Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

UNION CARBIDE CORPORATION
(Exact name of registrant as specified in its charter)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o No ý.

At June 30, 2005, 1,000 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 and Subsidiaries
Consolidated Statements of Cash Flows

Union Carbide Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income

Union Carbide Corporation and Subsidiaries
Notes to the 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 ("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 Statement of Financial Accounting Standards ("SFAS") No. 128, "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 SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," 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, or other Dow subsidiaries have been reflected as related company transactions in the consolidated financial statements. See Note H for further discussion.

Certain reclassifications of prior year's amounts have been made to conform to the presentation adopted for 2005. 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, 2004.

In November 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 151, "Inventory Costs—an amendment of ARB No. 43, Chapter 4," which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) and also requires that the allocation of fixed production overhead be based on the normal capacity of the production facilities. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Corporation is currently evaluating the impact of adopting this statement.

In December 2004, the FASB issued revised SFAS No. 123 ("SFAS No. 123R"), "Share-Based Payment" which replaces SFAS No. 123, "Accounting for Stock-Based Compensation" and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." This statement, which requires that the cost of all share-based payment transactions be recognized in the financial statements, establishes fair value as the measurement objective and requires entities to apply a fair-value-based measurement method in accounting for share-based payment transactions. As issued, the statement applies to all awards granted, modified, repurchased or cancelled after July 1, 2005. In March 2005, the U.S. Securities and Exchange Commission (the "SEC") issued Staff Accounting Bulletin ("SAB") No. 107, which expresses views of the SEC staff regarding the interaction between SFAS No. 123R and certain SEC rules and regulations, and provides the staff's views regarding the valuation of share-based payment arrangements for public companies. Dow will consider the guidance of this SAB as it adopts SFAS No. 123R. On April 14, 2005, the SEC announced the adoption of a new rule that amends the compliance date for SFAS No. 123R, allowing companies to implement the statement at the beginning of their next fiscal year that begins after June 15, 2005, which is January 1, 2006 for Dow. The Corporation will continue to be allocated the portion of expense relating to its employees who receive stock-based compensation.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets—an amendment of APB Opinion No. 29." The statement addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Corporation has determined that its practices are consistent with the guidance of this statement; therefore, the adoption of SFAS No. 153 on July 1, 2005, will have no impact on the Corporation's consolidated financial statements.

In December 2004, the FASB issued FASB Staff Position ("FSP") No. FAS 109-1, "Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004," indicating that this deduction should be accounted for as a special deduction in accordance with the provisions of SFAS No. 109. Beginning in 2005, the Corporation recognizes the allowable deductions as qualifying activity occurs.

In December 2004, the FASB issued FSP No. FAS 109-2, "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004," which provides a practical exception to the SFAS No. 109 requirement to reflect the effect of a new tax law in the period of enactment by allowing additional time beyond the financial reporting period to evaluate the effects on plans for reinvestment or repatriation of unremitted foreign earnings. The American Jobs Creation Act of 2004 (the "Act") introduced a special one-time dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer, provided certain criteria are met. In May 2005, tax authorities released the clarifying language necessary to enable Dow to complete its determination regarding the repatriation and reinvestment of foreign earnings. Dow intends to repatriate funds from a foreign entity that is partially owned by the Corporation. Since the Corporation is included in Dow's consolidated federal income tax group and consolidated tax return, as the foreign entity repatriates its earnings, the Corporation will recognize dividend income and its share of the related tax impact of the repatriation provision of the Act, in accordance with the terms of the Dow-UCC Tax Sharing Agreement.

In March 2005, the FASB issued FASB Interpretation ("FIN") No. 47, "Accounting for Conditional Asset Retirement Obligations," which clarifies the term conditional asset retirement obligation as used in SFAS No. 143, "Accounting for Asset Retirement Obligations," as a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Corporation. FIN No. 47 is effective no later than the end of fiscal years ending after December 15, 2005. The Corporation is currently evaluating the impact of adopting this interpretation.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections," which replaces APB Opinion No. 20, "Accounting Changes," and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements," and provides guidance on the accounting for and reporting of accounting changes and error corrections. SFAS No. 154 applies to all voluntary changes in accounting principle and requires retrospective application (a term defined by the statement) to prior periods' financial statements, unless it is impracticable to determine the effect of a change. It also applies to changes required by an accounting pronouncement that does not include specific transition provisions. In addition, SFAS No. 154 redefines restatement as the revising of previously issued financial statements to reflect the correction of an error. The statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Corporation will adopt SFAS No. 154 beginning January 1, 2006.

