ML19323F700

Annual Financial Rept 1979

ML19323F700
Person / Time
Site:	05000054
Issue date:	05/23/1980
From:	UNION CARBIDE CORP.
To:
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ML19323F693	List: ML19323F692 ML19323F696 ML19323F700 ML19323F706 ML19323F712 ML19323F716
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NUDOCS 8005290353
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.

l UNION CARBIDE ANNUAL REPORT 1979 pglL ] F E AS WE MOVE INTO THE 1980s,WE h{' ON ,

li i/ : CAN POINT TO OPPORTUNITIES OR STRENGTHS IN EACH OF OUR FIVE q[y;.;j ej 9 .

INDUSTRY SEGMENTS: E CHEMICALS B ri  ;

& PLASTICS O GASES & RELATED l '~jx PRODUCTS METALS & CARBONS l l J j , i . E BATTERIES; HOME & AUTOMOTIVE i A& j

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4 <: PRODUCTS i SPECIALTY PRODUCTS l

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in n n w . u M :e u r 4 With consolidated sales of more than $9 billion in 1979, Union Carbide Corporation ranked among the 25 largest industrial companies in the United States and among the 50 largest in the world. The Corporation's diversified portfolio of busi-nesses included operations in five industry segments. Inter-national operations contributed about one-third of total sales. At ycar-end, Union Carbide's approximately 171,000 stockholders owned more than 66 million shares.

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Dollar amounts in millions ]

(except per share agures)

For the year 1979 1978  % Change Sales $9,176.5 S7.869.7 + 17 Net income $ 556.2 S 394.3 + 41 Net iricome per share $ 8.47 $ 6.09 + 39 Dividends $ 190.1 S 181.2 + 5 Dividends per share $ 2.90 S 2.80 + 4 Research and development expenses $ 160.8 $ 155.9 + 3 Capital expenditures $ 831.3 S 687.8 + 21 At year-end Total assets $8,802.6 S7.866.2 + 12 UCC stockholders' equity $4,042.5 S3.638.5 + 11 UCC stockholders' equity per share $ 61.06 S 55.92 + 9 Shares outstanding (millions) 66.2 65.1 + 2 Number of stockholders 171,093 176.079 - 3 Number of employees 115,763 113.371 + 2

. Sales by Industry Operating Profit Segment by Industry Segment Chernicals & Flastics 37% Chemicals & Plastics 37%

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Specialty Products 11 %

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Spec 1cid i Products 5%

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(I Dr5M Ieu4 m n The year 1979 was an excellent one o Operating profit in the Specialty sales (s seno Products segment rose 17%. Agricul- 1975 ti?c 1977 1978 1579 for Unica Carbide. Sales and net in-567 6 35

• 78' '8 come rose to the highest levels in our tural Products & Services. Food Proc-history essing & Packaging Materials, and a Worldwide sales for the year Electronics Components & Materials were S9.18 billion, on increase or 17% performed well.

over the $7 87 billion of 1978. O Worldwide sales were up in the a Net incomo of $556.2 million was Gases and Related Products seg-the highest ever, exceeding the 19/4 ment. But currency and inflationary figure of S525 I million, and marking effects signincantly reduced U. S. dol-a 41% increase over our 1978 earn- lar-reported earnings from Brazil.

ings of $394 3 million. The net result was a drop in segment a o Earnings per share of $8.47 were operating profit of 5%.

39% higher than the S6 09 per share o Export sales, which are included earned in 1978 despite a larger av- in domestic sales, reached an all-erage number of shares outstanding, time high increasing more than 50%

65.7 million vs 64.7 million in 1978. over 1978 levels. International sales gerating Pront 1so reached new highs. ,,,,,,,,,,,,g,,

Cperations in 1979 The recession ,,,3 em *io 830 868 t o72 many had forecast for 1979 did not Consolidated Performance Our occur. Various economic indicators gross margin as a percent of sales in continued to show strength, even dur- 1979 was 29.3% a slight improve-ing the closing months of the year. ment over t'ie margin of 29.1% in The high level of economic activity 1978 though below the 34 3% in 1974.

spurred excellent operating perform- Compared with five years ago, the once throughout the Corporation. 1979 gross margin reflects the fact Four of our hve industry segments that. on the whole. market conditions contributed to earnings growth, both have kept the prices of our products through increased volume of busi- from rising as quickly as raw mate-ness and through improvements in rial and production costs have risen.

price or through cost reductions.

o Strong worldwide demand for Our efforts to control overhead costs continued to show good results graphite electrodes increased sales in 1979. Selling expenses increased in our Metals & Carbons segment.

proportionally less than the increase Steelmaking by the electric arc fur- ,,

nace method, which uses the elec_ in sales. Administrative and other ex- Dividends / share cs>

penses increased at a slower pace iS75 1976 1977 1978 i979 trodes. set a production record in the United States and grew internation-than the general rate of inflation. 63 7g 6g 6g 37 ,

Sales per employee rose. l ally as well. Segment operating profit rose 61%. We have benehted from a number I o Despite rising feedstock costs. our of cost reduction and productivity im-provement programs-plant mod-Chemicals & Plastics segment

{ achieved a 28% gain in operating ernization in our Industrial Gases l profit. Exceptional export demand business. for example, and improve-1 and acceptance of price increases at ments in our Chemicals & Plastics cat-home and abroad contributed to the olyst technology, as well as various good results. energy conservation projects. Our o increased sa:es of Evereadyand new Unipo1 polyethylene process Ucar batteries, and the sales gains also improves productivity.

achieved by Prestone antifreeze / Union Corbide was in compliance summer coolant, contributed to good during the first program year of the results in the Batteries: Home & Auto- President's voluntary wage / price pro-motive segment. The gain in operat- gram administerad by the Council l

ing proht was 10%- on Wage and Price Stability.

! Earnings in 1979 were adversely affected by foreign currency transla-2 l

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! tion and exchange adjustments, returns to stockholders while retain- <

though not as much aslast year. In ing adequate capital for future busi-1979 the adjustments amounted to an citer-tax loss of S29.3 million, or 45 ness growth. T1 a supplementary in-formation. and further discussion of it.

g' cents per shore, compc.t,d with a appear as Note 17 on page 32.

! loss in 1978 of $59.1 million, or 91 Research and Development When

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' 7

cents per share. the prestigious Kirkpatrick Chemical Our share of income from com- Engineering Achievement Awards panies 20%-to-50 owned in- were announced for 1979. Union Car-creased by $28 million, reaching an bide won three out of a total of five i

all-time high. citations. Honor Awards went to our Linde Division, for its new high-Net income increased 41% in 1979. , ,

' compared with a 17% sales increase. punty hydrogen process, and to our i Nuclear Division. for its new ura-Financial Developments During nium recovety process The first- p

, the year we made a successful offer- place Kirkpatrick Award itself went to ing of debentures and notes, using our Polyolefins Division for its devel-the proceeds from the sole to reduce opment of the Unipolpolyethylene short-term debt. We issued S200 mil- process. That process, which requires .

lion of 9.35% Debentures due 2009 cne-quarter of the energy input and and $100 million of 9.125% Notes due '

one-half of the capitalinvestment of 1986 (effective rate of 9.22%). previous processes. was licensed to With the September 1.1979 div1 several companies in 1979. and will , ,

dend payment. our dividend on be licensed to others as well as used [

common stock increased from an an_ in plants of our own. '

nual rate of S2 80 to a rate of $3 00 The 1980 Outlook Uncertainty p: S per share. Our goal is to provide in- about the domestic economy and

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vestors an increasing total return on turmoil abroad make it di!!icult to i '

their investment through a combina- forecast business conditions in 1980. b tion of capital appreciation of their In general, however, we feel that as

, stock and a continuing flow of divi- 1980 progresses. business conditions

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dends. In keeping with that policy. will slow and demand for our prod-we plan to raise the quarterly divi- ucts will begin to decline accord-

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dend from time to time, but only to ingly, especially in those businesses /

levels we believe to be sustainable that serve the auto. housing. and while funding our planned growth. steel industries. In addition, the cur- ,

We have made certain accounting rent high rate of inflation will con- [

changes which will affect our re. tinue to affect raw material costs. We

! ported net income and earnings per believe that sales of consumer prod-share in 1980 and thereafter. The ucts, together with exports anci our Top: william s. Sneath. Chairman of the Board

! changes are discussed in a special significa .nternationalbusiness, and Chief Executive Oftcer i

section on page 4. Would provide an offsetting influ- Bottom: Warren M. Anderson. President and In this year's repor' we have also e ice; but the overall result may be a Chiet Operating O!ncer provided supplementary information ecline in operating profit as com-p red with 1979, before the effect of on the e!!ect of changing prices on accMng danges dscussed on our traditional measures of income and capital. We believe the data will P 9* 4' i make clear the critical need in our Nevertheless, we are in a good po-country for national monetary and sition to react e!!ectively to declining fiscal policies that will allow corpora. levels of business activity. Our inven-tions to provide reasonable dividend tories and employment are at rela-tively low levels. overhead is under tight control, and our businesses are diversified. Thus the effects of the l

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I t I Drh Nw JU)Mmemn forecast dcvnturn should be much divested ourselves of. a number of strength to contain our pervasive more moderate than those that were businesses which. though well estab- double-digit inflation. Energy policy experienced in the 1974 recession lished. were not contributing to our is stillin the formative stages. even and ref;ected in 1975 results objectives Those businesses-12 in while our dependence on foreign oil Portfolio Review Our strengthened all-compnsed more than S435 mil- becomes more precarious. We are position as we begin 1980 is attribu- lion in net assets employed. yet were only beginning to hear the admission table in part to realignment of our returning only about 0 6% on assets- at high levels d government of the portfolio of businesses We have dis- During the same period, we dis _ need for a rnore reasonable balance continued or sold several businesses continued some 25 new business ven. between environmental and eco-that careful reviews of our portfolio tures that did not fit within our devel. nomic priorities. And efforts to stimu-showed to be unrelated to our basic oping portfolio. As a result, we are late productivity are still merely con-direction or character or unlikely 'o now saving at least $20 million annu. Jectural. despite conditions that are achieve acceptable levels of profit- ally in cash outflow making it increasingly difficult for the ability United States to compete in world Issues for the '80s It is becoming In 1979 we withdrew from the more apparent that increasing the imaging systems hardware business ievei of business activity and improv. A business of any size that stays and sold our fish farming operations. ing the condition of our economy will cloof from these issues is n a very and in January of 1980 we sold a depend increasingly on our country's real sense defaulting on ili obliga-metalworking chemicals business ability to forge reasonable and real_ tion-not only to stockholders, cus-istic public policy. We have yet to see tomers and employees, but also to Earlier, during the period 1977 a willingness to adopt fiscal and the public at large. Union Carbide through 1978. we withdrew from. or monetary policies of sufficient has become increasingly active in IMPACT OF CERTAIN ACCOUNTING CHANGES EFFECTIVE IN 1980 In order to improve its financial re- used before the change That exten- use of the deferred method dunng porting. Union Carbide is making sion will provide management and periods of continuing high inflation several accounting changes effective others with a better matching of de- The large majonty of industry utihzes in 1980 While not affecting income preciation cost with the revenue pro- the flow-through method.

for tax purposes or cash flow. the ducing capabilities cf asse's. and it The cumulative effect of deferred changes will lead to an increase in will bnng our asset depreciation lives investment tax credits for the periods reported net income and earnings more in line with those used by com- through December 31.1979 will be per share in 1980 and subsequent petitors reported as a non-recurnng credit in ye rs Following a new requirement of the first quarter of 1980.

To depreciate the cost of machin- the Financial Accounting Standards We estimate that changes in ac-ery and equipment. Union Carbide Board, the corporation will capital-counting for the items described will be using revised estimated useful ize rather than charge as expense, hves rather than the shorter Internal interest costs attributable to major e W b'e h Nom em g g g g 39g Revenue Service guideline lives capital projects in progress The cap-adopted in 1962. The use of revised italized interest will be amortized M f WS hves in conjunction with the straight over the. average usefullife of the as' s s) hne depreciation method we have set. , 3 g . 3 37 used since 1967, will result in more Beginning m 1980. Union Carbide capita:1 ation or realistic historical depreciation costs willincludc investment tax credits in Interest

• 20 + 30 and also will allow us to provide, be- income in 1. " ear earned (the flow. Investment Tax ginning in 1979. realistic supplemen' cre d A + U 26 through method). rather than defer-tal information on inflation adjusted ring them and taking them into in-

1. 12*

• I 93 depreciation cost- come over the average guideline [jh +

+ 217- 3 27 On the whole. asset hves will be ex- life of the assets earning the credit + s 343 + s 5 20 tended by about 35% over those (the deferred method). _

The flow-through method will alle- ~^" *"

• 31

• viate the decreasing impact of the in-vestment tax credit which results from 4

this crea over the past several years and operations continues to be on As of March 1,1980 the Board will through the medium of a formal Key explicit accountability of managers number 14 Directors, including 12 Issues Program which tracks, anc- at alllevels of our company. But we outside directors. one of whom is a lyzcs, und supports the company's will continue to urge that scientists, former Chairman of the Board of spokesmanship role on the issues not regulators, decide which chemi- Union Carbide The individuals who which most seriously c!!ect our cols and other materials are haz- sit on the Board have been recom-businesses. ordous, and the degree of hatard mended by our Nominating Commit On our immediate agenda are they pose, before regulatory ceci- tee, which seeks individuals whose public policy issues relating to en- sions are made; and that the relative special skills, experience, and points orgy and feedstocks, environmental benefits and costs of various levels of view will enrich the collective ex-regulation. International trade and and methods of control be consid- pertise of the Board and con be used investment, and capital formation. ered. to the benefit of all stockholders. We are confident that our Board, with its Enagy and Feedstocks We are ac- Economic Competitiveness We will also continue to urge Go'Mrnment to strong complement of outside Direc-tive advocates of an energy pro-adopt the kinds of tax and regulamry tors is well-prepared to meet Union gram that fully recognizes the impor- Carbide's traditional high standards, pohey that vil serve to stimulate tance of conservation-and incen-tives to induce conservation-as a inmstment and investment in as well as evolving standards. of cor-researrt and development We be- potate governance.

mpor s d s retching o es ic up- lieve that such investment is the key Into the '80's As we move into the plies For Unicn Carbide, this is a ba- to an expanding economy and '3- 1980's, we can point to strengths or sic dimension of our business plan- creased employment It is also an es- opportunities in each of our five in-ning Between 1971 and the end of sential element of any economic pol- dustry segments, and tc a balanced 1979, we reduced the amount of en. icy which hopes to reverse the trend portfoho of businesses at different ergy needed to produce a pound of I w rd declining productivity. Fall- stages of growth, maturity, or devel-product by 20% and it is our goal to ing behind our overseas competitors opment. The task before us is to en-improve that figure to 30% by 1985. In productivity w!!! only exacerbate sure that each business makes the inflation, put further pressure on the fullest possible contribution, consist-We will also support policy which dollar and our balance of payments ent with the unique business environ-acknowledges the higher economic deficit, and cause U S. exports to be ment it faces, to the performance of value of hydrocarbon feedstocks uti- less competitive in both developed Union Carbide as a whole.

