10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

R QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedSEPTEMBER 30, 2015

or

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

1254 ENCLAVE PARKWAY, HOUSTON, TEXAS  77077

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:  281-966-2727

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.

R Yes    o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  

R Yes    o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer   R	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes    R No

At September 30, 2015, 935.42 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 Instructions H(1)(a) and (b) for Form 10-Q and is therefore filing this form with a reduced disclosure format.

Union Carbide Corporation

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended September 30, 2015

TABLE OF CONTENTS

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.	4
	Consolidated Statements of Income.	4
	Consolidated Statements of Comprehensive Income.	5
	Consolidated Balance Sheets.	6
	Consolidated Statements of Cash Flows.	7
	Consolidated Statements of Equity.	8
	Notes to the Consolidated Financial Statements.	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	17
	Results of Operations.	17
	Other Matters.	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	21
Item 4.	Controls and Procedures.	21
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	21
Item 1A.	Risk Factors.	21
Item 4.	Mine Safety Disclosures.	21
Item 6.	Exhibits.	21
SIGNATURES		23
EXHIBIT INDEX		24

2

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 the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including without limitation, the following sections: “Management's Discussion and Analysis,” and “Risk Factors.” These forward-looking statements are generally identified by the words or phrases “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “may,” “opportunity,” "outlook," “plan,” “project,” “should,” “strategy,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. 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 such forward-looking statements is included in the section titled “Risk Factors” (see Part I, Item 1A of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2014). Union Carbide Corporation undertakes 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.

3

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

Union Carbide Corporation and Subsidiaries

Consolidated Statements of Income

	Three Months Ended					Nine Months Ended
In millions (Unaudited)	Sep 30, 2015			Sep 30, 2014		Sep 30, 2015			Sep 30, 2014
Net trade sales	$	18		$	27	$	61		$	77
Net sales to related companies	1,442			1,711		4,466			5,109
Total Net Sales	1,460			1,738		4,527			5,186
Cost of sales	1,094			1,426		3,598			4,485
Research and development expenses	5			4		15			15
Selling, general and administrative expenses	2			2		6			7
Restructuring charges	—			—		18			—
Equity in earnings of nonconsolidated affiliates	1			2		3			6
Sundry income (expense) - net	(17		)	54		(28		)	42
Interest income	3			2		6			8
Interest expense and amortization of debt discount	7			8		21			23
Income Before Income Taxes	339			356		850			712
Provision for income taxes	91			109		262			223
Net Income Attributable to Union Carbide Corporation	$	248		$	247	$	588		$	489
Depreciation	$	40		$	45	$	118		$	133
Capital Expenditures	$	71		$	34	$	185		$	98

See Notes to the Consolidated Financial Statements.

4

Union Carbide Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

	Three Months Ended					Nine Months Ended
In millions (Unaudited)	Sep 30, 2015		Sep 30, 2014			Sep 30, 2015		Sep 30, 2014
Net Income Attributable to Union Carbide Corporation	$	248	$	247		$	588	$	489
Other Comprehensive Income, Net of Tax
Translation adjustments	—		(1		)	—		(2		)
Adjustments to pension and other postretirement benefit plans	14		10			38		30
Total other comprehensive income	14		9			38		28
Comprehensive Income Attributable to Union Carbide Corporation	$	262	$	256		$	626	$	517

See Notes to the Consolidated Financial Statements.

5

Union Carbide Corporation and Subsidiaries

Consolidated Balance Sheets

In millions (Unaudited)	Sep 30, 2015			Dec 31, 2014
Assets
Current Assets
Cash and cash equivalents	$	24		$	23
Accounts receivable:
Trade (net of allowance for doubtful receivables 2015: $-; 2014: $-)	16			29
Related companies	1,114			1,285
Other	53			67
Income taxes receivable	481			476
Notes receivable from related companies	1,431			1,292
Inventories	352			378
Deferred income taxes and other current assets	109			139
Total current assets	3,580			3,689
Investments
Investments in related companies	639			813
Investments in nonconsolidated affiliate	12			13
Other investments	7			8
Noncurrent receivables	44			44
Noncurrent receivables from related companies	98			131
Total investments	800			1,009
Property
Property	6,986			6,831
Less accumulated depreciation	5,726			5,679
Net property	1,260			1,152
Other Assets
Intangible assets (net of accumulated amortization 2015: $74; 2014: $73)	18			15
Deferred income tax assets - noncurrent	407			441
Asbestos-related insurance receivables - noncurrent	51			62
Deferred charges and other assets	34			45
Total other assets	510			563
Total Assets	$	6,150		$	6,413
Liabilities and Equity
Current Liabilities
Notes payable - related companies	$	27		$	43
Notes payable - other	1			—
Long-term debt due within one year	1			1
Accounts payable:
Trade	232			248
Related companies	474			872
Other	22			17
Income taxes payable	21			20
Asbestos-related liabilities - current	73			105
Accrued and other current liabilities	198			192
Total current liabilities	1,049			1,498
Long-Term Debt	480			481
Other Noncurrent Liabilities
Pension and other postretirement benefits - noncurrent	1,029			1,051
Asbestos-related liabilities - noncurrent	399			438
Other noncurrent obligations	138			136
Total other noncurrent liabilities	1,566			1,625
Stockholder's Equity
Common stock (authorized: 1,000 shares of $0.01 par value each; issued 2015: 935.42 shares; 2014: 1,000 shares)	—			—
Additional paid-in capital	138			312
Retained earnings	4,122			3,740
Accumulated other comprehensive loss	(1,205		)	(1,243		)
Union Carbide Corporation's stockholder's equity	3,055			2,809
Total Liabilities and Equity	$	6,150		$	6,413

See Notes to the Consolidated Financial Statements.

6

Union Carbide Corporation and Subsidiaries

Consolidated Statements of Cash Flows

	Nine Months Ended
In millions (Unaudited)	Sep 30, 2015			Sep 30, 2014
Operating Activities
Net Income Attributable to Union Carbide Corporation	$	588		$	489
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	137			150
Provision (credit) for deferred income tax	32			(92		)
Earnings of nonconsolidated affiliates in excess of dividends received	(1		)	(6		)
Net (gain)/loss on sales of property	3			(70		)
Net gain on ownership transfer of property	(23		)	—
Restructuring charges	18			—
Pension contributions	(1		)	(1		)
Other, net	2			—
Changes in assets and liabilities:
Accounts and notes receivable	20			(19		)
Related company receivables	32			4
Inventories	18			(28		)
Accounts payable	(10		)	33
Related company payables	(414		)	543
Other assets and liabilities	(32		)	(85		)
Cash provided by operating activities	369			918
Investing Activities
Capital expenditures	(185		)	(98		)
Change in noncurrent receivable from related company	33			30
Proceeds from sales of property	—			153
Post-closing payments on sale of property	(1		)	—
Cash acquired in ownership transfer of property	5			—
Cash provided by (used in) investing activities	(148		)	85
Financing Activities
Proceeds from notes payable	1			—
Dividends paid to stockholder	(220		)	(1,010		)
Payments on long-term debt	(1		)	—
Cash used in financing activities	(220		)	(1,010		)
Summary
Increase (decrease) in cash and cash equivalents	1			(7		)
Cash and cash equivalents at beginning of year	23			33
Cash and cash equivalents at end of period	$	24		$	26

See Notes to the Consolidated Financial Statements.

7

Union Carbide Corporation and Subsidiaries

Consolidated Statements of Equity

	Nine Months Ended
In millions (Unaudited)	Sep 30, 2015			Sep 30, 2014
Common Stock
Balance at beginning of year and end of period	$	—		$	—
Additional Paid-in Capital
Balance at beginning of year	312			312
Shares acquired for constructive retirement	(174		)	—
Balance at end of period	138			312
Retained Earnings
Balance at beginning of year	3,740			4,442
Net Income Attributable to Union Carbide Corporation	588			489
Dividends declared	(220		)	(1,010		)
Other	14			—
Balance at end of period	4,122			3,921
Accumulated Other Comprehensive Loss, Net of Tax
Balance at beginning of year	(1,243		)	(1,045		)
Other comprehensive income	38			28
Balance at end of period	(1,205		)	(1,017		)
Union Carbide Corporation's Stockholder's Equity	$	3,055		$	3,216

See Notes to the Consolidated Financial Statements.

8

Union Carbide Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

Table of Contents

Note		Page
1	Consolidated Financial Statements	9
2	Recent Accounting Guidance	9
3	Restructuring	10
4	Inventories	10
5	Intangible Assets	10
6	Financial Instruments	11
7	Commitments and Contingent Liabilities	12
8	Pension and Other Postretirement Benefits	14
9	Related Party Transactions	15
10	Accumulated Other Comprehensive Loss	16

NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS

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.

The Corporation is a wholly owned subsidiary of The Dow Chemical Company (“Dow”). 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 Dow’s global operations rather than stand-alone operations. Dow 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.

Intercompany transactions and balances are eliminated in consolidation. Transactions with the Corporation’s parent company, Dow, and other Dow subsidiaries have been reflected as related company transactions in the consolidated financial statements. See Note 9 for further discussion.

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, 2014.

NOTE 2 - RECENT ACCOUNTING GUIDANCE

Accounting Guidance Issued But Not Yet Adopted as of September 30, 2015

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under U.S. GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which was issued in August 2015, revised the effective date for this ASU to annual and interim periods beginning on or after December 15, 2017, with early adoption permitted, but not earlier than the original effective date of annual and interim periods beginning on or after December 15, 2016, for public entities. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Corporation is currently evaluating the impact of adopting this guidance.

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity

9

Union Carbide Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Corporation is currently evaluating the impact of adopting this guidance.

