ML20087H984
| ML20087H984 | |
| Person / Time | |
|---|---|
| Site: | 05000054 |
| Issue date: | 03/15/1984 |
| From: | Mcgovern J UNION CARBIDE CORP. |
| To: | Thomas C Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 8403220043 | |
| Download: ML20087H984 (5) | |
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UNION CARBIDE CORPORATION P. O. DOX 324. TUXEDO, NEW YORK 10987 MEDICAL PRODUCTS OlVISION TELEPHONE NUMBER: (914)351-2131 March 15, 1984 U. S. Nuclear Regulatory Connission Division of Licensing Standardization and Special Projects Branch Washington, DC 20555 Attn: Mr. Cecil 0. Thomas, Chief
Dear Mr. Thomas:
Your letter of March 2, 1984 requested certain financial information pertaining to the operation of the UCNR, License R-81. That information is presented below in the same order in which it appears in the request.
- 1. Estimated operating costs for each of the first five years of the license renewal period are tabulated as follows:
1984 $1.90 million 1985 52.03 million 1986 32.17 million 1987 32.32 million 1988 32.50 million These figures are based on recent cost history and it is assumed that the duty cycle will remain at the current level of approximately 95 percent, the facility staff will be maintained as required in the license and an inflation rate of 7 percent will persist over this period.
- 2. The unticipated cost for decommissioning the facility is estimated to be either $3.03 million to thoroughly dismantle the licensed facilities cr $1.24 million to place the facilty in a standby condition. A breakdown of these costs and the basic assumptions behind them are presented in the attachment.
8403220043 840315 PDR ADOCK 05000054 I PDR 0f b
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I b Thomas, Chief March 15, 1984
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- 3. Union Carbide, as the licensee, is responsible for and will provide the funds to cover both the operating costs and the decommissioning costs if required. The facility is currently operated for the benefit of Cintichem, Inc., a subsidiary of Medi-Physics, Inc., in accordance with an Operating Agreement whereby Cintichem reimburses Union Corbide for all operating expenses and has agreed to pay for the potential decommissioning costs. The costs are essentially funded through the sale of products and services that are generated in the facility. The predominant products are medical diagnostic radioisotopes.
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- 4. A copy of the most current Union Carbide Annual Report (1982) is enclosed.
Very truly yours, James J. McGovern Business Manager Radiochemicals JJMcG:js Attachment 4
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- Page 1 COST ESTIMATE FOR DECOMMISSIONING NUCLEAR FACILITIES AT STERLING FOREST An estimate of the cost of decommissioning the nuclear facilities (Reactor and Hot Lab) at Sterling Forest are as follows:
In order to make this first approximation, the following assumptions are made:
- a. Licensee continues to occupy the Sterling Forest site,
- b. The Reactor and Hot Lab buildings remain intact.
- c. The USNRC, N.Y.S. Dept. of Health, N.Y.S. Dept. of Environmental Conservation, U.S. Dept. of Environmental Protection and Sterling Forest Corporation agree to our proposal for decommissioning.
At present there are two alternatives in decommissioning the facilities.
The one chosen will depend ultimately on the final utilization of the .
site. These alternates are:
Alternate A Complete closure of the facility whereby a "delicensing" could be accomplished. It is proposed that this would be accomplished by dismantling and decontaminating the facility so that there would be no radiological hazard to the environment as defined by the responsible regulatory authorities. It is proposed that this condition be accomplished by segregating contaminated facilities from the environment or cleaning them up. This decomnissioning would result in the unrestricted availability of these two buildings or the site for whatever purpose is deemed desirable.
Alternate B Maintaining the nuclear utilization capabilities of the facilities under a byproduct materials license. There would have to be restricted access to the buildings under this condition but the buildings could be used for-other purposes provided the basic structures did not have to be altered.
JJMcG:js Rev. 04/26/83 l l
Cost Estimate for Decommissioning Nuclear Facilities at Sterling Forest Page 2 The cost approximations in 1983 dollars for these alternatives are as follows:
Alternate A Alternate B "Delicense" Standby " Byproduct License" PHASE I PHASE I
- a. Conduct Survey (radiological)
- b. Promulgate Decommissioning Plan.
- c. Prepare Hazards Summary Analysis and submit to NRC and N.Y.S.. Same As Alternate A 4
- d. Obtain approval to proceed.
It is estimated that this phase could 3 Months Time Required require 6 calendar months at about t
60 percent of present staff.
Based on current experience in At a cost of -
$250,000 operational expenses, this would amount to -
$450,000. Fuel Shipment - $80,000 Reprocessing $530,000 PHASE II PHASE II Fuel Shipment $82,000 Maintain facility under Fuel Reprocessing $530,000 Byproduct possession license.
Disposal of Low Level Minimum staff Waste (25 truck loads) $855.000 2 man / year $80,000 and Large Quantity Waste (20 truck loads) Minimum utili-ties / Year $300,000 Dismantle Decon Room and Prepare for Burial $12,000 Dismantle Stack and Prepare for Burial $12,000 Dismantle Filter Bank and Prepare for Burial $12,000 Dismantle Storage Tank and Prepare for Burial $12,000 Dismantle Pump Room and Disconnect Piping to Environment $23,000 Decon Pool $35,000 JJMcG:js Rev. 04/26/83
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Cost Estimate for Decommissioning Nuclear Facilities at Sterling Forest Page 3 Alternate A Alternate B "Delicense" Standby "Byprsduct License" PHASE II PHASE II Decon Hot Cells $35,000 Disconnect Piping to Process Drain Tanks and Bury $12,000 Labor and Utilities for Phase II, Assume 1/2 Staff 18 Months $730,000 PHASE III Cost of Final Radio-logical Survey Depending Upon Regulatory Require-ments. $230,000 Total cost of decommissioning Total cost of decomissioning Alternate A: Alternate B:
Phase I $450,000 Phase I $860,000 Phase II $2,350,000 Phase II $380,000 Phase III $230,000 $1,240,000 (Year 1)
$3,030,000 $350,000/
Year Thereafter (Utilities plus 1 H.P. Man)
An inventory of uranium exists which serves as fuel for the reactor and as target material for isotope production. The scrap value of this inventory is estimated to be $1 million.
Without considering other recoverable assets the estimated net decommissioning cost will be , '
$2 million. The net cost for placing the plant into standby by status will be $240,000.
JJMcG:js Rev. 03/15/84 l
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1 Union Carbide AnnualReport1982
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! Dollar amounts in micions (except per share figures) 1982 1981 1980 l For the year Sales $ 9,061 $10,168 $ 9,994 income before cumulative effect of change in accounting principle 310 649 673 Cumulative effect of change in accounting principle for the investment tax credit - -
217 Net income 310 649 890 Income per share before cumulative effect Of change in accounting principle 4.47 9.56 10.08 Net income per share 4.47 9.56 13.36 Dividends 235 224 206 Dividends per share 3.40 3.30 3.10 Capital expenditures 1,179 1,186 1,129 At yxr end Total assets $10,616 $10,423 $ 9,659 UCC stockholders' equity 5,159 5,263 4,776 UCC stockholders' equity per share 73.54 76.74 70.90 Shares outstanding (thousands) 70,153 68,582 67.367 ,
Number of stockholders 138,098 149,890 163,741 l Number of employees 103,229 110,255 116,105 l
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l Sales by Industry Segment Sales by Geographic Ssoment Chemicals & United States &
Plastics Puerto Rico Batteries Home &
Automotive Products Gases & Related Products Europe Metals & Carbons LatinAmerica Specialty Products Canada Africa & Middle East I
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"Everything we "We ended the year l achieved rested primed to convert I ultimately on the highet operating 1 ability of Carbide rates into higher people....They earnings."
deserve great praisc." f*,;fl,*"" ,
Warren M. Anderso:n Chaorman of the Board l
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19ff9F fJ [ ur results fpr 1982 wers as follows: Worldwide sal;s wers $9.06 b4Iion,
$$OChh0IdOFS ( Q jdown 11 percent from the prior ye:r. Income for the year <* : lined 52 per-v cent to $310 million. And earnings per share were $4.47, compared with
$9.56 in 1981.
The recession exacted a high price in terms of our sales and earnings, placing us in the same boat as many of our customers, suppliers and competitors, whose per-formance also suffered. But the strong economic medicine brought important benefits:
Necessary and overdue reductions were made in dangerously high inflation and in-terest rates, two of the most serious threats to the economy's long-term health.
Improved Productivity and Control of Overhead At Union Carbide, we made a concerted effort to have the recession work to our ad-vantage, and we closed out 1982 as a leaner and more effective organization, in a strong financial position.
To give credit where it's due, everything we achieved rested ultimately on the ability of Cartide people the world over to get the job done in trying times. They did, and they deserve great praise, not only for a job well done, but also for the enviable safety record compiled while doing it. Carbide's injury rata was among the lowest in our industry group, wMch itself has the lowest rate of all major U.S. industries.
As our sale s began to fall below plan, and below 1981 levels for many products, we redoubled effcrts to improve productivity and conserve cash. Planned construction spending was sharply curtailed. We also shut down or block-operated many facilities, reduced employment, cut inventories and raw materials commitments, and kept tight control of overhead and receivables.
However, difficult times did not diminish the Corporation's total commitment to equal employment opportunity at all levels. Women and minorities are already well represented in professional, managerial, and operating jobs throughout Union Carbide, and our aim now is to increase female and minority representation at higher levels of responsibility.