1 lized in petrochemical production- and d(,Jaloping countries around the Petrochemical production, which Moreover,we have a full public world' consumes only 4 5% of the nation's oil policy agenda that we expect to pur-and gas accounts for 413.000 jobs in M nogement Changes In 1979 Ar- sue with vigor and purpose. We be-the chemicals and plastics industries thur C. MacLeod. Robert E. Pyle, and lieve that our program will benetti alone. In most cases products made Heinn F. Tomfohrde III were elected our stockholders and, at the same from petrochemicals are less energy Vice-Presidents of the Corporation, as time, advance and enrich public di-intensive than the natural products was John H. Field in Januari of 1980. clogue on issues that will o!!ect all they replace. Many other industries, We are pleased to welcome to the our futures.

particularly the auto industry, de- Board of Directors C. Peter McCo-pond on lightweight plastics and other petrochemical products to lough, chairman and chief executive h officer of Xerox Corporation and a [

meet their own energy related goals member of the boards of several or. William S. Sneath I and objectives. ganizations, among them The New Chairman of the Board c n inue o pres or sou d co h O e seas Deve o n C unc1. @

effective environmental regulation Leaving the Board in 1979 were Warren M. Anderson based on the best available scientific Birny Mason. Jr., a former Chairman President information. We recognize our re. of the Board.who served the com-sponsibility to assist in establishing pony for 47 years and was on the February 20.1980 scinntific standards for environmental Board for 21 years, anc* .>ouglas H.

t: sting, and will continue la Freeman. Executive Vice-President, strengthen and improve our own test. who retired after 40 years with the ing capability; attention to the envi. company. F. Bruce Vernon. Senior ronm:ntalimpact of our products Vice-President, also retired in 1980 at-ter 41 years of service.

5 t

Overview This segment is our larg- 0 By using our proprietary catalyst sales cs amano

'"5 im 1* 85 8" est, comprising 37% of sales and op- technology, we added several hun-eroting profit in 1979. In addition, rited million pounds of ethylene ox-Chemicals & Plastics is a significant ido capacity with minimal capital supplier to other segments of Union expenditures.

Corbide. Domestically, we are the o Ouraward-winning Unipolprocess.

leading producer of a majority of our for high- and low-density poly-chemicals and plastics products. In ethylene was successfully licensed.

polyethylene, we are the world's Adverse effects were felt from rap-looder in size and proprietary tech-idly escalating feedstock costs, espe-nology, and it is the largest of our cially of imported naphtha, which is Chemicals & Plastics businesses. Our e, Wo o P many leading positions, low cost pro-Rico subsidiary. We are continuing to duction f acilities. and technological strengths enhance our long term e Md DeMWen -

as to increase substantially our use o'.

prospects in this competitive segment less expensive liquitied petroleum and we believe we can deal success- gas from the present level of 20% of oN tully with problems of feedstock price im im im ie7e io79 feedstock input.

and supply. 29c 39e 2ee sc9 396 To meet expected long-term de-1979 Highlights Sales were $3.348 million, an increase of 15% over m nd, expansions are planned in several areas:

those of 1978. Operating profit in-creased 28% to $396 million Exclud- 0 Low-density polyethylene-We ing results of the consolidated ethyl. plan to add a total of over a billion one derivatives businesses in Europe, pounds per year of capacity by the which we sold in 1978, the increase in end of 1982, using our new Unipol sales was 26%. Domestically, the sales process increase was due more to higher o Ethylene oxide / glycol-An add $

prices ( + 13%) than to change in vol. tional annual capacity of 650 mill.on ume and/or product mix ( + 10%). pounds of oxide and more than 9:0 Canadian sales are the most impor-

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million pounds of glycolis planned tant factor in international sales. for start-up in late 1983.

Several factors had a positive influ_ o Ethyleneamines-We plan to cdd Cs 2[c"l i ence on the current year's results: an additional 70 million pounds of 1975 1976 i977 197a i979 capacity b'; 1981. m 4e7 363 267 324 0 With good overallindustry de-mand, customers were more willing a Cellosize thickener-A new plant to accept price increases necessi, with a capacity of 7.5 million potnds toted by rapidly accelerating in. per year of this performance coct-creases in feedstock and energy ings material is scheduled to start up costs.

in Brazil during 1981.

O Export demand was exceptional, o Organo-functional silanes-A new and was aided by lower feedstock plant planned for Europe is expected costs in tho U.S. as compared with to be built by 1982.

overseas. Exports of chemicals and 1980 Outlook We anticipate that a plastics grew to almost half of Union slowdown in demand will follow the Carbide's total exports. exceptionally successful year of 1979.

O Currency translation and ex- Although the strength of export sales change lesses were reduced. and additionallicensing fneomo may mitigate the effects of a U.S

- slowdown, we see operating profit (before accounting changes) declin-ing over the short term, becauso we do not expect price increases fully to offset added raw material and en-ergy costs.

6

Basic Businesses

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p&+ 5 < # mm y Products, and Maikets

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<r-gj Purchased LPG and naphtha are procened into ethylene. propylene P 4 .

and benzene These intermediates t.;. 4 ,. 2 ' Q1" .. together with addittor al purchased

. amounts are used to make g, jfM v- '

n; . w, l polyethytene- tor packaging

1. pipe and electricalinsu!ation and l -

.. gy for transfer to the Battenes Home &

g Automotive Products segment for

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plastic Nrop and bags

1. y 9.. g'V Ethylene oxide glycol and denva p' 3d tives-transferred to the Battenes.

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Home & Automotive Products sog-ment for antifreeze summer coolant and for petroleum processing coat Ings lubricants. and other uses

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Alcohols and Oxo-Alconols-!cr T  : g; : ;J;w / ..WW % coatings preservatives. detergents v' ,.

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and cosmetics y ;m u Q '

'J' ' Intermediates together with pur-E.f t f chased matenals are used to produce phenoxy phenolic and sol-

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vent vinyl resins and vinyl acetate g+3. 9W: p.~A__.

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uppt acrylates and acetic esters for coat-

' x --j;xiOC;')ie;Jy' :-e sg r &u ings. latexes and packaging

-mp .g ' Purchased propylene oxide is used to make urethane Intermediates for au-tomotive, furniture. and other prod-ucts Purchased matenals and our own sil.

icon are used to make silicones for

, electronics and other uses

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,v ng _ 99gQ j M$f-d ,p r% a; Value added We blow-mold plasuc betr.es qO Nj A.2 "pp:g 77;.9 ' 4 frorn our own high-density pol "hylene L.ater g? y j ;-~ <H J S% -

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4 g].J.[. they will be blied with Prestone antureeze

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-f3#fU dM M MbD M Overview We continue to build on our growth prospects in the Industrial Sa;ss e s mm our position as one of the worldwide Gases business Most of our recent 'S'5 ** '" '"' '*

leaders in industrial gases This in- gain in oxygen sales has been due to cludes not only continuing growth in increased consumption in the steel.

countries where we have molor par- chemicals. and tabncated metal ticipation. but also increasing our products industries impressive gains standing in some o! the highly indus- have taken place in our nitrogen trialized areas and establishing posi- shipments to a wide variety of users tions in newly developing nations Growth markets for nitrogen are ma-with attractive growth prospects As a tenalizing in enhanced oil recovery major producer of industrial gases and in substitution for heat treating with outstandtng market technology, atmogheres made from natural gas.

we are strongly positioned for the fu- We started up the world's largest ture commercial helium plant during the 1979 Highlights Record worldwide year in Bushton. KS. with capacity to sales were achieved Sales were liquefy three million cu It. of helium

$1 A32 million. an increase of 13% annually Continuing demand for N M"#

• over those of 1978 Domestically, sales other of our industrial gases has re- i9's iv7e 19'? is78 1979 were vigorous Higher sales were at- quired expansions at several domes- a)' l') 42 te7 58 tributable to price increases ( + 8%) tic locations Added penetration of and a favorable change in volume overseas markets for industrial gases and/or product mix ( + 6%) Our ac- will occur upon completion in 1980 of livities in Canada. Brazil. and Europe plants in Germany. France. Brazil. .

also produced important sales in- and Canada.

creases Worldwide operating profit Among the other businesses of the decreased 5% from that of 1978, t segment, performance was gener-

$158 million. largely because of re- ally good As a leading supplier of duced reported U S dollar earnings products to the welding industry. we from Brazil, the result of severe infla-are continuing to focus our efforts on tion and currency effects in that those weldmg and cutting processes country increases in profits domesti- which are important to our Industrial cally and in most international areas Gases business and to our network of capita 1 Expenditures of the world reflect the results of good distributors ( S um demand. a strong commitment to op- i975 io's is77 197s 1979 erating cost reduction, and effective 1980 Outlook The year 1980 is ex- as ies m m m overhead control. pected to continue the uptrend in ,

sales The key to future growth is our i Industrial gases are important to focus on continuing technology pro-industry as a result of their contnbu~ grams for new applications of indus-tion to increased productivity energy trial gases and the growing opportu- I savings. and environmental improve- nities in the energy-related areas of '

l ment A broad market mix enhances coal gasification. syntuels and cata- I lysts Selective capital expansion will assure the opportunity to meet in-i creased levels of demand. Despite l an anticipated weakening in the I

economy. Operating profit is ex-l pected to grow, largely because of higher sales and the effects of plant modernization for increased effi-cienc'/.

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0.AS PRODUCTS. .

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Principal Raw Materials.

Products. and Markets

+- GAS PRODUCTS

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The r-:w rnatenal for rnalor industrial gases is air trorn which oxygen nitro ger and -;rgon are separated A rm r uperatirig cost in this process .

l that < ! electrical power 3ases are

.d f rom on 51te plants and in distnb utable form through tank trucks and cylinders ' Demand is pnmanly from the steel c;henwrals metal tabnca

.. tion petroleum and food freezing in dustnes sydrogen and otner gases h.[h'..o.u%,~.2..,:.g.~.AS;PR.OM.

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chased chem 1cals

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Purchased matenals and chemicals c .-  ; .. s are used te manufacture the follow-

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Ing products for sale as Indicated

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Welding equipment and Inate 7~ - -- ' '- - nals to the metal tabncating and

... J e weldmg industnes a Cryogenic and chemical systems and equipment - to the oil chemi cals and Industnal gases industnes Unox wastewater treatment sys-tems- principally to municipalities Molecular Steves chiefly to the oil and chemicals industnes M ( .'- OQM we og;;. - ea .. M '

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l Tc speed del;venes ct ;ndustnal gases to cus temers U .;Cn Carb;de ma;nt3;ns one of 'he largest and mest ett.c;ent tanker truck fleets m U s ;ndustr/

9

semmer.m m Overview Our metals businesses exports from the U S and Puerto Rico sales (s me comprise mineral products (primar- were more than double those of last ,"5 11y those of tungsten. Vanadium, and year. ']']'"'] ,

uranium) together with commodity In mineral products. total sales and specialty alloy products (primar- gains were a result of both price and 11y of manganese, silicon, and chro- volumeincreases especiallyin mium). Our strategic emphasis is on vanadium. Strong market demand mineral products, where we have in- for alloy products allowed price in-ground positions and our own mm- creases to offset cost inflation. Favor-ing and milling operations. We are able sales volumes were experi-aggressively explonng for mineral enced for most products.

products worldwide The majority of sales are domestic with western Eu. Electric arc furnace steelmaking, rope the most important interna- which utilizes graphite electrodes. set tional market an all-time U.S. production record in 1979. A similar experience took Our carbon businesses include place internationally. The increasing operating Profit graphite electrodes, carbon special- popularity of the electric arc method ( 8 ""

ties, and carbon fiber products. More of steelmaking is based on the sub-than half of the carbon business in

stantially lower capital and energy 1979 was in graphite electrodes.

costs of that method compared with where we are the world's leader. those of other forms of steelmaking.

