UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D C 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-1463
UNION CARBIDE CORPORATION
(a subsidiary of The Dow Chemical Company)
(Exact name of registrant as specified in its charter)
New York 13-1421730
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
39 Old Ridgebury Road, Danbury, CT 06817-0001
(Address of principal executive offices) (Zip Code)
203-794-2000
Registrant's telephone number, including area code
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
At April 30, 2001, 1,000 shares of common stock were
outstanding, all of which were held by the registrant's parent,
The Dow Chemical Company.
The registrant meets the conditions set forth in General
Instructions H(1)(a) and (b) of Form 10-Q and is therefore
filing this form with a reduced disclosure format.
Union Carbide Corporation
(a subsidiary of The Dow Chemical Company)
Table of Contents
Part I: Financial Information Page
Item 1. Financial Statements
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 6
Consolidated Statements of Comprehensive Income 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 14
Part II: Other Information
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signature 16
Cautionary statement: All statements in this Quarterly Report on
Form 10-Q that do not reflect historical information are forward-
looking statements, within the meaning of the Private Securities
Litigation Reform Act of 1995 (as amended). Forward-looking
statements include statements concerning the accounting and tax
treatment of the merger with The Dow Chemical Company ("Dow" and,
with regard to the merger, the "Dow Merger"); plans; capital
expenditures; environmental accruals; anticipated future events;
interest rate and currency risk management; ongoing and planned
capacity additions and other expansions; joint ventures;
Management's Discussion and Analysis of Financial Condition and
Results of Operations, and any other statements that do not
reflect historical information. Such forward-looking statements
are subject to risks and uncertainties. Important factors that
could cause actual results to differ materially from those
discussed in such forward-looking statements include the
supply/demand balance for the corporation's products; competitive
pricing pressures; raw material availability and costs; changes in
industry production capacities and operating rates; currency
exchange rates; global economic conditions; competitive technology
positions; failure by the corporation to achieve technology
objectives or complete projects on schedule and on budget, and an
inability to obtain new customers or retain existing ones.
Accordingly, there is no assurance that the corporation's
expectations will be realized. The corporation assumes no
obligation to provide revisions to any forward-looking statements
should circumstances change.
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Part I: Financial Information
Item 1: Financial Statements:
Union Carbide Corporation and Subsidiaries
Consolidated Statements of Income
Quarter ended March 31,
In millions (Unaudited) 2001 2000
Net Sales $ 1,536 $ 1,617
Cost of sales 1,476 1,402
Research and development expenses 46 58
Selling, general and administrative expenses 55 64
Amortization of intangibles 3 4
Merger-related expenses and restructuring 1,275 -
Insurance and finance company operations,
pretax income 1 1
Equity in earnings of nonconsolidated affiliates 12 42
Sundry income (expense) - net (1) 7
Earnings (Loss) Before Interest, Income Taxes
and Minority Interests (1,307) 139
Interest income 2 16
Interest expense and amortization of debt discount 51 37
Income (Loss) Before Income Taxes and Minority
Interests (1,356) 118
Provision (benefit) for income taxes (486) 20
Minority interests' share in income 1 1
Net Income (Loss) $ (871) $ 97
Depreciation $ 100 $ 98
Capital Expenditures $ 34 $ 195
See Notes to Consolidated Financial Statements.
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Union Carbide Corporation and Subsidiaries
Consolidated Balance Sheets
March 31, Dec. 31,
In millions (Unaudited) 2001 2000
Assets
Current Assets
Cash and cash equivalents $ 46 $ 63
Marketable securities 74 74
Accounts and notes receivable:
Trade (net of allowance for doubtful receivables) 906 897
Other 186 137
Inventories:
Finished and work in process 555 557
Materials and supplies 161 193
Deferred income tax assets - current 589 142
Other current assets 170 113
Total current assets 2,687 2,176
Investments
Investment in nonconsolidated affiliates 933 1,008
Other investments 96 97
Noncurrent receivables 173 154
Total investments 1,202 1,259
Property
Property 9,322 9,361
Less accumulated depreciation 5,316 4,840
Net property 4,006 4,521
Other Assets
Goodwill (net of accumulated amortization -
2001: $56; 2000: $54) 40 41
Deferred income tax assets - noncurrent 2 -
Deferred charges and other assets 367 349
Total other assets 409 390
Total assets $ 8,304 $ 8,346
See Notes to Consolidated Financial Statements.
