UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D C 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-1463
UNION CARBIDE CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-1421730
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
39 Old Ridgebury Road, Danbury, CT 06817-0001
(Address of principal executive offices) (Zip Code)
203-794-2000
Registrant's telephone number, including area code
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No _______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1997
Common Stock, $1 par value 125,483,309 shares
Total number of sequentially numbered pages in this filing,
including exhibits thereto: 20
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Financial Statements
Condensed Consolidated Statement of Income -
Union Carbide Corporation and Subsidiaries -
Quarter Ended March 31, 1997 and 1996........................ 3
Condensed Consolidated Balance Sheet - Union Carbide
Corporation and Subsidiaries - March 31, 1997 and
December 31, 1996............................................ 4
Condensed Consolidated Statement of Cash Flows -
Union Carbide Corporation and Subsidiaries -
Quarter Ended March 31, 1997 and 1996......................... 5
Notes to Condensed Consolidated Financial Statements -
Union Carbide Corporation and Subsidiaries................... 6-9
Discussion and Analysis of Results of Operations
and Financial Condition........................................ 10-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................... 14
Item 2. Sales of Unregistered Securities........................ 14
Item 4. Submission of Matters to a Vote of Security Holders..... 14-15
Item 6. Exhibits and Reports on Form 8-K........................ 16
Signature........................................................ 17
Exhibit Index.................................................... 18
PART I. FINANCIAL INFORMATION
UNION CARBIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Millions of dollars
(Except per share figures)
Quarter ended March 31,
1997 1996
NET SALES $ 1,638 $ 1,501
Cost of sales, exclusive of depreciation and
amortization 1,231 1,099
Research and development 40 36
Selling, administration and other expenses(a) 80 81
Depreciation and amortization 82 75
Partnership income 35 26
Other income - net 7 23
INCOME BEFORE INTEREST EXPENSE AND PROVISION FOR
INCOME TAXES 247 259
Interest expense 19 23
INCOME BEFORE PROVISION FOR INCOME TAXES 228 236
Provision for income taxes 66 66
INCOME OF CONSOLIDATED COMPANIES 162 170
Minority interest 3 (1)
Loss from corporate investments carried at equity 2 14
NET INCOME 157 157
Preferred stock dividend, net of income taxes 2 2
NET INCOME - COMMON STOCKHOLDERS $ 155 $ 155
Earnings per common share
Primary $ 1.14 $ 1.11
Fully diluted $ 1.03 $ 1.01
Cash dividends declared per common share $ 0.1875 $ 0.1875
(a) Selling, administration and other expenses include:
Selling $ 31 $ 32
Administration 29 31
Other expenses 20 18
$ 80 $ 81
The Notes to Condensed Consolidated Financial Statements on Pages 6 through 9
should be read in conjunction with this statement.
UNION CARBIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
Millions of dollars
March 31, Dec. 31,
1997 1996
ASSETS
Cash and cash equivalents $ 214 $ 94
Notes and accounts receivable 1,082 1,047
Inventories 553 541
Other current assets 179 191
Total current assets 2,028 1,873
Property, plant and equipment 7,274 7,159
Less: Accumulated depreciation 3,809 3,750
Net fixed assets 3,465 3,409
Companies carried at equity 706 695
Other investments and advances 71 77
Total investments and advances 777 772
Other assets 525 492
Total assets $6,795 $6,546
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 275 $ 268
Short-term debt and current portion of
long-term debt 76 112
Accrued income and other taxes 113 133
Other accrued liabilities 757 765
Total current liabilities 1,221 1,278
Long-term debt 1,494 1,487
Postretirement benefit obligation 471 473
Other long-term obligations 832 811
Deferred credits 316 301
Minority stockholders' equity in consolidated
subsidiaries 278 29
Convertible preferred stock - ESOP 140 144
Unearned employee compensation - ESOP (84) (91)
Stockholders' equity:
Common stock - authorized - 500,000,000 shares
- issued - 154,609,669 shares 155 155
Additional paid-in capital 329 370
Translation and other equity adjustments (51) (33)
Retained earnings 2,760 2,629
Less: Treasury stock, at cost-29,155,611 shares
(28,169,324 shares in 1996) 1,066 1,007
Total stockholders' equity 2,127 2,114
Total liabilities and stockholders' equity $6,795 $6,546
The Notes to Condensed Consolidated Financial Statements on Pages 6 through 9
should be read in conjunction with this statement.