In the second quarter of 2004, the Corporation recorded restructuring charges totaling $48 million resulting from decisions made by management in the second quarter relative to employment levels as Dow restructured its business organization and as the Corporation finalized plans for additional plant shutdowns and divestitures. The charges included severance of $21 million for a workforce reduction of approximately 360 people, most of whom ended their employment with UCC by the end of the third quarter of 2004, and curtailment costs of $9 million associated with UCC's defined benefit plans.

As of June 30, 2005, the Corporation's workforce had been reduced by 340 people due to this restructuring and severance of $18 million had been paid. In the second quarter of 2005, the estimated workforce reduction was revised to reflect employee redeployment and the severance accrual was reduced by $2 million (reflected in "Cost of sales"), leaving an accrual of $1 million for employees who will end their employment with UCC in the second half of 2005, and bringing the 2004 employee-related restructuring program to a close.

The following table provides a breakdown of inventories at June 30, 2005 and December 31, 2004:

The reserves reducing inventories from the first-in, first-out ("FIFO") basis to the last-in, first-out ("LIFO") basis amounted to $142 million at June 30, 2005 and $139 million at December 31, 2004.

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

Total estimated amortization expense for 2005 and the next five fiscal years is as follows:

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. The Corporation had accrued obligations of $104 million at December 31, 2004 for environmental remediation and restoration costs, including $39 million for the remediation of Superfund sites. At June 30, 2005, the Corporation had accrued obligations of $98 million for environmental remediation and restoration costs, including $36 million for the remediation of Superfund sites. 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 the ultimate cost with respect to these particular matters could range up to twice that amount. Inherent uncertainties exist in these estimates primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability, and evolving technologies for handling site remediation and restoration. It is the opinion of the Corporation's management that the possibility is remote that costs in excess of those disclosed will have a material adverse impact on the Corporation's consolidated financial statements.

The following disclosure should be read in conjunction with the Corporation's Annual Report on Form 10-K for the year ended December 31, 2004.

The Corporation and its subsidiaries are 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.

Separately, the Corporation is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past three 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 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.

Influenced by the bankruptcy filings of numerous defendants in asbestos-related litigation and the prospects of various forms of state and national legislative reform, the rate at which plaintiffs filed asbestos-related suits against various companies, including the Corporation and Amchem, increased in 2001, 2002 and the first half of 2003. Since then, the rate of filing has significantly abated. The Corporation expects more asbestos-related suits to be filed against it and Amchem in the future, and will aggressively defend or reasonably resolve, as appropriate, both pending and future claims.

In November 2004, the Corporation requested ARPC to review the Corporation's historical asbestos claim and resolution activity and determine the appropriateness of updating its January 2003 study. In response to this request, ARPC reviewed and analyzed data through November 14, 2004, and again concluded that it was not possible to estimate the full range of the cost of resolving future asbestos-related claims against UCC and Amchem because of various uncertainties associated with the litigation of those claims. ARPC did advise, however, that it was reasonable and feasible to construct a new estimate of the cost of resolving current and future asbestos-related claims using the same two widely used forecasting methodologies used by ARPC in its January 2003 study, if certain assumptions were made. As a result, the following assumptions were made and then used by ARPC:

The resulting study completed by ARPC in January 2005 stated that the undiscounted cost of resolving pending and future asbestos-related claims against UCC and Amchem, excluding future defense and processing costs, through 2017 was estimated to be between approximately $1.5 billion and $2.0 billion, depending on which of two accepted methodologies was used. At December 31, 2004, the recorded asbestos-related liability for pending and future claims was $1.6 billion. Based on the low end of the range in the January 2005 study, the recorded asbestos-related liability for pending and future claims at December 31, 2004 would be sufficient to resolve asbestos-related claims against UCC and Amchem into 2019. As in its January 2003 study, ARPC did provide estimates for a longer period of time in its January 2005 study, but also reaffirmed its prior advice that forecasts for shorter periods of time are more accurate than those for longer periods of time. Based on ARPC's studies, the Corporation's recent asbestos litigation experience, and the uncertainties surrounding asbestos litigation and legislative reform efforts, management determined that no change to the accrual was required at December 31, 2004.

