SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
October 25, 1999
UNION CARBIDE CORPORATION
(Exact name of registrant as specified in its charter)
New York 1-1463 13-1421730
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
39 Old Ridgebury Rd, Danbury, CT 06817-0001
(Address of principal executive offices) (Zip code)
Registrant's telephone number,
including area code 203-794-2000
Total number of sequentially numbered pages in this filing,
including exhibits thereto: 11
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Item 5. OTHER EVENTS.
See Union Carbide Corporation's press release dated October 25,
1999 accompanying this report as Exhibit 99.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99. Press release, October 25, 1999.
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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 hereunto duly authorized.
Date: October 25, 1999
UNION CARBIDE CORPORATION
By /s/J. Macdonald
J. Macdonald
Assistant Secretary
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EXHIBIT INDEX
Exhibits
99. Press release, dated October 25, 1999.
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UNION CARBIDE CORPORATION
NEWS RELEASE
CONTACT: Sean S. Clancy
(203) 794-6976
UNION CARBIDE REPORTS 3rd QUARTER EARNINGS
DANBURY, Conn., Oct. 25 -- Union Carbide Corporation (UCC) today
reported third quarter 1999 earnings of $0.57 per diluted share,
including a $0.21 per share gain from a litigation settlement, compared
to $0.55 per diluted share in the third quarter of 1998. The 1998 third
quarter earnings included a net loss of $0.28 per diluted share related
to the corporation's Aspell partnership and a net gain of $0.53 per
diluted share from a litigation settlement.
In addition, the corporation reported that it has restated net
earnings for the first and second quarters of 1999 upward by $6 million
($0.04 per diluted share) and $7 million ($0.05 per diluted share),
respectively. The fourth quarter of 1998 earnings were also understated
by $2 million, after tax ($0.01 per diluted share), the adjustment for
which has been included in the third quarter of 1999. These adjustments
correct an overstatement of cost of sales of $22 million ($15 million,
after tax). The overstatement was the result of human error associated
with a work process change in conjunction with Union Carbide's
enterprise-wide information systems implementation. The overstatement
did not impact cash flow. As restated, diluted earnings per share for
the second quarter of 1999 were $0.46, including a net gain of $0.06
from a litigation settlement.
Net income for the quarter totaled $77 million, compared to $76
million for last year's third quarter and $63 million, as restated, for
the second quarter of this year. Sales in the third quarter totaled
$1.498 billion, compared to $1.350 billion for the third quarter of 1998
and $1.418 billion for the second quarter of 1999.
"Earnings continue to be affected by higher feedstock prices that
substantially offset higher selling prices. Licensing income declined
from second quarter levels, exclusive of litigation gains reported in
both quarters," said UCC Chairman and CEO William H. Joyce. "On the
positive side, volumes remained high. We benefited from improved
performance of corporate investments carried at equity versus the second
quarter, marking the best quarterly equity company profit since 1995."
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1999
P3-01-017
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Partnership income increased primarily because of earnings
improvement at UOP, the corporation's joint venture with AlliedSignal.
While Asia continues to improve, the corporation believes it may take a
couple of years for UOP to fully recover to the record earnings level it
had reached prior to the Asian crisis and problems in other countries.
"Looking into the fourth quarter, price increases are scheduled for
products in our Basic Chemicals & Polymers (BC&P) business. We see
ethylene continuing to be tight, with industry inventory levels rising
slowly but not reaching normal levels before the end of the year. At
this point, it appears that feedstock costs could go somewhat higher.
While forecasting feedstock prices correctly remains difficult, I
believe margins will expand and income will improve for BC&P in the
fourth quarter," Dr. Joyce said. "We expect margins in our Specialties
& Intermediates (S&I) businesses will continue to suffer as cost
increases cannot be fully passed along quickly through increased selling
prices. Excluding litigation gains, licensing should increase slightly
from third quarter levels. Partnership income should decline,
particularly because of expenses associated with cost reduction programs
at UOP, while the equity companies continue to show improved
profitability. On balance, the combination of improved BC&P and equity
company earnings should more than offset any decline in S&I for an
improved Fourth Quarter, excluding litigation gains."
