UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended~~SEPTEMBER 30, 2017~~March 31, 2021

o☐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~~Union Carbide Corporation

(Exact name of registrant as specified in its charter)



New York						13-1421730
(State or other jurisdiction of incorporation or organization)						~~13-1421730~~ (I.R.S. Employer Identification No.)

7501 STATE HIGHWAY 185 NORTH, SEADRIFT, ~~TEXAS~~TX 77983

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 361-553-2997

Securities registered pursuant to Section 12(b) of the Act: None

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.

þ ~~Yes~~ o No

☑

Yes

☐

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).

þ ~~Yes~~ o No

☑

Yes

☐

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.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller reporting company

☐

~~Large accelerated filer~~ o

~~Accelerated filer~~ o

~~Non-accelerated filer~~ þ

~~(Do not check if a smaller reporting company)~~

~~Smaller reporting company~~ o

Emerging growth companyo

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

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

o ~~Yes~~ þ No

☐

Yes

☑

At ~~September 30, 2017,~~March 31, 2021, 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 ~~Instructions~~Instruction H(1)(a) and (b) for Form 10-Q and is therefore filing this form with a reduced disclosure format.

Table of Contents

Union Carbide Corporation

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended ~~September 30, 2017~~March 31, 2021

TABLE OF CONTENTS

Table of Contents



Union Carbide Corporation and Subsidiaries

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.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this report other than purely historical information, including estimates, projections, statements relating to business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of ~~the Private Securities Litigation Reform Act of 1995,~~federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of ~~1934. Forward-looking~~1934, as amended. Such statements ~~may appear throughout this report, including without limitation, the following sections: "Management's Discussion~~often address expected future business and ~~Analysis"~~financial performance, financial condition, and ~~"Risk Factors." These forward-looking statements are generally identified by the~~other matters and often contain words or phrases ~~"anticipate," "believe," "estimate," "expect," "future," "intend," "may," "opportunity," "outlook," "plan," "project," "should," "strategy," "will," "would," "will~~such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “will be,~~" "will~~” “will continue,~~" "will~~” “will likely ~~result"~~result,” “would” and similar ~~expressions.~~ expressions, and variations or negatives of these words or phrases.

Forward-looking statements are based on current assumptions and expectations ~~and assumptions~~of future events that are subject to risks, uncertainties and ~~uncertainties~~other factors that are beyond the Corporation’s control, which may cause actual results to differ materially from those projected, anticipated or implied in the forward-looking ~~statements.~~statements and speak only as of the date the statements were made. These factors often address expected future business and financial performance and financial condition, including, but not limited to: the continuing global and regional economic impacts of the coronavirus disease 2019 pandemic and other public health-related risks and events on the Corporation’s business; and developments related to contemplated restructuring activities and proposed divestitures or acquisitions such as workforce reduction, manufacturing facility and/or asset closure and related exit and disposal activities, and the benefits and costs associated with each of the foregoing.

Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. 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~~in Part I, Item 1A of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016). UCC undertakes~~2020. These are not the only risks and uncertainties that the Corporation faces. There may be other risks and uncertainties that the Corporation is unable to identify at this time or that it does not currently expect to have a material impact on its business. If any of those risks or uncertainties develops into an actual event, it could have a material adverse effect on the Corporation’s business. The Corporation assumes 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.

Table of Contents


PART I - FINANCIAL INFORMATION

~~PART I - FINANCIAL INFORMATION~~


ITEM 1. FINANCIAL STATEMENTS

Union Carbide Corporation and Subsidiaries

Consolidated Statements of Income


	Three Months Ended						Nine Months Ended					Three Months Ended
In millions (Unaudited)	Sep 30, 2017			Sep 30, 2016			Sep 30, 2017		Sep 30, 2016		In millions (Unaudited)	Mar 31, 2021		Mar 31, 2020
Net trade sales	$	31		$	27		$	113	$	77	Net trade sales	$	34	$	29
Net sales to related companies	1,184			1,221			3,722		3,644		Net sales to related companies	969		1,013
Total Net Sales	1,215			1,248			3,835		3,721
Total net sales											Total net sales	1,003		1,042
Cost of sales	991			957			3,056		2,726		Cost of sales	1,037		826
Research and development expenses	4			5			14		14		Research and development expenses	6		6
Selling, general and administrative expenses	1			1			4		5		Selling, general and administrative expenses	3		2
Restructuring and asset related charges - net	8			—			10		2		Restructuring and asset related charges - net	0		2
Integration and separation costs	1			—			1		—
Equity in earnings of nonconsolidated affiliate	—			—			—		3

Sundry income (expense) - net	(8		)	(10		)	6		20		Sundry income (expense) - net	(15)		(18)
Interest income											Interest income	1		7
Interest expense and amortization of debt discount	6			7			20		18		Interest expense and amortization of debt discount	7		8
Income Before Income Taxes	196			268			736		979
Provision for income taxes	152			82			337		380
Net Income Attributable to Union Carbide Corporation	$	44		$	186		$	399	$	599
Income (loss) before income taxes											Income (loss) before income taxes	(64)		187
Provision (credit) for income taxes											Provision (credit) for income taxes	(15)		41
Net income (loss) attributable to Union Carbide Corporation											Net income (loss) attributable to Union Carbide Corporation	$	(49)	$	146

Depreciation	$	45		$	39		$	132	$	120	Depreciation	$	41	$	45
Capital Expenditures	$	47		$	55		$	145	$	173
Capital expenditures											Capital expenditures	$	23	$	33

See Notes to the Consolidated Financial Statements.

Table of Contents

Union Carbide Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income


	Three Months Ended				Nine Months Ended					Three Months Ended
In millions (Unaudited)	Sep 30, 2017		Sep 30, 2016		Sep 30, 2017		Sep 30, 2016		In millions (Unaudited)	Mar 31, 2021		Mar 31, 2020
Net Income Attributable to Union Carbide Corporation	$	44	$	186	$	399	$	599
Other Comprehensive Income, Net of Tax
Net income (loss) attributable to Union Carbide Corporation									Net income (loss) attributable to Union Carbide Corporation	$	(49)	$	146
Other comprehensive income, net of tax									Other comprehensive income, net of tax
Cumulative translation adjustments	1		—		4		—		Cumulative translation adjustments	0		3
Pension and other postretirement benefit plans	12		11		36		32		Pension and other postretirement benefit plans	84		20
Total other comprehensive income	13		11		40		32		Total other comprehensive income	84		23
Comprehensive Income Attributable to Union Carbide Corporation	$	57	$	197	$	439	$	631
Comprehensive income attributable to Union Carbide Corporation									Comprehensive income attributable to Union Carbide Corporation	$	35	$	169

See Notes to the Consolidated Financial Statements.

Table of Contents

Union Carbide Corporation and Subsidiaries

Consolidated Balance Sheets


In millions, except share amounts (Unaudited)	Sep 30, 2017			Dec 31, 2016			In millions, except share amounts (Unaudited)	Mar 31, 2021		Dec 31, 2020
Assets							Assets
Current Assets							Current Assets
Cash and cash equivalents	$	13		$	11		Cash and cash equivalents	$	11	$	11
Accounts receivable:							Accounts receivable:
Trade (net of allowance for doubtful receivables 2017: $-; 2016: $-)	20			15
Trade (net of allowance for doubtful receivables 2021: $0; 2020: $0)							Trade (net of allowance for doubtful receivables 2021: $0; 2020: $0)	24		26
Related companies	893			843			Related companies	709		698
Other	48			36			Other	35		27
Income taxes receivable	242			275			Income taxes receivable	375		337
Notes receivable from related companies	1,257			1,411			Notes receivable from related companies	1,055		1,660
Inventories	299			307			Inventories	248		223
Other current assets	18			39			Other current assets	19		17
Total current assets	2,790			2,937			Total current assets	2,476		2,999
Investments							Investments
Investments in related companies	639			639			Investments in related companies	237		237
Investment in nonconsolidated affiliate	—			14

Other investments	25			30			Other investments	22		22
Noncurrent receivables	58			52			Noncurrent receivables	129		124
Noncurrent receivables from related companies	54			57			Noncurrent receivables from related companies	68		66
Total investments	776			792			Total investments	456		449
Property							Property
Property	7,243			7,144			Property	7,111		7,089
Less accumulated depreciation	5,837			5,750			Less accumulated depreciation	5,865		5,824
Net property	1,406			1,394			Net property	1,246		1,265
Other Assets							Other Assets
Intangible assets (net of accumulated amortization 2017: $80; 2016: $78)	26			25
Intangible assets (net of accumulated amortization 2021: $99; 2020: $97)							Intangible assets (net of accumulated amortization 2021: $99; 2020: $97)	15		16
Operating lease right-of-use assets							Operating lease right-of-use assets	119		123
Deferred income tax assets	797			928			Deferred income tax assets	472		494

