2006 Eastman 11K
 
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 [NO FEE REQUIRED]
 
For the fiscal year ended December 30, 2005
 
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
 
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 37660
 

 





Eastman Investment and Employee Stock Ownership Plan

Table of Contents

Report of Independent Registered Public Accounting Firm
3
   
Basic Financial Statements:
  
   
Statements of Net Assets Available for Benefits
4
Statements of Changes in Net Assets Available for Benefits
5
Notes to Financial Statements
6 - 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.


2

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 30, 2005 and 2004, and the changes in net assets available for benefits for the years 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 audits 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.



PricewaterhouseCoopers, LLP
Philadelphia, Pennsylvania
June 28, 2006







3

Eastman Investment and Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
December 30, 2005 and 2004
(in thousands)
                         
                         
       
2005
          
2004
    
       
Non-
          
Non-
    
   
Participant
  
participant
      
Participant
  
participant
    
   
Directed
  
Directed
  
Total
  
Directed
  
Directed
  
Total
                         
Assets
                        
                         
                         
Investments at fair value
$
712,973
$
103,426
$
816,399
$
648,283
$
128,486
$
776,769
                         
Investments at contract value
  
630,200
  
--
  
630,200
  
614,657
  
--
  
614,657
                         
Receivables:
                        
                         
Employer contributions
  
29,152
  
3,647
  
32,799
  
29,682
  
4,381
  
34,063
                         
Other
  
1,791
  
897
  
2,688
  
1,764
  
1,280
  
3,044
                         
Total assets
  
1,374,116
  
107,970
  
1,482,086
  
1,294,386
  
134,147
  
1,428,533
                         
                         
Liabilities
                        
                         
                         
Accrued expenses
  
14
  
15
  
29
  
12
  
16
  
28
                         
Other liabilities
  
26
  
954
  
980
  
384
  
1,146
  
1,530
                         
Total liabilities
  
40
  
969
  
1,009
  
396
  
1,162
  
1,558
                         
                         
Net assets available
                        
for plan benefits
$
1,374,076
$
107,001
$
1,481,077
$
1,293,990
$
132,985
$
1,426,975


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



4

Eastman Investment and Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
December 30, 2005 and 2004
(in thousands)
       
2005
          
2004
    
       
Non-
          
Non-
    
   
Participant
  
participant
      
Participant
  
participant
    
   
Directed
  
Directed
  
Total
  
Directed
  
Directed
  
Total
                         
Additions to net assets:
                        
                         
Investment income (loss)
                        
Interest
$
28,253
 $
-
 $
28,253
$
26,537
$
--
$
26,537
Dividends
  
20,766
  
3,781
  
24,547
  
13,702
  
4,395
  
18,097
Net appreciation (depreciation) in fair value of
                       
investments
  
26,930
  
(12,407)
  
14,523
  
72,949
  
43,555
  
116,504
Net investment gain (loss)
  
75,949
  
(8,626)
  
67,323
  
113,188
  
47,950
  
161,138
Participant contributions
  
67,917
  
--
  
67,917
  
98,937
  
--
  
98,937
Plan Sponsor contributions
  
29,152
  
3,647
  
32,799
  
29,552
  
4,381
  
33,933
Interfund transfers
  
15,882
  
(15,882)
  
-
  
20,051
  
(20,051)
  
--
Total additions
  
188,900
  
(20,861)
  
168,039
  
261,728
  
32,280
  
294,008
                         
Deductions from net assets:
                        
                         
Distributions to and withdrawals
                        
by participants
  
108,313
  
5,487
  
113,800
  
133,815
  
6,971
  
140,786
Loan transfers, net
  
364
  
(364)
  
--
  
154
  
(154)
  
-
Administrative expenses
  
137
  
--
  
137
  
169
  
--
  
169
                         
Total deductions
  
108,814
  
5,123
  
113,937
  
134,138
  
6,817
  
140,955
                         
Net increase (decrease) in net assets
  
80,086
  
(25,984)
  
54,102
  
127,590
  
25,463
  
153,053
Net assets available for plan
                        
benefits at beginning of year
  
1,293,990
  
132,985
  
1,426,975
  
1,166,400
  
107,522
  
1,273,922
Net assets available for plan
                        
benefits at end of year
$
1,374,076
 $
107,001
 $
1,481,077
$
1,293,990
$
132,985
$
1,426,975

The accompanying notes are an integral part of these financial statements.
5
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 30, 2005 and 2004 was immaterial.

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 including the Eastman Performance Plan payout, 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.


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

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 $14,000 and $13,000 for 2005 and 2004, respectively, 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 25% of qualifying compensation, as defined in the Plan, for 2005 and 2004 up to certain Internal Revenue Code limitations. In addition during 2004, participants were able to elect to defer a portion of their annual Eastman Performance Plan payout as a contribution to the Plan. The Eastman Performance Plan provides a lump-sum payment to participants based on the Company’s financial performance and is approved annually by the Company’s Board of Directors. For 2004, the maximum deferral for a Plan year is limited to 40% of the aggregate of Eastman Performance Plan payments and qualifying compensation, subject to certain Internal Revenue Code limitations. The final plan year for the Eastman Performance Plan ended on December 31, 2003. The final deferral from the Eastman Performance Plan occurred on March 12, 2004. 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 Note 5). Generally, participants may transfer amounts among the funds on any business day. Additionally, participants may, if certain conditions are met, diversify amounts from their ESOP Fund account within the Plan (see Note 8). 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 allows 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.

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.


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

Loans

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 30, 2005, $28.9 million in loans were outstanding for terms of 3 to 123 months and interest rates ranging from 4% to 10.50%. At December 30, 2004, $26.8 million in loans were outstanding for terms from 3 to 123 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 $5,000. Separated participants with accounts in excess of $5,000 or are retirement-eligible may elect (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, in monthly or annual installments. Participants in the Eastman Stock Fund or ESOP Fund may elect a lump sum distribution in Eastman common stock.

·  
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 $5,000. If the beneficiary is a surviving spouse and the participant account value exceeds $5,000, payment will be made in 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. Hardship withdrawals may not exceed the value of the participant’s accounts in the Plan on the date of withdrawal.

8
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements
 
·  
The Trustee is authorized to honor qualified domestic relation orders issued and served in accordance with Section 414(p) of the Internal Revenue Code.

·  
Effective March 28, 2005 the Plan was amended to lower the involuntary cash out limit from $5,000 to $1,000 for the majority of plan participants.

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.
 

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.
 

9
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements
 
·  
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
 
On or about August 1, 2004, the Company completed the sale of certain businesses and product lines in its coatings, adhesives, specialty polymers and inks ("CASPI") segment, including ABCO Industries, Inc. ("ABCO") and Eastman Resins, Inc. ("Resins") to Apollo Management, L.P. ("Apollo"), a private investment firm. In connection with this sale, on August 1, 2004, the Company fully vested each participant employed by (i) ABCO in his ABCO Employer Contribution Account, and (ii) Resins in his Resins Profit Sharing Account. The ABCO Employer Contribution Account and the Resins Profit Sharing Accounts held assets transferred to the Plan in connection with prior plan mergers. In February 2005, the Company made a contribution to the account of each participant, whose employment was terminated in connection with the sale of certain portions of the CASPI segment to Apollo, equal to 5% of the compensation paid to each participant for the period January 1, 2004 through July 31, 2004.
 
During 2005, the Company closed the operations of Cendian Corporation. The subsidiary's 401(k) plan was merged into the Plan on October 25, 2005. The assets of the Cendian plan are included in the participant's contributions total to the sum of $5.1 million.
 
 
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.

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.


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

Investment policy and valuation

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 Trustee has determined the market values of each fund as of December 30, 2005 and 2004. Such market values equal the aggregate of the closing prices of the securities held in each fund on December 30, 2005 and 2004 as reported by national exchanges, if available, or otherwise in good faith by the Trustee, plus cash, interest, dividends and such other sums received and accrued but not yet invested. The Managed Income Fund is reported at contract value as determined by the contract issuers. The Managed Income Fund is comprised of synthetic guaranteed investment contracts 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 wrapper contracts are valued as the difference between the contract value and the value of the underlying securities.

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.

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.

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.

Payments to participants

Benefits are recorded when paid.

 


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

3.  
CONTRIBUTIONS

Participant contributions represent qualifying compensation and other qualifying employee bonuses withheld from participating employees by Eastman and contributed to the Plan. Such
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 contributions for participant-directed funds of $29.2 million and $29.7 million, and for the non-participant-directed ESOP Fund of $3.6 million and $4.4 million at December 30, 2005 and 2004, respectively.

4.  
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
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 30, 2005 and 2004 were approximately $28.9 million and $26.8 million, respectively. Interest income earned on loans to participants is credited directly to the participants' accounts and was approximately $1.6 million and $1.4 million for 2005 and 2004.

5.  
INVESTMENTS

At December 30, 2005 and 2004, the Plan's assets were invested in investment contract funds (see Note 6), 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 Trustee manages investments in all funds. The following investment options, which invest primarily in common stock of the Plan sponsor, were available to participants in both 2005 and 2004:

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 2005, the Trustee purchased 1,460,100 shares of Eastman stock for the fund at an average price of $54.03 per share, and sold 1,315,900 shares of Eastman stock for the fund at an average price of $55.98 per share. During 2004, the Trustee purchased 1,143,200 shares of Eastman stock for the fund at an average price of $45.22 per share and sold 1,698,901 shares at an average price of $45.55 per share. Dividends paid from the Eastman Stock Fund totaled $2.7 million and $2.8 million in 2005 and 2004, respectively.


12
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 2005, the Trustee purchased 74,000 shares of Eastman stock for the fund at an average price of $56.48 per share, and sold 290,400 shares of Eastman stock for the fund at an average price of $55.85 per share. During 2004, the Trustee purchased 117,000 shares of Eastman stock for the fund at an average price of $42.94 per share, and sold 477,800 shares at an average price of $45.43 per share.


At December 30, 2005 and 2004, the following investments represented 5% or greater of ending net assets, (in thousands):

     
2005
     
Shares
  
Fair value
           
Eastman Chemical Company Common Stock, Non Participant Directed
    
8,420
$
102,455
Eastman Chemical Company Common Stock, Participant Directed
    
6,642
  
76,267
Fidelity Magellan® Fund
    
824
  
87,740
Fidelity Contrafund
    
1,881
  
121,797
           
           
     
2004
     
Shares
  
Fair value
           
Eastman Chemical Company Common Stock, Non Participant Directed
   
9,399
$
127,294
Eastman Chemical Company Common Stock, Participant Directed
    
5,987
  
79,328
Fidelity Magellan® Fund
    
927
  
96,356
Fidelity Contrafund
    
1,672
  
94,996


During 2005 and 2004, the Plan’s investments (including investments bought, sold and held during the year) appreciated (depreciated) in value by $14.5 million and $116.5 million, respectively, as follows (in thousands):

   
Net Appreciation
   
(Depreciation)
   
2005
  
2004
         
Eastman Chemical Company Common Stock, Non Participant Directed
$
(12,407)
$
43,555
Eastman Chemical Company Common Stock, Participant Directed
  
(4,551)
  
30,349
Mutual Funds
  
31,481
  
42,600
Total
$
14,523
$
116,504


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

6.  
INSURANCE CONTRACTS

The Plan holds an interest in the Managed Income Fund, which invests in guaranteed investment contracts ("GICs"), which are contracts between an insurance company and the fund that provide for guaranteed returns on principal amounts invested over various periods of time. This participant-directed fund also invests in synthetic 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.

To meet daily liquidity needs, the Managed Income Fund invests in short-term interest funds similar to money markets. The average yield for the Managed Income Fund was 4.10% and 4.22% for 2005 and 2004, respectively. The weighted average crediting interest rate for the fund was 3.95% and 4.02% at December 30, 2005 and 2004, respectively. In accordance with ERISA regulations, investment contracts held by the fund are reported at values determined by the contract issuer in accordance with the terms of the contracts themselves. The fair value in accordance with Statement of Financial Accounting Standards No. 107 "Disclosures about Fair Value of Financial Instruments" of investments contracts and short-term interest investments held by the fund was $623.5 million and $622.1 million at December 30, 2005 and 2004, respectively. Crediting interest rate resets occur quarterly and/or annually under the provisions of each individual contract in the fund. There are no minimum crediting interest rates for any of the investment contracts in the fund at December 30, 2005 and 2004.

