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.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

At September 30, 2017,2018, 935.51 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 InstructionsInstruction H(1)(a) and (b) for Form 10-Q and is therefore filing this form with a reduced disclosure format.

Throughout this Quarterly Report on Form 10-Q, except as otherwise indicated by the context, the terms "Corporation" or "UCC" as used herein mean Union Carbide Corporation and its subsidiaries.

A detailed discussion of principal risks and uncertainties which may cause actual results and events to differ materially from such forward-looking statements is included in the section titled "Risk Factors" (see Part I, Item 1A of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2016)2017). UCC undertakes no obligation to update or revise publicly any forward-looking statements whether because of new information, future events, or otherwise, except as required by securities and other applicable laws.

The unaudited interim consolidated financial statements of Union Carbide Corporation and its subsidiaries (the "Corporation" or "UCC") were prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and reflect all adjustments (including normal recurring accruals) which, in the opinion of management, are considered necessary for the fair presentation of the results for the periods presented. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017.

The Corporation is a wholly owned subsidiary of The Dow Chemical Company ("Dow"). In accordance with the accounting guidance for earnings per share, the presentation of earnings per share is not required in financial statements of wholly owned subsidiaries.

The Corporation’s business activities comprise components of Dow’s global operations rather than stand-alone operations. Dow conducts its worldwide operations through global businesses.principal product groups. Because there are no separable reportable business segments for UCC under the accounting guidance related to segment reporting and no detailed business information is provided to a chief operating decision maker regarding the Corporation’s stand-alone operations, the Corporation’s results are reported as a single operating segment.

Effective August 31, 2017, pursuant to the merger of equals transaction contemplated by the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017, Dow and E. I. du Pont de Nemours and Company ("DuPont") each merged with subsidiaries of DowDuPont Inc. ("DowDuPont") and, as a result, Dow and DuPont became subsidiaries of DowDuPont (the "Merger"). See Note 12 for additional information.

In the first quarter of 2017,2018, the Corporation made a changeadopted ASU 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which required retrospective application for the reclassification of net periodic benefit costs, other than the service cost component, from "Cost of sales" to "Sundry income (expense) - net." See Note 2 for additional information.

The changes to the consolidated statements of cash flows to include a new line under "Operating Activities" entitled "Asbestos-related payments." The new line captures cash payments made for asbestos-related claim and resolution activity as well as asbestos-related defense and processing costs (effective as of the fourth quarter of 2016income as a result of an accounting policy change).

In the thirdsecond quarter of 2017,2018, the Corporation changedadopted ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which resulted in a $254 million increase to retained earnings due to the presentationreclassification from accumulated other comprehensive loss for the effect of certain line itemsthe federal corporate income tax rate change as a result of the Tax Cuts and Jobs Act of 2017 ("The Act") on the faceCorporation's pension plans. This reclassification is reflected in the "Adoption of accounting standard" line in the consolidated statements of equity. The Corporation's significant accounting policy for Income Taxes was updated as a result of the adoption of ASU 2018-02 to indicate the Corporation uses the portfolio approach for releasing income to conform to the presentation that was adoptedtax effects from accumulated other comprehensive loss. See Note 2 for DowDuPont. Costs associated with integration and separation activities are now separately reported as “Integration and separation costs” and “Interest income” has been reclassified to “Sundry income (expense) - net.”  The changes were retrospectively applied and are summarized below:

In May 2014, the second quarter of 2018, the Corporation early adopted ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from The Act, which was enacted on December 22, 2017, and requires certain disclosures about stranded tax effects. An entity has the option of applying the new guidance at the beginning of the period of adoption or retrospectively to each period (or periods) in which the tax effects related to items remaining in accumulated other comprehensive income are recognized. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and early adoption is permitted,