Deferred charges and other assets	39			70			Deferred charges and other assets	38		29
Total other assets	862			1,023			Total other assets	644		662
Total Assets	$	5,834		$	6,146		Total Assets	$	4,822	$	5,375
Liabilities and Equity							Liabilities and Equity
Current Liabilities							Current Liabilities
Notes payable to related companies	$	27		$	25		Notes payable to related companies	$	29	$	33
Notes payable - other	2			—

Long-term debt due within one year	1			1			Long-term debt due within one year	2		2
Accounts payable:							Accounts payable:
Trade	253			249			Trade	260		229
Related companies	537			521			Related companies	533		409
Other	15			7			Other	16		28

Operating lease liabilities - current							Operating lease liabilities - current	19		19
Income taxes payable	103			23			Income taxes payable	22		23
Asbestos-related liabilities - current	132			126			Asbestos-related liabilities - current	85		85
Accrued and other current liabilities	189			181			Accrued and other current liabilities	127		139
Total current liabilities	1,259			1,133			Total current liabilities	1,093		967
Long-Term Debt	474			475			Long-Term Debt	391		391
Other Noncurrent Liabilities							Other Noncurrent Liabilities
Pension and other postretirement benefits - noncurrent	955			1,170			Pension and other postretirement benefits - noncurrent	680		1,340
Asbestos-related liabilities - noncurrent	1,266			1,364			Asbestos-related liabilities - noncurrent	995		1,013
Operating lease liabilities - noncurrent							Operating lease liabilities - noncurrent	101		105
Other noncurrent obligations	174			206			Other noncurrent obligations	209		201
Total other noncurrent liabilities	2,395			2,740			Total other noncurrent liabilities	1,985		2,659
Stockholder's Equity							Stockholder's Equity
Common stock (authorized: 1,000 shares of $0.01 par value each; issued: 935.51 shares)	—			—			Common stock (authorized: 1,000 shares of $0.01 par value each; issued: 935.51 shares)	0		0
Additional paid-in capital	138			138			Additional paid-in capital	141		141
Retained earnings	2,848			2,980			Retained earnings	2,898		2,987
Accumulated other comprehensive loss	(1,280		)	(1,320		)	Accumulated other comprehensive loss	(1,686)		(1,770)
Union Carbide Corporation's stockholder's equity	1,706			1,798			Union Carbide Corporation's stockholder's equity	1,353		1,358

Total Liabilities and Equity	$	5,834		$	6,146		Total Liabilities and Equity	$	4,822	$	5,375

See Notes to the Consolidated Financial Statements.

Table of Contents

Union Carbide Corporation and Subsidiaries

Consolidated Statements of Cash Flows


	Nine Months Ended							Three Months Ended
In millions (Unaudited)	Sep 30, 2017			Sep 30, 2016			In millions (Unaudited)	Mar 31, 2021		Mar 31, 2020
Operating Activities							Operating Activities
Net Income Attributable to Union Carbide Corporation	$	399		$	599
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss) attributable to Union Carbide Corporation							Net income (loss) attributable to Union Carbide Corporation	$	(49)	$	146
Adjustments to reconcile net income (loss) to net cash provided by operating activities:							Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	148			138			Depreciation and amortization	51		52
Provision (credit) for deferred income tax	109			(306		)	Provision (credit) for deferred income tax	(4)		1
Earnings of nonconsolidated affiliate in excess of dividends received	—			(2		)

Net gain on sales of property and investments	(26		)	(50		)	Net gain on sales of property and investments	(1)		(1)
Net gain on sale of ownership interest in nonconsolidated affiliate	(4		)	—

Restructuring and asset related charges - net	10			2			Restructuring and asset related charges - net	0		2
Net periodic pension benefit cost	21			21
Net periodic pension benefit cost (credit)							Net periodic pension benefit cost (credit)	(1)		14
Pension contributions	(162		)	(52		)	Pension contributions	(547)		(1)

Other, net	—			(1		)	Other, net	(1)		(1)
Changes in assets and liabilities:							Changes in assets and liabilities:
Accounts and notes receivable	10			(3		)	Accounts and notes receivable	(6)		1
Related company receivables	104			(82		)	Related company receivables	594		(48)
Inventories	8			(24		)	Inventories	(34)		4
Accounts payable	15			(25		)	Accounts payable	19		3
Related company payables	18			114			Related company payables	120		(95)
Asbestos-related payments	(92		)	(39		)	Asbestos-related payments	(18)		(18)
Other assets and liabilities	67			272			Other assets and liabilities	(58)		53
Cash provided by operating activities	625			562			Cash provided by operating activities	65		112
Investing Activities							Investing Activities
Capital expenditures	(145		)	(173		)	Capital expenditures	(23)		(33)
Change in noncurrent receivable from related company	3			7			Change in noncurrent receivable from related company	(2)		0
Proceeds from sale of ownership interest in nonconsolidated affiliate	22			—
Proceeds from sales of property	18			58
Proceeds from sales of investments	9			3
Cash used in investing activities	(93		)	(105		)

Cash used for investing activities							Cash used for investing activities	(25)		(33)
Financing Activities							Financing Activities
Dividends paid to stockholder	(531		)	(455		)

Dividends paid to parent							Dividends paid to parent	(40)		(81)
Changes in short-term notes payable	2			—			Changes in short-term notes payable	0		2
Payments on long-term debt	(1		)	(1		)
Cash used in financing activities	(530		)	(456		)

Cash used for financing activities							Cash used for financing activities	(40)		(79)
Summary							Summary
Increase in cash and cash equivalents	2			1			Increase in cash and cash equivalents	0		0
Cash and cash equivalents at beginning of year	11			23
Cash and cash equivalents at beginning of period							Cash and cash equivalents at beginning of period	11		11
Cash and cash equivalents at end of period	$	13		$	24		Cash and cash equivalents at end of period	$	11	$	11

See Notes to the Consolidated Financial Statements.

Table of Contents

Union Carbide Corporation and Subsidiaries

Consolidated Statements of Equity

In millions (Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Accum. Other Comp Loss Total Equity
2016
Balance at Jan 1, 2016 $ —
$ 138
$ 3,391
$ (1,228 ) $ 2,301
Net income attributable to Union Carbide Corporation —
—
599
—
599
Other comprehensive income —
—
—
32
32
Dividends declared —
—
(455 ) —
(455 )
Other —
—
1
—
1
Balance at Sep 30, 2016 $ —
$ 138
$ 3,536
$ (1,196 ) $ 2,478
2017
Balance at Jan 1, 2017 $ —
$ 138
$ 2,980
$ (1,320 ) $ 1,798
Net income attributable to Union Carbide Corporation —
—
399
—
399
Other comprehensive income —
—
—
40
40
Dividends declared —
—
(531 ) —
(531 )
Balance at Sep 30, 2017 $ —
$ 138
$ 2,848
$ (1,280 ) $ 1,706


	Three Months Ended
In millions (Unaudited)	Mar 31, 2021		Mar 31, 2020
Common Stock
Balance at beginning and end of period	$	0	$	0
Additional Paid-in Capital
Balance at beginning and end of period	141		141


Retained Earnings
Balance at beginning of period	2,987		2,922

Net income (loss) attributable to Union Carbide Corporation	(49)		146
Dividends declared	(40)		(81)

Balance at end of period	2,898		2,987
Accumulated Other Comprehensive Loss, Net of Tax
Balance at beginning of period	(1,770)		(1,665)

Other comprehensive income	84		23
Balance at end of period	(1,686)		(1,642)
Union Carbide Corporation's Stockholder's Equity	$	1,353	$	1,486

See Notes to the Consolidated Financial Statements.

Table of Contents

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



Union Carbide Corporation and Subsidiaries
(Unaudited)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

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, 2020 ("2020 10-K").

The Corporation is a wholly owned subsidiary of The Dow Chemical Company ("~~Dow"~~TDCC"). 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~~TDCC’s global operations rather than stand-alone operations. ~~Dow~~TDCC conducts its worldwide operations through global businesses. Because there are no ~~separable~~separate 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.

Intercompany transactions and balances are eliminated in consolidation. Transactions with the Corporation’s parent company, ~~Dow,~~TDCC, and other ~~Dow~~ subsidiaries of TDCC, have been reflected as related company transactions in the consolidated financial statements. See Note 11 for ~~further discussion.~~

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, 2016.

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.

~~Significant Accounting Policy Update~~

~~Integration and Separation Costs~~

The Corporation classifies expenses related to the Merger as integration and separation costs. Merger-related costs include: costs incurred to prepare for and close the Merger, post-Merger integration expenses and costs incurred to prepare for the separation of Dow’s agriculture business, specialty products business and materials science business.

Table of Contents

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

~~Changes in Financial Statement Presentation~~

~~Consolidated Statements of Cash Flows~~

In the first quarter of 2017, the Corporation made a change 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 2016 as a result of an accounting policy change).

