Company Quick10K Filing
Union Carbide
10-Q 2020-06-30 Filed 2020-07-24
10-Q 2020-03-31 Filed 2020-05-01
10-K 2019-12-31 Filed 2020-02-07
10-Q 2019-09-30 Filed 2019-10-25
10-Q 2019-06-30 Filed 2019-07-25
10-Q 2019-03-31 Filed 2019-05-03
10-K 2018-12-31 Filed 2019-02-11
10-Q 2018-09-30 Filed 2018-11-02
10-Q 2018-06-30 Filed 2018-08-03
10-Q 2018-03-31 Filed 2018-05-04
10-K 2017-12-31 Filed 2018-02-15
10-Q 2017-09-30 Filed 2017-11-06
10-Q 2017-06-30 Filed 2017-07-27
10-Q 2017-03-31 Filed 2017-04-27
10-K 2016-12-31 Filed 2017-02-09
10-Q 2016-09-30 Filed 2016-10-27
10-Q 2016-06-30 Filed 2016-07-28
10-Q 2016-03-31 Filed 2016-04-29
10-K 2015-12-31 Filed 2016-02-12
10-Q 2015-09-30 Filed 2015-10-27
10-Q 2015-06-30 Filed 2015-07-29
10-Q 2015-03-31 Filed 2015-04-29
10-K 2014-12-31 Filed 2015-02-13
10-Q 2014-09-30 Filed 2014-10-28
10-Q 2014-06-30 Filed 2014-07-29
10-Q 2014-03-31 Filed 2014-04-29
10-K 2013-12-31 Filed 2014-02-14
10-Q 2013-09-30 Filed 2013-10-29
10-Q 2013-06-30 Filed 2013-07-30
10-Q 2013-03-31 Filed 2013-04-30
10-K 2012-12-31 Filed 2013-02-15
10-Q 2012-09-30 Filed 2012-10-30
10-Q 2012-06-30 Filed 2012-08-01
10-Q 2012-03-31 Filed 2012-05-02
10-K 2011-12-31 Filed 2012-02-15
10-Q 2011-09-30 Filed 2011-11-01
10-Q 2011-06-30 Filed 2011-08-03
10-Q 2011-03-31 Filed 2011-05-04
10-K 2010-12-31 Filed 2011-02-18
10-Q 2010-09-30 Filed 2010-11-03
10-Q 2010-06-30 Filed 2010-08-04
10-Q 2010-03-31 Filed 2010-05-04
10-K 2009-12-31 Filed 2010-02-19

UCC 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1 - Consolidated Financial Statements
Note 2 - Recent Accounting Guidance
Note 3 - Business Separation
Note 4 - Revenue
Note 5 - Inventories
Note 6 - Intangible Assets
Note 7 - Commitments and Contingent Liabilities
Note 8 - Leases
Note 9 - Accumulated Other Comprehensive Loss
Note 10 - Pension and Other Postretirement Benefit Plans
Note 11 - Fair Value Measurements
Note 12 - Related Party Transactions
Note 13 - Subsequent Event
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 4. Mine Safety Disclosures
Item 6. Exhibits
EX-23 ucc-6302020xq2xex23.htm
EX-31.1 ucc-6302020xq2xex311.htm
EX-31.2 ucc-6302020xq2xex312.htm
EX-32.1 ucc-6302020xq2xex321.htm
EX-32.2 ucc-6302020xq2xex322.htm

Union Carbide Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02011201420172021
Assets, Equity
1.91.40.90.4-0.1-0.62011201420172021
Rev, G Profit, Net Income
1.00.60.2-0.2-0.6-1.02011201420172021
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2020

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 York13-1421730
(State or other jurisdiction of
     incorporation or organization)
(I.R.S. Employer Identification No.)

7501 STATE HIGHWAY 185 NORTH, SEADRIFT, TX  77983
(Address of principal executive offices) (Zip Code)
 Registrant's telephone number, including area code:  361-553-2997

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


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
 
 No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  
Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No

At June 30, 2020, 935.51 shares of common stock were outstanding, all of which were held by the registrant’s parent, The Dow Chemical Company.

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) for Form 10-Q and is therefore filing this form with a reduced disclosure format.