UNION CARBIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Millions of dollars
Quarter ended March 31,
1997 1996
Increase (decrease) in
cash and cash equivalents
OPERATIONS
Net income $ 157 $ 157
Noncash charges (credits) to net income
Depreciation and amortization 82 75
Deferred income taxes 17 32
Other noncash charges (2) -
Net gains on investing transactions - (2)
Increase in working capital(a) (79) (79)
Long-term assets and liabilities 3 30
Cash Flow From Operations 178 213
INVESTING
Capital expenditures (138) (186)
Investments, advances and acquisitions
(excluding cash acquired) (45) (259)
Sale of fixed and other assets - 6
Cash Flow Used for Investing (183) (439)
FINANCING
Change in short-term debt (3 months or less) (35) 9
Proceeds from short-term debt - 10
Repayment of short-term debt - (16)
Proceeds from long-term debt 14 -
Repayment of long-term debt (7) (2)
Issuance of common stock 18 25
Purchase of common stock (73) (78)
Proceeds from subsidiary preferred stock 246 -
Payment of dividends (27) (28)
Other (10) 1
Cash Flow From (Used for) Financing 126 (79)
Effect of exchange rate changes on cash and
cash equivalents (1) -
Change in cash and cash equivalents 120 (305)
Cash and cash equivalents beginning-of-period 94 449
Cash and cash equivalents end-of-period $ 214 $ 144
Cash paid for interest and income taxes
Interest (net of amount capitalized) $ 10 $ 12
Income taxes $ 7 $ 2
_____________
(a) Net change in certain components of working capital (excluding
non-cash expenditures):
(Increase) decrease in current assets
Notes and accounts receivable $ (35) $ (20)
Inventories (12) 38
Other current assets 5 22
Decrease in payables and accruals (37) (119)
Increase in working capital $ (79) $ (79)
The Notes to Condensed Consolidated Financial Statements on Pages 6 through 9
should be read in conjunction with this statement.
UNION CARBIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Consolidated Financial Statements
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments necessary for a
fair statement of the results for the interim periods. These adjustments
consist of only normal recurring adjustments. The accompanying
statements should be read in conjunction with the Notes to Financial
Statements of Union Carbide Corporation and Subsidiaries ("the
corporation" or "UCC") in the 1996 annual report to stockholders.
2. Common Stock
Through March 31, 1997, since inception of its 50 million common share
repurchase program, the corporation repurchased 44.2 million shares
(1.9 million during the first quarter of 1997) at an average effective
price of $33.11 per share. The corporation intends to acquire additional
shares from time to time at prevailing market prices, at a rate consistent
with the combination of corporate cash flow and market conditions.
In conjunction with the corporation's common stock buyback program, put
options were sold in a series of private placements entitling the holders
to sell 11.0 million shares of common stock to UCC, at specified prices
upon exercise of the options. Since inception of this program, through
March 31, 1997, options representing 8.1 million common shares have
expired unexercised, while options representing 2.1 million shares were
exercised for $79 million, or an average price of $37.05 per share.
Options representing 0.8 million shares remain outstanding at March 31,
1997.
Premiums received since the inception of the program recorded as
additional paid-in capital have reduced the average price of repurchased
shares from $33.37 per share to $33.11 per share.
3. Inventories
Millions of dollars
Mar. 31, Dec. 31,
1997 1996
Raw materials and supplies $ 124 $ 114
Work in process 47 54
Finished goods 382 373
$ 553 $ 541
4. Commitments and Contingencies
The corporation has entered into 3 major agreements for the purchase of
ethylene-related products and 2 other purchase agreements in the U.S. and
Canada. The net present value of the fixed and determinable portion of
these obligations at March 31, 1997 totaled $336 million.
The corporation is subject to loss contingencies resulting from
environmental laws and regulations, which include obligations to remove or
remediate the effects on the environment of the disposal or release of
certain wastes and substances at various sites. The corporation has
established accruals in current dollars for those hazardous waste sites
where it is probable that a loss has been incurred and the amount of the
loss can be reasonably estimated. The reliability and precision of the
loss estimates are affected by numerous factors, such as different stages
of site evaluation, the allocation of responsibility among potentially
responsible parties and the assertion of additional claims. The
corporation adjusts its accruals as new remediation requirements are
defined, as information becomes available permitting reasonable estimates
to be made, and to reflect new and changing facts.