In the third quarter of 2017, the Corporation changed the presentation to the consolidated statements of cash flows to conform to the presentation that was adopted for DowDuPont. "Net period pension benefit cost" are now separately reported and have been reclassified from "Other assets and liabilities." Prior periods have been updated to conform to the current year presentation and are summarized below:

Summary of Changes to the Consolidated Statements of Cash Flows Nine Months Ended Sep 30, 2016
In millions As filed Updated
Operating Activities
Net periodic pension benefit cost $ —
$ 21
Asbestos-related payments $ —
$ (39 )
Other assets and liabilities $ 254
$ 272

~~Consolidated Statements of Income~~

In the third quarter of 2017, the Corporation changed the presentation of certain line items on the face of the consolidated statements of income to conform to the presentation that was adopted 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:

Summary of Changes to the Consolidated Statements of Income Three Months Ended Nine Months Ended
Sep 30, 2016 Sep 30, 2016 Sep 30, 2016 Sep 30, 2016
In millions As Filed Updated As Filed Updated
Sundry income (expense) - net $ (14 ) $ (10 ) $ 10
$ 20
Interest income $ 4
$ —
$ 10
$ —

NOTE 2 - RECENT ACCOUNTING GUIDANCE

Recently Adopted Accounting Guidance ~~Issued But Not Yet Adopted at September 30, 2017~~

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under U.S. GAAP. 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 of the Effective Date," issued in August 2015, revised 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 May 2014, the FASB and International Accounting Standards Board formed The Joint Transition Resource Group for Revenue Recognition ("TRG"), consisting of financial statement preparers, auditors and users, to seek feedback on potential issues related to the implementation of the new revenue standard. As a result of feedback from the TRG, the FASB issued additional guidance to provide clarification, implementation guidance and practical expedients to address some of the challenges of implementation. In March 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)," which is an amendment on assessing whether an entity is a principal or

~~Table of Contents~~

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

an agent in a revenue transaction. This amendment addresses issues to clarify the principal versus agent assessment and lead to more consistent application. In April 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing," which contains amendments to the new revenue recognition standard on identifying performance obligations and accounting for licenses of intellectual property. The amendments related to identifying performance obligations clarify when a promised good or service is separately identifiable and allows entities to disregard items that are immaterial in the context of a contract. The licensing implementation amendments clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether revenue is recognized over time or at a point in time. In May 2016, the FASB issued ASU 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients," which provides clarity and implementation guidance on assessing collectibility, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. The new standards have the same effective date and transition requirements as ASU 2014-09.

The Corporation has a team in place to analyze ASU 2014-09 and the related ASU's across all revenue streams to evaluate the impact of the new standard on revenue contracts. This includes reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements under the new standard. The Corporation is completing contract evaluations and validating the results of applying the new revenue guidance. The Corporation is in the process of finalizing its accounting policies, drafting the new disclosures, quantifying the potential financial adjustment and completing its evaluation of the impact of the accounting and disclosure requirements on business processes, controls and systems. Full implementation will be completed by the end of 2017. Based on analysis completed to date, the Corporation expects the potential impact on the recognition of revenue from product sales and licensing arrangements to remain substantially unchanged. The Corporation expects to adopt the new standard using the modified retrospective approach, under which the cumulative effect of initially applying the new guidance is recognized as an adjustment to the opening balance of retained earnings in the first quarter of ~~2018.~~

~~In February 2016,~~2021, the FASB issued ASU 2016-02, "Leases (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 team in place to evaluate the new guidance and is in the process of implementing a software solution to facilitate 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.

~~In October 2016, the FASB issued ASU 2016-16,~~adopted Accounting Standards Update 2019-12, "Income Taxes (Topic 740): ~~Intra-Entity Transfers of Assets Other Than Inventory," which requires an entity to recognize~~Simplifying the ~~income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.~~Accounting for Income Taxes." The amendments ~~are effective~~simplify the accounting for ~~fiscal years,~~income taxes by removing certain exceptions to the general principles of Topic 740, "Income Taxes" and ~~interim periods within those fiscal years, beginning after December 15, 2017,~~improve consistent application by clarifying and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the beginning of the period of adoption. Early adoption is permitted in the first interim period of an annual reporting period for which financial statements have not been issued.amending existing guidance. The ~~Corporation will adopt the new guidance in the first quarter of 2018 and the~~ adoption of this guidance ~~will~~did not have a material impact on the ~~Consolidated Financial Statements.~~consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets," which clarifies the scope of guidance on nonfinancial asset derecognition in Accounting Standards Codification 610-20 and the accounting for partial sales of nonfinancial assets. The new guidance also conforms the derecognition guidance for nonfinancial assets with the model in the new revenue standard (ASU 2014-09). The new standard is effective for annual reporting periods, and interim periods within those fiscal years, beginning after December 15, 2017, and an entity is required to apply the amendments at the same time that it applies the amendments in ASU 2014-09. The Corporation is planning to apply the new guidance with the implementation of the new revenue standard in the first quarter of 2018.

In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which amends the requirements related to the income statement presentation of the components of net periodic benefit cost for employer sponsored defined benefit pension and other

~~Table of Contents~~

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

postretirement benefit plans. Under the new guidance, an entity must disaggregate and present the service cost component of the net periodic benefit cost in the same income statement line item(s) as 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 periodic benefit cost will be presented separately from the line item(s) that includes the service cost. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted at the beginning of an annual period in which the financial statements have not been issued. Entities must use a retrospective transition method to adopt the requirement 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. The Corporation is currently evaluating the impact of adopting this guidance.

NOTE 3 - ~~RESTRUCTURING AND ASSET RELATED CHARGES - NET~~REVENUE

~~In September 2017,~~Substantially all of the Corporation's revenue is generated by sales to TDCC. Products are sold to and purchased from TDCC at prices determined in accordance with the terms of an agreement between UCC and TDCC. The Corporation's revenue related to sales of product was approximately 99 percent for the three months ended March 31, 2021 (99 percent for the three months ended March 31, 2020); the remaining revenue primarily related to the licensing of patents and technology. The Corporation ~~approved restructuring actions that are aligned with DowDuPont’s synergy targets. As a result of these actions,~~sells its products to TDCC to simplify the Corporation recorded a pretax restructuring charge for severance and related benefit costs of $8 million in the third quarter of 2017. The impact of this charge is 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.customer interface process.

The ~~Corporation expects~~Corporation’s contract liabilities include payments received in advance of performance under long-term contracts for product sales and royalties with remaining contract terms that range up to ~~incur additional costs~~20 years. Amounts are recognized in revenue when the ~~future related to restructuring activities, as UCC continually looks~~performance obligations for ~~ways to enhance~~ the ~~efficiency and cost effectiveness of its operations.~~contract are met. The Corporation ~~expects~~has rights to ~~incur~~ additional ~~employee-related costs, including involuntary termination benefits, related~~consideration when product is delivered to ~~its~~the customer. The balance of contract liabilities was $40 million at March 31, 2021 ($40 million at December 31, 2020), of which $5 million ($5 million at December 31, 2020) was included in "Accrued and other ~~optimization activities. These costs cannot be reasonably estimated~~current liabilities" and $35 million ($35 million at ~~this time.~~

~~NOTE 4 - INCOME TAXES~~

~~A transaction for the sale of stock between the Corporation and Dow~~December 31, 2020) was included 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 taxes payable”"Other noncurrent obligations" in the consolidated balance ~~sheets~~sheets.

The Corporation disaggregates its revenue from contracts with customers by type of customer (sales to related parties and ~~recorded a charge~~sales to ~~“Provision for income taxes”~~trade customers) as presented in the consolidated statements of income and believes this disaggregation best depicts the nature, amount, timing and uncertainty of ~~$97 million.~~

~~The total amount~~its revenue and cash flows. Substantially all of ~~gross unrecognized tax benefits for uncertain tax positions, including positions impacting only~~ the timing of tax benefits, was $1 million at September 30, 2017 and $1 million at December 31, 2016. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $1 million at September 30, 2017 and $1 million at December 31, 2016.

~~In the second quarter of 2016, an adjustment was~~product sales are made to ~~a reserve for a tax matter regarding a historical change in~~ the ~~legal ownership structure of a former nonconsolidated affiliate. The adjustment arose due to legal proceedings~~Corporation's parent company, TDCC, and the Corporation’s ongoing assessment of the unrecognized tax benefits, which resulted in an unfavorable impact of $57 million to “Provision for income taxes” in the consolidated statements of income.

~~Interest~~there are no unique economic factors that affect revenue recognition and ~~penalties~~cash flows associated with uncertain tax positions are recognized as components of "Provision for income taxes" in the consolidated statements of income which totaled an insignificant amount for the three months ended September 30, 2017 and 2016. In the nine months ended September 30, 2017, the Corporation recognized a benefit of $2 million for interest and penalties (a charge of $82 million in the nine months ended September 30, 2016).these product sales.

The Corporation is included in Dow's consolidated federal income tax group and 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. 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 authorities may be settled or appealed by the Corporation. As a result, there is an uncertainty in income taxes recognized in the Corporation’s financial statements in accordance with accounting for income taxes and accounting for uncertainty in income taxes. Net reductions to the Corporation’s global unrecognized tax benefits are not expected to be material within the next twelve months.

