<PAGE>
RULE NO. 424(b)(3)
REGISTRATION NO. 333-88443
[UNION CARBIDE LOGO APPEARS HERE]
To the Stockholders of Union Carbide Corporation:
As you know, Union Carbide Corporation has entered into a merger agreement
with The Dow Chemical Company and a wholly owned subsidiary of Dow. Previously,
we sent to you the proxy statement/prospectus, dated October 5, 1999, which
described the merger and included a notice of special meeting of stockholders
to be held on December 1, 1999 for the purpose of adopting the merger
agreement. As a result of the merger, Union Carbide would become a subsidiary
of Dow and each then outstanding share of Union Carbide common stock would be
converted into 0.537 of a share of Dow common stock. This proxy
statement/prospectus supplement is provided to supplement the information
contained in the proxy statement/prospectus.
Union Carbide has restated net earnings for the first and second quarters of
1999 upward by $6 million ($.04 per diluted share) and $7 million ($.05 per
diluted share), respectively. The fourth quarter of 1998 earnings were also
understated by $2 million, after tax ($.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.
After considering the restatement of net earnings described above at a
meeting on October 24, 1999, your board of directors continues to recommend
that you vote FOR adoption of the merger agreement. Credit Suisse First Boston
Corporation, Union Carbide's financial advisor, has delivered to the board of
directors a letter, dated October 24, 1999 (attached as Annex I hereto), to the
effect that had such restatement of net earnings been included in the
information Credit Suisse First Boston reviewed in connection with issuing its
opinion, dated August 3, 1999 (attached as Annex B to the proxy
statement/prospectus), such restatement would not have resulted in any change
to the conclusion reached in such opinion that, as of the date of such opinion,
the exchange ratio provided for in the merger was fair to the holders of Union
Carbide common stock from a financial point of view. We encourage you to read
this letter carefully for a description of the matters considered and
limitations on the review undertaken with respect to this letter.
Your vote is very important. The affirmative vote of holders of two-thirds
of the outstanding shares of Union Carbide common stock is required to adopt
the merger agreement. Regardless of the number of shares you own, or whether
you plan to attend the December 1, 1999 stockholders meeting, please complete,
sign, date and mail your proxy card or vote your proxy by telephone, fax or the
Internet as soon as possible to make sure your shares are represented at the
meeting. See pages 15-17 of the proxy statement/prospectus for voting
instructions. If you have already returned a proxy card or voted by telephone,
fax or the Internet, no further action is required. If you have not yet voted,
we request that you do so promptly.
Sincerely,
/s/ William H. Joyce
Dr. William H. Joyce
Chairman of the Board, President and
Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this proxy statement/ prospectus supplement or the
proxy statement/prospectus. Any representation to the contrary is a criminal
offense and should be reported immediately to the Securities and Exchange
Commission.
----------------
The date of this proxy statement/prospectus supplement is October 25, 1999.
<PAGE>
This proxy statement/prospectus supplement includes revised financial
information that supersedes certain financial information contained in the
proxy statement/prospectus. This proxy statement/prospectus supplement should
be read in conjunction with the proxy statement/prospectus. If you require an
additional copy of the proxy statement/prospectus, please call D.F. King & Co.,
Inc. at 1-800-994-3227.
In connection with the restatement of net earnings described above, on
October 25, 1999, Union Carbide filed with the Securities and Exchange
Commission Forms 10-Q/A for the quarterly periods ended March 31, 1999 and June
30, 1999, respectively. The proxy statement/prospectus as supplemented by this
proxy statement/prospectus supplement incorporates by reference the information
contained in these Forms 10-Q/A as well as other important business and
financial information about both Dow and Union Carbide that is not included in
or delivered with the proxy statement/prospectus or this proxy
statement/prospectus supplement. See "Additional Information--Where You Can
Find More Information" on pages 61-62 of the proxy statement/prospectus.
2
<PAGE>
The following page supersedes page 4 of the proxy statement/prospectus:
The unaudited equivalent pro forma per share information for Union Carbide
is based on the unaudited pro forma amounts per share for Dow multiplied by the
exchange ratio of 0.537.
The information set forth below is qualified in its entirety by reference
to, and should be read in conjunction with, the historical consolidated
financial information of Dow and Union Carbide incorporated by reference in
this proxy statement/prospectus and the unaudited pro forma combined condensed
financial information included in this proxy statement/prospectus.