The value of the Managed Income Fund reflected in these financial statements is based upon the principal invested and the interest credited. The fair value of the Managed Income Fund, by investment type, as of December 30, 2005 and 2004 was as follows:

(in thousands)
  
December 30,
2005
  
December 30,
2004
         
Security backed investments:
        
Underlying assets at fair value
$
623,499
$
622,097
Wrapper contracts
  
6,701
  
(7,440)
Total contract value
$
630,200
$
614,657
 

7.  
OTHER RECEIVABLES

Other receivables in the amount of $2.7 million and $3.0 million at December 30, 2005 and 2004, respectively represent interest and dividends receivable, as well as receivables from the sale of stock.



14
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements

8.  
DIVERSIFICATION FROM ESOP FUND

Active or retired employees of the Company are eligible to diversify funds held in their ESOP Fund account. Effective July 2003, a participant may direct that all or any portion of his ESOP Fund account be transferred to other funds in the Plan without restrictions. This diversification is elected by employee notification to the IPCO who then transfers a portion of their account within the Plan for investment as directed by the participant. During 2005 and 2004, $12.1 million and $15.7 million, respectively, were transferred from the ESOP Fund within the Plan in connection with this program.

9.  
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.

10.  
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.

11.  
PLAN EXPENSES

Reasonable expenses of administering the Plan, unless paid by the Company, shall be paid by the Plan. For both 2005 and 2004, 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 incident 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 2005 and 2004, the Company paid all other expenses of the Plan related to plan oversight and administration, including auditing fees.

12.  
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
Eastman Investment and Employee Stock Ownership Plan
Notes to Financial Statements
 
13. ACCOUNTING PRONOUNCEMENTS
 
In December 2005, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position Nos. AAG INV-1 and SOP 94-4-1, "Reporting of Fully Benefit-Responsive Investments Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pensions Plans" ("FSP").  The FSP clarifies the definition of fully benefit-responsive investment contracts for contracts held by defined contribution plans.  The FSP also establishes enhanced financial statement presentation and disclosure requirements for defined contribution plans subject to the FSP.  The FSP is effective for financial statements issued for periods ending after December 15, 2006.

Management intends to adopt the FSP in the Plan's financial statements for the year ended December 30, 2006.  The effect of the FSP on the Plan's financial statements is expected to be enhanced financial statement presentation and disclosure requirements including the following:
 
Benefit-responsive investment contracts will be presented at fair-value on the statement of net assets available for benefits and the amount representing the difference between fair value and contract value of the investment contracts shall be presented on the face of the statement of net assets available for benefits as a single amount, calculated as the sum of the amounts necessary to adjust the portion of net assets attributable to each fully benefit-responsive investment contract from fair value to contract value.  The statement of changes in net assets available for benefits shall be prepared on a basis that reflects income credited to participants in the Plan and net appreciation or depreciation in the fair value of only those investment contracts that are not deemed to be fully benefit responsive.
 
 
A description of the nature of the benefit-responsive investment contracts, how they operate, and the methodology for calculating the interest crediting rate.
 
 
The average yield earned by the Plan for all fully benefit-responsive investment contracts for the year.
 
 
The average yield earned by the Plan for all fully benefit-responsive investment contracts with an adjustment to reflect the actual interest rate credited to participants in the Plan for the year.
 
 
A description of the events that limit the ability of the Plan to transact at contract value with the issuer.
 
 
A description of the events and circumstances that would allow issuers to terminate fully benefit-responsive investment contracts with the Plan and settle at an amount different from contract value.
 
   



16
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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, 6,642 shares
**
76,267
*
Eastman Chemical Company
Interest Bearing Cash
**
2,485
*
Eastman Chemical Company
Common stock, Non Participant directed, 8,420 shares
103,681
102,455
*
Eastman Chemical Company
Interest Bearing Cash
**
971
*
Fidelity Fund
Registered Investment Company, 1,359 shares
**
43,273
*
Fidelity Puritan Fund
Registered Investment Company, 2,503 shares
**
46,873
*
Fidelity Magellan Fund
Registered Investment Company, 824 shares
**
87,740
*
Fidelity Contrafund
Registered Investment Company, 1,881 shares
**
121,797
*
Fidelity Spartan U.S. Equity Index Portfolio
Registered Investment Company, 795 shares
**
35,097
*
Fidelity International Discovery Fund
Registered Investment Company, 1,038 shares
**
32,866
*
PIMCO Total Return Fund
Registered Investment Company, 2,130 shares
**
22,365
*
Templeton Foreign Fund
Registered Investment Company, 744 shares
**
9,431
*
Neuberger and Berman Genesis Trust Fund
Registered Investment Company, 1,451 shares
**
70,458
*
Fidelity Blue Chip Growth Fund
Registered Investment Company, 346 shares
**
14,935
*
Fidelity Freedom Income Fund
Registered Investment Company, 124 shares
**
1,413
*
Fidelity Freedom 2000 Fund
Registered Investment Company, 110 shares
**
1,342
*
Fidelity Freedom 2010 Fund
Registered Investment Company, 511 shares
**
7,173
*
Fidelity Freedom 2020 Fund
Registered Investment Company, 705 shares
**
10,368
*
Fidelity Freedom 2030 Fund
Registered Investment Company, 443 shares
**
6,657
*
Fidelity Freedom 2040 Fund
Registered Investment Company, 263 shares
**
2,319
*
Fidelity Spartan Extended Market Index Portfolio
Registered Investment Company, 294 shares
**
10,201
*
Fidelity Spartan International Index Fund
Registered Investment Company, 163 shares
**
5,835
*
Participant Loans
Participant Loan Fund with terms ranging from 3-123 months and rates ranging from 4% to 10.5%
**
28,888
*
Fidelity Retirement Money Market
Registered Investment Company, 1 share
**
1
*
Clipper Fund
Registered Investment Company, 122 shares
**
10,798
*
Franklin Small Mid Cap Growth Fund
Registered Investment Company, 722 shares
**
27,240
*
TCW Galileo Select Equities Fund
Registered Investment Company, 182 shares
**
3,698
*
WFA Small Cap Val Z
Registered Investment Company, 970 shares
**
29,251
 
17
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
*
Managed Income Fund, consisting of the following:
  
**
  
 
Fidelity short term cash fund
CASH
  
5,105
 
AXA Financial Inc
Corporate bond 7.75% 8/01/10
 
1,066
 
Accredited Mortgage Loan Trust ACCR 03-2 A1
Mortgage backed security 4.23% 10/33
 
492
 
Accredited Mortgage Loan Trust ACCR 03-3 A1
Mortgage backed security 4.46% 12/33
 
467
 
ACE Securities Corp ACE 03-HS1 M1
Mortgage backed security 1ML+75 6/33
 
75
 
ACE Securities Corp ACE 03-HS1 M2
Mortgage backed security 1ML+175 6/33
 
102
 
ACE Securities Corp ACE 03-NC1 M1
Mortgage backed security 1ML+78 7/33 M
  
171
 
ACE Securities Corp ACE 03-HE1 M1
Mortgage backed security 1ML+65 11/33
 
201
 
ACE Securities Corp ACE 04-FM1 M1
Mortgage backed security 1ML+60 9/33
  
152
 
ACE Securities Corp ACE 02-HE1 M1
Mortgage backed security 1ML+65 6/32
 
207
 
Aesop Funding II LLC
AESOP 05-1A A1
Mortgage backed security 3.95% 4/08
  
980
 
AIFUL Corporation
Corporate bond 4.45% 2/16/10 144A
  
2,509
 
AIFUL Corporation
Corporate bond 5% 8/10/10 144A
  
1,193
 
Alabama Power Co
Corporate bond 3.5% 11/15/07
 
553
 
Alliance Capital Management LP
Corporate bond 5.625% 8/15/06
 
2,717
 
Alltel Corp
Corporate bond 4.656% 5/17/07
  
2,788
 
America Movil SA
Corporate bond 4.125% 3/1/09
  
1,281
 
American General Finance Corp
Corporate bond 2.75% 6/15/08
 
498
 
American General Finance Corp
Corporate bond 4.625% 5/15/09
 
1,125
 
American General Finance Corp
Corporate bond 3.875% 10/1/09
 
431
 
American General Finance Corp
Corporate bond 4.875% 5/15/10
  
2,185
 
American Honda Finance Corp
Corporate bond 4.5% 5/26/09 144A
 
1,194
 
American Honda Finance Corp
Corporate bond 4.25% 3/11/08 144A
  
1,867
 
AmeriCredit Automobile Receivables Trust AMCAR 03-CF A4
Mortgage backed security 3.48% 5/10
 
842
 
AmeriCredit Automobile Receivables Trust AMCAR 04-BM A3
Mortgage backed security 2.07% 8/08
 
527
 
AmeriCredit Automobile Receivables Trust AMCAR 04-1 A3
Mortgage backed security 3.22% 7/08
 
432
 
AmeriCredit Automobile Receivables Trust AMCAR 04-1 B
Mortgage backed security 3.7% 1/09
 
74
 
AmeriCredit Automobile Receivables Trust AMCAR 04-1 C
Mortgage backed security 4.22% 7/09
 
79
 
AmeriCredit Automobile Receivables Trust AMCAR 04-CA A4
Mortgage backed security 3.61% 5/11
 
293
 
AmeriCredit Automobile Receivables Trust AMCAR 04-DF A3
Mortgage backed security 2.98% 7/09
 
576
 
AmeriCredit Automobile Receivables Trust AMCAR 04-DF A4
Mortgage backed security 3.43% 7/11
 
762
 
AmeriCredit Automobile Receivables Trust
AMCAR 05/1 A3
Mortgage backed security 4.26% 5/09
  
458
 
AmeriCredit Automobile Receivables Trust
AMCAR 05-BM A3
Mortgage backed security 4.05% 2/10
  
920
 
AmeriCredit Automobile Receivables Trust
AMCAR 05-CF A4
Mortgage backed security 4.63% 6/12
  
1,401
 
AmeriCredit Automobile Receivables Trust
AMCAR 05-DA A3
Mortgage backed security 4.87% 12/10
  
1,339
 
18
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
Ameriprise Finl Inc
Corporate bond 5.35% 11/15/10
  
511
 
Ameriquest Mortgage Securities Inc AMSI 03-3 M1
Mortgage backed security 1ML+80 3/33
 
176
 
Ameriquest Mortgage Securities Inc AMSI 04-R2 M1
Mortgage backed security 1ML+43 4/34
 
125
 
Ameriquest Mortgage Securities Inc AMSI 04-R2 M2
Mortgage backed security 1ML+48 4/34
 
100
 
ANZ Natl (Intl) Ltd
Corporate bond 4.265 5/16/05 144
  
1,805
 
ARGF Funding Corp
ARGF 05-1 A1
Mortgage backed security 4.02% 4/09
  
1,618
 
ARGF Funding Corp
ARGF 05-2 A1
Mortgage backed security 4.54% 5/09
  
1,285
 
Asset Backed Securities Corp Home Equity ABSHE 03-HE5 A2B
Mortgage backed security 4 8/33
 
43
 
Asset Backed Securities Corp Home Equity ABSHE 03-HE6 M1
Mortgage backed security 1ML+65 11/33
 
378
 
Asset Backed Securities Corp Home Equity ABSHE 04-HE3 M1
Mortgage backed security 1ML+54 6/34
 
151
 
Associates Corp Of N. America
Corporate bond 6.875% 11/15/08
 
127
 
Associates Corp Of N. America
Corporate bond 6.25% 11/01/08
  
821
 
AT&T Wireless
Corporate Bond 7.875% 3/01/11
  
1,648
 
BTM Curacao Holding NV
Corporate bond 4.76% 7/21/15 144A
  
416
 
Ball Corp 05-ESHAX1
Interest only strip CSTR 7/20
  
431
 
Banc of America Commercial Mortgage Inc BACM 04-6 XP
Interest only strip CSTR 12/42
  