~~Table of Contents~~

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

NOTE 54 - INVENTORIES

The following table provides a breakdown of inventories:


Inventories	Mar 31, 2021		Dec 31, 2020
In millions
Finished goods	$	216	$	157
Work in process	29		23
Raw materials	45		38
Supplies	86		98
Total	$	376	$	316
Adjustment of inventories to a LIFO basis	(128)		(93)
Total inventories	$	248	$	223

Inventories

Sep 30,
2017 Dec 31,
2016
In millions
Finished goods $ 210
$ 186
Work in process 44
38
Raw materials 53
50
Supplies 79
87
Total $ 386
$ 361
Adjustment of inventories to a LIFO basis (87 ) (54 )
Total inventories $ 299
$ 307

Table of Contents

NOTE 65 - INTANGIBLE ASSETS

The following table provides information regarding the Corporation’s intangible assets:


Intangible Assets	Mar 31, 2021						Dec 31, 2020
In millions	Gross Carrying Amount		Accum Amort		Net		Gross Carrying Amount		Accum Amort		Net
Intangible assets with finite lives:
Developed technology	$	33	$	(33)	$	0	$	33	$	(33)	$	0
Software	81		(66)		15		80		(64)		16
Total intangible assets	$	114	$	(99)	$	15	$	113	$	(97)	$	16

Intangible Assets Sep 30, 2017 Dec 31, 2016
In millions
Gross
Carrying Amount
Accumulated Amortization Net
Gross
Carrying Amount
Accumulated Amortization Net
Intangible assets with finite lives:
Licenses and intellectual property $ 33
$ (33 ) $ —
$ 33
$ (33 ) $ —
Software 73
(47 ) 26
70
(45 ) 25
Total intangible assets $ 106
$ (80 ) $ 26
$ 103
$ (78 ) $ 25

Total estimated amortization expense for ~~2017~~2021 and the five succeeding fiscal years, including amounts expected to be capitalized, is as follows:


Estimated Amortization Expense
In millions
2021	$	6
2022	$	5
2023	$	3
2024	$	1
2025	$	1
2026	$	0

Estimated Amortization Expense

In millions
2017 $ 4
2018 $ 6
2019 $ 6
2020 $ 6
2021 $ 4
2022 $ 2

~~Table of Contents~~

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

NOTE 76 - COMMITMENTS AND CONTINGENT LIABILITIES

A summary of the Corporation's commitments and contingent liabilities can be found in Note 14 to the Consolidated Financial Statements included in the 2020 10-K, which is incorporated by reference herein.

Environmental Matters

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,~~March 31, 2021, the Corporation had accrued obligations of ~~$119~~$142 million for probable environmental remediation and restoration costs, including ~~$20~~$19 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~~two and a half 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. As new or additional information becomes available and/or certain spending trends become known, management will evaluate such information in determination of the current estimate of the environmental liability. At December 31, ~~2016,~~2020, the Corporation had accrued obligations of ~~$145~~$133 million for probable environmental remediation and restoration costs, including ~~$20~~$18 million for the remediation of Superfund sites.

Table of Contents

Litigation

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.

Asbestos-Related Matters

A description of asbestos-related matters can be found in Note 13 to the Consolidated Financial Statements included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2016.

~~Introduction~~

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.

~~Estimating the Asbestos-Related Liability~~

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 2016 Ankura study 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 million at December 31, 2016, 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

~~Table of Contents~~

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

resolution costs. UCC management considers ~~all~~ these factors in conjunction with the most recent ~~Ankura~~actuarial study and determines whether a change in the estimate is warranted. Based on the Corporation's review of ~~2017~~2021 activity, it was determined that no adjustment to the accrual was required at ~~September 30, 2017.~~March 31, 2021.

The Corporation’s total asbestos-related liability for pending and future claims and defense and processing costs was ~~$1,398~~$1,080 million at ~~September 30, 2017,~~March 31, 2021 ($1,098 million at December 31, 2020), and was included in “Asbestos-related liabilities - current” and “Asbestos-related liabilities - noncurrent” in the consolidated balance sheets. At March 31, 2021, approximately 1524 percent of the recorded claim liability related to pending claims and approximately 8576 percent related to future claims.

~~Summary~~

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.

NOTE 7 - LEASES

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 anFor additional ~~cost of disposing of asbestos-related claims, including future defense and processing costs, could have a material impact~~information on the Corporation's ~~results~~leases, see Note 15 to the Consolidated Financial Statements included in the 2020 10-K.

The components of ~~operations~~lease cost for operating and finance leases for the three months ended March 31, 2021 and 2020 were as follows:


Lease Cost	Three Months Ended
In millions	Mar 31, 2021		Mar 31, 2020
Operating lease cost	$	5	$	5
Short-term lease cost	6		6
Variable lease cost	2		2



Total lease cost	$	13	$	13

The following table provides supplemental cash ~~flows for a particular period~~flow information related to leases:


Other Lease Information	Three Months Ended
In millions	Mar 31, 2021		Mar 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	5	$	5

Table of Contents

The following table summarizes the lease-related assets and onliabilities recorded in the consolidated ~~financial position.~~balance sheets at March 31, 2021 and December 31, 2020:

~~Other Litigation~~


Lease Position	Balance Sheet Classification	Mar 31, 2021		Dec 31, 2020
In millions
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		$	0	$	48
Finance leases		$	0	$	3
Assets
Operating lease assets	Operating lease right-of-use assets	$	119	$	123
Finance lease assets	Property	15		15
Finance lease amortization	Accumulated depreciation	(9)		(8)
Total lease assets		$	125	$	130
Liabilities
Current
Operating	Operating lease liabilities - current	$	19	$	19
Finance	Long-term debt due within one year	2		2
Noncurrent
Operating	Operating lease liabilities - noncurrent	101		105
Finance	Long-term debt	4		5
Total lease liabilities		$	126	$	131

~~While it is not possible~~

The weighted-average remaining lease term and discount rate for leases recorded in the consolidated balance sheets at ~~this time to determine with certainty~~March 31, 2021 and December 31, 2020 are provided below:


Lease Term and Discount Rate	Mar 31, 2021		Dec 31, 2020
Weighted-average remaining lease term
Operating leases	7.3 years		7.5 years
Finance leases	3.2 years		3.4 years
Weighted-average discount rate
Operating leases	3.27	%	3.28	%
Finance leases	3.62	%	3.62	%

The following table provides the ~~ultimate outcome~~maturities of ~~any~~lease liabilities at March 31, 2021:


Maturities of Lease Liabilities	Mar 31, 2021
	Operating Leases		Finance Leases
In millions
2021	$	17	$	2
2022	22		2
2023	20		2
2024	20		1
2025	18		0
2026 and thereafter	38		0
Total future undiscounted lease payments	$	135	$	7
Less: Imputed interest	15		1
Total present value of lease liabilities	$	120	$	6

Table 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.Contents

NOTE 8 - ACCUMULATED OTHER COMPREHENSIVE LOSS

The ~~following table summarizes~~changes in the ~~changes and after-tax~~ balances offor each component of accumulated other comprehensive loss ("AOCL") for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016:~~2020 were as follows:


Accumulated Other Comprehensive Loss	Three Months Ended
In millions		Mar 31, 2021		Mar 31, 2020
Cumulative Translation Adjustment
Beginning balance		$	(55)	$	(56)
Unrealized gains (losses) on foreign currency translation		0		3




Ending balance		$	(55)	$	(53)
Pension and Other Postretirement Benefits
Beginning balance		$	(1,715)	$	(1,609)
Gains (losses) arising during the period 1		87		0
Less: Tax (expense) benefit		(20)		0
Net gains (losses) arising during the period		67		0
Amortization and recognition of net loss 2		22		26
Less: Tax expense (benefit) 3		(5)		(6)
Net loss reclassified from AOCL to net income (loss)		17		20
Other comprehensive income (loss), net of tax		84		20

Ending balance		$	(1,631)	$	(1,589)
Total AOCL ending balance		$	(1,686)	$	(1,642)

1.See Note 9 for additional information.

2.These AOCL components are included in the computation of net periodic benefit cost (credit) of the Corporation's defined benefit pension and other postretirement benefit plans. See Note 9 for additional information.

3.Reclassified to "Provision (credit) for income taxes."

Accumulated Other Comprehensive Loss Cumulative Translation Adj Pension and Other Postretire Benefits Accum Other Comp Loss
In millions
Balance at Jan 1, 2016 $ (61 ) $ (1,167 ) $ (1,228 )
Amounts reclassified from accumulated other comprehensive income —
32
32
Net other comprehensive income —
32
32
Balance at Sep 30, 2016 $ (61 ) $ (1,135 ) $ (1,196 )

Balance at Jan 1, 2017 $ (62 ) $ (1,258 ) $ (1,320 )
Other comprehensive income before reclassifications 1
—
1
Amounts reclassified from accumulated other comprehensive income 3
36
39
Net other comprehensive income 4
36
40
Balance at Sep 30, 2017 $ (58 ) $ (1,222 ) $ (1,280 )

Table of Contents

~~Union Carbide Corporation~~

NOTE 9 - PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

A summary of the Corporation's pension and ~~Subsidiaries~~

~~Notes~~other postretirement benefit plans can be found in Note 17 to the Consolidated Financial Statements included in the 2020 10-K.