Graphite Electrodes is truly an inter- Arc furnaces are also relatively free national business, with about 50% of from the pollution problems asso-1979's total production and sales ciated with basic oxygen and open l overseas. hearth furnaces. Such factors, to-Our diversified mineral products gether with good overall steel de-l and our top ranked position in mand. boosted results substantially j Graphite Electrodes worldwide are over 1978. Support for future longer-strengths which are expected to pro- term growth includes a new SI10 mil-i vide future long-term benefits. lion graphite electrodes plant, to be

1979 Highlights Sales and profits at- completed by mid-1981,in Clarks-tained record levels. Sales reached ville. Tit Expansion is also taking capital Expenditures pl ce in Canada and Europe. The S1.772 million, an increase of 25%

wr rgest ca&on 2er plant in (8"$]

! over those of 1978. Dramatic im- iea i3i iio 77 io2 provement took place in operating Greenville. SC will provide for an ini-profit. which rose to S267 million in- tial production capacity of 800.000 p unds of carbon fibers per year.

i

! creasing 61% over that of 1978. These l percentage increases were the high- 1980 Outlook A weakening eco-est for any of the Corporation's seg. nomic outlook for 1980 will probably ments. Large sales increases were re- result in reduced activity in steel and corded domestically, the result of a other basic industries we supply. Al-combination of price increases though the carryover eftect of price

( + 13%) and a favorable change in increases implemented in 1979 may volume and'or product mix ( + 5%). increase dollar sales volume is ex-l Similar results were achieved in in- pected to be flat or dawn for many I ternational areas. with particularly products. An important exception is l

good results in Italy. France, the carbon fibers, which will benefit from United Kingdom, and Spain Carbon continued strong demand for fibers for aircraft and automotive applica-tions. Overall, we see difficulties in in-creasing selling prices enough to off-set fully increases in the costs of en-ergy and raw materials and thus we j anticipate lower operating profit in l 1980 (before accounting changes).

l 10

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l Overview We are the world's lead- Our key strength in Batteries is our sales rs saimm 88 ing producer of each of the principal comprehensive approach to the l'75 l'76 '77 l'7' i e s i20 i 36 i 6o consumer products of this segment. market. We have a fullline of seven Outstanding brand name recogni- different electrochemical battery sys-tion, supported by an extensive net- tems, and are a leader in both ccr work of consumer product organiza- bon zinc and the alkaline and other tions, provides us with good visibility high performance segments of the in a highly competitive marketplace business. This approach allows us to Our consumer products segment has meet the substantial and increasing contributed significantly to record demand from developing countries corporate sales. Operating profit of and others for carbon zinc batteries the segment has achieved a new as well as the growing trend in the

. record Consumer demand helps developed countries to trade up for l balance the industrial and agricul- high performance. Sales of alkaline -

tural demand of most of our other products increased dramatically dur-businesses ing the year.

1979 Highlights Sales advanced to The performance of our group of $U M*

• l S1.599 million. on increase of 18% home and automotive products re- i975 i976 i977 io7s i979 over 1978. Operating profit increased sulted in both sales and operating is7 113 ide 178 i's j 10% to $195 million. Higher domestic profit increases. Those products are I sales were mainly attributable to a sold primarily in the United States

) favorable change in volume and/or and Canada. A strong gain in the i product mix ( + 12%) with prices up performance of antifreeze was a re-modestly ( + 5%). sult of increased market share. Sales With our Evereadyand Ucar bat, were also stimulated by uncertain teries sold in over 100 countries, we market supply and rising prices. Par-i are the world sales leader in battery tially offsetting the good perform-l I

products. Including this year's in- ance of antifreeze were the less fa-crease, sales have grown without in_ vorable results of plastic wrap and terruption for more than twenty bags due to escalating resin costs, years. International operations con. private brand competition, and con-tribute over half of total sales. We are sumer resistance to commensurate expanding at most of our existing do- price increases. c3 %

"5 8"^ "7 "' '"'

! mestic and international Batteries lo- 1980 Outlook The results for 1980

" 5'

cations, and have built new plants in depend largely on economic condi-Egypt and Nigeria. Batteries contrib- tions that affect consumer spending utes a strong majority of this seg- patterns. Although overall demand ment's sales and profits. Batteries may be softer than 1979, we expect operating profits also reached new battery sales to continue theirlong records, but performance was held history of growth, as sales are stimu-back by our inability,in a highly lated by the popularity of electronic competitive marketplace, to offset toys and games in this country and

fully increased raw mcterial costs. others, and demand in developing countries continues to grow. Our vol-ume sales of antifreeze are expected to return to more normal growth as compared with an atypical 1979 per-formance. Improved sales are ex-i pected for plastic wrap and bags.

i Overall higher sales are exps ted to

! 1mpact favorably on operating profit.

i 12

e Basic Businessss g A

l 1

mv \

Principal Raw Materials, Products, and Markets I h Zinc silver and other materials are purchased to manufacture primary and secondary dry cell batteries Polyethylene from our Chemicals & t Plastics segment and purchesed g steel aluminum ar.d hardware are used to make flashlights lanterns and miniature lamps Purchases of some flashlights and lamps round out our product line The complete bat-tery and portable 11ghting product lines are distnbuted to onginal equipment manuf acturers and i

-- j through a vaned network of whole-salers and reta11ers under the Eve-ready Ucar and other trademarks Polyethylene trom our Chemicals &

j Plastics segment is umd to make both Glad and private label plastic wrap and bags. which are distributed vi ' ' chiefly through food brokers to super-markets Etbylene glycol from our Chemicals

)

at Plastics segment is used to make l both Prestone li and private label

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antitreeze summer coolant Simomz

'N". wax and other automotive specialty ,

products are produced for us under contract and are distributed through wholesale and retail outlets Eveready Energ:zer a'kaline battenes-

!ll!l ' Energized for Life Long Life' -were :ntro-4 duced nationwide early in 1080 i

I 13

i E-CIALTY PRODUCTS so1 mm>

Overview These distinct businesses sors and to meat packers for fresh ,, , , , , , , , ,

are being aggressively developed to beef packaging. Demand is primar- o, a 3e o ,i on im J increase their contributions to future fly in the U.S. and Canada. l sales and profits. Not all of our spe- Continued high industry growth )

cialty products are sales leaders in rates substantiallyimproved both ,

theirindustries. However,we have sales and operating profits in our emphasized products that enjoy Electronic Components & Materials

" market niches"-that is, those that business. We are the world's leading provide a unique combination of producer of solid tantalum capacl-performance and service. Most of the tors, and hold an important position products in this segment have experi- in monolithic ceramic capacitors, the enced rapid growth in sales or earn- newest and fastest-growing segment ings or h!gh quality return on assets, of the capacitor industry. Our specia -

or else have potential for such per- ized electronic materials business is formanca growing rapidly and is an important 1979 Highlights Sales of the seg-  ! actor in our electronic business. The operating Profit ment contribute the smallest propor- materials are used in such products (5"")

tion to total corporate sales, but have as integrated circuits and bubble-passed the billion dollar mark for the domain memories.

] l' "l' {' '*

first time, increasing 11% over those Our f ,cus in Medical Products is on of 1978 to $1,026 million. Operating blood unalyzers and supporting pront has broken through the flat per- reagents, and on radiopharmaceuti-j formance of the past three years, ris' cols,which together accounted for j ing to S56 million, an increase of 17% the largest proportion of Medical over that of 1978. Domestic and inter- Products sales in 1979. Both of those national sales and operating profit product creas experienced in-

, were up significantly over that of creased demand. Continuing careful 1978. assessment of the potential for the i Agricultural Products & Services imaging systems hardware business, contributed approximately half of however, led to the discontinuance of segment sales in 1979. Development that product line late in 1979. Our of agricultural products and services, Medical Products businesses were cgpita1

, _ Expenditures will continue to be one of our major not yet profitable- Im io7e im 1978 im 4 strategic thrusts in coming years. We Through our Nuclear Division,we 59 9a 88 7e 87 participate in three product creas: also operate government-owned fa-insecticides, herbicides, and growth cilities involved in nuclear materials regulators. Insecticides, the most im- production and nuclear and non-portant contributors to sales and nuclear research, including a multi-profits, include Sevin brand and purpose R&D center, a national de-Tomik brand. We are also an impor- fense engineering facility, and a gas-tant supplier of intermediates to other eous diffusion plant at Oak Ridge, producers. Sales of Amlben multicrop TN; and a gaseous diffusion plant at herbicide continue to show attractive Paducch, KY.

gains. Our growth regulatm partici-pate in the fastest growing porHon of 1980 Outlook Total sales are ex-the industry. pected to be up modestlyin 1980, Sales and operating profits for with increases expected in most busi-Food Processing & Packaging Mate. nesses. On the whole, general eco-rtals were good in 1979. We are the nomic weakness in 1980 may tempo-world'slargest producer of cellulosic rarily decrease demand for our elec-casings for hot dogs, sausages, and tronic products. Operating profit of processed meats.We also supply the Specialty Products segment in shrink bags to frozen poultry proces. 1980 should increase more signifi-contly than scles, due to improved manufacturing efficiencies and the approach to profitability of Medical Products.

14

Basic Businesses Principal Raw Materials, Products, and Markets l All of the following specialty products are produced from n.anufactured or purchased chemicals metals com-ponents and other matenals C Insecticides herbicides and growth regulators are soid directly and through distnbutors to a broad range of agricultural markets E Intermediates for insecticides are sold to chemical manuf acturers

c. Cellulosic casings are made for production of hot dogs sausages and processed meats Shrinkable plastic bags are made for fresh beef and poultry packaging The casings and bags are sold to meat and poul-try processors and packers L:- Capacitors. substrates and propn etary processing chemicals and ma-tenals are sold to the electronics In dustry for computers television re-ceivers ground-based and satellite communications systems. etc E Blood analyzers and radio-i- pharmaceuticals are sold to the health care industry Tomatoes treated with Ethrel growth regulatcr one of the newest of Union Carbide s agncul tural products r: pen faster and at a more un:-

form rate 15

I WKHM.n M h NACH4 Overview Sales from operations in International operating profit in- sales by creased to $318 million, compared Geographic Area the United States and Puerto Rico

(" domestic operations") have in- with $242 million in 1978. represent-creased during each of the last five ing a gain of 31%. M Io %

years. with the largest gain taking In spite of lower sales in Europe fol- turcr in place in 1979. Exports, which are in- lowing the divestment of our consoli- , ,,,

cluded in domestic sales. have had a dated ethylene derivatives busi-more significant influence during re- nesses there in 1978. Europe remains caraam cent years Domestic operating profit our largest international area Ad- m,no has been cyclical, but has increased justed for the divestment. European during each of the last two years to sales from continuing operations in- McaSt,,, i s _ .

reach its highest level in five years creased 38% over those of 1978.

In general a similar pattern has While all of our industry segments operating Proht J-

~

occurred in operations outside the participated in meeting demand by Geo9raphic United States and Puerto Rico (" inter- from Europe, our metals and carbons Area ~

national operations") Although sales products accounted for more than cras aa es s and operating profit have been half of our total sales there In 1979.

smaller in international than in do- results in Europe were favorably af-mestic operations. our international fected by high demand, permitting r2r tam operations have contributed signifi- implementation of substantial price g, contly to the success of our current increases in a majority of business -

and longer-term goals of maintain- creas m k=co 41 ing our status as an important world- Adjusted for the gain on the sale of unca , , ^ , ^ ' -

wide corporation. our consolidated ethylene deriva. MJte East 1 %

Exports and international sales to- tives businesses. and tho results of op-gether account for 37% of total con- erations of those businesses. operat-solidated sales. In addition, although ing profit in Europe in 1979 was more their sales are not consolidated, com- than double that of 1978. Our on-panies which are 20%-to-50% owned going program to expand battery by Union Carbide also contribute to products in Europe is progressing net income. very well, though it has not yet con-1979 Highlights In 1979. domestic tributed to profits-sales reached a record level. in. Our second largest sales area was the For East, where batteries. chemi-creasing 20% over those of 1978 to S6.395 million Exports increased cols, and plastics were our most im-more than 50% The largest propor. portant products Sales of these prod-tion of exports was attributable to ucts increased significantly over the chemicals and plastics products previous year's. Continuing a recent Metals c.nd cc.rbons, as weli cs weld- ' rend. operating profit in the Far East ing produc9 and molecular sieves, rose 37% .n 1979.

were amor g the other more signiti. Aided by increased sales of bat-cant expo' ts Domestic sales were fa, teries, gases, and related products.

vorably iafluenced both by higl.er sales also increased in Latin America prices ( + 10%) and by favorable Latin American operating profit changes in volume and/or product declined to $41 million from S75 mil-lion in 1978. largely because of re-mix ( + 9% ) duced reported U S. dollar earnings Domestic operating profit, advanc_

ing to $754 mihion. was up 20% over from Brazil. the result of severe infla-that of 1978 tion and currency effects in tnat International sales also achieved country.

l new highs. reaching $2.782 million. Excellent results were achieved in l Canada, where the Chemicals &

an increase over those of 1978 of

^0% Prices increased during the Plastics and Metals & Carbons seg-year ( + 14%) but changes in volume ments are among more important and/or product mix were unfavor- contributors to sales. In Canada, op-eroting profit more than doubled. re-able ( - 4% ). flecting a higher operating rate and a more profitable product mix.

16

M % d W.

Sales Operating Profit Millions of dollars 1979 1978 1977 1976 1975 1979 1978 1977 1976 1975 Industry Segments Chemicals & Plastics 53,348 S2.908 S2.787 S2.571 S2.183 $ 396 $309 $285 S395 S290 Gases & Related Products 1,432 1.263 1.104 987 885 158 167 149 153 137 Metals & Carbons 1,772 1.416 1.243 1.151 1.088 267 166 202 202 220 Battenes. Ilome &

Automotive Products 1,599 1.356 1,196 1.052 1.036 195 178 146 113 157 Specialty Products 1,026 927 706 585 473 56 48 48 47 56 Total UCC Consolidated $9,177 $7.870 $7.036 S6,346 $5.665 $1,072 S868 S830 S910 S860 Geographic Segments United States & Puerto Rico $6,395 $5.336 S4.789 S4.253 $3.726 $ 754 $626 S619 $669 S609 Africa & Middle East 105 85 75 48 48 13 10 9 9 4 Canada 531 426 366 381 369 74 30 58 50 53 Europe 959 1.011 929 910 819 108 67 15 80 98 Far East 597 478 406 355 315 82 60 45 41 35 Latin Amenca 590 534 471 399 388 41 75 84 61 61 International Operations 2,782 2.634 2 247 2.093 1.939 318 242 211 241 251 Total UCC Consolidated $9,177 S7.870 S7.035 S6.346 $5.665 $1,072 S868 S830 S910 $860 Identifiable Assets Identifiable Assets Millions of dollars 1979 1978 1977 Millions of dollars 1979 1978 1977 Industry Segments Geographic Segments United States & Puerto Rico $5,884 $5.344 S4.770 Chemicals & Plastics $3,463 S3.232 S3.114 Africa & Middle East 124 107 90 Gases & Related Products 1,362 1.254 1.122 Canada 615 566 520 Metals & Carbons 1,577 1.433 1.442 Europe 833 726 1.096 Batteries. liome & Far East 459 372 271 Automotive Products 907 777 672 Latin America 486 471 385 Specialty Products 955 768 669 Interactional Operations 2,517 2.242 2.362 Intersegment eliminations (68) (56) (55) Intersegment eliminations (205) (178) (168)

Totalldentthable Assets $8,196 $7.408 $6.964 Totalldentlhable Assets $8,196 S7.408 S6.964 N;tzs to Segment Data o Scl:s of chemicals in each of the years 1975-379 were S t.482. $1.664. shown for Europe include $363 milhon representing identifiable assets S1824. S1.969. and $2.286 milhon. respectively Sales of plastics were of European ethylene denvatives businesses. reported principally un-S701. S907. $963. S939. and $1062 milhon. respectively. der the Chemicals & Plastics industry segment that were sold in 1978.