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Union Carbide Corporation and Subsidiaries
Consolidated Balance Sheets
March 31, Dec. 31,
In millions (Unaudited) 2001 2000
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable:
Related companies $ 1,308 $ -
Other 219 1,171
Long-term debt due within one year 1 7
Accounts payable:
Trade 562 703
Other 122 67
Income taxes payable 15 -
Accrued and other current liabilities 361 352
Total current liabilities 2,588 2,300
Long-Term Debt 1,748 1,748
Other Noncurrent Liabilities
Deferred income tax liabilities - noncurrent 528 278
Pension and other postretirement benefits - noncurrent 682 492
Other noncurrent obligations 1,031 834
Total other noncurrent liabilities 2,241 1,604
Minority Interest in Subsidiaries 41 40
Stockholders' Equity
Common stock - issued - 1,000 shares
(158,994,683 shares in 2000) - 159
Additional paid-in capital - 217
Unearned ESOP shares (50) (50)
Retained earnings 2,040 3,572
Accumulated other comprehensive loss (304) (224)
Treasury stock, at cost - no shares
(23,431,939 shares in 2000) - (1,020)
Total stockholders' equity 1,686 2,654
Total Liabilities and Stockholders' Equity $ 8,304 $ 8,346
See Notes to Consolidated Financial Statements.
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Union Carbide Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended March 31,
In millions (Unaudited) 2001 2000
Operating Activities
Net income (loss) $ (871) $ 97
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 103 102
Provision (credit) for deferred income taxes (422) 22
Undistributed earnings of nonconsolidated affiliates (9) (20)
Minority interests' share in income 1 2
Other net gain (24) (23)
Merger-related expenses and restructuring 1,176 -
Tax benefit-nonqualified stock options exercises 4 5
Changes in assets and liabilities that provided
(used) cash:
Accounts and notes receivable (56) (3)
Inventories 34 (7)
Accounts payable (64) 54
Other assets and liabilities (153) 5
Cash provided by (used in) operating activities (281) 234
Investing Activities
Capital expenditures (34) (195)
Proceeds from sales of property - 8
Investments in nonconsolidated affiliates (31) (65)
Proceeds from the sale of investments 22 12
Purchase of investments (22) (16)
Cash used in investing activities (65) (256)
Financing Activities
Change in short-term notes payable (952) 64
Change in notes payable to related companies 1,308 -
Repayments of long-term debt (5) -
Purchases of treasury stock (1) -
Proceeds from sales of common stock 6 10
Dividends paid to stockholders (28) (30)
Cash provided by financing activities 328 44
Effect of Exchange Rate Changes on Cash and
Cash Equivalents 1 -
Summary
Increase (decrease) in cash and cash equivalents (17) 22
Cash and cash equivalents, beginning-of-period 63 41
Cash and cash equivalents, end-of-period $ 46 $ 63
See Notes to Consolidated Financial Statements.
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Union Carbide Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
Three Months Ended March 31,
In millions (Unaudited) 2001 2000
Net income (loss) $(871) $ 97
Other comprehensive income (loss), net of tax:
Unrealized gains and losses on investments (1) 4
Cumulative translation adjustments (79) (10)
Comprehensive income (loss) $(951) $ 91
See Notes to Consolidated Financial Statements.
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Union Carbide Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note A - Consolidated Financial Statements
The unaudited interim financial statements reflect all
adjustments (consisting of normal recurring accruals) which,
in the opinion of management, are considered necessary for a
fair presentation of the results for the periods covered.
Certain reclassifications of prior period amounts have been
made to conform to the current period's presentation. These
statements should be read in conjunction with the audited
Notes to Financial Statements of Union Carbide Corporation
and Subsidiaries (the "corporation" or "UCC") in the 2000
Annual Report on Form 10-K.
Condensed Summary of Significant Accounting Policies:
Business and Geographic Segment Information - Effective with
the Dow Merger, the corporation's business activities were
fully integrated with those of Dow and are no longer operated
as separate business units. Dow conducts its worldwide
operations through global businesses which extend beyond the
boundaries of both geography and legal entities. This
results in the corporation's business activities comprising
fully integrated components of Dow's global businesses rather
than stand-alone operations. Because there are no separable
reportable business segments for the corporation under
Statement of Financial Accounting Standards ("Statement") No.