NOTE 3 - RESTRUCTURING

On April 29, 2015, the Corporation approved actions to improve the cost effectiveness of the Corporation's global operations and further streamline the organization. These actions will affect approximately 16 positions and result in the shutdown of a manufacturing facility that produces water soluble polymers in Institute, West Virginia, in the fourth quarter of 2015. These actions are expected to be completed by the end of 2016.

As a result of these actions, the Corporation recorded pretax restructuring charges of $18 million in the second quarter of 2015 consisting of costs associated with exit or disposal activities of $2 million, severance costs of $2 million and asset write-downs and write-offs of $14 million. The impact of these charges is shown as "Restructuring charges" in the consolidated statements of income. At September 30, 2015, severance of $1 million had been paid, leaving a liability of $1 million for 13 employees.

The Corporation expects to incur additional costs in the future related to restructuring activities, as UCC continually looks for ways to enhance the efficiency and cost effectiveness of its operations. Future costs are expected to include demolition costs related to the closed facilities; these will be recognized as incurred. The Corporation also expects to incur additional employee­related costs, including involuntary termination benefits, related to its other optimization activities. These costs cannot be reasonably estimated at this time.

NOTE 4 - INVENTORIES

The following table provides a breakdown of inventories:

Inventories In millions	Sep 30, 2015		Dec 31, 2014
Finished goods	$	192	$	205
Work in process	26		30
Raw materials	49		45
Supplies	85		98
Total inventories	$	352	$	378

The reserves reducing inventories from the first-in, first-out (“FIFO”) basis to the last-in, first-out (“LIFO”) basis amounted to $61 million at September 30, 2015 and $125 million at December 31, 2014.

NOTE 5 - INTANGIBLE ASSETS

The following table provides information regarding the Corporation’s intangible assets:

Intangible Assets	At September 30, 2015							At December 31, 2014
In millions	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Intangible assets with finite lives:
Licenses and intellectual property	$	33	$	(33	)	$	—	$	33	$	(33	)	$	—
Software	59		(41		)	18		55		(40		)	15
Total intangible assets	$	92	$	(74	)	$	18	$	88	$	(73	)	$	15

10

Union Carbide Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

Total estimated amortization expense for 2015 and the five succeeding fiscal years is as follows:

Estimated Amortization Expense In millions
2015	$	2
2016	$	3
2017	$	3
2018	$	4
2019	$	4
2020	$	3

NOTE 6 - FINANCIAL INSTRUMENTS

Investments

The Corporation's investments in marketable securities include debt securities which are classified as available-for-sale. At September 30, 2015, the Corporation held $4 million in debt securities ($5 million at December 31, 2014), which had contractual maturities of less than 10 years. These securities are recorded at fair value, which approximates cost, and are included in “Other investments” in the consolidated balance sheets and classified as Level 2 measurements. There were no proceeds from sales of marketable securities for the nine-month periods ended September 30, 2015 and September 30, 2014.

For securities frequently traded in less active markets, fair value is based on the closing price at the end of the period; where the security is less frequently traded, fair value is based on the price a dealer would pay for the security or similar securities, adjusted for any terms specific to that asset or liability, or by using observable market data points of similar, more liquid securities to imply the price. Market inputs are obtained from well-established and recognized vendors of market data and subjected to tolerance/quality checks.

Long-Term Debt

The Corporation had long-term debt of $481 million in the consolidated balance sheets at September 30, 2015 ($482 million at December 31, 2014). At September 30, 2015, the fair value of this long-term debt was $586 million ($601 million at December 31, 2014) and is classified as a Level 2 measurement. Fair value is determined in a manner similar to the methods described above for investments.

Cost approximates fair value for all other financial instruments.

11

Union Carbide Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

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 September 30, 2015, the Corporation had accrued obligations of $129 million for probable environmental remediation and restoration costs, including $22 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, however, 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. At December 31, 2014, the Corporation had accrued obligations of $132 million for probable environmental remediation and restoration costs, including $22 million for the remediation of Superfund sites.

Litigation

The Corporation is 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 regulatory proceedings; health, safety and environmental matters; employment; patents; contracts; taxes; and commercial disputes.

Asbestos-Related Matters

Separately, 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 Liability

Based on a study completed by Analysis, Research & Planning Corporation (“ARPC”) in January 2003, the Corporation increased its December 31, 2002 asbestos-related liability for pending and future claims for the 15-year period ending in 2017 to $2.2 billion, excluding future defense and processing costs. Since then, the Corporation has compared current asbestos claim and resolution activity to the results of the most recent ARPC study at each balance sheet date to determine whether the accrual continues to be appropriate. In addition, the Corporation has requested ARPC to review the Corporation’s historical asbestos claim and resolution activity each year since 2004 to determine the appropriateness of updating the most recent ARPC study.

In October 2014, the Corporation requested ARPC to review its historical asbestos claim and resolution activity and determine the appropriateness of updating its December 2012 study. In response to that request, ARPC reviewed and analyzed data through September 30, 2014. The resulting study, completed by ARPC in December 2014, estimates that the undiscounted cost of disposing of pending and future claims against UCC and Amchem, excluding future defense and processing costs, to be between $540 million and $640 million through 2029 based on the data as of September 30, 2014. As in earlier studies, ARPC provided longer periods of time in its December 2014 study, but also reaffirmed that forecasts for shorter periods of time are more accurate than those for longer periods of time.

In December 2014, based on ARPC's December 2014 study and the Corporation's own review of the asbestos claim and resolution activity, the Corporation determined that an adjustment to the accrual was required due to the increase in mesothelioma claim activity compared with what had been forecasted in the December 2012 study. Accordingly, the

12

Union Carbide Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

Corporation increased its asbestos-related liability for pending and future claims by $78 million. The Corporation's asbestos-related liability for pending and future claims was $513 million at December 31, 2014, and approximately 22 percent of the recorded liability related to pending claims and approximately 78 percent related to future claims.

Based on the Corporation’s review of 2015 activity, it was determined that no adjustment to the accrual was required at September 30, 2015. The Corporation’s asbestos-related liability for pending and future claims was $454 million at September 30, 2015. Approximately 19 percent of the recorded liability related to pending claims and approximately 81 percent related to future claims.

Insurance Receivables

At December 31, 2002, the Corporation increased the receivable for insurance recoveries related to its asbestos liability to $1.35 billion, substantially exhausting its asbestos product liability coverage. The insurance receivable related to the asbestos liability was determined by the Corporation after a thorough review of applicable insurance policies and the 1985 Wellington Agreement, to which the Corporation and many of its liability insurers are signatory parties, as well as other insurance settlements, with due consideration given to applicable deductibles, retentions and policy limits, and taking into account the solvency and historical payment experience of various insurance carriers. The Wellington Agreement and other agreements with insurers are designed to facilitate an orderly resolution and collection of the Corporation’s insurance policies and to resolve issues that the insurance carriers may raise.

In September 2003, the Corporation filed a comprehensive insurance coverage case, now proceeding in the Supreme Court of the State of New York, County of New York, seeking to confirm its rights to insurance for various asbestos claims and to facilitate an orderly and timely collection of insurance proceeds (the “Insurance Litigation”). The Insurance Litigation was filed against insurers that were not signatories to the Wellington Agreement and/or do not otherwise have agreements in place with the Corporation regarding their asbestos-related insurance coverage, in order to facilitate an orderly resolution and collection of such insurance policies and to resolve issues that the insurance carriers may raise. Since the filing of the case, the Corporation has reached settlements with most of the carriers involved in the Insurance Litigation and continues to pursue a settlement with the remaining carrier. The Corporation’s receivable for insurance recoveries related to its asbestos liability was $10 million at September 30, 2015 and December 31, 2014.

In addition to the receivable for insurance recoveries related to its asbestos liability, the Corporation had receivables for defense and resolution costs submitted to insurance carriers that have settlement agreements in place regarding their asbestos-related insurance coverage. The following table summarizes the Corporation’s receivables related to its asbestos-related liability:

Receivables for Asbestos-Related Costs In millions	Sep 30, 2015		Dec 31, 2014
Receivables for defense and resolution costs - carriers with settlement agreements	$	51	$	69
Receivables for insurance recoveries - carriers without settlement agreements	10		10
Total	$	61	$	79

After a review of its insurance policies, with due consideration given to applicable deductibles, retentions and policy limits, and after taking into account the solvency and historical payment experience of various insurance carriers; existing insurance settlements; and the advice of outside counsel with respect to the applicable insurance coverage law relating to the terms and conditions of its insurance policies, the Corporation continues to believe that its recorded receivable for insurance recoveries from all insurance carriers is probable of collection.

The Corporation expenses defense costs as incurred. The pretax impact for defense and resolution costs, net of insurance, was $20 million for the third quarter of 2015 ($32 million in the third quarter of 2014), $65 million for the first nine months of 2015 ($86 million for the first nine months of 2014) and reflected in “Cost of sales” in the consolidated statements of income.

13

Union Carbide Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

Summary

The amounts recorded by the Corporation for the asbestos-related liability and related insurance receivable described above were based upon current, known facts. However, future events, such as the number of new claims to be filed and/or received each year, the average cost of disposing of each such claim, coverage issues among insurers and the continuing solvency of various insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the United States, could cause the actual costs and insurance recoveries for the Corporation to be higher or lower than those projected or those recorded.

Because of the uncertainties described above, the Corporation's management cannot estimate the full range of the cost of resolving pending and future asbestos-related claims facing UCC and Amchem. The Corporation's management believes that it is reasonably possible that the cost of disposing of the Corporation’s asbestos-related claims, including future defense 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 of the Corporation.

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 adequate provisions have been made for probable losses with respect to pending claims and proceedings, and that, except for the asbestos-related matters described above, the ultimate outcome of all known and future claims, after provisions for insurance, will not have a material adverse impact on the results of operations, cash flows and financial position of the Corporation. Should any losses be sustained in connection with any of such legal proceedings and claims in excess of provisions provided and available insurance, they will be charged to income when determinable.

