EX-99 2 earningsrelease2.txt PRESS RELEASE DATED OCTOBER 30, 2000 EXHIBIT 99 UNION CARBIDE News Release CONTACT: Tomm F. Sprick (203) 794-6992 UNION CARBIDE REPORTS 3rd QUARTER EARNINGS DANBURY, Conn., Oct. 30 -- Union Carbide Corporation (UCC) today reported third quarter 2000 earnings of $0.22 per diluted share, compared to $0.36 per diluted share (before inclusion of a $0.21 per share gain from a litigation settlement) in the third quarter of 1999. Second quarter 2000 earnings were $0.86 per diluted share, before inclusion of an $0.08 per diluted share gain from the demutualization of Metropolitan Life Insurance Company (Met Life), a provider of certain employee benefits for the company. Union Carbide Chairman and CEO William H. Joyce said the decline in earnings and margins from the prior quarter reflected higher costs for energy and raw materials combined with lower average selling prices from prior quarter levels for polyethylene and ethylene glycol. Energy and raw material costs continued to rise during the quarter, he said, particularly in September. Income from investments carried at equity totaled $33 million for the current quarter, compared to $12 million in the third quarter of last year, and $43 million in second quarter 2000. Partnership losses totaled $6 million in third quarter 2000, compared to income of $18 million in the same period last year and income of $9 million in second quarter 2000. The Carbide CEO said that the company's EQUATE joint venture in Kuwait was operating efficiently and well, and that the decline from its second quarter performance was largely attributable to a nearly two-week curtailment of ethane feedstock supply resulting from problems at a nearby refinery. - MORE - 2000 P3-01-014 Page 2 of 12 He also indicated that a decline in UOP earnings was mainly responsible for lower partnership results posted in the third quarter. Dr. Joyce added that concerns about the current environment of high demand and limited supply have caused oil companies to defer catalyst replacement and technology upgrade projects in order to keep refinery capacity running, which resulted in a delay in the expected upturn in UOP earnings. Dr. Joyce said that rapidly rising raw material and energy costs, at the same time that the strong U. S. dollar hurt earnings from overseas sales, made the third quarter of 2000 among the most difficult in recent years for petrochemical producers. In this very challenging business environment, the company has intensified efforts to control fixed costs and capital expenditures and improve working capital management. Dr. Joyce noted that fixed costs declined in the quarter even though costs associated with the third quarter 2000 startup of olefins and polyethylene units in Canada were only partly offset by some non- recurring declines in "selling, administrative and other expenses." Reductions both in accounts receivable and in inventories from second quarter 2000 to current levels contributed approximately $90 million to cash flow in the current year's third quarter. Having substantially completed the Canadian units, which are the last of the corporation's planned major North American projects, construction expenditures in the quarter were less than quarterly depreciation for the first time since 1993. Dr. Joyce added that, over the next year, investments would also decline. The company's largest investment, construction of a fully integrated chemicals complex in Malaysia by the OPTIMAL Group, is about 60 percent complete and expected to be completed in late 2001. - MORE - Page 3 of 12 Dr. Joyce said he was confident that capacity additions and infrastructure improvements made during the past five years would have a positive effect on earnings in future years and would make an appreciable contribution to the success of the combined companies following completion of the planned Dow Chemical/Union Carbide merger. Net income for the quarter totaled $29 million, compared to $77 million for last year's third quarter, and $130 million for the second quarter of this year. Third quarter sales totaled $1.637 billion, compared to $1.498 billion for the third quarter of 1999 and $1.674 billion for second quarter 2000. The effective tax rate in the quarter remained approximately 25 percent, the full year estimated rate. Dr. Joyce noted that the corporation's performance in the near term is highly dependent on external variables, such as the cost of raw materials and energy, as well as industry operating rates. The company is anticipating increases in average fourth quarter