In the first quarter of 2018, the Corporation adopted ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is the new comprehensive revenue recognition standard that will supersede all existingsupersedes the revenue recognition guidance under U.S. GAAP.requirements in Topic 605, "Revenue Recognition," and most industry specific guidance. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral ofIn 2015 and 2016, the Effective Date,"Financial Accounting Standards Board ("FASB") issued in August 2015, revisedadditional ASUs related to Topic 606 that delayed the effective date for this ASU to annual and interim periods beginning on or after December 15, 2017, with early adoption permitted, but not earlier than the original effective date of annual and interim periods beginning on or after December 15, 2016, for public entities. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," and associated ASUs for Topic 842, which requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance requires that a lessee recognize assets and liabilities for leases with lease terms of more than twelve months and recognition, presentation and measurement in the financial statements will depend on its classification as a finance or operating lease. In addition, the new guidance will require disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. Lessor accounting remains largely unchanged from current U.S. GAAP but does contain some targeted improvements to align with the new revenue recognition guidance issued in 2014 (ASU 2014-09). The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, using a modified retrospective approach, and early adoption is permitted. The Corporation has a cross-functional team in place to evaluate and implement the new guidanceguidance. The team continues to review existing lease arrangements and is inhas engaged a third party to assist with the processcollection of implementing a software solution to facilitatelease data. The Corporation will elect the development of business processes and controls around leases to meet the new accounting and disclosure requirements upon adoption in the first quarter of 2019.

postretirement benefit plans. Underapplying the other practical expedients and accounting policy elections has been evaluated and the Corporation is in the process of documenting the related considerations and decisions. The Corporation is currently implementing a third-party software solution in connection with the adoption of the ASU; however, the system is still being modified to comply with the new guidance. The Corporation continues to enhance accounting systems and update business processes and controls related to the new guidance an entity must disaggregatefor leases. Collectively, these activities are expected to facilitate the Corporation's ability to meet the new accounting and presentdisclosure requirements upon adoption in the service cost componentfirst quarter of 2019. The Corporation is working to quantify the impact and anticipates that the adoption of the net periodic benefit costnew standard will result in a material increase in lease-related assets and liabilities in the sameconsolidated balance sheets. The impact to the Corporation's consolidated statements of income statement line item(s)and cash flows is not expected to be material.

In August 2018, the FASB issued ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans," which, as part of the FASB disclosure framework project, removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of certain disclosures and adds new disclosure requirements that are considered relevant for employers that sponsor defined benefit pension and/or other employee compensation costs arising from services rendered during the period, and only the service cost component will be eligible for capitalization. Other components of net periodicpostretirement benefit cost will be presented separately from the line item(s) that includes the service cost.plans. The new standard is effective for fiscal years and interim periods within those fiscal years, beginningending after December 15, 2017. Early2020, and early adoption is permitted at the beginning of an annual period in which the financial statements have not been issued. Entities must usepermitted. The new guidance should be applied on a retrospective transition method to adopt the requirementbasis for separate presentation of the income statement service cost and other components, and a prospective transition method to adopt the requirement to limit the capitalization of benefit cost to the service component.all periods presented. The Corporation is currently evaluating the impact of adopting this guidance.

In September 2017, the Corporation approved restructuring actions that are aligned with DowDuPont’s synergy targets. As a result of these actions, the Corporation recorded a pretax restructuring charge for severance and related benefit costs of $8 million in the third quarter of 2017. In November 2017, the Corporation approved additional restructuring actions in connection with the restructuring program. A pretax restructuring charge for severance and related benefit costs of $2 million was recorded in the fourth quarter of 2017, as well as charges of $62 million for the write-off and write-down of manufacturing and facility related assets at multiple UCC sites, including a steam unit in Institute, West Virginia.

In addition to actions taken in 2017, the Corporation recorded pretax charges of $1 million in the third quarter of 2018 ($3 million for the first nine months of 2018) for additional restructuring charges for severance and related benefit costs. At September 30, 2018, severance of $8 million had been paid, leaving a liability of $5 million. The impact of this charge iswas shown as “Restructuring and asset related charges - net” in the consolidated statements of income. These actions are expected to be substantially completed by September 30, 2019. At September 30, 2017, severance of $1 million was paid, leaving a liability of $7 million.

