Other Lease Information
Nine Months Ended
Sep 30, 2019
In millions
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 18
Financing cash flows for finance leases $ 1

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at September 30, 2020 and December 31, 2019:

Lease Position Balance Sheet Classification Sep 30, 2019
In millions
Right-of-use assets obtained in exchange for lease obligations:
Operating leases ¹
$ 105
Assets
Operating lease assets Operating lease right-of-use assets $ 93
Finance lease assets Property 12
Finance lease amortization Accumulated depreciation (6 )
Total lease assets $ 99
Liabilities
Current
Operating Operating lease liabilities - current $ 18
Finance Long-term debt due within one year 1
Noncurrent
Operating Operating lease liabilities - noncurrent 75
Finance Long-Term Debt 5
Total lease liabilities $ 99


1.	~~Includes $99 million related to the adoption of Topic 842. See Note 2 for additional information.~~



~~Lease Term and Discount Rate~~	~~Sep 30, 2019~~
~~Weighted-average remaining lease term~~
~~Operating leases~~	~~6.4 years~~
~~Finance leases~~	~~4.8 years~~
~~Weighted-average discount rate~~
~~Operating leases~~	~~4.23~~	%
~~Finance leases~~	~~4.22~~	%


Lease Position	Balance Sheet Classification	Sep 30, 2020		Dec 31, 2019
In millions
Right-of-use assets obtained in exchange for lease obligations:
Operating leases ¹		$	8	$	105
Finance leases		$	1	$	0
Assets
Operating lease assets	Operating lease right-of-use assets	$	81	$	89
Finance lease assets	Property	12		12
Finance lease amortization	Accumulated depreciation	(7)		(6)
Total lease assets		$	86	$	95
Liabilities
Current
Operating	Operating lease liabilities - current	$	15	$	16
Finance	Long-term debt due within one year	1		1
Noncurrent
Operating	Operating lease liabilities - noncurrent	67		74
Finance	Long-Term Debt	4		5
Total lease liabilities		$	87	$	96

1.Includes $99 million for the period ended December 31, 2019 related to the adoption of ASU 2016-02, "Leases (Topic 842)," and the associated ASUs, in the first quarter of 2019.

The weighted-average remaining lease term and discount rate for leases recorded in the consolidated balance sheets at September 30, 2020 and December 31, 2019 are provided below:


Lease Term and Discount Rate	Sep 30, 2020		Dec 31, 2019
Weighted-average remaining lease term
Operating leases	5.9 years		6.3 years
Finance leases	3.6 years		4.5 years
Weighted-average discount rate
Operating leases	3.99	%	4.13	%
Finance leases	4.03	%	4.22	%

The following table provides the maturities of lease liabilities at September 30, ~~2019:~~2020:

Maturities of Lease Liabilities at Sep 30, 2019 Operating Leases Finance Leases
In millions
2019 $ 5
$ —
2020 20
2
2021 16
2
2022 15
1
2023 13
1
2024 and thereafter 37
1
Total future undiscounted lease payments $ 106
$ 7
Less imputed interest 13
1
Total present value of lease liabilities $ 93
$ 6


Maturities of Lease Liabilities	Sep 30, 2020
	Operating Leases		Finance Leases
In millions
2020	$	5	$	0
2021	17		2
2022	16		2
2023	14		1
2024	14		1
2025 and thereafter	27		0
Total future undiscounted lease payments	$	93	$	6
Less imputed interest	11		1
Total present value of lease liabilities	$	82	$	5

Table of Contents

At September 30, ~~2019,~~2020, the Corporation had an additional ~~lease~~leases of approximately ~~$15~~$16 million for equipment and a rail yard, which ~~has~~had not yet commenced. ~~This lease is~~These leases are expected to commence in 2020 and 2021, with a lease ~~term~~terms of up to 20 years.

~~Table of Contents~~

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

~~Future minimum lease payments for operating leases accounted for under ASC 840, "Leases," with remaining non-cancelable terms in excess of one year at December 31, 2018 were as follows:~~

Minimum Lease Commitments at Dec 31, 2018
In millions
2019 $ 18
2020 16
2021 14
2022 13
2023 13
2024 and thereafter 37
Total $ 111

NOTE 1012 - ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in the balances for each component of ~~AOCL~~accumulated other comprehensive loss ("AOCL") for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 were as follows:

Accumulated Other Comprehensive Loss Three Months Ended Nine Months Ended
In millions Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 Sep 30, 2018
Cumulative Translation Adjustment
Beginning balance $ (57 ) $ (58 ) $ (57 ) $ (59 )
Gains (losses) on foreign currency translation 1
2
1
2
(Gains) losses reclassified from AOCL to net income ¹
—
(1 ) —
—
Other comprehensive income (loss), net of tax 1
1
1
2
Ending balance $ (56 ) $ (57 ) $ (56 ) $ (57 )
Pension and Other Postretirement Benefits

Beginning balance $ (1,475 ) $ (1,514 ) $ (1,504 ) $ (1,293 )
Amortization and recognition of net loss ²
18
21
56
64
Less: Tax expense (benefit) ³
(4 ) (5 ) (13 ) (15 )
Other comprehensive income (loss), net of tax 14
16
43
49
Reclassification of stranded tax effects ⁴
—
—
—
(254 )
Ending balance $ (1,461 ) $ (1,498 ) $ (1,461 ) $ (1,498 )
Total AOCL ending balance $ (1,517 ) $ (1,555 ) $ (1,517 ) $ (1,555 )


Accumulated Other Comprehensive Loss	Three Months Ended						Nine Months Ended
In millions	Sep 30, 2020		Sep 30, 2019		Sep 30, 2020		Sep 30, 2019
Cumulative Translation Adjustment
Beginning balance	$	(53)	$	(57)	$	(56)	$	(57)
Gains (losses) on foreign currency translation	(1)		1		2		1


(Gains) losses reclassified from AOCL to net income ¹	1		0		1		0
Other comprehensive income, net of tax	0		1		3		1
Ending balance	$	(53)	$	(56)	$	(53)	$	(56)
Pension and Other Postretirement Benefits
Beginning balance	$	(1,570)	$	(1,475)	$	(1,609)	$	(1,504)



Amortization and recognition of net loss ²	26		18		77		56
Less: Tax expense (benefit) ³	(6)		(4)		(18)		(13)
Other comprehensive income, net of tax	20		14		59		43

Ending balance	$	(1,550)	$	(1,461)	$	(1,550)	$	(1,461)
Total AOCL ending balance	$	(1,603)	$	(1,517)	$	(1,603)	$	(1,517)

1.Reclassified to "Sundry income (expense) - net."