The BC&P segment reported an operating loss of $7 million for the
third quarter of 1999, compared to an operating loss of $42 million,
after restatement, in the prior quarter and an operating loss of $13
million in the 1998 third quarter. Price increases from the first half
of the year began to take hold and led to the improved financial
performance.
The S&I segment reported an operating profit of $134 million for
the third quarter of 1999, including the previously cited litigation
gain of $38 million, compared to $188 million, after restatement, in the
prior quarter and $233 million in the same period a year ago. Dr. Joyce
cited price increases that were insufficient to fully offset increased
raw material costs as a contributor to the decline in operating profit
versus the second quarter of 1999. Furthermore, the BC&P margin
improvements affected S&I revenues because that segment acquires raw
materials from BC&P at market-based transfer prices.
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Net income for the first nine months of 1999 was $197 million, or
$1.45 per diluted share. This compares to $336 million, or $2.41 per
diluted share, for the same period a year ago. Worldwide net sales for
the first nine months of 1999 were $4.318 billion, compared to
$4.370 billion for the first nine months of 1998.
Union Carbide is a worldwide chemicals company with advanced
process technologies and large-scale chemical production facilities.
- Specialties & Intermediates -- Union Carbide is the leading
North American supplier of solvents and intermediates to the paint and
coatings industry; the leading licensor of several technologies; and a
leading supplier of specialty chemicals, polymers and services used in
the personal care products, pharmaceuticals, automotive, wire and cable,
oil and gas and industrial lubricants industries.
- Basic Chemicals & Polymers -- Union Carbide is among the largest
manufacturers of polyethylene, the world's most widely used plastic, and
the technology leader in this industry; and a large manufacturer of
polypropylene, one of the world's fastest-growing, large-volume
plastics. UCC is also the world's largest producer of ethylene oxide
and its derivative ethylene glycol, used for polyester fiber, resin and
film, automotive antifreeze and other products.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions
Of the Private Securities Litigation Act of 1995
Those statements in the preceding pages that do not reflect
historical information are forward-looking statements. Forward-looking
statements include statements concerning anticipated future events or
performance, product prices, cost improvements, raw material costs,
volume increases, inventory levels, margins and earnings expectations.
Naturally, such forward-looking statements are subject to risks and
uncertainties. In addition to all specific assumptions cited, important
factors that could cause actual results to differ materially from those
discussed in such forward-looking statements include: the supply/demand
balance for the corporation's products; customer inventory levels;
competitive pricing pressures; feedstock availability and costs; changes
in industry production capacities and operating rates; currency exchange
rates; interest rates; global economic conditions; disruption in
transportation facilities; competitive technology positions; failure by
the corporation to achieve technology objectives, achieve cost reduction
targets or complete projects on schedule and on budget; and an inability
to obtain new customers or retain existing ones.