The Corporation expects to incur additional costs in the future related to restructuring activities, as UCC continually looks for ways to enhance the efficiency and cost effectiveness of its operations. The Corporation expects to incur additional employee-related costs, including involuntary termination benefits, related to its other optimization activities. These costs cannot be reasonably estimated at this time.

A transaction for the sale of stock between the Corporation and Dow in 2014 created a gain that was initially deferred for tax purposes. This deferred gain became taxable as a result of activities executed in anticipation of the intended separation of DowDuPont into three publicly traded companies. As a result, in the third quarter of 2017, the Corporation increased “Income"Income taxes payable”payable" in the consolidated balance sheets and recorded a charge to “Provision for income taxes” in the consolidated statements of income of $97 million. 

The Corporation is included in Dow's consolidated federal income tax group and DowDuPont's consolidated tax return. Current and deferred tax expenses are calculated for the Corporation as a stand-alone group and are allocated to the group from the consolidated totals.totals, consistent with the Dow-UCC Tax Sharing Agreement. UCC is currently under examination in a number of tax jurisdictions, including the U.S. federal and various state jurisdictions. Positions challenged by the tax authoritiesIt is reasonably possible that these examinations may be settled or appealed by the Corporation. As a result, there is an uncertainty in income taxes recognizedresolved in the Corporation’s financial statements in accordance with accounting for income taxes and accounting for uncertainty in income taxes. Net reductions tonext twelve months. The impact on the Corporation’s global unrecognized tax benefits areresults of operations is not expected to be material within the next twelve months.material.

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies.

At September 30, 2017,2018, the Corporation had accrued obligations of $119$102 million for probable environmental remediation and restoration costs, including $20$17 million for the remediation of Superfund sites. These obligations are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets. This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the Corporation has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately three times that amount. Consequently, it is reasonably possible that environmental remediation and restoration costs in excess of amounts accrued could have a material impact on the Corporation's results of operations, financial condition and cash flows. It is the opinion of the Corporation’s management that the possibility is remote that costs in excess of the range disclosed will have a material impact on the Corporation’s results of operations, financial condition and cash flows. Inherent uncertainties exist in these estimates primarily due to unknown environmental conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies for handling site remediation and restoration. At December 31, 2016,2017, the Corporation had accrued obligations of $145$114 million for probable environmental remediation and restoration costs, including $20$19 million for the remediation of Superfund sites.

The Corporation is 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.

A descriptionsummary of asbestos-related matters can be found in Note 1314 to the Consolidated Financial Statements included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2016.2017.

The Corporation is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that UCC sold in the past, alleged exposure to asbestos-containing products located on UCC’s premises and UCC’s responsibility for asbestos suits filed against a former UCC subsidiary, Amchem Products, Inc. ("Amchem"). In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that injuries incurred in fact resulted from exposure to the Corporation’s products.

The Corporation expects more asbestos-related suits to be filed against UCC and Amchem in the future, and will aggressively defend or reasonably resolve, as appropriate, both pending and future claims.

Since 2003, the Corporation has engaged Ankura Consulting Group, LLC ("Ankura"), a third party actuarial specialist, to review the Corporation's historical asbestos-related claim and resolution activity in order to assist UCC management in estimating the Corporation's asbestos-related liability. Each year, Ankura has reviewed the claim and resolution activity to determine the appropriateness of updating the most recent Ankura study. Historically, every other year beginning in October, Ankura has completed a full review and formal update to the most recent Ankura study.

Based on the December 20162017 Ankura studyreview and the Corporation's own review of the data, and taking into account the change in accounting policy that occurred in the fourth quarter of 2016, the Corporation's total asbestos-related liability through the terminal year of 2049, including asbestos-related defense and processing costs, was $1,490$1,369 million at December 31, 2016,2017, and was included in “Asbestos-related liabilities - current” and “Asbestos-related liabilities - noncurrent” in the consolidated balance sheets.