~~(Unaudited)~~

On March 4, 2021, TDCC announced changes to the design of its U.S. tax-qualified and non-qualified pension plans, including the plans of the Corporation (the “UCC Plans”). Effective December 31, 2023 (“Effective Date”), the Corporation will freeze the pensionable compensation and credited service amounts used to calculate pension benefits for employees who participate in the UCC Plans. As a result, at the Effective Date and subject to any bargaining obligations required by law, active participants of the UCC Plans will not accrue additional benefits for future service and compensation. Additionally, contributions to U.S. tax-qualified and non-qualified defined contribution plans will be harmonized across the U.S. eligible employee population of TDCC and its consolidated subsidiaries. The new matching contribution, beginning January 1, 2022, will allow all eligible U.S. employees to receive matching contributions of up to 5 percent of their eligible compensation. In addition, beginning on January 1, 2024, all eligible U.S. employees will receive an automatic non-elective contribution of 4 percent of eligible compensation to their respective defined contribution plans.

The ~~tax effects on~~Corporation's funding policy is to contribute to pension plans when pension laws and/or economics either require or encourage funding. On March 4, 2021, the ~~net activity related~~Corporation elected to ~~each component~~contribute $545 million to its tax-qualified pension plan, funded by the Corporation's notes receivable from TDCC, and, as a result, increased its estimated total 2021 pension contributions to approximately $550 million, of ~~accumulated~~which $547 million has been contributed through March 31, 2021.

In connection with the foregoing plan amendments, the Corporation remeasured the UCC Plans effective February 28, 2021, which resulted in a pretax actuarial gain of $87 million, reflected in other comprehensive income ~~(loss) for~~and inclusive of a $14 million reduction in the ~~three~~projected benefit obligation resulting from the plan amendments, and ~~nine months ended September 30, 2017 and 2016 were as follows:~~a pretax curtailment gain of $7 million, recognized in the first quarter of 2021.

Tax Benefit Three Months Ended Nine Months Ended
In millions Sep 30, 2017 Sep 30, 2016 Sep 30, 2017 Sep 30, 2016
Pension and other postretirement benefits $ 6
$ 6
$ 22
$ 20

~~A summary~~The following table provides the components of the ~~reclassifications out~~Corporation's net periodic benefit cost (credit) for all significant plans:


Net Periodic Benefit Cost (Credit) for All Significant Plans	Three Months Ended
In millions		Mar 31, 2021		Mar 31, 2020
Defined Benefit Pension Plans
Service cost		$	8	$	9
Interest cost		19		28
Expected return on plan assets		(51)		(50)
Amortization of net loss		30		27
Curtailment gain		(7)		0
Net periodic benefit cost (credit)		$	(1)	$	14

Other Postretirement Benefit Plan

Interest cost		$	1	$	1
Amortization of net gain		(1)		(1)
Net periodic benefit cost		$	0	$	0

Net periodic benefit cost (credit), other than the service cost component, is included in "Sundry income (expense) - net" in the consolidated statements of ~~accumulated other comprehensive loss for the three and nine months ended September 30, 2017 and 2016 is provided as follows:~~income.

Reclassifications Out of Accumulated Other Comprehensive Loss Three Months Ended Nine Months Ended Consolidated Statements of Income Classification
Sep 30, 2017 Sep 30, 2016 Sep 30, 2017 Sep 30, 2016
In millions
Cumulative translation adjustments $ —
$ —
$ 3
$ —
See (1) below
Pension and other postretirement benefits 18
17
58
52
See (2) below
Tax benefit (6 ) (6 ) (22 ) (20 ) See (3) below
After-tax 12
11
36
32

Total reclassifications for the period, after-tax $ 12
$ 11
$ 39
$ 32


1.	~~"Sundry income (expense) - net."~~


2.	~~Included in the computation of net periodic benefit cost of the Corporation's pension and other postretirement plans. See Note 9 for additional information.~~


3.	~~"Provision for income taxes."~~

~~NOTE 9 - PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS~~

Net Periodic Benefit Cost for All Significant Plans Three Months Ended Nine Months Ended
In millions Sep 30,
2017 Sep 30,
2016 Sep 30,
2017 Sep 30,
2016
Defined Benefit Pension Plans:
Service cost $ 10
$ 9
$ 28
$ 27
Interest cost 33
33
97
99
Expected return on plan assets (56 ) (54 ) (166 ) (162 )
Amortization of net loss 20
19
62
57
Net periodic benefit cost $ 7
$ 7
$ 21
$ 21

Other Postretirement Benefits:
Interest cost $ 2
$ 2
$ 6
$ 6
Amortization of net gain (2 ) (2 ) (4 ) (5 )
Net periodic benefit cost $ —
$ —
$ 2
$ 1

Table of Contents

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

NOTE 10 - ~~FINANCIAL INSTRUMENTS~~

~~Investments~~FAIR VALUE MEASUREMENTS

The Corporation's ~~investments in marketable securities~~financial instruments are classified as ~~available-for-sale. Proceeds from sales of available-for-sale securities were $2 million for~~Level 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).~~

~~For securities~~security is frequently traded in less active markets, fair value is based on the closing price at the end of the period; where the security is less frequently traded, fair value is based on the price a dealer would pay for the security or similar securities, adjusted for any terms specific to that asset or liability, or by using observable market data points of similar, more liquid securities to imply the price. Market inputs are obtained from well-established and recognized vendors of market data and subjected to ~~tolerance/~~tolerance and quality checks.

The following table summarizes the fair value of the Corporation's financial instruments at March 31, 2021 and December 31, 2020:

Fair Value of Financial Instruments Sep 30, 2017 Dec 31, 2016
In millions Cost Gain Loss Fair Value Cost Gain Loss Fair Value
Cash equivalents $ 9
$ —
$ —
$ 9
$ 7
$ —
$ —
$ 7
Debt securities ¹
$ —
$ —
$ —
$ —
$ 2
$ —
$ —
$ 2
Long-term debt including debt due within one year $ (475 ) $ —
$ (134 ) $ (609 ) $ (476 ) $ —
$ (95 ) $ (571 )


Fair Value of Financial Instruments	Mar 31, 2021								Dec 31, 2020
In millions	Cost		Gain		Loss		Fair Value		Cost		Gain		Loss		Fair Value
Cash equivalents 1	$	10	$	0	$	0	$	10	$	10	$	0	$	0	$	10

Long-term debt including debt due within one year	$	(393)	$	0	$	(114)	$	(507)	$	(393)	$	0	$	(120)	$	(513)

1. ~~Marketable securities are~~Money market fund is included in ~~"Other investments"~~"Cash and cash equivalents" in the consolidated balance ~~sheets.~~sheets and held at amortized cost, which approximates fair value.

~~For~~Cost approximates fair value for all other financial ~~instruments, cost approximates fair value.~~instruments.

NOTE 11 - RELATED PARTY TRANSACTIONS

A summary of the Corporation's related party transactions can be found in Note 19 to the Consolidated Financial Statements included in the 2020 10-K.

Product and Services Agreements

The ~~Corporation sells its products~~following table summarizes UCC’s transactions with TDCC and a TDCC subsidiary related to ~~Dow to simplify the customer interface process. Products are sold to~~product 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~~services agreements for the ~~sales in that quarter~~three months ended March 31, 2021 and ~~reach agreement~~2020:


Product and Services Agreements Transactions	Three Months Ended
	Mar 31, 2021		Mar 31, 2020		Income Statement Classification
In millions
TDCC Subsidiary:
Commodity and raw materials purchases 1	$	483	$	231	Cost of sales
Commission expense	$	6	$	5	Sundry income (expense) - net
TDCC:
General administrative and overhead type services and service fee 2	$	17	$	8	Sundry income (expense) - net
Activity-based costs	$	19	$	23	Cost of sales

1.Period-end balances on ~~any necessary adjustments, at which point the prices~~hand 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 million in the third quarter of 2017 ($379 million in the third quarter of 2016) and $1,213 million in the first nine months of 2017 ($1,011 million in the first nine months of 2016).inventory. The increase in purchase costs ~~in the first nine months of 2017 when compared with the same period last year is~~was primarily due to higher feedstock and energy ~~costs.~~costs, which reflect the impacts of Winter Storm Uri.

2.The increase in services and fees resulted from TDCC's periodic review of the actual cost of services provided to UCC in accordance with related agreements.