Based on the Corporation's review of 2005 activity, the Corporation determined that no change to the accrual was required at June 30, 2005.

The asbestos-related liability for pending and future claims was $1.5 billion at June 30, 2005 and $1.6 billion at December 31, 2004. At June 30, 2005, approximately 39 percent of the recorded liability related to pending claims and approximately 61 percent related to future claims. At December 31, 2004, approximately 37 percent of the recorded liability related to pending claims and approximately 63 percent related to future claims.

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.

The Corporation's receivable for insurance recoveries related to its asbestos liability was $590 million at June 30, 2005 and $712 million at December 31, 2004. At June 30, 2005, $453 million ($543 million at December 31, 2004) of the receivable for insurance recoveries was related to insurers that are not signatories to the Wellington Agreement and/or do not otherwise have agreements in place regarding their asbestos-related insurance coverage.

In addition, the Corporation had receivables for defense and resolution costs submitted to insurance carriers for reimbursement as follows:

The Corporation expenses defense costs as incurred. The pretax impact for defense and resolution costs, net of insurance, was $14 million in the second quarter of 2005 ($48 million in the second quarter of 2004) and $32 million in the first six months of 2005 ($73 million in the first six months of 2004), and was reflected in "Cost of sales."

In September 2003, the Corporation filed a comprehensive insurance coverage case in the Circuit Court for Kanawha County in Charleston, West Virginia, seeking to confirm its rights to insurance for various asbestos claims (the "West Virginia action") and to facilitate an orderly and timely collection of insurance proceeds. Although the Corporation already has settlements in place concerning coverage for asbestos claims with many of its insurers, including those covered by the 1985 Wellington Agreement, this lawsuit was filed against insurers that are 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. In early 2004, several of the defendant insurers in the West Virginia action filed a competing action in the Supreme Court of the State of New York, County of New York. As a result of motion practice, the West Virginia action was dismissed in August 2004 on the basis of forum non conveniens (i.e., West Virginia is an inconvenient location for the parties). The comprehensive insurance coverage litigation is now proceeding in the New York courts (the "New York action"). Through the second quarter of 2005, the Corporation reached settlements with several of the carriers involved in the New York action. After a further review of its insurance policies, with due consideration given to applicable deductibles, retentions and policy limits, 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 amounts recorded for the asbestos-related liability and related insurance receivable described above were based upon current, known facts. However, projecting 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 to be higher or lower than those projected or those recorded.

Because of the uncertainties described above, management cannot estimate the full range of the cost of resolving pending and future asbestos-related claims facing the Corporation and Amchem. 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 adverse impact on the 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 consolidated 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.

At December 31, 2004, the Corporation had various outstanding commitments for take or pay agreements, with terms extending from one to six years. Such commitments were not in excess of current market prices. The fixed and determinable portion of obligations under purchase commitments at December 31, 2004 is presented in the following table:

The Corporation has undertaken obligations to guarantee the performance of certain nonconsolidated affiliates (including the OPTIMAL Group and Nippon Unicar Company Limited) and a former subsidiary of the Corporation (via delivery of cash or other assets) if specified triggering events occur. Non-performance under a contract for commercial and/or financial obligations by the guaranteed party would trigger the obligation of the Corporation to make payments to the beneficiary of the guarantees. Financial obligations include debt and lease arrangements.

The following table provides a summary of the final expiration, maximum future payments, and recorded liability reflected in the consolidated balance sheet for these guarantees.

The Corporation has a defined benefit pension plan that covers substantially all employees in the United States. Benefits are based on length of service and the employee's three highest consecutive years of compensation.

The Corporation's funding policy is to contribute to the plan when pension laws and economics either require or encourage funding. As previously disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2004, UCC does not expect to contribute assets to its qualified pension plan trust in 2005. Consistent with that expectation, no contributions were made in the first half of 2005. The Corporation also has a non-qualified supplemental pension plan. Benefit payments to retirees under this plan are expected to be $6 million in 2005. In the first six months of 2005, benefit payments of $1 million were made.