Each quarter, the Corporation reviews claims filed, settled and dismissed, as well as average settlement and resolution costs by disease category. The Corporation also considers additional quantitative and qualitative factors such as the nature of pending claims, trial experience of the Corporation and other asbestos defendants, current spending for defense and processing costs, significant appellate rulings and legislative developments, trends in the tort system, and their respective effects on expected future

The Corporation’s asbestos-related liability for pending and future claims and defense and processing costs was $1,398$1,290 million at September 30, 2017,2018, and approximately 1516 percent of the recorded liability related to pending claims and approximately 8584 percent related to future claims.

The Corporation's management believes the amounts recorded for the asbestos-related liability (including defense and processing costs) reflect reasonable and probable estimates of the liability based on current, known facts. However, future events, such as the number of new claims to be filed and/or received each year and the average cost of defending and disposing of each such claim, as well as the numerous uncertainties surrounding asbestos litigation in the United States, over a significant period of time, could cause the actual costs for the Corporation to be higher or lower than those projected or those recorded. Any such event could result in an increase or decrease in the recorded liability.

Because of the uncertainties described above, the Corporation cannot estimate the full range of the cost of resolving pending and future asbestos-related claims facing UCC and Amchem. As a result, it is reasonably possible that an additional cost of disposing of asbestos-related claims, including future defense and processing costs, could have a material impact on the Corporation's results of operations and cash flows for a particular period and on the consolidated financial position.

While it is not possible at this time to determine with certainty the ultimate outcome of any of the legal proceedings and claims referred to in this filing, management believes that the possibility is remote that the aggregate of all such other claims and lawsuits will have a material adverse impact on the results of operations, cash flows and financial position of the Corporation.

The following table summarizes the changes and after-tax balances of each component of accumulated other comprehensive loss ("AOCL") for the nine months ended September 30, 20172018 and 2016:2017:

The Corporation's investments in marketable securitiesfinancial instruments are classified as available-for-sale. Proceeds from sales of available-for-sale securities were $2 million forLevel 2 measurements. For assets and liabilities classified as Level 2 measurements, where the nine-month period ended September 30, 2017 ($2 million in proceeds from the maturity of marketable securities for the nine-month period ended September 30, 2016).

The Corporation sells its products to Dow to simplify the customer interface process. Products are sold to and purchased from Dow at market-based prices in accordance with the terms of Dow’s intercompany pricing policies. After each quarter, the Corporation and Dow analyze the pricing used for the sales in that quarter and reach agreement on any necessary adjustments, at which point the prices are final. The Corporation also procures certain commodities and raw materials through a Dow subsidiary and pays a commission to that Dow subsidiary based on the volume and type of commodities and raw materials purchased. The commission expense is included in "Sundry income (expense) - net" in the consolidated statements of income. Purchases from that Dow subsidiary were $377$407 million in the third quarter of 20172018 ($379377 million in the third quarter of 2016)2017) and $1,213$1,219 million induring the first nine months of 20172018 ($1,0111,213 million induring the first nine months of 2016)2017). The increase in purchase costs in the first nine months of 2017 when compared with the same period last year is due to higher feedstock and energy costs.

The Corporation has a master services agreement with Dow whereby Dow provides services including, but not limited to, accounting, legal, treasury (investments, cash management, risk management, insurance), procurement, human resources, environmental, health and safety and business management for UCC. Under the master services agreement with Dow, general administrative and overhead type services that Dow routinely allocates to various businesses are charged to UCC. The master services agreement cost allocation basis is headcount and includes a 10 percent service fee. This agreement resulted in expense of $8 million in the third quarter of 20172018 ($78 million in the third quarter of 2016)2017) and $24$22 million infor the first nine months of 20172018 ($2124 million infor the first nine months of 2016)2017) for general administrative and overhead type services and the 10 percent service fee, included in "Sundry income (expense) - net" in the consolidated statements of income. The remaining activity-based costs were $20$23 million in the third quarter of 20172018 ($1920 million in the third quarter of 2016)2017) and $60$67 million in the first nine months of 20172018 ($5360 million in the first nine months of 2016)2017), and were included in "Cost of sales" in the consolidated statements of income.