162
 
Banc of America Commercial Mortgage Inc BACM 04-2 A3
Mortgage backed security 4.05% 11/38
  
2,145
         
 
Banc of America Commercial Mortgage Inc BACM 04-4 A3
Mortgage backed security 4.128% 7/42
  
668
 
Banc of America Commercial Mortgage Inc BACM 04-5 XP
Interest only strip CSTR 11/41
  
237
 
Banc of America Commercial Mortgage Inc
BACM 05-5 A1
Mortgage backed security 4.716% 8/10
  
1,145
 
Banc of America Commercial Mortgage Inc
BACM 05-6 A1
Mortgage backed security 5.001% 9/47
  
704
 
Banc of America Commercial Mortgage Inc
BACM 05-1 A2
Mortgage backed security 4.64% 11/42
  
1,446
 
Banc of America Commercial Mortgage Inc
BACM 2003-2 A2
Mortgage backed security 4.342% 3/41
  
1,306
 
Banc of America Commercial Mortgage Inc
BACM 05-3 A3B
Interest only strip CSTR 7/43
  
946
 
Banc of America Commercial Mortgage Inc
BACM 05-3 XP
Interest only strip CSTR 7/43
  
357
 
Banc of America Commercial Mortgage Inc
BACM 05-4 A1
Mortgage backed security 4.432 7/45
  
848
 
Banc of America Commercial Mortgage Inc
BACM 05-4 XP
Interest only strip CSTR 7/45
  
101
 
Bank of New York Co Inc/The
Corporate bond 4.25%/3ML 9/4/12
  
602
 
Bank of New York Co Inc/The
Corporate bond 3.4/3ML+148 3/15/13
  
2,086
 
Bank of Tokyo MIT GL
Corporate bond 8.4% 4/15/10
  
1,221
 
Bank One Corp
Corporate bond 6% 8/01/08 DT
  
1,062
 
Bank One Texas
Corporate bond 6.25% 2/15/08
  
630
 
19
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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 One
Corporate bond 2.625% 6/30/08
  
2,113
 
Bank One Issuance Trust BOIT 04-B2 B2
Mortgage backed security 4.37% 4/12
  
1,365
 
BankAmerica Corp/Old
Corporate bond 6.25% 4/01/08
  
245
 
Bank UTD Cop
Corporate bond 8.875% 5/01/07
  
1,281
 
Bayview Financial Acquisition Trust BAYV 04-C A1
Mortgage backed security 1ML+42 5/44
  
708
 
Bayview Commercial Asset Trust BAYC 04-2 A1
Mortgage backed security 1ML+43 8/34
  
610
 
Bayview Commercial Asset Trust BAYC 04-2 M1
Mortgage backed security 1ML+58 8/34
  
195
 
Bayview Commercial Asset Trust BAYC 04-3 M1
Mortgage backed security 1ML+50 1/35
  
136
 
Bayview Commercial Asset Trust BAYC 04-3 M2
Mortgage backed security 1ML+100 1/35
  
91
 
Bear Stearns Commercial Mortgage Securities BSCMS 04-ESA B
Mortgage backed security 4.888% 5/16
  
344
 
Bear Stearns Commercial Mortgage Securities BSCMS 04-ESA C
Mortgage backed security 4.937% 5/16
  
390
 
Bear Stearns Commercial Mortgage Securities BSCMS 04-ESA D
Mortgage backed security 4.986% 5/16
  
140
 
Bear Stearns Commercial Mortgage Securities BSCMS 04-ESA E
Mortgage backed security 5.064% 5/16
  
442
 
Bear Stearns Commercial Mortgage Securities BSCMS 04-ESA F
Mortgage backed security 5.182% 5/16
  
105
 
Bear Stearns Commercial Mortgage Securities BSCMS 04-PWR5 A2
Mortgage backed security 4.254% 7/42
  
629
 
Bear Stearns Commercial Mortgage Securities BSCMS 04-PWR5 X2
Interest only strip CSTR 7/42
  
205
 
Bear Stearns Commercial Mortgage Securities BSCMS 04-T16 A3
Mortgage backed security 4.03% 2/46
  
1,508
 
Bear Stearns Commercial Mortgage Securities BSCMS 04-PWR6 X2
Interest only strip CSTR 11/41
  
128
 
Bear Stearns Commercial Mortgage Securities BSCMS 03-PWR2 A3
Mortgage backed security 4.83% 5/39
  
421
 
Bear Stearns Commercial Mortgage
Securities BSCMS 04-ESA A3
Mortgage backed security 4.741% 5/16
  
1,118
 
Bear Stearns Commercial Mortgage
Securities BSCMS 03-T12 X2
Interest only strip CSTR 8/39
  
67
 
Bear Stearns Commercial Mortgage
Securities BSCMS 05-PER9 A1
Mortgage backed security 4.498% 9/42
  
1,334
 
Bear Stearns Commercial Mortgage
Securities BSCMS 05-T20 A1
Mortgage backed security 4.94% 10/42
  
1,232
 
Bear Stearns Asset Backed Securities Inc BSABS 04-BO1 M3
Mortgage backed security 1ML+105 9/34
  
262
 
Bear Stearns Asset Backed Securities Inc BSABS 04-BO1 M4
Mortgage backed security 1ML+120 9/34
  
223
 
Bear Stearns Asset Backed Securities Inc BSABS 04-BO1 M5
Mortgage backed security 1ML+140 9/34
  
211
 
Bear Stearns Assest Backed Securities Inc
ARM 05-3 1A1
Interest only strip CSTR 8/35
  
1,619
 
BellSouth Corp
Corporate bond 4.2% 9/15/09 DT
  
851
 
Berkshire Hathaway
Corporate bond 3.4% 7/2/07
  
1,185
 
Boeing Cap Glbl
Corporate bond 5.75% 2/15/07
  
655
 
British Telecommunications PLC
Corporate bond 8.12% 5/8.375 12/10
  
1,393
 
20
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
CDC Mortgage Capital Trust CDCMC 03-HE3 M1
Mortgage backed security 1ML+70 11/33
  
248
 
Cendant Timeshare Receivables Funding
CDTIM 05-1 A1
Mortgage backed security 4.67% 5/17
  
512
 
CIT Equipment Collateral
CITEC 05-VT1A3
Mortgage backed security 4.12% 8/08
  
1,037
 
CIT Equipment Collateral
CITEC 05-VT1A4
Mortgage backed security 4.36% 11/12
  
213
 
CIT Group Inc
Corporate bond 3.375% 4/01/09
  
499
 
CIT Group Inc
Corporate bond 3.65% 11/23/07
  
1,030
 
CIT Group Inc
Corporate bond 5% 11/24/08
  
1,015
 
CNH Equipment Trust
CNH 05-A A3
Mortgage backed security 4.02% 4/09
  
822
 
CNH Equipment Trust
CNH 05-B A3
Mortgage backed security 4.27% 1/10
  
1,408
 
CNH Equipment Trust
CNH 05-B B
Mortgage backed security 4.57% 7/12
  
399
 
Commercial Mortgage Pass-Through Certificate COMM 05-C6 XP
Interest only strip CSTR 6/44
  
157
 
Countrywide Asset-Backed Certificates CWL 04-3 M1
Mortgage backed security 1ML+50 6/34
  
150
 
Countrywide Asset-Backed Certificates CWL 04-4 A
Mortgage backed security 1ML+37.5 8/34
  
171
 
Countrywide Asset-Backed Certificates CWL 04-4 M1
Mortgage backed security 1ML+48 7/34
  
376
 
Countrywide Asset-Backed Certificates CWL 03-SD3 A1
Mortgage backed security 1ML+42 12/32
  
59
 
Countrywide Home Loan Mortgage Pass CWHL 02-25 2A1 Through Trust
Mortgage backed security 5.5% 11/17
  
298
 
Canadian IMP Bk Comm NY
CIBC # Y$CD
Certificate of Deposit 4.375% 7/28/2008
  
815
 
Capital Auto Receivables Asset Trust CARAT 04-2 A2
Mortgage backed security 3.35% 2/08
  
880
 
Capital Auto Receivables Asset Trust
CARAT 04/1 A4
Mortgage backed security 2.64% 11/08
  
651
 
Capital Auto Receivables Asset Trust
CARAT 05/1 A4
Mortgage backed security 4.05% 7/09
  
1,293
 
Capital One Mtn
Corporate bond 4.875% 5/15/08
  
301
 
Capital One Mtn
Corporate bond 4.25% 12/01/08
  
294
 
Capital One Auto Finance Trust COAFT 04-B A3
Mortgage backed security 2.96% 4/09
  
718
 
Capital One Auto Finance Trust
COAFT 05-A A3
Mortgage backed security 4.28% 7/09
  
1,068
 
Capital One Auto Finance Trust
COAFT 05-BSSC
Mortgage backed security 4.48% 12/10
  
949
 
Capital One Auto Finance Trust
COAFT 05-C A4
Mortgage backed security 4.71% 6/12
  
2,923
 
Capital One Auto Finance Trust
COAFT 05-D A3
Mortgage backed security 4.81% 3/10
  
602
 
Capital One Multi-Asset Execution Trust COMET 03-2B
Mortgage backed security 3.5% 2/09
  
683
 
Capital One Multi-Asset Execution Trust COMET 04-B5 B5
Mortgage backed security 3.7% 5/10
  
1,583
 
Capital One Multi-Asset Execution Trust COMET 04-B6 B6
Mortgage backed security 4.155% 7/12
  
1,125
 
21
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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 One Multi-Asset Execution Trust
COMET 2003-B3 B3
Mortgage backed security 4.5% 6/11
  
1,849
 
Capital One Multi-Asset Execution Trust
COMET 05-A2A2
Mortgage backed security 4.05% 2/11
  
1,859
 
Capital One Prime Auto Receivables Trust COPAR 04-3 A3
Mortgage backed security 3.39% 1/09
  
869
 
Capital One Prime Auto Receivables Trust
COPAR 2003-2 A4
Mortgage backed security 2.88% 6/10
  
825
 
Capital Trust Re CDO Ltd CTCDO 04-1A A2
Mortgage backed security 1ML+45 7/39
  
300
 
Capital Trust Re CDO Ltd CTCDO 04-1A B
Mortgage backed security 1ML+75 7/39
  
160
 
Capital Trust Re CDO Ltd CTCDO 04-1A C
Mortgage backed security 1ML+110 7/39
  
205
 
Chase Commercial Mortgage Securities Corp CCMSC 99-2 A1
Mortgage backed security 7.032% 1/32
  
283
 
Chase Insurance Trust
CCMSC 99-2 A1
Mortgage backed security 4.52% 12/10
  
6,315
 
Chile Government International Bond CHILE REP GLB
Corporate bond 6.875% 4/28/09 DT
  
43
 
Chile Government International Bond CHILE REP GLB
Corporate bond 5.625% 7/23/07 DT
  
1,052
 
Chubb Corp CHUBB CORP
Corporate bond 3.95% 4/01/08
  
163
 
Chubb Corp
Corporate bond 4.934% 11/16/07
  
2,283
 
Citigroup Inc
Corporate bond 3.5% 2/01/08
  
721
 
Citibank Credit Card Issuance Trust CCCIT 03-A6 A6
Mortgage backed security 2.9% 5/10
  
466
 
Citibank Credit Card Issuance Trust CCCIT 04-A4
Mortgage backed security 3.2% 8/09
  
1,661
 
Citibank Credit Card Issuance Trust
CCCIT 05-B1 B1
Mortgage backed security 4.4% 9/10
  
3,468
 
Citigroup Commercial Mortgage Trust CGCMT 04-C2 XP
Interest only strip CSTR 10/41
  
209
 
Citigroup Commercial Mortgage Trust
CGCMT 05-EMG A2
Mortgage backed security 4.2211% 9/51
  