Purchase Commitments

A summary of the Corporation's purchase commitments can be found in Note 13 to the Consolidated Financial Statements included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2014. There have been no material changes to purchase commitments since December 31, 2014.

NOTE 8 - PENSION AND OTHER POSTRETIREMENT BENEFITS

Net Periodic Benefit Cost for All Significant Plans	Three Months Ended						Nine Months Ended
In millions	Sep 30, 2015			Sep 30, 2014			Sep 30, 2015			Sep 30, 2014
Defined Benefit Pension Plans:
Service cost	$	11		$	7		$	33		$	23
Interest cost	41			46			123			138
Expected return on plan assets	(57		)	(58		)	(171		)	(174		)
Amortization of prior service cost	—			1			—			3
Amortization of net loss	22			17			66			51
Net periodic benefit cost	$	17		$	13		$	51		$	41
Other Postretirement Benefits:
Interest cost	$	3		$	3		$	9		$	9
Amortization of net gain	(3		)	(2		)	(9		)	(6		)
Net periodic benefit cost	$	—		$	1		$	—		$	3

14

Union Carbide Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 9 - RELATED PARTY TRANSACTIONS

The Corporation sells its products to Dow to simplify the customer interface process. Products are sold to and purchased from Dow at market-based prices in accordance with the terms of Dow’s intercompany pricing policies. After each quarter, the Corporation and Dow analyze the pricing used for the sales in that quarter and reach agreement on any necessary adjustments, at which point the prices are final. The Corporation also procures certain commodities and raw materials through a Dow subsidiary and pays a commission to that Dow subsidiary based on the volume and type of commodities and raw materials purchased. The commission expense is included in “Sundry income (expense) - net” in the consolidated statements of income. Purchases from that Dow subsidiary were $399 million in the third quarter of 2015 ($756 million in the third quarter of 2014) and $1,392 million during the first nine months of 2015 ($2,187 million during the first nine months of 2014).

The Corporation has a master services agreement with Dow whereby Dow provides services including, but not limited to, accounting, legal, treasury (investments, cash management, risk management, insurance), procurement, human resources, environmental, health and safety and business management for UCC. Under the master services agreement with Dow, general administrative and overhead type services that Dow routinely allocates to various businesses are charged to UCC. The master services agreement cost allocation basis is headcount and includes a 10 percent service fee. This agreement resulted in expense of $7 million in the third quarter of 2015 ($6 million in the third quarter of 2014) and $22 million for the first nine months of 2015 ($19 million for the first nine months of 2014) for general administrative and overhead type services and the 10 percent service fee, included in “Sundry income (expense) - net” in the consolidated statements of income. The remaining activity-based costs were $18 million in the third quarter of 2015 ($13 million in the third quarter of 2014), and $51 million in the first nine months of 2015 ($37 million in the first nine months of 2014), and were included in “Cost of sales” in the consolidated statements of income. The increase in activity-based costs in 2015 when compared with 2014 for the same periods is due to additional charges for engineering services to support site infrastructure projects as well as planned maintenance turnaround projects.

Management believes the method used for determining expenses charged by Dow is reasonable. Dow provides these services by leveraging its centralized functional service centers to provide services at a cost that management believes provides an advantage to the Corporation.

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

As part of Dow’s cash management process, UCC is a party to revolving loans with Dow that have interest rates based on LIBOR (London Interbank Offered Rate) with varying maturities. At September 30, 2015, the Corporation had a note receivable of $1.4 billion ($1.2 billion at December 31, 2014) from Dow under a revolving loan agreement. The Corporation may draw from this note receivable in support of its daily working capital requirements and, as such, the net effect of cash inflows and outflows under this revolving loan agreement is presented in the consolidated statements of cash flows as an operating activity.

The Corporation also has a separate revolving credit agreement with Dow that allows the Corporation to borrow or obtain credit enhancements up to an aggregate of $1 billion that matures December 30, 2015. Dow may demand repayment with a 30-day written notice to the Corporation, subject to certain restrictions. A related collateral agreement provides for the replacement of certain existing pledged assets, primarily equity interests in various subsidiaries and joint ventures, with cash collateral. At September 30, 2015, $907 million ($875 million at December 31, 2014) was available under the revolving credit agreement. The cash collateral is reported as “Noncurrent receivables from related companies” in the consolidated balance sheets.

On a quarterly basis, the Corporation's Board of Directors reviews and approves a dividend distribution to its parent company and sole shareholder, Dow. The Board takes into consideration the level of earnings and cash flows, among other factors, in determining the amount of the dividend distribution. In the third quarter of 2015, the Corporation did not pay a cash dividend to Dow; dividends to Dow totaled $220 million in the first nine months of 2015. In the third quarter of 2014, the Corporation declared and paid a dividend of $355 million to Dow; dividends to Dow totaled $1 billion in the first nine months of 2014.

The Corporation received no cash dividends from its related company investments in the third quarter of 2015 and during the first nine months of 2015 ($2 million in the third quarter of 2014 and $11 million during the first nine months of 2014). These dividends are included in “Sundry income (expense) – net” in the consolidated statements of income.

15

Union Carbide Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

In the third quarter of 2014, as part of the sale-leaseback transaction entered into by Dow for a significant portion of Dow's North American railcar fleet, UCC sold all of the railcars owned by UCC to Dow at fair value for $145 million in cash. The sale of the railcars resulted in a pretax gain of $66 million, and is included in "Sundry income (expense) - net" in the consolidated statements of income.

On October 5, 2015, Dow announced (i) it had completed the transfer of its U.S. Gulf Coast Chlor-Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses into a new company ("Splitco"), (ii) participating Dow shareholders tendered, and Dow accepted, Dow shares for Splitco shares in a public exchange offer, and (iii) Splitco merged with a wholly owned subsidiary of Olin Corporation in a tax efficient Reverse Morris Trust transaction (collectively, the “Transaction”).

As part of the Transaction, Dow established a separate legal entity structure to hold the relevant assets to be carved out from the existing Dow structure. To facilitate the Transaction, all entities in Europe and Asia Pacific were aligned under one single entity, with shares owned entirely by Dow. In order to align entity ownership under Dow, entities distributed shares to Dow through either a series of dividends or share redemptions. As a result, in September 2015, UCC redeemed 462.7096 shares of common stock of Dow International Holding Company (“DIHC”), a cost method investment, in exchange for stock in Blue Cube International Holdings, LLC (“BCIH”). Prior to the distribution, UCC had a 19.1 percent ownership interest in DIHC with the other 80.9 percent owned by Dow and its other wholly-owned subsidiaries. After the distribution, UCC’s investment in DIHC was reduced to 15.0 percent and resulted in a reduction in investments in related companies of $174 million. UCC then transferred and distributed to Dow all of its membership interest in BCIH in exchange for 64.58 shares of its common stock held by Dow. Dow will continue to own 100 percent of UCC. The results of these transactions are reflected in “Investments in related companies” and “Additional paid-in capital” in the consolidated balance sheets.

NOTE 10 - ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table provides an analysis of the changes in accumulated other comprehensive loss for the nine-month periods ended September 30, 2015 and 2014:

Accumulated Other Comprehensive Loss	Nine Months Ended
In millions	Sep 30, 2015			Sep 30, 2014
Cumulative Translation Adjustments at beginning of year	$	(63	)	$	(78	)
Translation adjustments	—			(1		)
Reclassification to earnings - Sundry income (expense) - net	—			(1		)
Balance at end of period	$	(63	)	$	(80	)
Pension and Other Postretirement Benefit Plans at beginning of year	$	(1,180	)	$	(967	)
Adjustments to pension and other postretirement benefit plans (net of tax of $19, $17) (1) (2)	38			30
Balance at end of period	$	(1,142	)	$	(937	)
Total Accumulated Other Comprehensive Loss	$	(1,205	)	$	(1,017	)

(1) Included in "Net periodic benefit cost." See Note 8 for additional information.

(2) Tax amounts are included in "Provision for income taxes" in the consolidated statements of income.

16

Union Carbide Corporation and Subsidiaries

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

Pursuant to General Instruction H of Form 10-Q “Omission of Information by Certain Wholly-Owned Subsidiaries,” this section includes only management's narrative analysis of the results of operations for the nine-month period ended September 30, 2015, the most recent period, compared with the nine-month period ended September 30, 2014, the corresponding period in the preceding fiscal year.

References to “Dow” refer to The Dow Chemical Company and its consolidated subsidiaries, except as otherwise indicated by the context.

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

RESULTS OF OPERATIONS

Total net sales were $1,460 million in the third quarter of 2015 compared with $1,738 million in the third quarter of 2014, a decrease of 16 percent. Total net sales were $4,527 million for the first nine months of 2015 compared with $5,186 million for the first nine months of 2014, a decrease of 13 percent. Net sales to related companies, principally to Dow, and based on market prices for the related products, for the third quarter of 2015 were $1,442 million compared with $1,711 million for the third quarter of 2014, a decrease of 16 percent. Net sales to related companies were $4,466 million for the first nine months of 2015 compared with $5,109 million for the first nine months of 2014, a decrease of 13 percent.

Average selling prices for most products decreased in the third quarter of 2015 compared with the third quarter of 2014. Prices were down across all businesses, primarily driven by lower feedstock and energy costs as well as competitive pricing pressure. Total sales volume was down in the third quarter of 2015 compared with the third quarter of 2014. Sales volume increases in ethylene, vinyl acetate monomer, POLYOX^™ and oxo alcohols were more than offset by lower demand in surfactants, ethylene oxide/ethylene glycol ("EO/EG") and acrylic monomers.

