Mortgage                   BSCMS 2007-PW15 X2
Interest Only Strip CSTR 2/44
**
354
 
Bear Stearns Commercial Mortgage                   BSCMS 07-T26 X2
Interest Only Strip CSTR 1/12/45
**
142
 
Bear Stearns
Corporate Bond 4.245% 1/7/10
**
876
 
Bear Stearns
Corporate Bond  5.85% 7/19/10
**
187
 
Bellsouth
Corporate Bond 4.2% 9/15/09 DT
**
879
 
Brazos Higher Education Authority                        BRHEA 06-A A2R
Mortgage backed security 5.03% 12/41
**
1,477
 
British G Step
Corporate Bond 12/10 DT
**
1,260
 
CDC Financial Products
Synthetic GIC – 4.194%
**
153
 
CNH Equipment Trust                                              CNH 05-B B
Mortgage backed security 4.57 7/12
**
353
 
Commercial Mortgage Pass-Through                    COMM 05-C6 XP
Interest Only Strip CSTR 6/44
**
66
 
CPS Auto Trust                                                         CPS 06-C A3 5.14% 1/11
Mortgage backed security 5.47% 11/11
**
149
 
CPS Auto Trust                                                         CPS 07-B A3
Mortgage backed security 5.14% 1/11
**
422
 
CPS Auto Trust                                                         CPS 2007-C A3
Mortgage backed security 5.45 5/12 144A
**
335
 
Countrywide Asset-Backed Certificate                 CWL 04-4 A
Mortgage backed security 1ML+37.5 8/34
**
15
 
Countrywide Home Loans                                      CWHL 05-HYB3 2A6B
Mortgage backed security CSTR 6/35
**
150
 
Capital Auto Receivables Asset                            CARAT 07-1 B
Mortgage backed security 5.15% 9/12
**
338
 
Capital Auto Receivables Asset                            CARAT 07-SN1 B
Mortgage backed security 5.52% 3/15/11
**
153
 
Capital Auto Receivables Asset                            CARAT 07-SN1 C
Mortgage backed security 5.73% 3/15/11
**
95
 
Capital Auto Receivables Asset                            CARAT 06-1 B
Mortgage backed security 5.26 10/10
**
221

22 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
Capital Auto Receivables Asset                           CARAT 2006-SN1A A4A
Mortgage backed security 5.32% 3/10
**
714
 
Capital One Auto Finance Trust                           COAFT 05-BSS C
Mortgage backed security  4.48 12/10
**
578
 
Capital One Auto Finance Trust                           COAFT 05-C A4A
Mortgage backed security 4.71 6/12
**
2,056
 
Capital One Multi-Asset Executive                       COMET 04-B6 B6
Mortgage backed security 4.155 7/12
**
1,021
 
Capital One Multi-Asset Executive                       COMET 07-B3 B3
Mortgage backed security 5.05% 3/13
**
2,380
 
Capital One Multi-Asset Executive                       COMET 07-B5 B5
Mortgage backed security 5.4% 5/13
**
1,113
 
Capital One Prime Auto Receivable                       COPAR 06-2 A4
Mortgage backed security 4.94% 7/12
**
474
 
Capital One Prime Auto Receivable                       COPAR 2007-1 B1
Mortgage backed security 5.76% 12/13
**
385
 
Capital Trust Re Cdo Ltd                                         CTCDO 04-1A A2
Mortgage backed security 1ML+45 7/39
**
81
 
Capital Trust Re Cdo Ltd                                         CTCDO 04-1A B
Mortgage backed security 1ML+75 7/39
**
24
 
Capital Trust Rd Cdo Ltd                                        CTCDO 04-1A C
Mortgage backed security 1ML+110 7/39
**
21
 
CARGILL INC
Corporate Bond 6.375% 6/12 144A
**
2,095
 
Citigroup/Deutsche Bank Commercial                  CD 06-CD3 XP
Interest Only Strip CSTR 10/48
**
431
 
Cendant Timeshare Receivables                            CDTIM 05-1A A1
Mortgage backed security 4.67 5/17
**
106
 
CHASE MANHATTAN
Corporate Bond 7.875% 6/15/10
**
1,029
 
Chase Mortgage Finance Corporation                 CHASE 07-A2 2A1
Mortgage backed security CSTR 7/37
**
54
 
Chile Rep Global
Foreign Bond 6.875 4/28/09 DT
**
41
 
Citibank Credit Card Issuance                                 CCCIT 06-B2 B2
Mortgage backed security 5.15% 3/11
**
1,333
 
Citibank Credit Card Issuance                                 CCCIT 07-B2 B2
Mortgage backed security 5% 4/12
**
1,647
 
Citibank Credit Card Issuance                                 CCCIT 07-B6 B6
Mortgage backed security 5% 11/12
**
1,069
 
Citigroup Commercial Mortgage                             CGCMT 04-C2 XP
Interest Only Strip  CSTR 10/41
**
80
 
Citigroup Commercial Mortgage                             CGCMT 05-EMG A2
Mortgage backed security 4.2211 9/51
**
333
 
CW Capital Colbalt                                                   CWCI 07-C2 A1
Mortgage backed security CSTR 9/11
**
289
 
Commercial Mortgage Pass-Through                    COMM 06-C8 A1
 Mortgage backed security 5.11% 12/46
**
386
 
Commercial Mortgage Pass-Through                    COMM 06-C8 XP
Interest Only Strip CSTR 12/46
**
538


23 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
Commercial Mortgage Pass-Through                          COMM 06-CN2A BFX
Mortgage backed security 5.537 2/19
**
167
 
Commercial Mortgage Pass-Through                          COMM 06-CN2A CFX
Mortgage backed security 5.47945 2/19
**
69
 
Commercial Mortgage Pass-Through                           COMM 06-CN2A D
Mortgage backed security 5.52861 2/19
**
107
 
Commercial Mortgage Pass-Through                          COMM 06-CN2A E
Mortgage backed security CSTR 2/19
**
163
 
Commercial Mortgage Pass-Through                          COMM 06-CN2A F
Mortgage backed security CSTR 2/19
**
37
 
Commercial Mortgage Pass-Through                           COMM 04-LB4A XP
Interest Only Strip CSTR 10/37
**
132
 
Commercial Mortgage Pass-Through                           COMM 05-LP5 XP
Interest Only Strip CSTR 5/43
**
51
 