472
 
Commercial Mortgage Pass Through Certificates COMM 99-1 A2
Mortgage backed security 6.455% 5/32
  
1,142
 
Commercial Mortgage Pass Through Certificates COMM 04-CNL X1
Interest only strip CSTR 9/14
  
76
 
Commercial Mortgage Pass Through Certificates COMM 04-CNL B
Mortgage backed security 1ML+40 9/14
  
200
 
Commercial Mortgage Pass Through Certificates COMM 04-CNL D
Mortgage backed security 1ML+64 9/14
  
60
 
Commercial Mortgage Pass Through Certificates COMM 04-CNL E
Mortgage backed security 1ML+70 9/14
  
85
 
Commercial Mortgage Pass Through Certificates COMM 04-CNL F
Mortgage backed security 1ML+80 9/14
  
65
 
Commercial Mortgage Pass Through Certificates COMM 04-HTL1 B
Mortgage backed security 1ML+45 7/16
  
27
 
Commercial Mortgage Pass Through Certificates security COMM 04-HTL1 D
Mortgage backed 1ML+55 7/16
  
64
 
Commercial Mortgage Pass Through Certificates COMM 04-HTL1 E
Mortgage backed security 1ML+75 7/16
  
45
 
Commercial Mortgage Pass Through Certificates COMM 04-HTL1 F
Mortgage backed security 1ML+80 7/16
  
48
 
22
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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 Certificates COMM 04-LNB4 XP
Interest only strip CSTR 10/37
  
377
 
Commercial Mortgage Pass Through
Certificates COMM 05-LP5 A2
Mortgage backed security 4.63% 5/43
  
1,308
 
Commercial Mortgage Pass Through
Certificates COMM 05-LP5 XP
Interest only strip CSTR 5/43
  
153
 
Commercial Mortgage Acceptance Corp
CMAC 98-C2 B
Mortgage backed security CSTR 9/30
  
1,742
 
Commercial Mortgage Asset Trust
CMAT 99-C1 A3
Mortgage backed security 6.64% 1/32
  
352
 
Consolidated Natural Gas Co
Corporate bond 5.375% 11/01/06
  
708
 
Constellation Energy GRP
Corporate bond 6.35% 4/01/07
  
1,238
 
Constellation Energy GRP
Corporate bond 6.125% 9/01/09
  
568
 
Costco Wholesale Corp
Corporate bond 5.5% 3/15/07
  
470
 
CS First Boston Mortgage Securities Corp CSFB 97-C2 A2
Mortgage backed security 6.52% 1/35
  
18
 
CS First Boston Mortgage Securities Corp CSFB 97-C2 A3
Mortgage backed security 6.55% 1/35
  
642
 
CS First Boston Mortgage Securities Corp CFSB 99-C1 A2
Mortgage backed security 7.29% 9/41
  
2,926
 
CS First Boston Mortgage Securities Corp
CFSB 01-CK3 A3
Mortgage backed security 6.4% 6/34
  
593
 
CS First Boston Mortgage Securities Corp CSFB 03-C5 A3
Mortgage backed security 4.429% 12/36
  
950
 
CS First Boston Mortgage Securities Corp CSFB 03-C4 A3
Interest only strip CSTR 8/36
  
562
 
CS First Boston Mortgage Securities Corp CSFB 04-C1 A3
Mortgage backed security 4.321% 1/37
  
508
 
CS First Boston Mortgage Securities Corp CSFB 04-C4 ASP
Interest only strip CSTR 10/39
  
211
 
CS First Boston Mortgage Securities Corp CSFB 04-HC1 A2
Mortgage backed security 1ML+50 12/21
  
170
 
CS First Boston Mortgage Securities Corp CSFB 04-HC1 B
Mortgage backed security 1ML+75 12/21
  
441
 
CS First Boston Mortgage Securities Corp
CSFB 05-C1 ASP
Interest only strip 2/38
  
175
 
CS First Boston Mortgage Securities Corp
CSFB 05-C4 ASP
Interest only strip 8/38
  
411
 
CS First Boston Mortgage Securities Corp
CSFB 05-C2 ASP
Interest only strip 4/37
  
229
 
Crown Castle International
CCI05-1A B
Mortgage backed security 4.878% 6/35
  
518
 
Crown Castle International
CCI05-1A B
Mortgage backed security 5.074% 6/35
  
472
 
DLJ Commercial Mortgage Corp DLJCM 99-CG1 A1B
Mortgage backed security 6.46% 3/32
  
1,036
 
DLJ Commercial Mortgage Corp
DLJCM 1999-CG10A3
Mortgage backed security 6.77% 3/32
  
1,426
 
DLJ Commercial Mortgage Corp
DLJCM 00-CF1A1B
Mortgage backed security 7.62% 6/33
  
928
 
DaimlerChrysler NA Holding Corp
Corporate bond 4.75% 1/15/08
  
1,919
 
DaimlerChrysler NA Holding Corp
Corporate bond 9/10/07 SER D #36
  
632
 
Daimler Chrysler Auto Trust DCAT 04-C A3
Mortgage backed security 2.98% 8/08
  
1,461
 
Daimler Chrysler Auto Trust DCAT 05-B A3
Mortgage backed security 4.04% 9/09
  
803
 
23
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
John Deere Capital Corp
Corporate bond 3.9% 1/15/08 DT
  
799
 
John Deere Capital Corp
Corporate bond 3.375% 10/1/07
  
1,091
 
John Deere Mtn
Corporate bond 4.375% 3/14/08
  
972
 
Diversified Reit Trust DRT00-1A A2
Mortgage backed security 6.971% 3/10
  
734
 
RR Donnelley & Sons Co
Corporate bond 3.75% 4/1/09
  
1,842
 
Drive Insurance 05-1 A3
Mortgage backed security 3.75% 4/09
  
484
 
Drive Insurance 05-3 A3
Mortgage backed security 4.99% 10/10
  
1,305
 
Exelon General Global
Corporate bond 6.95% 6/15/11
  
1,368
 
Federal Farm Credit Bank
Government bond 3.25% 6/15/07
  
5,114
 
Federal Home Loan Bank
Government bond 4.25% 4/16/07
  
3,514
 
FPL Group Capital Inc
Corporate bond 3.25% 4/11/06
  
331
 
FPL Group Capital Inc
Corporate bond 5.551% 2/16/08
  
741
 
Freddie Mac
FHLMC 3.875% 1/12/09-1/06
  
1,728
 
Freddie Mac
FHLMC 4.48% 9/19/08
  
2,756
 
Freddie Mac FHR 1608 J
Mortgage backed security 6% 6/22
  
395
 
Freddie Mac FHR 1644 IA
Mortgage backed security 6.75% 8/23
  
157
 
Freddie Mac FHR 2292 QT
Mortgage backed security 6.5% 5/30
  
49
 
Freddie Mac
FHLMC 4.25% 7/15/09
  
8,031
 
Freddie Mac
FHLMC 4.00% 8/17/07
  
6,610
 
Freddie Mac
FHLMC 5.00% 5/14 #E76434
  
27
 
Freddie Mac
FHLMC 5.00% 6/14 #E77224
  
105
 
Freddie Mac
FHLMC 4.889% 3/33 #847126
  
50
 
Freddie Mac
FHLMC 4.314% 12/34 #1B2670
  
125
 
Freddie Mac
FHLMC 4.106% 12/34 #1B2699
  
107
 
Freddie Mac
FHLMC 4.497% 6/35 #1B2907
  
175
 
Freddie Mac
FHLMC 4.307% 5/35 #847408
  
230
 
Freddie Mac
FHLMC 4.00% 2/35 #1G0068
  
215
 
Freddie Mac
FHLMC 4.37% 3/35 #1G0125
  
204
 
Freddie Mac
FHLMC 4.401% 2/35 #1G0103
  
280
 
Freddie Mac
FHLMC 4.444% 3/35 #1G0133
  
141
 
Freddie Mac
FHLMC 4.504% 3/35 #1G0145
  
156
 
Freddie Mac
FHLMC 4.498% 3/35 #1L0123
  
914
 
Freddie Mac
FHLMC 5.034% 4/35 #1N0002
  
766
 
Freddie Mac
FHLMC 5.676% 4/32 #789284
  
32
 
Freddie Mac
FHLMC 4.819% 10/32 #1B0610
  
20
 
Freddie Mac
FHLMC 4.441% 2/34 #781229
  
155
 
Freddie Mac
FHLMC 4.13% 12/34 #782916
  
147
 
Freddie Mac
FHLMC 4.985% 8/33 #782926
  
68
 
Freddie Mac
FHLMC 4.232% 1/35 #782988
  
460
 
Freddie Mac
FHLMC 4.434% 2/35 #783032
  
295
 
Freddie Mac
FHLMC 4.307% 3/35 #783067
  
140
 
Fannie Mae
FNMA 6.00% 5/15/08
  
9,737
 
Fannie Mae
FNMA 5.25% 1/15/09
  
9,963
 
Fannie Mae
FNMA 6.625% 9/15/09
  
6,295
 
Fannie Mae
FNMA 4.75% 1/02/07 SUBS
  
8,584
 
Fannie Mae
FNMA 4.00% 9/02/08 SUBS
  
2,353
 
Fannie Mae
FNMA 3.375% 12/15/2008
  
6,081
 
Fannie Mae
FNMA 3.25% 2/15/09
  
422
 
Fannie Mae
FNMA 4.50% 10/15/08
  
31,375
 
Fannie Mae Pool
FNMA 15YR 7.00% 8/08 #252068
  
55
 
Fannie Mae Pool
FNMA 15YR 7.00% 1/13 #251428
  
11
 
Fannie Mae Pool
FNMA 15YR 6.50% 11/13 #323755
  
459
 
Fannie Mae Pool
FNMA 15YR 7.00% 8/14 #323877
  
90
 
Fannie Mae Pool
FNMA 15YR 6.00% 3/14 #487614
  
45
 
24
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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 Pool
FNMA 15YR 6.50% 9/14 #514373
  