raw material and energy costs compared to third quarter levels. Overall, average BC&P selling prices in the fourth quarter are likely to be lower than in the third quarter, despite price increases in selected products. Earnings in the S&I segment should benefit from modest margin improvement in a number of specialty and intermediate product lines. Partnership income should remain weak in the quarter. Equity company results will likely decline from third quarter, primarily because of weakness at Polimeri Europa, the company's European-based polyethylene joint venture, as well as increased costs associated with the Malaysian joint venture projects. The S&I segment reported an operating profit of $45 million for the third quarter of 2000, compared to $96 million (before a gain from litigation of $38 million) for the same period last year, - MORE - Page 4 of 12 and $80 million (before the gain of $12 million from the demutualization of Met Life) for the second quarter of this year. Average selling price increases were insufficient to offset rising raw material and energy costs. S&I segment results were negatively affected by reduced partnership income. The BC&P segment reported an operating loss of $15 million for the third quarter of 2000, compared to an operating loss of $7 million for the third quarter of 1999, and operating income of $68 million (before the gain of $6 million from the Met Life demutualization) in the prior quarter. Compared to last year's third quarter, the loss in the current quarter reflects higher energy and raw material costs that were only slightly offset by higher selling prices. Lower average selling prices compared to the prior quarter, and higher energy and raw material costs, resulted in a 35 percent decline in unit variable margins for the segment compared to second quarter 2000. Net income for the first nine months of 2000 was $256 million, or $1.86 per diluted share. This compares to $217 million in the same period last year, or $1.59 per diluted share, before the cumulative effect of a change in accounting principle of $20 million, or $0.14 per diluted share. Net worldwide sales for the first nine months of 2000 were $4.928 billion, compared to $4.318 billion for the same period last year. Union Carbide is a worldwide chemicals company with advanced process technologies and large-scale chemical production facilities. - Specialties & Intermediates (S&I) -- Union Carbide is the leading North American supplier of solvents and intermediates to the paint and coatings industry; the leading licensor of several technologies; and a leading supplier of specialty chemicals, polymers and services used in the personal care products, pharmaceuticals, automotive, wire and cable, oil and gas and industrial lubricants industries. - MORE - Page 5 of 12 - Basic Chemicals & Polymers (BC&P) -- Union Carbide is among the largest manufacturers of polyethylene, the world's most widely used plastic, and the technology leader in this industry; and a large manufacturer of polypropylene, one of the world's fastest-growing, large-volume plastics. UCC is also the world's largest producer of ethylene oxide and its derivative ethylene glycol, used for polyester fiber, resin and film, automotive antifreeze and other products. Cautionary Statement for Purposes of the "Safe Harbor" Provisions Of the Private Securities Litigation Act of 1995 Those statements in the preceding pages that do not reflect historical information are forward-looking statements. Forward-looking statements include statements concerning the pending Dow Chemical/Union Carbide merger, anticipated future events or performance, sales prices, cost improvements, raw material costs, volume increases, operating rates and earnings expectations. Naturally, such forward-looking statements are subject to risks and uncertainties. In addition to all specific assumptions cited, important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include: the supply/demand balance for the corporation's products; customer inventory levels; competitive pricing pressures; feedstock availability and costs; raw material and energy costs; changes in industry production capacities and operating rates; currency exchange rates; interest rates; global economic conditions; disruption in transportation facilities; competitive technology positions; failure by the corporation to achieve technology objectives, achieve cost reduction targets or complete projects on schedule and on budget; an inability to obtain new customers or retain existing ones; and, with respect to the Dow merger, failure to obtain necessary regulatory and other governmental approvals and failure to satisfy conditions of the merger agreement. - MORE - Page 6 of 12 UNION CARBIDE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF INCOME