Greenwich Capital Commercial F                                   GCCFC 07-GG11 XP
 Interest Only Strip .48% 12/49
**
583
 
Constelation GN
Corporate Bond 6.125% 9/01/09
**
545
 
Continental Airlines Inc                                                    CONTL AIR 991A
 Mortgage backed security 6.545% 2/02/19
**
696
 
Countrywide MTN
Corporate Bond 4.125% 9/15/09
**
26
 
Covidien Int
Corporate Bond 5.15% 10/15/10
**
1,633
 
Covidien Int
Corporate Bond  5.45% 10/12
**
386
 
Credit Suisse
Corporate Bond 5% 5/15/13
**
2,035
 
CS First Boston Mortgage Security                             CSFB 03-C4 A3
Mortgage backed security  CSTR 8/36
**
496
 
CS First Boston Mortgage Security                             CSFB 04-C1 A3
Mortgage backed security 4.321 1/37
**
452
 
CS First Boston Mortgage Security                            CSFB 04-C4 ASP
Interest Only Strip CSTR 10/39
**
71
 
Credit Suisse Mortgage Capital                                   CSMC 07-C3 A1
Mortgage backed security CSTR 6/39
**
219
 
Credit Suisse Mortgage Capital                                   CSMC 06-C5 ASP
Interest Only Strip CSTR 12/39
**
480
 
Credit Suisse Mortgage Capital                                   CSMC 06-C4 ASP
Interest Only Strip CSTR 9/39
**
829
 
Credit Suisse Mortgage Capital                                   CSMC 07-C1 A1
Mortgage backed security 5.227 2/40
**
227
 
Credit Suisse Mortgage Capital                                   CSMC 07-C1 ASP
Interest Only Strip CSTR 2/40
**
540
 
Credit Suisse Mortgage Capital                                    CSMC 07-C2 A1
Mortgage backed security 5.237 1/49
**
185
 
CS First Boston Mortgage Security                             CSFB 05-C1 ASP
Interest Only Strip CSTR 2/38
**
64
 
CS First Boston Mortgage Security                             CSFB 05-C4 ASP
Interest Only Strip CSTR 8/38
**
170
 
CS First Boston Mortgage Security                             CSFB 05-C2 ASP
Interest Only Strip CSTR 4/37
**
92
 
DBS Bank Ltd
Corporate Bond 5.125/VAR 5/17 144A
**
1,530

24 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
DLJ Commercial Mortgage Corp                                    DLJCM 00-CF1 A1B
Mortgage backed security 7.62 6/33
**
813
 
Daimler Chrysler
Corporate Bond  5.75% 8/10/09
**
2,853
 
Daimler Chrysler Auto Trust                                         DCAT 2006-C B
Mortgage backed security 5.11% 4/13
**
682
 
John Deere Capital
Corporate Bond 4.875% 3/16/09
**
290
 
Deutsche Telekom Int Fin
Corporate Bond 5.375% 3/23/11
**
271
 
Diageo Capital
Corporate Bond 5.2 1/30/13
**
639
 
DRT 00-1A A2
Mortgage backed security 6.971% 3/10
**
40
 
Donnelley RR
Corporate Bond 3.75% 4/1/09
**
1,907
 
Drive Auto Receivables Trust                                       DRIVE 06-2 A-2
Mortgage backed security  5.3% 7/11
**
114
 
Drivetime Auto Owner Trust                                          DRVT 2006-A A3
Mortgage backed security  5.501% 11/11
**
375
 
DuPont
Corporate Bond 5% 1/15/13
**
289
 
DuPont
Corporate Bond 5% 7/15/13
**
709
 
EDP Finance BV
Corporate Bond 5.375 11/12 144A
**
1,068
 
ERP Operating LP
Corporate Bond 5.5% 10/1/12
**
261
 
Encana Corp
Corporate Bond 4.75% 10/15/13
**
126
 
Enel Finance International
Corporate Bond 5.7% 1/15/13144A
**
1,420
 
Exelon Generation Co LLC
Corporate Bond 6.95% 6/15/11
**
1,232
 
Freddie Mac
FHLG 15YR  5.00%  5/14 #E76434
**
14
 
Freddie Mac
FHLG 15YR  5.00%  6/14 #E77224
**
58
 
Freddie Mac
FHLM ARM  4.889%  3/33 #847126
**
13
 
Freddie Mac
FHLM ARM   4.69% 11/35 #1B2428
**
586
 
Freddie Mac
FHLM ARM 4.314% 12/34 #1B2670
**
64
 
Freddie Mac
FHLM ARM   4.22%  2/35 #1B2747
**
469
 
Freddie Mac
FHLM ARM   4.63%  3/35 #1B2811
**
298
 
Freddie Mac
FHLM ARM   4.49%  4/35 #1B2869
**
330
 
Freddie Mac
FHLM ARM 4.497% 6/35 #1B2907
**
73
 
Freddie Mac
FHLM ARM   4.68%  1/36 #847584
**
119
 
Freddie Mac
FHLM ARM  5.084%  8/35 #1J0005
**
109
 
Freddie Mac
FHLM ARM 4.401% 2/35 #1G0103
**
238
 
Freddie Mac
FHLM ARM 4.37% 3/35 #1G0125
**
116
 
Freddie Mac
FHLM ARM 4.444% 3/35 #1G0133
**
94
 
Freddie Mac
FHLM ARM 4.504% 3/35 #1G0145
**
80
 
Freddie Mac
FHLM ARM  4.941% 11/35 #1J1228
**
303
 
Freddie Mac
FHLM ARM   5.26%  1/36 #1J1274
**
283
 
Freddie Mac
FHLM ARM   5.88%  4/36 #1J1279
**
532
 
Freddie Mac
FHLM ARM   4.93%  9/35 #1K1215
**
340
 
Freddie Mac
FHLM ARM   5.78% 10/35 #1N0063
**
91
 
Freddie Mac
FHLM ARM   5.62% 12/35 #1N0117
**
402
 
Freddie Mac
FHLM ARM   5.775% 1/37 #1N1446
**
422
 
Freddie Mac
FHLM ARM   5.15%  8/36 #1B7241
**
208
 
Freddie Mac
FHLM ARM   5.85%  1/36 #1G1803
**
721
 
Freddie Mac
FHLM ARM 5.34% 6/35 #1L0097
**
195


25 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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 4.441% 2/34 #781229
**
55
 