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UNION CARBIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
Quarter Ended
Sept. 30, June 30, Sept. 30,
Millions of Dollars, Except Per Share Amounts 1999 1999 1998
(Restated)
<S> <C> <C> <C>
NET SALES $1,498 $1,418 $1,350
Cost of sales, exclusive of depreciation and amortization 1,232 1,105 1,036
Research and development 38 39 34
Selling, administration and other expenses (a) 72 57 78
Depreciation and amortization 103 95 95
Partnership income (loss) 18 (4) (46)
Other income - net 52 27 129
INCOME BEFORE INTEREST EXPENSE AND PROVISION
FOR INCOME TAXES 123 145 190
Interest expense 32 35 28
INCOME BEFORE PROVISION FOR INCOME TAXES 91 110 162
Provision for income taxes 24 28 58
INCOME OF CONSOLIDATED COMPANIES AND
PARTNERSHIPS 67 82 104
Minority interest 2 1 -
Income (loss) from corporate investments
carried at equity 12 (18) (28)
NET INCOME $ 77 $ 63 $ 76
Earnings per common share
Basic - $ 0.58 $ 0.47 $ 0.56
Based on the indicated number of shares 133,464,524 133,088,173 134,286,957
Diluted - $ 0.57 $ 0.46 $ 0.55
Based on the indicated number of shares 136,898,772 136,453,663 137,545,375
(a) Selling $ 24 $ 23 $ 25
Administration 28 16 26
Other expenses 20 18 27
Total $ 72 $ 57 $ 78
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UNION CARBIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
Nine Months Ended
Sept. 30,
Millions of Dollars, Except Per Share Amounts 1999 1998
<S> <C> <C>
NET SALES $4,318 $4,370
Cost of sales, exclusive of depreciation and amortization 3,369 3,284
Research and development 114 107
Selling, administration and other expenses (a) 199 234
Depreciation and amortization 302 288
Partnership income 20 18
Other income - net 93 150
INCOME BEFORE INTEREST EXPENSE AND PROVISION
FOR INCOME TAXES 447 625
Interest expense 98 84
INCOME BEFORE PROVISION FOR INCOME TAXES 349 541
Provision for income taxes 90 168
INCOME OF CONSOLIDATED COMPANIES AND PARTNERSHIPS 259 373
Minority interest 4 2
Loss from corporate investments carried at equity 38 35
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 217 336
Cumulative effect of change in accounting principle (20) -
NET INCOME $ 197 $ 336
Earnings per common share
Basic - Income before cumulative effect of
change in accounting principle $ 1.63 $ 2.47
- Cumulative effect of change in accounting
principle (0.15) -
- Net income $ 1.48 $ 2.47
Based on the indicated number of shares 133,135,986 135,755,666
Diluted - Income before cumulative effect of
change in accounting principle $ 1.59 $ 2.41
- Cumulative effect of change in accounting
principle (0.14) -
- Net income $ 1.45 $ 2.41
Based on the indicated number of shares 136,356,408 139,277,527
(a) Selling $ 70 $ 74
Administration 69 84
Other expenses 60 76
Total $ 199 $ 234
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UNION CARBIDE CORPORATION AND SUBSIDIARIES
SEGMENT DATA
<CAPTION>
Quarter Ended
Sept. 30, June 30, Sept. 30,
Millions of dollars 1999 1999 1998
<S> <C> <C> <C>
SALES
Specialties & Intermediates $1,057 $1,036 $ 995
Basic Chemicals & Polymers 522 436 421
Intersegment Eliminations (81) (54) (66)
Total $1,498 $1,418 $1,350
OPERATING PROFIT (LOSS)
(Restated Quarter Ended June 30, 1999)
Specialties & Intermediates $ 134 $ 188 $ 233
Basic Chemicals & Polymers (7) (42) (13)
Other (4) (1) (30)
Total $ 123 $ 145 $ 190
DEPRECIATION AND AMORTIZATION
Specialties & Intermediates $ 67 $ 62 $ 61
Basic Chemicals & Polymers 36 33 34
Total $ 103 $ 95 $ 95
CAPITAL EXPENDITURES
Specialties & Intermediates $ 58 $ 93 $ 111
Basic Chemicals & Polymers 120 115 103
Total $ 178 $ 208 $ 214
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UNION CARBIDE CORPORATION AND SUBSIDIARIES
SEGMENT DATA
<CAPTION>
Nine Months Ended Sept. 30,
Millions of dollars 1999 1998
<S> <C> <C>
SALES
Specialties & Intermediates $3,127 $3,175
Basic Chemicals & Polymers 1,379 1,419
Intersegment Eliminations (188) (224)
Total $4,318 $4,370
OPERATING PROFIT (LOSS)
Specialties & Intermediates $ 530 $ 601
Basic Chemicals & Polymers (82) 65
Other (1) (41)
Total $ 447 $ 625
DEPRECIATION AND AMORTIZATION
Specialties & Intermediates $ 192 $ 182
Basic Chemicals & Polymers 110 106
Total $ 302 $ 288
CAPITAL EXPENDITURES
Specialties & Intermediates $ 220 $ 332
Basic Chemicals & Polymers 339 239
Total $ 559 $ 571
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