Dividends

The ~~Corporation has a master services agreement with Dow whereby Dow provides services including, but not limited~~following table summarizes cash dividends declared and paid to ~~accounting, legal, treasury (investments, cash management, risk management, insurance), procurement, human resources, environmental, health~~TDCC for the three months ended March 31, 2021 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 2017 ($7 million in the third quarter of 2016) and $24 million in the first nine months of 2017 ($21 million in the first nine months of 2016) 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 million in the third quarter of 2017 ($19 million in the third quarter of 2016) and $60 million in the first nine months of 2017 ($53 million in the first nine months of 2016), and were included in "Cost of sales" in the consolidated statements of income.2020:

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.


Cash Dividends Declared and Paid	Three Months Ended
	Mar 31, 2021		Mar 31, 2020
In millions

Cash dividends declared and paid	$	40	$	81

~~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, the Corporation had a note receivable of

Table of Contents

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

$1.2 billion ($1.4 billion at December 31, 2016) from Dow under a revolving loan agreement. The Corporation may draw from this note receivable in support of its daily working capital requirements and, as such, the net effect of cash inflows and outflows under this revolving loan agreement is presented in the consolidated statements of cash flows as an operating activity.

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. 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, $949 million was available under the revolving credit agreement ($947 million at December 31, 2016). The cash collateral is reported as “Noncurrent receivables from related companies” in the consolidated balance sheets.

On a quarterly basis, the Corporation's Board of Directors 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 2017, the Corporation declared and paid a cash dividend of $181 million to Dow; dividends to Dow totaled $531 million in 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.

~~NOTE 12 - MERGER WITH DUPONT~~

Effective August 31, 2017, Dow and DuPont completed the previously announced merger of equals transaction contemplated by the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017 (the "Merger Agreement"), by and among Dow, DuPont, DowDuPont, Diamond Merger Sub, Inc. and Orion Merger Sub, Inc. Pursuant to the Merger Agreement, (i) Diamond Merger Sub, Inc. was merged with and into Dow, with Dow surviving the merger as a subsidiary of DowDuPont (the "Diamond Merger") and (ii) Orion Merger Sub, Inc. was merged with and into DuPont, with DuPont surviving the merger as a subsidiary of DowDuPont (the "Orion Merger" and, together with the Diamond Merger, the "Mergers"). Following the consummation of the Mergers, each of Dow and DuPont became subsidiaries of DowDuPont (collectively, the "Merger"). Following the Merger, Dow and DuPont intend to pursue, subject to the receipt of regulatory approvals and approval by the board of directors of DowDuPont ("DowDuPont Board"), the separation of the combined company's agriculture business, specialty products business and materials science business through one or more tax-efficient transactions ("Intended Business Separations").

On August 31, 2017, following the Diamond Merger, Dow requested that the New York Stock Exchange ("NYSE") withdraw the shares of Dow Common Stock from listing on the NYSE and file a Form 25 with the U.S. Securities and Exchange Commission ("SEC") to report that the shares of Dow Common Stock are no longer listed on the NYSE. The shares of Dow Common Stock were suspended from trading on the NYSE prior to the open of trading on September 1, 2017.

On September 12, 2017, DowDuPont announced that the DowDuPont Board and management, with the assistance of independent advisors, completed their comprehensive review of the portfolio composition of the three intended independent companies. The DowDuPont Board unanimously concluded that, in light of knowledge gained since the announcement of the proposed merger of equals, certain targeted adjustments will be made between the materials science and specialty products businesses, which will enhance the competitive advantages of the intended resulting companies. As a result of this change, it is expected that a portion of UCC's business will move to the specialty products business as part of the intended spin-off transactions, and the Corporation does not expect the intended spin-off transactions to have a material impact on the Consolidated Financial Statements.

~~Table of Contents~~



~~Union Carbide Corporation and Subsidiaries~~

~~ITEM 2. MANAGEMENT’S~~


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Pursuant to General Instruction ~~H of~~H(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, compared~~Form 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"~~"TDCC" refer to The Dow Chemical Company and its consolidated subsidiaries, except as otherwise indicated by the context. Union Carbide Corporation (the "Corporation" or "UCC") has been a wholly owned subsidiary of TDCC since 2001. TDCC has been a wholly owned subsidiary of Dow Inc. since 2019.

~~Dow~~TDCC conducts its worldwide operations through global businesses. ~~Union Carbide Corporation’s (the "Corporation" or "UCC")~~UCC's business activities comprise components of ~~Dow’s~~TDCC’s global ~~operations~~businesses rather than stand-alone operations. Because there are no ~~separable~~separate 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.

Statements on COVID-19 and U.S. Gulf Coast Freeze

COVID-19

Additional information regarding all actions taken by UCC since the onset of the pandemic can be found in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020 ("2020 10-K").

The pandemic caused by coronavirus disease 2019 ("COVID-19") has impacted all geographic regions where UCC's products are produced and sold. Dow Inc. (together, with TDCC and its consolidated subsidiaries, "Dow") directs global safety, crisis management and security protocols for all of Dow's assets and workforce, which includes the assets and workforce of UCC. During this public health crisis, Dow is focused on the health and safety of its employees, contractors, customers and suppliers around the world and maintaining the safe and reliable operations of its manufacturing sites. Although supply disruptions and related logistical issues have posed challenges across all modes of transportation, UCC’s manufacturing sites have continued to operate during the COVID-19 pandemic, with no significant impact to manufacturing whether through shutdowns or shortages in labor, raw materials or personal protective equipment. Supply chain and logistical challenges are expected to stabilize throughout 2021. Contingency plans remain in place in the event of significant impacts from COVID-19 infection resurgences.

A significant number of UCC employees continue to work remotely. The Corporation continues to encourage its workforce to practice safe behaviors in the workplace and while away from work to help prevent community spread of COVID-19. Dow and the Corporation continue to monitor ongoing mitigation efforts to appropriately implement Dow's comprehensive Return to Workplace plan. UCC sites continue to follow on-site workforce restrictions in accordance with government regulations.

Prior to the weather-related events on the U.S. Gulf Coast discussed below, most end-markets for UCC products had substantially recovered from the impacts of COVID-19 and the Corporation experienced improved demand and expected a return to pre-COVID-19 sales levels.

U.S. Gulf Coast Freeze

Beginning in mid-February 2021, Winter Storm Uri had a broad impact on the U.S. Gulf Coast and in particular across the entire state of Texas, resulting in widespread utility and raw material supply disruptions and industry-wide production outages. UCC's Texas City, Texas, ("Texas City") and Seadrift, Texas, ("Seadrift") operations were severely impacted with significant production disruptions that extended into mid-March at Seadrift and late March at Texas City, primarily due to precautionary shutdowns prior to the arrival of record low temperatures, raw material supply constraints and damage caused by extremely cold temperatures. While not as severely impacted, the Corporation's St. Charles, Louisiana, operations initiated certain precautionary shutdowns in anticipation of the record low temperatures and experienced raw material supply disruptions and equipment damage caused by the extreme cold. However, at March 31, 2021, UCC's ethylene production facilities and all sites were operational. As a result of the winter storm, the product and supply chain impacts created very tight industry supply fundamentals which resulted in higher raw material costs in addition to pricing momentum in certain end-markets.

Table of Contents

RESULTS OF OPERATIONS

Net Sales

Total net sales were ~~$1,215 million in the third quarter of 2017 compared with $1,248 million in the third quarter of 2016, a decrease of 3 percent. Total net sales were $3,835~~$1,003 million in the first ~~nine months~~quarter of ~~2017~~2021 compared with ~~$3,721~~$1,042 million in the first ~~nine months~~quarter of ~~2016, an increase~~2020, a decrease of 34 percent. Net sales to related companies, principally to ~~Dow, and based on market prices for the related products,~~TDCC, were ~~$1,184 million in the third quarter of 2017 compared with $1,221 million in the third quarter of 2016, a decrease of 3 percent. Net sales to related companies were $3,722~~$969 million in the first ~~nine months~~quarter of ~~2017~~2021 compared with ~~$3,644~~$1,013 million in the first ~~nine months~~quarter of ~~2016,~~2020, a decrease of 4 percent. Selling prices to TDCC are determined in accordance with the terms of an ~~increase of 2 percent.~~agreement between UCC and TDCC.

Average selling ~~prices~~price increased 513 percent in the ~~third~~first quarter of ~~2017~~2021 compared with the same quarter last year. Price ~~increases across almost all products were~~increased primarily ~~driven by~~in response to tight ~~market~~ supply ~~as a result of hurricane-related supply disruptions, with the largest price increases~~and demand fundamentals in polyethylene, ethylene oxide/ethylene glycol ("EO/EG"), oxo alcohols and vinyl acetate monomers. Total sales volume was down 8 percent in the third quarter of 2017 compared with the third quarter of 2016 as a result of hurricane-related production 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 volume in electrical and telecommunications, polyethylene, EO/EG, glycol ethers and ethanolamines.