For the first nine months of 2015, average selling prices for most products decreased compared with the first nine months of 2014, driven by lower feedstock, energy and other raw material costs. Sales volume for the first nine months of 2015 declined slightly compared with the first nine months of 2014. Sales volume increases in polyethylene, oxo alcohols and vinyl acetate monomer were more than offset by declines in ethylene, which was impacted by a planned maintenance turnaround and higher internal consumption in 2015, and lower demand for electrical and telecommunications, surfactants and glutaraldehydes for the same period last year.

Cost of sales decreased 23 percent from $1,426 million in the third quarter of 2014 to $1,094 million in the third quarter of 2015. Cost of sales decreased 20 percent from $4,485 million in the first nine months of 2014 to $3,598 million in the first nine months of 2015. Decreases from the three- and nine-month periods ended September 30, 2014, were driven by lower feedstock, energy and other raw material costs, which were partially offset by an increase in planned maintenance turnaround spending in the same periods last year.

Research and development expenses were $5 million in the third quarter of 2015, compared with $4 million in the third quarter of 2014. For the first nine months of 2015, research and development expenses were $15 million, flat when compared with the first nine months of 2014. Selling, general and administrative expenses were $2 million in the third quarter of 2015, flat when compared with the third quarter of 2014. For the first nine months of 2015, selling, general and administrative expenses were $6 million compared with $7 million in the first nine months of 2014.

In the second quarter of 2015, the Corporation recorded pretax restructuring charges of $18 million consisting of costs associated with exit or disposal activities of $2 million, severance costs of $2 million and asset write-downs and write-offs of $14 million. The impact of these charges is shown as "Restructuring charges" in the consolidated statements of income. See Note 3to the Consolidated Financial Statements for additional information.

Equity in earnings of nonconsolidated affiliates was $1 million in the third quarter of 2015 compared with $2 million in the third quarter of 2014. Equity in earnings of nonconsolidated affiliates was $3 million in the first nine months of 2015 compared with $6 million in the first nine months of 2014.

17

Union Carbide Corporation and Subsidiaries

Sundry income (expense) – net includes a variety of income and expense items such as the gain or loss on foreign currency exchange, dividend income from investments, commissions, charges for management services provided by Dow, and gains and losses on sales of investments and assets. Sundry income (expense) - net for the third quarter of 2015 was net expense of $17 million compared with net income of $54 million for the same quarter last year. The third quarter of 2014 included the gain on the sale of UCC's railcar fleet to Dow and higher dividend income from related company investments. For the first nine months of 2015, sundry income (expense) - net was net expense of $28 million compared with net income of $42 million for the first nine months of 2014. The first nine months of 2015 included the net gain on the transfer of ownership of a third party's land and facilities in Institute, West Virginia, to UCC in the second quarter of 2015. The first nine months of 2014 included the gain on the sale of UCC's railcar fleet to Dow in the third quarter of 2014, a gain on the sale of assets in the second quarter of 2014 and higher dividend income from related company investments.

Interest income was $3 million in the third quarter of 2015 ($6 million for the first nine months of 2015) compared with $2 million in the third quarter of 2014 ($8 million for the first nine months of 2014). Interest expense and amortization of debt discount was $7 million in the third quarter of 2015 ($21 million for the first nine months of 2015) compared with $8 million in the third quarter of 2014 ($23 million for the first nine months of 2014).

The Corporation reported a tax provision of $91 million in the third quarter of 2015, which resulted in an effective tax rate of 26.8 percent. This compared with a tax provision of $109 million in the third quarter of 2014, which resulted in an effective tax rate of 30.6 percent. For the first nine months of 2015, the Corporation reported a tax provision of $262 million, which resulted in an effective tax rate of 30.8 percent. This compared with a tax provision of $223 million for the first nine months of 2014, which resulted in an effective tax rate of 31.3 percent. The effective tax rate fluctuates based on, among other factors, where income is earned, dividends received from investments in related companies and the level of income relative to tax credits available. The decrease in the third quarter of 2015 tax rate compared with the third quarter of 2014 was primarily due to the release of valuation allowances recorded in the third quarter of 2015.

The Corporation reported net income of $248 million in the third quarter of 2015, essentially flat compared with $247 million in the third quarter of 2014. The impact of lower selling prices across all businesses, increased planned maintenance turnaround spending and a decrease in sundry income were offset by the favorable impact of lower feedstock, energy and other raw material costs when compared with the same period last year. Net income for the first nine months of 2015 was $588 million compared with $489 million for the first nine months of 2014. Lower feedstock, energy and other raw material costs and the gain on the transfer of ownership of the Institute, West Virginia site more than offset the impact of lower selling prices, restructuring charges, a decrease in sundry income and higher planned maintenance turnaround spending in the first nine months of 2015 compared with the first nine months of 2014.

Capital spending in the third quarter of 2015 was $71 million ($185 million for the first nine months of 2015) compared with $34 million in the third quarter of 2014 ($98 million for the first nine months of 2014), reflecting increased spending on U.S. Gulf Coast projects and site infrastructure projects both for the quarter and first nine months of 2015. The Corporation expects capital spending in 2015 to be approximately $260 million.

Institute, West Virginia Site

On March 23, 2015, UCC signed an agreement with Bayer CropScience LP ("BCS") to transfer ownership of BCS's Institute Industrial Park to UCC. Effective April 1, 2015, UCC and BCS began a phased transfer to UCC of plant activities as well as the transfer of land and certain site assets to be completed by mid-year 2016. BCS will continue to be a tenant of the Industrial Park with UCC providing site services to BCS. In the second quarter of 2015, UCC recorded a net pretax gain of $23 million on the transfer of ownership and control of the site, which is included in "Sundry income (expense) - net" in the consolidated statements of income. The gain on the transaction represents the transfer of land, certain site assets and cash consideration received offset by increases in remediation liabilities and a deferred liability for site services. Additional costs may be recognized for demolition and decommissioning costs and will be recorded in the period incurred.

18

Union Carbide Corporation and Subsidiaries

OTHER MATTERS

Recent Accounting Guidance

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

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Note 1 to the Consolidated Financial Statements in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014 (“2014 10-K”) describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. The Corporation’s critical accounting policies that are impacted by judgments, assumptions and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Corporation’s 2014 10-K. Since December 31, 2014, there have been no material changes in the Corporation’s critical accounting policies.

Asbestos-Related Matters

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

It is the opinion of UCC's management that it is reasonably possible that the costs of disposing of its asbestos-related claims, including future defense 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 of the Corporation.

The table below provides information regarding asbestos-related claims pending against the Corporation and Amchem, based on criteria developed by UCC and its external consultants. UCC had a significant increase in the number of claims settled, dismissed or otherwise resolved in 2015, resulting from a detailed review of the status of individual claims and an update to criteria used to classify claims.

	2015		2014
Claims unresolved at January 1	26,116		29,005
Claims filed	5,919		6,821
Claims settled, dismissed or otherwise resolved	(13,568	)	(6,600	)
Claims unresolved at September 30	18,467		29,226
Claimants with claims against both UCC and Amchem	(6,714	)	(8,261	)
Individual claimants at September 30	11,753		20,965

Plaintiffs' lawyers often sue numerous defendants in individual lawsuits or on behalf of numerous claimants. As a result, the damages alleged are not expressly identified as to UCC, Amchem or any other particular defendant, even when specific damages are alleged with respect to a specific disease or injury. In fact, there are no personal injury cases in which only the Corporation and/or Amchem are the sole named defendants. For these reasons and based upon the Corporation's litigation and settlement experience, the Corporation does not consider the damages alleged against it and Amchem to be a meaningful factor in its determination of any potential asbestos-related liability.

For additional information see Asbestos-Related Matters in Note 7 to the Consolidated Financial Statements and Part II, Item 1. Legal Proceedings.

19

Union Carbide Corporation and Subsidiaries

Debt Covenants and Default Provisions

The Corporation’s outstanding public debt has been issued under indentures which contain, among other provisions, covenants that the Corporation must comply with while the underlying notes are outstanding. Such covenants are typically based on the Corporation’s size and financial position and include, subject to the exceptions and qualifications contained in the indentures, obligations not to (i) allow liens on principal U.S. manufacturing facilities, (ii) enter into sale and lease-back transactions with respect to principal U.S. manufacturing facilities, or (iii) merge into or consolidate with any other entity or sell or convey all or substantially all of its assets. Failure of the Corporation to comply with any of these covenants could, after the passage of any applicable grace period, result in a default under the applicable indenture which would allow the note holders to accelerate the due date of the outstanding principal and accrued interest on the subject notes. Management believes the Corporation was in compliance with the covenants referred to above at September 30, 2015.

Dividends

On a quarterly basis, the Corporation's Board of Directors reviews and approves a dividend distribution to its parent company and sole shareholder, Dow. The Board takes into consideration the level of earnings and cash flows, among other factors, in determining the amount of the dividend distribution.

In the third quarter of 2015, the Corporation did not declare or pay a cash dividend to Dow; dividends to Dow totaled $220 million for the first nine months of 2015. In the third quarter of 2014, the Corporation declared and paid a cash dividend of $355 million to Dow; dividends to Dow totaled $1.01 billion in the first nine months of 2014.

On October 23, 2015, the UCC Board of Directors approved a dividend to Dow of $950 million, payable on December 18, 2015.

20

Union Carbide Corporation and Subsidiaries

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omitted pursuant to General Instruction H of Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Corporation carried out an evaluation, under the supervision and with the participation of the Corporation's Disclosure Committee and the Corporation's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Corporation's disclosure controls and procedures pursuant to paragraph (b) of Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Corporation's disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting  

There were no changes in the Corporation's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting. 

PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

No material developments in asbestos-related matters occurred during the third quarter of 2015. For a summary of the history and current status of asbestos-related matters, see Note 7 to the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations, Asbestos-Related Matters.

