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Eastman repurchasing $1 billion worth of stock

Sharon Caskey Hayes • Oct 26, 2007 at 12:00 AM

KINGSPORT — Eastman Chemical Co. just completed the repurchase of $300 million worth of common stock authorized by its board of directors earlier this year.

Now the board has upped the ante and authorized the repurchase of another $700 million worth of stock, bringing the total share repurchase authorization to $1 billion this year.

The share repurchase was announced Friday by Eastman Chairman and CEO Brian Ferguson in a conference call with Wall Street analysts.

Ferguson said that between 2003 and the end of this year, Eastman will have accumulated about $1.5 billion in divestiture proceeds from the sale of assets around the globe.

Eastman has used about one-third of those proceeds to pay down the company’s debt.

“The remainder we are returning to stockholders through the $1 billion in share repurchases authorized this year,” Ferguson said.

A share repurchase plan typically elevates the market value of the remaining shares held by stockholders since it reduces the number of shares outstanding, and thus, increases earnings per share.

Under the $300 million share repurchase program, Eastman purchased a total of 4.6 million shares at an average price of $65 per share in the first three quarters of this year. The company had 81 million shares outstanding as of Sept. 30.

Richard A. Lorraine, senior vice president and chief financial officer, said the share repurchases “reflect both our strong financial profile and our confidence in future cash flows while also preserving financial flexibility as we continue to fund profitable growth initiatives.”

“These actions also demonstrate our commitment to enhancing stockholder value,” Lorraine said.

The company said its priorities for use of available cash continue to be paying the dividend, funding targeted growth initiatives, and repurchasing shares.

Eastman expects to repurchase shares from time to time in either the open market or through private transactions. The timing, volume and nature of share repurchases will be at the discretion of management, depending on market conditions, applicable securities laws and other factors, and may be suspended or discontinued at any time.

Eastman may also implement all or part of the repurchases under a Rule 10b5-1 trading plan, which would allow repurchases under preset terms at times when Eastman might otherwise be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

Traded on the New York Stock Exchange, Eastman’s shares closed Friday at $66.43, up 3.72 percent for the day.

Headquartered in Kingsport, Eastman manufactures and markets chemicals, fibers and plastics and posted $7.5 billion in sales in 2006. The company employs 11,000 worldwide, including 7,500 in Kingsport.

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