The Corporation provides certain health care and life insurance benefits to retired U.S. employees. The plan provides health care benefits, including hospital, physicians' services, drug and major medical expense coverage, and life insurance benefits. The Corporation and the retiree share the cost of these benefits, with the Corporation portion increasing as the retiree has increased years of credited service. There is a cap on the Corporation portion. These benefits are subject to change at any time.

The Corporation funds most of the cost of these health care and life insurance benefits as incurred. As previously disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2004, UCC does not expect to contribute assets to its other postretirement benefit plans in 2005. Consistent with that expectation, no contributions were made in the first half of 2005. Benefit payments to retirees under these plans are expected to be $63 million in 2005. In the first six months of 2005, benefit payments of $25 million were made.

The Corporation sells products to Dow to simplify the customer interface process. Products are sold to and purchased from Dow in accordance with the terms of Dow's long-standing intercompany pricing policies. The application of these policies results in products being sold to and purchased from Dow at market-based prices. 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 approximately $572 million in the second quarter of 2005 ($446 million in the second quarter of 2004) and $1,175 million in the first half of 2005 ($889 million in the first half of 2004).

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, for general administrative and overhead type services that Dow routinely allocates to various businesses, UCC is charged the cost of those services based on the Corporation's and Dow's relative manufacturing conversion costs. This arrangement results in a quarterly charge of approximately $4 million (included in "Sundry income (expense)—net").

For services that Dow routinely charges based on effort, UCC is charged the cost of such services on a fully absorbed basis, which includes direct and indirect costs. Additionally, certain Dow employees are contracted to UCC and Dow is reimbursed for all direct employment costs of such employees. 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 LIBOR-based interest rates with varying maturities. At June 30, 2005, the Corporation had a note receivable of $328 million from Dow under a revolving loan agreement. 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, 2005, however, 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 June 30, 2005, $802 million was available under the revolving

credit agreement. The cash collateral was reported as "Noncurrent receivable from related company" in the consolidated balance sheets.

In June 2005, the Corporation received a cash dividend of approximately $29 million from Dow Chemical Canada Inc. ("Dow Canada") which was included in "Sundry income (expense)—net". The Corporation accounts for its 11.2 percent ownership interest in Dow Canada using the cost method.

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 three- and six-month periods ended June 30, 2005, the most recent periods, compared with the three- and six-month periods ended June 30, 2004, the corresponding periods in the preceding fiscal year.

References below to "Dow" refer to The Dow Chemical Company and its consolidated subsidiaries, except as the context otherwise requires.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements made by or on behalf of Union Carbide Corporation (the "Corporation" or "UCC"). This section covers the current performance and outlook of the Corporation. The forward-looking statements contained in this section and in other parts of this document involve risks and uncertainties that may affect the Corporation's operations, markets, products, services, prices and other factors as more fully discussed elsewhere and in filings with the U.S. Securities and Exchange Commission (SEC). These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that the Corporation's expectations will be realized. The Corporation assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.

The Corporation reported net income of $190 million for the second quarter of 2005, compared with $138 million for the second quarter of 2004. The results for the second quarter of 2004 were negatively impacted by a restructuring charge of $48 million. Net income for the first half of 2005 was $470 million, compared with $229 million for the first half of 2004. The significant improvement was due to higher selling prices, improved operating margins and a gain on the sale of a portion of the Corporation's ownership interest in EQUATE Petrochemical Company K.S.C ("EQUATE").

Total net sales for the second quarter of 2005 were $1,584 million compared with $1,359 million for the second quarter of 2004, an increase of 17 percent. Year to date, total net sales were $3,268 million, an increase of 22 percent from $2,670 million for the first half of 2004. Selling prices to Dow are based on market prices for the related products. Average selling prices for all products were substantially higher in the second quarter of 2005 and on a year-to-date basis compared with the same periods of last year due to improved industry fundamentals and the continuing increase in feedstock and energy costs. In the second quarter of 2005, volume gains for wire and cable products, polypropylene and glycol ethers were more than offset by lower demand for the Corporation's other products. Polyethylene and ethylene glycol ("EG") volume decreased as end-use customers reduced inventories in anticipation of lower product prices. Lower ethanol sales volume resulted from the Corporation's exit of the industrial ethanol business in the second quarter of 2004. Sales volume for vinyl acetate monomer was reduced by an unplanned outage at the Corporation's manufacturing facility in Texas. On a year-to-date basis, volume was also impacted by a decline in EG volume due to scheduled plant turnarounds in the first quarter of 2005.