<TABLE>
<CAPTION>
Year Ended
Six Months December 31,
Ended --------------------
June 30, 1999 1998 1997 1996
------------- ------ ------- -----
<S> <C> <C> <C> <C>
Dow:
Income per share from continuing
operations:
Basic:
Historical............................. $ 3.35 $ 5.83 $ 7.81 $7.71
Pro forma.............................. 2.97 5.69 8.07 7.75
Diluted:
Historical............................. $ 3.30 $ 5.76 $ 7.70 $7.60
Pro forma.............................. 2.93 5.61 7.79 7.44
Book value per share:
Historical............................. $35.20 $33.91
Pro forma.............................. 35.88 34.93
Cash dividends declared per share:
Historical............................. $ 1.74 $ 3.48 $ 3.36 $3.00
Pro forma.............................. 1.74 3.48 3.36 3.00
Union Carbide:
Income per share before the cumulative
effect of change in accounting principle:
Basic:
Historical............................. $ 1.05 $ 2.98 $ 5.02 $4.43
Equivalent pro forma................... 1.59 3.06 4.33 4.16
Diluted:
Historical............................. $ 1.02 $ 2.91 $ 4.53 $3.90
Equivalent pro forma................... 1.57 3.01 4.18 4.00
Book value per share:
Historical............................. $18.42 $18.46
Equivalent pro forma................... 19.27 18.76
Cash dividends declared per share:
Historical............................. $ 0.45 $ 0.90 $0.7875 $0.75
Equivalent pro forma................... 0.93 1.87 1.80 1.61
</TABLE>
The Meeting
The meeting of Union Carbide's stockholders will take place on Wednesday,
December 1, 1999, in the John C. Creasy Health Education Center, 24 Hospital
Avenue, Danbury, Connecticut, at 10:00 a.m. Eastern time. At the meeting, you
will be asked to vote on adoption of the merger agreement. If you plan to
attend the meeting, you will need to obtain a ticket. Please call the toll-free
number--1-800-934-3350--and a member of Union Carbide's Shareholder Services
Department will process your ticket request.
Vote Required
Each stockholder of record on the record date is entitled to one vote on
each matter submitted to a vote at the meeting for each share of Union Carbide
common stock held. A majority of the shares of Union Carbide common stock
outstanding on the record date represented in person or by proxy
3
<PAGE>
The following page supersedes page 10 of the proxy statement/prospectus:
Selected Historical Financial Information of Union Carbide
Union Carbide is providing the following information to aid your analysis of
the financial aspects of the merger. Union Carbide derived this information
from audited financial statements for the years 1994 through 1998 and unaudited
financial statements for the six months ended June 30, 1998 and 1999. In the
opinion of Union Carbide management, this unaudited interim information
reflects all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations and financial
condition for the six months ended June 30, 1998 and 1999. Results for interim
periods should not be considered indicative of results for any other periods or
for the year. This information is only a summary. You should read it along with
Union Carbide's historical financial statements and related notes and the
section titled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in Union Carbide's annual reports, quarterly
reports and other information on file with the Securities and Exchange
Commission and incorporated by reference in this proxy statement/prospectus.
See "Additional Information--Where You Can Find More Information."
<TABLE>
<CAPTION>
Union Carbide
-------------------------------------------------
Six Months
Ended
June 30, Year Ended December 31,
------------- -----------------------------------
1999 1998 1998 1997 1996 1995 1994
------ ------ ------ ------- ------ ------ ------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Historical
Consolidated Statements of
Income Information:
Net sales................... $2,820 $3,020 $5,659 $ 6,502 $6,106 $5,888 $4,865
Earnings before cumulative
effect
of change in accounting
principle.................. 140 260 403 669 583 915 379
Earnings before cumulative
effect
of change in accounting
principle
per common share--basic.... $ 1.05 $ 1.91 $ 2.98 $ 5.02 $ 4.43 $ 6.65 $ 2.51
Earnings before cumulative
effect
of change in accounting
principle
per common share--diluted.. 1.02 1.86 2.91 4.53 3.90 5.85 2.27
Cash dividends declared per
common share............... 0.45 0.45 0.90 0.7875 0.75 0.75 0.75
Weighted average common
shares
outstanding--basic......... 133.0 136.5 135.0 128.2 131.0 137.2 149.9
Weighted average common
shares
outstanding--diluted....... 136.1 140.2 138.4 144.0 151.6 157.9 170.7
</TABLE>
<TABLE>
<CAPTION>
December 31,
June 30, ----------------------------------
1999 1998 1997 1996 1995 1994
-------- ------ ------ ------ ------ ------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Selected Historical Consolidated