Freddie Mac
FHLM ARM   4.30% 11/34 #782877
**
267
 
Freddie Mac
FHLM ARM 4.232% 1/35 #782988
**
100
 
Freddie Mac
FHLM ARM   4.60%  2/35 #783028
**
253
 
Freddie Mac
FHLM ARM 4.434% 2/35 #783032
**
98
 
Freddie Mac
FHLM ARM 4.307% 3/35 #783067
**
53
 
Freddie Mac
FHLM ARM 4.42%  4/35 #783096
**
390
 
Freddie Mac
FHLM ARM   4.74%  4/35 #783104
**
464
 
Fannie Mae
FNMA DN DN 0% 3/25/09
**
8,899
 
Fannie Mae
FNMA DN 0% 9/25/09
**
5,876
 
Fannie Mae
FNMA 5 10/15/11
**
19,241
 
Fannie Mae
FNMA 15YR  7.00%  1/13 #251428
**
4
 
Fannie Mae
FNMA 15YR  6.50% 11/13 #323755
**
179
 
Fannie Mae
FNMA 15YR  7.00%  8/14 #323877
**
32
 
Fannie Mae
FNMA 15YR  6.00%  3/14 #487614
**
30
 
Fannie Mae
FNMA 15YR  6.50%  9/14 #514373
**
1
 
Fannie Mae
FNMA 15YR  7.00% 11/14 #522277
**
21
 
Fannie Mae
FNMA 15YR  6.50% 10/13 #535234
**
321
 
Fannie Mae
FNMA 15YR  7.00%  6/16 #545122
**
13
 
Fannie Mae
FNMA ARM 4.305% 8/33 #555696
**
70
 
Fannie Mae
FNMA ARM   4.38%  7/33 #555702
**
287
 
Fannie Mae
FNMA 15YR  7.00%  2/16 #569915
**
37
 
Fannie Mae
FNMA 15YR  6.00% 10/16 #589129
**
19
 
Fannie Mae
FNMA 15YR  7.00%  8/16 #599602
**
72
 
Fannie Mae
FNMA 15YR  7.00%  4/17 #636135
**
149
 
Fannie Mae
FNMA 15YR  6.50%  4/17 #637244
**
120
 
Fannie Mae
FNMA 15YR  6.00% 11/17 #671380
**
161
 
Fannie Mae
FNMA 15YR  6.00% 11/17 #672789
**
38
 
Fannie Mae
FNMA 15YR  6.00% 12/17 #673965
**
46
 
Fannie Mae
FNMA 3.625% 8/15/11
**
21,033
 
Fannie Mae
FNMA 2.875% 12/11/13
**
195
 
Fannie Mae
FNMA 15YR  6.00%  2/18 #684153
**
14
 
Fannie Mae
FNMA ARM   4.14%  4/33 #688960
**
822
 
Fannie Mae
FNMA 15YR  7.00%  2/18 #693327
**
199
 
Fannie Mae
FNMA ARM 4.318% 3/33 #694530
**
25
 
Fannie Mae
FNMA ARM 4.801% 2/33 #695019
**
47
 
Fannie Mae
FNMA ARM  4.292%  3/33 #701296
**
19
 
Fannie Mae
FNMA ARM 3.984% 5/33 #703915
**
11
 
Fannie Mae
FNMA ARM 4.079% 4/33 #708221
**
7
 
Fannie Mae
FNMA ARM   4.57%  6/33 #712321
**
523
 
Fannie Mae
FNMA ARM   5.12%  1/34 #725109
**
31
 
Fannie Mae
FNMA ARM  4.862%  9/34 #725855
**
74
 
Fannie Mae
FNMA ARM  4.832%  8/34 #725858
**
34
 
Fannie Mae
FNMA ARM  4.409% 10/34 #725968
**
274
 
Fannie Mae
FNMA 15YR  4.00%  8/18 #727438
**
1,034
 
Fannie Mae
FNMA ARM 4.115% 2/35 #735343
**
12
 
Fannie Mae
FNMA ARM 4.319% 5/35 #735538
**
38


26 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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 ARM   4.66%  7/35 #735942
**
257
 
