UNION CARBIDE CORPORATION
NEWS RELEASE
CONTACT: Tomm F. Sprick
(203) 794-6992
UNION CARBIDE REPORTS 4th QUARTER LOSS
DANBURY, Conn., Jan. 29 -- Union Carbide Corporation (UCC) today reported
a fourth quarter 2000 loss of $0.70 per diluted share, including a non-
recurring charge of $0.17 per diluted share related to the company's UOP
partnership, compared with earnings of $0.22 per diluted share in the third
quarter of 2000 and $0.68 per diluted share for fourth quarter 1999.
UCC Chairman and CEO William H. Joyce said that margins and earnings were
adversely affected by high raw material and energy costs, which rose to
unprecedented levels by the end of the quarter, and by average selling prices,
which were lower than in the prior quarter. The negative impact on earnings
was primarily in the North American-based Basic Chemicals and Polymers
businesses. Dr. Joyce also noted that sales revenues declined somewhat from
the prior quarter, while sales volumes were virtually unchanged.
"Carbide and others are being negatively impacted by a volatile energy
market," said Dr. Joyce. "At the same time, product selling prices have not
been keeping pace with the high cost of natural gas and natural gas liquids,
such as ethane and propane, which are the primary feedstocks for our olefins-
chain derivatives."
He noted, for example, that natural gas prices more than quadrupled from
December 1999 to the end of December 2000, while the price for ethane nearly
doubled and the cost of propane increased nearly 40 percent in the same
period.
"To improve margins and reduce losses in this very challenging
environment," Dr. Joyce said, "the company is implementing price increases for
many severely affected products and cutting back production of some products.
UCC has temporarily shut down units in cases where adequate price increases
are not being realized." The company also has intensified efforts to control
fixed costs and capital expenditures, and to improve working capital
management.
Income from corporate investments carried at equity totaled $8 million
for the current quarter, compared with $40 million in the fourth quarter of
last year and $33 million in third
- MORE -
2001
P3-01-002
Page 2
of 10
quarter 2000. Excluding the non-recurring charge of $31 million from UOP,
partnership losses totaled $15 million in the fourth quarter 2000, compared to
a loss of $9 million in the same period last year and a loss of $6 million in
the third quarter 2000.
Union Carbide recorded a net loss for the quarter of $94 million,
compared to net income of $94 million for last year's fourth quarter and net
income of $29 million for the third quarter of this year. Fourth quarter 2000
sales totaled $1.598 billion compared with $1.552 billion for the fourth
quarter of 1999 and $1.637 billion for third quarter 2000. The effective tax
rate for the quarter was approximately 25 percent.
Carbide's S&I segment reported an operating profit of $51 million for the
fourth quarter of 2000, compared with $77 million for the same period last
year, and $45 million for the third quarter of this year. S&I segment results
were negatively affected by reduced partnership income.
The BC&P segment reported an operating loss of $122 million for the
fourth quarter of 2000, compared to operating income of $61 million in the
fourth quarter of 1999, and an operating loss of $15 million in the prior
quarter.
Full Year Results
For the full year 2000, UCC reported net income of $162 million, or $1.18
per diluted share. In addition to the non-recurring charge of $0.17 per
diluted share related to UOP, full-year results included a gain of $0.08 per
diluted share from the receipt and sale of shares issued in connection with
the demutualization of Metropolitan Life Insurance Company, a provider of
certain employee benefits for the company, and $0.40 per diluted share from
amortization of investment gains and changes in actuarial assumptions
reflecting long-term investment returns on pension plan assets. Prior year
income was $311 million, or $2.27 per diluted share, before a charge of $0.14
per diluted share from the cumulative effect of a change in accounting
principle. UCC set a company record in 2000 with worldwide sales of $6.526
billion, compared with the previous record of $6.502 billion set in 1997.
Worldwide sales in 1999 were $5.870 billion.
Union Carbide is a worldwide chemicals company with advanced process
technologies and large-scale chemical production facilities.
- Specialties & Intermediates (S&I) -- Union Carbide is the leading
North American supplier of solvents and intermediates to the paint and
coatings industry; the leading licensor of several technologies; and a leading
supplier of specialty chemicals, polymers and services used
- MORE -
Page 3
of 10
in the personal care products, pharmaceuticals, automotive, wire and cable,
oil and gas and industrial lubricants industries.