Union Carbide ended the year with a good balance sheet, with short-term debt at acceptable levels, and with its businesses primed to convert higher operating rates into higher eamings.
If the economy recovers, Union Carbide will do better in 1983. Toward that end, we have been urging a better balance of fiscal and monetary policies from Washington, a balance which must be achieved and sustained to pave the way for a meaningful recovery. The sacrifices of 1982, made in the interest of long-term economic health, should not be wasted.
Management Retirements and Promotions The year just ended also marked the retirement of four corporate officers: William S.
Gray, Jr., Richard J. Hughes, Fred C. Kroft, Jr., and Stephen E. Nightingale. All made major contributions during long years of service.
We were pleased to announce the election of Rolf H. Towe as vice president and treasurer. In addition, Louis G. Peloubet was promoted to vice president and controller, John H. Field was promoted to executive vice president, and J. Clayton Stephenson, who is an executive vice president, was named chief financial officer.
Finally, and perhaps most important, we can report that Union Carbido will emerge from the recession well positioned for the decade of the 80s. We are proud of that achievement and think it is a good time to te:I the story behind it, which appears on the following pages. We think stockholders will find it well worth reading.
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Warren M. Anderson Alec Flamm I
Chairman of the Board President 3
Unirn Crrbide or union carbide,1982 was a year of coping with the recession, while pre-paring to get back on the earnings track the company was following before cnd the the slump. And at year-end the evidence was clear that we arc indeed " lever.
ODO W aged for the upturn,"in the parlance of Wall Steet, and operating more effectively R;sponding to than at any time in recent history. l Change The result is a shared achievement in the fullest sense, as Carbiders the world l over redoubled efforts to conserve money and resources, to find more efficient ways to get the job done, and to implement plans and programs designed to keep the company l financially strong in a difficult year. I Yet to stop with the achievements of 1982 would tell only part of the story. For l much has been done to sustan the company's competitive leadership, and enlarge its l 1
opportunities for profitable growth, right through the end of the decade.
With a chance tha! the worst of the recession is behind us, it seems a good time for a progress report and review of our efforts.
But first, what will the decade be like?
A New Set of Rules One thing already clear, as a futurist has neatly put it, is that yesterday is over. For many large companies, that means, for example, that the steady volume growth they witnessed during much of the 60s is probably history. And it means that high double-digit inflation probably won't be around to make earnings look good, while the quality of those earnings-the rate of return-is eroded by higher costs, as it was for many cor-porations in the late 70s.
In other words, in the slow growth era many are forecasting, weak competitors will have no place to hide. The rich rewards of the 80s will go to the cost-efficient pro-ducers with the best technology, and to companies that know how to create growth opportunities of their own.
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For some companies, the proc:ss of adjusting to this new set of rules has just begun. At Union' Carbide, the work has been underway for more than five years, and the pieces, along with a new strategic direction, are largely in place.
Although the changes begun in 1977 were prompted by a complex set of
~,; , 7 business and economic considerations, at their heart was the same basic motive that
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drives any successful business: the will to do better.
,!' in the early 70s, market leadership and market share were what mattered most
/g i g to Union Carbide. To keep its lead, the company paced the rapid growth of its large
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( those capita l-intensive businesses came under pressure from escalating costs, the
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it proved too high a price to pay for simply getting bigger, and priorities at Union Car-
.- bide were shifted, from market share for its own sake, to a balance that ccmbined strong market position with a drive to improve the quali'y of returns.
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in practical terms, that meant redirecting a portion of the investment that might f d have gone for new capacity into projects and technologies that have made Union
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- m4 r, Carbids the low-cost producer virtually across the board in its U.S.-based high-volume businesses.
- asTJedO w .Nied, e And it meant a new and searching analysis of the Corporation's business port-M,87 7 7 %$W' " ' folio, slimming it so that evertually it will include only those businuses that support Carbide's twin goals of bett er earnings quality and continued grow h.
The result of that arulysis was the first tangible expression af a new corporate strategy, leading to the sale over four years of more than a billion dollart of low-yielding Priorities were assets. The proceeds, in turn, provided much of the wherewithal far the urive to im-chlft d after prove cost efficiency and otherwise strengthen operations in the re ;t.
O cccrching The move was sound enough under the circumstances, bu as the recession cn: lysis of the took hold and deepened-and competitors rushed to follow suit-it oegan to look pro-Corporation's phetic. For it left the Corporation with a portfolio better balanced for the decade's com-petitive tests, combining the earnings and cash flow of very large-and now very bu:Inesses. lean-businesses with the flexibility provided by smaller businesses :o range across new and promising growth opportunities.
It is a diversified lineup. Union Carbide is the world's leading polyoiefins pro-ducer, the nation's largest producer of industrial gases, the world's leading producer of dry-cell batteries, and the world's largest producer of graphite electiodes for steel-making. The Corporation's portfolio also includes a rapidly developing agricultural prcducts business, the world's largest selling brand of antifreez1, ar,d s=Jh rpecialty businesses as electronic products, food processing and packaging mateia>s, molecular sieves, coatings services, specialty chemicals, and specialty polymers rad composites.
In the large businesses serving markets whose growth is slowing-autos and steel, for example-maintaining a leading market position will ra tonaer take the heavy capital investment of the past. Instead, funding at reduced levels can 90 mainly to sus-tain the low-cost leadership of those businesses.
And just as higher ccsts and heavy investment eroded their returns in the past, reducing costs and slowing the rate of investment is precisely the way to improve them.
Carbide's aim is to have those slower-growing businesses generate cash and earnings to fuel the expansion of an array of businesses whose greatest growth is still ahead, thereby helping to ma'ntain liquidity as well.
1 Elements of Strategy: Low Cost Producer l Although the true measure of a strategy cannot be taken with the economy at a virtual j standstill, much has already been accomplished. Of great importance are the major i strides Union Carbide has made in advancing and improving its low-cost position. l l
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The most drarpatic example is in tha company's poly;thylene business, whero l Union Carbide's low pr:ssura Unipol process for manufacturing low-density polyethyl- I ene resins is rapidly changing the industry. An extension of the company's low-pressure gas-phase Unipol process for high-density polyethylene, the new low-density
'] technology can cut capital costs for a new plant by up to two-thirds and energy needs 1
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by as much as 85 percent.
Many benefits have flowed from this development, some expected, and some ;
- even better than expected. In terms of Union Carbide's own operations, Unipol made it
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M~ 3. , &' possible to rejuvenate our processing plants, go:ng from a system about 17 years old on average to one whose average age is four years, and doing so in less than five d
l years. That represents a 75 percent conversion to Unipol for the Union Carbide polyethylene system.
p / The Unipol process placed the Corporation so far ahead of competitors that it
. also became possible to participate in a broader segment of the world market simply by n - licensing Unipol to others. To date, there are more than 20 Unipo/ licensees in 14 coun-
'. N, tries on six continents. Their planned capacity suggests that by 1985, at least 25 percent fi 's of the world's total polyethylene capacity will be based on Union Carbide's technology.
</ '"4 A transformation through technology has sMo taken place in Union Carbide's i ethylene oxide / glyco! business, ancher in which the company has kept its leadership g over the years by developing that industry's most cost-efficient catalysts.
p 1 The latest generation of high-efficiency catalysts can turn even a 10-or MAM_ :*- % year-old plant into a cost-effective competitor. Its catalysts have established Carbide as a low-cost producer. And they will also be making a substantial contribution to income in their own right, now that the Corporation has begun licensing its know-how to others.
Union Carbide also owns the world's leading and lowest-cost process for the Carbide has made production of oxo-alcohols.
major strides in The main market for the oxo-chemicals is the coatings business, where they are improving its used as either solvents or intermediates. At five billion pounds a year worldwide, the m rket for oxo-chemicals is a fraction of polyethylene's volume. But by 1984, as much low cosf posliion.
as 40 percent of wor:d capacity will be based on Union Carbide's process.
In addition to these high-voiume petrcchemical businesses, low-cost status in other areas can be claimed by the company's graphite electrodes business, and by its battery business, whose plants are cost competitive w;th any in the world.
Glements of Strategy: Technology Mrst While their cost <fficient operation and strong market positions ensure an important strategic role for Union Carbide's traditional high-volume businesses, other segments of its portfolio will also be helping to meet the Corporation's growth objectives.
Carbide's already large consumer businesses form one such segment. Con-sumer businesses accounted for more than a fifth of consolidated revenues in 1982, and chalked up record earnings and oood growth right through the recession. Leading that growth are some of the world's best known brand names-Eveready, Energizer, Prestone, Glad, and Simoniz-all spawning product extensions year after year that lead to new markets and larger sales.
Carbide's consumer products also account for a large share of its stature as a major multinational. With manufacturing activities, including mines and mills, in 38 countries, and marketing activities in 130, the company's search for growth oppor-tunities is truly global in scope.
In still other segments of the Corporate portfolio, Carbide is employing tech-nology both to create new products, and to point the way to promising new extensions of our basic businesses.
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The industrial gase.s business of Carbide's Linde Division offers good examples.
Through technological advances, Linde is extracting growth even from the relatively i slow growing steel industry. The division has invented a unique combustion system ex-pected to open sizeable new oxygen markets in steel mills. It has developed additional 1 I
processes which use argon in steelmaking, and has a major position in the growing l market for nitrogen in heat treating.
l Linde's technology has opened new uses of industrial gases in faster growing l l markets as well. For example, oil and gas recovery are enhanced by the injection of l nitrogen into producing fields, and by the use of high pressure nitrogen to fracture producing formations. Although declining oil prices have slowed the growth of these applications, Carbide still foresees attractive prospects in the oil field through its joint l ventures with Hallibur*on and Ingersoll Rand.