3
 
Fannie Mae Pool
FNMA 15YR 6.00% 11/14 #520642
  
32
 
Fannie Mae Pool
FNMA 15YR 7.00% 11/14 #522277
  
34
 
Fannie Mae Pool
FNMA 15YR 6.50% 10/13 #535234
  
866
 
Fannie Mae Pool
FNMA 15YR 7.00% 6/16 #545122
  
28
 
Fannie Mae Pool
FNMA 15YR 7.00% 2/16 #569915
  
86
 
Fannie Mae Pool
FNMA 15YR 6.00% 10/16 #589129
  
43
 
Fannie Mae Pool
FNMA 15YR 7.00% 8/16 #599602
  
91
 
Fannie Mae Pool
FNMA 15YR 7.00% 1/21 #TBA
  
1,135
 
Fannie Mae Pool
FNMA 15YR 7.00% 4/17 #636135
  
343
 
Fannie Mae Pool
FNMA 15YR 6.50% 4/17 #637244
  
261
 
Fannie Mae Pool
FNMA 15YR 6.00% 11/17 #671380
  
228
 
Fannie Mae Pool
FNMA 15YR 6.00% 11/17 #672789
  
72
 
Fannie Mae Pool
FNMA 15YR 6.00% 12/17 #673965
  
110
 
Fannie Mae FNR 02-18 PE
Mortgage backed security 5.5% 6/16
  
2,001
 
Fannie Mae Pool
FNMA 15YR 6.00% 2/18 #684153
  
23
 
Fannie Mae Pool
FNMA 15YR 7.00% 2/18 #693327
  
334
 
Fannie Mae Pool
FNMA 15YR 4.00% 8/18 #727438
  
1,464
 
Fannie Mae Pool
FNMA ARM 3.878% 6/33 #723633
  
387
 
Fannie Mae Pool
FNMA ARM 3.975% 11/34 #781809
  
180
 
Fannie Mae Pool
FNMA ARM 4.025% 1/35 #781871
  
168
 
Fannie Mae Pool
FNMA ARM 4.25% 2/35 #255658
  
110
 
Fannie Mae Pool
FNAM ARM 4.35% 8/33 #555696
  
199
 
Fannie Mae Pool
FNMA ARM 4.710% 10/32 #648938
  
23
 
Fannie Mae Pool
FNMA ARM 4.986% 11/32 #668236
  
71
 
Fannie Mae Pool
FNMA ARM 4.732% 10/32 #668509
  
26
 
Fannie Mae Pool
FNMA ARM 4.925% 12/32 #677026
  
11
 
Fannie Mae Pool
FNMA ARM 3.828% 4/33 #688969
  
295
 
Fannie Mae Pool
FNMA ARM 4.646% 1/33 #689554
  
64
 
Fannie Mae Pool
FNMA ARM 4.708% 2/33 #693344
  
20
 
Fannie Mae Pool
FNMA ARM 4.318% 3/33 #694530
  
43
 
Fannie Mae Pool
FNMA ARM 4.292% 3/33 #701296
  
113
 
Fannie Mae Pool
FNMA ARM 3.984% 5/33 #703915
  
30
 
Fannie Mae Pool
FNMA ARM 4.079% 4/33 #708221
  
34
 
Fannie Mae Pool
FNMA ARM 4.351% 6/33 #720921
  
53
 
Fannie Mae Pool
FNMA ARM 3.836% 6/33 #723760
  
68
 
Fannie Mae Pool
FNMA ARM 4.479% 4/34 #725361
  
146
 
Fannie Mae Pool
FNMA ARM 3.765% 7/34 #725834
  
412
 
Fannie Mae Pool
FNMA ARM 4.862% 9/34 #725855
  
181
 
Fannie Mae Pool
FNMA ARM 4.832% 8/34 #725858
  
104
 
Fannie Mae Pool
FNMA ARM 4.409% 10/34 #725968
  
517
 
Fannie Mae Pool
FNMA ARM 4.115% 2/35 #735343
  
59
 
Fannie Mae Pool
FNMA ARM 4.162% 2/35 #735345
  
159
 
Fannie Mae Pool
FNMA ARM 4.587% 2/35 #735355
  
927
 
Fannie Mae Pool
FNMA ARM 4.49% 8/34 #735360
  
299
 
Fannie Mae Pool
FNMA ARM 4.357% 1/35 #735364
  
102
 
Fannie Mae Pool
FNMA ARM 5.229% 8/33 #735030
  
140
 
Fannie Mae Pool
FNMA ARM 4.20% 1/35 #735162
  
318
 
Fannie Mae Pool
FNMA ARM 4.53% 3/35 #735448
  
295
 
Fannie Mae Pool
FNMA ARM 3.463% 4/34 #735478
  
206
 
Fannie Mae Pool
FNMA ARM 4.319% 5/35 #735538
  
135
 
Fannie Mae Pool
FNMA ARM 4.177$ 3/35 #735545
  
446
 
Fannie Mae Pool
FNMA ARM 4.815% 12/32 #735602
  
134
 
25
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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 Pool
FNMA ARM 4.423% 5/35 #745049
  
914
 
Fannie Mae Pool
FNMA ARM 3.753% 10/33 #746320
  
86
 
Fannie Mae Pool
FNMA ARM 4.055% 10/18 #749296
  
90
 
Fannie Mae Pool
FNMA ARM 3.752% 10/33 #755148
  
88
 
Fannie Mae Pool
FNMA ARM 4.358% 10/33 #754672
  
43
 
Fannie Mae Pool
FNMA ARM 4.294% 1/34 #759264
  
131
 
Fannie Mae Pool
FNMA ARM 3.750% 1/34 #761058
  
94
 
Fannie Mae Pool
FNMA ARM 3.826% 10/33 #763199
  
1,067
 
Fannie Mae Pool
FNMA ARM 4.250% 1/34 #765659
  
150
 
Fannie Mae Pool
FNMA ARM 4.25% 2/34 #765660
  
111
 
Fannie Mae Pool
FNMA ARM 4.23% 3/34 #766457
  
82
 
Fannie Mae Pool
FNMA ARM 4.057% 5/34 #768224
  
44
 
Fannie Mae Pool
FNMA ARM 4.368% 2/34 #769940
  
232
 
Fannie Mae Pool
FNMA ARM 4.021% 12/34 #773212
  
97
 
Fannie Mae Pool
FNMA ARM 3.83% 1/35 #773220
  
95
 
Fannie Mae Pool
FNMA ARM 3.98% 1/35 #773221
  
113
 
Fannie Mae Pool
FNMA ARM 4.0% 1/35 #773225
  
75
 
Fannie Mae Pool
FNMA ARM 4.12% 2/35 #773243
  
154
 
Fannie Mae Pool
FNMA ARM 4.128% 2/35 #773255
  
304
 
Fannie Mae Pool
FNMA ARM 4.455% 3/35 #773281
  
134
 
Fannie Mae Pool
FNMA ARM 4.305% 7/34 #776389
  
75
 
Fannie Mae Pool
FNMA ARM 3.939% 10/34 #781549
  
124
 
Fannie Mae Pool
FNMA ARM 3.987% 12/34 #781575
  
121
 
Fannie Mae Pool
FNMA ARM 3.786% 12/34 #781576
  
112
 
Fannie Mae Pool
FNMA ARM 3.827% 12/34 #781580
  
17
 
Fannie Mae Pool
FNMA ARM 3.791% 6/34 #783545
  
425
 
Fannie Mae Pool
FNMA ARM 4.351% 1/35 #783580
  
111
 
Fannie Mae Pool
FNMA ARM 4.499% 3/35 #783587
  
316
 
Fannie Mae Pool
FNMA ARM 4.4% 2/35 #783588
  
147
 
Fannie Mae Pool
FNMA ARM 4.544% 7/34 #786380
  
148
 
Fannie Mae Pool
FNMA ARM 4.607% 8/34 #790203
  
133
 
Fannie Mae Pool
FNMA ARM 5.019% 9/34 #790458
  
161
 
Fannie Mae Pool
FNMA ARM 4.658% 9/34 #790618
  
37
 
Fannie Mae Pool
FNMA ARM 5.106% 9/34 #790762
  
117
 
Fannie Mae Pool
FNMA ARM 4.748% 7/34 #793028
  
286
 
Fannie Mae Pool
FNMA ARM 4.339% 9/34 #794241
  
124
 
Fannie Mae Pool
FNMA ARM 4.364% 9/34 #794242
  
303
 
Fannie Mae Pool
FNMA ARM 3.737% 1/35 #797416
  
142
 
Fannie Mae Pool
FNMA ARM 4.202% 1/35 #797418
  
191
 
Fannie Mae Pool
FNMA ARM 4.549% 8/34 #796985
  
623
 
Fannie Mae Pool
FNMA ARM 4.67% 11/34 #799727
  
322
 
Fannie Mae Pool
FNMA ARM 5.064% 11/34 #800067
  
29
 
Fannie Mae Pool
FNMA ARM 4.825% 12/34 #800297
  
259
 
Fannie Mae Pool
FNMA ARM 4.845% 12/34 #800335
  
97
 
Fannie Mae Pool
FNMA ARM 4.571% 9/34 #801337
  
378
 
Fannie Mae Pool
FNMA ARM 5.05% 7/34 #801635
  
58
 
Fannie Mae Pool
FNMA ARM 4.037% 12/34 #802854
  
55
 
Fannie Mae Pool
FNMA ARM 4.324% 12/34 #802660
  
64
 
Fannie Mae Pool
FNMA ARM 4.23% 11/34 #803591
  
45
 
Fannie Mae Pool
FNMA ARM 4.484% 10/34 #803592
  
491
 
Fannie Mae Pool
FNMA ARM 4.029% 1/35 #806167
  
41
 
Fannie Mae Pool
FNMA ARM 4.127% 1/35 #806519
  
167
 
Fannie Mae Pool
FNMA ARM 4.105% 1/35 #806520
  
162
 
Fannie Mae Pool
FNMA ARM 4.072% 12/34 #806640
  
164
 
26
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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 Pool
FNMA ARM 4.17% 11/34 #806720
  
138
 
Fannie Mae Pool
FNMA ARM 4.048% 1/35 #806711
  
76
 
Fannie Mae Pool
FNMA ARM 4.118% 1/35 #807221
  
166
 
Fannie Mae Pool
FNMA ARM 3.913% 12/34 #809113
  
81
 
Fannie Mae Pool
FNMA ARM 5.029% 2/35 #809463
  
52
 
Fannie Mae Pool
FNMA ARM 4.742% 3/35 #809822
  
167
 
Fannie Mae Pool
FNMA ARM 4.625% 2/35 #809931
  
299
 
Fannie Mae Pool
FNMA ARM 4.145% 2/35 #810415
  
194
 
Fannie Mae Pool
FNMA ARM 4.57% 2/35 #811803
  
110
 
Fannie Mae Pool
FNMA ARM 4.052% 2/35 #812091
  
79
 
Fannie Mae Pool
FNMA ARM 4.144% 1/35 #813569
  
255
 
Fannie Mae Pool
FNMA ARM 4.118% 2/35 #813114
  
59
 
Fannie Mae Pool
FNMA ARM 4.694% 11/34 #813184
  
347
 
Fannie Mae Pool
FNMA ARM 4.151% 1/35 #813170
  
298
 
Fannie Mae Pool
FNMA ARM 4.197% 1/35 #813200
  
133
 
Fannie Mae Pool
FNMA ARM 4.269% 10/34 #813564
  
244
 
Fannie Mae Pool
FNMA ARM 4.017% 12/34 #813565
  
616
 
Fannie Mae Pool
FNMA ARM 3.87% 1/35 #813713
  
167
 
Fannie Mae Pool
FNMA ARM 3.84% 1/35 #813714
  
264
 
Fannie Mae Pool
FNMA ARM 4.023% 2/35 #813737
  
81
 
Fannie Mae Pool
FNMA ARM 4.559% 1/35 #813842
  
201
 
Fannie Mae Pool
FNMA ARM 4.508% 1/35 #813848
  
140
 
Fannie Mae Pool
FNMA ARM 4.790% 1/35 #815323
  
368
 
Fannie Mae Pool
FNMA ARM 4.653% 3/35 #816322
  
50
 
Fannie Mae Pool
FNMA ARM 4.857% 1/35 #816356
  
17
 
Fannie Mae Pool
FNMA ARM 4.293% 3/35 #815586
  
84
 
Fannie Mae Pool
FNMA ARM 4.573% 2/35 #816591
  
663
 
Fannie Mae Pool
FNMA ARM 4.639% 2/35 #816599
  
65
 
Fannie Mae Pool
FNMA ARM 4.349% 2/35 #818857
  
54
 
Fannie Mae Pool
FNMA ARM 4.372% 4/35 #820407
  
60
 
Fannie Mae Pool
FNMA ARM 4.725% 3/35 #820598
  
823
 
Fannie Mae Pool
FNMA ARM 4.5% 5/35 #820996
  
83
 
Fannie Mae Pool
FNMA ARM 4.302% 1/35 #827592
  
112
 
Fannie Mae Pool
FNMA ARM 5.8170% 5/35 #827781
  
671
 
Fannie Mae Pool
FNMA ARM 5.208% 5/35 #827783
  
2,266
 
Fannie Mae Pool
FNMA ARM 4.409% 5/35 #829985
  
277
 
Fannie Mae Pool
FNMA ARM 5.203% 6/35 #830605
  
492
 
Fannie Mae Pool
FNMA ARM 4.555% 7/35 #832099
  
334
 
Fannie Mae Pool
FNMA ARM 5.344% 7/35 #834917
  
63
 
Fannie Mae Pool
FNMA ARM 5.101% 7/35 #841837
  
435
 
Fieldstone Mortgage Investment Corp FMIC 03-1 M1
Mortgage backed security 1ML+68 11/33
  
91
 
Fifth Third Auto Trust FITAT 04-A A3
Mortgage backed security 3.19% 2/08
  
550
 
Fifth Third MED
Corporate Bond 3.375% 8/15/08
  
1,101
 
First Union Commercial Mortgage Securities Inc FULB 97-C2 A3
Mortgage backed security 6.65% 11/29
  