Cost of sales increased 12 percent in the second quarter of 2005 compared with the second quarter of 2004 principally due to higher raw material costs. Cost of sales for the first half of 2005 increased 18 percent compared with the same period last year. However, gross margins improved in the second quarter of 2005 and on a year-to-date basis, as higher selling prices more than offset the unfavorable impact of higher feedstock and energy costs and lower volumes.

Equity in earnings of nonconsolidated affiliates decreased to $98 million in the second quarter of 2005 from $209 million in the second quarter of 2004. Equity earnings were impacted by unplanned outages and EQUATE and the OPTIMAL Group during the second quarter of 2005. Equity earnings in the second quarter of 2004 were favorably impacted by the recognition of investment tax allowances by one of the Corporation's joint ventures. Despite strong results reported by EQUATE and

UOP LLC for the first half of 2005, equity earnings were $43 million lower than in the first half of 2004 due to the benefit of the investment tax allowances in 2004.

In the second quarter of 2004, the Corporation recorded a restructuring charge totaling $48 million. The charge included severance of $21 million for a workforce reduction of 360 people, curtailment costs of $9 million associated with UCC's defined benefit plans, an asset write off of $8 million associated with the shutdown of a latex manufacturing facility and a write down of the net book value of a marine terminal (sold in the third quarter of 2004) of $10 million.

Sundry income (expense)—net includes a variety of income and expense items such as the gain or loss on foreign currency exchange, dividends 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 second quarter of 2005 was net income of $1 million compared with net expense of $17 million for the second quarter last year. Net sundry income for the second quarter of 2005 included dividend income of $29 million from Dow Chemical Canada Inc. ("Dow Canada") and a loss of $8 million associated with the early extinguishment of $345 million of debt. Year to date, sundry income (expense) was net income of $53 million compared with net expense of $55 million last year. Net sundry income for the first six months of this year also included a $70 million pretax gain on the sale of a portion of the Corporation's interest in EQUATE in the first quarter of 2005. In November 2004, the Corporation sold a 2.5 percent interest in EQUATE to National Bank of Kuwait for $104 million. In March 2005, these shares were sold to private Kuwaiti investors thereby completing the restricted transfer, which resulted in the first quarter gain and reduced the Corporation's ownership interest from 45 percent to 42.5 percent.

The effective tax rate for the second quarter of 2005 was 28 percent compared with 36.4 percent for the same quarter last year. Year to date, the effective tax rate was 29.5 percent versus 36.0 percent last year. The effective tax rate fluctuates based on, among other factors, where income is earned, the level of after-tax income from joint ventures, and the level of income relative to tax credits available. In addition, the effective tax rate for 2005 reflects the favorable impact of $29 million of dividend income from Dow Canada, which was based on previously taxed income.

See Note B to the Consolidated Financial Statements for a discussion of accounting changes and recently issued accounting pronouncements.

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Note A to the Consolidated Financial Statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2004 ("2004 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 2004 10-K. Since December 31, 2004, there have been no material changes in the Corporation's critical accounting policies.

The following disclosure should be read in conjunction with the Corporation's Annual Report on Form 10-K for the year ended December 31, 2004.

The Corporation is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past three 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 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 table below provides information regarding asbestos-related claims filed against the Corporation and Amchem for the six months ended June 30, 2005 and 2004:

Plaintiffs' lawyers often sue dozens or even hundreds of defendants in individual lawsuits on behalf of hundreds or even thousands of claimants. As a result, those damages 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 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. At each balance sheet date, the Corporation compares current asbestos claim and resolution activity to the assumptions in the most recent ARPC study to determine whether the accrual continues to be appropriate. In November 2004, the Corporation requested ARPC to review the Corporation's historical asbestos claim and resolution activity and determine the appropriateness of updating its January 2003 study. In January 2005, ARPC provided the Corporation with a report summarizing the results of its study. Based on ARPC's studies, the Corporation's recent asbestos litigation experience, and the uncertainties surrounding asbestos litigation and legislative reform efforts, management determined that no change to the accrual was required at December 31, 2004.