Linde also sees growth opportunities in electronics, where higher-purity and specialty gases are in demand; and in the chemical industry, where nitrogen and oxygen applications continue to grow in size and number.
With technology the key to these and other applications, the Linde R&D budget continued to increase right through the recession.
Elements of Strategy: The Niche to Grow It is Union Carbide's goal to have its business extensions make an important contribu-tion to financial performance in the 80s. The strategy for pursuing them is highly selec-tive, but the basic mandate is simple and direct: Go where the action is. That may be
! toward an industry with good growth potential, or toward a niche or industry segment that is growing faster than the market as a whole.
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b oxtcnding our b sic businesses.
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The company's recent move into the polysilicon business is a prima example:
Union Carbide's goal is to be a major supplier of this basic material for the production of semiconductors, one of the fastest growing industries in the world.
Based on the known needs of the electronics industry, the market for polysilicon is forecast to grow more than 15 percent a year. And Carbide will begin serving it with commercial quantities of polysilicon from a 1,200-ton-a-year plant scheduled to come
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on stream in 1984.
j Union Carbide's proprietary technology virtually assures that its first plant will be the industry's quahty leader when it starts up. In fact, the product will be of such stunn-
, g ing purity that end users may need to re-think its potential. How pure is that? "To find
> the impurities," says a Union Carbide scientist associated with the project,"would be like tracing 70 or 80 particular dollar bills in the entire U.S. economy."
Union Carbide's agricultural products business is another aiming for rapid growth.
,, The goal of the business is to be the world's largest and lowest-cost producer of car-bamate insecticides. Union Carbide's expertise in carbamate chemistry gives it a special l
, competitive edge in this fast-growing market, and exceptional qualifications for meeting tough environmental and safety standards associated with agricultural chemicals.
% 1 4- By the end of the decade, we expect to add nine new insecticides to our roster, l d'J.
h tor a total of 11. Our intention is to have the broadest and strongest portfolio of insecti-cides in the industry, with products that offer important protection for all the major g g '" ;' .
agricultural crops of the world.
In its chemical segment, Carbide's silicones business may be the perfect example M - 7 v of a group of products whose uses are already large and varied, but whose potential applications are vastly larger. Silicones find their way into such products as lubricants, electronics, pharmaceuticals, polishes, plastic composites, and textiles, and increasing'y into personal care products, adhesives, sealants, and other rapidly growing markets.
One simple Yet marketers think there are still thousands of potential customer companies circ!egy: Cultivate whose products and processes can be improved with silicones, and Carbide is supoort-O f2St-grO Wit'g ing the growing markets for silicones with a major new production facility that will begin per ting in mid-1983.
markei niche. The niche philosophy is also deeply ingrained in the thinking of Union Carbide's specialty polymers and composites business, which operates on the idea that every-thing in the world is a substitute for something else.
And where high strength, close engineering tolerances, and resistance to heat and acids is called for, that substitute increasingly is a specialty aolymer.
With the electrical / electronic industry as one of its main markets, this business, too, is serving high-growth areas of the economy.
The latest application, and one with great promise, is a printed circuit board made of a patented Union Carbide engineering polymer, a plastic that can withstand wave solder temperatures of up to 525 degrees F. Thus the Radel A-400 polymer is off l to a running start among a family of other high flycrs that includes Union Carbide's Udel polysulfone, Mindel engineering resins, and Arde/ polyarylate.
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Substitution also plays an important part in the stmtegy of Union Carbide's l
specialty chemicals business, the downstream end of ine company's chemical opera-l tions that will get more attention in the competitive environment of the 80s. Its phenoxy is the key ingredient in the zinc-rich pa;nts that make new cars more rust resistant. And its solution vinyl resins are important not only for paint, but also as the binder for mag-netic tape, a market growing at nine percent a year, and one that depends heavily on Union Carbide for its solution vinyl resins.
Still other profitable niches are filled by such products as molecular sioves, which are used as catalysts or catalyst bases in the petroleum refining industry, and metallic and ceramic coatings, which impart long life to the fan blades of nearly all the jet engines made in the United States.
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The C=ential Qarbidp Union Carbide is therefore relying on several strategies for continue d leadership and improved performance in the 80s.
In its high-volume businesses, the goal is to improve earnings quality in a slow-growth era by emphasizing cost efficiency and market position over expansion for its own sake.
A second strategy employs technology to create profitable new extensions of its basic businesses, directing marketing efforts toward the higher growth sectors of the economy, and the high-growth segments of those industries that are more mature.
With these complementary strategies in place, Carbide restructured its opera-tions in 1982 to reflect the sharply defined roles of its various businesses and the need l
to manage them accordingly.
By grouping high-volume petrochemicals operations together, managers can focus on cost efficiency and aggressive marketing to maintain worldwide market leadership. And in the high-technology end of the chemical business, where value is added by superior product performance and technical service, managers will have all the R&D support and enirepreneurial freedom they need to pursue growth wherever they find it. Two new labs opened in 1982 t re the latest expression of that commitment.
Finally, we are convinced that changes underway in the nation's industrial sector will provide many new avenues for profitable growth.
Under the goad of the steep energy price increases of the 70s, and the emergence of tough new competitors in world markets, U.S. industry, led by the automakers, is downsizing to meet the tests of a new era. Companies are striving to do more with less, to conserve resources, to improve productivity and efficiency, and to employ new cost-efficient materials to build better products.
Union Carbide has been a strong underpinning of industry for decades. With a vanguard of skilled and ta!ented people, and the ability to create the materials for a new era of competition, it is set for an even more critical role in the 80s.
"When you get down to it," says a Carbide manager, "our real business is to use our skills, our technologies, and our products to make industry more competitive. And considering the tests that lie ahead. I can't think of a more important business to be in."
With a vanguard of skilled and talented people, we are ready for the 80s.
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Irdustry Segment Sales and Operating Profit Ch2micals & Plastics Minions of dollars 1982 1981 1980 Sales $ 3.287 $ 3,795 $ 3.655
% of UCC Consohdated 37% 37% 36 %
Operating profit $ 77 $ 277 $ 421 ,
% of UCC Consolidated 12 % 23 % 33 %
anw -
G3ses & Related Milhons of dollars 1982 1981 1980 ,
TCducts Sales S 1.698 $ 1,780 $ 1.561
% of UCC Consohdated 19 % 17 % 16 %
, - 2 - -
Operating profit $ 217 $ 303 $ 240 %, .S *a - -
% of UCC Consolidated 33 % 26 % 19 % ' %. #' s se small M3(als & Carbons M4Hions of dollars 1982 1981 1980 Sales $ 1,127 $ 1.679 $ 1,884 ob of UCC Consohdated 12 % 17% 19 %
~
Operating profit S 55 $ 281 $ 314 .
% of UCC Consohdated 8% 24 % 24 %
i Datteries/Horrie & Mahons of dollars 1982 1981 1980 - -- - -
Automotive Products Sales $ 1.931 5 1.908 $ 1,7's6
% of UCC Conschdated 21 % 19 %
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Operatmg profit $ 219 $ 199 $ 185
% of UCC Consohdated 33 % 17 % 14 %
ig~L g iw g. ..w'. .A Specialty Products MJhons of dollars 1982 1981 1980 gy Sales $ 1,018 $ 1,006 $ 1,098 k' '
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% of UCC Consolidated 11 % 10 % 11 % -s
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Businesses Highlights of 1982 Polyolefins Polyethylene sales volume approached a record high. Major improvements in Unipol process technology, and advances in Unipol product fabrication technology, were announced.
Cthylene oMide/ glycol Constructicn of new glycol capacity continued at Prentiss, Alberta. In our worldwide catalyst leasing program, the number of customer contracts signed exceeded plan.
Solvents / coatings materials Modemization of oxo-alcohol facilities at Texas City, Texas, continued, with completion sched-uled for late 1983. The facilities will be converted to our proprietary low-pressure oxo process.
Specialty chemicals Process revisions at the Institute, West Virginia, plant improved manufacturing costs for Cellosize thickener. A synthetic thickener, based on new chemistry, was introduced.
Indu:frial gases Unique oxygen-fired combustion systems featuring major energy savings were brought to readi-ness for commercialization. A novel adsorption-process oxygen plant began operation to supply a steel customer. Several new plants serving electronics and oil field markets were completed.
Engineering products Engineenng products and processes posted record worldwide sales. Sales were up in the coatings service, cryogenic, and medical areas, including Linde Homecare Medical Systems.
Molecular sieves sales were down. Two new coatings services plants were completed.
Gr:phite electrodes The second phase of construction was completed in May on a new, highly-automated graph-ite electrode facility we are buildir'g at Clarksville, Tennessee.
C:rbon fibers Our carbon fiber and engineered plastics businesses were joined together in a new division which will take advantage of our capabilities in both areas.
Carbon specialties Construction was completed on a multimillion-dollar expansion and modernization of graphite specialties facilities at Clarksburg West Virginia. Capacity has been increased by 50 percent.
Metfl3 Despite reduced operations in tungsten, uranium, vanadium, and ferrochrome, development of mineral properties and new mineral products continued.