Balance Sheet Information:
Working capital................... $ 613 $ 436 $ 362 $ 595 $ 858 $ 329
Total assets...................... 7,465 7,291 6,964 6,546 6,256 5,028
Total long-term debt.............. 2,044 1,796 1,458 1,487 1,285 899
Total stockholders' equity........ 2,454 2,449 2,348 2,114 2,045 1,509
</TABLE>
4
<PAGE>
The following page supersedes page 12 of the proxy statement/prospectus
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
--------------- -----------------------
1999 1998 1998 1997 1996
------- ------- ------- ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C>
Selected Unaudited Pro Forma Combined
Statements of Income Information:
Net sales.............................. $11,856 $12,706 $24,100 $26,520 $26,159
Earnings before cumulative effect of
change in accounting principle........ 879 1,106 1,707 2,471 2,483
Earnings before cumulative effect of
change in accounting principle per
common share--basic................... $ 2.97 $ 3.66 $ 5.69 $ 8.07 $ 7.75
Earnings before cumulative effect of
change in accounting principle per
common share--diluted................. 2.93 3.59 5.61 7.79 7.44
Weighted average common shares
outstanding--basic.................... 295.6 302.2 299.8 303.2 320.4
Weighted average common shares
outstanding--diluted.................. 301.3 308.7 305.4 315.9 336.1
</TABLE>
<TABLE>
<CAPTION>
December 31,
June 30, -----------------------
1999 1998 1997 1996
-------- ------- ------- -------
(in millions)
<S> <C> <C> <C> <C>
Selected Unaudited Pro Forma Combined Balance
Sheet Information:
Working capital.............................. $ 2,470 $ 2,034 $ 2,391 $ 5,271
Total assets................................. 31,545 32,005 31,878 32,158
Total long-term debt and redeemable preferred
stock....................................... 6,160 5,890 5,703 5,717
Net stockholders' equity..................... 10,548 10,278 10,374 10,468
</TABLE>
5
<PAGE>
The following page supersedes page 66 of the proxy statement/prospectus:
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
June 30, 1999
(in millions)
<TABLE>
<CAPTION>
The Dow Union Carbide Merger Combined
Chemical Corporation Pro Forma Pro Forma
Company (As Restated) Adjustments (As Restated)
-------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents. $ 218 $ 41 $ (75)(1) $ 659
475 (2)
Accounts and notes
receivable............... 4,065 1,075 -- 5,140
Inventories............... 2,593 599 -- 3,192
Other current assets...... 574 247 6 (4) 827
------- ------- ------- -------
Total current assets.... 7,450 1,962 406 9,818
------- ------- ------- -------
Investments:
Investment in
nonconsolidated
affiliates............... 1,379 561 -- 1,940
Other investments and
noncurrent receivables... 2,720 119 -- 2,839
------- ------- ------- -------
Total investments....... 4,099 680 -- 4,779
------- ------- ------- -------
Net Property................ 8,226 4,351 -- 12,577
------- ------- ------- -------
Total Other Assets.......... 3,330 472 569 (4) 4,371
------- ------- ------- -------
Total Assets............ $23,105 $ 7,465 $ 975 $31,545
======= ======= ======= =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and long-
term debt due within one
year..................... $ 1,286 $ 419 -- $ 1,705
Accounts payable.......... 2,394 239 -- 2,633
Other current liabilities. 2,313 691 $ 6 (4) 3,010
------- ------- ------- -------
Total current
liabilities............ 5,993 1,349 6 7,348
------- ------- ------- -------
Long-Term Debt.............. 4,063 2,044 -- 6,107
------- ------- ------- -------
Other Noncurrent
Liabilities:
Deferred income tax
liabilities--noncurrent.. 785 -- 977 (4) 1,762
Pension and other
postretirement benefits--
noncurrent............... 1,870 439 20 (4) 2,329
Other noncurrent
obligations.............. 2,241 1,141 (428)(4) 2,954
------- ------- ------- -------
Total other noncurrent
liabilities............ 4,896 1,580 569 7,045
------- ------- ------- -------
Minority Interest in
Subsidiary Companies....... 406 38 -- 444
------- ------- ------- -------
Temporary Equity............ 53 -- -- 53
------- ------- ------- -------
Stockholders' Equity:
Common stock.............. 818 157 (157)(3) 818
Additional paid-in
capital.................. 891 114 433 (2) --
(4,892)(3)
3,454 (3)
Retained earnings......... 13,242 3,417 (75)(1) 13,130
(3,454)(3)
Unearned employee
compensation--ESOP and
other equity adjustments. -- (58) -- (58)
Accumulated other
comprehensive loss....... (300) (157) -- (457)
Treasury stock, at cost... (6,957) (1,019) 42 (2) (2,885)
5,049 (3)
------- ------- ------- -------
Net stockholders'
equity................. 7,694 2,454 400 10,548
------- ------- ------- -------
Total Liabilities and
Stockholders' Equity... $23,105 $ 7,465 $ 975 $31,545
======= ======= ======= =======