O Sales as presented are to unattlicted customers 1Yansfers between C Withdrawal from the imaging systems hardware business in 1979 re-segments were as follows sulted in a net charge of $24 3 million included in operating prott of the Moons of do;lars 1979 1978 1977 Specialty Product and United States & Puerto Rico segments.

From Chemica;s & P!astics $ 224 S 186 ST84 0 Sale of consolida'ed Europe m ethylene derivatives businesses in From other industry segmer.fs 51 37 34 1978. resulting in a gain of S52.9 milhon. is included in operating prott Tdtal between segments $ 275 S 223 S 218 of the Chemicals & Plastics and Europe segments From United sta!es & Puerto Rico $ 437 $ 358 S 320 C Sale of the calendered rigid vinyl products business in 1977. resulting from other geographic segments 136 96 59 in a gain of $9.8 million,is included in operating prott of the Specialty Total between segments $ 573 S 454 S 379 Products and United States & Puerto Rico segments.

Products are transferred between segments on a basis intended to rep- c Awrite-off in 1976 due to abandonment of plans to produce dispos-r;.sent the approximate market value of the products, able diapers, resulting in a net charge of $14 7 milhon. is included in c Th3 following toele reconciles totalident1 table assets to the tonsoh- oper ting profit of the Batteries. Home & Automotive Products and dated anancial statements Urdted States & Puerto Rico segments.

Mcens of dollars 1979 1978 1977 C Sale of the flexible vinyl alm business in 1976, resulting in a gain of Totalidentinab e assets S I milhoa is included in operating prott of the Specialty Products and

$8.196 S7A08 S6.964 Investments and advances 320 291 268 Umted States & Puerto Rico segments.

Corporate assets 287 167 191 O Shutdown in 1975 of facilities at Whiting. Indiana, resulted in a net TotalUcc Consolidated $8.803 S7.866 S7 423 charge of $11.0 million to operating prott of the Chemicals & Plastics C In 1978, assets shown for Chemicals & Plastics and for United States & n nHed StaMs & Netto Eco segments- l Pu;rto Rico include S322 million representing identifiable assets of Gulf International Operations amounts reported do not include results of Coast Oletns Company. an att11 ate consolidated in 1978. In 1977 assets intemational companies carried at equity See Note 5 on p. 28.  ;

17

1 Discussion of 1979 and 1978 Consolidated Operations development spending equaled 3% or more of sales. Our Not Scles Sales continued to grow and reached a new corporate development group and research laboratory 1 record in 1979, increasing 17% to S9,177 million. The in, was discontinued in 1976 and research and develop-  !

crease in 1978 was 12%. In 1979 the impact on sales of ment expenses in that year were virtually unchanged price increases ( + 11%) was greater than that of change from those of 1977.

in volume and/or product mix ( + 5%). Eliminating the re- Selling, administrative, and other expenses in 1979 sults of our consolidated European ethylene derivatives were $1,053 million. an increase of 12%. That compares businesses which we sold in 1978, sales increased 21%. with an increase of 10% in 1978. Selling expenses, which All of our segments participated in greater sales in 1979, usually change in proportion to sales, increased only the largest percentage increases taking place in the 12% in 1979 to S507 million,less than the increase in sales Metals & Carbons and the Batteries; Home & Automotive of 17%-an improvement over the results of 1978, when segments. Aided by strong exports, domestic sales grew selling expenses increased 14%, compared with a 12%

twice as fast as international sales.

Cost of Sales Cost of sales increased 16% to S6A91 mil. Nu.aber of Employees (Year-end) 1979 1978 lion, primarily because of increased volume and/or United States & Puerto Rico 65.626 63 838 changes in product mix. but also because of increased

""C & Middle East 2 368 unit costs Cost of sales increased 13% in 1978. Contribut- dc ing to higher costs in 1979 was inf ation in labor, hydro- Europe s.986 8.848 carbon feedstocks and other major raw materials and Far East 20.312 19.506 fuels and electric power. Distribution expenses also ad- Latin Amenca 13.593 14 080 vanced over those of the prior year. Approximate International cperations 50.137 49.533 changes in 7verage unit costs-for domestic operations Total Ucc consolidated

• 115.763 113.371 only--of three significant elements in purchased mate- *Does not include 19.976 employees (19.807 in 1978) of the Nuclear Divi-rials and power were as follows: ston at facilities operated for the U S Government-Percent change over pnor year 1979 1978 liydrocarbon feedstocks + 36 +3 " E' I"* "' '*

(Wages. benetts. payroll taxes) 1979 1978 Other major raw matenals + 18 +5 fuels and electric power + 18 + 14 Domestic

- - '-~~

Millions of dollars $1.632.7 S1.457.3 Rising costs were only partly o!! set by solid advances in Percent of domestic sales 26 27 energy conservation. Nevertheless. because of higher Intemational sales as a result of favorable changes both in price and - tillions et dollars S 515.5 s 474 2 in volume and product mix, the gross margin percent in- F tcent ot international sales 19 19 creased in 1979 to 29 3%. That compares with a gross ..dl UCC Consolidated margin percent of 29.1% in 1978.which represented a Millions et dollars $2.148.2 sl.9315 decline from 29.9% in 1977. Percent et total sales 23 25 For more intormation about Union Carbide's principal *Does not include employment costs of employees of the Nuclear Division raw materials. products, markets. and methods of distri. a* tacilities operated for the U.S. Government.

bution, see pp. 7,9,11,13. and 15. Unless otherwise indi-cated there, the products of Union Carbide are sold prin-cipally by its own sales force, directly to customers in the industries named or for the uses mentioned.

Overhead Research and development expenses, which increased 3% in 1979 to S161 million, are directed to. sales / Employee (s Thousands) words product development and process technobgy. In * * * '" * * * * "#

our Agricultural Products & Services and our Food Proc-essing & Packaging Materials businesses, research and 18 1

sales increase. Efforts to hold down administrative and The reported losses crise from currency exchange rate other expenses continue. In 1979 those expenses in- fluctuations. which c!!ect the dollar value at which the creased 12% to $546 million. In 1978 they increased 6%. accounts of foreign affiliates are included in our consoli-Depreciation Depreciation expense continued to rise in dated financial statements. There is no cash gain or loss 1979, to $470 milhon. representing an increase of 13% unless funds are actually converted between currencies.

over that of 1978. Depreciation in 1978 increased. to $417 Such conversions took place to only a minor degree in million,16% over that of 1977. 1979 and 1978.

Oth;r Income and Expenses Interest on long-term and The major part of the currency losses both in 1979 and short-term debt increased more slowly in 1979, rising by 1978 reflected the translation of foreign currency 1%. In 1978 totalinterest expense increased 7%. Short- amounts into U S. dollars. In 1979 the loss was due princi-term interest rates continued to rise during both 1979 and pally to the depreciation of the Brazilian cruzeiro against 1978. but in 1979 a portion of short-term debt was re, the U.S. dollar. In 1978 the loss was due principally to the duced from the proceeds of $300 million of long-term depreciation of the cruzeiro and the weakening of the debt issued at more favorable rates. U.S. dollar relative to the Belgian franc. The Belgian franc loss was attributable mainly to debt in that currency.

Many transactions account for the change in the

'Other income-net" category to a net expense position The reported figures do not include the effect of cur-in 1979 from a net income position in 1978. An analysis of rency rate changes on inventories. which are required to both years is included in Note C on Page 29. A provision be translated at the exchange rates in effect at the time was made in 1979 for expenses in connection with with, the inventories were acquired. Sales revenues. however, drawal from the Corporation's imaging systems hard. re translated at current exchange rates. As a conse-ware business. In contrast.1978 included a major non-recurring gain from the sa!9 of our consolidated Euro. salance of Payments pean ethylene derivatives businesses. There was little M*ll1 "8 ' d 11 I I'78 change overall in the "Other income-net" category in Exports to customers from domestic operations $ 602 S 385 Exports to subsidiaries from domestic operations 417 358 1978 compared with 1977. E!!ects of foreign currency translation and exchange adjustments are discussed be-Net end trominternationcicinitates <

low. Proceeds from European divestiture - 193 F r:ign Currency Losses Foreign currency translation Other receipts 44 36 and exchange adjustments had the following effect on T t Ido11 rinflow $1.133 s.<117_

net income: Totalimports s 339 S 220 International +nvestments 30 60 Foreign currency loss 1979 1978 r rsem W 80 Millions of dollars $29.3 $597 Dollars per share $0.45 SO 91 Net Favorable Eclana $ 663 S 651 Price In'ds t by Year (1972 = 100) 1979 1978 Domestic 216 196 International 204 178 Tota 1 UCC 212 190 19

quence, when inventones are subsequently sold and prior year. and was attributable to o!!iliates in Mexico.

charged against revenues. there is an increase or de- South AIrica. and Japan.

cream in U S. dollar profit margins Net Income Net income in 1979 achieved a significant In 1979, the most significant impact from this inventory advance over 1978 rising 41% to S556 million a record e!!ect was in Brazil When inventories there were sold high. The increase in 1978 was 2%. The ratio of net in-anc charged against revenue, there was a subsiantial come to net sales increased to 61% in 1979 compared decrease in 0 S. dollar profit margins. with 5.0% in 1978, and 5 5% in 1977.

In 1978. there was an increase in U S dollar profit mar- _ ___.__ _ _ __ _ _ _ _ _ _

gins as a result of inventory effects worldwide. Income statement Data by Quarter FA:lltor.s of dollars 1st 2 rid 3rd 4th in Brazil translction losses in both 1979 and 1978. and quarter quarter quarter quarter Year the reduction in profit margins from inventory sales in 1979 1979. were partially offset by a number of currency pro- Net Sales S21648 S2.289 7 S2.325 7 $2.396 3 $9.176 5 tection measures which are reflecteo ia other accounts Cost ct sales 1.5364 1.577 8 1.622.1 1.754 4 64907 Deprecianon 113 o 122 3 115 0 118 8 469 7 Provision for Income Taxes The effective income tax Net income

~"~~ ~ ~ ~ - -

124o ~ - ~ ~ ' ~ ~ -

150 5 1494 131 7 5562 rato decreased in 1979 The e!!ective rate was 314%. as compared with 32 8% in 1978. principally due to changes 1978 in United Kingdom Tax Laws and a reduction in the statu. Net s les $1823 0 S t.979 8 S t.97c 2 S20907 $7.869 7 Is es 1 4 tory Federal tax rate The effective rate in 1977 was $s n 13 [ 13 ] f5 ,