Table of Contents

Union Carbide Corporation

QUARTERLY REPORT ON FORM 10-Q
For the quarterly period ended June 30, 2020

TABLE OF CONTENTS

 PAGE
 
Item 1.
Item 2.
Item 3.
Item 4.
 
Item 1.
Item 1A.
Item 4.
Item 6.

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Union Carbide Corporation and Subsidiaries

Throughout this Quarterly Report on Form 10-Q, except as otherwise indicated by the context, the terms "Corporation" or "UCC" as used herein mean Union Carbide Corporation and its subsidiaries.

FORWARD-LOOKING STATEMENTS
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report, including without limitation, the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations." These forward-looking statements often address expected future business and financial performance and financial condition, including the potential impacts of the coronavirus disease 2019 pandemic and crude oil supply and price volatility and estimates regarding benefits achieved through contemplated restructuring activities, such as workforce reductions and exit and disposal activities. In this context, forward looking statements often contain words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "may," "opportunity," "outlook," "plan," "project," "seek," "should," "strategy," "target," "will," "will be," "will continue," "will likely result," "would" and similar expressions and variations or negatives of these words. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.

A detailed discussion of principal risks and uncertainties which may cause actual results and events to differ materially from those projected, anticipated or implied in such forward-looking statements is included in the section titled "Risk Factors" contained in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2019. UCC assumes no obligation to update or revise publicly any forward-looking statements whether because of new information, future events or otherwise, except as required by securities and other applicable laws.


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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Union Carbide Corporation and Subsidiaries
Consolidated Statements of Income

 Three Months EndedSix Months Ended
In millions (Unaudited)Jun 30,
2020
Jun 30,
2019
Jun 30,
2020
Jun 30,
2019
Net trade sales$21  $47  $50  $75  
Net sales to related companies849  992  1,862  2,242  
Total net sales870  1,039  1,912  2,317  
Cost of sales746  902  1,572  1,852  
Research and development expenses5  7  11  13  
Selling, general and administrative expenses2    4  2  
Restructuring charges  1  2  2  
Integration and separation costs  1    2  
Sundry income (expense) - net(22) (18) (40) (39) 
Interest income2  10  9  19  
Interest expense and amortization of debt discount11  7  19  14  
Income before income taxes86  113  273  412  
Provision for income taxes18  3  59  57  
Net income attributable to Union Carbide Corporation
$68  $110  $214  $355  
Depreciation$46  $42  $91  $85  
Capital expenditures$32  $45  $65  $105  
See Notes to the Consolidated Financial Statements.

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Union Carbide Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income

 Three Months EndedSix Months Ended
In millions (Unaudited)Jun 30,
2020
Jun 30,
2019
Jun 30,
2020
Jun 30,
2019
Net income attributable to Union Carbide Corporation$68  $110  $214  $355  
Other comprehensive income, net of tax    
Cumulative translation adjustments    3    
Pension and other postretirement benefit plans19  14  39  29  
Total other comprehensive income19  14  42  29  
Comprehensive income attributable to Union Carbide Corporation
$87  $124  $256  $384  
See Notes to the Consolidated Financial Statements.

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Union Carbide Corporation and Subsidiaries
Consolidated Balance Sheets
In millions, except share amounts (Unaudited)Jun 30,
2020
Dec 31,
2019
Assets
Current Assets  
Cash and cash equivalents$11  $11  
Accounts receivable:
Trade (net of allowance for doubtful receivables 2020: $; 2019: $)
16  26  
Related companies595  658  
Other20  17  
Income taxes receivable355  337  
Notes receivable from related companies1,598  1,505  
Inventories227  247  
Other current assets28  20  
Total current assets2,850  2,821  
Investments  
Investments in related companies237  238  
Other investments22  22  
Noncurrent receivables120  118  
Noncurrent receivables from related companies66  66  
Total investments445  444  
Property  
Property7,307  7,247  
Less accumulated depreciation5,967  5,878  
Net property1,340  1,369  
Other Assets  
Intangible assets (net of accumulated amortization 2020: $94; 2019: $90)
20  22  
Operating lease right-of-use assets86  89  
Deferred income tax assets492  507  
Deferred charges and other assets29  26  
Total other assets627  644  
Total Assets$5,262  $5,278  
Liabilities and Equity
Current Liabilities  
Notes payable to related companies$30  $32  
Notes payable - other9  6  
Long-term debt due within one year1  1  
Accounts payable:
Trade204  218  
Related companies334  386  
Other20  10  
Operating lease liabilities - current16  16  
Income taxes payable25  25  
Asbestos-related liabilities - current95  105  
Accrued and other current liabilities142  126  
Total current liabilities876  925  
Long-Term Debt472  473  
Other Noncurrent Liabilities  
Pension and other postretirement benefits - noncurrent1,125  1,154  
Asbestos-related liabilities - noncurrent1,038  1,060  
Operating lease liabilities - noncurrent70  74  
Other noncurrent obligations189  194  
Total other noncurrent liabilities2,422  2,482  
Stockholder's Equity  
Common stock (authorized: 1,000 shares of $0.01 par value each; issued: 935.51 shares)
    