2.	These AOCL components are included in the computation of net periodic benefit cost of the Company's defined benefit pension and other postretirement benefit plans. See Note 11 for additional information.


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


4.	~~Amounts reclassified to retained earnings as a result of the adoption of ASU 2018-02.~~

~~Table of Contents~~

~~Union Carbide Corporation and Subsidiaries~~

2.~~Notes to~~These AOCL components are included in the ~~Consolidated Financial Statements~~computation of net periodic benefit cost of the Corporation's defined benefit pension and other postretirement benefit plans. See Note 13 for additional information.



~~(Unaudited)~~

3.Reclassified to "Provision for income taxes."

NOTE 1113 - PENSION ~~PLANS~~ AND OTHER POSTRETIREMENT ~~BENEFITS~~BENEFIT PLANS

A summary of the Corporation's pension ~~plans~~ and other postretirement ~~benefits~~benefit plans can be found in Note 1517 to the Consolidated Financial Statements included in the Corporation's Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. The following table provides the components of the Corporation's net periodic benefit cost for all significant plans:

Net Periodic Benefit Cost for All Significant Plans Three Months Ended Nine Months Ended
In millions Sep 30,
2019 Sep 30,
2018 Sep 30,
2019 Sep 30,
2018
Defined Benefit Pension Plans:
Service cost $ 9
$ 10
$ 27
$ 30
Interest cost 36
32
108
96
Expected return on plan assets (52 ) (55 ) (158 ) (164 )
Amortization of net loss 20
24
62
71
Net periodic benefit cost $ 13
$ 11
$ 39
$ 33

Other Postretirement Benefits:
Interest cost $ 2
$ 2
$ 6
$ 5
Amortization of net gain (2 ) (3 ) (6 ) (7 )
Net periodic benefit cost $ —
$ (1 ) $ —
$ (2 )


Net Periodic Benefit Cost for All Significant Plans	Three Months Ended						Nine Months Ended
In millions	Sep 30, 2020		Sep 30, 2019		Sep 30, 2020		Sep 30, 2019
Defined Benefit Pension Plans
Service cost	$	9	$	9	$	26	$	27
Interest cost	28		36		84		108
Expected return on plan assets	(50)		(52)		(150)		(158)
Amortization of net loss	27		20		81		62
Net periodic benefit cost	$	14	$	13	$	41	$	39

Other Postretirement Benefit Plan
Service cost	$	0	$	0	$	1	$	0
Interest cost	1		2		4		6
Amortization of net gain	(1)		(2)		(4)		(6)
Net periodic benefit cost	$	—	$	0	$	1	$	0

Net periodic benefit cost, other than the service cost component, is included in "Sundry income (expense) - net" in the consolidated statements of income.

Table of Contents

NOTE 1214 - FAIR VALUE MEASUREMENTS

The Corporation's financial instruments are classified as Level 2 measurements. For assets and liabilities classified as Level 2 measurements, where the 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/quality checks.

The following table summarizes the fair value of the Corporation's financial instruments at September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

Fair Value of Financial Instruments Sep 30, 2019 Dec 31, 2018
In millions Cost Gain Loss Fair Value Cost Gain Loss Fair Value
Cash equivalents ¹
$ 10
$ —
$ —
$ 10
$ 10
$ —
$ —
$ 10
Long-term debt including debt due within one year $ (474 ) $ —
$ (115 ) $ (589 ) $ (474 ) $ —
$ (67 ) $ (541 )


Fair Value of Financial Instruments	Sep 30, 2020														Dec 31, 2019
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	$	(391)	$	0	$	(95)	$	(486)	$	(474)	$	0	$	(115)	$	(589)

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

Cost approximates fair value for all other financial instruments.

Fair Value Measurements on a Nonrecurring Basis

As part of the 2020 Restructuring Program, the Corporation rationalized its manufacturing assets to further enhance competitiveness while the COVID-19 economic recovery gains traction. In the third quarter of ~~2019,~~2020, the Corporation recognized an impairment charge of $75 million resulting from the planned divestiture of its acetone derivatives product line to ALTIVIA Ketones & Additives, LLC. The divestiture includes the Corporation's acetone derivatives related inventory and productionmanufacturing assets ~~located in Institute, West Virginia, in addition to the site infrastructure, land and utilities. The assets,~~associated with this plan, classified as Level 3 measurements and valued using unobservable inputs, were written down to zero inand the ~~third quarter~~Corporation recorded an impairment charge of ~~2019, except for inventory,~~$4 million, which ~~will be sold at the lower of cost or market. The impairment charge~~ was included in "Restructuring and asset related charges - net" in the consolidated statements of income. ~~See Note 5 for additional information.~~

~~Table of Contents~~

~~Union Carbide Corporation and Subsidiaries~~

~~Notes to the Consolidated Financial Statements~~



~~(Unaudited)~~

NOTE 1315 - RELATED PARTY TRANSACTIONS

The Corporation sells its products to TDCC to simplify the customer interface process. Products are sold to and purchased from TDCC at market-based prices in accordance with the terms of ~~TDCC’s intercompany pricing policies.~~an agreement between UCC and TDCC. After each quarter, the Corporation and TDCC analyze the pricing used for the sales in that quarter and reach agreement on any necessary adjustments, at which point the prices are final. The Corporation also procures certain commodities and raw materials through a TDCC subsidiary and pays a commission to that TDCC subsidiary based on the volume and type of commodities and raw materials purchased. The commission expense iswas included in "Sundry income (expense) - net" in the consolidated statements of income. Purchases from that TDCC subsidiary were ~~$247~~$270 million in the third quarter of ~~2019~~2020 ($~~407~~247 million in the third quarter of ~~2018)~~2019) and ~~$861~~$707 million during the first nine months of ~~2019~~2020 ($~~1,219~~861 million during the first nine months of ~~2018)~~2019). The decrease in purchase costs for the ~~three and~~ nine months ended ~~2019~~September 30, 2020 when compared with the same period last year was primarily due to lower feedstock and energy ~~costs, lower demand and the impact of the separation of the specialty products business. See Note 3 for additional information.~~costs.