ITEM 1A.  RISK FACTORS

There were no material changes in the Corporation's risk factors in the third quarter of 2015.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 6.  EXHIBITS

See the Exhibit Index of this Quarterly Report on Form 10-Q for exhibits filed with this report.

21

Union Carbide Corporation and Subsidiaries

Trademark Listing

The following trademark of The Dow Chemical Company appears in this report:

POLYOX

22

Union Carbide Corporation and Subsidiaries

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		UNION CARBIDE CORPORATION
		Registrant
Date: October 27, 2015
	By:	/s/ RONALD C. EDMONDS
		Ronald C. Edmonds
		Vice President and Controller
		The Dow Chemical Company
		Authorized Representative of
		Union Carbide Corporation
	By:	/s/ IGNACIO MOLINA
		Ignacio Molina
		Vice President, Treasurer and
		Chief Financial Officer

23

Union Carbide Corporation and Subsidiaries

Exhibit Index

EXHIBIT NO.	DESCRIPTION
23	Analysis, Research & Planning Corporation’s Consent.
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

24

EX-23

EXHIBIT 23

Analysis, Research & Planning Corporation's Consent

Union Carbide Corporation:

Analysis, Research & Planning Corporation (“ARPC”) hereby consents to the use of ARPC's name and the reference to ARPC's reports appearing in this Quarterly Report on Form 10-Q of Union Carbide Corporation for the quarter ended September 30, 2015.

/s/ B. THOMAS FLORENCE

B. Thomas Florence

President

Analysis, Research & Planning Corporation

October 23, 2015

25

EX-31.1

EXHIBIT 31.1

Union Carbide Corporation and Subsidiaries

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Richard A. Wells, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Union Carbide Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 27, 2015

/s/ RICHARD A. WELLS

Richard A. Wells

President and Chief Executive Officer

26

EX-31.2

EXHIBIT 31.2

Union Carbide Corporation and Subsidiaries

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Ignacio Molina, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Union Carbide Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 27, 2015

/s/ IGNACIO MOLINA

Ignacio Molina

Vice President, Treasurer and

Chief Financial Officer

27

EX-32.1

EXHIBIT 32.1

Union Carbide Corporation and Subsidiaries

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Richard A. Wells, President and Chief Executive Officer of Union Carbide Corporation (the “Corporation”), certify that:

1. the Quarterly Report on Form 10-Q of the Corporation for the quarter ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ RICHARD A. WELLS

Richard A. Wells

President and Chief Executive Officer

Date: October 27, 2015

28

EX-32.2

EXHIBIT 32.2

Union Carbide Corporation and Subsidiaries

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Ignacio Molina, Vice President, Treasurer and Chief Financial Officer of Union Carbide Corporation (the “Corporation”), certify that:

1. the Quarterly Report on Form 10-Q of the Corporation for the quarter ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ IGNACIO MOLINA

Ignacio Molina

Vice President, Treasurer and

Chief Financial Officer

Date: October 27, 2015

29

XML

ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Translation adjustments		$ 0	$ (1)	$ 0	$ (2)
Adjustments to pension and other postretirement benefit plans		14	10	38	30
Accumulated Other Comprehensive Income (Loss) [Member]
Union Carbide Corporation's Stockholder's Equity, Beginning				(1,243)	(1,045)
Union Carbide Corporation's Stockholder's Equity, Ending		(1,205)	(1,017)	(1,205)	(1,017)
Accumulated Translation Adjustment [Member]
Translation adjustments				0	(1)
Union Carbide Corporation's Stockholder's Equity, Beginning				(63)	(78)
Union Carbide Corporation's Stockholder's Equity, Ending		(63)	(80)	(63)	(80)
Accumulated Defined Benefit Plans and Other Post Retirement Adjustment [Member]
Union Carbide Corporation's Stockholder's Equity, Beginning				(1,180)	(967)
Adjustments to pension and other postretirement benefit plans	[1],[2]			38	30
Adjustments to pension and other postretirement benefit plans, tax	[2]			(19)	(17)
Union Carbide Corporation's Stockholder's Equity, Ending		$ (1,142)	$ (937)	(1,142)	(937)
Impact to Sundry income (expense) [Member]
Reclassification to earnings - Sundry income (expense) - net				$ 0	$ (1)

[1] Included in "Net periodic benefit cost." See Note 8 for additional information.

[2] Tax amounts are included in "Provision for income taxes" in the consolidated statements of income.

XML

INTANGIBLE ASSETS (Schedule of Amortization Expense of Intangible Assets) (Table and Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 92	$ 88
Finite-Lived Intangible Assets, Accumulated Amortization	(74)	(73)
Finite-Lived Intangible Assets, Net	18	15
Licenses and intellectual property [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	33	33
Finite-Lived Intangible Assets, Accumulated Amortization	(33)	(33)
Finite-Lived Intangible Assets, Net	0	0
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	59	55
Finite-Lived Intangible Assets, Accumulated Amortization	(41)	(40)
Finite-Lived Intangible Assets, Net	$ 18	$ 15

XML

RECENT ACCOUNTING GUIDANCE

9 Months Ended

Sep. 30, 2015

Recent Accounting Guidance [Abstract]

RECENT ACCOUNTING GUIDANCE

RECENT ACCOUNTING GUIDANCE

Accounting Guidance Issued But Not Yet Adopted as of September 30, 2015

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under U.S. GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which was issued in August 2015, revised the effective date for this ASU to annual and interim periods beginning on or after December 15, 2017, with early adoption permitted, but not earlier than the original effective date of annual and interim periods beginning on or after December 15, 2016, for public entities. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Corporation is currently evaluating the impact of adopting this guidance.

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Corporation is currently evaluating the impact of adopting this guidance.

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COMMITMENTS AND CONTINGENT LIABILITIES (Environmental Matters) (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies	$ 129	$ 132
Accrual For Environmental Loss Contingencies Superfund Sites [Member]
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies	$ 22	$ 22

XML

FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS (Long-Term Debt) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Long-term Debt [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 481	$ 482
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Long-term Debt [Member]
Debt Instrument [Line Items]
Long-term Debt, Fair Value	$ 586	$ 601

XML

COMMITMENTS AND CONTINGENT LIABILITIES (Asbestos-Related Matters of Union Carbide Corporation) (Table and Narrative) (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2002
Loss Contingencies [Line Items]
Liability for asbestos claims, gross	$ 454	$ 513		$ 454		$ 2,200
Asbestos Related Loss Contingency, Range of Possible Loss, Minimum		540
Asbestos Related Loss Contingency, Range of Possible Loss, Maximum		640
Asbestos Related Charges Credit		$ 78
Percentage of recorded asbestos liability related to pending claims	19.00%	22.00%		19.00%
Percentage of recorded asbestos liability related to future claims	81.00%	78.00%		81.00%
Receivables for asbestos-related costs	$ 61	$ 79		$ 61		$ 1,350
Defense and resolution costs for asbestos related claims	20		$ 32	65	$ 86
Estimated Insurance Recoveries of Defense and Resolution Costs [Member] [Domain]
Loss Contingencies [Line Items]
Receivables for asbestos-related costs	51	69		51
Receivables for insurance recoveries - carriers without settlement agreements
Loss Contingencies [Line Items]
Receivables for asbestos-related costs	$ 10	$ 10		$ 10

XML

PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Defined Benefit Pension Plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost	$ 11	$ 7	$ 33	$ 23
Interest cost	41	46	123	138
Expected return on plan assets	(57)	(58)	(171)	(174)
Amortization of prior service cost	0	1	0	3
Amortization of net (gain) loss	22	17	66	51
Net periodic benefit cost	17	13	51	41
Other Postretirement Benefits [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Interest cost	3	3	9	9
Amortization of net (gain) loss	(3)	(2)	(9)	(6)
Net periodic benefit cost	$ 0	$ 1	$ 0	$ 3

XML

CONSOLIDATED FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

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.

The Corporation is a wholly owned subsidiary of The Dow Chemical Company (“Dow”). 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 Dow’s global operations rather than stand-alone operations. Dow 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.

Intercompany transactions and balances are eliminated in consolidation. Transactions with the Corporation’s parent company, Dow, and other Dow subsidiaries have been reflected as related company transactions in the consolidated financial statements. See Note 9 for further discussion.

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, 2014.