- Basic Chemicals & Polymers (BC&P) -- Union Carbide is among the
largest manufacturers of polyethylene, the world's most widely used plastic,
and the technology leader in this industry; and a large manufacturer of
polypropylene, one of the world's fastest-growing, large-volume plastics. UCC
is also the world's largest producer of ethylene oxide and its derivative
ethylene glycol, used for polyester fiber, resin and film, automotive
antifreeze and other products.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions
Of the Private Securities Litigation Act of 1995
Those statements in the preceding pages that do not reflect historical
information are forward-looking statements. Forward-looking statements
include statements concerning the pending Dow Chemical/Union Carbide merger,
anticipated future events or performance, sales prices, cost improvements, raw
material costs, volume increases, operating rates and earnings expectations.
Naturally, such forward-looking statements are subject to risks and
uncertainties. In addition to all specific assumptions cited, 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; customer inventory levels; competitive
pricing pressures; feedstock availability and costs; raw material and energy
costs; changes in industry production capacities and operating rates; currency
exchange rates; interest rates; global economic conditions; disruption in
transportation facilities; competitive technology positions; failure by the
corporation to achieve technology objectives, achieve cost reduction targets
or complete projects on schedule and on budget; an inability to obtain new
customers or retain existing ones; and, with respect to the Dow merger,
failure to obtain necessary regulatory and other governmental approvals and
failure to satisfy conditions of the merger agreement.
- MORE -
Page 4
of 10
UNION CARBIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Quarter Ended
Dec. 31, Sept. 30, Dec. 31,
Millions of Dollars, Except Per Share Amounts 2000 2000 1999
NET SALES $1,598 $1,637 $1,552
Cost of sales, exclusive of depreciation and amortization 1,442 1,421 1,240
Research and development 37 37 40
Selling, administrative and other expenses (a) 65 48 58
Depreciation and amortization 119 100 106
Partnership loss 46 6 9
Other income - net 18 9 9
INCOME (LOSS) BEFORE INTEREST EXPENSE AND
PROVISION FOR INCOME TAXES (93) 34 108
Interest expense 41 35 35
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (134) (1) 73
Provision (benefit) for income taxes (33) - 18
INCOME (LOSS) OF CONSOLIDATED COMPANIES
AND PARTNERSHIPS (101) (1) 55
Minority interest 1 3 1
Income from corporate investments carried at equity 8 33 40
NET INCOME (LOSS) $ (94) $ 29 $ 94
Earnings (loss) per common share
Basic - $(0.70) $ 0.22 $ 0.70
Based on the indicated number of shares 135,267,309 134,960,774 133,953,770
Diluted - $(0.70) $ 0.22 $ 0.68
Based on the indicated number of shares 135,267,309 (1) 137,075,390 137,557,329
(a) Selling $ 20 $ 21 $ 24
Administrative 20 21 21
Other expenses 25 6 13
Total $ 65 $ 48 $ 58
(1) The diluted share base for the quarter ended December 31, 2000 excludes incremental shares
of 2,133,243 related to stock options. These shares are excluded due to their antidilutive
effect as a result of the corporation's loss during the fourth quarter of 2000.