At March 31, 1997, the corporation had established environmental remediation
accruals in the amount of $307 million. These accruals have two components,
estimated future expenditures for site investigation and cleanup and
estimated future expenditures for closure and postclosure activities. In
addition, the corporation had environmental loss contingencies of
$134 million.
The corporation has sole responsibility for the remediation of
approximately 40 percent of its environmental sites. These sites are well
advanced in the investigation and cleanup stage. The corporation's
environmental accruals at March 31, 1997 included $221 million for these
sites, of which $90 million was for estimated future expenditures for site
investigation and cleanup and $131 million was for estimated future
expenditures for closure and postclosure activities. In addition,
$68 million of the corporation's environmental loss contingencies related
to these sites. The site with the largest total potential cost to the
corporation is a nonoperating site. Of the above accruals, this site
accounted for $31 million, of which $17 million was for estimated future
expenditures for site investigation and cleanup and $14 million was for
estimated future expenditures for closure and postclosure activities. In
addition, $20 million of the above environmental loss contingencies
related to this site.
The corporation does not have sole responsibility at the remainder of its
environmental sites. All of these sites are in the investigation and
cleanup stage. The corporation's environmental accruals at March 31, 1997
included $86 million for estimated future expenditures for site
investigation and cleanup at these sites. In addition, $66 million of the
corporation's environmental loss contingencies related to these sites.
The largest two of these sites are also nonoperating sites. Of the above
accruals, these sites accounted for $36 million for estimated future
expenditures for site investigation and cleanup. In addition, $13 million
of the above environmental loss contingencies related to these sites.
In 1996, worldwide expenses of continuing operations related to
environmental protection for compliance with Federal, state and local laws
regulating solid and hazardous wastes and discharge of materials to air
and water, as well as for waste site remedial activities, totaled $110
million. Expenses in 1995 and 1994 were $138 million and $153 million,
respectively. While estimates of the costs of environmental protection
for 1997 are necessarily imprecise, the corporation estimates that the
level of these expenses will be somewhat greater than that experienced in
1996.
The corporation has severally guaranteed 45 percent (approximately
$608 million at March 31, 1997) of EQUATE Petrochemical Company's debt and
working capital financing needs until certain completion tests are
achieved; thereafter, a $54 million several guarantee will provide ongoing
support. The corporation also severally guaranteed certain sales volume
targets until EQUATE's sales capabilities are proved. In addition, the
corporation has pledged its shares in EQUATE as security for EQUATE's
debt. The corporation has political risk insurance coverage for its
equity investment and, until the completion tests are concluded,
substantially all of its guarantee of EQUATE's debt.
The corporation had additional contingent obligations at March 31, 1997 of
$59 million, of which $33 million related to guarantees of debt.
The corporation is one of a number of defendants named in approximately
4,500 lawsuits, some of which have more than one plaintiff, involving
silicone breast implants. The corporation was not a manufacturer of
breast implants but did supply generic bulk silicone materials to certain
manufacturers. Also, the corporation in 1990 acquired and in 1992
divested the stock of a small specialty silicones company that, among
other things, supplied silicone gel intermediates and silicone
dispersions for breast implants. In 1993, most of the suits that were
brought in Federal courts were consolidated for pre-trial purposes in the
United States District Court, Northern District of Alabama.
In 1995, after the District Court rejected an initial settlement proposal,
certain defendants, including the corporation, proposed, and the court
approved, a revised settlement program. While the corporation cannot
predict the number of claimants who will participate in the settlement,
based on sample data prepared under supervision of the court, the
corporation estimates that its maximum expenditures under the revised
agreement should not exceed $100 million prior to insurance recovery.
Although insurance coverage is subject to issues as to scope and
application of policies, retention limits, exclusions and policy limits,
and the insurers have reserved their right to deny coverage, the
corporation believes that after probable insurance recoveries neither the
settlement nor litigation outside the settlement will have a material
adverse effect on the consolidated financial position of the corporation.
In addition to the above, the corporation and its consolidated subsidiaries
are involved in a number of legal proceedings and claims with both private
and governmental parties. These cover a wide range of matters including,
but not limited to, product liability; governmental regulatory proceedings;
health, safety and environmental matters; employment; patents; contracts
and taxes. In some of these legal proceedings and claims, the cost of
remedies that may be sought or damages claimed is substantial.