</TABLE>
6
<PAGE>
The following page supersedes page 67 of the proxy statement/prospectus:
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
For the six months ended June 30, 1999
(in millions, except per share data)
<TABLE>
<CAPTION>
The Dow Union Carbide Merger Combined Pro
Chemical Corporation Pro Forma Forma
Company (As Restated) Adjustments (As Restated)
-------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Net Sales.................... $9,036 $2,820 -- $11,856
------ ------ ----- -------
Cost of sales.............. 6,671 2,137 $ 187 (4) 8,995
Research and development
expenses.................. 415 76 5 (4) 496
Selling, general and
administrative expenses... 764 127 -- 891
Amortization of
intangibles............... 54 -- 7 (4) 61
Depreciation and
amortization.............. -- 199 (199)(4) --
Partnership income......... -- 2 (2)(4) --
Insurance and finance
company operations, pretax
income.................... 61 -- 10 (4) 71
Equity in earnings (losses)
of nonconsolidated
affiliates................ 47 (50) 2 (4) (1)
Sundry income--net......... 157 41 (16)(4) 182
------ ------ ----- -------
Earnings Before Interest,
Income Taxes and Minority
Interests................... 1,397 274 (6) 1,665
------ ------ ----- -------
Interest income............ 52 -- 6 (4) 58
Interest expense and
amortization of debt
discount.................. 241 66 -- 307
------ ------ ----- -------
Income Before Income Taxes
and Minority Interests...... 1,208 208 -- 1,416
------ ------ ----- -------
Provision for income taxes. 431 66 -- 497
Minority interests' share
in income................. 35 2 -- 37
Preferred stock dividends.. 3 -- -- 3
------ ------ ----- -------
Earnings before cumulative
effect of change in
accounting principle........ 739 140 -- 879
------ ------ ----- -------
Cumulative effect of change
in accounting principle... -- (20) -- (20)
------ ------ ----- -------
Net Income Available for
Common Stockholders......... $ 739 $ 120 -- $ 859
====== ====== ===== =======
Share Data:
Earnings before cumulative
effect of change in
accounting principle per
common share--basic....... $ 3.35 $ 1.05 (5) $ 2.97
Earnings per common share--
basic..................... 3.35 0.90 (5) 2.91
Earnings before cumulative
effect of change in
accounting principle per
common share--diluted..... 3.30 1.02 (5) 2.93
Earnings per common share--
diluted................... 3.30 0.88 (5) 2.86
Weighted average common
shares outstanding--basic. 220.4 133.0 (5) 295.6
Weighted average common
shares outstanding--
diluted................... 224.4 136.1 (5) 301.3
</TABLE>
7
<PAGE>
ANNEX I
[LETTERHEAD OF CREDIT SUISSE FIRST BOSTON CORPORATION]
October 24, 1999
Board of Directors
Union Carbide Corporation
39 Old Ridgebury Road
Danbury, Connecticut 06817-0001
Members of the Board:
Reference is made to our written opinion to the Board of Directors dated August
3, 1999 (the "Opinion") in connection with the merger (the "Merger")
contemplated by the Agreement and Plan of Merger, dated as of August 3, 1999,
among Union Carbide Corporation ("Union Carbide"), The Dow Chemical Company
("Dow Chemical") and Transition Sub Inc., a wholly owned subsidiary of Dow
Chemical. We have been advised by Union Carbide of the restatement of net
earnings (the "Restatement") as described in the proxy statement/prospectus
supplement to be dated October 25, 1999 of Union Carbide and Dow Chemical
relating to the Merger (the "Proxy Statement/Prospectus Supplement").
Based upon the information in the Proxy Statement/Prospectus Supplement
relating to the Restatement and without undertaking any responsibility to
update the Opinion or to review or take into account any changes since the date
of the Opinion in events, circumstances or projections or other matters we may
have considered in connection with issuing the Opinion, we confirm that, had
the Restatement been included in the information we reviewed in connection with
issuing the Opinion, such Restatement would not have resulted in any change to
the conclusion reached in the Opinion that, as of the date of the Opinion, the
Exchange Ratio (as defined in the Opinion) was fair to the holders of Union
Carbide common stock from a financial point of view.
This letter is being provided to the Board of Directors in light of, and solely
with respect to, the specific matters relating to the Restatement referred to
above and does not constitute a "bring-down" of the Opinion. This letter is
subject to the same qualifications, limitations and assumptions as are set
forth in the Opinion. We hereby consent to the inclusion of this letter as
Annex I to, and the reference thereto in, the Proxy Statement/Prospectus
Supplement.
Very truly yours,
/s/ Credit Suisse First Boston Corporation
- ------------------------------------------
CREDIT SUISSE FIRST BOSTON CORPORATION