The Corporation also has a master services agreement with TDCC, whereby TDCC provides services including, but not limited ~~to, accounting, legal,~~to: accounting; legal; treasury (investments, cash management, risk management, insurance)~~, procurement,~~; procurement; human ~~resources, environmental,~~resources; environmental; health and ~~safety~~safety; and business management for UCC. Under the master services agreement with TDCC, general administrative and overhead type services that TDCC 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 $6$7 million in the third quarter of ~~2019~~2020 ($86 million in the third quarter of ~~2018)~~2019) and ~~$18~~$23 million for the first nine months of ~~2019~~2020 ($2218 million for the first nine months of ~~2018)~~2019) 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 ~~$21~~$19 million in the third quarter of ~~2019~~2020 ($2321 million in the third quarter of ~~2018)~~2019) and ~~$65~~$66 million for the first nine months of ~~2019~~2020 ($6765 million for the first nine months of ~~2018)~~2019), and were included in "Cost of sales" in the consolidated statements of income.

Management believes the method used for determining expenses charged by TDCC is reasonable. TDCC 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.

Table of Contents

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

As part of TDCC’s cash management process, UCC is a party to revolving loans with TDCC that have interest rates based on LIBOR (London Interbank Offered Rate) with varying maturities. At September 30, ~~2019,~~2020, the Corporation had a note receivable of $1.5 billion ($~~1.3~~1.5 billion at December 31, ~~2018)~~2019) from TDCC 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 TDCC that allows the Corporation to borrow or obtain credit enhancements up to an aggregate of $1 billion that matures on December 30, ~~2019.~~2020. TDCC 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, ~~2019, $936~~2020, $937 million was available under the revolving credit agreement ($~~949~~937 million at December 31, ~~2018)~~2019). The cash collateral iswas reported as “Noncurrent receivables from related companies” in the consolidated balance sheets.

On a quarterly basis, the ~~Corporation's board of directors~~Board reviews and determines if there will be a dividend distribution to its parent company and sole shareholder, 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 quarter of 2020, the Corporation declared and paid a cash dividend of $25 million to TDCC; cash dividends to TDCC totaled $187 million for the first nine months of 2020. In the third quarter of 2019, the Corporation declared a ~~cash~~ dividend of $112 million to TDCC, which was paid on October 3, 2019; cash dividends paid to TDCC totaled $338 million for the first nine months of 2019. ~~In the third quarter of 2018, the Corporation declared and paid a cash dividend of $177 million to TDCC; cash dividends to TDCC totaled $423 million for the first nine months of 2018.~~

~~Also, in~~In the first quarter of 2019, in anticipation of the business separation activities to align ~~the~~TDCC's specialty products business with DowDuPont, UCC issued a stock dividend to TDCC for 63.4 percent of its ownership interest in DIHC, a cost method investment, which totaled $401 million. UCC also distributed assets and liabilities aligned with ~~the~~TDCC's specialty products business for an additional dividend to TDCC of $71 million. See Note 3 for additional information.

~~Table of Contents~~



~~Union Carbide Corporation and Subsidiaries~~

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

Pursuant to General Instruction H(1)(a) and (b) for Form 10-Q "Omission of Information by Certain Wholly-Owned Subsidiaries," the Corporation is filing this Form 10-Q with a reduced disclosure format.

References to "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. On April 1, 2019, DowDuPont Inc. (“DowDuPont” and effective June 3, 2019, n/k/a DuPont de Nemours, Inc.) completed the separation of its materials science business and Dow Inc. became the direct parent company of TDCC. The separation was contemplated by the merger of equals transaction effective August 31, 2017, under the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017. TDCC and E. I. du Pont de Nemours and Company and its consolidated subsidiaries ("Historical DuPont") each merged with subsidiaries of DowDuPont and, as a result, TDCC and Historical DuPont became subsidiaries of DowDuPont (the “Merger”). Subsequent to the Merger, TDCC and Historical DuPont engaged in a series of internal reorganization and realignment steps to realign their businesses into three subgroups: agriculture, materials science and specialty products. This included transferring certain Corporation assets and liabilities aligned with the specialty products business to TDCC (the "Business Separation"). Dow Inc. was formed as a wholly owned subsidiary of DowDuPont to serve as the holding company for the materials science business. UCC remains a wholly owned subsidiary of TDCC.

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

Table of Contents

Statement on COVID-19 and Oil Price Volatility

Overview of UCC’s Response to COVID-19

The pandemic caused by coronavirus disease 2019 ("COVID-19") has impacted all geographic regions where UCC’s products are produced and sold. Financial markets were volatile towards the end of the first quarter and early in the second quarter of 2020, primarily due to uncertainty with respect to the severity and duration of the pandemic, coupled with fluctuations in crude oil prices due in part to the global spread of COVID-19. As the second quarter progressed, crude oil prices increased, driven by improved supply/demand fundamentals and those conditions continued in the third quarter. Financial markets also continued a gradual recovery in the third quarter of 2020.

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. UCC’s primary manufacturing operations are in the United States, where efforts to contain the spread of COVID-19 resulted in significant mitigation measures, including social distancing and stay-at-home mandates, travel restrictions and/or bans, and restricted access to certain corporate facilities and manufacturing sites. The Corporation’s manufacturing facilities in the United States have been designated essential operations by state and local governments and all of UCC’s manufacturing sites and facilities, including its smaller sites in Asia Pacific, continue to operate and are doing so safely, having implemented social distancing and enhanced health, safety and sanitization measures as directed by Dow’s regional Crisis Management Teams (“CMTs”). The CMTs continue to work closely with site leadership and are adjusting alert levels as warranted on a site by site basis. In the second quarter of 2020, the CMTs initiated implementation of Dow’s comprehensive return to workplace plan ("RTW Plan") that is tailored for each site and includes a number of health and safety measures to be followed in a gradual and phased approach. Employees in the United States have slowly been returning to the workplace, in accordance with the RTW Plan, and the Corporation expects that to continue in the fourth quarter of 2020. The Corporation continues to encourage its workforce to follow safety measures when away from work to help prevent community spread of COVID-19.

During this public health crisis, UCC is focused on the health and safety of its employees, contractors, customers and suppliers around the world and maintaining 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 continue to ease through the remainder of 2020, absent significant impacts from COVID-19 infection resurgences.

Dow has taken proactive measures to electively focus on cash and maintain financial strength with a continued emphasis on safe, reliable operations and disciplined capital allocation. In accordance with these actions, the Corporation reduced its 2020 capital expenditures target to approximately $130 million and temporarily idled one of the Corporation’s U.S. polyethylene production units to balance production to demand across markets more severely affected by restrained economic activity. The polyethylene production unit returned to more normalized operating rates in the third quarter. Further, on September 30, 2020, the Corporation's Board of Directors (the "Board") approved restructuring actions that were aligned to the structural cost improvement initiatives announced by Dow Inc. in response to the continued economic impact from the pandemic caused by COVID-19. The restructuring program is designed to reduce structural costs and enable the Corporation to further enhance competitiveness while the COVID-19 economic recovery gains traction. This program includes workforce cost reductions and actions to rationalize the Corporation's manufacturing assets. See Note 6 to the Consolidated Financial Statements for additional information.