The corporation has recorded nonenvironmental litigation accruals of
$192 million, and related insurance recovery receivables of $135 million.
At March 31, 1997, the corporation had nonenvironmental litigation loss
contingencies of $45 million.
While it is impossible at this time to determine with certainty the
ultimate outcome of any legal proceedings and claims referred to in this
note, management believes that adequate provisions have been made for
probable losses with respect thereto and that such ultimate outcome, after
provisions therefor, will not have a material adverse effect on the
consolidated financial position of the corporation, but could have a
material effect on consolidated results of operations in a given quarter
or year. Should any losses be sustained in connection with any of such
legal proceedings and claims, in excess of provisions therefor, they will
be charged to income in the future.
5. Minority Interest
On January 30, 1997, a newly formed real estate investment trust
subsidiary issued $250 million of preferred stock bearing a current
dividend yield of 14 percent for 10 years and 1 percent thereafter.
Domestic real estate with a fair market value of approximately
$500 million will be mortgaged in conjunction with this transaction. The
preferred stock may be redeemed if, as a result of a change in tax laws,
rules or regulations, dividends on the preferred stock or interest paid on
the mortgage note is not fully deductible for Federal income tax purposes.
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Overview
The corporation reported first quarter 1997 net income available to common
stockholders of $155 million, or $1.03 per share, fully diluted ($1.14 per
share, primary). For the corresponding quarter in 1996 the corporation
reported earnings of $155 million, or $1.01 per share, fully diluted ($1.11
per share, primary).
The corporation's first quarter earnings were the same as in the first quarter
of 1996 and reflected the offsetting effects of increased sales volumes,
decreasing average selling prices for most chemical products and increasing
raw material and energy costs. Notwithstanding significantly increased sales
volumes, the Specialties & Intermediates segment experienced a reduction in
operating profit largely due to lower average selling prices attributable in
part to the negative impact on international sales of an increased U.S. dollar
currency exchange rate. Basic Chemicals & Polymers reported an improvement in
operating profit over the first quarter of 1996 as a result of increased
volumes and increased average selling prices for polyethylene and
polypropylene resins. Ethylene oxide/glycol prices remained at levels well
below the first quarter of 1996.
In the second quarter of 1997, the company believes average selling prices for
Specialties & Intermediates should increase while volumes are expected to
remain at levels achieved in the first quarter of the year. Propylene costs
are expected to increase moderately. In the Basic Chemicals & Polymers
segment, the corporation's outlook includes volumes at levels achieved in the
first quarter of this year, increased average selling prices and reduced raw
material costs which, if realized, would result in improved margins.
Results of Operations
Sales increased 9.1 percent in the first quarter, compared to the same period
of 1996, as the result of a 13.3 percent increase in volume being partially
offset by a 3.6 percent decline in average selling prices.
The corporation's variable margin (revenues less variable manufacturing and
distribution costs) for the first quarter of 1997 was 42.2 percent, down
3.2 percentage points compared to 45.4 percent in the first quarter of 1996,
principally due to higher feedstock costs and lower prices for ethylene
oxide/glycol and other products. The current quarter's gross margin (variable
margin less fixed manufacturing and distribution costs) as a percentage of
sales declined 2.0 percentage points, from 26.8 percent to 24.8 percent, in
comparison to the first quarter of 1996, reflecting higher feedstock costs
coupled with stable fixed manufacturing and distribution costs.
Industry Segments
The company's operations are classified into two main business segments,
Specialties & Intermediates and Basic Chemicals & Polymers. The Specialties &
Intermediates segment includes the corporation's specialty chemicals and
polymers product lines, licensing and solvents and chemical intermediates.
The Basic Chemicals & Polymers segment includes the corporation's ethylene
and propylene manufacturing operations as well as the production of first
level ethylene and propylene derivatives - polyethylene, polypropylene,
ethylene oxide and ethylene glycol. The corporation's noncore operations and
financial transactions are included in the Other segment.
Information about the corporation's operations in its business segments for
the first quarter of 1997 and 1996 follows. Sales of the Basic Chemicals &
Polymers segment include intersegment sales, principally ethylene oxide, which
are made at the estimated market value of the products transferred. Operating
profit represents income before interest expense and provision for income
taxes.