Based on the Corporation's review of 2005 activity, the Corporation determined that no change to the accrual was required at June 30, 2005.

The following table provides information regarding defense and resolution costs related to asbestos-related claims filed against the Corporation and Amchem:

Defense and Resolution Costs	Six Months Ended		Aggregate Costs
In millions	June 30, 2005		June 30, 2004		to Date as of June 30, 2005
Defense costs	$	32		$	47	$	376
Resolution costs		98			148		1,024

The average resolution payment per asbestos claimant and the rate of new claim filings has fluctuated both up and down since the beginning of 2001. Union Carbide's management expects such fluctuations to continue in the future based upon the number and type of claims settled in a particular period, the jurisdictions in which such claims arose, and the extent to which any proposed legislative reform related to asbestos litigation is being considered.

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 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 addition, the Corporation had receivables for defense and resolution costs submitted to insurance carriers for reimbursement as follows:

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 Exchange Act Rule 15d-15(b); and whether any change has occurred in the Corporation's internal control over financial reporting pursuant to Exchange Act Rule 15d-15(d). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Corporation's disclosure controls and procedures are effective and that no change in the Corporation's internal control over financial reporting occurred during the Corporation's most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

No material developments in any legal proceedings, including asbestos-related matters, occurred during the second quarter of 2005. For a summary of the history and current status of legal proceedings, including asbestos-related matters, see Management's Discussion and Analysis of Financial Condition and Results of Operations, Asbestos-Related Matters; and Note F to the Consolidated Financial Statements.

Exhibit No.		Exhibit Description
10.3		Second Amended and Restated Agreement (to Provide Materials and Services), dated as of April 1, 2005, between the Corporation and Dow Hydrocarbons and Resources Inc.
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.

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.

New York (State or other jurisdiction of incorporation or organization)				13-1421730 (I.R.S. Employer Identification No.)
400 West Sam Houston Parkway South, Houston, Texas 77042 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 713-978-2016
Not applicable (Former name, former address and former fiscal year, if changed since last report)

			PAGE
PART I—FINANCIAL INFORMATION
	Item 1. Financial Statements.		3
		Consolidated Statements of Income	3
		Consolidated Balance Sheets	4
		Consolidated Statements of Cash Flows	6
		Consolidated Statements of Comprehensive Income	6
		Notes to the Consolidated Financial Statements	7
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.		15
		Disclosure Regarding Forward-Looking Information	15
		Results of Operations	15
		Other Matters	16
	Item 3. Quantitative and Qualitative Disclosures About Market Risk.		19
	Item 4. Controls and Procedures.		19
PART II—OTHER INFORMATION
	Item 1. Legal Proceedings.		19
	Item 6. Exhibits.		19
SIGNATURES			20
EXHIBIT INDEX			21

		Three Months Ended					Six Months Ended
In millions (Unaudited)		June 30, 2005		June 30, 2004			June 30, 2005		June 30, 2004
	Net trade sales	$	73	$	84		$	145	$	163
	Net sales to related companies		1,511		1,275			3,123		2,507

Total Net Sales			1,584		1,359			3,268		2,670

	Cost of sales		1,383		1,237			2,824		2,401
	Research and development expenses		18		23			39		47
	Selling, general and administrative expenses		5		4			10		10
	Amortization of intangibles		—		1			—		2
	Restructuring charges		—		48			—		48
	Equity in earnings of nonconsolidated affiliates		98		209			251		294
	Sundry income (expense) — net		1		(17	)		53		(55	)
	Interest income		6		2			10		3
	Interest expense and amortization of debt discount		19		23			42		46

Income before Income Taxes			264		217			667		358

	Provision for income taxes		74		79			197		129

Net Income Available for Common Stockholder		$	190	$	138		$	470	$	229

Depreciation		$	68	$	82		$	135	$	160

Capital Expenditures		$	51	$	33		$	94	$	59

In millions (Unaudited)			June 30, 2005		Dec. 31, 2004
Assets
Current Assets
	Cash and cash equivalents		$	26	$	22
	Accounts receivable:
		Trade (net of allowance for doubtful receivables — 2005: $3; 2004: $4)		45		58
		Related companies		309		504
		Other		175		191
	Notes receivable from related companies			365		53
	Inventories			195		186
	Deferred income tax assets — current			37		71
	Asbestos-related insurance receivables — current			148		175