Fannie Mae
FNMA ARM   5.01% 11/35 #745124
**
248
 
Fannie Mae
FNMA ARM   5.45%  5/36 #745676
**
335
 
Fannie Mae
FNMA ARM  5.541% 11/36 #745972
**
343
 
Fannie Mae
FNMA ARM 3.753% 10/33 #746320
**
39
 
Fannie Mae
FNMA ARM 4.055% 10/18 #749296
**
24
 
Fannie Mae
FNMA ARM 4.358% 10/33 #754672
**
18
 
Fannie Mae
FNMA ARM 3.752% 10/33 #755148
**
45
 
Fannie Mae
FNMA ARM 4.321% 2/35 #773246
**
337
 
Fannie Mae
FNMA ARM   4.38%  3/35 #773264
**
186
 
Fannie Mae
FNMA ARM 4.455% 3/35 #773281
**
92
 
Fannie Mae
FNMA ARM 4.351 1/35 #783580
**
73
 
Fannie Mae
FNMA ARM 4.499% 3/35 #783587
**
208
 
Fannie Mae
FNMA ARM   4.876% 7/34 #785318
**
203
 
Fannie Mae
FNMA ARM  5.106%  9/34 #790762
**
57
 
Fannie Mae
FNMA ARM   4.82%  8/34 #793420
**
240
 
Fannie Mae
FNMA ARM   4.96%  8/34 #796988
**
176
 
Fannie Mae
FNMA ARM 4.202% 1/35 #797418
**
111
 
Fannie Mae
FNMA ARM 4.67% 11/34 #799727
**
166
 
Fannie Mae
FNMA ARM 4.85% 11/34 #799812
**
135
 
Fannie Mae
FNMA ARM 4.825% 12/34 #800297
**
121
 
Fannie Mae
FNMA ARM 4.845% 12/34 #800335
**
46
 
Fannie Mae
FNMA ARM   5.00%  9/34 #801341
**
681
 
Fannie Mae
FNMA ARM 5.05% 7/34 #801635
**
22
 
Fannie Mae
FNMA ARM 4.118% 1/35 #807221
**
40
 
Fannie Mae
FNMA ARM 4.5% 2/35 #809429
**
534
 
Fannie Mae
FNMA ARM   4.38%  2/35 #809593
**
385
 
Fannie Mae
FNMA ARM 4.625% 2/35 #809931
**
155
 
Fannie Mae
FNMA ARM 4.57% 2/35 #811803
**
35
 
Fannie Mae
FNMA ARM   4.85%  1/35 #813844
**
321
 
Fannie Mae
FNMA ARM 4.293% 3/35 #815586
**
29
 
Fannie Mae
FNMA ARM   4.75%  5/35 #815626
**
104
 
Fannie Mae
FNMA ARM 4.372% 4/35 #820407
**
20
 
Fannie Mae
FNMA ARM 4.5% 5/35 #820996
**
34
 
Fannie Mae
FNMA ARM 4.575% 7/35 #822002
**
109
 
Fannie Mae
FNMA ARM   5.12%  6/35 #823810
**
115
 
Fannie Mae
FNMA ARM  4.796%  8/35 #825485
**
142
 
Fannie Mae
FNMA ARM   4.58%  7/35 #826362
**
864
 
Fannie Mae
FNMA ARM 4.302% 1/35 #827592
**
55
 
Fannie Mae
FNMA ARM   5.10%  5/35 #827782
**
141
 
Fannie Mae
FNMA ARM  4.520%  8/35 #829603
**
95
 
Fannie Mae
FNMA ARM 5.203% 6/35 #830605
**
201
 
Fannie Mae
FNMA ARM  4.555% 7/35 #832099
**
169
 
Fannie Mae
FNMA ARM  5.344%  7/35 #834917
**
21
 
Fannie Mae
FNMA ARM   5.04%  7/35 #834931
**
704
 
Fannie Mae
FNMA ARM  5.101%  7/35 #841837
**
255
 
Fannie Mae
FNMA ARM  5.349% 12/34 #843013
**
61
 
Fannie Mae
FNMA ARM   5.280% 3/35 #843014
**
21

27 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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 ARM   5.16%  9/35 #843021
**
989
 
Fannie Mae
FNMA ARM   4.69% 11/35 #844061
**
327
 
Fannie Mae
FNMA ARM  4.893% 10/35 #847787
**
116
 
Fannie Mae
FNMA ARM   5.32%  1/36 #850852
**
446
 
Fannie Mae
FNMA ARM   5.409% 2/36 #865319
**
59
 
Fannie Mae
FNMA ARM   5.839% 1/36 #879146
**
371
 
Fannie Mae
FNMA ARM   5.40% 11/35 #879153
**
270
 
Fannie Mae
FNMA ARM   5.80%  3/36 #881670
**
170
 
Fannie Mae
FNMA ARM   6.25%  6/36 #886983
**
50
 
Fannie Mae
FNMA ARM   4.56%  5/35 #888115
**
870
 
Fannie Mae
FNMA ARM   4.86%  7/35 #888382
**
597
 
Fannie Mae
FNMA ARM   5.07%  9/36 #888398
**
1,260
 
Fannie Mae
FNMA 15YR  4.50% 12/18 #888889
**
1,955
 
Fannie Mae
FNMA ARM   4.36% 10/37 #889704
**
319
 
Fannie Mae
FNMA ARM   5.08%  9/36 #889945
**
66
 
Fannie Mae
FNMA ARM   4.21%  5/35 #889946
**
526
 
Fannie Mae
FNMA ARM   5.57%  5/36 #891228
**
737
 
Fannie Mae
FNMA ARM   5.50%  5/36 #896475
**
298
 
Fannie Mae
FNMA ARM   4.90%  2/36 #995015
**
4,885
 
Fannie Mae
FNMA ARM   4.59%  7/35 #995016
**
388
 
Fannie Mae
FNMA ARM   4.30%  2/35 #995017
**
636
 
Fannie Mae
FNMA ARM   4.987%   #995269
**
3,462
 
Fannie Mae
FNMA ARM  4.785% 2/36 #995271
**
846
 
Fannie Mae
FNMA ARM  4.898%  5/35 #995272
**
63
 
Fannie Mae
FNMA ARM  4.58%  7/35 #995273
**
209
 
Fannie Mae
FNMA ARM  4.765% 1/34 #995274
**
15
 
Fidelity
FID INST CASH PORT: MM FUND CLASS I SHS F/N/A
**
24,041
 
First Investors Auto Owner Trust                               FIAOT 06A A3
Mortgage backed security 4.93 2/15/11
**
96
 
Fleetboston Fin
Corporate Bond 7.375% 12/1/09
**
887
 
Ford Credit Auto Owner Trust                                        FORDO 2006-B B
Mortgage backed security 5.43% 2/12
**
548
 
Ford Credit Auto Owner Trust                                         FORDO 2006-C B
Mortgage backed security 5.3% 6/12
**
255
 
Ford Credit Auto Owner Trust                                           FORDO 07-A B
Mortgage backed security 5.6% 10/12
**
148
 
Franklin Auto Trust                                                              FRNK 06-1 A4
Mortgage backed security 5.03% 7/14
**
1,959
 
Franklin Auto Trust                                                           FRNK 06-1 B1
Mortgage backed security 5.14% 7/14
**
110
 
Franklin Auto Trust                                                            FRNK 07-1 B
Mortgage backed security 5.13 2/15
**
376
 
Fremont Home Loan Trust                                                   FHLT 04-A M1
Mortgage backed security 1ML+55 1/34
**
200
 
Fremont Home Loan Trust                                                FHLT 04-1 M1
Mortgage backed security 1ML+45 2/34
**
17
 
Fremont Home Loan Trust                                                  FHLT 04-1 M2
Mortgage backed security 1ML+50 2/34
**
71

28
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
Fremont Home Loan Trust                                                FHLT 04-1 M3
Mortgage backed security 1ML+55 2/34
**
28
 
Fuji Fin
Corporate Bond 8.625% 4/15/10 144A
**
1,262
 
GE Capital Credit Card Master                                        GEMNT 07-1 B
Mortgage backed security 4.95% 3/13
**
952
 
GE Capital Credit Card Master                                       GEMNT 2007-3 B
Mortgage backed security 5.49% 6/13
**
1,022
 
GE Capital Credit Card Master                                       GECMC 07-C1 XP
Interest Only Strip CSTR 12/49
**
183
 
GE Commercial Mortgage Security                               GMACC 04-C2 A2
Mortgage Backed Security CSTR 8/38
**
1,408
 