Millions of dollars
Quarter ended March 31,
1997 1996
Sales
Specialties & Intermediates $1,122 $1,077
Basic Chemicals & Polymers 597 519
Intersegment Eliminations (81) (95)
Total $1,638 $1,501
Operating Profit
Specialties & Intermediates $ 184 $ 193
Basic Chemicals & Polymers 62 58
Other 1 8
Total $ 247 $ 259
Depreciation and Amortization
Specialties & Intermediates $ 51 $ 46
Basic Chemicals & Polymers 31 29
Total $ 82 $ 75
Capital Expenditures
Specialties & Intermediates $ 88 $ 134
Basic Chemicals & Polymers 50 52
Total $ 138 $ 186
Sales of the Specialties & Intermediates segment increased 4.2 percent to
$1,122 million in the first quarter of 1997 over that of 1996. Operating
profit for the first quarter of 1997 was $184 million, versus $193 million for
the comparable quarter of 1996. Volume increased by 13.5 percent, while
average selling prices declined by 8.2 percent due in part to the negative
impact on international sales of a stronger U.S. dollar currency exchange
rate. Operating profit declined versus the comparable quarter of 1996 due to
lower selling prices and an increase in the cost of propylene, the segment's
main raw material.
Sales of the Basic Chemicals & Polymers segment increased 15.0 percent to
$597 million in the first quarter of 1997 from $519 million in the comparable
quarter of 1996. The sales increase was related to a 13.0 percent increase in
customer volume coupled with a 7.8 percent increase in average selling prices.
Average prices for polyethylene and polypropylene resins increased
significantly versus the first quarter of 1996, more than offsetting a decline
in ethylene oxide/glycol prices. Operating profit for the first quarter of
1997 improved to $62 million from $58 million.
Selling, administration and other expenses were $80 million in the first
quarter of 1997, versus $81 million in the first quarter of 1996.
Partnership income increased $9 million, or 34.6 percent, in the first quarter
of 1997 versus the comparable quarter in 1996 due to increased earnings of
Petromont related to increases in polyethylene pricing and an increase of the
earnings of UOP due to normal variations in quarterly sales activity.
Other income - net declined by $16 million from the first quarter of 1996,
largely due to decreased interest income.
Interest expense decreased $4 million in the first quarter of 1997, reflecting
lower interest rates due to first quarter 1997 refinancings and an increase in
capitalized interest associated with the corporation's capital program.
Loss from corporate investments carried at equity declined from $14 million in
the first quarter of 1996 to $2 million in the current quarter. This
improvement is the result of improved Polimeri Europa results partially offset
by an increase in EQUATE's preliminary operating expenses. These expenses are
expected to continue through start-up in the second half of 1997.
Estimates of future expenses related to environmental protection for
compliance with Federal, state and local laws regulating solid and hazardous
wastes and discharge of materials to air and water, as well as for waste site
remedial activities have not changed materially since December 31, 1996. The
reliability and precision of the loss estimates are affected by numerous
factors, such as different stages of site evaluation, the allocation of
responsibility among potentially responsible parties and the assertion of
additional claims. The corporation's environmental exposures are discussed in
more detail in the Commitments and Contingencies footnote to the financial
statements on pages 6 through 9 of this report on Form 10-Q.
The corporation continues to be named as one of a number of defendants in
lawsuits involving silicone gel breast implants. The corporation supplied
bulk silicone materials to certain companies that at various times were
involved in the manufacture of breast implants. These cases are discussed in
more detail in the "Commitments and Contingencies" footnote to the financial
statements on pages 6 through 9 of this report on Form 10-Q.
Accounting Changes
Statement of Financial Accounting Standards No. 128 ("Statement 128"),
"Earnings Per Share", will require presentation of "basic" and "diluted"
earnings per share for periods ending after December 15, 1997. Had
Statement 128 been in effect, "basic" and "diluted" earnings per common share
would have been $1.17 and $1.03, respectively, in the first quarter of 1997
($1.15 and $1.01 per common share, respectively, in the first quarter of
1996).
Financial Condition - March 31, 1997
Cash flow from operations for the first quarter of 1997 was $178 million, down
from $213 million in the first quarter of 1996, principally caused by a
decline in deferred income taxes and an increase in undistributed earnings of
companies carried at equity.