131, "Disclosures about Segments of an Enterprise and Related
Information," and the information used by the chief operating
decision maker regarding the corporation's operations relates
to the corporation in its entirety, the corporation's results
are reported as a single operating segment. Prior to the Dow
Merger, the corporation was managed as two separate business
segments, Specialties and Intermediates and Basic Chemicals
and Polymers, as well as a non-operating segment ("Other").
Prior periods have been restated to conform to the current
period's presentation.
Research and Development - Research and development costs are
charged to expense as incurred. Depreciation expense
applicable to research and development facilities and
equipment is included in "Research and development expenses"
in the Consolidated Statements of Income.
Related Companies - Significant transactions with the
corporation's parent company, Dow, or other Dow subsidiaries
have been characterized as related company transactions in
the consolidated financial statements.
Earnings Per Share - In accordance with Statement No. 128,
"Earnings Per Share," the presentation of earnings per share
is not required in financial statements of wholly owned
subsidiaries.
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Note B - The Dow Merger and Merger-related Expenses and Restructuring
On February 6, 2001, the corporation merged with a wholly
owned subsidiary of Dow. As a result of the merger, each
share of Union Carbide common stock outstanding immediately
prior to the merger was exchanged for 1.611 shares of Dow
common stock, and Union Carbide became a wholly owned
subsidiary of Dow.
Contemporaneous with the merger, certain rights vested and
stock units equivalent to Union Carbide common stock were
converted into stock units equivalent of Dow common stock
under various employee benefit and incentive plans, such as
the ESOP Plan, the 1997 Union Carbide Long-Term Incentive
Plan and the deferred compensation plan.
On February 23, 2001, the corporation cancelled its unused
$1 billion major bank credit agreement.
In order to satisfy the European Commission's condition for
approval of the merger, the corporation divested its 50-
percent interest in Polimeri Europa S.r.l. ("Polimeri
Europa") to EniChem S.p.A. in April 2001.
On March 29, 2001, Dow's management made certain decisions
relative to employment levels, duplicate assets and
facilities and excess capacity resulting from the merger of
the corporation into a subsidiary of Dow. These decisions were
based on Dow management's assessment of the actions necessary
to achieve synergies as the result of the merger. The
economic effects of these decisions, combined with merger-
related transaction costs and certain asset impairments,
resulted in a pretax special charge in the first quarter of
$1,275 million. The following table shows the major
components of the special charge:
In millions
Transaction costs $ 41
Labor-related costs 629
Write-down of assets and facilities 605
Total $1,275
Transaction costs of $41 million consisted primarily of
investment banking, legal and accounting fees, all of which
had been paid at March 31, 2001.
Employee-related costs consisted predominantly of provisions
for employee severance, change of control obligations,
medical and retirement benefits, and outplacement services.
Dow's integration plans include a combined workforce
reduction of approximately 4,500 people, primarily from the
corporation's administrative, marketing, purchasing, research and
development, and manufacturing workforce. The charge for
severance was based upon the severance plan provisions
communicated to employees. Headcount reductions began in the
second quarter of 2001. Approximately one-half of the
reductions will be completed by the end of September;
approximately 80 percent will be completed by the end of the
first 12 months following the merger. The corporation expects
that approximately 66 percent of the employee-related costs
will be expended in cash within the next two years, though
the timing of severance payments is dependent upon employee
elections. Expenditures with respect to employee-related
costs associated with pension and postretirement benefit
plans will occur over a much more extended period that is not
currently determinable.
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The special charge included $605 million for the write-down
of duplicate assets and facilities directly related to the
merger, the loss on divestitures required to obtain
regulatory approval for the merger, asset impairments and
lease abandonment reserves. Duplicate assets consist
principally of capitalized software costs, information
technology equipment, research and development facilities and
equipment, all of which were written off during the first
quarter. The fair values of the impaired assets, which
include production facilities and transportation equipment,
were determined based on discounted cash flows and an
appraisal, respectively. These components of the special
charge will require limited future cash outlays, and will
result in a decrease in annual depreciation of approximately
$65 million.