GE Commercial Mortgage Security                               GMACC 04-C3 X2
Interest Only Strip  CSTR 12/41
**
58
 
GE Capital Credit Card Master                                     GMACC 05-C1 X2
Interest Only Strip CSTR 5/43
**
85
 
GE Commercial Mortgage Security                              GMACC 06-C1 XP
Interest Only Strip CSTR 11/45
**
51
 
GS Mortgage Securities Corporation                          GSMS 05-GG4 XP
Interest Only Strip CSTR 7/39
**
308
 
GSR Mortgage Loan Trust                                           GSR 05-AR2 2A1
Mortgage backed security  CSTR 4/35
**
243
 
GS Auto Loan Trust                                                     GSALT 05-1 B
Mortgage backed security 4.62 11/13
**
18
 
GE Capital Commercial Mortgage                              GECMC 04-C2 A2
Mortgage backed security 4.119% 3/40
**
505
 
GCO Slims Trust                                                           GCOSL 06-1A
Mortgage backed security NOTE 5.72 3/22
**
434
 
General Electric Capital Corp
Corporate Bond 7.5% 6/15/09
**
1,121
 
General Electric Capital Corp
Corporate Bond 4.25 9/13/10
**
986
 
General Electric Capital Corp
Corporate Bond 5.2% 2/01/11
**
1,950
 
GA ST
Corporate Bond 5.35 3/1/11
**
3,174
 
Glaxosmith Kline
Corporate Bond 4.85% 5/15/13
**
860
 
Global Signal Trust                                                         TOWER 06-1 B
 Mortgage backed security 5.588% 2/36
**
278
 
Global Signal Trust                                                         TOWER 06-1 C
Mortgage backed security 5.707% 2/36
**
325
 
Greenwich Capital Commercial Funding Corp             GCCFC 05-GG3 XP
Interest Only Strip CSTR 8/42
**
320
 
Greenwich Capital Commercial Funding Corp             GCCFC 05-GG5
Interest Only Strip  CSTR 4/37
**
276
 
GS Auto Loan Trust                                                        GSALT 07-1 A3
Mortgage backed security 5.39% 12/11
**
1,227
 
GS Auto Loan Trust                                                        GSALT 07-1 B
Mortgage backed security 5.53% 12/14
**
145
 
Household Automotive Trust                                       HAT 2006-3 A3
Mortgage backed security  5.38% 9/11
**
960
 
Host Marriott Pool Trust                                               HMPT 99-HMTA B
Mortgage backed security 7.3% 8/15
**
245

29
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
Host Marriott Pool Trust                                                    HMPT 99-HMTA D
Mortgage backed security 7.97 8/15
**
206
 
Household Global
Corporate Bond  5.875% 2/1/09 DT
**
307
 
Household Fin Co
Corporate Bond 4.75% 5/15/09
**
775
 
Household Automotive Trust                                          HAT 05-1 A4
Mortgage backed security 4.35% 6/12
**
1,101
 
Household Automotive Trust                                         HAT 07-1 A3
Mortgage backed security 5.3% 11/11/11
**
559
 
Household Automotive Trust                                          HAT 07-1 A4
Mortgage backed security  5.33% 11/18/13
**
816
 
Hutchinson Wham
Corporate Bond 5.45 11/24/10 144
**
684
 
Hyundai Auto Receivables Trust                                   HART 05-A C
Mortgage backed security 4.22 2/12
**
18
 
Hyundai Auto Receivables Trust                                    HART 06-1 B
Mortgage backed security 5.29 11/12
**
41
 
Hyundai Auto Receivables Trust                                  HART 06-1 C
Mortgage backed security  5.34 11/12
**
55
 
Hyundai Auto Receivables Trust                                  HART 2007-A A3A
Mortgage backed security 5.04 1/12
**
862
 
Impac Cmb Trust                                                              IMM 05-1 M4
Mortgage backed security 1ML+75 4/35
**
4
 
Impac Cmb Trust                                                            IMM 05-1 M5
Mortgage backed security 1ML+77 4/35
**
2
 
Impac Cmb Trust                                                               IMM 05-1 M6
Mortgage backed security 1ML+82 4/35
**
5
 
JP Morgan Chase
Synthetic GIC – 4.249%
**
153
 
JP MorganChase and Company
Corporate Bond 6.75 2/1/11 DT
**
258
 
JP MorganChase and Company
Corporate Bond 4.891/VAR 9/15
**
526
 
JP MorganChase and Company
Corporate Bond 4.75% 5/1/13
**
1,394
 
JP Morgan Chase Commercial Mortgage        JPMCC 2001-C1 A2
Mortgage backed security 5.464 10/35
**
269
 
JP Morgan Chase Commercial Mortgage       JPMCC 03-CB7 X2 CSTR 1/38
Interest Only Strip  CSTR 1/37
**
19
 
JP Morgan Chase Commercial Mortgage        JPMCC 04-CBX X2
Interest Only Strip CSTR 1/37
**
171
 
JP Morgan Chase Commercial Mortgage        JPMCC 04-C3 A2 4.223% 1/42
Mortgage backed security  CSTR 10/42
**
805
 
JP Morgan Chase Commercial Mortgage       JPMCC 05-LDP4 X2
Interest Only Strip CSTR 10/42
**
229
 
JP Morgan Chase Commercial Mortgage       JPMCC 2006-LDP9 A1
Mortgage backed security CSTR 5/47
**
443
 
JP Morgan Mortgage Trust                              JPMMT 07-A1 1A1
Mortgage backed security CSTR 7/35
**
90
 
JP Morgan Chase Commercial Mortgage       JPMCC 07-LDP10 A-1
Mortgage backed security 5.122% 1/49
**
208
 
Jackson National
 Corporate Bond 5.375% 5/8/13 144
**
438

30 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
JP Morgan Auto Receivables Trust                                  JPMRT 2006-A A4
Mortgage backed security 5.14% 12/14
**
789
 
JP Morgan Auto Receivables Trust                              JPMART 2006-A B
Mortgage backed security 5.36% 12/14
**
107
 
Keyspan Corp
Corporate Bond 7.625% 11/15/10
**
357
 
Korea Development Bank
Corporate Bond 4.75 7/20/09
**
455
 
Korea Development Bank
Corporate Bond 3.875 3/02/09
**
602
 
Kraft Foods Inc.
Corporate Bond 4.125% 11/12/09
**
116
 
Kraft Foods Inc.
Corporate Bond 5.625% 8/11/10
**
1,216
 
LB-UBS Commercial Mortgage Trust                                LBUBS 07-C1 A1
 Mortgage backed security CSTR 2/15/40
**
182
 