- MORE -
Page 5
of 10
UNION CARBIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended
Dec. 31,
Millions of Dollars, Except Per Share Amounts 2000 1999
NET SALES $6,526 $5,870
Cost of sales, exclusive of depreciation and amortization 5,531 4,609
Research and development 152 154
Selling, administrative and other expenses (a) 247 257
Depreciation and amortization 423 408
Partnership income (loss) (40) 11
Other income - net 87 102
INCOME BEFORE INTEREST EXPENSE AND PROVISION
FOR INCOME TAXES 220 555
Interest expense 158 133
INCOME BEFORE PROVISION FOR INCOME TAXES 62 422
Provision for income taxes 16 108
INCOME OF CONSOLIDATED COMPANIES AND PARTNERSHIPS 46 314
Minority interest 7 5
Income from corporate investments carried at equity 123 2
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 162 311
Cumulative effect of change in accounting principle - (20)
NET INCOME $ 162 $ 291
Earnings per common share
Basic - Income before cumulative effect of
change in accounting principle $ 1.20 $ 2.33
- Cumulative effect of change in accounting
principle - (0.15)
- Net income $ 1.20 $ 2.18
Based on the indicated number of shares 134,846,440 133,342,112
Diluted - Income before cumulative effect of
change in accounting principle $ 1.18 $ 2.27
- Cumulative effect of change in accounting
principle - (0.14)
- Net income $ 1.18 $ 2.13
Based on the indicated number of shares 137,491,207 136,658,319
(a) Selling $ 86 $ 94
Administrative 85 90
Other expenses 76 73
Total $ 247 $ 257
- MORE -
Page 6
of 10
UNION CARBIDE CORPORATION AND SUBSIDIARIES
SEGMENT DATA
Quarter Ended
Dec. 31, Sept. 30, Dec. 31,
2000 2000 1999
Millions of Dollars, Except As Indicated
Specialties and Intermediates
Segment revenues $1,137 $1,122 $1,055
Depreciation and amortization 70 65 70
Partnership income (loss) (40) (6) (13)
Operating profit 51 45 77
Income (loss) from corporate
investments carried at equity (4) 1 (5)
Unit variable margin (cents/pound) 20.2 17.6 21.1
Fixed cost per pound of products
sold (cents/pound) 13.4 13.1 14.4
Capital expenditures 30 29 71
Basic Chemicals & Polymers
Segment revenues $ 576 $ 614 $ 597
Depreciation and amortization 49 35 36
Partnership income (loss) (6) - 4
Operating profit (loss) (122) (15) 61
Income (loss) from corporate
investments carried at equity 12 32 45
Unit variable margin (cents/pound) 3.2 7.5 11.2
Fixed cost per pound of products
sold (cents/pound) 6.8 6.4 6.7
Capital expenditures 32 46 134
Other
Operating profit (loss) $ 4 $ 4 $ (30)
- MORE -
Page 7
of 10
UNION CARBIDE CORPORATION AND SUBSIDIARIES
SEGMENT DATA
Year Ended Dec.31,
2000 1999
Millions of Dollars, Except As Indicated
Specialties and Intermediates
Segment revenues $4,492 $4,182
Depreciation and amortization 269 262
Partnership income (loss) (36) 6
Operating profit 270 607
Income (loss) from corporate
investments carried at equity (4) (1)
Unit variable margin (cents/pound) 18.9 22.5
Fixed cost per pound of products
sold (cents/pound) 13.2 13.9
Capital expenditures 175 291
Basic Chemicals & Polymers
Segment revenues $2,453 $1,976
Depreciation and amortization 154 146
Partnership income (loss) (4) 5
Operating profit (loss) (33) (21)
Income (loss) from corporate
investments carried at equity 127 3
Unit variable margin (cents/pound) 7.9 7.2
Fixed cost per pound of products
sold (cents/pound) 6.4 5.8
Capital expenditures 284 473
Other
Operating profit (loss) $ 9 $ (31)
- MORE -
Page 8
of 10
UNION CARBIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
Millions of Dollars
at Dec. 31,
2000 1999
ASSETS
Cash and cash equivalents $ 63 $ 41
Notes and accounts receivable 1,034 1,132
Inventories 750 680
Other current assets 329 297
Current assets 2,176 2,150