	Total current assets			1,300		1,260

Investments
	Investments in related companies			462		462
	Investments in nonconsolidated affiliates			939		1,041
	Other investments			24		23
	Noncurrent receivables			7		13
	Noncurrent receivable from related company			209		222

	Total investments			1,641		1,761

Property
	Property			7,347		7,304
	Less accumulated depreciation			5,313		5,227

	Net property			2,034		2,077

Other Assets
	Goodwill			26		26
	Other intangible assets (net of accumulated amortization — 2005: $122; 2004: $124)			20		20
	Deferred income tax assets — noncurrent			283		452
	Asbestos-related insurance receivables — noncurrent			901		1,028
	Prepaid pension expense			708		655
	Deferred charges and other assets			52		52

	Total other assets			1,990		2,233

Total Assets			$	6,965	$	7,331

In millions (Unaudited)			June 30, 2005			Dec. 31, 2004
Liabilities and Stockholder's Equity
Current Liabilities
	Notes payable:
		Related companies	$	6		$	139
		Other		4			4
	Long-term debt due within one year			96			266
	Accounts payable:
		Trade		240			260
		Related companies		200			270
		Other		43			40
	Income taxes payable			124			116
	Asbestos-related liabilities — current			92			92
	Accrued and other current liabilities			219			360

	Total current liabilities			1,024			1,547

Long-Term Debt				832			1,006

Other Noncurrent Liabilities
	Pension and other postretirement benefits — noncurrent			465			470
	Asbestos-related liabilities — noncurrent			1,452			1,549
	Other noncurrent obligations			400			433

	Total other noncurrent liabilities			2,317			2,452

Minority Interest in Subsidiaries				4			4

Stockholder's Equity
	Common stock (1,000 shares authorized and issued)			—			—
	Additional paid-in capital			—			—
	Retained earnings			2,903			2,433
	Accumulated other comprehensive loss			(115	)		(111	)

	Net stockholder's equity			2,788			2,322

Total Liabilities and Stockholder's Equity			$	6,965		$	7,331

Inventories In millions	June 30, 2005		Dec. 31, 2004
Finished goods	$	54	$	60
Work in process		27		25
Raw materials		34		32
Supplies		80		69

Total inventories	$	195	$	186

Other Intangible Assets		At June 30, 2005							At December 31, 2004
In millions		Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Intangible assets with finite lives:
	Licenses and intellectual property	$	36	$	(35	)	$	1	$	36	$	(35	)	$	1
	Patents		4		(2	)		2		4		(2	)		2
	Software		101		(84	)		17		103		(86	)		17
	Other		1		(1	)		—		1		(1	)		—

	Total	$	142	$	(122	)	$	20	$	144	$	(124	)	$	20

Receivables for Costs Submitted to Insurance Carriers In millions	June 30, 2005		December 31, 2004
Receivables for defense costs	$	91	$	85
Receivables for resolution costs		368		406

Total	$	459	$	491

Fixed and Determinable Portion of Take or Pay Obligations at December 31, 2004 In millions
2005	$	10
2006		10
2007		10
2008		8
2009		5
2010 through expiration of contracts		5

Total	$	48

Guarantees In millions	Final Expiration	Maximum Future Payments		Recorded Liability
Guarantees at June 30, 2005	2014	$	112	$	2
Guarantees at December 31, 2004	2014	$	114	$	2

	2005		2004
Claims unresolved at January 1	203,416		193,891
Claims filed	20,456		34,013
Claims settled, dismissed or otherwise resolved	(25,402	)	(24,389	)

Claims unresolved at June 30	198,470		203,515
Claimants with claims against both UCC and Amchem	64,682		69,647

Individual claimants at June 30	133,788		133,868

	UNION CARBIDE CORPORATION Registrant
Date: August 2, 2005

	By:	/s/ FRANK H. BROD Frank H. Brod Corporate Vice President and Controller The Dow Chemical Company Authorized Representative of Union Carbide Corporation

	By:	/s/ EDWARD W. RICH Edward W. Rich Vice President, Treasurer and Chief Financial Officer