Cash flow used for investing totaled $183 million, down from $439 million in
the comparable period of 1996. The majority of this decline is due to
decreases of $48 million in capital expenditures and $214 million in
investments, advances and acquisitions. Major capital projects in progress in
the first quarter of 1997 included a new CARBOWAX polyethylene glycol and
TERGITOL surfactants facility, an ethanolamine unit and an olefins expansion,
all at Taft, La., as well as an upgrade of information technology
infrastructure. Capital expenditures are expected to approximate 1996 levels
by the end of 1997. Major capital projects in 1996 included an ethylene
propylene rubber facility at Seadrift, Tex., as well as new cogeneration
facilities at Texas City, Tex. and Taft, La., and an upgrade of information
technology infrastructure. During the first quarter of 1997 the corporation
made an additional investment of $12 million in EQUATE Petrochemical Company.
Significant investments and acquisitions in the first quarter of 1996 included
the purchases of the polypropylene assets and business of Shell Oil Company
and 95 percent of the outstanding shares of Companhia Alcoolquimica Nacional,
a Brazilian producer of vinyl acetate monomer.
Cash flow from financing was $126 million for the first quarter of 1997, as
opposed to cash flow used by financing of $79 million for the quarter ended
March 31, 1996. The 1997 quarter included common stock repurchases of
1.9 million shares for $73 million under the existing common stock repurchase
program. Cash dividends totaled $27 million, while debt was reduced by
$28 million.
On January 30, 1997, a newly formed real estate investment trust subsidiary
issued $250 million of preferred stock bearing a current dividend yield of
14 percent for 10 years and 1 percent thereafter,
The corporation's ratio of debt to total capital decreased to 39.5 percent at
March 31, 1997 from 42.7 percent at December 31,1996. At March 31, 1997 there
were no outstanding borrowings under the existing major bank credit agreement
aggregating $1 billion.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 4 to the corporation's consolidated financial statements
on pages 6 through 9 of this report on Form 10-Q.
Item 2. Sales of Unregistered Securities
During the first quarter of 1997, put options were sold to
institutional investors in a series of private placements exempt from
registration under Section 4(2) of the Securities Act of 1933,
entitling the holders to sell 800,000 shares of Union Carbide
Corporation common stock to the corporation, at $45.00 per share.
Premiums received for the sales of the options totaled $898,500.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual Meeting - April 23, 1997
(b) Election of Directors
Proxies for the meeting were solicited pursuant to
Regulation 14A. There was no solicitation in opposition to
the management's nominees as listed in the proxy statement.
All of the management's nominees as listed in the proxy
statement were elected, the vote on said proposal being as
follows:
Shares Voted
Directors Shares For Shares Withheld
John J. Creedon 124,524,975 1,577,935
C. Fred Fetterolf 124,834,150 1,268,760
Joseph E. Geoghan 124,937,651 1,165,259
Thomas P. Gerrity 124,919,086 1,183,824
Rainer E. Gut 123,445,515 2,657,395
Vernon E. Jordan, Jr. 124,191,371 1,911,539
William H. Joyce 124,664,664 1,438,246
Robert D. Kennedy 124,743,052 1,359,858
Ronald L. Kuehn, Jr. 124,890,526 1,212,384
Rozanne L. Ridgway 124,807,819 1,295,091
James M. Ringler 124,891,613 1,211,297
William S. Sneath 122,358,810 3,744,100
Election required a plurality of the common and ESOP shares
voted.
(c) Other matters voted upon.
Proposal to Ratify the Appointment of Auditors
Shareholders ratified the appointment of KPMG Peat Marwick LLP
to conduct the annual audit of the financial statements of the
corporation and its consolidated subsidiary companies for the
year ending December 31, 1997.
The vote was:
FOR - 124,739,670 shares or 99.46 percent of the shares voted.
AGAINST - 674,785 shares or 0.54 percent of the shares voted.
ABSTAIN - 688,455 shares.
Ratification required an affirmative vote of a majority of the
common and ESOP shares voted.
Proposal to Adopt the 1997 Union Carbide Long-Term Incentive
Plan
Shareholders approved and authorized the 1997 Union Carbide
Long-Term Incentive Plan.
The vote was:
FOR - 104,646,685 shares or 73.41 percent of the shares
outstanding (83.78 percent of the shares voted).