301% The increase to 32 8% in 1978 occurred primarily Net mcome 78 9 loo 8 ac 7 127 9 394 3 because, compared with the previous year, a lower pro-

- ~~~ ~ ~ - ~ ~ ~ ~ ~ ~ - ~ ' - ~ - ~ ~

portion of income was denved from areas subject to _ . _ - . . - _ - - - - - - _ - - . - - - -

lower tax rates An analysis of the major items in 1979 supplementary Income statement Data

?Anh ns !donars W9 M8 and 1978 is included in Note 7 on Page 29.

Taxes other than income taxes $233.2 S207.1 Minority Interest and Equity Companies The minority faamtenance and repa:rs $616.3 S518 6 stockholders' share of income decreased by 23% in 1979. Domesuc advernsma expend:tures S 55.1 S 51i Higher entnings wore achieved in many of our subsidi- Internanonal adverns. ,g expenditures _30 _a _ _ 25 4 ary companies. esp tcially Canada. These were more Total advernsing exenditures' - - ~ - ~ ~ ~$ 85.9

- ~ ~ ~ ~ - ~ ~ ~ - ~ ' ~ ~ ~

S 76 5 than o!! set. however, oy lower income in Brazil In 1978 there was an increase of 3%. the result of higher earnings in several subsidiarles. partially offset by lower earnings in Canada Our share of income of companies carried at equity expanded significantly in 1979 to $33 million from S5 mil-hon in 1978. A major part of this increase was due to po-lyoletins business improvement in Japan and Sweden. A smaller increase took place in 1978 as compared to the Net Income and Dividends < s Mmor.s) 1970 1971 19'2 1973 1974 1975 197$ 1977 1976 1979 15' 153 266 297 525 382 441 38$ 3G4 $$6 121 121 121 126 133 147 154 175 181 190 20

. Millions of dollars-Te2 Year Summary Union Carbide Corporation and Consolidated Subsidianes except per share figures Fir The Year 1979 1978 1977 1976 1975 1974 1973 1972 1971 1970 Nst salas $9,176.5 S7.869 7 $7,036.1 $6.345.7 $5.665 0 $5.3201 $3.938 8 S3.261.3 $3.037 5 S3.026.3 Deductions (additions)

Cost of sales 6.490.7 5.580 4 4.930 6 4.337.2 3.839 3 3.497.9 2.575 9 2.137.1 2.0164 2.002.9 Research and development 160.8 155.9 155 8 142 4 120 2 94 2 76 8 69 6 78 3 78 0 Selling. administrative. and other expenses 1.052.6 942 9 860 2 7561 638 7 531.3 426 2 376 8 368.7 360 3 Depreciation 469.7 416 6 358 8 301 0 269 8 248.3 2452 245.2 229 3 236 4 Interest on long. term and short-ter'n debt 161.3 159 3 1491 120 2 100 2 69.8 60 6 56.1 60.9 58.5 Other income-net 42 1 (12 4) (12.9) (37.7) (487) (25 6) (0 5) (10.3) (7.3) (6.7)

Income before provision for income taxes 799.3 627.0 594 5 726 5 745 5 904 2 554 6 3868 291.2 296.9 Provision for income taxes 251.4 205 5 178'l 26$4 343 2 375 4 2450 164 3 126.9 130 4 Income of consolidated companies $47.9 4215 415.7 460.1 402 3 528 8 309.6 222.5 164 3 loo 5 1.ess Minority share ot tncome 25.0 32 5 31.6 27 9 28 4 30 7 250 17.8 15.7 13 3 Plus UCC share of income of companies carried at equity 33.3 5.3 10 9.0 78 27 0 12.6 35 44 41 Income before extraordinary items 556.2 394 3 3851 441.2 381.7 525.1 297.2 208.2 153 0 157.3 Extraordinary ttems - - - - - - -

(2 2) (02) -

Net income 556.2 J94 3 385.1 441 2 381.7 525.1 297.2 206.0 152 8 157.3 Not income per share 8.47 6 09 6 05 7.15 6.23 8 61 4 89 3.40 2.52 2.60 Dividends 190.1 181.2 178 4 153.8 146.9 132 6 126.1 121.3 121.1 121.0 Davidends per share 2.90 2 80 2 80 2 50 2 40 2.175 2 075 2.00 2.00 100 Capital expenditures 831.3 687.8 805.4 964 5 862.2 516 6 288.7 243 9 335 2 393.7 Market price range per share High 44 % 43% 62 % 76% 66% 46 51% 52 50% 40%

tow 34 33% 40 55% 40% 31% 29 % 41% 38% 29 %

At Year End 1979 1978 1977 1976 1975 1974 1973 1972 1971 1970 Working capital 2,070.4 1.621.3 1.645.2 1.663 2 1.654 4 1.347.0 1.205 0 997.3 870 7 789.3 Total ossets 8.802.6 7.866 2 7.423.2 6.621 6 5.740 8 4.879.2 4.163 4 3.711.3 3.546.3 3.563.8 Total capitalization 6.316.8 5.794.1 5.603 3 5.087.4 4 411.5 3.773 0 3.344 3 3.091.5 3.020 5 3.070.1 UCC stockholders' equity 4.042.5 3.638 5 3.407.0 3.055 1 27480 2.502 4 2.106 4 1.929 4 1.839.3 1.804 6 Equity per share 61.06 55.92 52.79 49 45 44 80 4101 34 60 31.77 30 37 29.84 Othir Data 1979 1978 1977 1976 1975 1974 1973 1972 1971 1970 Current ratto (at year-end) 2.2 2.0 22 2.3 2.5 22 2.5 2.6 2.6 22 Total debt as percent of total capitalization (at year-end) 31.4 32.3 34 5 363 33 8 29.3 326 33.2 34 9 38.2 Net income as percent of Scles 6.1 50 5.5 7.0 6.7 9.9 7.5 6.3 50 5.2 UCC stockholders' equity (average) 14.5 11.2 11.9 15.2 14 5 22.8 14 7 10 9 8.4 8.8 Nat income plus minority shcro of income as percent of tota 1 capitalization (avercge) 0.6 7.5 7.8 99 10 0 15 6 10 0 7.3 5.5 5.7 D1vidends as percent oi net income 34.2 46 0 46.3 34 9 38 5 25.3 42.4 58.9 79.3 76.9 Shcras outstanding (thousands; at yact-end) 66,206 65.065 64.533 61.787 61.336 61.016 60.868 60.732 60.568 60.479 Number of employees (at year-end) I15.763 113.371 113.669 113.118 106.475 109.566 109.417 98.114 99.181 102.144 Nst income per share is based on weighted aver 2ge number of shares outstanding during the year.

Total dsbt consists of short-term debt. Jong-term r.ebt. and current installments of long-term debt.

Total capitalization consists of total debt plus r%nonty stockholders

• equity in consolidated subsidiaries and UCC stockholders' equity.

21

Changes in Financial Position: Sources of Funds 1979 amounted to S190.1 million, representing a payout Operations Internally generated cash flow from opera- ratio of 34% of net income. Of the total dividends de-clared. $23.4 million, or 12%, was reinvested in Union tions is the source of most of our funds. This cash !!ow equals not income before non-cash items-that is, ma:nly Carbide common stock through our Dividend Reinvest-before depreciation and deferred income tax charges ment and Stock Purchase Plan. Total dividends declared In 1979, cash flow Irom operations constituted 71% of the in 1978 and 1977 were S181.2 million and $178.4 million, total sources of funds, the highest proportion in several respectively. Payout ratios were 46% in both years. Divi-years The remainder of funds pr)vided came from dend reinvestment was negligible in 1978, the year the Plan was introduced; the first dividends to be reinvested financing and other sources. In 1779. cash flow from op.

orations increased 22% over thei of the prior year, reach- under the Plan were reinvested on September 1,1978.

ing SI124.3 million, compared with $924 2 million and Capital Expenditures The major use of funds was for S877 0 million for 1978 and 19'7, respectively. capital projects, which amounted to $831.3 million in Financing Major new dorr.estic borrowings in 1979 re. 1979 and $687.8 million in 1978. Capital expenditures in sulted from the issuance in August of $200 million of de. 1977 cmounted to $805,4 million. In 1979, approximately bentures, due 2009, and S100 million of notes, due 1986. half of our expenditures were for additional capacity. A Net proceeds were used to reduce short-term debt. In significant share of expenditures was applied to cost re-addition. revenue bonds totaling S15.6 million were is. duction projects. and to replacement of machinery and sued by local authontles to finance domestic pollution equipment with an emphasis on increasing productivity.

abatement projects that will be operated in connection Approximately 70% of our capital expenditures in 1979 with our manufacturing facilities During the year we sold were for domestic construction, while a majority of the re-commercial paper from time to time, at the highest. mainder was spent in Latin America and Europe.

grade rating. in order to obtain short-term funds. Various Working Capital During the year, working capitalin-lines of credit are also available to Union Carbide and its creased by S449.1 million. a change of 28%. Totalinven-subsidiaries. Funds obtained from the sale of stock tories at year-end 1979 had risen by 15% over those of through Union Carbide's Dividend Reinvestment and the prior ye':r, with accounts receivable increasing by Stock Purchase Plan amounted to S27.2 million. 14%. Accounts receivable levels continued to increase in Debt Ratio At year-end 1979, the ratio of total debt to line with the strong increase in sales. In terms of days' total capitalization was 314%. slightly below that of the sales outstanding at year-end (based on fourth quarter prior yocr. 32.3%. The yound 1977 ratio was 34.5%. To. sales). receivables represented about 54 days at year-tal debt includes sbat-term debt, long term debt. and the end 1979 and 1978.

Current portion a long-term debt; total capitalization consists of tote.1 debt plus minority stockholders' equity in consolidatea subsidiaries and UCC stockholders

• equity.

Changes in Financial Position: Uses of Funds Dividends The quarterly cash dividend was increased to 75c per share. commencing with the payment made on September 1,1979, thus increasing the total payout in 1979 to S2.90 a share. Total dividends declared during Capital Expenditures by Industry Segment cr. meals & Plastus 30%

2%

Metals & Carbor.s 12%

Ac t;ve ucts 11%

Specialty Products 14 %

22

M:ntcoment's Responsibility for Financial Statements rarnings variance 1979 vs. 1978 vs.

D uan per share IM8 IM7 Union Carbide Corporation's financial reports are pre-Dom " '

pared by the Corporation's management, which is re- ning p ces $ + 6.14 s + 155 sponsible for their f altness, integrity, and objectivity The volume and product mix +1.47 + 1.40 4 accompanying financial statements have been pre- Manufacturing and dictnbunon costs - 5.04 - 1 77 pared in conformity with generally accepted accounting + 2.57 + 1.18 principles applied on a consistent basis and, accordingly. Internanonal gross margin include amounts which are estimates and judgments. All selling prices y

historical financial information in this Annual Report is Manufactunng acid d:stnbution costs -1.79 - 0 87 consistent with the accompanying financial statements- +1.55 + 084 The Corporation maintains accounting systems, includ- Total gross margm + 4.12 + 2 02 ing internal audit controls administered by a staff of inter- Research and development - 0.05 -

nol auditors, which are designed to provide reasonable selling. administrative. and other expenses -1.14 - 0 91

assurance as to the reliability of the Co.poration's finan- Depreciation - 0.55 - 0 64 cial records and the protection of assets The effective. other income-net - 0.57 -

ness of those systems depends primarily upon the careful interest on long term and short-term debt - 0.02 - 0.11 4 selection of financial and other managers, clear delega-tion of authority and assignment of accountability,incul-

[n oc$o ers are et mcome 02 share of income of companies carned at equity + 0.43 + 0 07 i cation of high business ethics and conflict-of interest Increase in shares outstanding - 0.12 - 0.1 I standards. policies and procedures for coordinating the Net change $ + 2.38 $ + 0 04

, management of corporate resources, and the leadership c..d commitment of top management.

The Wrporation's financial statements are examined by Main Htedman & Cranstoun, independent certified public accout.hnte, in accordance with gerierally ac-

, copted auditing standards. These standards provide for a review of internal accounting control systems and tests of transactions to the extent they deem appropriate. The accountants' report appears on page 34.

The Audit Committee of the Board of Directors, which consists solely of non-employee directors,is responsible for overseeing the functioning of the accounting system.

related controls and annual financial statements. The Au-dit Committee recommends to the Board of Directors the selection of the independent auditors, subject to the ap-proval of shareholders. The Audit Committee periodi-cally meets with the independent auditors, management and internal auditors to review and evaluate their ac-counting, auditing and financial reporting activities and responsibilities. The independent and internal auditors have full and free access to the Audit Committee and meet with it, with and without management present, to discuss the results of their examinations.

UCC Equity / Share (s) 1970 1971 1972 1973 1974 1975 IJ76 1977 1978 1G79 29 64 3037 3177 34 60 4101 44 80 4945 $279 5592 oino 23 b.

Union Carbide Corpcration and Subsidianes Millions of dollars (except per share figures). Year ended December 31.

1979 1978 Not sales $9,176.5 $7.869.7 Deductions (additions)

Cost of sales 6,490.7 5.580.4 Research and development 160.8 155.9 Selling, administrative, and other expenses 1,052.6 942.9 Depreciation 469.7 416.6 Interest on long-term and short-term debt 161.3 159.3 Other income-net 42.1 ( 12.4)

Income before provision f )r income taxes 799.3 627.0 Provision for income taxes 251.4 205.5 Income of consolidated companies 547.9 421.5 Less: Minority stockholdert share olincome 25.0 32.5 i Plus: UCC share of incom a of companies carried at equity 33.3 5.3 Not income 556.2 394.3 Retained earnings at ;anuary l' _3,120.3 2.904 8 3,676.5 3.299.1 Dividends declared 190.1 181.2 Petained earnings at December 31 $3,486.4 S3.117.9 Per share Net income' $ 8.47 S 6.09 Dividends declared $ 2.90 S 2.80

• After adjustment for a credit of $2 4 million in 1979 for companies with which business combinations were e!!ected on a pooling of interests basis (S0.3 million charge in 1978)

' Based on 65.673.908 shares (64.738 610 shares in 1978) the weighted average number of shares outstanding dunng the year The Notes to Financial Statements on pages 27 through 34 are an integral part et this statement.

24 f

Union Carbide Corporation and Subsidianes Millions of dollars. at December 31.

1979 1978 Assets Cash $ 115.7 S 109.1 lime deposits and short-term marketable securities 333.3 174 6 449.0 283.7 Notes and accounts receivable 1,433.3 1.258 6 Inventories Raw materials and supplies 498.0 436.5 Work in process 445.6 396.2 Finished goods 829.2 708.4 1,773.6 1.541.1 Prepaid expenses _

155.3 154.3 Total current assets 3,811.2 3.237.7 _

Property, plant, and equipment 8,729.5 8.050.1 Less. Accumulated depreciation _

4,271.2 3.931.2 Net fixed assets 4,458.3 4.118.9 _

Companies carried at equity 213.1 178 2 Other investments and advances 107.1 113.1 Totalinvestments and advances 320.2 291.3 I

Other assets 212.9 218.3 Total assets $8,802.6 $7.866.2 Liabilities and stockholders' equity _

Accounts payable $ 528.0 S 433 8 Short-term debt 155.6 338.2 Payments due within one year on long-term debt 51.9 53.6 Accrued income and other taxes 239.4 220.0 Other accrued liabilities 765.9 570 8 _

Total current liabilities 1,740.8 1.616.4 '