Review of 2020 Financial Impacts from COVID-19

The Corporation's sales declined 20 percent in the first nine months of 2020 compared with the same period last year, as the COVID-19 pandemic disrupted the global economy and supply/demand fundamentals. Local price declined in the first quarter and continued to decline in the second quarter of 2020, largely impacted by lower global energy prices. In March and April 2020, crude oil prices declined significantly, due in part to the COVID-19 pandemic, coupled with increased supply from oil producers, resulting in margin compression in the second quarter of 2020. In the latter half of the second quarter and continuing into the third quarter, crude oil prices increased as supply/demand fundamentals improved, driving higher feedstock costs. However, decreased demand and continued margin compression negatively impacted operating results for the three months ended September 30, 2020 compared with the same quarter last year. See Results of Operations in this report for additional discussion of results for the three and nine months ended September 30, 2020.

Table of Contents

At the time of this filing, the ultimate severity and duration of the COVID-19 pandemic and oil price volatility cannot be reasonably estimated. The COVID-19 pandemic has had and could continue to have a substantial negative impact on the Corporation’s results of operations, financial condition and cash flows. The effects of the COVID-19 pandemic in the first nine months of 2020 and the additional risks associated with these conditions are more fully discussed in this report in Part II, Item 1A, Risk Factors. The Corporation is actively monitoring for potential financial impacts from the COVID-19 pandemic and oil price volatility, including, but not limited to: evaluating the recoverability of its assets; enhancing cyber security monitoring; and evaluating ongoing appropriateness of its estimates.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States. There have been no significant impacts to the Corporation's results of operations or financial position resulting from the CARES Act in the three and nine months ended September 30, 2020. The Corporation continues to assess the provisions and potential impacts of this legislation and expects to realize certain effects of the CARES Act in the fourth quarter of 2020. At this time the Corporation does not expect the CARES Act to have a significant impact on the provision for income taxes in 2020.

RESULTS OF OPERATIONS

Net Sales

Total net sales were $842 million in the third quarter of 2020 compared with $1,059 million in the third quarter of 2019, ~~compared with $1,424 million in the third quarter of 2018,~~ a decrease of 2620 percent. Total net sales were $2,754 million for the first nine months of 2020 compared with $3,376 million for the first nine months of 2019, ~~compared with $4,103 million for the first nine months of 2018,~~ a decrease of 18 percent. Net sales to related companies, principally to TDCC, and based on market prices for the related products, were $817 million in the third quarter of 2020 compared with $1,028 million in the third quarter of 2019, ~~compared with $1,385 million in the third quarter of 2018,~~ a decrease of 2621 percent. Net sales to related companies were $2,679 million in the first nine months of 2020 compared with $3,270 million in the first nine months of 2019, ~~compared with $3,998 million in the first nine months of 2018,~~ a decrease of 18 percent.

Average selling ~~prices~~price decreased 1913 percent in the third quarter of ~~2019~~2020 compared with the same quarter last year. Price decreased across ~~most~~all products with the largest decreases in polyethylene, plastics used for wire and cable applications and oxo alcohols. Volume declined 7 percent in the third quarter of 2020 compared with the same quarter last year as lower demand for polyethylene, ethanolamines and glycol ethers and the absence of acetone derivatives volume due to the divestiture of the product line in the fourth quarter of 2019 more than offset improved demand for vinyl acetate monomers.

In the first nine months of 2020, average selling price decreased 17 percent compared with the first nine months of 2019, with price decreases across all products, primarily in response to lower feedstock and other raw material costs as well as margin compression, with the largest decreases in polyethylene, oxo alcohols, ~~and ethylene oxide/ethylene glycol ("EO/EG"). Volume was down 7 percent in the third quarter of 2019 compared with the third quarter of 2018, as lower demand for vinyl acetate monomers and~~ plastics used for wire and cable applications ~~as well as lower volume resulting from the Business Separation more than offset increases in polyethylene~~ and ~~surfactants.~~

~~For~~glycol ethers. Volume for the first nine months of ~~2019, average selling prices decreased 14~~2020 was down 1 percent compared with the first nine months of ~~2018,~~2019, with ~~price~~ decreases ~~across all products, driven~~resulting from the divestiture of the Corporation's acetone derivatives product line as well as the Business Separation. These volume decreases were partially offset by ~~lower feedstock~~increases in vinyl acetate monomers, which was unfavorably impacted in 2019 by planned maintenance turnaround activity, as well as increases in ethylene oxide/ethylene glycol and ~~other raw material costs,~~home and personal care products.

Cost of Sales

Cost of sales was $787 million in the third quarter of 2020 compared with $854 million in the ~~largest decreases~~third quarter of 2019, a decrease of 8 percent. Cost of sales decreased 13 percent from $2,706 million in ~~polyethylene, oxo alcohols and EO/EG. Volume for~~ the first nine months of 2019 ~~was down 4 percent compared with~~to $2,359 million in the first nine months of ~~2018, as lower demand~~2020. The decline in ~~plastics~~cost of sales for ~~wire and cable applications and acrylic monomers and decreases resulting from~~ the ~~Business Separation more than offset demand growth~~three months ended September 30, 2020 was driven primarily by the divestiture of the Corporation's acetone derivatives product line in ~~polyethylene and ethyleneamines. Volume was also negatively impacted by planned maintenance turnaround activity at multiple production facilities during~~ the ~~first nine months of 2019.~~

~~Cost of Sales~~

~~During the third~~fourth quarter of 2019 ~~the Corporation recorded~~and a ~~pretax~~one-time charge of $55 million related to environmental remediation matters at a number of current and historical locations. The charge primarily resulted from the culmination of long-standing negotiations and discussions with regulators and agencies, including technical studies supporting higher cost estimates for final or staged remediation plans, and the Corporation’s review of its closure strategies and obligations to monitor ongoing operations and maintenance activities.

~~Table of Contents~~



~~Union Carbide Corporation and Subsidiaries~~

~~Cost of sales was $854 million~~sites, recorded in the third quarter of 2019 compared with $1,062 million in the third quarter of 2018, a decrease of 20 percent. Cost of sales decreased 13 percent from $3,102 million in the first nine months of 2018 to $2,706 million in the first nine months of 2019. The ~~decline~~decrease in cost of sales for the ~~three and~~ nine months ended September 30, ~~2019,~~2020 was driven ~~primarily~~ by the divestiture of the Corporation's acetone derivatives product line, the impact from the Business Separation, lower feedstock and other raw material costs ~~lower volume~~ and the ~~impact from the Business Separation, which more than offset charges for~~one-time charge related to environmental remediation matters recorded in the third quarter of 2019. See Note 10 to the Consolidated Financial Statements for additional information about the Corporation's environmental matters.