~~In the first nine months of 2017, average selling prices were up 5 percent with price increases in most products compared with the first nine months of 2016, driven by~~addition to higher feedstock ~~energy~~ and other raw material costs, with the most significant price increases in polyethylene and ~~tight market supply as a result of hurricane-related supply disruptions in the third quarter of 2017. Sales volume~~acrylic monomers. Volume declined 17 percent in the first ~~nine months~~quarter of ~~2017 was down 2 percent when~~2021 compared with the ~~first nine months of 2016. Sales~~same quarter last year as the freeze and related impacts on the U.S. Gulf Coast severely limited production, with the most significant volume ~~increases~~declines in ~~vinyl acetate monomers, acrylic monomers~~oxo alcohols, ethylene oxide/ethylene glycol and ~~glutaraldehydes were more than offset by lower sales volume in electrical and telecommunications, EO/EG and oxo alcohols.~~glycol ethers.

Cost of Sales

Cost of sales ~~were $991 million in the third quarter of 2017 compared with $957 million in the third quarter of 2016, an increase of 4 percent. Cost of sales increased 12 percent from $2,726~~was $1,037 million in the first ~~nine months~~quarter of ~~2016 to $3,056~~2021 compared with $826 million in the first ~~nine months~~quarter of ~~2017. Increases for the three- and nine-month periods ended September 30, 2017, were~~2020, an increase of 26 percent. The increase in cost of sales was driven by higher feedstock ~~energy~~ and ~~other raw material~~energy costs, as well as ~~increased planned maintenance turnaround spending when compared with~~repair and start-up costs totaling approximately $30 million, resulting from the ~~same periods last year, and hurricane-related production and supply disruptions and repair costs in~~record low temperatures that impacted the ~~third quarter of 2017.~~

~~Research and Development ("R&D"), Selling, General and Administrative ("SG&A") Expenses~~

R&D expenses were $4 million in the third quarter of 2017 compared with $5 million in the third quarter of 2016. In the first nine months of 2017, R&D expenses were $14 million, flat when compared with the first nine months of 2016. SG&A expenses were $1 million in the third quarter of 2017 and the third quarter of 2016. In the first nine months of 2017, SG&A expenses were $4 million compared with $5 millionU.S. Gulf Coast in the first ~~nine months of 2016.~~

~~Restructuring and Asset Related Charges - Net~~

~~In the third~~ quarter of 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. The impact of this charge is shown as “Restructuring and asset related charges - net” in the consolidated2021.

~~Table of Contents~~



~~Union Carbide Corporation and Subsidiaries~~

~~statements of income. See Note 3 to the Consolidated Financial Statements for additional information on the Corporation's restructuring activities.~~

~~Equity in Earnings of Nonconsolidated Affiliate~~

Equity in earnings of a nonconsolidated affiliate was zero in the third quarter of 2017 and the first nine months of 2017, compared with zero in the third quarter of 2016 and $3 million in the first nine months of 2016. On March 16, 2017, UCC entered into a share sale and purchase agreement to sell its ownership interest in Asian Acetyls Co., 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 recorded a pretax gain of $4 million on the sale, included in "Sundry income (expense) - net" in the consolidated statements of income.

Sundry Income (Expense) - Net

Sundry income (expense) – net includes a variety of income and expense items such as ~~the gain or loss on foreign currency exchange, commissions,~~ charges for management services provided by ~~Dow, interest income,~~TDCC, non-operating pension and other postretirement benefit plan credits or costs, commissions, gains and losses on sales of investments and ~~assets.~~ assets and gains and losses on foreign currency exchange.

Sundry income (expense) - net in the ~~third~~first quarter of ~~2017~~2021 was expense of $8$15 million compared with expense of ~~$10~~$18 million in the same quarter last year. InThe decrease in the first ~~nine months~~quarter of ~~2017, sundry~~2021 was primarily the result of non-operating pension benefit plan credits recognized in 2021 resulting from a remeasurement of pension plans to reflect the announced freeze of plan benefits, effective December 31, 2023, partially offset by an increase in charges for management services provided by TDCC.

Interest Income

Interest income ~~(expense) - net~~ was ~~income of $6 million compared with income of $20~~$1 million in the first ~~nine months of 2016. Sundry income (expense) - net includes the pretax gains on the sales of land at the Corporation's Texas City, Texas, site in the second quarters of 2016 and 2017.~~

~~Texas City, Texas, Land Sales~~

~~On June 27, 2016, UCC signed agreements for the sale of excess land at the Texas City, Texas, manufacturing site. As a result, in the second~~ quarter of 2016, UCC recorded a pretax gain of $46 million on the sale of one parcel of land. On April 3, 2017, the Corporation sold a second parcel of land, which also included terminal assets and ancillary agreements for the supply of energy and site and terminal services, and recorded a pretax gain of $232021 compared with $7 million in the ~~second~~first quarter of ~~2017.~~2020. The decrease in interest income primarily resulted from the impact of the significant drop in interest rates due to the current interest rate environment.

Interest Expense and Amortization of Debt Discount

Interest expense and amortization of debt discount was ~~$6 million in the third quarter of 2017 ($20~~$7 million in the first ~~nine months~~quarter of ~~2017)~~2021 compared with ~~$7 million in the third quarter of 2016 ($18~~$8 million in the first ~~nine months~~quarter of ~~2016).~~2020, reflecting reduced interest expense resulting from the early extinguishment of debt in September 2020.

Provision (Credit) for Income Taxes

The Corporation reported a ~~tax provision~~credit for income taxes of ~~$152~~$15 million in the ~~third~~first quarter of ~~2017,~~2021, which resulted in an effective tax rate of ~~77.6 percent. This~~23.4 percent, compared with a tax provision of ~~$82~~$41 million in the ~~third~~first quarter of ~~2016,~~2020, 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 38.821.9 percent. The effective tax rate fluctuates based on, among other factors, where income is ~~earned, dividends received~~earned.

Net Income (Loss) Attributable to UCC

The Corporation reported a net loss of $49 million in the first quarter of 2021 compared with net income of $146 million in the first quarter of 2020. The net loss reported in the first quarter of 2021 was driven primarily by production disruptions, higher feedstock and energy costs, and repair and start-up costs resulting from ~~investments~~the extreme weather caused by Winter Storm Uri.

Table of Contents

Capital Expenditures

Capital spending in ~~related companies~~the first quarter of 2021 was $23 million compared with $33 million in the first quarter of 2020. Capital spending decreased as spending for U.S. Gulf Coast projects and site infrastructure projects continues to trend down and the ~~level~~Corporation continues to limit capital expenditures to retain the financial strength of ~~income relative~~the Corporation and Dow Inc. while the COVID-19 economic recovery continues to ~~tax credits available. The~~gain traction.

Pension Plan Changes

On March 4, 2021, TDCC announced changes to the design of its U.S. tax-qualified and non-qualified pension plans, including the plans of the Corporation (the “UCC Plans”) and, effective ~~tax rate~~December 31, 2023, the Corporation will freeze the pensionable compensation and credited service amounts used to calculate pension benefits for employees who participate in the ~~third~~plans. Additionally, the Corporation contributed $545 million to its tax-qualified pension plan, of which $81 million was anticipated to satisfy minimum required contributions based on the pre-existing plan design and market conditions at December 31, 2020.

In connection with the foregoing plan amendments and inclusive of the additional discretionary contribution to the U.S. tax-qualified plan, the Corporation remeasured the UCC Plans effective February 28, 2021, which resulted in a decrease of $45 million in expected net periodic pension benefit cost for 2021, inclusive of a curtailment gain of $7 million, recognized in the first quarter of ~~2017 was impacted by~~2021. The Corporation expects a ~~deferred gain related to the sale~~net periodic pension benefit cost credit of ~~stock between UCC and Dow~~approximately $5 million in ~~2014. The gain on the transaction was deferred for tax purposes, but with the activities that were executed in anticipation~~2021, inclusive of the intended separation of DowDuPont into three publicly traded companies, the gain became taxable, resulting in a charge to the tax provision of $97 million. In the second quarter of 2016, the Corporation adjusted the reserve for uncertain tax positions for a tax matter regarding the historical change in the legal ownership structure of a former nonconsolidated affiliate, resulting in a charge to the tax provision of $57 million.curtailment gain. See Note 49 to the Consolidated Financial Statements for additional ~~information.~~information related to the Corporation's pension plans.

~~Net Income Attributable to UCC~~

The Corporation reported net income of $44 million in the third quarter of 2017 compared with $186 million in the third quarter of 2016. Net income in the first nine months of 2017 was $399 million compared with $599 million in the first nine months of 2016.

~~Capital Expenditures~~

Capital spending in the third quarter of 2017 was $47 million ($145 million in the first nine months of 2017) compared with $55 million in the third quarter of 2016 ($173 million in the first nine months of 2016), reflecting spending for U.S. Gulf Coast and site infrastructure projects in both years.