Batt ry products Emegizer alkaline battery sales continued strong. The new Eveready Super Heavy Duty line af premium carbon-zinc batteries was successfully introduced.
Plactic wrap and bags Glad brand product introductions included Funtime sandwich bags, deodorant garbage bags, and Sheer Strength disposer bags. Our line of unique Handle-Tie bags was expanded.
Automotive products Prestone Il antifreeze / summer coolant and Simoniz SuperPoly car polish maintained leading positions. A new product, Prestone cooling system super sealer, was introduced.
Agricultural products A new Temik aldicarb insecticide plant was completed in Brazil, and an Amiben chloramben l herbicide plant started up in Woodbine, Georgie.
Food processing and A new E-Z Smoke casing was introduced that imparts color and flavor to meat products pro-packaging materials cessed by the Shirmatic system. Specialty films capacity was added at Centerville, Iowa, and Pauls Valley, Oklahoma.
Electronics A polycrystalline silicon pilot plant was completed in Washougal, Washington, and construc-tion begun on a major polycrystalline silicon facility at Moses Lake, Washington.
'1
, dards No. 52. (See discussion on page 21 and Note 2 on S gm:nt Rsvisw page 29.) If 1981 were adjusted to a comparable basis (State-ment No. 52),1982 international operating profit would have been lower than that of last year by about 20%. International ur domestic operations in 1982 were severely affected operating profit had decreased 23% in 1981 reflecting lower by the persistent recession which began in the fourth results in all geographic segments-especially Canada.
quarter of 1981 and continued throughout 1982.
In 1982, for the first time in recent history, total domestic laternational Operations sales declined from the prior year. The 13% decline reflected Millions of dollars 1982 1981 1980 11% lower volume and 3% lower average selling pnces. -
Sales in 1981 had increased 2% as a result of 8% higher sales $ 3.010 $ 3.189 $ 3.149 average selling prices, partly offset by the ef'ect of 6% lower 8 275 $ 3 $ 4
["9, P] I,,, 39 p pgQ
, volume.
Operating profit for cur domestic operations declined 55% Following is a review of Union Carbide's operations by [
from 1981 as a result of the lower volume, selling prices and worldwide industry segment and by geographic segment. ;
operating rates, particularly in the second half of the year.
Operating profit had decreased 2% in 1981.
Export sales to customers, which are included in domestic Chemicals & Plastics sales, declined 14% in 1982 following a 13% decline in 1981.
Sales in both years were depressed by the combined effect of a strong U.S. dollar and weak foreign economies. n 1982 segment sales declined 13% from 1981 as indus-ftrial chemicals in the United States and the polye unitsd States a Puerto Rico business worldwide fell victim to persistent recession. Do-Millions of dollars mestic sales for the segment were 15% lower while interna.
1982 1981 1980 tional sales were off 9%.
sales $ 6.051 $ 6.979 $ 6.845 Volume in the United States declined 13%, and prices for Operabng profit S 382* $ 852 $ 869 Identifiable assets most products weakened during the year in reaction to flag-S 7.319 $ 7.115 $ 6.542 g ng demand. Overall average selling prices were down 2%
' Includes the favorable effect of LIFO inventory reductions (see Note 1 on in 1982. In 1981, worldwde sales had increased 4%. Domes-page 29) and a credit of $44 milhon related to an advance sale of uranium.
tic sales in 1981 had increased 4% as a result of 740 higher Intemational sales declined 6% from 1981 as a result of average prices and 3% lower volume.
l lower sales in Europe and Canada. The decline resulted Operating profit declined by 72% from 1981 due to the i
mainly from lower volume as average selling prices declined weak woridwide market conditions and low operating rates, 2%. Sales had increased 1% in 1981. especially in tho fourth quarter. Operating profit in 1981 had International operating profit decreased 15% chiefly as a declined 34% from 1980, especially as a result of reces-result of operating losses in Canada. Significant percentage sionary pressures in the fourth quarter.
gains were recorded in Africa & Middle East. Results for 1982 reflect the adoption of a new policy for translating foreign currency, Statement of Financial Accounting Stan-
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, Operating profit 5 776 $ 277 $ 421 idenunable assets $ c.956 $ 3.850 $ 3,75c a7he segment's 1982 saios decreased 5% from 1981, in-5 5 56 $ s fluenced, in part, by the steep decline in domestic steel P]'ation
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production. Domestic prices remained relatively constant-
!
- Sales of chemicals in 1982,1981. and 1980 were $2.225 milhon. $2.575 about 1% above last year-while domestic volume fell 6%
8 below last year. Sales in 1981 had increased 14%, the
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- l lncludes the favorable effect of LtFO inventory reductions. See Note 1 on
, page 29.
Operating profit in 1982 declined 28% from the record 1981 results, chiefly due to weakness in the domestic in-Polyethylene sales volume approached a record high in dustrial gases business. International operations were also I
! 1982. Sales of Unipol process linear low-density resins in- less favorable, due especially to the depressed Brazilian l creased markedly as the resins continued to displace high- economy. Worldwide operating profit had increased by 26% i
, pressure low-density products in virtually all major in 1981. i polyethylene markets. Advances in Unipol fabrication j technology resulted in the introduction of new high- Milhons of dollars 1982 1981 1980 !
- performance film and molding products. Major break-Sales $ 1,698 $ 1.780 $ 1.561 i throughs in our Icw-pressure, gas-phase Unipol process 4 l technology were announced. Five more licensee Unipol proj-1 ects were put in commercial operation during the year.
[n'$"bPs s 2 ts86 Depreciation S 117 5 104 5 79
] in our oxide / glycol business, catalyst leasing activities Capital expenditures $ 336 $ 308 $ 268 showed an appreciable increase. And in our solvents / coat-ings materials business, several new latexes and ter- In industrial gases in 1982, our Linde Division imple-polymers received increasing acceptalice in their respective mented stringent cost reduction measures, trimmed back its r arkets. But in general,1982 was a year of consolidation work force, and exercised tight control of overhead. As part and conservation in the chemicals area. Sales of ethylene of an on-going program, obsolete facilities were shut down.
oxide and glycol were adversely affected by depressed sales Their load was assumed by more efficient plants.
in the polyester fabrics, automotive, housing, and natural gas Construction was substantially completed at a new 1 industries. Sales volume of ethylene oxide derivatives de- Loveland, Colorado, plant which will replace a much less ef-clined, and price competition was severe. In solvents and ficient plant in the same general area; and construction con-coatings, all production units were operated well below full tinued on a plant in Hatfield, Pennsylvania, expected on
. capacity. stream early in 1983, which will replace a higher cost facility. l 1 In specialty chemicals, lower sales were only partly offset l l by selected price increases and cost control programs. But J despite the economic pressures, emphasis on new product j research, development, and marketing was maintained. !
i Farleft: The Eveready .
Super Heavy Duty battery has I j '. * '
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, business. Start-up of the addition :
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i Right: Cryogenic containers are -
manufactured at our Speedway, y +
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drawn, liquid nitrogen or oxygen -
, " f will be introduced into the con-tainers' storage spaces.
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In the area of enhanced oil and gas recovery, new plants The 80% operating profit decline from 1981 resulted began operation at Anschutz Ranch in Wyoming for Amoco
- primarily from lower carbons volume, especially in the United
' States. Operating profit had declined 11% in 1981 due to Petroleum and at an adjacent facility for Chevron. These f very large and modern facilities will place the Union Carbide lower metals volume and to the effect of the sale of portions
-ingersoll Rand joint venture, Niject,in the forefront of the of the metals business.
enhanced oil and gas recovery market. Additional facilities for Marathon Oil, Mobil, Getty. and Woods Petroleum have MJIions of dollars 1982 1981 1980
' been placed in operation. Work also began on liauid nitrogen sales 5 1,127 s 1.679 s 1.884 t plants at Mooreland, Oklahoma, and Big Spririg, Texas, operating profit 5 55' s 281 s 314' which will supply the oil field nitrogen requirements of identifiable assets s 1,708 $ 1.790 s 1,763 Welinite Services, Union Carbide's joint venture with Depreciation 3 50 $ 52 5 50 i Halbburton. capital expenditures s % s 183 $ 200 A specialty gases facility was finished at East Chicago.
- Includes a credit of $44 mdi.on related to an advance sale of uranium.
The Linde Division increased its sales to the semi-conductor tincludes a charge of $22 million representing accrual of the loss on safe industry of both bulk and specialty gases. of portions of the metals business. sales of these operations, pnncipally Engineering products and processes posted record world, domestic, aggregated $320 million in 1980 and 5184 mdlion through the te 4 on$gN
, wide sales. Sales were up in the coatings service, cryogenic, $$ur'tNo'"s4 m" don' e and medical areas. Molecular sieves sales were down.
Operating rates were reduced at carbon products facilities
- during 1932 la response to weak demand from the steel, aluminum, and fe:roalloy industries. Rates were reduced in
[ Metals & Carboris step with demand so as to reduce inventory levels.
E Metals operations were curtai'ed during 1982 in response n 1982 segment sales declined 33%. Af:er adjustment for to declining demand. The weakness in steel directly affected a ithe divestiture of portions of the metals business sold in chrome and vanadium, and poor economic conditions mid-1981, sales from continuing operations declined about dramatically lowered prices and consumption of tungsten.