Table of Contents

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

R&D expenses were $6 million in the third quarter of ~~2019, compared with $4 million in the same period last year.~~2020 and 2019. For the first nine months of ~~2019,~~2020, R&D expenses were ~~$19~~$17 million compared with ~~$14~~$19 million in the first nine months of ~~2018.~~2019. SG&A expenses were $2 million in the third quarter of ~~2019 compared with $1 million in the third quarter of 2018.~~2020 and 2019. For the first nine months of ~~2019,~~2020, SG&A expenses were $4$6 million compared with $5$4 million in the first nine months of ~~2018.~~2019. The increase in SG&A expenses was driven primarily by administrative fees associated with ongoing service arrangements.

Restructuring and Asset Related Charges - Net

2020 Restructuring Program

On September 30, 2020, the Board approved restructuring actions that were aligned to the structural cost improvement initiatives announced by Dow Inc. in response to the continued economic impact from the pandemic caused by COVID-19. The restructuring program is designed to reduce structural costs and enable the Corporation to further enhance competitiveness while the COVID-19 economic recovery gains traction. This program includes workforce cost reductions and actions to rationalize the Corporation's manufacturing assets ("2020 Restructuring Program"). These actions are expected to be substantially complete by the end of 2021.

As a result of these actions, in the third quarter of 2020 the Corporation recorded pretax restructuring charges of $13 million, consisting of severance and related benefit costs of $9 million and asset write-downs and write-offs of $4 million. The impact of these charges was included in "Restructuring and asset related charges - net" in the consolidated statements of income.

DowDuPont Cost Synergy Program

In September and November 2017, the Corporation approved restructuring actions that were aligned with DowDuPont’s cost synergy targets. As this restructuring program has ended, the Corporation had no restructuring charges related to this program in the third quarter of 2020, compared with restructuring charges for severance and related benefit costs of $2 million in the third quarter of 2019. For the ~~three~~nine months ended September 30, ~~2019,~~2020, the Corporation recorded ~~pretax~~program related restructuring charges of $2 million for severance and related benefit costs, ~~($1 million for the three months ended September 30, 2018). For the nine months ended September 30, 2019, the Corporation recorded pretax restructuring charges of~~compared with $4 ~~million for severance and related benefit costs ($3~~ million for the nine months ended September 30, ~~2018). See Note 5 to the Consolidated Financial Statements for additional information on the Corporation's restructuring activities.~~2019.

Asset Related Charges

On August 13, 2019, the Corporation entered into a definitive agreement to sell its acetone derivatives product ~~line to ALTIVIA Ketones & Additives, LLC.~~line. The ~~divestiture includes~~sale was completed in the ~~Corporation's~~fourth quarter of 2019 and included acetone derivatives related inventory and production assets, as well as site infrastructure, land and utilities located in Institute, West ~~Virginia, in addition~~Virginia. The sale also included TDCC-owned railcars that were transferred to ~~the site infrastructure, land and utilities. The divestiture is expected to close~~UCC in the fourth quarter of ~~2019.~~2019 in anticipation of the sale. The ~~Corporation will remain at~~assets, with the ~~Institute site as a tenant. As a result~~exception of ~~this planned divestiture,~~inventory and railcars, were written down to zero in the ~~Corporation recognized~~third quarter of 2019, resulting in a pretax impairment charge of $75 million, ~~in the third quarter of 2019. The impairment charge~~which was included in "Restructuring and asset related charges - net" in the consolidated statements of income. The Corporation remains at the Institute, West Virginia site as a tenant.

Sundry Income (Expense) - Net

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

Sundry income (expense) - net in the third quarter of ~~2019~~2020 was anincome of $45 million compared with expense of $19 ~~million compared with an expense of $20~~ million in the same quarter last year. For the first nine months of ~~2019,~~2020, sundry income (expense) -– net was ~~an expense~~income of ~~$58~~$5 million compared with an expense of ~~$48~~$58 million in the first nine months of ~~2018.~~2019. The increase in ~~expense~~sundry income in the third quarter of 2020 was primarily the result of the sale of UCC's rail infrastructure operations and assets at UCC's sites in St. Charles, Louisiana, and Seadrift, Texas, which resulted in a pretax gain of $86 million, and was partially offset by a pretax loss of $19 million on the early extinguishment of debt, both included in "Sundry income (expense) - net" in the consolidated statements of income. Sundry income (expense) - net for the three and nine months ended September 30, ~~2019~~2020 was ~~primarily a result of higher pension and other postretirement benefit plan costs~~also impacted by increased expenses associated with the master services agreement with TDCC when compared with the same ~~period~~periods last year.

Interest Income

Interest income was $1 million in the third quarter of 2020 ($10 million for the first nine months of 2020) compared with $9 million in the third quarter of 2019 ($28 million for the first nine months of 2019) ~~compared with $8 million in the third quarter of 2018 ($20 million for the first nine months of 2018)~~. The ~~increase~~decrease in interest income ~~for~~primarily resulted from the ~~nine months ended September 30, 2019, was primarily~~impact of the ~~result of higher~~significant drop in interest rates ~~and an increase in notes receivable from related parties.~~due to the current interest rate environment.

Table of Contents

Interest Expense and Amortization of Debt Discount

Interest expense and amortization of debt discount was $7 million in the third quarter of ~~2019 compared with $9 million in the third quarter of 2018.~~2020 and 2019. For the first nine months of ~~2019,~~2020, interest expense and amortization of debt discount was ~~$21~~$26 million compared with ~~$22~~$21 million in the first nine months of ~~2018.~~2019. The increase in interest expense and amortization of debt discount was primarily due to the recognition of interest and penalties related to the settlement of sales and use tax disputes in Seadrift, Texas, and Texas City, Texas.