Management believes the method used for determining expenses charged by Dow is reasonable. Dow provides these services by leveraging its centralized functional service centers to provide services at a cost that management believes provides an advantage to the Corporation.

The monitoring and execution of risk management policies related to interest rate and foreign currency risks, which are based on Dow’s risk management philosophy, are provided as a service to UCC.

As part of Dow’s cash management process, UCC is a party to revolving loans with Dow that have interest rates based on LIBOR (London Interbank Offered Rate) with varying maturities. At September 30, 2017,2018, the Corporation had a note receivable of

The Corporation also has a separate revolving credit agreement with Dow that allows the Corporation to borrow or obtain credit enhancements up to an aggregate of $1 billion that matures December 30, 2017.2018. Dow may demand repayment with a 30-day written notice to the Corporation, subject to certain restrictions. A related collateral agreement provides for the replacement of certain existing pledged assets, primarily equity interests in various subsidiaries, with cash collateral. At September 30, 2017, $9492018, $948 million was available under the revolving credit agreement ($947949 million at December 31, 2016)2017). The cash collateral is reported as “Noncurrent receivables from related companies” in the consolidated balance sheets.

On a quarterly basis, the Corporation's Boardboard of Directorsdirectors reviews and determines if there will be a dividend distribution to its parent company and sole shareholder, Dow. The Board takes into consideration the level of earnings and cash flows, among other factors, in determining the amount of the dividend distribution. In the third quarter of 2018, the Corporation declared and paid a cash dividend of $177 million to Dow; dividends to Dow totaled $423 million in the first nine months of 2018. In the third quarter of 2017, the Corporation declared and paid a cash dividend of $181 million to Dow; dividends to Dow totaled $531 million infor the first nine months of 2017. In the third quarter of 2016, the Corporation declared and paid a cash dividend of $55 million to Dow; dividends to Dow totaled $455 million in the first nine months of 2016.

Pursuant to General Instruction H ofH(1)(a) and (b) for Form 10-Q "Omission of Information by Certain Wholly-Owned Subsidiaries," the Corporation is filing this section includes only management's narrative analysis of the results of operations for the nine-month period ended September 30, 2017, the most recent period, comparedForm 10-Q with the nine-month period ended September 30, 2016, the corresponding period in the preceding fiscal year.a reduced disclosure format.

References to "Dow" refer to The Dow Chemical Company and its consolidated subsidiaries, except as otherwise indicated by the context. Effective August 31, 2017, pursuant to the merger of equals transaction contemplated by the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017, Dow and E. I. du Pont de Nemours and Company ("DuPont") each merged with subsidiaries of DowDuPont Inc. ("DowDuPont") and, as a result, Dow and DuPont became subsidiaries of DowDuPont (the "Merger").

Dow conducts its worldwide operations through global businesses.principal product groups. Union Carbide Corporation’s (the "Corporation" or "UCC") business activities comprise components of Dow’s global operationsprincipal product groups rather than stand-alone operations. Because there are no separable reportable business segments for UCC and no detailed business information is provided to a chief operating decision maker regarding the Corporation’s stand-alone operations, the Corporation’s results are reported as a single operating segment.

Total net sales were $1,424 million in the third quarter of 2018 compared with $1,215 million in the third quarter of 2017, compared with $1,248 million in the third quarteran increase of 2016, a decrease of 317 percent. Total net sales were $4,103 million for the first nine months of 2018 compared with $3,835 million infor the first nine months of 2017, compared with $3,721 million in the first nine months of 2016, an increase of 37 percent. Net sales to related companies, principally to Dow, and based on market prices for the related products, were $1,385 million in the third quarter of 2018 compared with $1,184 million in the third quarter of 2017, compared with $1,221 million in the third quarteran increase of 2016, a decrease of 317 percent. Net sales to related companies were $3,722$3,998 million in the first nine months of 20172018 compared with $3,644$3,722 million infor the first nine months of 2016,2017, an increase of 27 percent.