Net fixed assets 4,521 4,521
Investments and other assets 1,649 1,286
Total Assets $8,346 $7,957
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt and current portion of
long-term debt $1,178 $ 782
Other current liabilities 1,122 1,007
Current liabilities 2,300 1,789
Long-term debt 1,748 1,869
Other long-term obligations 1,644 1,682
Stockholders' equity 2,654 2,617
Total Liabilities and Stockholders' Equity $8,346 $7,957
- MORE -
Page 9
of 10
Union Carbide Corporation
Data Sheet
4Q00 3Q00 4Q99 4Q/3Q 4Q/4Q
Union Carbide Corporation
Net Sales MM$ 1,598 1,637 1,552 (2.4)% 3.0 %
Customer Volumes MM Lb. 4,193 4,202 4,217 (0.2)% (0.6)%
Average Selling Prices Cents/Lb. 38.1 39.0 36.8 (2.3)% 3.5 %
Unit Variable Margin Cents/Lb. 11.6 12.9 16.3 (10.1)% (28.8)%
Fixed Costs MM $ 433 410 472 5.6 % (8.3)%
S & I Segment
Segment Revenues MM $ 1,137 1,122 1,055 1.3 % 7.8 %
Customer Sales Revenues MM $ 1,107 1,122 1,055 (1.3)% 4.9 %
Customer Volumes MM Lb. 2,228 2,216 2,223 0.5 % 0.2 %
Average Selling Prices Cents/Lb. 49.7 50.6 47.5 (1.8)% 4.6 %
Unit Variable Margin Cents/Lb. 20.2 17.6 21.1 14.8 % (4.3)%
Operating Profit * MM $ 51 45 77 13.3 % (33.8)%
B C & P Segment
Segment Revenues MM $ 576 614 597 (6.2)% (3.5)%
Customer Sales Revenues MM $ 491 515 497 (4.7)% (1.2)%
Customer Volumes MM Lb. 1,965 1,986 1,994 (1.1)% (1.5)%
Average Selling Prices Cents/Lb. 24.9 25.9 24.9 (3.9)% - %
Unit Variable Margin Cents/Lb. 3.2 7.5 11.2 (57.3)% (71.4)%
Operating Profit / (Loss) MM $ (122) (15) 61 (713.3)% (300.0)%
Change in Average Selling Prices
B C & P Chemicals Cents/Lb. Change (0.6) (1.7)
B C & P Plastics Cents/Lb. Change (2.6) (2.5)
Change in Customer Volumes
B C & P Chemicals % Change (6.9)% (10.5)%
B C & P Plastics % Change 5.8 % 12.1 %
Hydrocarbon By-products % Change (3.1)% (8.7)%
* S&I Operating Profit for the 4th Quarter of 2000 includes a non-recurring charge of
$31 million related to the corporation's UOP partnership.
- MORE -
Page 10
of 10
Union Carbide Corporation
Data Sheet
2000/
Year 2000 Year 1999 1999
Union Carbide Corporation
Net Sales MM $ 6,526 5,870 11.2 %
Customer Volumes MM Lb. 16,721 16,763 (0.3)%
Average Selling Prices Cents/Lb. 39.0 35.0 11.4 %
Unit Variable Margin Cents/Lb. 13.6 15.3 (11.1)%
Fixed Costs MM $ 1,684 1,716 (1.9)%
S & I Segment
Segment Revenues MM $ 4,492 4,182 7.4 %
Customer Sales Revenues MM $ 4,462 4,182 6.7 %
Customer Volumes MM Lb. 8,998 8,946 0.6 %
Average Selling Prices Cents/Lb. 49.6 46.7 6.2 %
Unit Variable Margin Cents/Lb. 18.9 22.5 (16.0)%
Operating Profit * MM $ 270 607 (55.5)%
B C & P Segment
Segment Revenues MM $ 2,453 1,976 24.1 %
Customer Sales Revenues MM $ 2,064 1,688 22.3 %
Customer Volumes MM Lb. 7,723 7,817 (1.2)%
Average Selling Prices Cents/Lb. 26.7 21.6 23.6 %
Unit Variable Margin Cents/Lb. 7.9 7.2 9.7 %
Operating Profit / (Loss) * MM $ (33) (21) 57.1 %
Change in Average Selling Prices
B C & P Chemical Cents/Lb. Change 5.1
B C & P Plastics Cents/Lb. Change 4.8
Change in Customer Volumes
B C & P Chemicals % Change (13.2)%
B C & P Plastics % Change 6.2 %
Hydrocarbon By-products % Change 4.6 %
* S&I Operating Profit for 2000 includes a gain of $12 million, and BC&P Operating Profit for the same
period includes a gain of $6 million, both from the receipt and sale of shares issued in connection
with the demutualization of Metropolitan Life, a provider of certain employee benefit programs for the
corporation. S&I Operating Profit for 2000 includes a non-recurring charge of $31 million related to
the corporation's UOP partnership. S&I Operating Profit for 1999 includes a gain of $50 million from
favorable settlements of litigation of the licensing business.
- END -