Provision ~~(Credit)~~ for Income Taxes

The Corporation reported a tax provision of $14 million in the third quarter of 2020, which resulted in an effective tax rate of 19.2 percent, compared with a credit for income taxes of $19 million in the third quarter of 2019, which resulted in an effective tax rate of negative 18.4 ~~percent, compared with a tax provision of $62 million in the third quarter of 2018, which resulted in an effective tax rate of 18.6~~ percent. For the first nine months of ~~2019,~~2020, the Corporation reported a tax provision of ~~$38~~$73 million, which resulted in an effective tax rate of ~~7.4 percent. This~~21.1 percent, compared with a tax provision of ~~$184~~$38 million infor the first nine months of ~~2018,~~2019, which resulted in an effective tax rate of ~~19.8~~7.4 percent. The effective tax rate fluctuates based on, among other factors, where income is earned. The ~~change in the effective~~ tax rate was favorably impacted in the three and nine months ended September 30, 2019, ~~resulted from amended returns that reflect~~due to the restoration of tax basis in assets, driven by a ~~recent~~ court judgment that did not involve the Corporation, and ~~a tax accounting method change related~~deductions allowed in the United States for certain sales to ~~depreciation of fixed assets, both resulting in a favorable adjustment to the provision (credit) for income taxes.~~foreign customers.

~~Table of Contents~~



~~Union Carbide Corporation and Subsidiaries~~

Net Income Attributable to UCC

The Corporation reported net income of $59 million in the third quarter of 2020 compared with $122 million in the third quarter of ~~2019 compared with $272 million in the third quarter of 2018.~~2019. Net income for the first nine months of ~~2019~~2020 was ~~$477~~$273 million compared with ~~$743~~$477 million in the first nine months of ~~2018.~~2019.

Capital Expenditures

Capital spending in the third quarter of ~~2019~~2020 was ~~$40~~$34 million ($40 million in the third quarter of 2019) and $99 million for the first nine months of 2020 ($145 million for the first nine months of 2019) ~~compared with $73 million in the third quarter of 2018 ($174 million for the first nine months of 2018),~~. Capital spending decreased as spending for U.S. Gulf Coast projects and site infrastructure projects ~~winds down.~~continues to trend down and the Corporation reduced its 2020 capital expenditures target to retain the financial strength of the Corporation and Dow Inc.

Planned Sale of Marine and Terminal Operations and Assets

On September 14, 2020, TDCC entered into a definitive agreement to divest certain U.S. Gulf Coast marine and terminal operations and assets for expected cash proceeds of $620 million. Included in the transaction are certain assets and equipment located at UCC's site in St. Charles, Louisiana. In addition, TDCC has entered into mutual long-term service agreements with the buyer, effective upon closing of the transaction, that are designed to ensure the continuation of marine and terminal services for existing UCC operations at the impacted site. The transaction is expected to close in the fourth quarter of 2020, subject to customary regulatory approvals and other closing conditions, and the Corporation expects to record a gain on the transaction.

OTHER MATTERS

Recent Accounting Guidance

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

Critical Accounting 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 10-K for the year ended December 31, ~~2018~~2019 ("~~2018~~2019 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 ~~2018~~2019 10-K. Since December 31, ~~2018,~~2019, there have been no material changes in the Corporation’s accounting 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	2020	2019
Claims unresolved at Jan 1	11,117	12,780
Claims filed	3,623	4,396
Claims settled, dismissed or otherwise resolved	(5,099)	(5,763)
Claims unresolved at Sep 30	9,641	11,413
Claimants with claims against both UCC and Amchem	(3,168)	(3,935)
Individual claimants at Sep 30	6,473	7,478

Asbestos-Related Claim Activity 2019 2018
Claims unresolved at Jan 1 12,780
15,427
Claims filed 4,396
5,279
Claims settled, dismissed or otherwise resolved (5,763 ) (7,861 )
Claims unresolved at Sep 30 11,413
12,845
Claimants with claims against both UCC and Amchem (3,935 ) (4,778 )
Individual claimants at Sep 30 7,478
8,067

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 810 to the Consolidated Financial Statements and Part II, Item 1. Legal Proceedings.

~~Table of Contents~~



~~Union Carbide Corporation and Subsidiaries~~

~~Environmental Matters~~

The Corporation determines the costs of environmental remediation of its current and historical locations based on current law and existing technologies. Inherent uncertainties exist in such evaluations primarily due to unknown environmental conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies. The recorded liabilities are adjusted periodically as remediation efforts progress, or as additional technical or legal information becomes available. At September 30, 2019, the Corporation had accrued obligations of $141 million for probable environmental remediation and restoration costs, including $21 million for the remediation of Superfund sites. 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 two and a half times that amount. For additional information see Environmental Matters in Note 8 to the Consolidated Financial Statements.

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, ~~2019.~~2020.

Dividends

In the third quarter of 2020, the Corporation declared and paid a cash dividend of $25 million to TDCC ($187 million for the first nine months of 2020). In the third quarter of 2019, the Corporation declared a cash dividend of $112 million to TDCC, which was paid on October 3, 2019; cash dividends paid to TDCC totaled $338 million for the first nine months of 2019.

In ~~the third quarter of 2018, the Corporation declared and paid a cash dividend of $177 million to TDCC; cash dividends paid to TDCC totaled $423 million for the first nine months of 2018. Also, in~~ the first quarter of 2019, in ~~preparation for~~anticipation of the business separation activities to align ~~the~~TDCC's specialty products business with DowDuPont, UCC issued a stock dividend to TDCC for 63.4 percent of its ownership interest in ~~DIHC,~~Dow International Holdings Company, a cost method investment, which totaled $401 million. UCC also distributed assets and liabilities aligned with ~~the~~TDCC's specialty products business for an additional dividend to TDCC of $71 million. ~~On October 23, 2019, the UCC Board~~

Table of ~~Directors approved a dividend to TDCC of $120 million, payable on or before December 27, 2019.~~Contents

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.

Table of 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 quarter of ~~2019.~~2020. For a current status of asbestos-related matters, see Note 810 to the Consolidated Financial Statements.

Environmental Proceedings

On October 23, 2019, UCC received a proposed Agreed Order from the Texas Commission on Environmental Quality (“TCEQ”) relating to emissions of ethylene oxide from a process leak at the Corporation's manufacturing facility in Seadrift, Texas. The proposed Agreed Order included an administrative penalty of $800,000. On December 30, 2019, the TCEQ sent a revised Agreed Order reducing the penalty to $600,000 based on UCC's corrective actions and allowing for half of the administrative penalty amount to be used to fund a Supplemental Environmental Project. UCC paid $300,000 in January 2020. The revised Agreed Order was approved by the TCEQ Commissioners on July 1, 2020 and UCC remitted final payment on July 29, 2020.

ITEM 1A. RISK FACTORS

~~There were~~Since December 31, 2019, there have been no material changes into the Corporation's Risk Factors, except as noted below:

Public Health Crisis: A public health crisis or global outbreak of disease, including the pandemic caused by coronavirus disease 2019 (“COVID-19”) has had, and could continue to have, a negative effect on the Corporation's manufacturing operations, supply chain and workforce, creating disruptions that could continue to have a substantial negative impact on the Corporation’s results of operations, financial condition and cash flows.