XML

RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 18, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Payments of Dividends			$ 220	$ 1,010
Proceeds from Dividends Received	$ 0	$ 2	0	11
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	$ 639		639			$ 813
Treasury Stock, Shares, Constructively Retired	64.58
The Dow Chemical Company [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	$ 399	756	$ 1,392	2,187
Service Fee with Parent			10.00%
Notes Receivable, Related Parties	1,400		$ 1,400			1,200
Line of Credit Facility, Maximum Borrowing Capacity	1,000		1,000
Notes Receivable, Related Parties, Noncurrent	907		907			$ 875
Payments of Dividends	$ 0	355	$ 220	1,000
Proceeds from Sale of Productive Assets		145
Subsidiary or Equity Method Investee, Cumulative Percentage Ownership after All Transactions	100.00%
Dow International Holding Company [Member]
Related Party Transaction [Line Items]
Common Stock, Related Company					462.7096
Ownership Interest Percentage, Related Company	15.00%		15.00%		19.10%
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	$ 174		$ 174
Sundry income (expense) [Member] | The Dow Chemical Company [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	7	6	22	19
Gain (Loss) on Sale of Assets and Asset Impairment Charges		66
Cost of Sales [Member] | The Dow Chemical Company [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	$ 18	$ 13	$ 51	$ 37
The Dow Chemical Company [Member] | Dow International Holding Company [Member]
Related Party Transaction [Line Items]
Ownership Interest Percentage, Related Company					80.90%

XML

Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net trade sales	$ 18	$ 27	$ 61	$ 77
Net sales to related companies	1,442	1,711	4,466	5,109
Total Net Sales	1,460	1,738	4,527	5,186
Cost of sales	1,094	1,426	3,598	4,485
Research and development expenses	5	4	15	15
Selling, general and administrative expenses	2	2	6	7
Restructuring charges	0	0	18	0
Equity in earnings of nonconsolidated affiliates	1	2	3	6
Sundry income (expense) - net	(17)	54	(28)	42
Interest income	3	2	6	8
Interest expense and amortization of debt discount	7	8	21	23
Income Before Income Taxes	339	356	850	712
Provision for income taxes	91	109	262	223
Net Income Attributable to Union Carbide Corporation	248	247	588	489
Depreciation	40	45	118	133
Capital Expenditures	$ 71	$ 34	$ 185	$ 98

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Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Operating Activities
Net Income	$ 588	$ 489
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	137	150
Provision (credit) for deferred income tax	32	(92)
Earnings of nonconsolidated affiliates in excess of dividends received	(1)	(6)
Net (gain)/loss on sales of property	(3)	70
Net gain on ownership transfer of property	(23)	0
Restructuring charges	18	0
Pension contributions	(1)	(1)
Other, net	2	0
Changes in assets and liabilities:
Accounts and notes receivable	20	(19)
Related company receivables	32	4
Inventories	18	(28)
Accounts payable	(10)	33
Related company payables	(414)	543
Other assets and liabilities	(32)	(85)
Cash provided by operating activities	369	918
Investing Activities
Capital expenditures	(185)	(98)
Change in noncurrent receivable from related company	33	30
Proceeds from sales of property	0	153
Post-closing payments on sale of property	(1)	0
Cash acquired in ownership transfer of property	5	0
Cash used in investing activities	(148)	85
Financing Activities
Proceeds from notes payable	1	0
Dividends paid to stockholder	(220)	(1,010)
Payments on long-term debt	1	0
Cash used in financing activities	(220)	(1,010)
Summary
Increase(decrease) in cash and cash equivalents	1	(7)
Cash and cash equivalents at beginning of year	23	33
Cash and cash equivalents at end of period	$ 24	$ 26

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

9 Months Ended

Sep. 30, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss	Nine Months Ended
In millions	Sep 30, 2015			Sep 30, 2014
Cumulative Translation Adjustments at beginning of year	$	(63	)	$	(78	)
Translation adjustments	—			(1		)
Reclassification to earnings - Sundry income (expense) - net	—			(1		)
Balance at end of period	$	(63	)	$	(80	)
Pension and Other Postretirement Benefit Plans at beginning of year	$	(1,180	)	$	(967	)
Adjustments to pension and other postretirement benefit plans (net of tax of $19, $17) (1) (2)	38			30
Balance at end of period	$	(1,142	)	$	(937	)
Total Accumulated Other Comprehensive Loss	$	(1,205	)	$	(1,017	)

(1) Included in "Net periodic benefit cost." See Note 8 for additional information.

(2) Tax amounts are included in "Provision for income taxes" in the consolidated statements of income.

XML

INVENTORIES (Schedule of Inventories) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Finished goods	$ 192	$ 205
Work in process	26	30
Raw materials	49	45
Supplies	85	98
Total inventories	352	378
Inventory, LIFO Reserve	$ 61	$ 125

XML

Consolidated Statements of Equity - USD ($) $ in Millions	Total	Union Carbide Corporation's Stockholder's Equity [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive (Loss), Net of Tax [Member]
Union Carbide Corporation's Stockholder's Equity, Beginning at Dec. 31, 2013			$ 0		$ 4,442	$ (1,045)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares acquired for constructive retirement	$ 0
Net Income	489				489
Dividends declared					(1,010)
Other comprehensive income	28					28
Union Carbide Corporation's Stockholder's Equity, Ending at Sep. 30, 2014			0	$ 312	3,921	(1,017)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stockholders' Equity, Other					0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		$ 3,216
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	2,809
Union Carbide Corporation's Stockholder's Equity, Beginning at Dec. 31, 2014			0		3,740	(1,243)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares acquired for constructive retirement	174
Net Income	588				588
Dividends declared					(220)
Other comprehensive income	38					38
Union Carbide Corporation's Stockholder's Equity, Ending at Sep. 30, 2015			$ 0	$ 312	4,122	$ (1,205)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stockholders' Equity, Other					$ 14
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 3,055	$ 3,055

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Net Income Attributable to Union Carbide Corporation	$ 248	$ 247	$ 588	$ 489
Other Comprehensive Income, Net of Tax
Translation adjustments	0	(1)	0	(2)
Adjustments to pension and other postretirement benefit plans	14	10	38	30
Total other comprehensive income	14	9	38	28
Comprehensive Income Attributable to Union Carbide Corporation	$ 262	$ 256	$ 626	$ 517

XML

ACCUMULATED OTHER COMPREHENSIVE LOSS

9 Months Ended

Sep. 30, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table provides an analysis of the changes in accumulated other comprehensive loss for the nine-month periods ended September 30, 2015 and 2014:

Accumulated Other Comprehensive Loss	Nine Months Ended
In millions	Sep 30, 2015			Sep 30, 2014
Cumulative Translation Adjustments at beginning of year	$	(63	)	$	(78	)
Translation adjustments	—			(1		)
Reclassification to earnings - Sundry income (expense) - net	—			(1		)
Balance at end of period	$	(63	)	$	(80	)
Pension and Other Postretirement Benefit Plans at beginning of year	$	(1,180	)	$	(967	)
Adjustments to pension and other postretirement benefit plans (net of tax of $19, $17) (1) (2)	38			30
Balance at end of period	$	(1,142	)	$	(937	)
Total Accumulated Other Comprehensive Loss	$	(1,205	)	$	(1,017	)

(1) Included in "Net periodic benefit cost." See Note 8 for additional information.

(2) Tax amounts are included in "Provision for income taxes" in the consolidated statements of income.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2015 shares
Document and Entity Information
Entity Registrant Name	UNION CARBIDE CORP /NEW/
Entity Central Index Key	0000100790
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding	935.42

XML

INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories In millions	Sep 30, 2015		Dec 31, 2014
Finished goods	$	192	$	205
Work in process	26		30
Raw materials	49		45
Supplies	85		98
Total inventories	$	352	$	378

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Current Assets
Cash and cash equivalents	$ 24	$ 23
Accounts receivable:
Trade (net of allowance for doubtful receivables - 2015: $-; 2014: $-)	16	29
Related companies	1,114	1,285
Other	53	67
Income taxes receivable	481	476
Notes receivable from related companies	1,431	1,292
Inventories	352	378
Deferred income taxes and other current assets	109	139
Total current assets	3,580	3,689
Investments
Investments in related companies	639	813
Investments in nonconsolidated affiliates	12	13
Other investments	7	8
Noncurrent receivables	44	44
Noncurrent receivables from related companies	98	131
Total investments	800	1,009
Property
Property	6,986	6,831
Less accumulated depreciation	5,726	5,679
Net property	1,260	1,152
Other Assets
Intangible assets (net of accumulated amortization 2015: $73; 2014: $73)	18	15
Deferred income tax assets - noncurrent	407	441
Asbestos-related insurance receivables - noncurrent	51	62
Deferred charges and other assets	34	45
Total other assets	510	563
Total Assets	6,150	6,413
Current Liabilities
Notes payable - related companies	27	43
Notes payable - other	1	0
Long-term debt due within one year	1	1
Accounts payable:
Trade	232	248
Related companies	474	872
Other	22	17
Income taxes payable	21	20
Asbestos-related liabilities - current	73	105
Accrued and other current liabilities	198	192
Total current liabilities	1,049	1,498
Long-Term Debt	480	481
Other Noncurrent Liabilities
Pension and other postretirement benefits - noncurrent	1,029	1,051
Asbestos-related liabilities - noncurrent	399	438
Other noncurrent obligations	138	136
Total other noncurrent liabilities	1,566	1,625
Stockholder's Equity
Common stock (authorized and issued: 1,000 shares of $0.01 par value each)	0	0
Additional paid-in capital	138	312
Retained earnings	4,122	3,740
Accumulated other comprehensive loss	(1,205)	(1,243)
Union Carbide Corporation's stockholder's equity	3,055	2,809
Total Liabilities and Equity	$ 6,150	$ 6,413

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INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2015

Intangible Assets, Net (Excluding Goodwill) [Abstract]

INTANGIBLE ASSETS DISCLOSURE

INTANGIBLE ASSETS

The following table provides information regarding the Corporation’s intangible assets:

Intangible Assets	At September 30, 2015							At December 31, 2014
In millions	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Intangible assets with finite lives:
Licenses and intellectual property	$	33	$	(33	)	$	—	$	33	$	(33	)	$	—
Software	59		(41		)	18		55		(40		)	15
Total intangible assets	$	92	$	(74	)	$	18	$	88	$	(73	)	$	15

Total estimated amortization expense for 2015 and the five succeeding fiscal years is as follows:

Estimated Amortization Expense In millions
2015	$	2
2016	$	3
2017	$	3
2018	$	4
2019	$	4
2020	$	3

XML

INVENTORIES

9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

The following table provides a breakdown of inventories:

Inventories In millions	Sep 30, 2015		Dec 31, 2014
Finished goods	$	192	$	205
Work in process	26		30
Raw materials	49		45
Supplies	85		98
Total inventories	$	352	$	378

The reserves reducing inventories from the first-in, first-out (“FIFO”) basis to the last-in, first-out (“LIFO”) basis amounted to $61 million at September 30, 2015 and $125 million at December 31, 2014.