The following table summarizes the activity in the special
charge reserve for the three months ended March 31, 2001:
In millions
Opening Additions Charges Against Balance at
Balance to Reserve Reserve Period End
- $1,275 $ (646) $ 629
Note C - Commitments and Contingencies
The corporation has two major agreements for the purchase of
ethylene-related products and two other purchase agreements
in the U.S. and Canada. The net present value of the fixed
and determinable portion of obligations under these purchase
commitments at March 31, 2001 totaled $170 million including
one contract for the purchase of ethylene with Dow
representing $132 million of this obligation.
The corporation is subject to loss contingencies resulting
from environmental laws and regulations, which include
obligations to remove or remediate the effects on the
environment of the disposal or release of certain wastes and
substances at various sites. The corporation has established
accruals in current dollars for those hazardous waste sites
where it is probable that a loss has been incurred and the
amount of the loss can be reasonably estimated. The
reliability and precision of the loss estimates are affected
by numerous factors, such as different stages of site
evaluation, the allocation of responsibility among
potentially responsible parties and the assertion of
additional claims. The corporation adjusts its accruals as
new remediation requirements are defined, as information
becomes available permitting reasonable estimates to be made,
and to reflect new and changing facts.
At March 31, 2001, the corporation had established
environmental remediation accruals in the amount of
$180 million. These accruals have two components, estimated
future expenditures for site investigation and cleanup and
estimated future expenditures for closure and postclosure
activities. In addition, the corporation had environmental
loss contingencies of $67 million.
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The corporation has sole responsibility for the remediation
of approximately 40 percent of its environmental sites for
which accruals have been established. These sites are well
advanced in the investigation and cleanup stage. The
corporation's environmental accruals at March 31, 2001
included $148 million for these sites, of which $38 million
was for estimated future expenditures for site investigation
and cleanup and $110 million was for estimated future
expenditures for closure and postclosure activities. In
addition, $51 million of the corporation's environmental loss
contingencies related to these sites. The three sites with
the largest total potential cost to the corporation are
nonoperating sites. Of the above accruals, these sites
accounted for $48 million, of which $10 million was for
estimated future expenditures for site investigation and
cleanup and $38 million was for estimated future expenditures
for closure and postclosure activities. In addition,
$34 million of the above environmental loss contingencies
related to these sites.
The corporation does not have sole responsibility at the
remainder of its environmental sites for which accruals have
been established. All of these sites are in the
investigation and cleanup stage. The corporation's
environmental accruals at March 31, 2001 included $32 million
for estimated future expenditures for site investigation and
cleanup at these sites. In addition, $16 million of the
corporation's environmental loss contingencies related to
these sites. The largest two of these sites are also
nonoperating sites. Of the above accruals, these sites
accounted for $10 million for estimated future expenditures
for site investigation and cleanup. In addition, $2 million
of the above environmental loss contingencies related to
these sites.
In 2000, worldwide expenses related to environmental
protection for compliance with federal, state and local laws
regulating solid and hazardous wastes and discharge of
materials to air and water, as well as for waste site
remedial activities, totaled $104 million. Expenses in 1999
and 1998 were $118 million and $91 million, respectively.
While estimates of the costs of environmental protection for
2001 are necessarily imprecise, the corporation estimates
that these expenses will approximate the average of the last
three years.
The corporation severally guaranteed up to approximately
$122 million at March 31, 2001 of EQUATE Petrochemical
Company K.S.C.'s ("EQUATE") debt and working capital financing
needs. The corporation has also severally guaranteed certain sales
volume targets until EQUATE's sales capabilities are proved.
In addition, the corporation has pledged its shares in EQUATE
as security for EQUATE's debt. The corporation has political
risk insurance coverage for its equity investment and a
majority of its guarantee of EQUATE's debt.
The corporation had additional contingent obligations at
March 31, 2001 totaling $69 million, of which $26 million
related to guarantees of debt.
The corporation and its consolidated subsidiaries are
involved in a number of legal proceedings and claims with
both private and governmental parties. These cover a wide
range of matters, including, but not limited to: product
liability; trade regulation; governmental regulatory
proceedings; health, safety and environmental matters;
employment; patents; contracts; taxes; and commercial
disputes. In some of these legal proceedings and claims, the
cost of remedies that may be sought or damages claimed is
substantial.
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The corporation has recorded nonenvironmental litigation
accruals of $164 million and related insurance recovery
receivables of $142 million. At March 31, 2001, the
corporation had nonenvironmental litigation loss
contingencies of $69 million.