25% from 1981. Sales were severely affected by the low level Demand for uranium remained at low levels due to cancella-
_ of steel production during the year. (Total crude steel pro- tion or deferral of nuclear reactor construction.
e duction in the United States declined to an estimated 73
, million tons in 1982, which represented the lowest annual level of steel production since 1946.) Domestically, segment 5 prices were down 3% and volume in continuing operations declined about 33%. The segment's 1981 sales in continuing E operations had declined 4% from 1980.
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. _ _ _ . sumers seeking to extend the life of their automobiles through more do-it-yourself maintenance.
l The strength of our consumer-reated product sales and s encouraging operating profit results provided a bright spot among our recession-battered indus'ry segments in 1982. The segment's 1982 sales increased 1% over those of Specialty Products 1981. Averrge domestic prices were 4% below 1981, while volume increased 7%. Antifreeze business volumes wero . egment sales in 1982 increased 1% over 1981. Sales especially strc.ng. Segment sales in 1981 had increased 6% ga:ns for our agricultural products and food processing over 1980. and packaging materials businesses were ne2rly offset by Operating proht increased 10% in 1982. Operating profit lower electronics materials sales, which were affected by for batteries was substantially improved with higher domestic lower industry-wide selling prices. Sales in 1981 had declined as well as intematioral resu'ts. Home and automotive prod- 8%, partly due to the effect of the divestiture of certain ucts operating profit also showed strong improvement, as businesses in 1980 and parts of the medical products the effect of lower plastic wrap and bags results was more business in early 1981.
than offset by improved anti-freeze operations. Segment Operating profit declined by 24% in 1982, with lower operating profit had increased 8% in 1981. results reported by the major businesses, particularly agricul-
_ tural products and electronics. Operating profit had declined l Mi.'icos of dollars 1982 1901 1980 110/o in 1931. l Sates $ 1.931 $IE8 $ 1.796 Operaang proht 3 219 5 199 $ 185 M.llions of dollars 1982 1981 1980 Identifiable assets $ 1.403 $ 1,337 $ 1.211 Depre ciation S 49 5 44 $ 32 Sales $ 1.018 $ 1.006 $ 1.098 Cap tal expenditures $ 114 5 140 $ 155 Opersng proht S 89 $ 117 $ 132 Identshaute assets $ 1.040 $ 1.041 $ 846 Energizer aikaline batteries continued to enjoy excei'ent growth in 1982, and a new line of Eveready Super Heavy Du- %x'hnd.tures 168 $ 1 1 ty premium carbon zinc batteries was introduced. A new In 1982 our Larvin thiodicarb insecticide received a provi-research and developmert center, the largest of its kind in sional fechnical product registration in the United States. Pa-the world, was completed in Westlake, Ohio. tent litigations on tarvin insecticide and Ethrel ethephon Prices were rolled t,ack on Glad disposer bag products in plant regulator were favorably concluded, solidifying our 1982 to meet competitive price reductions. The shortfall in worldwide proprietary position in both products.
revenues was partia!!y oliset, however, by plant and distribu- In our food processing and packaging materials business, tion cost improvements. Several new products were specialty films production capacity was expanded to support introduced. sales in fresh red meat and processed meats packaging. An The continued oversupply of ethylene glycol in 1982 ex- g.Z Smoke casing was introduced.
erted downward pressure on antifreeze prices But price reductions in Prestone il antifreeze / summer coolant did not match the steep declines effected by competition. Union Carbide's volume actua:ly increased.
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t crystals plant in Washougal Washington, to accommodate Latin America E the transfer of R&D and manufacturing operations from our
) San Diego olant Construction of a major polycrystalline ales in Latin America shower 1 nt ,ncrea9 'n 1982 as -
( sihcon facshty at Moses Lake Washington. was begun compared to 1981 Sales volumes Aere lowe4 uue to economic difficulties in Argentina and Brazd and the effect .
of the continuing recession throughout the area T he cut-Europe rencv devaluations in Argenttna and Brazil also affected -
oollar sales amounts Saies of industnal gases the larges' 1_
~
E product hne in th9 segment were flat whoe sales of Dat -
g urope. Our largest intern 3tional segment in terms of Es. sales reported mixed financial result 5,n 1982 As a tenes. the second largest product hne were lower Sales of . .-
' this intemational segment had increased 11a in 1981 mainly result of continuing weak economic conditions sales in 1
E 1982 were down 700 from 1981 The dechne was poncipally the result of sesere inflat on Our avorage seli nq pnce in. -
b due to weakness in the steel-related industry businesses creases moderated significantly a,1982 Operating profit dechned 8 ' > and S ' respectively in both
[ Sales of agocultural products improved significantly cver 1981 Segment sales had deciined 13*o in 1981 1982 and 1981 Operating profit increased 1600 over 1981 If 1981 were ad-
+ '*
5 g justed to a comparable oasis (Statement No 52).1982 oper- M ~ oso'*1cs >
{
ating profit would have been higher than that of last year by only about 30 o improved operations of the battery business 3,,,s operat,nq pn . i s
a 3w n,n
_ were offset by the effect of lower results in most of the other men u easu's - w s ,N - ,88 7 businesses Operating profit had dechned 1700 in 1981 i We are the leading producer and marketer of dry cell bat- F tenes and portable hqhting products : 1 Latin Amenca We -
M,nons a m,ws ,98z ma, men are also the leading suppher of graphite electrodes in Mexico [
l- sers s sv 5m s , odo ard Brazil and of industnal gases in Brazil Start up of the ?
single largest industnal gas plant in South Amer.ca at NE[ sb. 5 sh Ie Jacare! Brazil took place in 1982 7 l-int v. , a < mcgr a rs - aor moreser sna a crua s me oss ar sre 7 a
c' ;xwons n' me rnews rms; ness ser % ae .1 on page 30 e in 1982 the Corporation purchased the stock held by its b French joint wntu.er in certain European food processing E and packaging matenals operations. and became the 100 percent equity owner An Itahan subsidiary brought on stream a new $30 rmlhon organofunctional silanes plant
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- Millic.,ns of dollars 1982 1981 1980 Sales S 762 $ 755 $ 709 Operating profit _ $ 82 $ 80 $ 95 anada, suffering from the worst recession in 50 years, identifiable assets $ 632 $ 604 $ 518 Cexperienced the most severe sales and operating profit declines among our international segments. Sales declined Despite severe competition,1982 trading volumes sur-18% from 1981, reflecting decreases in all major businesses, passed those of the prior year. Growth in China trade was except industrial gases and foco processing and packaging especially marked. Battery plant expansions were completed materials. Sales had increased 10% in 1981, at Singapore in 1982. A collaborative pesticide research pro-Canada's operating loss of $22 million was chiefly related gram between the Corporation and Union Carbide india to !osses reported in the pclyethyleno, metals and battery Limited has been intensif:ed.
businesses. Operating profit had declined 54% in 1981.
mummet Milhons of dollars 1982 1981 1980
_ _ g Sales $ 553 $ 671 9 609 o b$e7s e s 72 6 ga!es for our smallest international segment increased
%p1% over 1981 and operating profit more than doubled, To cope with the recession, Union Cattida Canada Limited primarily due to impmved operations at battery facilities.
implemented a comprehensive cost restraint program which Sales and operating profit in 1981 had declined 2% and included a reduction in work force. moderated employee ecm- 71c/o, respectively, due primarily to depressed worldwide de-pensation programs, and curtailed capital spending. mand for chromium and vanadium.
_ ,, Millions of dollars 1982 1981 1980 Far Erst sales S 125 $ 124 $ 126 Operating profit $ 12 $ 5 $ 17
- - - ~
' identifiable assets S 146 $ 155 $ 164 ales increased 1% over 1981, primarily as a result of -
Sincreased battery sales. Po!yethyierie sales were Over sharplythe past two years, battery operations in the Ivory lower as a result of soft prices due to excess industry pro- Coast, Kenya, Sudan, and Egypt have been expanded and l duction capacity. Sales had increased 6% in 1981. are well positioned to take full advantage of market demand.
Operating profit increased 3% over 1981. If 1981 were ad- Chromium and vanadium cemand decreased in 1982; justed to a comparable basis (Statement No. 52),1982 operating chrome ore production has been suspended and vanadium profit would have declined from tim of 1981 by about 6%, due production curtailed pending recovery in the steel industry.
mainly to lower chemicals and plastics results. Overall operating Trading company branch offices have been strategically profit in the Far East l'ad declined 16% in 1981. located to maximize imports from other segments.
Farleft: This t,vlk's bcid graphics are part of an identifica.
tion program that is manhg peo. ~
pie more aware of our Linde Divi-sion, a ikader in the industrial h b y
gas business. __y _
.~ . :.. . . Left: Our entries in tt . . <
growireg electronics * ."; h clude Lonco specia,. . , Aa ,
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17
Notes to Segment Review
%*hroughout this review, the terms Union Carbide, UCC
- The following table reconcihs segment identifiable assets 5 Conso4 dated, we, and our refer to Union Carbide Corpora- to total identifiable assets ai,a total identifiable assets to the tion and its consolidated subsidiaries. The terms Corporation consolidated financial statements:
and UCC refer to Union Carbida Corporation, the parent company. The term domestic means the United States and Mimons of dollars 1982 1981 1980 Puerto Rico, and the term domestic operations refers gener-ally to all of Union Carbide's operations in this area, including '[3 ,y m ,n $10,178 $ 9,981 $ 9,256 cxports. The term intemafional refers to all other parts of the Intersegment eliminations (55) (77) (76) world, and intemational operations refers to all operations Totalidentifiable assets $10,123 $ 9,904 3 9,180 other than domestic.