Quarter Ended Sept. 30, June 30, Sept. 30, Millions of dollars, except per share amounts 2000 2000 1999 NET SALES $1,637 $1,674 $1,498 Cost of sales, exclusive of depreciation and amortization 1,421 1,354 1,232 Research and development 37 39 38 Selling, administrative and other expenses (a) 48 61 72 Depreciation and amortization 100 102 103 Partnership income (loss) (6) 9 18 Other income - net 9 36 52 INCOME BEFORE INTEREST EXPENSE AND PROVISION FOR INCOME TAXES 34 163 123 Interest expense 35 45 32 INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (1) 118 91 Provision for income taxes - 29 24 INCOME (LOSS) OF CONSOLIDATED COMPANIES AND PARTNERSHIPS (1) 89 67 Minority interest 3 2 2 Income from corporate investments carried at equity 33 43 12 NET INCOME $ 29 $ 130 $ 77 Earnings per common share Basic - Net income $ 0.22 $ 0.96 $ 0.58 Based on the indicated number of shares 134,960,774 134,745,740 133,464,524 Diluted - Net income $ 0.22 $ 0.94 $ 0.57 Based on the indicated number of shares 137,075,390 137,919,070 136,898,772 (a) Selling $ 21 $ 22 $ 24 Administrative 21 22 28 Other expenses 6 17 20 Total $ 48 $ 61 $ 72
- MORE - Page 7 of 12 UNION CARBIDE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended Sept. 30, Millions of dollars, except per share amounts 2000 1999 NET SALES $4,928 $4,318 Cost of sales, exclusive of depreciation and amortization 4,089 3,369 Research and development 115 114 Selling, administrative and other expenses (a) 182 199 Depreciation and amortization 304 302 Partnership income 6 20 Other income - net 69 93 INCOME BEFORE INTEREST EXPENSE AND PROVISION FOR INCOME TAXES 313 447 Interest expense 117 98 INCOME BEFORE PROVISION FOR INCOME TAXES 196 349 Provision for income taxes 49 90 INCOME OF CONSOLIDATED COMPANIES AND PARTNERSHIPS 147 259 Minority interest 6 4 Income (loss) from corporate investments carried at equity 115 (38) INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 256 217 Cumulative effect of change in accounting principle - (20) NET INCOME $ 256 $ 197 Earnings per common share Basic - Income before cumulative effect of change in accounting principle $ 1.90 $ 1.63 - Cumulative effect of change in accounting principle - (0.15) - Net income $ 1.90 $ 1.48 Based on the indicated number of shares 134,705,126 133,135,986 Diluted - Income before cumulative effect of change in accounting principle $ 1.86 $ 1.59 - Cumulative effect of change in accounting principle - (0.14) - Net income $ 1.86 $ 1.45 Based on the indicated number of shares 137,520,401 136,356,408 (a) Selling $ 66 $ 70 Administrative 65 69 Other expenses 51 60 Total $ 182 $ 199
- MORE - Page 8 of 12 UNION CARBIDE CORPORATION AND SUBSIDIARIES SEGMENT DATA
Quarter Ended Sept. 30, June 30, Sept. 30, 2000 2000 1999 Millions of dollars, except as indicated Specialties & Intermediates Segment revenues $1,122 $1,125 $1,057 Depreciation and amortization 65 67 67 Partnership income (loss) (6) 8 17 Operating profit 45 92 134 Income (loss) from corporate investments carried at equity 1 (2) - Unit variable margin (cents/pound) 17.6 18.6 20.1 Fixed cost per pound of products sold (cents/pound) 13.1 13.3 14.1 Capital expenditures 29 47 58 Basic Chemicals & Polymers Segment revenues $ 614 $ 655 $ 522 Depreciation and amortization 35 35 36 Partnership income (loss) - 1 1 Operating profit (loss) (15) 74 (7) Income (loss) from corporate investments carried at equity 32 45 12 Unit variable margin (cents/pound) 7.5 11.6 7.1 Fixed cost per pound of products sold (cents/pound) 6.4 6.3 5.9 Capital expenditures 46 80 120 Other Operating profit (loss) $ 4 $ (3) $ (4)
- MORE - Page 9 of 12 UNION CARBIDE CORPORATION AND SUBSIDIARIES SEGMENT DATA
Nine Months Ended Sept. 30, Sept. 30, 2000 1999 Millions of dollars, except as indicated Specialties & Intermediates Segment revenues $3,355 $3,127 Depreciation and amortization 199 192 Partnership income 4 19 Operating profit 219 530 Income (loss) from corporate investments carried at equity - 4 Unit variable margin (cents/pound) 18.4 22.9 Fixed cost per pound of products sold (cents/pound) 13.1 13.7 Capital expenditures 145 220 Basic Chemicals & Polymers Segment revenues $1,877 $1,379 Depreciation and amortization 105 110 Partnership income 2 1 Operating profit (loss) 89 (82) Income (loss) from corporate investments carried at equity 115 (42) Unit variable margin (cents/pound) 9.5 5.8 Fixed cost per pound of products sold (cents/pound) 6.3 5.4 Capital expenditures 252 339 Other Operating profit (loss) $ 5 $ (1)