Additional paid-in capital141  141  
Retained earnings2,974  2,922  
Accumulated other comprehensive loss(1,623) (1,665) 
Union Carbide Corporation's stockholder's equity1,492  1,398  
Total Liabilities and Equity$5,262  $5,278  
See Notes to the Consolidated Financial Statements.
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Union Carbide Corporation and Subsidiaries
Consolidated Statements of Cash Flows

 Six Months Ended
In millions (Unaudited)Jun 30,
2020
Jun 30,
2019
Operating Activities  
Net income attributable to Union Carbide Corporation$214  $355  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization105  99  
Provision for deferred income tax3  15  
Net gain on sales of property and investments(1)   
Restructuring charges2  2  
Net periodic pension benefit cost27  26  
Pension contributions(1) (1) 
Changes in assets and liabilities:
Accounts and notes receivable7  (24) 
Related company receivables(30) 129  
Inventories20  11  
Accounts payable(2) 6  
Related company payables(54) (70) 
Asbestos-related payments(32) (42) 
Other assets and liabilities(34) (63) 
Cash provided by operating activities224  443  
Investing Activities  
Capital expenditures(65) (105) 
Change in noncurrent receivable from related company  (3) 
Proceeds from sales of property1    
Proceeds from sales of investments  2  
Cash used for investing activities(64) (106) 
Financing Activities  
Dividends paid to parent(162) (338) 
Changes in short-term notes payable3  1  
Payments on long-term debt(1)   
Cash used for financing activities(160) (337) 
Summary  
Increase in cash and cash equivalents    
Cash and cash equivalents at beginning of period11  13  
Cash and cash equivalents at end of period$11  $13  
See Notes to the Consolidated Financial Statements.
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Union Carbide Corporation and Subsidiaries
Consolidated Statements of Equity

 Three Months EndedSix Months Ended
In millions (Unaudited)Jun 30,
2020
Jun 30,
2019
Jun 30,
2020
Jun 30,
2019
Common Stock  
Balance at beginning and end of period$  $  $  $  
Additional Paid-in Capital  
Balance at beginning and end of period141  138  141  138  
Retained Earnings  
Balance at beginning of period2,987  2,951  2,922  3,338  
Net income attributable to Union Carbide Corporation68  110  214  355  
Dividends declared(81) (178) (162) (810) 
Other  (1)   (1) 
Balance at end of period2,974  2,882  2,974  2,882  
Accumulated Other Comprehensive Loss, Net of Tax  
Balance at beginning of period(1,642) (1,546) (1,665) (1,561) 
Other comprehensive income19  14  42  29  
Balance at end of period(1,623) (1,532) (1,623) (1,532) 
Union Carbide Corporation's Stockholder's Equity$1,492  $1,488  $1,492  $1,488  
See Notes to the Consolidated Financial Statements.
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Union Carbide Corporation and Subsidiaries
(Unaudited)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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Note Page
1
2
3
4
5
6
7
8
9
10
11
12
13


NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The unaudited interim consolidated financial statements of Union Carbide Corporation and its subsidiaries (the "Corporation" or "UCC") were prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and reflect all adjustments (including normal recurring accruals) which, in the opinion of management, are considered necessary for the fair presentation of the results for the periods presented. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019.

The Corporation is a wholly owned subsidiary of The Dow Chemical Company ("TDCC"). In accordance with the accounting guidance for earnings per share, the presentation of earnings per share is not required in financial statements of wholly owned subsidiaries.