LB-UBS Commercial Mortgage Trust                             LBUBS 07-C1 XCP
Interest Only Strip CSTR 2/40 IO
**
82
 
LB-UBS Commercial Mortgage Trust                             LBUBS 07-C2 A1
Mortgage backed security 5.226 2/40
**
167
 
LB-UBS Commercial Mortgage Trust                                LBUBS 07-C2 XCP
Interest Only Strip CSTR 2/40
**
378
 
LB-UBS Commercial MortgageTrust                              LBUBS 00-C3 A2
Mortgage backed security 7.95 1/10
**
903
 
LB-UBS Commercial Mortgage Trust                            LBUBS 00-C5 A2
Mortgage backed security 6.51 12/26
**
439
 
LB-UBS Commercial Mortgage Trust                              LBUBS 04-C6 A2
Mortgage backed security 4.187% 8/29
**
688
 
LB-UBS Commercial Mortgage Trust                            LBUBS 04-C8 XCP
Interest Only Strip CSTR 12/39
**
40
 
LB-UBS Commercial Mortgage Trust                            LBUBS 04-C2 A3
Mortgage backed security 3.973% 3/29
**
651
 
LB-UBS Commercial Mortgage Trust                             LBUBS 05-C1 AAB
Mortgage backed security CSTR 2/30
**
439
 
LB-UBS Commercial Mortgage Trust                             LBUBS 05-C5 XCP
Interest Only Strip CSTR 9/40
**
399
 
LB-UBS Commercial Mortgage Trust                          LBUBS 05-C7 XCP
Interest Only Strip CSTR 11/40
**
178
 
LB-UBS Commercial Mortgage Trust                       LBUBS 206-C1A XCP
Interest Only Strip CSTR 2/41
**
278
 
LB-UBS Commercial Mortgage Trust                        LBUBS 2006-C3 A1
Mortgage backed security 5.478 3/39
**
243
 
Long Beach Auto Receivables Trust                          LBART 2006-B A4
Mortgage backed security 5.18% 9/13
**
436
 
M&I Auto Loan Trust                                                        MILT 05-1 B
Mortgage backed security 5.02 7/12
**
931
 
MBNA Capital
Corporate Bond 8.278% 12/01/26
**
460
 
Merrill Lynch/Countrywide Commercial                          MLCFC 07-6 A1
Mortgage backed security 5.175% 3/12/51
**
188
 
Merrill Lynch/Countrywide Commercial                             MLCFC 2006-4 XP
Interest Only Strip CSTR 12/49
**
958
 
Manufacturers & Traders Trust Co
Corporate Bond 3.85/VAR 4/1/13
**
1,202
 
Ameritech Capital Funding
Corporate Bond 6.25% 5/18/09 EC
**
851


31 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
Marriott Vacation Club Owner Trust                          MVCOT 05-2 A
Mortgage backed security 4.6% 10/27
**
230
 
Marriott Vacation Club Owner Trust                          MVCOT 06-2A A
Mortgage backed security 5.417% 10/28
**
185
 
Marriott Vacation Club Owner Trust                          MVCOT 06-2A B
Mortgage backed security 5.467% 10/28
**
35
 
Marriott Vacation Club Owner Trust                          MVCOT 06-2A C
Mortgage backed security 5.766% 10/28
**
14
 
Master Adjustable Rate Mortgage                             MARM 04-11 1A4
Mortgage backed security 1ML+49 11/34
**
11
 
Merrill Lynch & Co
Corporate Bond 5.45% 2/05/13
**
155
 
Merrill Lynch & Co
Corporate Bond 6.15% 4/25/13
**
384
 
Merrill Lynch & Co
Corporate Bond 4.125% 1/15/09
**
765
 
Merrill Lynch Mortgage Trust                                      MLMT 04-MKB1 A2
Mortgage backed security 4.353% 2/42
**
2,606
 
Merrill Lynch Mortgage Trust                                      MLMT 04-KEY2 A2
Mortgage backed security 4.166% 8/39
**
1,024
 
Merrill Lynch Mortgage Trust                                      MLMT 04-BPC1 XP
Interest Only Strip CSTR 9/41
**
203
 
Merrill Lynch Mortgage Trust                                       MLMT 05-MKB2 XP
Interest Only Strip CSTR 9/42
**
20
 
Merrill Lynch Mortgage Trust                                     MLMT 05-MCP1 XP
Interest Only Strip CSTR 6/43
**
105
 
Midamerican Energy Co.
Corporate Bond 5.65% 7/15/12
**
1,136
 
Merrill Lynch/Countrywide Commercial                     MLCFC 06-3 XP
Interest Only Strip CSTR 7/46
**
308
 
Monumental Global
Corporate Bond 5.5% 4/13 144A
**
209
 
MSTDW Global
Corporate Bond 6.75% 4/15/11
**
379
 
Morgan Stanley Capital                                                    MSC 04-HQ4 X2
Interest Only Strip CSTR 4/40
**
54
 
Morgan Stanley Capital                                                  MSC 04-HQ3 A2
Mortgage backed security 4.05 1/41
**
305
 
Morgan Stanley Capital                                                     MSC 05-TOP17 X2
Interest Only Strip CSTR 12/41
**
74
 
Morgan Stanley Capital                                                    MSC 05-IQ9 X2
Interest Only Strip  CSTR 7/56
**
145
 
Morgan Stanley Capital                                                  MSC 05-HQ5 X2
Interest Only Strip CSTR 1/42
**
43
 
Morgan Stanley Capital                                                   MSC 06-T21 A1
Mortgage backed security 4.925 10/52
**
535
 
Morgan Stanley Capital                                                    MSC 2006-HQ10 X2
Interest Only Strip CSTR 11/41
**
283
 
Morgan Stanley Capital                                                    MSC 2007-HQ11 A1
Mortgage backed security CSTR 2/44
**
309
 
National Aust Bank
Corporate Bond 5.35% 6/12/13 144
**
242
 
National Collegiate Student Loan                                    NCSLT 2007-2 AIO
Interest Only Strip  6.7% 7/12
**
331
 