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RESTRUCTURING RESTRUCTURING (Details) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2015 USD ($) employees	Jun. 30, 2015 USD ($) employees	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) employees	Sep. 30, 2014 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 0	$ 18	$ 0	$ 18	$ 0
Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Number of Positions Eliminated | employees		16
Severance Costs		$ 2
Payments for Restructuring				(1)
Restructuring Reserve	$ 1			$ 1
Entity Number of Employees | employees	13			13
Cost Associated with Exit and Disposal Activities [Member]
Restructuring Cost and Reserve [Line Items]
Costs Associated with Exit and Disposal Activities		2
Impairment of Long-Lived Assets and Other Assets [Member]
Restructuring Cost and Reserve [Line Items]
Impairment of Long-Lived Assets and Other Assets		$ 14

XML

INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2015

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets

Intangible Assets	At September 30, 2015							At December 31, 2014
In millions	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Intangible assets with finite lives:
Licenses and intellectual property	$	33	$	(33	)	$	—	$	33	$	(33	)	$	—
Software	59		(41		)	18		55		(40		)	15
Total intangible assets	$	92	$	(74	)	$	18	$	88	$	(73	)	$	15

Schedule of Expected Amortization Expense [Table Text Block]

Estimated Amortization Expense In millions
2015	$	2
2016	$	3
2017	$	3
2018	$	4
2019	$	4
2020	$	3

XML

PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

9 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

PENSION AND OTHER POSTRETIREMENT BENEFITS

Net Periodic Benefit Cost for All Significant Plans	Three Months Ended						Nine Months Ended
In millions	Sep 30, 2015			Sep 30, 2014			Sep 30, 2015			Sep 30, 2014
Defined Benefit Pension Plans:
Service cost	$	11		$	7		$	33		$	23
Interest cost	41			46			123			138
Expected return on plan assets	(57		)	(58		)	(171		)	(174		)
Amortization of prior service cost	—			1			—			3
Amortization of net loss	22			17			66			51
Net periodic benefit cost	$	17		$	13		$	51		$	41
Other Postretirement Benefits:
Interest cost	$	3		$	3		$	9		$	9
Amortization of net gain	(3		)	(2		)	(9		)	(6		)
Net periodic benefit cost	$	—		$	1		$	—		$	3

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FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2015

Financial Instruments [Abstract]

Financial Instruments Disclosure [Text Block]

FINANCIAL INSTRUMENTS

Investments

The Corporation's investments in marketable securities include debt securities which are classified as available-for-sale. At September 30, 2015, the Corporation held $4 million in debt securities ($5 million at December 31, 2014), which had contractual maturities of less than 10 years. These securities are recorded at fair value, which approximates cost, and are included in “Other investments” in the consolidated balance sheets and classified as Level 2 measurements. There were no proceeds from sales of marketable securities for the nine-month periods ended September 30, 2015 and September 30, 2014.

For securities frequently traded in less active markets, fair value is based on the closing price at the end of the period; where the security is less frequently traded, fair value is based on the price a dealer would pay for the security or similar securities, adjusted for any terms specific to that asset or liability, or by using observable market data points of similar, more liquid securities to imply the price. Market inputs are obtained from well-established and recognized vendors of market data and subjected to tolerance/quality checks.

Long-Term Debt

The Corporation had long-term debt of $481 million in the consolidated balance sheets at September 30, 2015 ($482 million at December 31, 2014). At September 30, 2015, the fair value of this long-term debt was $586 million ($601 million at December 31, 2014) and is classified as a Level 2 measurement. Fair value is determined in a manner similar to the methods described above for investments.

Cost approximates fair value for all other financial instruments.

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COMMITMENTS AND CONTINGENT LIABILITIES

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES DISCLOSURE

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 September 30, 2015, the Corporation had accrued obligations of $129 million for probable environmental remediation and restoration costs, including $22 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, however, 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. At December 31, 2014, the Corporation had accrued obligations of $132 million for probable environmental remediation and restoration costs, including $22 million for the remediation of Superfund sites.

Litigation

The Corporation is 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 regulatory proceedings; health, safety and environmental matters; employment; patents; contracts; taxes; and commercial disputes.

Asbestos-Related Matters

Separately, 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 Liability

Based on a study completed by Analysis, Research & Planning Corporation (“ARPC”) in January 2003, the Corporation increased its December 31, 2002 asbestos-related liability for pending and future claims for the 15-year period ending in 2017 to $2.2 billion, excluding future defense and processing costs. Since then, the Corporation has compared current asbestos claim and resolution activity to the results of the most recent ARPC study at each balance sheet date to determine whether the accrual continues to be appropriate. In addition, the Corporation has requested ARPC to review the Corporation’s historical asbestos claim and resolution activity each year since 2004 to determine the appropriateness of updating the most recent ARPC study.

In October 2014, the Corporation requested ARPC to review its historical asbestos claim and resolution activity and determine the appropriateness of updating its December 2012 study. In response to that request, ARPC reviewed and analyzed data through September 30, 2014. The resulting study, completed by ARPC in December 2014, estimates that the undiscounted cost of disposing of pending and future claims against UCC and Amchem, excluding future defense and processing costs, to be between $540 million and $640 million through 2029 based on the data as of September 30, 2014. As in earlier studies, ARPC provided longer periods of time in its December 2014 study, but also reaffirmed that forecasts for shorter periods of time are more accurate than those for longer periods of time.

In December 2014, based on ARPC's December 2014 study and the Corporation's own review of the asbestos claim and resolution activity, the Corporation determined that an adjustment to the accrual was required due to the increase in mesothelioma claim activity compared with what had been forecasted in the December 2012 study. Accordingly, the Corporation increased its asbestos-related liability for pending and future claims by $78 million. The Corporation's asbestos-related liability for pending and future claims was $513 million at December 31, 2014, and approximately 22 percent of the recorded liability related to pending claims and approximately 78 percent related to future claims.

Based on the Corporation’s review of 2015 activity, it was determined that no adjustment to the accrual was required at September 30, 2015. The Corporation’s asbestos-related liability for pending and future claims was $454 million at September 30, 2015. Approximately 19 percent of the recorded liability related to pending claims and approximately 81 percent related to future claims.

Insurance Receivables

At December 31, 2002, the Corporation increased the receivable for insurance recoveries related to its asbestos liability to $1.35 billion, substantially exhausting its asbestos product liability coverage. The insurance receivable related to the asbestos liability was determined by the Corporation after a thorough review of applicable insurance policies and the 1985 Wellington Agreement, to which the Corporation and many of its liability insurers are signatory parties, as well as other insurance settlements, with due consideration given to applicable deductibles, retentions and policy limits, and taking into account the solvency and historical payment experience of various insurance carriers. The Wellington Agreement and other agreements with insurers are designed to facilitate an orderly resolution and collection of the Corporation’s insurance policies and to resolve issues that the insurance carriers may raise.

In September 2003, the Corporation filed a comprehensive insurance coverage case, now proceeding in the Supreme Court of the State of New York, County of New York, seeking to confirm its rights to insurance for various asbestos claims and to facilitate an orderly and timely collection of insurance proceeds (the “Insurance Litigation”). The Insurance Litigation was filed against insurers that were not signatories to the Wellington Agreement and/or do not otherwise have agreements in place with the Corporation regarding their asbestos-related insurance coverage, in order to facilitate an orderly resolution and collection of such insurance policies and to resolve issues that the insurance carriers may raise. Since the filing of the case, the Corporation has reached settlements with most of the carriers involved in the Insurance Litigation and continues to pursue a settlement with the remaining carrier. The Corporation’s receivable for insurance recoveries related to its asbestos liability was $10 million at September 30, 2015 and December 31, 2014.

In addition to the receivable for insurance recoveries related to its asbestos liability, the Corporation had receivables for defense and resolution costs submitted to insurance carriers that have settlement agreements in place regarding their asbestos-related insurance coverage. The following table summarizes the Corporation’s receivables related to its asbestos-related liability:

Receivables for Asbestos-Related Costs In millions	Sep 30, 2015		Dec 31, 2014
Receivables for defense and resolution costs - carriers with settlement agreements	$	51	$	69
Receivables for insurance recoveries - carriers without settlement agreements	10		10
Total	$	61	$	79

After a review of its insurance policies, with due consideration given to applicable deductibles, retentions and policy limits, and after taking into account the solvency and historical payment experience of various insurance carriers; existing insurance settlements; and the advice of outside counsel with respect to the applicable insurance coverage law relating to the terms and conditions of its insurance policies, the Corporation continues to believe that its recorded receivable for insurance recoveries from all insurance carriers is probable of collection.

The Corporation expenses defense costs as incurred. The pretax impact for defense and resolution costs, net of insurance, was $20 million for the third quarter of 2015 ($32 million in the third quarter of 2014), $65 million for the first nine months of 2015 ($86 million for the first nine months of 2014) and reflected in “Cost of sales” in the consolidated statements of income.

Summary

The amounts recorded by the Corporation for the asbestos-related liability and related insurance receivable described above were based upon current, known facts. However, future events, such as the number of new claims to be filed and/or received each year, the average cost of disposing of each such claim, coverage issues among insurers and the continuing solvency of various insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the United States, could cause the actual costs and insurance recoveries for the Corporation to be higher or lower than those projected or those recorded.

Because of the uncertainties described above, the Corporation's management cannot estimate the full range of the cost of resolving pending and future asbestos-related claims facing UCC and Amchem. The Corporation's management believes that it is reasonably possible that the cost of disposing of the Corporation’s asbestos-related claims, including future defense 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 of the Corporation.

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 adequate provisions have been made for probable losses with respect to pending claims and proceedings, and that, except for the asbestos-related matters described above, the ultimate outcome of all known and future claims, after provisions for insurance, will not have a material adverse impact on the results of operations, cash flows and financial position of the Corporation. Should any losses be sustained in connection with any of such legal proceedings and claims in excess of provisions provided and available insurance, they will be charged to income when determinable.