AGAINST - 20,257,820 shares or 14.21 percent of the shares
outstanding (16.22 percent of the shares voted).
ABSTAIN - 1,198,405 shares.
Approval required an affirmative vote of a majority of the
common and ESOP shares outstanding.
Proposal to Adopt the 1997 Stock Option Plan for Non-Employee
Directors of Union Carbide Corporation
Shareholders approved and authorized the 1997 Stock Option Plan
for Non-Employee Directors of Union Carbide Corporation.
The vote was:
FOR - 115,337,118 shares or 80.91 percent of the shares
outstanding (92.60 percent of the shares voted).
AGAINST - 9,222,735 shares or 6.47 percent of the shares
outstanding (7.40 percent of the shares voted).
ABSTAIN - 1,543,057 shares.
Approval required an affirmative vote of a majority of the
common and ESOP shares outstanding.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The following exhibits are filed as part of this report:
11 - Computation of Earnings Per Share
27 - Financial Data Schedule.
(b) The corporation filed the following reports on Form 8-K for the
three months ended March 31, 1997.
(1) Form 8-K dated January 20, 1997, contained the corporation's
press release dated January 20, 1997.
(2) Form 8-K dated January 22, 1997, contained the Distribution
Agreement dated January 22, 1997 among Registrant, Credit
Suisse First Boston Corporation, Morgan Stanley & Co.
Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation, the Bond Resolution and the Forms of the Fixed
and Floating Rate Notes related to the corporation's Medium
Term Notes program.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION CARBIDE CORPORATION
(Registrant)
Date: May 9, 1997 By: /s/John K. Wulff
JOHN K. WULFF
Vice-President, Chief
Financial Officer and
Controller
EXHIBIT INDEX
Exhibit Page
No. Exhibit No.
11 Computation of Earnings Per Share 19
27 Financial Data Schedule 20
Exhibit 11
UNION CARBIDE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In millions of dollars, except per share amounts)
Quarter Ended March 31,
1997 1996
Earnings Per Share - Primary
Net income $ 157 $ 157
Less: Preferred stock dividend 2 3
Appreciation on redeemed preferred stock 6 -
Net income for primary income calculation $ 149 $ 154
Weighted average number of common
and common equivalent shares applicable
to primary earnings per share calculation
Weighted average number of shares outstanding 126,406,832 134,502,414
Dilutive effect of stock options 4,227,498 4,739,654
130,634,330 139,242,068
Earnings per share - primary $ 1.14 $ 1.11
Earnings Per Share - Fully Diluted
Net income for primary income calculation $ 149 $ 154
Add back: Preferred stock dividend 2 3
Net income for fully diluted income calculation $ 151 $ 157
Weighted average number of common
and common equivalent shares applicable to
fully diluted earnings per share calculation
Weighted average number of shares outstanding 126,406,832 134,502,414
Dilutive effect of stock options 4,227,498 5,158,254
Shares issuable upon conversion of UCC
convertible preferred stock 15,853,095 16,200,160
146,487,425 155,860,828
Earnings per share - fully diluted $ 1.03 $ 1.01
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNION
CARBIDE CORPORATION'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000100790
<NAME> UNION CARBIDE CORPORATION
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 214
<SECURITIES> 0
<RECEIVABLES> 1082
<ALLOWANCES> 0
<INVENTORY> 553
<CURRENT-ASSETS> 2028
<PP&E> 7274
<DEPRECIATION> 3809
<TOTAL-ASSETS> 6795
<CURRENT-LIABILITIES> 1221
<BONDS> 1494
140
0
<COMMON> 155
<OTHER-SE> 1972
<TOTAL-LIABILITY-AND-EQUITY> 6795
<SALES> 1638
<TOTAL-REVENUES> 1638
<CGS> 1231
<TOTAL-COSTS> 1231
<OTHER-EXPENSES> 122<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19
<INCOME-PRETAX> 228
<INCOME-TAX> 66
<INCOME-CONTINUING> 157
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 157
<EPS-PRIMARY> 1.14
<EPS-DILUTED> 1.03
<FN>
<F1>OTHER EXPENSES ARE EQUAL TO RESEARCH AND DEVELOPMENT OF 40 AND DEPRECIATION AND
AMORTIZATION OF 82.
</FN>
</TABLE>