Long-term debt 1,773.1 1.482.5 Deferred credits 952.5 847 5 M!nonty stockholders' equity in consolidated subsidiaries 293.7 281.3 UCC stockholders' equity Common stocle Authorized-90.000.000 shares Issued-66.292.649 shares (65.165.069 shares in 1978) 557.1 521.7 Retained earnings _3 486.4 1 3.117.9 4,043.5 3.639.6 Less: Treasury stock. at cost-87.090 shares (99.846 shares in 1978) 1.0 1.1 Total UCC stockholders' equity 4,042.5 3.638.5 Totalliabilities and stockholders

• equity $8,802.6 $7.866.2 The Notes to Financial statements on pages 27 through 34 are an integral part et this statement l

25 L

Uraon Carbide Corporation and Subsidiaries Millionsof dollars.

Year ended December 31, 1979 1978 Cash and time deposits and short term marketable securities at beginning of year $ 283.7 S 323.1 Funds provided by Net income 556.2 394.3 Noncash charges te net income Depreciation 469.7 416.6 Deferred income taxes 104.0 85.7 Other noncash charges-net (5.6) 27.6 Total funds from operations 1.124.3 924.2 Long-term debt New borrovings 370.4 39.8 Reductions (80.1) (43.3)

Increase (decrease) in short-term debt and current portion of long-term debt (184.3) 156.6 Increase in common stock 35.5 18.7 Total funds from financing 141.5 171.8 European ethylene derivatives businesses sold Net fixed assets - 267.5 Other assets-net - 101.7 Long- and short-term debt assumed by purchaser -

(217.9)

Net assets sold - 151.3 Reductions of net fixed assets 22.9 23.7 Decrease (increase) in investments and other assets 7.1 (18.2)

Increase in payables and accruals 290.8 221.0 Other-net 7.3 (40.0)

Total funds from other sources 328.1 337.8 Total funds provided 1,593.9 1.433.8 Funds used for Dividends 190.1 181.2 Capital expenditures 831.3 687.8 Net fixed assets of Gulf Coast Oletins Company, an affiliate consolidated in 1978 - 296.9 Increase in notes and accounts receivable 174.7 224.2 Increase in inventories 232.5 83.1 Total funds used 1,428.6 1.473.2 Net increase (decrease)in funds 165.3 (39.4)

Cash and time deposits and short term l marketable securities at end of year $449.0 $ 283.7 l

Major changes in financial position resulting trom significant acquisitions and divestments are reported sepa-

! rately in this statement. see Note 3. 'Eigni:1 cant Transactions." for further details. Areounts reported for 1978 l changes in asset and liability accounts are exclusive of changes in account balances rasulting from the sale of l consolidated European ethylene dertvontes businesses.

l The Notes to Financial statements on pages 27 through 34 are an integral part of this statement i

1 26

M M h M f h 0 M v e W =?H H 1 4 M M Union carrade corporaten and subsidianes Fatents, trade marks, and goodwill-Amounts paid for purchased patents and for securities of newly acquired subsidiaries in excess of the fair value of the net assets of

1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES such subsidiaries hava been charged to patents. trade Principles of consolidation-The consolidated financial marks and goodwill. The portion of such amounts deter-mined to be attnbutable to patents is amortized over statements include the assets. liabilities. revenues. and their remaining lives and the balance is amortized over expenses of all signliicant subsidiaries except Ucar Capi-the estimated period of benefit, but not more than 40 tal Corporation, which is carried at equity in net assets.

All significant inter-company transactions have been years eliminated in consolidation. Investments in signi!! cant Research and development-Research and develop-companies 20 to 50 percent owned are carried at equity ment costs are charged to expense as incurred. l>epreci-in not assets. and Union Carbide's share of their earnings ation expense applicable to research and development is included in income. Other investments are carried f acilities and equipment is included in Depreciation in generally at cost or less. the income statement (S10 4 million in 1979 and S8.1 mil-M rkstable securities-Marketable securities are car- lion in 1978).

ried at the lower of cost or market. Income taxes-Provision has been made for deferred in-come taxes where di!!erences exist between the period Inv:ntories-Inventory values, which do not include de- in which transactions. principally relating to deprecia-preciation, are stated at cost or market, whichever is low- tion, affect taxable income and the period in which they er. Cost is determined generally on the "last in, first-out, rm .n come b h Medal e r (LIFO) method for U S. companies and for certain subsid-laries operating outside the United Stctes. Generally, the * #

" average cost" method is used b) all other subsidiaries.

Approximately 63 percent of inventory amounts before mm memg mcich h of M msds W ms b h gMm fm home W Bem imm cpplication of the LIFO method at December 31.1979 (65 cms am kW umMy b d kom e

percent at December 31.1978) have been valued on the LIFO basis. It is estimated that if these inventories had Retirement program-The Corporation's contribution to been valued at current costs. inventories would have the U S. retirement program in each year is based on the been approximately S786 million and $655 million recommendation of an independent actuarial firm using higher than reported at December 31.1979 and Decem- the entry age normal method. Accrued costs are funded ber 31.1978. respectively. for all employees age 25 and over. with unfunded prior service costs being amortized over 30 years except for Fixed assets and depreciation-Fixed assets are carried experience gains and losses occurring after 1975 and ad-at cost. Expenditures for replacements are capitalized justments to retirees' benefits which are amortized over and the replaced items are retired. Maintenance and re- 15 years. An investment income assumption of 6 percent pairs cro charged to operations. Gains and losses from is used for actuarial purposes.

the sale of property are included in income. Program costs of consolidated international subsid-Depreciation is calculated on a straight-line basis utiliz- laries are accounted for substantially on an accrual ing generally 1962 U S Internal Revenue Service guide- basis.

line lives The Corporation and its subsidiaries use other depreciation methods (generally accelerated) for tax Net income per share-Net income per share is based purposes where appropriate. on the weighted average number of shares of common stock outstanding in each year. There would have been no material dilutive effect on net income per share for 1979 or 1978 it convertible securities had been converted and if outstanding stock options had been exercised.

2. UCAR CAPITAL CORPORATION Ucar Capital Corporation (Capital), a wholly owned fi-nonce subsidiary, purchases without recourse certain customer obligations from Union Carbide at a discount sufficient to yield earr ings of not less than one and one-half times its fixed charges. In l5e Consolidated Statement of Income and Retained Earnings. Ccytal's income be-fore income taxes, which amounted to S8.5 million in 1979 and 1978, is included in Other income-net as a re-27

fiv W E M M(a8.m OvCeCv6fMTM duction of discount expense and the related income tax 5. INTERNATIONAL OPERATIONS is included in Provision for income taxes The following is a financial summary of consolidated in-The average effective interest rate on Capital's borrow- ternational subsidiaries and international companies ings. which consist of S100 million of 15-year notes du carried at equity- '

1992 and 3100 milllon of 5-year notes due 1982. was 8 4 percent in 1979 and 1978 Muhons of dollars December 31.1979 Decerr.ber 31.1978 Additional financial information relating to Capital is Cornpanies Compan:es presented below: camed camed Consohdated at Consohdated at MUhons et douars ~

~ ~~ ~

December 3'l.~ ~ -

subsidianes equity subsidianes* equfy 1979 1978 Total assets $2.690.2 $ 963.6 S2.407 0 S 784 2 Less Totalhabst:es

'~

_1;288.8 _632 6 _l 166 3 523 4 TctAl asmts $ '251.6 S 250 1 Less Total habihtles 203 8 2069 Net assets 1.401.4 331.0 1.240 7 260 8 UCC equity $1.139.5 $ 151.8 S 9911 S 1215 Net asmts_

$ 47 8 S 43 2 Net sales $2.782.1 $ 920 Ot $2 533 8 $ 602 7'

3. SIGNIFICANT TRANSACTIONS Net mcome $ 168.3 $ 69 4 S 1064 S 14 7 In October 1978. the Corporation purchased the remain- UCC sham $ 1453 $ 32 4 S 76 4 S 91 Ing interest in Gulf Coast Olefins Company (GCOC). Net s les includes S314 o m:lhon ropresentmo sales of European ethylene dem wes busmem m mem s Id m 19 8 nd Net m me nd UCC whose principal asset is an olefins unit at Taft. Louisiana, shara include a loss of $318 milhon for these operations Net inccme and thereby increasing its interest in GCOC to 100 percent. Ucc share also melude a gain of $24 7 m:thon trom the sale et these busi-Concurrently. GCOC retired its long-term debt of $292 nesses See Note 3 million with funds provided by Union Carbide. + Exclusive of $77 5 milhon net sales to UCC and its conschdated subsid-Also in 1978, the Corporation sold its consolidated Euro, t ries in 1979 (S781 milhon in 1978) pean ethylene derivatives businesses for net proceeds of Sl76 million plus assumption by the purchaser of $217.9 6. SEGMENT INFORMATION million in long- and short-term debt. In the Consolidated Summaries of industry and geographic segment data Statement of Income and Retained Earnings. Net sales are included in the Financial Review on page 17.

for 1978 includes $314 6 million and Net income includes Amounts for 1979 and 1978 included in the summaries a loss of $318 million for these European operations This are incorporated by reference as part of this note.

sale resulted in a gain of S52.9 million (S24.7 million after Capital expenditures and depreciation by industry tax. or S0 38 per share) which is included in Other in- segment are as follows; come-net in 1978.

Milhons et dollars Capital Expenditures Depreciation

4. FOREIGN CURRENCY ADJUSTMENTS 1979 1978 1979 1978 Chemicals & Plastics $ 324 S 267 $ 218 S 191 In 1979. translation of balance sheet accounts carried in Gases & Related Products 227 183 101 88 foreign currencies. and exchange gains and losses. Metals & Carbons 102 77 75 65 resulted in a charge to Other income-net of S36 8 million Battenes. Home &

(SSI 4 million in 1978) The effect. after adjustments for Automotive Products 91 78 36 30 Specialty Products 87 75 40 36 taxes on exchange gains and losses for minonty interests.

and for currency adjustments of companies carried at The following is a reconciliation of segment operating equity. was to decrease net income in 1979 by $29.3 mil-profit to the consolidated financial statements:

lion (S59.1 million in 1978).

Milhons of dollars 1979 197B Total segment operating pro!:t $1,072 S 868 Less General corporate expenses-net 112 82 Interest on long-term and short-term debt 161 159 Income before provision for income taxes $ 799 $ 627 Union Carbide's businesses and products are described on pages 6 through 16.

28

7. INCOME TAXES The Corporation provides for taxes on undistributed earnings of offiliates included in consolidated retained The following is an analysis of income tax expense:

earnings to the extent such earnings are planned to be fatinons ci dollars 1979 1978 mmM M nd rhesM MMe4 WMMM current Deferred current Deterred earnings of o!!iliates intended to be reinvested indeft-U 7S iederalTnios taxes

~ ~ ~ ~

$ W5~ T52TS i6i ~ ~~S 5T;

~ ~ ~

nitely amounted to $14 billion at December 31,1979.

U s investment tax credit (49.6) 23 8 (57 8) 38 2 U s energy tax credit (1.4) -

(6 9) -

8. OTHER INCOME-NET Us state andlocaltaxes based on income 11.5 - 97 _ The following is an analysis of Other income-net:

flon-U s. income taxes

- - - - . - _ . .. ~

105.4 27.5 88 1 (61).

Provision for income taxes $251.4 S205 5 Investment income (pnncipally from short-term investments) $ 39.1 S 30.7 The consolidated o!!ective income tax rate was 314 h,'*[co ehen o saf s of customer percent in 1979 and 32.8 percent in 1978. An analysis of obhgations to Ucar capital corporation (17.0) (17 0) the dl!!erence between the provision for income taxes charges related to the sale of a mineral and the amount computed by applying the statutory production payment (11.6) (11.6) sales and disposals or businesses and other assets * (21.1) 54 4 Federalincome tax rate to consolidated income betore Other 5.3 7.3 provision for income taxes is as follows.

$ (42.1) S 12 4 1979 1978 aincludes for 1979 a charge of $24 3 milhon (S131 milhon after tax. or Percent Percent 50 20 per share) resulting from withdrawal from the Corporation's imag-Millions of Mulions of ing systems hardware business. Includes for 1978 a gain of $52.9 million of protax of pretax ($24 7 milhon after tax. or SO 38 per share) from sale of the Corporation's do11 ors income dollars income conschdated European ethylene derivatives businesses Tax at statutcry Federal rate $367.7 46.0 $3009 480 Income taxes of subsidiaries 9. SUPPLEMENTARY BALANCE SHEET DETAIL cperating in Puerto Rico and outside the Umted states (67.6) (8.5) (56 9) (91)

Amortization of U s Millions ci dollars December 3L mvestment tax credit (25.8) (3.2) (19 6) (3 I) 1979 1978

~

U s energy tax credit (1.4) (0.2) (6 9) (1.1) Notes and accounts receivable Allowable depletion in 1Tade $1.334.4 S1.159.1 excess ci cost depletion (15.5) (2.0) (15 3) (2 4) Other 128.1 120 5 US state and local taxes a etit 6.2 0.8 5.1 08 Less Allowance for doubtful accounts 29.2 21.0 e a nco Domestic international sales $1.433.3 S t.258.6 corporation (11.5) (1.4) (7 6) (l2) Fixed assets Other net _ _ _ _ _ _ _ _ _ _ _

(0.7) (0.1) 58 09 Land and improvements $ 489.1 S 464 8

$ 251.4 31.4 S 205 5 32 8 Buildings 911.0 854 8 Machinery and equipment 6,646.6 6.242 0 constructionin progress and other 682.8 488.5 Portions of the income of several subsidiaries operating

$8,729.5 S8.050.1 in Puerto Rico and outside the United States are exempt from income taxes under local tax statutes Non-U.S. in. other assets come taxes were reduced by $42 million in 1979 (S41 Deferred charges $ 72.7 $ 70 4 million in 1978) as a result of these exemptions which ex- N,gr tae a and goodwill 9 2 pire principally in 1989 $ 212.9 S 218.3 Deferred credits Income taxes * $ 491.1 $ 399 4 Investment tax credit 217.9 195.2 Mineral production payment 68.6 91.4 Deterred revenue from sales of certain customer obligations to Ucar Capital Corporation 122.9 123.0 Other 52.0 38 5

$ 952.5 S 847.5

• Deferred income taxes related to current items are included in accrued income and other taxes in the amount of $614 million in 1979 ($80.3 mil-lion in 1978).

29

10. LONG TERM DEBT Payments due on long-term debt in the four years after 1980 are: 1981, $61.9 million; 1982. S126 6 million; 1983, fcons or dollars December 31. SS4 4 million; 1984. S67.0 million.