Identifiable assets by e The following are totals for UCC Consolidated of the 9eographic segment $10,517 $10,105 $ 9,424 Intersegment eliminations (394) (201) (244) various segment items reported on the previous pages:
Totalidentifiable assets $10,123 $ 9.904 $ 9,180 Millions of dollars 1982 1981 1980 $ 9,904 $ 9,180 Totalidentifiable assets $10,123 Sales $ 9,061 $10,168 $ 9,994 !nvestments and advances 418 411 358 Operiting profit $ 657 $ 1,177 $ 1,292 Corporate assets 75 108 121 Cp e nditures 1, $ 1, ! 1, whsowaw asms $10,616 m.m $ R6%
For th3 amounts of identifiable assets, see the note below, e Segment sales as presented in the preceding pages are to customers. Transfers between segments were as follows:
Millions of dollars 1982 1981 1980 From Chemicals & Plastics $ 187 $ 268 $ 261 From other industry segments 33 38 44 Total between segments $ 220 $ 306 $ 305 From United States &
Puerto Rico S 405 $ 419 $ 471 from other geographic segments 78 104 174 Totd between segments $ 483 $ 523 $ 645 Prvducts are transferred between segments at the esti-mated market value of the products.
e The following tabla reconciles segment operating profit to the consolidated financial statements. (The term operating profit is used as defined in Statement of Financial Account-ing Standards No.14.)
Mdlions of dollars 1982 1981 1980 Totd segment operating profit S 657 $ 1,177 $ 1,292 Less: General corporate expenses-net 36 90 87 Interest on long-term and short-term debt 236 171 153 Income before provision for income taxes $ 385 $ 916 $ 1,052 18
Raw Materials, Products, and Mark 5s Chemicals & Plastics MIe buy LPG and naphtha and make ethylene, propylene, and benzene. These, plus pur-WWehased materials, are used to make the following for use by us and our customers:
polyethylene, for films, pipe, electrical insulation, wrap, bags, and other products; ethylene oxide / glycol and derivatives, for antifreeze, polyester fiber, petroleum processing, coatings, lubricants, and other uses; alcohols and oxo-alcohols, for coatings, preservatives, detergents, arid cosmetics. We make and buy other materials to produce phenoxy, phenolic and solvent vinyl resins, vinyl acetate, acrylates, and acetic esters, for coatings, latexes, and packaging and other products. Purchased propylene oxide is used to make urethane intermediates for automotive, furniture, and other products. Purchased materials are used to make silicones for various uses. Products are sold directly and through distributors.
GaseJ & Helated Products gxygen, nitrogen, and argon are separated from air. A major operating cost is that of elec-wtrical power. Gases are sold from on-site plants and in distributable form. Demand is primar-ily from the steel, chemicals, metal fabrication, petroleum, food-freezing, and electronics indus-tries. Hydrogen and other specialty gases are produced from our own or purchased materials.
Purchased materials and chemicals are used to manufacture the following products for sale as indicated: welding equipment and materials, to the metal fabricating and welding indus-tries; cryogenic and process systems and equipment, to the oil, chemicals, medical, and industrial gases industries; molecular sieves, chiefly to the natural gas, oil, and chemicals industries; ceramic and metallic materials to the aircraft, oil drilling, and textile markets.
Metals & Carbons gres mined and milled from company-owned reserves are sold as indicated: uranium, to welectric utilities; tungsten, to the electrical, chemical, and machine tool industries; vana-dium, to the steel, chemical, and titanium industry; chromium, to stainless and specialty steel producers. Anthracite coal, premium-grade petroleum coke, coal-tar pitch, and petroleum pitch are purchased to make electrodes, refractory linings, metallurgical specialties, and other carbon and graphite forms, sold to the steel, ferroalloys, aluminum, chemicals, and transpor-tation industries. High-performance products such as boron nitride and flexible graph te are sold for unique applications in the electronics and automotive industrics. Carbon fibers, both manufactured and purchased, are sold to the aerospace, transportation, and recreation industries.
Batteries /Home R syinc, silver, and other materials are purchased to manufacture dry cell batteries. Our Auf xeotive Products Asown polyethylene and purchased steel, aluminum, and hardware are used to make flashlights, tanterns, and miniature lamps. Some flashlights and lamps are purchased for resale. Products are sold to original equipment manufacturers and through wholesa:ers and retailers under the Eveready, Energizer, Ucar and other trademarks. Our own polyet1ylene is used to make Glad brand, private label, and generic plastic wrap and bags, which are sold chiefly through brokers to food stores. Our own ethylene glycol is used to make Prestone Il brand and private label antifreeze / summer coolant, sold to wholesalers and retailer's and the auto industry. Simoniz wax and other automotive specialties, produced for us under contract, are sold to wholesalers and retailers.
Specialty Products All of the following are produced from manufactured or purchased chemicals and other Ahtmaterials: insecticides, herbicides, and p! ant growth regulators, sold through f 3rmulators and distributors to a broad range of agricultural and specialty markets; intermediates for insec-ticides, sold to chemical manufacturers; cellulosic casings made for production of hct dogs, sausages, and processed meats, and shrinkable plastic bags, made for fresh and processed meat and poultry packaging, both sold to meat and poultry processors and packers capacitors, substrates, and proprietary processing chemicals and materials, sold to the electronics industry for computers, television receivers, communications systems, automobiles, etc.
19
S .
S:I:cted Fin:nci:I Dcto Union Cart >ide C~porat on and subsidianes ooitar amounts in milhons (except per share figures) 1982a 1981 1980 1979 1978 Fr:m the income statement Net sales S 9,061 $10,168 $ 9,994 $ 9,177 $ 7,870 Cost of sales S 6,687 $ 7,431 $ 7,186 $ 6,491 $ 5,580 Research and development expense $ 240 $ 207 $ 166 $ 161 $ 156 Selling, administrative, and other expenses S 1,249 $ 1,221 $ 1,152 $ 1,053 $ 943 Depreciation S 426 $ 386 $ 326 $ 470 $ 417 Interest on long-term and short-term debt S 236 $ 171 $ 153 $ 161 $ 159 Other income (expense)-net S 162 $ 164 $ 41 $ (42) $ 12 Income before provision for income taxes S 385 $ 916 $ 1,052 $ 799 $ 627 Provision for income taxes S 58 $ 258 $ 360 $ 251 $ 205 Income before cumulative effect of change in accounting principle S 310 $ 649 $ 673 $ 556 $ 394 Cumulative effect of char.ge in accounting principle for ITC - -
$ 217 - -
Not income S 310 $ 649 $ 890 $ 556 .$ 394 income per share before cumulative effect of change in accounting principle S 4.47 $ 9.56 $ 10.08 $ 8.47 $ 6.09 Cumulative effect per share of change in accounting principle for ITC - -
$ 3.28 - -
Net income per sliare S 4.47 $ 9.56 $ 13.36 $ 8.47 $ 6.09 Pro forma net income with 1980 change in accounting principle for ITC applied retroactively $ 573 $ 448 Pro forma net income per share $ 8.73 $ 6.92 Frcm the balance sheet tat year esuf)
Workino capital $ 1,747 $ 2,147 $ 2,124 $ 2,070 $ 1,621 Total assets $10,616 $10,423 $ 9,659 $ 8,803 $ 7,866 Long-term debt S 2,428 $ 2,101 $ 1,859 $ 1,773 $ 1,483 Total capitalization S 8,305 $ 8,018 $ 7,282 $ 6,317 $ 5,794 UCC stockholders' equity S 5,159 $ 5,263 $ 4,776 $ 4,042 $ 3,639 UCC stockholders' equity per share S 73.54 $ 76.74 $ 70.90 $ 61.06 $ 55.92 Cther data Funds from operations S 715 $ 1,172 $ 1,211 $ 1,114 $ 924 Dividends S 235 $ 224 $ 206 $ 190 $ 181 Dividends per share S 3.40 $ 3.30 $ 3.10 $ 2.90 $ 2.80 Shares outstanding (thousands at year-end) 70,153 68,582 67,367 66,206 65,065 Market price per share-high S 61 $ 62% $ 52% $ 44% $ 43%
Market price per share-low S 40 % $ 45 % $ 35 % $ 34 $ 33 %
Capital expenditures S 1,179 $ 1,186 $ 1,129 $ 831 $ 688 Number of employees (at year-end) 103,229 110,255 116,105 117,031 113,371 Szlected financialratios Total debt / total capitalization (at year-end) 33.9 % 30.3 % 29.9 % 31.4 % 32.3 %
Net income / average UCC stockholders' equity 6.0 % 12.9 % 15.3%b 14.5 % 11.2 %
Net income + minority share of income / average total capitalization 4.3 % 9.1 % 10.6%b 9.6% 7.5 %
Dividends / net income 75.8 % 34.5 % 30.6 %b 34.2 % 46.0 %
Dividends / funds from operations 32.9 % 19.1 % 17.0 % 17.1 % 19.6 %
" Amounts for 1982 reflect the adoption of Statement of Financial Accounting Standards No. 52. (See Note 2, Foreign Currency Translation, on page 29.)
D Net income in these ratios excludes the non-recumng credit for the cumulatrve effect of the change in accounting principle for the invectment tax credit (lTC).