National Collegiate Student Loan                                   NCSLT 2006-2 AIO
Interest Only Strip 6% 8/11
**
32

32 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
National Collegiate Student Loan                                   NCSLT 04-2 AIO
Interest Only Strip  9.75% 10/14
**
206
 
National Collegiate Student Loan                                   NCSLT 05-1 AIO
Interest Only Strip 6.75% 12/09
**
29
 
National Collegiate Student Loan                                   NCSLT 05-2 AIO
Interest Only Strip 7.73 3/12
**
57
 
National Collegiate Student Loan                                     NCSLT 06-1 A-IO
Interest Only Strip 5.5 4/11
**
135
 
National Collegiate Student Loan                                    NCSLT 2006-3 AIO
Interest Only Strip 7.1% 1/12
**
434
 
National Collegiate Student Loan                                  NCSLT 06-4 AIO
Interest Only Strip 6.35% 02/12
**
320
 
National Collegiate Student Loan                                NCSLT 2007-1 AIO
Interest Only Strip 7.27% 4/12
**
429
 
Navistar Financial Corp Owner                                        NAVOT 05-A A4
Mortgage backed security 4.43 1/14
**
531
 
NYLife Global
Corporate Bond 4.65% 5/9/13 144A
**
992
 
Nissan Auto Receivables Owner                                   NAROT 05-A A4
Mortgage backed security 3.82 7/10
**
146
 
Nordstrom Private Label Credit                                      NORD 07-1A A
Mortgage backed security 4.92 5/13 144A
**
1,913
 
Northern Trust Co
Corporate Bond 5.5% 8/15/13
**
183
 
Northstar Education Finance                                           NEF 05-1 A5
Mortgage backed security 4.74 10/45
**
564
 
Nstar
Corporate Bond 8% 2/15/10
**
328
 
Onyx Acceptance Owner Trust                                      ONYX 05-B A4
Mortgage backed security 4.34% 5/12
**
362
 
Oracle Corp
Corporate Bond 5% 1/15/11
**
436
 
Orix Corp
Corporate Bond 5.48% 11/22/11
**
110
 
Peco Energy
Corporate Bond  5.6% 10/15/13
**
627
 
Pacific Gas & Electric
Corporate Bond 6.25% 12/13
**
510
 
Petroleum Export
Corporate Bond 4.623% 6/15/10 144A
**
245
 
Petroleum Export
Corporate Bond  4.633% 6/15/10 144A
**
146
 
Philip Morris
Corporate Bond 4.875% 5/16/13
**
349
 
Pinnacle Capital Asset Trust                                         PCAT 2006-A C
Mortgage backed security 5.77% 5/10
**
6
 
Prime Property Funding
Corporate Bond 5.6% 6/15/11
**
362
 
Providian Master Note Trust                                        PMNT 06-B1A B1
Mortgage backed security 5.35 3/13
**
1,059
 
Rabobank Nederland
Synthetic GIC – 4.25%
**
153
 
Ras Laffan
Mortgage backed security 8.294 3/15/14 144A
**
545
 
Residential Asset Mortgage Pro                                 RAMP 04-SL2 A1
Mortgage backed security  6.5 10/16
**
28
 
GMAC Mortgage Coporation Loan                          GMACM 05-AR5 1A1
Mortgage backed security CSTR 9/35
**
140
 
Rio Tinto Fin
Corporate Bond 5.875% 7/15/13
**
1,174
 
SBC Comm Glbl
Corporate Bond 6.25 3/15/11
**
422

33 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
SBC Comm Glbl
Corporate Bond 4.125 9/15/09
**
620
 
SLM Student Loan Trust                                                 SLMA 04-A B
Mortgage backed security 3ML+58 6/33
**
60
 
SVO VOI Mortgage Corp                                                SVOVM 05-A A
Mortgage backed security 5.25 2/21
**
249
 
Solomon Brothers Mortgage Securities                         SBM7 00-C3 A2
Mortgage backed security 6.592 12/33
**
818
 
Solomon Brothers Mortgage Securities                         SBM7 00-C1 A2
Mortgage backed securities 7.52 12/09
**
819
 
Santander Issuances
Corporate Bond 5.805/VAR 6/20/16
**
571
 
SBA Cmbs Trust                                                                 SBAC 05-1A A
Mortgage backed security 5.369 11/35
**
277
 
SBA Cmbs Trust                                                                 SBAC 05-1A B
Mortgage backed security 5.565 11/35
**
173
 
Scotland  Intl
Mortgage backed security  7.7% 8/15/10144A
**
1,030
 
Sempra Energy
Corporate Bond 7.95% 3/01/10
**
721
 
Sempra Energy
Corporate Bond 4.75 5/15/09
**
253
 
Simon Property Group LP
Corporate Bond 5.3% 5/30/13
**
391
 
Starwood Commercial Mortgage                                    STARW 99-C1A B
Mortgage backed security 6.92 2/14
**
186
 
State Street Bank & Trading Co. Boston
Synthetic GIC – 4.25%
**
153
 
Lahman Large Loan LLL 1997-LLI D
Mortgage backed security  7.15 10/34
**
376
 
Structured Asset Securities Co                                        SASC 04-GEL1 A
Mortgage backed security 1ML+36 2/34
**
14
 
Structured Asset Securities Co                                       SASC 04-NP1 A
Mortgage backed security 1ML+40 9/33
**
55
 
Telecom Italia Capital
Corporate Bond  4% 1/15/10
**
1,760
 
Telefonos De Mexico S.A.
Corporate Bond  4.75% 1/27/10
**
2,398
 
Transcapit
Corporate Bond 5.67% 3/5/14 144A
**
699
 
Triad Auto Receivables Owner Trust                           TAROT 2006-C A4
Mortgage backed security 5.31% 5/13
**
376
 
Triad Auto Receivables Owner Trust                          TAROT 06-A A3
Mortgage backed security 4.77% 1/11
**
93
 
Tyrquoise Card Backed Security                                    HCARD 07-1 B
Mortgage backed security 5.53% 6/12
**
809
 