1979 1978 Various lines of credit are available to the Corporation Union Carbide Corporation and its subsidiaries. The principal domestic line of credit, 3 50% tiotes due semiannuany to 1984 $ 90 0 which is subject to customary review and annual re-

$ 75.0 3 625% !Jotes due semtannuouy to 1990. Issued newal, provides for borrowings of up to $800 million at 4 fJo sd so i nually o 3 the prime rate. There were no borrowings in 1979 under 4 50% FJotes due annuaHy.1985 to 1994 200.0 200 0 this arrangement. The Corporation as a matter of prac-5 30% S:r. king Fund Debentures. with equal on- 11C0 maintains its bank balances in amounts sufficient to nual sinkmg rund payments.1978 to 1997 177.0 189 8 compensate banks for credit lines and sennces.

7 50% Sinkmg Fund Debentures due 2006. 'ssued at a discount (effective rate 7 55%). with an-nual sinking fund payments.1987 to 2005 200.0 200 0 11. LEASES Leases that meet the criteria for capiialization set forth in n si k ng u d :r nt 1986 o 2 300.0 300 0 9125% Notes due 1986. lssued at a discount Financial Accounting Standards Board Statement No.13 (ettective rate 9 22%) 100.0 - have been classified and accounted for as capitalleases.

9 35% Sinking Fund Debentures due 2009. with For noncapitalized leases, involving primarily distribution annual sinkmg fund payments,1990 to 2008 200.0 -

equipment and facilities commitments under noncancel-aton unde apt IIea s

& Mses MMg W on year m mom W m@m the following future payments:

D:mestic subsidiary 175% Guaranteed Debentures due 1982. con- Miulons et dollars vert:ble into Union Carbide Corporation 1980 $59 1985-1989 $90 common stock at S$6 50 per sharo 38.6 38 6 1981 $48 1990-1994 $73 Ilt:rnational subsidiaries 1 83 S30 After 1999 S26 8 375% Canadian Dollar fJotes due 1992 19.5 20 0 3

9 25% Canadian Dollar Notes due 1982 25.7 25 5 9 75% Canadian Dollar Debentures due 1986 22.4 23 3 10 75% Canad:an Douar Debentures due 1995 64.2 63 6 Total lease and rental payments under noncapitalized Other debt-various matunties and interest rates 192.4 177 6 leases extending ene month or more were $92.1 million 1,825.0 1.536 1 in 1979 ($91.1 million in 1978).

Less Payments due within one year 51.9 53 6

$1.773.1 $1.492.5 12. CAPITAL S' LOCK ecemW M. M aM M8, hm was W.N@

During 1979 and 1978 the Corpora. ion and a subsidi-ary purchased a total of $35 5 million of the 5.30% Sink- shares of preferred stock (S1 par value) authorized and ing Fund Debentures to apply against future sinking fund unissued. Issued shares of common stock ($1 por value) requirements. Previously the Corporation had repur- e 8 shams at DeMw M, M @ G sMm chased S37 5 million o' the debentures to satisfy sinking i December 31.1978) held by the Corporation as collat-fund requirements through 1980. er 1 under employee stock purchase contracts executed Pollution abatement facility obligations represent state, under the Corporation's previous stock option plans. The m unt to be paid under these contracts $0.8 million at commonwealth, and local governmental bond financing of pollution abatement facilities and are treated for ac- ecemW M. M (W Mon at De m W E M 8),

counting and tax purposes as debt of Union Carbide Cor- has been deducted from common stock.

poration The bonds mature at various dates from 1998 ssuan s of shams of common stochem as foHow through 2009 and have an average annual e!!ective in- 1979 3978 (Crest rate of 5 81 percent.

Dtvidend Reinvestment and stock Purchase Plan International subsidiaries' debt includes $58.8 million issued at 95% of market price for d.<tdend (SSI.6 million in 1978) due in U S. dollars. At December 31, reinvestments 620,139 173.457 1979. S3225 million of international consolidated assets issued at market pnce for optional cash was pledged as security for $816 million of international payments 97.400 69.961 subsidiaries' debt ^ ""'Ch **d ' * '"** P"C' DY ** DSI'*

under the savings Plan for Employees 200,803 228.013 Issued under employee stock option plans 2,100 -

Issued in business combination transactions 207.138 -

1,127,580 471.431 30

During 1079 the Corporation transferred 12,756 shares of stock appreciation rights, generally become exercisable treasury common stock in business combination transac- two years after such date. Options may not have a dura-tions (60,574 shares in 1978). tion of more than ten years. Annual bonus awards are Shorts of common stock were reserved for issuance as cash bonuses which are intended to provide incentives follows: for meritorious performance and total compensation

!ovels comparable to those of major competitive em-December 31. ployers.

I'7' 3978

--- Previously, in 1974, stockholders had approved the r r s is under the Dividend h nyestment Union Carbide Incentive Program for key employees, ro on r to cf co y rtible debentures 9l 9 which consisted of a combination cash payment and for stock option plans stock option plan and a separate cash awards plan. Un-options granted out not exercised 45s.894 203.246 der the 1974 Program, no award could be granted for Available for granting future options 1,224,120 1,500.000 any year after 1978. Option prices were 100 percent of or E loyees 136.022 336.825 generally become exercisable five years after, and ex-3,041,671 3.980.245 pire seven years citer, the date of grant. Option awards were coupled with a contingent cash award, which may

13. RETIREMENT PROGRAM not exceed two times the aggregate option price, pay-ble five years after the date of the award. The payment The retirement program of Union Carbide Corporation of the cash award is contingent upon achievement by covers substantially all U.S employees and certain em-the Corporation of certain earnings objectives.

ployees in other countries. Various arrangements for pro-When shares are issued upon exercise of options, no viding retirement benefits are maintained by consoli-charges are made to income and the entire proceeds dated international subsidiaries. Total program costs for 1979 amount to S172.6 million ($157.5 million in 1978), of when received are credited to the common stock ac-count. For stock appreciation rights granted, income is which S148.0 million (S133.8 million in 1978) related to charged in each quarter for their appreciation. The the U S. Retirement Program.

charge is based on the amount, if any, by which the mor-At January 1,1979, the date of the latest actuarial valu-ation, the computed value of benefits vested with U.S. and ket price of the common stock exceeds the option price set forth in the related stock option.

internationally assigned employees exceeded the carry-The status of options is as follows:

Ing value of plan assets by approximately $167 million.

At September 30,1979, the estimated corresponding Number of shares of common stock 1979 1978 cmount was approximately $133 million. outstanding at January 1 203,246 108.430 The estimated amount necessary to provide for all un- Granted during the year 275.s80- 127,121 funded prior service costs was approximately $896 mil- Exercised during the year 2,100 -

lion at September 30,1979. canceled or expired during the year 18,132 32.305 Outstanding at December 31 458,s94 203.246

14. INCENTIVE PROGRAMS

• Includes 90 400 shares granted with stock appreciation rights attached.

In 1978, stockholders approved the five-year Union Car-bids Incentive Compensation Plan. The plan, which be- 15, COMMITMENTS AND CONTINGENCIES como effective January 1,1979, provides for granting At December 31,1979, the cost of completing authorized stock option awards and annual bonus awards to key construction projects is estimated at $1.3 billion. A portion employees. Employees awarded options may also be of this amount is covered by firm commitments. Also, the awarded stock appreciation rights related to part or all Corporation and its consolidated subsidiaries have var-of the optioned shares. On exercise, such rights would en-ious purchase commitments for materials and supplies abl2 a holder to receive in cash or common stock the incident to the ordinary conduct of business; and commit-amount by which the market price of the common stock ments to several companies, in which the Corporation on the date of exercise exceeds the option price. The has investments, for working capital or supplies and for number of shares Ibject to options may not exceed product support. The commitments are, in the aggregate, 1,500,000. Option prices are 100 percent of fair market not expected to have a material adverse effect on the value on the date of the grant. Options, and any related consolidated financial position of the Corporation.

In the normal course of business the Corporation and its consolidated subsidiaries are invQed in a number of legal proceedings and claims with both private and gov-31

1 ernmental parties These cover a wide range of matters. dollars of equivalent value or general purchasing power j including trade regulation product liability, utlhty regu- (constant dollars). Financial data presented for a series l lation. Federal regulatory proceedings, patents, trade of years are made more comparable by reporting the marks. contracts, and taxes. In some of these cases the amounts for each year in terms of a common unit of remedies that may be sought or damages claimed are measure of purchasing power.

substantial. In the opinion of counsel. the outcome of the The second method of measurement adjusts for legal proceedings and claims are not expected to have " changes in specific prices". The objective of this method a material adverse effect on the consolidated financial is to reflect the effects of changes in the specific prices position of the Corporation Should any losses be sus- (also referred to as " current costs") of the resources actu-toined. in excess of provisions therefor. they will be ally used in a company's operations, so that measures of charged to income in the future. these resources and their consumption reflect the current cost of replacing these resources, rather than the histori-

16. QUARTERLY FINANCIAL DATA (UNAUDITED) col cost amounts actually expended to acquire them.

The quarterly Incomo Statement data for 1979 and 1978 The accompanying summary statement of income, included in the Financial Review on page 20. and the summary balance sheet data, and five-year comparisons quarterly not income per share amounts for these years were prepared in accordance with Statement No. 33.

included in Information for Investors on page 35 are in- Management's Overview Management believes that corporated by reference as a part of this note. " constant dollcr/ct.rrent cost" information is very signifi-cant in today's inflationary economy. Historical measures

17. SUPPLEMENTARY DATA ON CHANGING PRICES of profit are deceptive because of rapidly changing (UNAUDITED) prices. While the current cost data is subjective, it pro-During the past 10 years, the United States has experi- vides a reasonable approximation of the margin be-enced rapid inflation as contrasted to the relatively low tween Union Carbide's current revenues and the current level of inflation in prior years. Continued inflation over costs of goods consumed and services utilized. This mar-time distorts traditional accounting measurements of in. gin is less than under traditional measures of income come and capital. In an effort to produce financialinfor- based on historical costs. The reduction in net income re-motion that discloses the effects of inflation, the Financial sults from the higher levels of depreciation and cost of Accounting Standards Board (FASB) has issued Statement sales under constant dollar / current cost concepts.

No. 33, Fincacial Reporting and Changing Prices. requir. Of particular concern is the higher proportion of in-ing companics to explain the effect of inflationary factors come absorbed by income taxes in the data adjusted for on their opemtions using two di!!erent methods to adjust the impact of inflation. The effective tax burden is shown historical financial statements for the effects of changing to be approximately 25% greater than on a historical prices The FASB believes that both types of information cost basis. The data emphasizes the critical need for na-are likely to be useful and that experimentation is re- tional monetary and fiscal policies designed to provide quired to determine their usefulness. odequate returns to stockholders and capital for future The first method prescribed by Statement No. 33 pro- business growth which, in turn, will mean increased pro-vides data adjusted for "generalinflation" using the Con- ductivity and employment.

sumer Price Index for all Urban Consumers as the broad. Following are additional comments pertaining to the based measure of the generalinflation rate. The objec- supplementary data presented.

tive of this approach is to provide financialinformation in Net sales for 1979 were 59,176.5 million. Net sales for 1975. expressed at their equivalent in average 1979 dol-lors, amounted to S7,650.6 million. The average annual sales growth rate in constant dollars from 1975 to 1979 was 5%, compared with 13% on an historical cost basis.

The excess of increase in general price level over in-crease in specific prices of S505.2 million is the result of a significant difference between the Consumer Price Index for all Urban Consumers and the rate of increase in con-struction costs experienced by the corporation during the year.

32

Millions of dollars Year ended December 31.1979 Adjusted for General Adjusted for At Inflation Changes in Summary Statement of Income Historical (Average Specific Prices Adjusted for Changing Prices Cost 1979 Dollars) (Current Costs)

N:t Sales S 9,176.5 S 9.176.5 S 9.176.5 Cost of sales 6.490.7 6.631.4 6,632.5 Depreciation 469.7 490.4 487.8 Oth2r operating expense-net 1.247.2 1.247.2 1.247.2 Intarcst expense 161.3 161.3 161.3 Provision for income taxes 251.4* 251.4* 251.4*

Het income S 556 2 S 394.8 S 396.3 Nat income per share S 8.47 S 6.01 S 6.03 Gain due to decline in purchasing power of n:t monetary liabilities 5 263.9 S 263.9 Effect of increase in general price level of inventories and property, plant, and equipment held during the year S 992.5 ,

Increase in specific prices (current cost) 487.3 Excess of increase in general price level over increase in specific prices S 505.2 Summrry Balance Sheet Data Adjusted for Changing Prices lnytntories S 1.773.6 S 2.138 0 S 2.559.1 Property, plant and aquipment.

net of accumulated depreciation 4.458.3 5.832.9 5.732.4 UCC Stockholders' Equity 4.042.5 5.781.5 6.102.1

• In accordance with Statement No. 33. no adjustment has been made to the provision for income taxes As a result the e!:ective tax r te for 1979 nses from 31.4 percent on a hl.toncal cost basis tc 39 4 percent and 39 3 parcent. respectively. in the average 1979 dollar and current cost calculations.