Pro forma net income data are restated to reflect the change in accounting princiale for the ITC. (See Note 5, 798o Accounting Change for the Investment Tax Credst, on page 30.) Net income per share is based on weighted average number of $ ares outstanding during the year. Funds from operations include net income and non cash charges (credits) to net income. (See Consolidated Statement of Changes in FinancialPosition.) Total debt consists of shcrt-term det't. long-term debt, and current installments of long-term debt. Totalcapitalization cons sts of totaldebt plus minonty stockholders' equity in consolidated subsidianes and UCC stockholders' equity.
20
Transl: tion gains and losses relating to our operations in Financial Review . Latin Ameri 2, whera hyperinfistion mists, continue to be included in the income statement on essentially the samo basis as in prior years.
he subjects covered by the financial review are found Ton the fo!!owing pages: Lower 1982 Sales Subject Page abs MM W to M,@ yon as a M d b Mg@
ing worldwide recession. Woriuwide volume was 9% lower, SelectId Financial Data 20 mainly due to an 11% decline in domestic volumes. Average Curr ncy Translaton Poliaf 21 selling prices declined 3%, chiefly reflecting lower prices in sa Margin most non-consumer product lines in the United States. Ad-Resoirch & Development Expenses 22 justed for the divestiture of portions of our metals business Selling. Administrative. and Other Expenses 22 sold in June 1981, sales of continuing operations decreased Employees 22 9%. Sales percentage declines were especially severe in our
,','C'^
,E e
y metals, carbon, chemicals, and plastics businesses. Some Other income-Net 22 businesses not related to the housing, steel, and automotive Forrign Currency Adjustments 22 industries improved over last year with batteries, agricultural Supplementary income Statement Data 23 products and food processing and packaging materials Balinc3 of Payments 23 reporting encouraging gains. International sales declined
[no i y e est $ less than domestic sales, in spite of the currency translation incoms From Equity Companies 23 effects of a strong U.S. dollar during 1982. Export sales (in-Net income 23 cluded in the domestic results) were 14% below last year.
Analysis of Change in kamings Per Share 23
[ Percent change over prior year 1982 1981 1980 Capita! Expenditures 24 Sales - 11 +2 +9 Working Capital 24 Average Selling prices -3 +7 + 14 Cash Flow from Operations 24 Volume -9 -5 -4 Debt Ratio 25 Funds from Extemal Sources 25 Year-to-year changes in sales and volume have been affected by our di-Suppumentary Data on Changing Prices 35 vestiture program, but the effects have been partially offset by increasing revenues from our technology licensing programs.
New PoHcy for Translating Foreign Currency Lower Gross Margin Ratio Results for 1982 reflect the January 1 adoption of a new Cost of sales in 1982 decreased 10%, versus the 11%
policy for translating foreign currencies, Statement of Finan- decrease in sales, resulting in a decline in the gross margin cial Accounting Standards No. 52. Results for 1981 on a ratio to 26.2%. The effect of a stronger international ratio Stat: ment No. 52 basis are presented in Note 2 on page 29. (largely due to Union Carbide's adoption of Statement No. 52 Additional pro forma 1981 information is presented in Notes in 1982) was offset by the effect of a considerably weaker 6 and 9 on pages 30 and 32. The new procedures are ex- domestic ratio. A modest favorable effect on the domestic pected to minimize the effect on income of erratic gains and ratio resulted from LIFO inventory reductions. These reduc-losses arising from foreign currency translation. Generally, tions were achieved to bring working capital levels in line other than in Latin America, unrealized gains and losses with a lower level of business activity (see Note 1 on page rtsulting from translating foreign subsidiaries' assets and 29). During the second half of the year domestic operating liabilities into U.S. dollars are accumulated in an equity ac- rates declined, resulting in less favor & ole absorptioa of count on the balance sheet until such time as the subsidiary period costs and reduced operating efficiencies. Although is sold or substantially or completely liquidated. An analysi3 hydrocarbon feedstock costs were sharply lower, inflation in by geographic area of the equity adjustment from translation fuels, electric power, and labor contributed to higher unit pro-as of December 31,1982 is shown below: duction and distribution costs. Approximate changes in domestic purchased cost indices for three categories of raw Equity Adjustment from Foreign Curroney Translation materials and energy were as follows:
Millions of Dollars 1982 Africa & Middle East $ (35)
Canada (38) Hydrocarbon feedstocks - 16 + 12 + 39 Europs (152) Other major raw materials -1 + 12 + 23 Far East (24) Fue:s ar.d electric power + 17 + 24 + 25 Total $(249) 21
In 1981, the gross margin ratio had declined to 26.9% due Employment costs
- to the effect of a :ower international ratio (primarily due to the (Wages, benefits, payroll taxes) 1982 1981 1980 negative impact on plant cost of currency rate changes on inventories), Had the new accounting standard for translation Domestic S $1 $ 74 of foreign currencies adopted in 1982 been in e'fect in 1981, [l[,nsof, d, Hdors, , 5 '
ihe worldwide gross margin ratio would have been 27.6%. *n internationai -
1980, the gross margin ratio had declined to 28.1% (State- MiHions of dollars $ 574 $ 595 $ 594 Percent of international sales 19 % 19 % 19 % -
ment No. 8 basis). ,
For more information about Union Carbide's principal raw Total Ucc consolidated We f d Hars $2/28 $2.4M $2M5 materials, markets, and methoJs of oistribution, see page Per ent t t tais les 27 % 24 % 23 %
- 19. Unless otherwise indicated there, the products of Union
- D es n t include employment costs of employees of the Nuclear Diiision Carbide are sold principally by its own s;les force directly to ** * ** P*'**# ' *"* ""* ***** " " * " * '
customers in the industries named or for the uses mentioned.
High1r Research and Development Expenses
'" *** Y* *' " ***"**
ahn spense in G82 was W mWon, representing In support of Union Carbide's strategic plans, research and an increase of 10% over 1981. The comparable :,ncrease in development expenses in 1982 increased 16%, to a total 1981 was 18%. Although annual capital expenditures have of $240 million. In 1981 these expenses amounted to $207 remained relatively constant during the 1980 through 1982 -
per?od, they represent dramatic increases over the years prior to 1980, and depreciation expense thereforo continued Szlling, Administrative, and Other Expenses to rise.
During 1982, Union Carbide benefited significantly from its programs to control overhead costs. Total selling, adminis- Significant interest Expense increase trative, and other expenses were $1,249 million, an increase Interest expense on long-term and short-term debt increased of only 2%. These expenses increased 6% and 9%, respec- 38% to $236 million in 1982. The increase resulted chiefly tively, ,nI 1981 and 1980. Selling expenses in 1982 totalled from higher average levels of short-term debt. Interest ex-
$630 million, an increase of 5%. In 1981 the increase was pense in 1981 was $171 million, an increase of 12% over 7%. Administrative and other expenses of $619 million were 1980*
virtually unchanged from the $620 million reported last year.
These expenses had increased 5% in 1981. Administrative expenses included charitab;e contributions of $4.7 million Favorable "Other income-Net"In 1982 '
in 1982. For the second consecutive year, Union Carbide recorded a significant favorable Other income-net position ($162 million Em;rloyees and $164 million, respectively, in 1962 and 1981). The major
- " 1982,1981, and 1980 are explained in Note 9 on .
Tha number of employees and their respective employmerit a e 2.
costs follow:
Numbsr or Emprovees Foreign Currency Adjustments (Year-end) 1982 1331 1980 Foreign currency adjustments incluied in Otherincome-net -
were as follows:
United States & Puerto Rico 53.379 59,088 62,4L Africa & Middle East 3.060 3.132 2.847 Foreign currency adjustments 1982 1981 1980 Canada 4.209 4.962 5,015 Europe 7.151 7.190 8,731 Millions of dollars $ 5 $ 67* $ 1 Far East 19,693 19368 20,977 *Had Statement No. 52 been in effect in 1981 'oreign currency ad-Latin Amenca 15,737 15,915 16.042 jusrnents would have been approximately $10 miHion.
International Operations 49,850 51,167 63.612 The $5 million gain in 1982, calculated under the new ac-Total Ucc conschdated" 103.229 110.255 116,105 counting standard for translation of foreign currencies,
'Does not include 17,814 employees (18.850 in 1981 and 19.755 in 1980) resulted primarily from devaluation of the Brazilian cruzeiro.
of the Nuclear Division at facihties orarated for the United States Govern- Under the new standard (Statement No. 52), only translation gains and lesses relating to our operations in Latin America 1
22
continue to be included in the income st:tement. The signifi- Lower 1982 Minority Interest ont gain in 1981, calculated under the previous accounting The minority stockholders' share o' income declined in 1982 standard (Statement No. 8) resulted mainly from the transla-by 23% to $36 million. A 4% decrease was reported in 1981.
ton mto United States dollars of the Brazilian cruzeiro and European currencies. The most significant decrease for both years occurred in Ca.'ada as a result of the prolonged recession.
Supplementary income Statement Data Lower 1962 income from Equity Companies Supplementary income statement data for 1982,1981, and 1980 are shown below; Our share of income of companies carried et equity in 1982 was $19 million, a decline of 50% from the $38 million reported in 1981 ($28 million on Statement No. 52 basis).
Milhons of dollars 1982 1981 1980 Tho largest decrease between the two years on a Statement Tax:s other than income taxes $271 $271 $261 No. 52 basis resulted from Canadian equity company eam-M:dntenance and repairs $579 $658 $634 ings. In 1981, our share of income from companies carried at equity increased 27% due primarily to more favorable net Domestic advertising currency gains (under Statement No. 8 procedures) for
" $* $ $ 4 sOveral companies and increased earnings of equity com-Intent aI advertising expenditures 40 35 39 panies in Canada.