Average selling prices increased 56 percent in the third quarter of 20172018 compared with the same quarter last year. Price increasesincreased across almost allmost products were primarily driven by tightin response to higher feedstock and other raw material costs and market supply as a result of hurricane-related supply disruptions,demand, with the largest price increases in polyethylene,oxo alcohols, ethylene oxide/ethylene glycol ("EO/EG"), oxo alcoholsglycol ethers and vinyl acetate monomers. Total sales volumepolyethylene. Volume was down 8up 11 percent in the third quarter of 20172018 compared with the third quarter of 2016 as a result of2017, which was impacted by hurricane-related productionsupply disruptions and the impact of planned maintenance turnarounds. Increases in sales volume in water soluble polymers and glutaraldehydes were more than offset by lower sales volumeVolume increases in electrical and telecommunications, polyethylene,ethanolamines, glycol ethers, EO/EG glycol ethers and ethanolamines.oxo alcohols more than offset volume declines in glutaraldehydes, polyethylene and vinyl acetate monomers.

InFor the first nine months of 2017,2018, average selling prices were up 5increased 6 percent with price increases in most products compared with the first nine months of 2016, driven by2017, with price increases across most products in response to higher feedstock energy and other raw material costs, with the largest increases in polyethylene, oxo alcohols, glycol ethers and tight market supply as a resultelectrical and telecommunications. Volume for the first nine months of 2018 increased 1 percent compared with the first nine months of 2017. Sales volume was negatively impacted by hurricane-related supply disruptions in the third quarter of 2017. Sales volume2017, as well as higher planned maintenance turnaround activity in the first nine months of 2017 was down 2 percent when compared with2017.

Certain countries where the first nine monthsCorporation's products are distributed or sold, principally through sales to Dow, have recently enacted tariffs on certain products, including those manufactured at UCC production facilities. Currently enacted tariffs are not expected to have a material impact on the Corporation's results of 2016. Sales volume increasesoperations in vinyl acetate monomers, acrylic monomers and glutaraldehydes were more than offset by lower sales volume in electrical and telecommunications, EO/EG and oxo alcohols.2018.

Cost of sales were $991$1,062 million in the third quarter of 2018 compared with $994 million in the third quarter of 2017, compared with $957 million in the third quarter of 2016, an increase of 47 percent. Cost of sales increased 121 percent from $2,726$3,061 million in the first nine months of 20162017 to $3,056$3,102 million infor the first nine months of 2017.2018. Increases in cost of sales for the three- and nine-month periods ended September 30, 2017,2018, were driven by higherincreased sales volume and increased feedstock energy and other raw material costs as well as increasedwhich more than offset lower planned maintenance turnaround spending when compared with the same periods last year, and hurricane-related production and supply disruptions and repair costs in the third quarter of 2017.year.

R&D expenses were $4 million in the third quarter of 2017 compared with $52018 and $14 million in the third quarter of 2016. Infor the first nine months of 2017, R&D expenses were $14 million,2018, flat when compared with the first nine months of 2016.same periods last year. SG&A expenses were $1 million in the third quarter of 2017 and2018, flat compared with the third quarter of 2016. In2017. For the first nine months of 2017,2018, SG&A expenses were $4$5 million compared with $5$4 million in the first nine months of 2016.2017.