UCC sells substantially all of its products to TDCC in order to simplify the worldwide customer interface process and, as a result, the Corporation is subject to many of the same global risk factors facing TDCC, including those presented by COVID-19. The pandemic caused by COVID-19 has impacted all geographic regions where UCC's products are produced and sold. The global, regional and local spread of COVID-19 has resulted in significant global mitigation measures, including government-directed quarantines, social distancing and shelter-in-place mandates, travel restrictions and/or bans, and restricted access to certain corporate facilities and manufacturing sites. Uncertainty with respect to the ~~third quarter~~severity and duration of ~~2019.~~the COVID-19 pandemic, coupled with oil price fluctuations due in part to the global spread of COVID-19 and the continued increase in global cases, has contributed to the volatility of financial markets. While the severity and duration of the COVID-19 pandemic in key geographic regions and end-markets cannot be reasonably estimated at this time, impacts to the Corporation include, but are not limited to: a decrease in demand for certain Corporation products; price declines; reduced profitability; supply chain disruptions impeding the Corporation’s ability to ship and/or receive product; temporary idling or permanent closure of select manufacturing facilities and/or manufacturing assets; asset impairment charges; interruptions or limitations to manufacturing operations imposed by local, state or federal governments; workforce absenteeism and distraction; labor shortages; increased cyber security risk and data accessibility disruptions due to remote working arrangements; and workforce reductions. Additional risks may include, but are not limited to: shortages of key raw materials; additional asset impairment charges; increased obligations related to the Corporation’s pension and other postretirement benefit plans; and deferred tax valuation allowances. Disruptions and market volatility resulting from the COVID-19 pandemic have had and could continue to have a substantial negative impact on the Corporation’s results of operations, financial condition and cash flows.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

Table of Contents

ITEM 6. EXHIBITS


	EXHIBIT NO.			DESCRIPTION

	~~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 ~~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:	October ~~25, 2019~~23, 2020
		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



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



~~Title of each class~~	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~N/A~~	~~N/A~~	~~N/A~~


		PAGE

			~~PAGE~~

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements.	4

	Consolidated Statements of 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..	20

	Results of ~~Operations~~Operations..	2022

	Other ~~Matters~~Matters..	2224

Item 3.	Quantitative and Qualitative Disclosures About Market ~~Risk~~Risk..	2326

Item 4.	Controls and ~~Procedures~~Procedures..	2326

PART II - OTHER INFORMATION

Item 1.	Legal ~~Proceedings~~Proceedings..	2427

Item 1A.	Risk ~~Factors~~Factors..	2427

Item 4.	Mine Safety ~~Disclosures~~Disclosures..	2427

Item 6.	~~Exhibits~~Exhibits..	2428

SIGNATURES				2529


In millions, except share amounts (Unaudited)	Sep 30, 2019			Dec 31, 2018			In millions, except share amounts (Unaudited)	Sep 30, 2020		Dec 31, 2019
Assets							Assets
Current Assets							Current Assets
Cash and cash equivalents	$	13		$	13		Cash and cash equivalents	$	11	$	11
Accounts receivable:							Accounts receivable:
Trade (net of allowance for doubtful receivables 2019: $-; 2018: $-)	30			21
Trade (net of allowance for doubtful receivables 2020: $0; 2019: $0)							Trade (net of allowance for doubtful receivables 2020: $0; 2019: $0)	16		26
Related companies	745			1,029			Related companies	694		658
Other	19			31			Other	21		17
Income taxes receivable	299			330			Income taxes receivable	336		337
Notes receivable from related companies	1,485			1,281			Notes receivable from related companies	1,498		1,505
Inventories	250			304			Inventories	231		247
Other current assets	25			15			Other current assets	25		20
Total current assets	2,866			3,024			Total current assets	2,832		2,821
Investments							Investments
Investments in related companies	238			639			Investments in related companies	237		238

Other investments	21			23			Other investments	22		22
Noncurrent receivables	96			67			Noncurrent receivables	122		118
Noncurrent receivables from related companies	67			54			Noncurrent receivables from related companies	66		66
Total investments	422			783			Total investments	447		444
Property							Property
Property	7,410			7,430			Property	7,289		7,247
Less accumulated depreciation	6,040			5,982			Less accumulated depreciation	5,970		5,878
Net property	1,370			1,448			Net property	1,319		1,369
Other Assets							Other Assets
Intangible assets (net of accumulated amortization 2019: $90; 2018: $87)	23			25
Intangible assets (net of accumulated amortization 2020: $96; 2019: $90)							Intangible assets (net of accumulated amortization 2020: $96; 2019: $90)	18		22
Operating lease right-of-use assets	93			—			Operating lease right-of-use assets	81		89
Deferred income tax assets	474			463			Deferred income tax assets	486		507

Deferred charges and other assets	26			34			Deferred charges and other assets	29		26
Total other assets	616			522			Total other assets	614		644
Total Assets	$	5,274		$	5,777		Total Assets	$	5,212	$	5,278
Liabilities and Equity							Liabilities and Equity
Current Liabilities							Current Liabilities
Notes payable to related companies	$	32		$	28		Notes payable to related companies	$	18	$	32
Notes payable - other	2			1			Notes payable - other	11		6
Long-term debt due within one year	1			1			Long-term debt due within one year	1		1
Accounts payable:							Accounts payable:
Trade	207			247			Trade	214		218
Related companies	313			515			Related companies	324		386
Other	11			39			Other	26		10
Dividends payable to parent	112			—

Operating lease liabilities - current	18			—			Operating lease liabilities - current	15		16
Income taxes payable	24			24			Income taxes payable	25		25
Asbestos-related liabilities - current	105			118			Asbestos-related liabilities - current	90		105
Accrued and other current liabilities	169			163			Accrued and other current liabilities	156		126
Total current liabilities	994			1,136			Total current liabilities	880		925
Long-Term Debt	472			473			Long-Term Debt	390		473
Other Noncurrent Liabilities							Other Noncurrent Liabilities
Pension and other postretirement benefits - noncurrent	949			979			Pension and other postretirement benefits - noncurrent	1,110		1,154
Asbestos-related liabilities - noncurrent	1,087			1,142			Asbestos-related liabilities - noncurrent	1,027		1,060
Operating lease liabilities - noncurrent	75			—			Operating lease liabilities - noncurrent	67		74
Other noncurrent obligations	184			132			Other noncurrent obligations	192		194
Total other noncurrent liabilities	2,295			2,253			Total other noncurrent liabilities	2,396		2,482
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	2,892			3,338			Retained earnings	3,008		2,922
Accumulated other comprehensive loss	(1,517		)	(1,561		)	Accumulated other comprehensive loss	(1,603)		(1,665)
Union Carbide Corporation's stockholder's equity	1,513			1,915			Union Carbide Corporation's stockholder's equity	1,546		1,398