While it is impossible at this time to determine with
certainty the ultimate outcome of any of the legal
proceedings and claims referred to in this note, management
believes that adequate provisions have been made for probable
losses with respect thereto and that such ultimate outcome,
after provisions therefor, will not have a material adverse
effect on the consolidated financial position of the
corporation, but could have a material effect on consolidated
results of operations in a given quarter or year. Should any
losses be sustained in connection with any of such legal
proceedings and claims in excess of provisions therefor, they
will be charged to income when determinable.
Note D - Accounting Changes
In 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities." It requires that an entity recognize
all derivative instruments as either assets or liabilities in
the statement of financial position and measure those
instruments at fair value. Changes in the fair value of
those derivatives will be reported in earnings or accumulated
other comprehensive loss, depending on the uses of the
derivatives and whether they qualify for hedge accounting.
This Statement, as amended by Statement No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of FASB Statement No. 133," and
Statement No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities - an amendment of
FASB Statement No. 133," is effective for all fiscal quarters
of fiscal years beginning after June 15, 2000. The
corporation adopted the provisions of Statement No. 133, as
amended, on January 1, 2001. Due to the corporation's
limited use of financial instruments to manage its exposure
to market risks, primarily related only to changes in foreign
currency exchange rates, the adoption of Statement No. 133 on
January 1, 2001 did not have a material effect on the
corporation's financial position or results of operations.
In 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") 101, "Revenue Recognition in
Financial Statements," which summarizes the staff's views
regarding the application of generally accepted accounting
principles to selected revenue recognition issues. The
corporation adopted the provisions of SAB 101 on October 1,
2000, the effect of which was not material to the
corporation's financial position or results of operations.
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Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
Pursuant to General Instruction H of Form 10-Q, this section
includes only management's narrative analysis of the results of
operations for the three months ended March 31, 2001, the most
recent period, and the three months ended March 31, 2000, the
same period in the year immediately preceding it.
On February 6, 2001, the corporation merged with a wholly owned
subsidiary of Dow. As a result of the merger, each share of
Union Carbide common stock outstanding immediately prior to the
merger was exchanged for 1.611 shares of Dow common stock and
Union Carbide became a wholly owned subsidiary of Dow. The
merger received clearance from the U.S. Federal Trade
Commission, the European Commission and the Canadian Competition
Bureau, subject to the divestiture of certain assets and the contribution
of UNIPOL (trademark symbol) polyethylene technology licensing and
polyethylene conventional catalyst businesses of the corporation
to its joint venture Univation Technologies, LLC. The transaction
is intended to qualify as a tax-free reorganization for U.S. federal
income tax purposes and has been accounted for under the
pooling-of-interests method of accounting.
Results of Operations
The corporation reported a first quarter net loss of $871
million. Results of operations were impacted by a special charge
of $1,275 million ($838 million after tax) related to the merger
of the corporation into a subsidiary of Dow. Net income for the
first quarter of 2000 was $97 million.
Consolidated net sales for the first three months of 2001 were
$1,536 million, a decrease of 5 percent compared with net sales
of $1,617 million for the same three months of 2000. The decline
in net sales reflects a 4 percent increase in average selling
prices coupled with a 9 percent decrease in volume. Throughout
2000, the chemical industry slowly increased average selling
prices in response to a dramatic increase in raw material costs.
Volume declines occurred in most businesses including ethylene
oxide/glycol, where weak volume and high ethylene costs led to the
temporary shutdown of production at the corporation's ethylene glycol
facility in Prentiss, Alberta, Canada, and butanol and vinyl acetate,
where low demand and negative product margins caused the
corporation to temporarily cease production.
Although net sales declined 5 percent in the first quarter of
2001 compared with the first quarter of 2000, cost of sales
increased by $74 million, or 5 percent. This was the result of
a continued increase in the cost of oil and natural gas-related
raw materials and energy which began in the early part of 2000
and continued into the first quarter of 2001. Due to competitive
pressures, the corporation was unable to increase average selling
prices in order to totally offset the effect of these rising raw
material costs. Therefore, the corporation's gross margin, as a
percent of sales, declined to 3.9 percent for the first quarter
of 2001 compared with a gross margin of 13.3 percent for the
same quarter of 2000.
Declines of $12 million and $9 million in research and
development and selling, general and administrative expenses,
respectively, are primarily the result of decreases in accruals
for employee incentive plans coupled with synergies associated
with the integration into Dow.