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

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 and its consolidated subsidiaries. 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. 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. See Note 3 for additional information.

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Intercompany transactions and balances are eliminated in consolidation. Transactions with the Corporation’s parent company, TDCC, and other subsidiaries of TDCC, have been reflected as related company transactions in the consolidated financial statements. See Note 12 for additional information.


NOTE 2 - RECENT ACCOUNTING GUIDANCE
Accounting Guidance Issued But Not Adopted at June 30, 2020
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, "Income Taxes" and improve consistent application by clarifying and amending existing guidance. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment. The Corporation is currently evaluating the impact of adopting this guidance.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The amendments provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are intended to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. The new standard is effective March 12, 2020 through December 31, 2022, with the adoption date being dependent upon the Corporation’s election. The Corporation is currently evaluating the impact of adopting this guidance.


NOTE 3 - BUSINESS SEPARATION
On April 1, 2019, DowDuPont completed the separation of its materials science business and Dow Inc. became the direct parent company of TDCC. UCC remains a wholly owned subsidiary of TDCC.

In the first quarter of 2019, in anticipation of DowDuPont's intended separation of its materials science business, UCC's assets and liabilities aligned with TDCC's specialty products business were transferred to TDCC as part of the internal reorganization steps to align TDCC's specialty products business to DowDuPont. In order to align entity ownership under TDCC, UCC distributed shares and assets to TDCC through dividends or asset distributions. As a result, in February 2019, UCC issued to TDCC a dividend of 1,067 shares of common stock of Dow International Holdings Company (“DIHC”), a cost method investment, resulting in a reduction in "Investments in related companies" of $401 million. UCC also transferred, as an asset distribution, the assets and liabilities aligned with TDCC's specialty products business for an additional dividend of $71 million to TDCC. The results of these transactions are reflected in “Investments in related companies” and “Retained earnings” in the consolidated balance sheets. See Note 12 for additional information.

The Corporation evaluated the impact of the specialty products product line transfer and determined it did not represent a strategic shift that had a major effect on the Corporation’s operations and financial results and did not qualify as an individually significant component of the Corporation. As a result, this transfer was not reported as discontinued operations.


NOTE 4 - REVENUE
Substantially all of the Corporation's revenue is generated by sales to TDCC. Products are sold to and purchased from TDCC at market-based prices in accordance with the terms of an agreement between UCC and TDCC. The Corporation's revenue related to sales of product was approximately 98 percent for the three months ended June 30, 2020 and 99 percent for the six months ended June 30, 2020 (99 percent for the three and six months ended June 30, 2019); the remaining revenue primarily related to the licensing of patents and technology. The Corporation sells its products to TDCC to simplify the customer interface process.

The Corporation’s contract liabilities include payments received in advance of performance under long-term contracts for product sales and royalties with remaining contract terms that range up to 21 years. Amounts are recognized in revenue when the performance obligations for the contract are met. The Corporation has rights to additional consideration when product is delivered to the customer. The balance of contract liabilities was $39 million at June 30, 2020 ($41 million at December 31, 2019), of which $3 million ($4 million at December 31, 2019) was included in "Accrued and other current liabilities" and $36 million ($37 million at December 31, 2019) was included in "Other noncurrent obligations" in the consolidated balance sheets.

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The Corporation disaggregates its revenue from contracts with customers by type of customer (sales to related parties and sales to trade customers) as presented in the consolidated statements of income and believes this disaggregation best depicts the nature, amount, timing and uncertainty of its revenue and cash flows. Substantially all of the product sales are made to the Corporation's parent company, TDCC, and there are no unique economic factors that affect revenue recognition and cash flows associated with these product sales.


NOTE 5 - INVENTORIES
The following table provides a breakdown of inventories:

InventoriesJun 30,
2020
Dec 31,
2019
In millions
Finished goods$146  $162  
Work in process22  31  
Raw materials43  47  
Supplies88  92  
Total$299  $332  
Adjustment of inventories to a LIFO basis(72) (85) 
Total inventories$227  $247  


NOTE 6 - INTANGIBLE ASSETS
The following table provides information regarding the Corporation’s intangible assets:

Intangible AssetsJun 30, 2020Dec 31, 2019
In millionsGross
Carrying Amount
Accumulated AmortizationNetGross
Carrying Amount
Accumulated AmortizationNet
Intangible assets with finite lives:      
Developed technology$33  $(33) $  $33  $(33) $  
Software81  (61) 20  79  (57) 22  
Total intangible assets$114  $(94) $20  $112  $(90) $22  

Total estimated amortization expense for 2020 and the five succeeding fiscal years, including amounts expected to be capitalized, is as follows:

Estimated Amortization Expense
In millions
2020$8  
2021$6  
2022$5  
2023$3  
2024$1  
2025$  


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NOTE 7 - COMMITMENTS AND CONTINGENT LIABILITIES
Environmental Matters
Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. At June 30, 2020, the Corporation had accrued obligations of $126 million for probable environmental remediation and restoration costs, including $19 million for the remediation of Superfund sites. These obligations are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets. This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the Corporation has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately two and a half times that amount. Consequently, it is reasonably possible that environmental remediation and restoration costs in excess of amounts accrued could have a material impact on the Corporation's results of operations, financial condition and cash flows. It is the opinion of the Corporation’s management that the possibility is remote that costs in excess of the range disclosed will have a material impact on the Corporation’s results of operations, financial condition and cash flows. Inherent uncertainties exist in these estimates primarily due to unknown environmental conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies for handling site remediation and restoration. As new or additional information becomes available and/or certain spending trends become known, management will evaluate such information in determination of the current estimate of the environmental liability. At December 31, 2019, the Corporation had accrued obligations of $132 million for probable environmental remediation and restoration costs, including $20 million for the remediation of Superfund sites.

Litigation
Asbestos-Related Matters
A summary of asbestos-related matters can be found in Note 14 to the Consolidated Financial Statements included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2019.

Introduction
The Corporation is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that UCC sold in the past, alleged exposure to asbestos-containing products located on UCC’s premises and UCC’s responsibility for asbestos suits filed against a former UCC subsidiary, Amchem Products, Inc. ("Amchem"). In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that injuries incurred in fact resulted from exposure to the Corporation’s products. The Corporation expects more asbestos-related suits to be filed against UCC and Amchem in the future, and will aggressively defend or reasonably resolve, as appropriate, both pending and future claims.

Estimating the Asbestos-Related Liability
Since 2003, the Corporation has engaged Ankura Consulting Group, LLC ("Ankura"), a third party actuarial specialist, to review the Corporation's historical asbestos-related claim and resolution activity in order to assist UCC management in estimating the asbestos-related liability. Each year, the Corporation requests Ankura to review its claim and resolution activity, including asbestos-related defense and processing costs, to determine the appropriateness of updating the most recent Ankura study.

Based on the review completed by Ankura in December 2019 and the Corporation's internal review process, the Corporation's total asbestos-related liability through the terminal year of 2049, including asbestos-related defense and processing costs, was $1,165 million at December 31, 2019, and was included in “Asbestos-related liabilities - current” and “Asbestos-related liabilities - noncurrent” in the consolidated balance sheets.

Each quarter, the Corporation reviews claims filed, settled and dismissed, as well as average settlement and resolution costs by disease category. The Corporation also considers additional quantitative and qualitative factors such as the nature of pending claims, trial experience of the Corporation and other asbestos defendants, current spending for defense and processing costs, significant appellate rulings and legislative developments, trends in the tort system, and their respective effects on expected future resolution costs. UCC management considers these factors in conjunction with the most recent Ankura study and determines whether a change in the estimate is warranted. Based on the Corporation's review of 2020 activity, it was determined that no adjustment to the accrual was required at June 30, 2020.

The Corporation’s total asbestos-related liability for pending and future claims and defense and processing costs was $1,133 million at June 30, 2020, and approximately 20 percent of the recorded claim liability related to pending claims and approximately 80 percent related to future claims.
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Summary
The Corporation's management believes the amounts recorded for the asbestos-related liability, including defense and processing costs, reflect reasonable and probable estimates of the liability based on current, known facts. However, future events, such as the number of new claims to be filed and/or received each year and the average cost of defending and disposing of each such claim, as well as the numerous uncertainties surrounding asbestos litigation in the United States over a significant period of time, could cause the actual costs for the Corporation to be higher or lower than those projected or those recorded. Any such event could result in an increase or decrease in the recorded liability.