Total Liabilities and Equity	$	5,274		$	5,777		Total Liabilities and Equity	$	5,212	$	5,278


	Nine Months Ended							Nine Months Ended
In millions (Unaudited)	Sep 30, 2019			Sep 30, 2018			In millions (Unaudited)	Sep 30, 2020		Sep 30, 2019
Operating Activities							Operating Activities
Net income attributable to Union Carbide Corporation	$	477		$	743		Net income attributable to Union Carbide Corporation	$	273	$	477
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	148			157			Depreciation and amortization	159		148
Provision (credit) for deferred income tax	(23		)	28			Provision (credit) for deferred income tax	3		(23)
Net loss on sales of property and investments	1			—
Restructuring and asset related charges - net	79			3

Net (gain) loss on sales of property and investments							Net (gain) loss on sales of property and investments	(87)		1

Restructuring charges and asset related charges - net							Restructuring charges and asset related charges - net	15		79
Net periodic pension benefit cost	39			33			Net periodic pension benefit cost	41		39
Pension contributions	(2		)	(42		)	Pension contributions	(2)		(2)
Net loss on early extinguishment of debt							Net loss on early extinguishment of debt	19		0

Changes in assets and liabilities:							Changes in assets and liabilities:
Accounts and notes receivable	7			25			Accounts and notes receivable	11		7
Related company receivables	39			(86		)	Related company receivables	(29)		39
Inventories	34			(25		)	Inventories	15		34
Accounts payable	(58		)	12			Accounts payable	14		(58)
Related company payables	(195		)	(112		)	Related company payables	(76)		(195)
Asbestos-related payments	(68		)	(79		)	Asbestos-related payments	(49)		(68)
Other assets and liabilities	14			(63		)	Other assets and liabilities	(21)		14
Cash provided by operating activities	492			594			Cash provided by operating activities	286		492
Investing Activities							Investing Activities
Capital expenditures	(145		)	(174		)	Capital expenditures	(99)		(145)
Change in noncurrent receivable from related company	(13		)	—			Change in noncurrent receivable from related company	0		(13)

Proceeds from sales of property	1			—			Proceeds from sales of property	98		1

Proceeds from sales of investments	3			—			Proceeds from sales of investments	0		3
Cash used for investing activities	(154		)	(174		)	Cash used for investing activities	(1)		(154)
Financing Activities							Financing Activities

Dividends paid to parent	(338		)	(423		)	Dividends paid to parent	(187)		(338)
Changes in short-term notes payable	1			4			Changes in short-term notes payable	5		1
Payments on long-term debt	(1		)	(1		)	Payments on long-term debt	(84)		(1)
Transaction financing, debt issuance and other costs							Transaction financing, debt issuance and other costs	(19)		0
Cash used for financing activities	(338		)	(420		)	Cash used for financing activities	(285)		(338)
Summary							Summary
Increase in cash and cash equivalents	—			—			Increase in cash and cash equivalents	0		0
Cash and cash equivalents at beginning of period	13			13			Cash and cash equivalents at beginning of period	11		13
Cash and cash equivalents at end of period	$	13		$	13		Cash and cash equivalents at end of period	$	11	$	13


Note		Page
1	Consolidated Financial Statements	9
2	Recent Accounting Guidance	10
3	Business Separation	10
4	Revenue	10
5	Divestitures	11
6	Restructuring and Asset Related Charges - Net	11
7	Inventories	12
8	Intangible Assets	13
9	Notes Payable and Long-Term Debt	14
10	Commitments and Contingent Liabilities	15
11	Leases	16
12	Accumulated Other Comprehensive Loss	18
13	Pension and Other Postretirement Benefit Plans	18
14	Fair Value Measurements	19
15	Related Party Transactions	19



Intangible Assets	Sep 30, 2019							Dec 31, 2018
In millions	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Intangible assets with finite lives:
Licenses and developed technology	$	33	$	(33	)	$	—	$	33	$	(33	)	$	—
Software	80		(57		)	23		79		(54		)	25
Total intangible assets	$	113	$	(90	)	$	23	$	112	$	(87	)	$	25



Estimated Amortization Expense
In millions
2019	$	7
2020	$	8
2021	$	6
2022	$	4
2023	$	2
2024	$	1


Notes Payable	Sep 30, 2020			Dec 31, 2019
In millions
Notes payable to banks and other lenders	$	11		$	6
Notes payable to related companies	18			32
Total notes payable	$	29		$	38
Period-end average interest rates	1.22		%	1.88		%


Long-Term Debt	2020 Average Rate		Sep 30, 2020		2019 Average Rate		Dec 31, 2019
In millions
Promissory notes and debentures:
Debentures due 2023	7.875	%	$	129	7.875	%	$	175
Debentures due 2025	6.79	%	12		6.79	%	12
Debentures due 2025	7.50	%	113		7.50	%	150
Debentures due 2096	7.75	%	135		7.75	%	135
Finance lease obligations ¹			5				6
Unamortized debt discount and issuance costs			(3)				(4)
Long-term debt due within one year			(1)				(1)
Total long-term debt			$	390			$	473


Maturities of Long-Term Debt for Next Five Years at Sep 30, 2020
In millions
2020	$	0
2021	$	1
2022	$	2
2023	$	131
2024	$	1
2025	$	125



Lease Cost	Three Months Ended Sep 30, 2019		Nine Months Ended Sep 30, 2019
In millions	Three Months Ended Sep 30, 2019		Nine Months Ended Sep 30, 2019
Operating lease cost	$	7	$	18
Short-term lease cost	6		20
Variable lease cost	1		3
Amortization of right-of-use assets - finance	—		1
Total lease cost	$	14	$	42


Other Lease Information	Nine Months Ended
In millions	Sep 30, 2020		Sep 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	14	$	18
Financing cash flows for finance leases	$	1	$	1



Asbestos-Related Claim Activity	2019		2018
Claims unresolved at Jan 1	12,780		15,427
Claims filed	4,396		5,279
Claims settled, dismissed or otherwise resolved	(5,763	)	(7,861	)
Claims unresolved at Sep 30	11,413		12,845
Claimants with claims against both UCC and Amchem	(3,935	)	(4,778	)
Individual claimants at Sep 30	7,478		8,067