~~Table of Contents~~



~~Union Carbide Corporation and Subsidiaries~~

OTHER MATTERS

Recent Accounting Guidance

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

Critical Accounting ~~Policies~~Estimates

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~~consolidated financial statements and accompanying notes. Note 1 to the Consolidated Financial Statements in the ~~Corporation’s Annual Report on Form~~Corporation's 2020 10-K ~~for the year ended December 31, 2016 ("2016 10-K")~~ describes the significant accounting policies and methods used in the preparation of the ~~Consolidated Financial Statements.~~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 ~~2016~~2020 10-K. Since December 31, ~~2016,~~2020, there have been no material changes in the Corporation’s ~~critical~~ accounting ~~policies.~~policies that are impacted by judgments, assumptions and estimates.

Table of Contents

Asbestos-Related Matters

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.~~consultants:


Asbestos-Related Claim Activity	2021	2020
Claims unresolved at Jan 1	9,126	11,117
Claims filed	1,110	1,296
Claims settled, dismissed or otherwise resolved	(1,428)	(1,269)
Claims unresolved at Mar 31	8,808	11,144
Claimants with claims against both UCC and Amchem	(2,541)	(3,809)
Individual claimants at Mar 31	6,267	7,335

Asbestos-Related Claim Activity 2017 2016
Claims unresolved at Jan 1 16,141
18,778
Claims filed 5,598
5,909
Claims settled, dismissed or otherwise resolved (6,560 ) (7,052 )
Claims unresolved at Sep 30 15,179
17,635
Claimants with claims against both UCC and Amchem (5,544 ) (6,444 )
Individual claimants at Sep 30 9,635
11,191

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 76 to the Consolidated Financial Statements and Note 14 to the Consolidated Financial Statements included in the 2020 10-K, and Part II, Item 1. Legal Proceedings.

Debt Covenants and Default Provisions

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.~~March 31, 2021.

~~Table of Contents~~



~~Union Carbide Corporation and Subsidiaries~~

Dividends

On a quarterly basis, the Corporation's Board of Directors (the "Board") reviews and determines if there will be a dividend distribution to its parent company and sole shareholder, ~~Dow.~~TDCC. 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~~first quarter of ~~2017,~~2021, the Corporation declared and paid a cash dividend of ~~$181~~$40 million to ~~Dow; dividends paid to Dow totaled $531~~TDCC ($81 million in 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, the UCC Board of Directors approved a dividend to Dow of $72 million, payable on December 22, 2017.2020).

Table of Contents



~~Union Carbide Corporation and Subsidiaries~~


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omitted pursuant to General Instruction H of Form 10-Q.


ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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.

Changes in Internal Control Over Financial Reporting

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.

~~Effective August 31, 2017, pursuant to the merger~~

Table of equals transactions 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. and, as a result, Dow and DuPont became subsidiaries of DowDuPont Inc. The Corporation’s internal control over financial reporting continued to operate as designed to support the consolidation of the Corporation into Dow.Contents


Union Carbide Corporation and Subsidiaries PART II - OTHER INFORMATION

~~PART II – OTHER INFORMATION~~


ITEM 1. LEGAL PROCEEDINGS

Litigation

Asbestos-Related Matters

No material developments in asbestos-related matters occurred in the ~~third~~first quarter of ~~2017.~~2021. For a current status of asbestos-related matters, see Note 76 to the Consolidated Financial Statements.


ITEM 1A. RISK FACTORS

~~There were~~Since December 31, 2020, there have been no material changes into the Corporation's ~~risk factors in the third quarter of 2017.~~Risk Factors.


ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


ITEM 6. EXHIBITS

~~See the Exhibit Index of this Quarterly Report on Form 10-Q for exhibits filed with this report.~~


			EXHIBIT NO.						DESCRIPTION

			23 *						Ankura Consulting Group, LLC's Consent.
			31.1 *						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			31.2 *						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			32.1 *						Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
			32.2 *						Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
			101.INS						The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
			101.SCH						Inline XBRL Taxonomy Extension Schema Document.
			101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
			101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
			101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
			101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
			104						Cover Page Interactive Data File. The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

* Filed herewith

Table of Contents



Union Carbide Corporation and Subsidiaries Signatures

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:			April 23, 2021


~~Date: November 6, 2017~~
	~~By:~~	/s/ RONALD C. EDMONDS
			Ronald C. Edmonds
		Controller and Vice President
		of Controllers and Tax
		The Dow Chemical Company
		Authorized Representative of
		Union Carbide Corporation


	~~By:~~	~~/s/ IGNACIO MOLINA~~
		~~Ignacio Molina~~
		~~Vice President, Treasurer and~~
		~~Chief Financial Officer~~

~~Table of Contents~~



~~Union Carbide Corporation~~/s/ IGNACIO MOLINA
Ignacio Molina Vice President, Treasurer and ~~Subsidiaries~~ ~~Exhibit Index~~ Chief Financial Officer



~~EXHIBIT NO.~~		~~DESCRIPTION~~

23		~~Ankura Consulting Group, LLC's Consent.~~

~~31.1~~		~~Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~31.2~~		~~Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~32.1~~		~~Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~		~~Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101.INS~~		~~XBRL Instance Document.~~

~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document.~~

~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document.~~

~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document.~~

~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document.~~

~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document.~~


			Page

				~~PAGE~~

PART I - FINANCIAL INFORMATION

Item 1.		Financial Statements.	4

		Consolidated Statements of ~~Income.~~Income.	4

		Consolidated Statements of Comprehensive Income.	5

		Consolidated Balance ~~Sheet~~Sheets.s.	6

		Consolidated Statements of Cash Flows.	7

		Consolidated Statements of Equity.	8

		Notes to the Consolidated Financial Statements.	9

Item 2.		Management's Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations..	1917

		Results of ~~Operations~~Operations..	1918

		Other ~~Matters~~Matters..	2119

Item 3.		Quantitative and Qualitative Disclosures About Market ~~Risk~~Risk..	2321

Item 4.		Controls and ~~Procedures~~Procedures..	2321

PART II - OTHER INFORMATION

Item 1.		Legal ~~Proceedings~~Proceedings..	2322

Item 1A.		Risk ~~Factors~~Factors..	2322

Item 4.		Mine Safety ~~Disclosures~~Disclosures..	2322

Item 6.		~~Exhibits~~Exhibits..	2322

SIGNATURES			2423

~~EXHIBIT INDEX~~	25


Note		Page
1	Consolidated Financial Statements	9
2	Recent Accounting Guidance	10
3	Revenue	10
4	Inventories	10
5	Intangible Assets	11
6	Commitments and Contingent Liabilities	11
7	Leases	12
8	Accumulated Other Comprehensive Loss	14
9	Pension and Other Postretirement Benefit Plans	15
10	Fair Value Measurements	16
11	Related Party Transactions	16



Summary of Changes to the Consolidated Statements of Cash Flows	Nine Months Ended Sep 30, 2016
In millions	As filed		Updated
Operating Activities
Net periodic pension benefit cost	$	—	$	21
Asbestos-related payments	$	—	$	(39	)
Other assets and liabilities	$	254	$	272



Intangible Assets	Sep 30, 2017							Dec 31, 2016
In millions	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Intangible assets with finite lives:
Licenses and intellectual property	$	33	$	(33	)	$	—	$	33	$	(33	)	$	—
Software	73		(47		)	26		70		(45		)	25
Total intangible assets	$	106	$	(80	)	$	26	$	103	$	(78	)	$	25



Estimated Amortization Expense
In millions
2017	$	4
2018	$	6
2019	$	6
2020	$	6
2021	$	4
2022	$	2



Accumulated Other Comprehensive Loss	Cumulative Translation Adj			Pension and Other Postretire Benefits			Accum Other Comp Loss
In millions	Cumulative Translation Adj			Pension and Other Postretire Benefits			Accum Other Comp Loss
Balance at Jan 1, 2016	$	(61	)	$	(1,167	)	$	(1,228	)
Amounts reclassified from accumulated other comprehensive income	—			32			32
Net other comprehensive income	—			32			32
Balance at Sep 30, 2016	$	(61	)	$	(1,135	)	$	(1,196	)

Balance at Jan 1, 2017	$	(62	)	$	(1,258	)	$	(1,320	)
Other comprehensive income before reclassifications	1			—			1
Amounts reclassified from accumulated other comprehensive income	3			36			39
Net other comprehensive income	4			36			40
Balance at Sep 30, 2017	$	(58	)	$	(1,222	)	$	(1,280	)



Tax Benefit	Three Months Ended				Nine Months Ended
In millions	Sep 30, 2017		Sep 30, 2016		Sep 30, 2017		Sep 30, 2016
Pension and other postretirement benefits	$	6	$	6	$	22	$	20



Asbestos-Related Claim Activity	2017		2016
Claims unresolved at Jan 1	16,141		18,778
Claims filed	5,598		5,909
Claims settled, dismissed or otherwise resolved	(6,560	)	(7,052	)
Claims unresolved at Sep 30	15,179		17,635
Claimants with claims against both UCC and Amchem	(5,544	)	(6,444	)
Individual claimants at Sep 30	9,635		11,191