In the third quarter of 2017, the Corporation approved restructuring actions that are aligned with DowDuPont’sDowDuPont's synergy targets. As a result of these actions, the Corporation recorded a pretax restructuring charge for severance and related benefit costs of $8 million in the third quarter of 2017. The impactIn the third quarter of this2018, the Corporation recorded a pretax charge is shown as “Restructuringof $1 million ($3 million for the first nine months of 2018) for additional severance and asset related charges - net” inbenefit costs, aligned with the consolidated

Sundry income (expense) – net includes a variety of Nonconsolidated Affiliate

For the first nine months of 2017,2018, sundry income (expense) - net was expense of $28 million compared with zero in the third quarterincome of 2016 and $3$11 million in the first nine monthssame period last year. In the second quarter of 2016. On March 16, 2017, UCC entered intocompleted the sale of a shareparcel of land, which also included terminal assets and ancillary agreements for the supply of energy and site and terminal services, at the Texas City, Texas, manufacturing facility and recorded a pretax gain of $23 million. In the second quarter of 2017, UCC also completed the sale and purchase agreement to sellof its ownership interest in Asian Acetyls Co., Ltd.LTD. ("ASACCO"), a nonconsolidated affiliate accounted for under the equity method of accounting. ASACCO agreed to purchase all of the shares of registered common stock owned by UCC. On April 24, 2017, the sale was completed for proceeds of $22 million. In the second quarter of 2017, the Corporation and UCC recorded a pretax gain of $4 million on the sale, included in "Sundry income (expense) - net" in the consolidated statements of income.

Interest expense and amortization of debt discount was $9 million in the third quarter of 2018 compared with $6 million in the third quarter of 2017 ($202017. For the first nine months of 2018, interest expense and amortization of debt discount was $22 million compared with $20 million in the first nine months of 2017) compared with $7 million in the third quarter of 2016 ($18 million in the first nine months of 2016).2017.

The Corporation reported a tax provision of $62 million in the third quarter of 2018, which resulted in an effective tax rate of 18.6 percent. This compared with a tax provision of $152 million in the third quarter of 2017, which resulted in an effective tax rate of 77.6 percent. This compared with a tax provision of $82 million in the third quarter of 2016, which resulted in an effective tax rate of 30.6 percent. In the first nine months of 2017, the Corporation reported a tax provision of $337 million, which resulted in an effective tax rate of 45.8 percent. This compared with a tax provision of $380 million in the first nine months of 2016, which resulted in an effective tax rate of 38.8 percent. The effective tax rate fluctuates based on, among other factors, where income is earned, dividends received from investments in related companies and the level of income relative to tax credits available. The effective tax rate for the third quarter of 2017 was unfavorably impacted by a deferred gain related to the sale of stock between UCC and Dow in 2014. The gain on the transaction was deferred for tax purposes, but with the restructuring activities that were executedoccurred in anticipation of the intended separation of DowDuPontDow and DuPont into three publicly traded companies, the gain became taxable, resulting in a charge to the tax provision of $97 million. InFor the second quarterfirst nine months of 2016,2018, the Corporation adjusted the reserve for uncertain tax positions forreported a tax matter regardingprovision of $184 million, which resulted in an effective tax rate of 19.8 percent. This compared with a tax provision of $337 million for the historicalfirst nine months of 2017, which resulted in an effective tax rate of 45.8 percent. The effective tax rate fluctuates based on, among other factors, where income is earned. The tax rate in the first nine months of 2018 reflects the change in the legal ownership structureU.S. federal corporate income tax rate as a result of the Tax Cuts and Jobs Act that was enacted on December 22, 2017, which reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent, as well as a former nonconsolidated affiliate, resultingdeduction in a chargethe U.S. related to the tax provision of $57 million. See Note 4certain sales to the Consolidated Financial Statements for additional information.foreign customers.

The Corporation reported net income of $272 million in the third quarter of 2018 compared with $44 million in the third quarter of 2017 compared with $186 million in the third quarter of 2016.2017. Net income infor the first nine months of 20172018 was $399$743 million compared with $599$399 million infor the first nine months of 2016.2017.