392
 
First Union
Corporate bond 6.375% 1/15/09
  
638
 
FleetBoston Financial Corp
Corporate bond 3.85% 2/15/08
  
398
 
Fleet Financial
Corporate bond 6.375% 5/15/08
  
177
 
Ford Credit Auto Owner Trust FORDO 03-B B1
Mortgage backed security 2.85% 10/07
  
623
 
Ford Credit Auto Owner Trust
FORDO 05-A A3
Mortgage backed security 3.48% 11/08
  
1,108
 
27
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
Ford Credit Auto Owner Trust
FORDO 05-A A4
Mortgage backed security 3.72% 10/09
  
294
 
Ford Credit Auto Owner Trust
FORDO 2005-AB
Mortgage backed security 3.88% 1/10
  
288
 
Ford Credit Auto Owner Trust
FORDO 05-C A3
Mortgage backed security 4.3% 8/09
  
1,299
 
Ford Credit Auto Owner Trust
FORDO 05-C A4
Mortgage backed security 4.36% 6/10
  
716
 
Franklin Resources Inc
Corporate bond 3.7% 4/15/08
  
1,503
 
Franklin Templeton FRNK 05-1 A3
Mortgage backed security 4391% 4/10
  
901
 
Fremont Home Loan Trust FHLT 04-A M1
Mortgage backed security 1ML+55 1/34
  
452
 
Fremont Home Loan Trust FHLT 04-A M2
Mortgage backed security 1ML+115 1/34
  
532
 
Fremont Home Loan Trust FHLT 04-1 M1
Mortgage backed security 1ML+45 2/34
  
50
 
Fremont Home Loan Trust FHLT 04-1 M2
Mortgage backed security 1ML+50 2/34
  
100
 
Fremont Home Loan Trust FHLT 04-1 M3
Mortgage backed security 1ML+55 2/34
  
100
 
Fremont Home Loan Trust FHLT 04-1 M4
Mortgage backed security 1ML+95 2/34
  
252
 
Fremont Home Loan Trust FHLT 04-1 M5
Mortgage backed security 1ML+110 2/34
  
101
 
FUJI Financial
Corporate Bond 8.625% 4/15/10 144A
  
1,313
 
GE Capital Commercial Mortgage Corp
GECMC 02-2A A2
Mortgage backed security 4.97% 8/36
  
1,577
 
GGP Mall Properties Trust GGPMP 01-C1A A2
Mortgage backed security 5.007% 11/11
  
607
 
GMAC Commercial Mortgage Securities Inc GMACC 97-C2 A3
Mortgage backed security 6.566% 4/29
  
441
 
GMAC Commercial Mortgage Securities Inc GMACC 04-C2 A2
Interest only strip CSTR 8/38
  
1,451
 
GMAC Commercial Mortgage Securities Inc GMACC 04-C3 X2
Interest only strip CSTR 12/41
  
178
 
GMACC Commercial Mortgage Securities
GMACC 97-C1 A3
Mortgage backed security 6.869% 7/29
  
350
 
GMACC Commercial Mortgage Securities
GMACC 2002-C1 A1
Mortgage backed security 5.785% 11/39
  
1,596
 
GMACC Commercial Mortgage Securities
GMACC 2004-C3 A3
Interest only strip CSTR 12/41
  
1,233
 
GMACC Commercial Mortgage Securities
GMACC 05-C1 A2
Interest only strip CSTR 5/43
  
731
 
GMACC Commercial Mortgage Securities
GMACC 05-C1 X2
Interest only strip CSTR 5/43
  
265
 
GS Auto Loan Trust GSALT 05-1 A3
Mortgage backed security 4.45% 5/10
  
965
 
GS Auto Loan Trust GSLAT 05-1 B
Mortgage backed security 4.62% 11/13
  
145
 
GS Mortgage Securities Corp 03-C1 A2A
Mortgage backed security 3.59% 1/40
  
754
 
GS Mortgage Securities Corp 04-C1 A1
Mortgage backed security 3.659% 10/28
  
1,575
 
GS Mortgage Securities Corp 98-GLII A2
Mortgage backed Security 6.562% 4/31
  
777
 
GS Mortgage Securities Corp 05-GG4 XP
Interest only strip CSTR 7/39
  
748
 
GSAMP Trust GSAMP 04-FM2 M2
Mortgage backed securities 1ML+110 1/34
  
200
 
GSAMP Trust GSAMP 04-FM2 M3
Mortgage backed securities 1ML+130 1/34
  
200
 
Ge Capital Commercial Mortgage Corp GECMC 04-C2 A2
Mortgage backed securities 4.119% 3/40
  
504
 
Ge Capital Commercial Mortgage Corp GECMC 04-C3 A2
Mortgage backed securities 4.433% 7/39
  
1,933
 
28
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
GE Commercial Equipment Financing LLC GECEF 04-A A3
Mortgage backed securities 3.36% 6/08
  
1,148
 
General Electric Capital Corp
Corporate bond 7.5% 6/15/09
  
1,190
 
General Electric Capital Corp
Corporate bond 3.5% 5/01/08
  
454
 
General Electric Capital Corp
Corporate bond 3.5% 8/15/07
  
531
 
General Electric Capital Corp
Corporate bond 4.125% ¾/08
  
4,192
 
General Electric Cap Corp
Corporate bond 4.00% 6/15/2009
  
1,152
 
General Electric Cap Corp
Corporate bond 5.00% 6/15/07
  
1,064
 
Goldman Sachs Group Inc
Corporate bond 4.5% 6/15/10
  
1,425
 
Greenpoint Financial
Corporate bond 3.2% 6/06/08
  
1,644
 
Greenwich Capital Commercial Funding Corp GCCFC 03-C1 A2
Mortgage backed securities 3.285% 7/35
  
861
 
Greenwich Capital Commercial Funding Corp GCCFC 04-GG1 A4
Mortgage backed securities 4.755% 6/36
  
931
 
Greenwich Capital Commercial Funding
Corp GCCFC 05-GG3 A2
Interest only strip CSTR 8/42
  
669
 
Greenwich Capital Commercial Funding
Corp GCCFC 05-GG3 XP
Interest only strip CSTR 8/42
  
939
 
Greenwich Capital Commercial Funding
Corp GCCFC 05-GG5
Interest only strip CSTR 4/37
  
779
 
John Hancock Global Funding II
Corporate bond 3.75% 9/30/08
  
794
 
Halifax and Bank of Scotland PLC MTN
Corporate bond 3.75% 9/30/08 144A
  
914
 
Halifax and Bank of Scotland PLC
Corporate bond 3.625% 7/23/07 144A
  
1,442
 
Heinz Co
Corporate bond 6.428% 12/01/08 144A
  
764
 
Holmes Financing PLC HFP 7 2M
Mortgage backed security 3M:+80 7/40
  
263
 
Heller Financial Commercial Mortgage Asset HFCMC 00-PH1 A1
Mortgage backed securities 7.715% 1/34
  
279
 
Honda Auto Receivables Trust
HAROT 05-4 A4
Mortgage backed securities 4.6% 11/10
  
1,204
 
Honda Auto Receivables Trust
HAROT 05-2 A3
Mortgage backed securities 3.93% 1/09
  
584
 
Honda Auto Receivables Trust
HAROT 05-3 A3
Mortgage backed securities 3.87% 4/09
  
1,333
 
Host Marriot Pool Trust HMPT 99-HMTA D
Mortgage backed securities 7.97% 8/15
  
215
 
Host Marriot Pool Trust HMPT 99-HMTA B
Mortgage backed security 7.3% 8/15
  
258
 
Household Automotive Trust HAT 04-1 A3
Mortgage backed securities 3.3% 5/09
  
937
 
Household Automotive Trust HAT 04-1 A4
Mortgage backed securities 3.93% 7/11
  
558
 
Household Automotive Trust HAT 05-1 A4
Mortgage backed securities 4.35% 6/12
  
1,522
 
Household Automotive Trust HAT 05-2 A3
Mortgage backed securities 4.37% 5/10
  
1,434
 
Household Automotive Trust HAT 05-3 A3
Mortgage backed securities 4.8% 10/10
  
596
 
Household GBL
Corporate bond 5.875% 2/1/09 DT
  
314
 
Household FIN
Corporate bond 4.625% 1/15/08
  
875
 
Household FINC
Corporate bond 4.125% 12/15/08
  
1,267
 
Household MTN
Corporate bond 4.125% 11/16/09
  
989
 
Household INTL
Corporate bond 5.836% 2/15/08
  
2,319
 
HSBC Finance Corp
Corporate bond 5.25% 1/14/11
  
377
 
HSBC Finance Corp
Corporate bond 4.125% 3/11/08
  
1,488
 
Household Private Label Credit Card Master Note Trust I HPLCC 02-1 A
Mortgage backed securities 5.5% 1/11
  
1,715
 
HFC Home Equity Loan Asset Backed Certificates HFCHC 03-1 M
Mortgage backed securities 1ML+63 10/32
  
63
 
HFC Home Equity Loan Asset Backed Certificates HFCHC 03-2 M
Mortgage backed securities 1ML+58 9/33
  
101
 
29
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
Household Mortgage Loan Trust HMLHC 03-HC1
Mortgage backed securities 1ML+65 2/33
  
114
 
Household Mortgage Loan Trust HLHMC 03-HC2
Mortgage backed securities 1ML+60 6/20/2103
  
154
 
Hutchison Whampoa International 01/11 Ltd
Corporate bond 7% 2/16/11 144A
  
662
 
Hutchison Whampoa International 03/33 Ltd
Corporate bond 5.45% 11/24/10 144
  
1,217
 
Hyundai Auto Receivables Trust
HART 05-A C
Mortgage backed securities 4.22% 2/12
  
94
 
Impac CMB Trust IMM 05-1 M4
Mortgage backed securities 1ML+75 4/35
  
76
 
Impac CMB Trust IMM05-1 M5
Mortgage backed securities 1ML+77 4/35
  
76
 
Impac CMB Trust IMM05-1 M6
Mortgage backed securities 1ML+82 4/35
  
115
 
International Lease Finance Corp
Corporate bond 3.75% 8/01/07
  
1,511
 
International Lease Finance Corp
Corporate bond 5.00% 4/15/10
  
578
 
International Lease Finance Corp
Corporate bond 4.625% 6/02/08
  
298
 
JPMorgan Chase & Co
Corporate bond 3.625% 5/1/08
  
391
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 04-CB9 A2
Interest only strip CSTR 6/41
  
1,514
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 03-PM1A A2
Interest only strip CSTR 8/40
  
1,761
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 03-CB7 X2
Interest only strip CSTR 1/38
  
62
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 05-LDP4 X2
Interest only strip CSTR 10/42
  
607
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 05-LDP4 A1
Interest only strip CSTR 10/42
  
1,199
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 04-CB8 A2
Mortgage backed securities 3.837% 1/39
  
1,214
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 2001-C1 A2
Mortgage backed securities 5.464% 10/35
  
1,652
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 05-LDP2 A2
Mortgage backed securities 4.575% 7/42
  
733
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 05-LDP5 A1
Mortgage backed securities 5.035% 12/44
  
1,124
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 04-CBX X2
Interest only strip CSTR 1/37
  
535
 
JP Morgan Chase Commercial Mortgage Securities Corp JPMCC 04-C3 A2
Mortgage backed securities 4.223% 1/42
  
809
 
Korea Development Bank
Corporate bond 3.875% 3/02/09
  
735
 
Korea Development Bank
Corporate bond 4.75% 7/20/09
  
603
 
Kraft Foods Inc
Corporate bond 5.25% 6/1/07
  
534
 
LB Commercial Conduit Mortgage Trust
LBCMT 98-C4 A1B
Mortgage backed security 6.21% 10/35
  
1,390
 
LB Commercial Conduit Mortgage Trust
LBCMT 33-C1 A2
Mortgage backed securities 6.78% 6/31
  
1,362
 
LB-UBS Commercial Mortgage Trust LBUBS 00-C3 A1
Mortgage backed securities 7.95% 7/09
  