Because of the uncertainties described above, the Corporation cannot estimate the full range of the cost of resolving pending and future asbestos-related claims facing UCC and Amchem. As a result, it is reasonably possible that an additional cost of disposing of asbestos-related claims, including future defense and processing costs, could have a material impact on the Corporation's results of operations and cash flows for a particular period and on the consolidated financial position.

Other Litigation Matters
The Corporation is also involved in a number of legal proceedings and claims with both private and governmental parties. These cover a wide range of matters, including, but not limited to: product liability; trade regulation; governmental tax and regulatory disputes; health, safety and environmental matters; employment matters; patent infringement; contracts; and commercial litigation. While it is not possible at this time to determine with certainty the ultimate outcome of any of the legal proceedings and claims referred to in this filing, management believes that the possibility is remote that the aggregate of all such other claims and lawsuits will have a material adverse impact on the results of operations, cash flows and financial position of the Corporation.


NOTE 8 - LEASES
For additional information on the Corporation's leases, see Note 15 to the Consolidated Financial Statements included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2019.

The components of lease cost for operating and finance leases for the three and six months ended June 30, 2020 and 2019 were as follows:

Lease CostThree Months EndedSix Months Ended
In millionsJun 30, 2020Jun 30, 2019Jun 30, 2020Jun 30, 2019
Operating lease cost$5  $5  $10  $11  
Short-term lease cost5  7  11  14  
Variable lease cost2  2  4  2  
Amortization of right-of-use assets - finance1  1  1  1  
Total lease cost$13  $15  $26  $28  

The following table provides supplemental cash flow information related to leases:

Other Lease InformationSix Months Ended
In millionsJun 30, 2020Jun 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$10  $11  
Financing cash flows for finance leases$1  $  

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

Lease PositionBalance Sheet ClassificationJun 30, 2020Dec 31, 2019
In millions
Right-of-use assets obtained in exchange for lease obligations:
Operating leases 1
$3  $105  
Assets
Operating lease assetsOperating lease right-of-use assets$86  $89  
Finance lease assetsProperty12  12  
Finance lease amortizationAccumulated depreciation(7) (6) 
Total lease assets$91  $95  
Liabilities
Current
OperatingOperating lease liabilities - current$16  $16  
FinanceLong-term debt due within one year1  1  
Noncurrent
OperatingOperating lease liabilities - noncurrent70  74  
FinanceLong-Term Debt4  5  
Total lease liabilities$91  $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.

Lease Term and Discount RateJun 30, 2020Dec 31, 2019
Weighted-average remaining lease term
Operating leases6.0 years6.3 years
Finance leases4.0 years4.5 years
Weighted-average discount rate
Operating leases4.17 %4.13 %
Finance leases4.22 %4.22 %

The following table provides the maturities of lease liabilities at June 30, 2020:

Maturities of Lease LiabilitiesJun 30, 2020
Operating LeasesFinance Leases
In millions
2020$10  $1  
202118  2  
202216  1  
202314  1  
202413  1  
2025 and thereafter27    
Total future undiscounted lease payments$98  $6  
Less imputed interest12  1  
Total present value of lease liabilities$86  $5  

At June 30, 2020, the Corporation had additional leases of approximately $16 million for equipment and a rail yard, which had not yet commenced. These leases are expected to commence in 2020 and 2021, with lease terms of up to 20 years.

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NOTE 9 - ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in the balances for each component of accumulated other comprehensive loss ("AOCL") for the three and six months ended June 30, 2020 and 2019 were as follows:

Accumulated Other Comprehensive LossThree Months EndedSix Months Ended
In millionsJun 30, 2020Jun 30, 2019Jun 30, 2020Jun 30, 2019
Cumulative Translation Adjustment
Beginning balance$(53) $(57) $(56) $(57) 
Gains on foreign currency translation
    3    
Ending balance
$(53) $(57) $(53) $(57) 
Pension and Other Postretirement Benefits
Beginning balance
$(1,589) $(1,489) $(1,609) $(1,504) 
Amortization and recognition of net loss 1
25  19  51  38  
Less: Tax expense (benefit) 2
(6) (5) (12) (9) 
Other comprehensive income, net of tax
19  14  39  29  
Ending balance$(1,570) $(1,475) $(1,570) $(1,475) 
Total AOCL ending balance