Capital spending in the third quarter of 20172018 was $47$73 million ($145174 million infor the first nine months of 2017)2018) compared with $55$47 million in the third quarter of 20162017 ($173145 million infor the first nine months of 2016)2017), reflecting increased spending for U.S. Gulf Coast projects and site infrastructure projects in both years.projects.

See Note 2 to the Consolidated Financial Statements for a summary of recent accounting guidance.

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Note 1 to the Consolidated Financial Statements in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 20162017 ("20162017 10-K") describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. The Corporation’s critical accounting policies that are impacted by judgments, assumptions and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Corporation’s 20162017 10-K. Since December 31, 2016,2017, there have been no material changes in the Corporation’s critical accounting policies.policies that are impacted by judgments, assumptions and estimates.

The Corporation is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that UCC sold in the past, alleged exposure to asbestos-containing products located on UCC’s premises, and UCC’s responsibility for asbestos suits filed against a former UCC subsidiary, Amchem Products, Inc. ("Amchem"). In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that injuries incurred in fact resulted from exposure to UCC’s products.

The table below provides information regarding asbestos-related claims pending against the Corporation and Amchem based on criteria developed by UCC and its external consultants.

Plaintiffs' lawyers often sue numerous defendants in individual lawsuits or on behalf of numerous claimants. As a result, the damages alleged are not expressly identified as to UCC, Amchem or any other particular defendant, even when specific damages are alleged with respect to a specific disease or injury. In fact, there are no personal injury cases in which only the Corporation and/or Amchem are the sole named defendants. For these reasons and based upon the Corporation's litigation and settlement experience, the Corporation does not consider the damages alleged against it and Amchem to be a meaningful factor in its determination of any potential asbestos-related liability.

For additional information see Asbestos-Related Matters in Note 78 to the Consolidated Financial Statements and Part II, Item 1. Legal Proceedings.

The Corporation’s outstanding public debt has been issued under indentures which contain, among other provisions, covenants that the Corporation must comply with while the underlying notes are outstanding. Such covenants are typically based on the Corporation’s size and financial position and include, subject to the exceptions and qualifications contained in the indentures, obligations not to (i) allow liens on principal U.S. manufacturing facilities, (ii) enter into sale and lease-back transactions with respect to principal U.S. manufacturing facilities, or (iii) merge into or consolidate with any other entity or sell or convey all or substantially all of its assets. Failure of the Corporation to comply with any of these covenants could, after the passage of any applicable grace period, result in a default under the applicable indenture which would allow the note holders to accelerate the due date of the outstanding principal and accrued interest on the subject notes. Management believes the Corporation was in compliance with the covenants referred to above at September 30, 2017.2018.

On a quarterly basis, the Corporation's Boardboard of Directorsdirectors reviews and determines if there will be a dividend distribution to its parent company and sole shareholder, Dow. The Board takes into consideration the level of earnings and cash flows, among other factors, in determining the amount of the dividend distribution.

In the third quarter of 2018, the Corporation declared and paid a cash dividend of $177 million to Dow; dividends paid to Dow totaled $423 million for the first nine months of 2018. In the third quarter of 2017, the Corporation declared and paid a cash dividend of $181 million to Dow; dividends paid to Dow totaled $531 million infor the first nine months of 2017. In the third quarter of 2016, the Corporation declared and paid a cash dividend of $55 million to Dow; dividends paid to Dow totaled $455 million in the first nine months of 2016. On November 2, 2017,1, 2018, the UCC Board of Directors approved a dividend to Dow of $72$130 million, payable on December 22, 2017.21, 2018.

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Corporation carried out an evaluation, under the supervision and with the participation of the Corporation's Disclosure Committee and the Corporation's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Corporation's disclosure controls and procedures pursuant to paragraph (b) of Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Corporation's disclosure controls and procedures were effective.

There were no changes in the Corporation's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting. 

No material developments in asbestos-related matters occurred in the third quarter of 2017.2018. For a current status of asbestos-related matters, see Note 78 to the Consolidated Financial Statements.

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.