1,389
 
LB-UBS Commercial Mortgage Trust LBUBS 00-C3 A2
Mortgage backed securities 7.95% 1/10
  
1,033
 
LB-UBS Commercial Mortgage Trust LBUBS 00-C5 A1
Mortgage backed securities 6.41% 12/19
  
886
 
LB-UBS Commercial Mortgage Trust LBUBS 00-C5 A2
Mortgage backed securities 6.51% 12/26
  
489
 
LB-UBS Commercial Mortgage Trust LBUBS 04-C6 A2
Mortgage backed securities 4.187% 8/29
  
683
 
30
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
LB-UBS Commercial Mortgage Trust LBUBS 03-C3 A2
Mortgage backed securities 3.086% 5/27
  
640
 
LB-UBS Commercial Mortgage Trust LBUBS 03-C7 A3
Interest only strip CSTR 9/27
  
803
 
LB-UBS Commercial Mortgage Trust LBUBS 04-C2 A3
Mortgage backed securities 3.973% 3/29
  
676
 
LB-UBS Commercial Mortgage Trust LBUBS 05-C1 AAB
Interest only strip CSTR 2/30
  
549
 
LB-UBS Commercial Mortgage Trust LBUBS 05-C5 XCP
Interest only strip CSTR 9/40
  
760
 
LB-UBS Commercial Mortgage Trust LBUBS 01-C20A2
Mortgage backed securities 6.653% 11/27
  
349
 
LB-UBS Commercial Mortgage Trust LBUBS 03-C5 A2
Mortgage backed securities 3.478% 7/27
  
1,446
 
LB-UBS Commercial Mortgage Trust LBUBS 04-C8 XCP
Interest only strip CSTR 12/39
  
127
 
LB-UBS Commercial Mortgage Trust LBUBS 05-C7 XCP
Interest only strip CSTR 11/40
  
476
 
Legg Mason Inc
Corporate bond 6.75% 7/02/08
  
344
 
Lehman Brothers Holdings Inc
Corporate bond 7% 2/1/08
  
2,247
 
Lehman Brothers Holdings Inc
Corporate bond 4% 1/22/08
  
576
 
Lehman Brothers Holdings Inc
Corporate bond 3.95% 11/10/09
  
363
 
Lehman Brothers Global
Corporate bond 3.6% 3/13/09
  
297
 
Long Beach Mortgage Loan Trust -MLT 03-3 M1
Mortgage backed securities 1ML+75 7/33
  
895
 
Louis Dreyfus
Corporate Bond 6.875% 12/01/07
  
420
 
M&I Auto Loan Trust
MILT 05-1 A3
Mortgage backed securities 4.83% 9/09
  
1,377
 
M&I Auto Loan Trust
MILT 05-1 B
Mortgage backed securities 5.02% 7/12
  
1,082
 
MBNA Credit Card Master Note Trust MBNAS 02-1B
Mortgage backed securities 5.15% 7/09
  
1,506
 
MBNA Credit Card Master Note Trust MBNAS 05-B4 B4
Mortgage backed securities 4.9% 3/11
  
1,377
 
Master Seasoned Securities Trust MSSTR 04-1 1A1
Interest only strip CSTR 8/17
  
631
 
Marshall & Ilsley Corp
Corporate bond 3.8% 2/08/08
  
1,584
 
Manufacturers & Traders Trust Company
Corporate bond 3.85% 4/01/13
  
1,727
 
Marriott Vacation Club Owner Trust
MVCOT 05-2 A
Mortgage backed securities 4.6% 10/27
  
694
 
Master Adjustable Rate Mortgages Trust
MARM 04-11 1A
Mortgage backed securities 4 1ML+49 11/34
  
161
 
Master Adjustable Rate Mortgages Trust
MARM 04-11 2A
Mortgage backed securities 2 1ML+44 11/34
  
132
 
Marshall & Ilsley Corp
Corporate bond 4.5% 8/25/08
  
1,934
 
Meritage Mortgage Loan Trust MMLT 04-1 M1
Mortgage backed securities 1ML+50 7/34
  
225
 
Merrill Auto Trust Securitization
MATS 05-1 A3
Mortgage backed securities 4.10% 8/09
  
1,573
 
Merrill Lynch & Co Inc
Corporate bond 4.125% 1/15/09
  
849
 
Merrill Lynch & Co Inc
Corporate bond 4.25% 9/14/07
  
2,915
 
Merrill Lynch & Co Inc
Corporate bond 4.831% 10/27/08
  
1,590
 
Merrill Lynch Mortgage Trust MLMT 04-MKB1 A2
Mortgage backed securities 4.353% 2/42
  
4,779
 
31
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
Merrill Lynch Mortgage Trust MLMT 04-KEY2 A2
Mortgage backed securities 4.166% 8/39
  
1,188
 
Merrill Lynch Mortgage Trust MLMT 04-BPC1 XP
Interest only strip CSTR 9/41
  
565
 
Merrill Lynch Mortgage Trust
MLMT 05-GGP1A
Mortgage backed securities 4.099% 11/10
  
1,960
 
Merrill Lynch Mortgage Trust
MLMT 05-GGP1B
Mortgage backed securities 4.146% 11/10
  
321
 
Merrill Lynch Mortgage Trust
MLMT 05-GGP1C
Mortgage backed securities 4.208% 11/10
  
272
 
Merrill Lynch Mortgage Trust
MLMT 05-GGP1D
Mortgage backed securities 4.291% 11/10
  
84
 
Merrill Lynch Mortgage Trust
MLMT 05-GGP1E
Mortgage backed securities 4.33% 11/10
  
119
 
Merrill Lynch Mortgage Trust
MLMT 05-GGP1F
Mortgage backed securities 4.35% 11/10
  
148
 
Merrill Lynch Mortgage Trust
MLMT 05-GGP1G
Mortgage backed securities 4.374% 11/10
  
124
 
Merrill Lynch Mortgage Trust
MLMT 05-MKB2XP
Interest only strip CSTR 9/42
  
55
 
Merrill Lynch Mortgage Trust
MLMT 05-MCP1A2
Mortgage backed securities 4.556% 6/43
  
1,120
 
Merrill Lynch Mortgage Trust
MLMT 05-MCP1XP
Interest only strip CSTR 6/43
  
242
 
Merrill Lynch Mortgage Trust
MLMT 05-LC1A1
Mortgage backed securities 5.017% 1/44
  
564
 
Monumental Global Funding II
Corporate bond 2.8% 7/08 144A
  
2,121
 
Monumental Life Insurance
Synthetic GIC Global Wrap -4.09%
  
1,675
 
Morgan JP & Co
Corporate bond 6.25% 1/15/09
  
1,643
 
Morgan JP MTNA
Corporate bond 6.00% 1/15/09
  
427
 
JP Morgan Commercial Mortgage Finance Corp JPMC 99-C8 A2
Mortgage backed securities 7.4% 7/31
  
898
 
JP Morgan Commercial Mortgage Finance Corp JPMC 00-C9 A2
Mortgage backed securities 7.77% 10/32
  
1,004
 
Morgan Stanley MSTDW
Corporate bond 5.8% 4/17/2006
  
994
 
Morgan Stanley MSTDW
Corporate bond 3.625% 4/1/2008
  
3,456
 
Morgan Stanley Capital I MSC 98-WF2 A2
Mortgage backed securities 6.54% 7/30
  
633
 
Morgan Stanley Capital I MSC 98-HF2 A2
Mortgage backed securities 6.48% 11/30
  
1,382
 
Morgan Stanley Capital I MSC 03-IQ5 A3
Mortgage backed securities 4.71% 4/38
  
612
 
Morgan Stanley Capital I MSC 99-CAM1 A4
Mortgage backed securities 7.02% 3/32
  
552
 
Morgan Stanley Capital I MSC 04-HQ4 X2
Interest only strip CSTR 4/40
  
142
 
Morgan Stanley Capital I MSC 04-HQ3 A2
Mortgage backed securities 4.05% 1/41
  
522
 
Morgan Stanley Capital I MSC 05-IQ9 X2
Interest only strip CSTR 7/56
  
335
 
Morgan Stanley Capital I MSC 05-HQ5 X2
Interest only strip CSTR 1/42
  
134
 
Morgan Stanley Capital I MSC 98-XL2 A2
Mortgage backed securities 6.17% 10/34
  
601
 
Morgan Stanley Capital I MSC 03-IQ5 A2
Mortgage backed securities 4.09% 4/38
  
518
 
Morgan Stanley Capital I MSC 05-TOP17X2
Interest only strip CSTR 12/41
  
171
 
Morgan Stanley ABS Capital I MSAC 03-NC7 M1
Mortgage backed securities 1 ML+70 6/33
  
191
 
Morgan Stanley ABS Capital I MSAC 03-NC6 M1
Mortgage backed securities 1 ML+80 6/33
  
323
 
Morgan Stanley ABS Capital I MSAC 03-NC8 M1
Mortgage backed securities 1ML+70 9/33
  
264
 
32
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
Morgan Stanley
Corporate bond 4% 1/15/10
  
294
 
Morgan Stanley
Corporate bond 5.05% 1/21/11
  
1,101
 
Morgan Stanley Dean Witter Capital I MSDWC 01-NC1 M2
Mortgage backed securities 1 ML+107 10/31
  
14
 
Morgan Guaranty
Synthetic GIC Global Wrap - 4.10%
  
1,675
 
Mortgage Capital Funding Inc MCFI 98-MC2 A2
Mortgage backed securities 6.423% 6/30
  
1,371
 
National Collegiate Student Loan Trust NCSLT 04-2 AIO
Mortgage backed securities 9.75% 10/14
  
450
 
National Collegiate Student Loan Trust NCSLT 05-1 AIO
Mortgage backed securities 6.75% 12/09
  
108
 
National Collegiate Student Loan Trust NCSLT 05-2 AIO
Mortgage backed securities 7.73% 3/12
  
186
 
National Collegiate Student Loan Trust NCSLT 05-3W AIO
Mortgage backed securities 4.8% 7/12
  
396
 
National Rural Utilities Cooperative Finance Corp
Corporate bond 5.75% 8/28/09
  
429
 
National Rural Utilities Cooperative Finance Corp
Corporate bond 3.24% 7/22/07
  
742
 
Nations Bank Corp
Corporate bond 6.375% 2/15/08
  
616
 
Nationslink Funding Corp
Mortgage Backed securities 6.571% 1/31
  
545
 
Navistar Financial Corp Owner Trust NAVOT 04-B A3
Mortgage backed securities 3.13% 5/09
  
533
 
Navistar Financial Corp Owner Trust NAVOT 05-A A3
Mortgage backed securities 4.22% 2/10
  
2,774
 
Navistar Financial Corp Owner Trust NAVOT 05-A A4
Mortgage backed securities 4.43% 1/14
  
562
 
Nissan Auto Lease Trust NALT 04-A A3
Mortgage backed securities 2.9% 8/07
  
1,181
 
Nissan Auto Lease Trust NALT 04-A A4B
Mortgage backed securities 3.18% 6/10
  
289
 
Nissan Auto Lease Trust NALT 05-A A3
Mortgage backed securities 4.70% 10/08
  
1,515
 
Nissan Auto Receivables Owner Trust NAROT 05-A A4
Mortgage backed securities 3.82% 7/10
  