- MORE - Page 10 of 12 UNION CARBIDE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET
Millions of Dollars Sept. 30, June 30, 2000 2000 ASSETS Cash and cash equivalents $ 63 $ 59 Notes and accounts receivable 1,104 1,166 Inventories 701 743 Other current assets 314 301 Current assets 2,182 2,269 Net fixed assets 4,577 4,616 Investments and other assets 1,613 1,532 Total Assets $8,372 $8,417 LIABILITIES AND STOCKHOLDERS' EQUITY Short-term debt and current portion of long-term debt $1,111 $1,109 Other current liabilities 1,085 1,071 Current liabilities 2,196 2,180 Long-term debt 1,755 1,758 Other long-term obligations 1,655 1,694 Stockholders' equity 2,766 2,785 Total Liabilities and Stockholders' Equity $8,372 $8,417
- MORE - Page 11 of 12 Union Carbide Corporation Data Sheet
3Q00 2Q00 3Q99 3Q/2Q 3Q/3Q Union Carbide Corporation Net Sales MM $ 1,637 1,674 1,498 (2.2)% 9.3 % Customer Volumes MM Lb. 4,202 4,128 4,185 1.8 % 0.4 % Average Selling Prices Cents/Lb. 39.0 40.6 35.8 (4.0)% 8.8 % Unit Variable Margin Cents/Lb. 12.9 15.5 14.1 (16.8)% (8.7)% Fixed Costs MM $ 410 418 434 (1.9)% (5.5)% S & I Segment Segment Revenues * MM $ 1,122 1,125 1,057 (0.3)% 6.1 % Customer Volumes MM Lb. 2,216 2,266 2,244 (2.2)% (1.2)% Average Selling Prices Cents/Lb. 50.6 49.7 47.1 1.8 % 7.5 % Unit Variable Margin Cents/Lb. 17.6 18.6 20.1 (5.4)% (12.4)% Operating Profit / Loss ** MM $ 45 92 134 (51.1)% (66.4)% Increase in Raw Material, Energy & Related Manufacturing Variable Costs MM $ 25 132 B C & P Segment Segment Revenues MM $ 614 655 522 (6.3)% 17.6 % Customer Sales Revenues MM $ 515 549 441 (6.2)% 16.8 % Customer Volumes MM Lb. 1,986 1,862 1,941 6.7 % 2.3 % Average Selling Prices Cents/Lb. 25.9 29.5 22.7 (12.2)% 14.2 % Unit Variable Margin Cents/Lb. 7.5 11.6 7.1 (35.3)% 5.6 % Operating Profit / Loss MM $ (15) 74 (7) (120.3)% (114.3)% Increase in Raw Material, Energy & Related Manufacturing Variable Costs MM $ 24 79 Change in Average Selling Prices B C & P Chemicals Cents/Lb. Change (6.8) 2.2 B C & P Plastics Cents/Lb. Change (2.2) 2.2 Change in Customer Volumes B C & P Chemicals % Change 15.3 % (4.4)% B C & P Plastics % Change 1.4 % 7.7 % Hydrocarbon By-products % Change 0.4 % 8.3 % * Segment Revenues equal Customer Revenues. ** S&I Operating Profit for the 2nd Quarter of 2000 includes a gain of $12 million, and BC&P Operating Profit for the same Quarter includes a gain of $6 million, both from the demutualization of Metropolitan Life, a provider of certain employee benefit programs for the company; S&I Operating Profit for the 3rd Quarter of 1999 includes a gain of $38 million from a favorable litigation settlement.
- MORE - Page 12 of 12 Union Carbide Corporation Data Sheet
9 Mo. 00/ 9 Mo. 00 9 Mo. 99 9 Mo. 99 Union Carbide Corporation Net Sales MM $ 4,928 4,318 14.1 % Customer Volumes MM Lb. 12,528 12,546 (0.1)% Average Selling Prices Cents/Lb. 39.3 34.4 14.2 % Unit Variable Margin Cents/Lb. 14.3 15.0 (4.7)% Fixed Costs MM $ 1,251 1,244 0.6 % S & I Segment Segment Revenues * MM $ 3,355 3,127 7.3 % Customer Volumes MM Lb. 6,770 6,723 0.7 % Average Selling Prices Cents/Lb. 49.6 46.5 6.7 % Unit Variable Margin Cents/Lb. 18.4 22.9 (19.7)% Operating Profit / Loss ** MM $ 219 530 (58.7)% Increase in Raw Material, Energy & Related Manufacturing Variable Costs MM $ 528 B C & P Segment Segment Revenues MM $ 1,877 1,379 36.1 % Customer Sales Revenues MM $ 1,573 1,191 32.1 % Customer Volumes MM Lb. 5,758 5,823 (1.1)% Average Selling Prices Cents/Lb. 27.3 20.5 33.2 % Unit Variable Margin Cents/Lb. 9.5 5.8 63.8 % Operating Profit / Loss ** MM $ 89 (82) 208.5 % Increase in Raw Material, Energy & Related Manufacturing Variable Costs MM $ 279 Change in Average Selling Prices B C & P Chemicals Cents/Lb. Change 7.3 B C & P Plastics Cents/Lb. Change 7.2 Change in Customer Volumes B C & P Chemicals % Change (14.1)% B C & P Plastics % Change 4.2 % Hydrocarbon By-products % Change 9.8 % * Segment Revenues equal Customer Revenues. ** S&I Operating Profit for the Nine Months of 2000 includes a gain of $12 million, and BC&P Operating Profit for the same Nine Months includes a gain of $6 million, both from the demutualization of Metropolitan Life, a provider of certain employee benefit programs for the company; S&I Operating Profit for the Nine Months of 1999 includes a gain of $50 million from favorable litigation settlements.
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