Purchase Commitments

A summary of the Corporation's purchase commitments can be found in Note 13 to the Consolidated Financial Statements included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2014. There have been no material changes to purchase commitments since December 31, 2014.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS DISCLOSURE

RELATED PARTY TRANSACTIONS

The Corporation sells its products to Dow to simplify the customer interface process. Products are sold to and purchased from Dow at market-based prices in accordance with the terms of Dow’s intercompany pricing policies. After each quarter, the Corporation and Dow analyze the pricing used for the sales in that quarter and reach agreement on any necessary adjustments, at which point the prices are final. The Corporation also procures certain commodities and raw materials through a Dow subsidiary and pays a commission to that Dow subsidiary based on the volume and type of commodities and raw materials purchased. The commission expense is included in “Sundry income (expense) - net” in the consolidated statements of income. Purchases from that Dow subsidiary were $399 million in the third quarter of 2015 ($756 million in the third quarter of 2014) and $1,392 million during the first nine months of 2015 ($2,187 million during the first nine months of 2014).

The Corporation has a master services agreement with Dow whereby Dow provides services including, but not limited to, accounting, legal, treasury (investments, cash management, risk management, insurance), procurement, human resources, environmental, health and safety and business management for UCC. Under the master services agreement with Dow, general administrative and overhead type services that Dow routinely allocates to various businesses are charged to UCC. The master services agreement cost allocation basis is headcount and includes a 10 percent service fee. This agreement resulted in expense of $7 million in the third quarter of 2015 ($6 million in the third quarter of 2014) and $22 million for the first nine months of 2015 ($19 million for the first nine months of 2014) for general administrative and overhead type services and the 10 percent service fee, included in “Sundry income (expense) - net” in the consolidated statements of income. The remaining activity-based costs were $18 million in the third quarter of 2015 ($13 million in the third quarter of 2014), and $51 million in the first nine months of 2015 ($37 million in the first nine months of 2014), and were included in “Cost of sales” in the consolidated statements of income. The increase in activity-based costs in 2015 when compared with 2014 for the same periods is due to additional charges for engineering services to support site infrastructure projects as well as planned maintenance turnaround projects.

Management believes the method used for determining expenses charged by Dow is reasonable. Dow provides these services by leveraging its centralized functional service centers to provide services at a cost that management believes provides an advantage to the Corporation.

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

As part of Dow’s cash management process, UCC is a party to revolving loans with Dow that have interest rates based on LIBOR (London Interbank Offered Rate) with varying maturities. At September 30, 2015, the Corporation had a note receivable of $1.4 billion ($1.2 billion at December 31, 2014) from Dow under a revolving loan agreement. The Corporation may draw from this note receivable in support of its daily working capital requirements and, as such, the net effect of cash inflows and outflows under this revolving loan agreement is presented in the consolidated statements of cash flows as an operating activity.

The Corporation also has a separate revolving credit agreement with Dow that allows the Corporation to borrow or obtain credit enhancements up to an aggregate of $1 billion that matures December 30, 2015. Dow may demand repayment with a 30-day written notice to the Corporation, subject to certain restrictions. A related collateral agreement provides for the replacement of certain existing pledged assets, primarily equity interests in various subsidiaries and joint ventures, with cash collateral. At September 30, 2015, $907 million ($875 million at December 31, 2014) was available under the revolving credit agreement. The cash collateral is reported as “Noncurrent receivables from related companies” in the consolidated balance sheets.

On a quarterly basis, the Corporation's Board of Directors reviews and approves a dividend distribution to its parent company and sole shareholder, Dow. The Board takes into consideration the level of earnings and cash flows, among other factors, in determining the amount of the dividend distribution. In the third quarter of 2015, the Corporation did not pay a cash dividend to Dow; dividends to Dow totaled $220 million in the first nine months of 2015. In the third quarter of 2014, the Corporation declared and paid a dividend of $355 million to Dow; dividends to Dow totaled $1 billion in the first nine months of 2014.

The Corporation received no cash dividends from its related company investments in the third quarter of 2015 and during the first nine months of 2015 ($2 million in the third quarter of 2014 and $11 million during the first nine months of 2014). These dividends are included in “Sundry income (expense) – net” in the consolidated statements of income.

In the third quarter of 2014, as part of the sale-leaseback transaction entered into by Dow for a significant portion of Dow's North American railcar fleet, UCC sold all of the railcars owned by UCC to Dow at fair value for $145 million in cash. The sale of the railcars resulted in a pretax gain of $66 million, and is included in "Sundry income (expense) - net" in the consolidated statements of income.

On October 5, 2015, Dow announced (i) it had completed the transfer of its U.S. Gulf Coast Chlor-Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses into a new company ("Splitco"), (ii) participating Dow shareholders tendered, and Dow accepted, Dow shares for Splitco shares in a public exchange offer, and (iii) Splitco merged with a wholly owned subsidiary of Olin Corporation in a tax efficient Reverse Morris Trust transaction (collectively, the “Transaction”).

As part of the Transaction, Dow established a separate legal entity structure to hold the relevant assets to be carved out from the existing Dow structure. To facilitate the Transaction, all entities in Europe and Asia Pacific were aligned under one single entity, with shares owned entirely by Dow. In order to align entity ownership under Dow, entities distributed shares to Dow through either a series of dividends or share redemptions. As a result, in September 2015, UCC redeemed 462.7096 shares of common stock of Dow International Holding Company (“DIHC”), a cost method investment, in exchange for stock in Blue Cube International Holdings, LLC (“BCIH”). Prior to the distribution, UCC had a 19.1 percent ownership interest in DIHC with the other 80.9 percent owned by Dow and its other wholly-owned subsidiaries. After the distribution, UCC’s investment in DIHC was reduced to 15.0 percent and resulted in a reduction in investments in related companies of $174 million. UCC then transferred and distributed to Dow all of its membership interest in BCIH in exchange for 64.58 shares of its common stock held by Dow. Dow will continue to own 100 percent of UCC. The results of these transactions are reflected in “Investments in related companies” and “Additional paid-in capital” in the consolidated balance sheets.

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PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (Tables)

9 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Net Periodic Benefit Cost for All Significant Plans

Net Periodic Benefit Cost for All Significant Plans	Three Months Ended						Nine Months Ended
In millions	Sep 30, 2015			Sep 30, 2014			Sep 30, 2015			Sep 30, 2014
Defined Benefit Pension Plans:
Service cost	$	11		$	7		$	33		$	23
Interest cost	41			46			123			138
Expected return on plan assets	(57		)	(58		)	(171		)	(174		)
Amortization of prior service cost	—			1			—			3
Amortization of net loss	22			17			66			51
Net periodic benefit cost	$	17		$	13		$	51		$	41
Other Postretirement Benefits:
Interest cost	$	3		$	3		$	9		$	9
Amortization of net gain	(3		)	(2		)	(9		)	(6		)
Net periodic benefit cost	$	—		$	1		$	—		$	3

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INTANGIBLE ASSETS (Schedule of Future Amortization Expense of Intangible Assets) (Details) $ in Millions	Sep. 30, 2015 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Estimated Amortization Expense, 2015	$ 2
Estimated Amortization Expense, 2016	3
Estimated Amortization Expense, 2017	3
Estimated Amortization Expense, 2018	4
Estimated Amortization Expense, 2019	4
Estimated Amortization Expense, 2020	$ 3

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Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Allowance for doubtful accounts	$ 0	$ 0
Accumulated Amortization	$ 74	$ 73
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000	1,000
Common stock, shares issued	935.42	1,000

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RESTRUCTURING (Notes)

9 Months Ended

Sep. 30, 2015

Restructuring and Related Activities [Abstract]

Restructuring, Impairment, and Other Activities Disclosure [Text Block]

RESTRUCTURING

On April 29, 2015, the Corporation approved actions to improve the cost effectiveness of the Corporation's global operations and further streamline the organization. These actions will affect approximately 16 positions and result in the shutdown of a manufacturing facility that produces water soluble polymers in Institute, West Virginia, in the fourth quarter of 2015. These actions are expected to be completed by the end of 2016.

As a result of these actions, the Corporation recorded pretax restructuring charges of $18 million in the second quarter of 2015 consisting of costs associated with exit or disposal activities of $2 million, severance costs of $2 million and asset write-downs and write-offs of $14 million. The impact of these charges is shown as "Restructuring charges" in the consolidated statements of income. At September 30, 2015, severance of $1 million had been paid, leaving a liability of $1 million for 13 employees.

The Corporation expects to incur additional costs in the future related to restructuring activities, as UCC continually looks for ways to enhance the efficiency and cost effectiveness of its operations. Future costs are expected to include demolition costs related to the closed facilities; these will be recognized as incurred. The Corporation also expects to incur additional employee­related costs, including involuntary termination benefits, related to its other optimization activities. These costs cannot be reasonably estimated at this time.

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FINANCIAL INSTRUMENTS (Investments) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Investment Holdings [Line Items]
Available-for-sale Securities, Gross Realized Gains (Losses), Sale Proceeds	$ 0	$ 0
Debt Securities Maturity	less than 10 years
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Debt Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Fair Value Disclosure	$ 4		$ 5

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COMMITMENTS AND CONTINGENT LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Receivables for Asbestos-Related Costs

Receivables for Asbestos-Related Costs In millions	Sep 30, 2015		Dec 31, 2014
Receivables for defense and resolution costs - carriers with settlement agreements	$	51	$	69
Receivables for insurance recoveries - carriers without settlement agreements	10		10
Total	$	61	$	79

Unrecorded Unconditional Purchase Obligations Disclosure [Table Text Block]