Uncredito Luxem Fin
Corporate Bond 5.584/VAR 1/13/17
**
634
 
US Bancorp
Corporate Bond 4.5 7/29/10
**
569
 
US Bancorp
Corporate Bond 5.3% 4/28/09
**
364
 
US Treasury Note/Bond
USTN 4.875% 5/31/11
**
7,079
 
US Treasury Note/Bond
USTN 4.875% 7/31/11
**
27,203
 
US Treasury Note/Bond
USTN 4.5% 11/30/11
**
18,525
 
US Treasury Note/Bond
USTN 4.75% 5/31/12
**
50,670
 
US Treasury Note/Bond
USTN 4.625% 7/31/12
**
41,966
 
US Treasury Note/Bond
USTN 2.75% 2/28/13
**
527
 
US Treasury Note/Bond
USTN .625% 4/15/13
**
2,690
 
US Treasury Note/Bond
USTN 3.5% 5/31/13
**
26,933
 
US Treasury Note/Bond
USTN 3.125% 9/30/13
**
3,448

34 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
US Treasury Note/Bond
USTN 2.75% 10/31/13
**
1,580
 
US Treasury Note/Bond
USTN 3.75% 11/15/18
**
12,802
 
US Treasury Note/Bond
USTN 2% 11/30/13
**
27,899
 
US Treasury Note/Bond
USTN 1.75% 11/15/11
**
2,208
 
US Treasury Note/Bond
USTN 1.5% 12/31/13
**
4,860
 
US Treasury Note/Bond
USTN 1.125% 12/15/11
**
12,538
 
Unitedhealth Group Inc
Corporate Bond 5.125% 11/15/10
**
1,676
 
Verizon Communications Inc
Corporate Bond 5.25% 4/15/13
**
746
 
Verizon New York Inc
Corporate Bond 6.875% 4/01/12
**
1,928
 
Vodafone Group Inc
Corporate Bond 7.75% 2/15/10 DT
**
2,670
 
Vodafone Group PLC
Corporate Bond 5.5% 6/15/11
**
360
 
WAMU Mortgage Pass-Through                                   WAMU 05-AR16 1A3
Mortgage backed security CSTR 12/35
**
400
 
Wachovia Bank Commercial Mortgage                        WBCMT 05-C22 A1
Mortgage backed security 4.98 12/44
**
368
 
Wachovia Bank Commercial Mortgage                        WBCMT 06-C24 XP
Interest Only Strip CSTR 3/45
**
86
 
Wachovia Bank Commercial Mortgage                       WBCMT 03-C6 A2
Mortgage backed security 4.498 8/35
**
374
 
Wachovia Bank Commercial Mortgage                       WBCMT 03-C7 A1
Mortgage backed security 4.241 10/35
**
1,177
 
Wachovia Bank Commercial Mortgage                      WBCMT 03-C8 A3
Mortgage backed security 4.445% 11/35
**
1,605
 
Wachovia Bank Commercial Mortgage                      WBCMT 04-C11 A3
Mortgage backed security 4.719 1/41
**
339
 
Wachovia Bank Commercial Mortgage                        WBCMT 04-C14 A2
Mortgage backed security 4.368 8/41
**
1,510
 
Wachovia Bank Commercial Mortgage                        WBCMT 05-C18 XP
Interest Only Strip  CSTR 4/42
**
84
 
Wachovia Bank Commercial Mortgage                       WBCMT 04-C15 XP
Interest Only Strip CSTR 10/41
**
293
 
Wachovia Auto Loan Owner Trust                             WALOT 06-1 A-3
Mortgage backed security 5.1 7/11
**
296
 
Wachovia Auto Loan Owner Trust                             WALOT 06-1B
Mortgage backed security 5.15% 7/12
**
405
 
Wachovia Capital
Corporate Bond 7.965 6/1/27 144A
**
117
 
Wachovia Auto Loan Owner Trust                            WALOT 06-2 B
Mortgage backed security 5.29% 6/12
**
751
 
Wachovia Auto Loan Owner Trust                             WALOT 06-2 C
Mortgage backed security 5.34% 10/12
**
233
 
Wachovia Corporation
Corporate Bond 6.15% 3/15/09
**
310
 
Wachovia Auto Loan Owner Trust                              WALOT 07-1 B
Mortgage backed security 5.38% 7/20/12
**
918
 
Wachovia Auto Loan Owner Trust                              WALOT 07-1 C
Mortgage backed security 5.45% 10/22/12
**
442
 
Wachovia Bank Commercial Mortgage                        WBCMT 07-C30 A1
Mortgage Backed security 5.031% 12/43
**
294


35 
 
 
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) – Schedule of Assets (Held at End of Year)
December 31, 2008
(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
 
Wachovia Bank Commercial Mortgage                        WBCMT 2007-C30 XP
Interest Only Strip CSTR 12/43
**
360
 
Washington Mutual Master Note                                 WMMNT 2007-B1 B1
Mortgage backed security 4.95% 3/14
**
1,572
 
Wells Fargo
Corporate Bond 3.98 10/29/10
**
549
 
Wells Fargo Mortgage Backed Securities                    WFMBS 05-AR4 2A2
Mortgage backed security CSTR 4/35
**
973
 
Wells Fargo Mortgage Backed Securities                     WFMBS 05-AR2 2A2
Mortgage backed security 4.57% 3/35
**
547
 
Wells Fargo Mortgage Backed Securities                     WFMBS 05-AR10 2A2
Mortgage backed security CSTR 6/35
**
523
 
WFS Financial Owner Trust                                            WESTO 05-3 A4
Mortgage backed security 4.39 5/13
**
537
 
WFS Financial Owner Trust                                            WESTO 05-3 B
Mortgage backed security 4.50 5/13
**
312
 
WFS Financial Owner Trust                                             WESTO 05-3 C
Mortgage backed security  4.54 5/13
**
378
 
 Sub-total Managed Income Fund
    
551,135
 
Self Directed Brokerage Account
9,698 Shares
**
             9,697
 
Total Assets
    
1,200,763
         

*   Represents a party-in-interest to the Plan.
** Historical cost is omitted because the investment is participant-directed.



36 
 
 




SIGNATURES

The Plan.  Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed by the undersigned thereunto duly authorized.
 
Eastman Investment and Employee
Stock Ownership Plan
 
 
 
 
 
 
Date:  June 29, 2009
By: /s/Scott V. King     
 
Scott V. King
 
Vice President, Controller and Chief Accounting Officer


37 
 
 

Eastman Investment and Employee Stock Ownership Plan
Exhibit Index



Exhibit
Number
Description
Sequential
Page Number
     
23.01
Consent of Independent Registered Public Accounting Firm
39
     

 

38