In the first quarter of 2001, pretax costs of $1,275 million were
recorded for merger-related expenses and restructuring. These
costs included transaction costs, employee severance, and the
write-down of duplicate assets and facilities. For further
details, see Note B to the corporation's consolidated financial
statements included in this Quarterly Report on Form 10-Q.
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Equity in earnings of nonconsolidated affiliates decreased from
$42 million in the first quarter of 2000 to $12 million in the
same quarter of 2001. This decline primarily related to
decreased earnings at UOP LLC ("UOP") and EQUATE coupled with
additional pre-operating expenses related to the corporation's
Malaysian joint ventures, the OPTIMAL Group, offset by lower losses
for the Aspell Polymere SNC joint venture in France. Additionally,
the first quarter of 2001 was affected by the absence of earnings
from Polimeri Europa, which was required to be divested as part of
the merger clearance from the European Union. UOP's earnings continue
to be negatively impacted by the slowdown of projects in the oil and
gas industry which the venture services. Additionally, temporary
outages at EQUATE's facility in Kuwait resulted in lower than
anticipated production thereby causing a decrease in sales volume
for the first quarter of 2001 compared with the sales volume in
the first quarter of 2000.
Interest income of $2 million in the first quarter of 2001
declined $14 million from the $16 million reported for the first
quarter of 2000. This was primarily the result of $15 million in
interest income associated with a tax refund which was received
in the first quarter of 2000.
Interest expense increased $14 million for the three month period
ended March 31, 2001 as compared with the same three month period
of 2000. This increase was primarily the result of greater
average short-term debt outstanding during 2001 compared with
2000 combined with decreases in capitalized interest from the
prior year's first quarter. Capitalized interest for the first
quarter of 2000 related primarily to the corporation's olefins
and polyethylene projects in Canada, both of which were completed
in the second half of 2000.
Environmental
Estimates of future expenses related to environmental protection
for compliance with federal, state and local laws regulating
solid and hazardous wastes and discharge of materials to air and
water, as well as for waste site remedial activities, have not
changed materially since December 31, 2000. The reliability and
precision of the loss estimates are affected by numerous factors,
such as different stages of site evaluation, the allocation of
responsibility among potentially responsible parties and the
assertion of additional claims. The corporation's environmental
exposures are discussed in more detail in Note C to the
consolidated financial statements included in this Quarterly
Report on Form 10-Q.
Accounting Changes
See Note D to the consolidated financial statements included in
this Quarterly Report on Form 10-Q.
Item 3: Qualitative and Quantitative Disclosure About Market Risk
Omitted pursuant to General Instruction H of Form 10-Q.
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Part II. Other Information
Item 1. Legal Proceedings
See Note C to the corporation's consolidated financial
statements included in this Quarterly Report on Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
No exhibits are filed pursuant to this item.
(b) The corporation filed the following current reports on
Form 8-K for the three months ended March 31, 2001:
1. Current Report on Form 8-K dated January 18, 2001,
contained the corporation's January 18, 2001 press
release announcing the corporation's anticipated
earnings for the fourth quarter and year ended
December 31, 2000.
2. Current Report on Form 8-K dated January 29, 2001,
contained the corporation's January 29, 2001 press
release announcing the corporation's complete earnings
statement for the fourth quarter and year ended
December 31, 2000.
3. Current Report on Form 8-K dated February 6, 2001,
contained the corporation's February 6, 2001 press
release announcing it had completed the merger with a
wholly owned subsidiary of The Dow Chemical Company.
Additionally, the companies announced the amounts,
record dates and payable dates of the pro rata dividends
that would be paid to shareholders of The Dow Chemical
Company and the corporation.
4. Current Report on Form 8-K dated February 20, 2001,
contained a description required under Item 1 of
Form 8-K regarding the corporation's change of control
with regard to its merger into a subsidiary of The
Dow Chemical Company.
5. Current Report on Form 8-K dated March 15, 2001,
contained requirements under Item 4 of Form 8-K
regarding the corporation's change in Independent Auditors.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Union Carbide Corporation
(Registrant)
Date: May 15, 2001 By: /s/ Frank H. Brod
Frank H. Brod
Vice President & Controller
The Dow Chemical Company
Authorized Representative of
Union Carbide Corporation
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