Five Year Com3. Trisons 1979 1978 1977 1976 1975 Net Sales At histoneci cost $9,176.5 $7.869.7 S7.036.1 S6.345.7 $5.665.0 in average 1979 dollars 8.767.8 8.439.4 8.102.4 7.650.6 Dividends per share At historical cost 2.90 2 80 2.80 2.50 2.40 In average 1979 dollars 2.90 3.12 3 36 3.19 3.24 Marktt prl:e per share (at year-end)

At historical cost 42.00 34.00 41.25 61.88 61.13 In average 1979 dollars 37.70 36.32 47.97 77.06 79.92 Averoga consumer price index 217.7 195.4 181.5 170.5 161.2 33

3H D Meso 5 M.is*M Ch MIerTiTR 1

VZ1uation of Current Costs Current cost values pre- Report of Independent Certified Public Accountants sented in the supplementary data were determined as follows: To The Stockholders and Board of Directors Inventorfes and Cost of Sales-Cost of sales, determined of Union Carbide Corporation for historical cost purposes on the "last-in, first-out" (LIFO) We have examined the accompanying consolidated fi-method for U.S. companies and for certain subsidiaries nancial statements (pages 24 through 34) of Union Car-u; crating outside the United States, have been adjusted bide Corporation and subsidiaries as of December 31, to reflect current material, labor, and overhead costs. If 1979 and 1978 and the Ten-Year Summary (page 21). Our the LIFO method had not been utilized in the primary fi- examinations were made in accordance with generally ncncial statements, the impact on cost of sales would accepted auditing standards and, accordingly, included have been significantly greater. such tests of the accounting records and such other mtdit-Property, Plant and Equipment-The current cost of prop- ing procedures as we considered necessary in the ch-erty, plant and equipment is defined by Statement No. 33 cumstances.

cs the current cost of accuiring the same service poten- In our opinion, the accompanying consolidated finan-tici embodied by the asset owned. It follows that the cur- cial statements present fairly the financial position of rent cost of an asset will be directly a!!ected by the differ- Union Carbide Corporation and subsidiaries at Decem-ences between its operating costs and the operating ber 31,1979 and 1978 and the results of their operations costs of a technologically superior asset that has become and the changes in their financial position for the years available. Therefore, the estimated current cost of prop- then ended, in conformity with generally accepted ac-erty, plant and equipment was calculated by application counting principles applied on a consistent basis. Also,in of indices. adjusted for technological change, to histori- our opinion, the Ten-Year Summary presents fairly the fi-cal costs of assett Indices appropriate to domestic oper- noncial information included therein.

ctions were selected on the basis of applicability to ma-jor business segment facilities. For foreign property, plant and equipment calculations, indices utilized were se-4 41 b d* g lected based on major country / company operations. Ad- Certified Public Accountants justments for technology change based on representa- 280 Park Avenue tive facilities were exteno, ' to related asset groups be- New York, N.Y.

fore incorporation into the int. :es ultimately utilized. February 13,1980 Land-Real current costs of individual properties can be determined only by actual sale. Land values have been bcsed on estimates of current cost.

Depreciation--Historical Depreciation expense is calcu-lated on a straight line basis generally atilizing 1962 U.S.

Internal Revenue Service guideline lives. These short-ened lives have the effect of accelerating depreciation charges and tend to provide some allowance for infla-tion. The extension of historical costs of property, plant, and equipment by Constant Dollar or Current Cost in-dices and the use of guideline lives to arrive at inflation cdjusted depreciation would overstate the effects of infla-tion. Consequently, for purpc es of Statement No. 33, re-vised estimated usefullives have been used for calculat-ing depreciation. Beginning in 1980, these revised lives will also be reflected in historical costs reported in Union Carbide's primary financial statements.

34

Quartsrly Price Range The 1980 Annual Meeting of Stockholders will be held 5* '

2 at 10:30 a.m. on April 23, in the Auditorium at the Geor-gia World Congress Center,285 International Boulevard, N.W., Atlanta, Georgia 30313.

A Notice of Annual Meeting and Proxy Statement, and

• a proxy voting card, are mailed to each stockholder in j s -

March, together with a copy of the current annual report.

l

% A Form 10-K Annual Report for the year ended Decem-ber 31,1979 will be filed with the Securities and Ex-change Commission in March. A copy will be made

. available without charge upon written request to the Secretary, Union Carbide Corporation. at the address be-low.

1975 1976 1977 1978 1979 General Offices: 270 Park Avenue, New York, N.Y.10017.

Telephone: (212) 551-2345.

Previous 4 Quarters' Net Incorne Per share Inquiries from Stockholders and others interested in 8' '

Union Carbide as an investment should be directed to the Investor Relations Department,48th Floor, at the ad-dress above.

Stock Transfer Agent: Union Carbide Corporation, Stock

,'-. Transfer Department Saw Mill River Road, Route 100-C,

, Tarrytown, N.Y.10591.

Registrar: Manufacturers Hanover Trust Company, ms ii7e i977 iv78 i979 4 w W& Mma hw hk RY lMM Principal Stock Exchange Listing: The New York Stock Annual Dtvidend Rate Exchange (Ticker Symbol: UK). Our stock is also listed or s3 2s , .

the Midwest Stock Exchange and on the Pacific Stock Ex-change in the United States, and overseas on exchanges in Amsterdam, Basle, Brussels, Geneva, Lausanne, Paris, and Zurich.

w '

A Dividend Reinvestment and Stock Purchase Plan is

?

s2 m available to stockholders. Under the plan, stock may be ins im im me im bought free of commissions and service charges, and rt. cnans atxve m moun a smocomme ic

• shares purchased through reinvested dividends are available at a discount. At December 1,1979 about 13%

of Union Carbide stockholders were enrolled in the plan.

Quanerly stock Data 1st 2nd 3rd 4th They reinvested approximately 15 6 of the Corpuat.on's Dollars per share quarter quarter quarter quarter Year total dividends paid on that date. For a prospectus ex-  ;

1979 plaining the plan in detail, write Union Carbide Corpora-Net income S t.91 S2.30 $2 27 S1 99 $8 47 tion, Stock Transfer Department, P.O. Box 340. Tarrytown, D1vidends 0.70 0 70 0 75 0.75 2 90 N.Y.10591.

hi h 40% 40W 44W 44W 44 V2 Publications Available on Request include reports on lov 34 35% 36W 37w 34 our Nuclear Division and operations in South Africa and 197a the following Public Affairs material:

0 " Key Public Issues 1980~-Union Carbide's positions on

$1 2 S1 S1 25 S1 S e }c me !ssues most critical to the Corporation.

Market Pnes 0 "An Energy User Joins the Energy Debate"-Reprints of high 41 43W 42 % 41W 43W Union Carbide's advertising on energy policy.

Iow 37W 37W 36 33 % 33 % 0" Perspectives"-Repnnts of management speeches on critical economic, social, and political issues.

For your copies, write Key Issues Box Z-6, Union Carbide ,

Corporation,270 Park Avenue, New York, New York 10017. I I

4 35

Directors of the Corporation Russell E. Train" Division Presidents International Area sidentof World Agricultural Products Division Warren M. Anderson * "

President and Chief R. Oldford. President Union Carbide Africa Operating O!/icer of E Perry Wilson u and Middle East. Inc.

Union Carbide Corporation Battery Products Division B.Sokol011.Jt. Chairman Director of various corporations; retired N. S. Livingston. Jr., President R. Manning Brown. Jr.,24 Union Carbide Chairman of New York Life Carbon Products Division Canada Limited Unio Carbide Co to on J. B. Reid. President Insurance Company J. S. Dewar. President 25 Kathryn D. Wriston"*

Roberto de Jesus Toro Coatings Materials Division Union Carbide Eastern. Inc.

Directorof various President of Banco de Ponce organizations N. L. Zutty President J.B. Law Chairman James L Ferguson Electronics Division Union Corbide Europe. Inc.

Chairman and Chlet Officers of the Corporation E P. Holloway. President P. E Hilton. Chairman

' R. W. Eddy. Mce-Chai1 man F d a fon Chairman of the Board and Ch!et Executive Othcer Engineering and Hydrocarbons Division Union Carbide James M. Hester 35 William S. Sneath R. G. Chenoweth, President Pan America,Inc.

Rectorof the United K. D. Rutter. Chairman Nations University President and Chief Ethylene OxidelGlycol Opemting Othcer Division Union Carbide Jsrome H. Holland'** Warren M. Anderson J. H. Bees. President Southern Africa. Inc.

"'I U Senior Mce-Presidents gggyg gge 9,3g, J. W. Rawlings. Chairman p f Jack B. Jackson 'a cha d ughes .

James M. Rehfield A. W. Lutz. Pre ident Director of various corporations J. Clayton Stephenson Films-Packaging Division 2

Elio E. Tarika G. E. Bailie. President Horace C. Jones .34 Chairman o/ the Mce-President and Home and Automotive C cers and Directors are hsted as Executive-Fmance Ch!et Financial Othcer Products Division of March 1,1980.

Committee of Burlington William S. Gray.Jr Directors serve on Committees of A. C. Egler. President Industries. Inc. Mce-President and the Board as indicated below:

General Counsel Linde Division ' Audit Committee C. Peter McColough" John A. Stichnoth R. D. Kennedy. President (Mr Brown. chairman)

Chairman and Chief Executive Othcer of Xerox Corporation Mce-President and Secretary Medical Products Division ((7gu 7 cha an$

Morse G. Dial. Jr. R. W. King. President 3 Pub 11c Policy Committee Ian D. Sinclair" Metals Division (Dr. Honand. chamnan)

Mee-Presidents 4 Executive Committee Chairman and Chief J hn H. Field E C. Krott, Jr.. President Executive Otheer of Canadian (Mr.Sneath. chairman) mes S. Reeman 5 Nominating Committee Pacibelimited A. Sherburne Hart Nuclear Division (Sr. de Jesus Toro. chairman)

William S Sneath* Fred C. Krott, Jr. R. E Hibbs. President Chairman of the Board and Arthur C. MacLeod Polyolefins Division Chief Executive Othcer James C. Malone Rohert E. Pyle J. W. Luchsinger. President of Union Carbide Corporation Heinn E Tomfohrde III Silicones and Urethane Reasurer Intermediates Division Stephen E. Nightingale R. H. Towe, President Controller Solvents and Intermediates Louis G Peloubol Division Mce-President-Federal Government Relations Specialty Chem 1cals James C. Rowland and Plastics Division T.T.Szo' ' resident 36 m

Union Carbide Corporation iS Union Carbide Africa GREECE represented worldwide by the and Middle East,Inc. Union Carbide Hellas Industrial following divisions and SubSid- GHANA g laries. Major producing c!!ili- Ucar Plastics (Ghana) umited-50% Elettrogratite Mendionale S PA ateS are hSted beneath the Union Carbide Ghana Limited-66 67% Unila S pA l division or Subsidiary having IVORY COAST Union Carbide Italia S pA rnanagernent responsibility for Union Carbide Cote d Ivoire NORWAY them. Subsidiaries and a!!ili- KENYA A/S Mercker Smelteverk ateS are 100 percent owned by Won Carbide Kenya Limited-65% As Saudetaldene S ud smelteverk A"5 the Corporation unleSS SAUDI ARABIA Carbide Hashim industnal SPAIN otherwlSe indicated; owner, Argon. SA-50%

Gas Co-25%

Ship iS direct or indirect. The SUDAN Uni n Carbide Ibenca. S A data are for year end 1979- Union Carbide Sudan umited-84% Union Carbide Navarra. S A SWEDEN Agricultural Products Union Carbide Unti s Kemi AB-50%

W n Carbide Norden AB Division Canada Limited-74.90%

Union Carbide Agricultural SWITZERLAND emducts Compaw. Inc W n Carbide Eumpe SA Union Carbide Eastern,Inc.

In January 1980 the Corpora'. ion UNITED KINGDOM he 1 of its chem AUSTRALIA Bn:Ish Acheson Electrodes Limited PEc cornpnsed a metalwoking chemicals Chemos Industnes Pty umited-60 02% Horstine Farmery Limited business active in 1979 Umon Carbide Australia Union Carbide U K. umited urrated-60 02% Viskase umited-50%

Battery Products Division HONG KONG Carbon Prodt: cts Division Smca Industnes usted Union Carbide INDIA Pan America,Inc.

Coatings Materials Division Union Carbide India Limited-50 9% ggg INDONESIA Union Carbide Argentina Electronics Division P T AgrocarbIndonesia-80% S AI.C S -99 99%

Engineering and P T Union Carbide Indonesia BRAZIL Hydrocarbons Division JAPAN Eletro Manganes Ltda -55%

Gulf Coast Oletins Company Nippon Unicar Company .llmgstento do Brasil usted-50% Mmenos e Metais Ltda Ethylene Oxide / Glycol Showa Union Gusei Co . Ltd -50% SA White Martins-5014%

Division Showa Unox K K.-50% SA White Martins Nordeste-50.14%

Sony Eveready Inc-50% Union Carbide do Brasil Ltda.

Ethylene Oxide Union Carbide Services Eastern L

Derivatives Division umited nC e Coloh SA KOREA Films Packaging Division Union Gas Company umited-50% COSTA RICA Uni n High Polymers. Ltd -50% Union Carbide Centro Amencana. S A.

Home and Automotive ECUADOR Prelucts DMisics MALAYSIA Union Carbide Malaysia Sdn Bhd -80% Union Carbide Ecuador CA Linde Division NEW ZEALAND MEXICO Union Carbide New Zealand Union Carbide Mexicana. SA-45 70%

Medical Products Division Limited-60 02% VENEZUELA PHILIPPINES Union Carbide de venezuela. CA Metals Division Union C'Irbide Philippines. Inc.

Nuclear Division REHEUC CF SRI LANKA Union Carbide d Ur.lon Carhds Ceylon umited-60% Puerto Rico, Inc.

Pg,atglagt SINGAPORE Union carbide Canbe Inc.

Polyolefins Division Metals and Ores P:e umited Union Carbide Films-Packaging. Inc.

Union Carbide Singapore Pte Limited Union Carbide Grordo. Inc.

Silicones and Urethane TAIWAN Intermediates Division Onental Union Chemical Union Carbide Solvents and Inter:nediates Southern Africa,Inc.

Un$on$ na Corporation-50%

Vision REPUBLIC OF SOUTH AFRICA THAILAND Elektrode Maatskappy Van Suid Air.ka Specialty Chemicals Union Carcade Thailand Limited (Etendoms) Beperk-50%

and Plastics Division **("' P' 'Y)

Union Carbide Europe,Inc. $ $

• M h' Uc r Chrome Company (SA)

BELGIUM pmpnetary) unted Union Carbide Benelux N V Ucar Minerals Corporation Indugas N V-50%

FRANCE RHODESIA La Littorale SA 99 95% Consolidation of the Rhodesian Union Carbide France S A subsidianes was discontinued as of Viscora. S A-50% January 1.1974. in recognition of lack of management control.

"C" "** '

• Ucar Battenen G m b H *N ** **

Union Carbide Deutschland G m b H. Union Carbide Rhomet (Pnvate) umited

m,LI.'uw4 h _ at edwa w- 4e me'e.m. h aaui.a h d.m- p. = 4 m anp.m4h WW - _am ..__eum- 4 ah4,has-.E, & -a-. m-.d.-. ,,4..,.,__g, . ,e ..ma_ m

.a .- ,.m,ma, m a..m-ew w- - -- -----r e

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