568
 
North Star Education Finance, Inc.
Mortgage backed securities 4.74% 10/45
  
827
 
Novastar Home Equity Loan NHEL 04-1 M1
Mortgage backed securities 1ML+45 6/34
  
150
 
Onyx Acceptance Grantor Trust
ONYX 05-A A3
Mortgage backed securities 3.69% 5/09
  
415
 
Onyx Acceptance Grantor Trust
ONYX 05-B A3
Mortgage backed securities 4.18% 3/10
  
2,646
 
Onyx Acceptance Grantor Trust
ONYX 05-B A4
Mortgage backed securities 4.34% 5/12
  
454
 
Peco Energy
Corporate Bond 3.50% 5/01/08
  
1,470
 
PNC Funding Corp
Corporate bond 4.2% 3/10/08
  
469
 
Park Place Securities Inc PPSI 04-WCW1 M1
Mortgage backed securities 1ML+63 9/34
  
318
 
Petroleum Export/Cayman
Corporate Bond 4.623% 6/15/10 144A
  
739
 
Petroleum Export/Cayman
Corporate Bond 4.633% 6/15/10 144A
  
442
 
Philip Morris
Corporate Bond 7.2% 2/01/07
  
943
 
Banco Popular NA
Corporate bond 3.875% 10/01/08
  
2,130
 
Banco Popular NA MTN
Corporate bond 5.2% 12/12/07
  
791
 
Prudential Financial Inc
Corporate bond 3.75% 5/01/08
  
593
 
Prime Property Funding
Corporate bond 5.6% 6/15/11
  
539
 
Principal Life Global
Corporate bond 3.625% 4/30/08
  
1,467
 
Prudential Securities Secured Financing Corp PSSF 98-C1 A1B
Mortgage backed securities 6.506% 7/08
  
704
 
Providian Master Note Trust
PMNT 05-2 B2
Mortgage backed securities 5.1% 11/12
  
1,039
 
33
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
Rabobank Capital Funding II
Corporate bond 5.26%/VR PERP 144A
  
2,929
 
Rabobank Nederland
Synthetic GIC Global Wrap - 4.10%
  
1,675
 
Reed Elsevier Capital Inc
Corporate bond 6.125% 8/01/06
  
748
 
Residential Asset Mortgage Products Inc RAMP 04-RS6 MII2
Mortgage backed securities 1ML+130 6/34
  
250
 
Residential Asset Mortgage Products Inc RAMP 03-SL1 3A1
Mortgage backed securities 7.125% 4/31
  
411
 
Residential Asset Mortgage Products Inc RAMP 04-SL2 A1I
Mortgage backed securities 6.5% 10/16
  
127
 
Residential Asset Mortgage Products Inc RAMP 03-RZ2 A1
Mortgage backed securities 3.6% 4/33
  
221
 
GMAC Mortgage Corp Loan Trust
GMAC 05-AR51A1
Interest only strip CSTR 9/35
  
467
 
Royal KPN NV
Corporate bond 8% 10/01/10
  
1,705
 
SBC Communications Inc
Corporate bond 6.25% 3/15/11
  
431
 
SBC Communications Inc
Corporate bond 4.125% 9/15/09
  
2,317
 
SLM Corp
Corporate bond 4% 1/15/09
  
664
 
SLM Corp
Corporate bond 3.5% 9/30/06
  
1,546
 
SLM Student Loan Trust SLMA 04-A B
Mortgage backed securities 3ML+58 6/33
  
203
 
SLM Student Loan Trust SLMA 05-7 A3
Mortgage backed securities 4.41% 7/25
  
1,225
 
SP PowerAssets Ltd
Corporate bond 3.8% 10/22/08 144
  
1,271
 
SVO VOI Mortgage Corp
SVOVM 05-A A
Mortgage backed securities 5.25% 2/21
  
571
 
St Paul Companies Inc
Corporate bond 5.75% 3/15/07
  
649
 
Salomon Brothers Mortgage Securities VII
SBM7 00-C3 A2
Mortgage backed securities 6.592% 12/33
  
902
 
Salomon Brothers Mortgage Securities VII
SBM7 00-C1 A2
Mortgage backed securities 7.52% 12/09
  
999
 
Salomonsmith Global Markets Holdings Inc
Corporate bond 6.5% 2/15/08
  
275
 
Bank of Santander
Corporate bond 4.75% 10/21/08 144A
  
2,310
 
SBAC CMS Trust
SBAC 05-1AA
Mortgage backed securities 5.36% 11/35
  
350
 
SBAC CMS Trust
SBAC 05-1AB
Mortgage backed securities 5.565% 11/35
  
243
 
Securitized Asset Backed Receivables LLC Trust SABR 04-NC1 M1
Mortgage backed securities 1ML+52 2/34
  
291
 
Sempra Energy
Corporate Bond 7.95% 3/01/10
  
517
 
Sempra Energy
Corporate Bond 4.621% 5/17/07
  
1,613
 
Sempra Energy
Corporate bond 4.75% 5/15/09
  
253
 
Southwestern Public Service Co
Corporate bond 5.125% 11/06
  
737
 
Southwest Air 01/1A2
Corporate bond 7.875% 9/01/07
  
574
 
Southwest Air
Mortgage Backed securities 5.496% 11/01/06
  
1,322
 
Sprint Cap Global
Corporate bond 7.625% 1/30/11
  
335
 
Sprint Cap Corp
Corporate bond 6.00% 1/15/07
  
436
 
Starwood Commercial Mortgage Trust
STARW 99-C1AB
Mortgage backed securities 6.92% 2/14
  
196
 
Amortizing Residential Collateral Trust
ARC 02-BC1 M2
Mortgage backed securities 1ML+110 1/32
  
68
 
Structured Asset Securities Corp SASC 04-GEL1 A
Mortgage backed securities 1ML+36 2/34
  
71
 
Structured Asset Securities Corp SASC 04-NP1 A
Mortgage backed securities 1ML+40 9/33
  
191
 
34
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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
 
 
Telecom Italia Capital SA
Corporate bond 4% 11/15/08
  
985
 
Telecom Italia Capital SA
Corporate bond 4% 1/15/10 144A
  
1,820
 
Telecom Italia Capital SA
Corporate bond 4.875% 10/01/10
  
457
 
Telefonos Mexico
Corporate bond 4.5% 11/19/08
  
424
 
Telefonos Mexico
Corporate bond 4.75% 1/27/10
  
2,938
 
Textron Financial Corp
Corporate bond 4.125% 3/3/08
  
787
 
Travelers Property Casualty Corp
Corporate bond 3.75% 3/15/08
  
848
 
Triad Auto Receivables Owner Trust
TAROT 05-A A3
Mortgage backed securities 4.05% 3/10
  
1,292
 
Triad Auto Receivables Owner Trust
TAROT 05-B A3
Mortgage backed securities 4.28% 6/10
  
1,543
 
UBS AG
Synthetic GIC Global Wrap - 4.10%
  
1,675
 
US Bank NA
Corporate bond 3.9% 8/15/08
  
1,042
 
US Bank NA
Corporate bond 4.4% 8/15/08
  
3,986
 
USA Education - SLM Corp
Corporate bond 5.625% 4/10/07
  
1,136
 
Union Planters Bank NA
Corporate bond 5.125% 6/15/07
  
502
 
United States Treasury Note/Bond
USTN 3.5% 8/19/05
  
10,120
 
United States Treasury Note/Bond
USTN 3.375% 9/15/09
  
13,672
 
United States Treasury Note/Bond
USTN 3.625% 4/30/07
  
5,303
 
United States Treasury Note/Bond
USTN 3.75% 5/15/08
  
1,972
 
United States Treasury Note/Bond
USTN 3.875% 7/31/07
  
13,790
 
United States Treasury Note/Bond
USTN 4.00% 8/31/07
  
4,839
 
Verizon Global Funding Corp
Corporate bond 7.25% 12/1/10
  
671
 
Verizon New York Inc
Corporate bond 6.875% 4/01/12
  
1,690
 
Volkswagen Auto Lease Trust VWALT 04-A A3
Mortgage backed securities 2.84% 7/07
  
1,254
 
Volkswagen Auto Lease Trust
VWALT 05-A A3
Mortgage backed securities 3.82% 5/08
  
2,091
 
WFS Financial Owner Trust WESTO 04-3 A3
Mortgage backed securities 3.3% 3/09
  
822
 
WFS Financial Owner Trust WESTO 04-3 A4
Mortgage backed securities 3.93% 2/12
  
657
 
WFS Financial Owner Trust WESTO 04-4 A4
Mortgage backed securities 3.44% 5/12
  
1,203
 
WFS Financial Owner Trust
WESTO 05-1 A3
Mortgage backed securities 3.59% 10/09
  
1,629
 
WFS Financial Owner Trust
WESTO 05-3 A4
Mortgage backed securities 4.39% 05/13
  
815
 
WFS Financial Owner Trust
WESTO 05-3B
Mortgage backed securities 4.50% 5/13
  
320
 
WFS Financial Owner Trust
WESTO 05-3C
Mortgage backed securities 4.54% 5/13
  
411
 
Wachovia Auto Owner Trust
WAOT 05-B A3
Mortgage backed securities 4.79% 4/10
  
893
 
Wachovia Bank Commercial Mortgage Trust WBCMT 03-C6 A2
Mortgage backed securities 4.498% 8/35
  
863
 
Wachovia Bank Commercial Mortgage Trust WBCMT 03-C8 A3
Mortgage backed securities 4.445% 11/35
  
1,796
 
Wachovia Bank Commercial Mortgage Trust WBCMT 04-C14 A2
Mortgage backed securities 4.368% 8/41
  
1,516
 
Wachovia Bank Commercial Mortgage Trust WBCMT 04-C15 XP
Interest only strip CSTR 10/41
  
841
 
Wachovia Bank Commercial Mortgage Trust WBCMT 05-C16 APB
Mortgage backed securities 4.692% 10/41
  
490
 
35
Eastman Investment and Employee Stock Ownership Plan
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
December 30, 2005
(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 Trust WBCMT 03-C7 A1
Mortgage backed securities 4.241% 10/35
  
1,157
 
Wachovia Bank Commercial Mortgage Trust WBCMT 05-C18 XP
Interest only strip CSTR 4/42
  
210
 
Wachovia Bank Commercial Mortgage Trust WBCMT 2004-C15 A2
Mortgage backed securities 4.039% 10/41
  
1,342
 
Wachovia Bank Commercial Mortgage Trust WBCMT 05-C16 A2
Mortgage backed securities 4.38% 10/41
  
2,400
 
Wachovia Bank Commercial Mortgage Trust WBCMT 05-C22 A1
Mortgage backed securities 4.98% 12/44
  
793
 
Wachovia Corp/Old
Corporate bond 6.15% 3/15/09
  
322
 
Wachovia Corp
Corporate bond 3.5% 8/15/08
  
759
 
Washington Mutual Inc
Corporate bond 4.5% 8/25/08
  
1,160
 
Washington Mutual MSC Mortgage Pass-Through CTFS WAMMS 03-MS9 2A1
Mortgage backed securities 7.5% 12/33
  
115
 
Wells Fargo & Co
Corporate bond 4% 9/10/12
  
467
 
Wells Fargo & Co
Corporate bond 4% 8/15/08
  
344
 
Wells Fargo & Co
Corporate bond 4.125% 3/10/08
  
3,741
 
Wells Fargo Mortgage Backed Securities Trust WFMBS 05-AR42A2
Interest only strip CSTR 4/35
  
1,891
 
Wells Fargo Mortgage Backed Securities Trust WFMBS 05-AR22A2
Mortgage backed securites 4.57% 3/35
  
1,089
 
Wells Fargo Mortgage Backed Securities Trust WFMBS 05-Ar9 2A1
Mortgage backed securities CSTR 5/35
  
1,689
 
Wells Fargo Mortgage Backed Securities Trust WFMBS 05-AR10
Mortgage backed securities CSTR 6/35
  
1,047
 
Whole Auto Loan Trust WALT 04-1 A3
Mortgage backed securities 2.96% 6/08
  
1,650
 
World Omni Auto Receivables Trust WOART 04-A A4
Mortgage backed securities 3.96% 7/11
  
1,018
 
World Omni Auto Receivables Trust
WOART 05-A A3
Mortgage backed securities 3.54% 6/09
  
503
 
Sub-total Managed Income Fund
    
630,200
 
Self Directed Brokerage Account
Various registered investment companies, 4,202 shares
**
4,202
 
Total Assets
    
$1,446,599
         
* 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 on its behalf by the undersigned thereunto duly authorized.

Eastman Investment and Employee
Stock Ownership Plan

Date: June 28, 2006
By: /s/ Scott V. King _
 
Scott V. King
 
Controller


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