Total advertising expenditures $130 $125 $113 Net income F vorable Balance of Ptyments Net income in 1982 was $310 million,52% lower than the
$649 million reported in 1981, Had the new accounting stan- ,
A favorable balance was again achieved in 1982, although dard for translation of foreign currencies adopted in 1982 }
cxports were significantly below those of 1981. Details are been in effect in 1981, net income for that year would have i shown below; been approximately $655 million. Net income as reported in 1981, decreased 4% from that of the previous year.
Milhons of dollars 1982 1981 1980 Exports to customers from Analysis of Change in Earnings Per Share
" S $ $ 69 Ex s sb i ies 1
Do;lars per share 1982 vs.1981 1981 vs.1980 )
from domestic operations 405 419 471 Earnings per share.1981 and 1980 $9.56 $10.08' Total exports 979 1.090 1.240 Proceeds from 14.75% notes Domestic gross margin issued abroad 148 - - Selhng prices - 1.79 + 5.32 N:t divid:nds from inter. Volume - 2.28 - 1.10 national affikates 35 53 71 Manufactunng and distnbution costs - 0.15 - 3 24 Other receipts 66 99 50
- 4.22 + 0.98 Total dollar inflow $ 1.226 $ 1.242 $ 1.36 ? International gross margin Selhng prices - 0.66 + 1.46 Totalimports $ 345 $ 493 $ 385 Volume -0.29 -0.31 Internationalinvestments 63 26 15 Manufacturing and distributien costs + 1.34 - 2.83 Oth:r disbursements l 101 80 143 ;
+ 0.39 - 1.68 Total dollar outflow $ 509 $ 599 $ 543 Total gross margin - 3.83 -0.70 Net favorable balance S 719 $ 643 $ 818 Research and development -0.35 -0.40 ,
Selling, administrative and other expenses - 0 29 -0.69 I Unusually Low 1982 Effective income Tax Rate Depreciation - 0.43 - 0.60 Other income-net -0.04 + 1.23 The effective income tax rate in 1982 was 15.1% versus Interest on long-term and short-term debt - 0.69 - 0.18 28.2% in 1981. The low rate was the result of an increased Effective income tax rate + 0.74 + 0.83 proportion of income from areas subject to lower tax rates
$"a[f nIom oIc panie car ied at equity .
and increased investment tax credits as a proportion of in- Increase in shares outstanding - 0.09 -0.17 come before tax. The effectivo income tax rate in 1981 had Net Change - 5M - 0.52 declined 6 percentage points from the 34.2% reported in 1980 essentially as a result of the same factors. An analysis Earnings per share.1982 and 1981 $ 4.47 $ 9.56 of the major items in 1982,1981, and 1980 is included in 1980 earnings per share are before the cumulative effect of a change in Not3 8 on page 31. accounting principie.
23
Quarterly Data Capital Expenditure 3 Stabiliz3 1st 2nd 3rd 4th These expenditures include additions to property, plant, and Miltons of dollars quarter quarter quarter quarter Year equipment, and additions to capital leases and capitalized 198'2 interest. Our capital expenditures program is managed to support approved strategic plans for the businesses in our sa es $ 8 8 $ Portfolio. Real capacity expansions, representing about half j aes $l636 Depreciaton 106 106 106 108 426 of total capital expenditures in recent years, were tightly con-Net income 91 118 71 308 310 trolled in 1982. Other capital expenditures are directed primarily to replacements, cost reductions and energy con-1981 servation, and to projects in support of health, safety, and Net sales $2.640 $2.674 $2.425 $2.429 $10.168 environmental standards.
Cost of sales 1.915 1,931 1,781 1,804 7,43' In addition to tighter controls, the lower level of capital expenditur6dn 1982, is due, in part, to moderating inflation e nc e i 1 1 and lower requirements for our new headquarters in Dan-bury, Connecticut, as it neared completion.
Quarterly Data The total expenditures of $1,179 million in 1982 repre-sented a decrease of 1% from the 1981 to;al of $1,186 million.
Dollars per share Year 1981 expenditures had increased 5% from the $1,129 million qua e quarter qua er quart in 1980. Capital expenditures in 1982,1981 and 1980, as re-1982 quired by accounting standards, include capitalized interest N;t income $ 1.32 $ 1.71 $ 1.02 $ 0.428 $ 4.47 totalling $73 million, $58 million and $46 million, respectively.
Dwidends 0.85 0.85 0.85 0.85 3 40 in 1980 and 1981 approximately three-quarters of the total Mirkat price (high)* 52 48 % 51 % 61 61 capital spending was in the United States and Puerto Rico.
Marut pnce (Iow)c 42 % 40 % 41 47 % 40 % In 1982 this ratio declined to about 70% due mainly to signifi-1981 cant expenditures for new ethylene glycol facilities at Pren-tiss, Alberta, Canada.
Nit incomeb $ 2.64 $ 2.86 $ 2.02 $ 2.04 $ 9.56 At December 31,1982, the cost of completing authorized M k t p ice (high)c 62 6 59 53 6 construction projects for added capacity, cost reduction, Maiht price (low)* 49 % 52 % 45% 46 % 45 % replacement, and other purposes is estimated at $1.1 billion.
A portion of this amount is covered by firm commitments,
' Includes the favorable effect of LIFO inventory reductions (see Note 1 on page 29) and a net gain of $23 million ($0.33 per share) related to an which are expected to be financed bY a combination of inter-advive sale of uranium. nally generated cash flow and external financing.
b Had the new accounting standard for translation of foreign currencies adopted in 1982 been in effect in 1981 (see Note 2 on page 29), net in- Working Capital Decreases come and net income per share by quarter in 1981 would have been tpproximately as follows: In 1982, working capital declined by $400 million, or 19%.
quar e quarter qua er qua r Year sales levels in the final quarter of 1982. In terms of days Net income $ 166 $ 183 $ 156 $ 150 $ 655 sales outstanding at year-end (based on fourth quarter sales),
Net income per share 2.46 2.70 2.30 2.20 9.66 receivables represented about 57 days at year-end 1982 as compared to 57 and 54 days, respectively, at the end of 1981 (Pnces are based on New York stock Exchange composite transactions and 1980.
Total inventories at year-end 1982 were 9% lower than at year-end 1981. Inventories were considerably higher during Dividends Maintained the year, due partly to seasonal factors, but were reduced by The cash dividend in 1982 was maintained at an annual rate year-end as a result of tight inventory control.
of $3.40 per share, despite the significant earnings decline for the year. The dividend was last increased in September Lower Cash Flow Provided by Operations 1981 from the previous rate of $3.20 per share. Of the total dividends declared in 1982, $56 million, or 24%, was rein- Cash flow from operations, as a percent of the total sources of funds, declined to 47% in 1982 and represented the vested in Union Carbide Corporation common stock through I west percentage reported in recent years. The ratio had our Dividend Reinvestment and Stock Purchase Plan. Total dividends declared in 1982,1981, and 1980 were $235 been 66% and 98%, respect!vely, in 1981 and 1980. Funds from perations consists of net income before non cash million, $224 million and $206 milliori, respectively. Divi-items such as depreciation and deferred income taxes.
dends as a percent of funds from operations for the past three years were as follows:
1982 1981 1980 Dividends / funds from operations 33 % 19 % 17 %
~
24
Dsbt Rstio Cantzinsd hirnsgement'a Statsm:nt cf Rstpontibility Borrowings are the main source of funds supplementing
. Fcr FinzncirlStat:m:nta funds generated by operations. In spite of the lower cash Union Carbide's financia; statements are prepared by flow provided from operations in 1982, debt was cont'olled management, which is responsible for their fairness, integ-resulting in a relatively low debt ratio of 33.9% by year end. rity, and objectivity. The accompanying financial statements
[ When prospects dimmed for the year, we moved quickly to have been prepared in conformity with generally accepted reduce construction expenditures, cuttirg our 1982 construc- accounting principles applied on a consistent basis, except tion budget of $1.5 billion by $321 million :n addition, we ex- for the change described in Note 2 and, accordingly, include tended efforts to control working capital, and activated new amounts which are estimates and judgments. All historical programs to keep down overhead costs. Year-end ratios of financial information in this Annual Report is consistent with total debt to total capitalization have been as follows: the accompanying financial statements.
Union Carbide maintains accounting systems, including in-1982 1981 19E3 ternal accounting controls monitored by a staff of internal Debt Ratio auditors, which are designed to provide reasonable assur-33 9 % 30.3 % 29 9 %
anCe as to the r3 liability of financial records and the protec-Total debt includes Liort-term debt, long-term debt, and tion of r.ssets. The concept of reasonable assurance is the current portion of long-term debt; total capitalization con. based on the recognition that the cost of a system must not sists of total debt plus minority stockho!ders' equity in con. exceed the related benefits. The effectiveness of those sys-solidated subsidiaries and UCC stockholders' equity. tems depends primarily upon the careful selection of financial Our target debt ratio is approximately 30-32%. and other managers, clear delegation of authority and assign-ment of accountability, inculcation of high business ethics and Funds from ExternalSources conflict-of-interest standards, policies and procedures for coordinating the management of corporate resources, and in 1982 Union Carbide used both long- and chort-term bor- the leadership and commitment of top management.
rowings to supplement funds from operations. Funds from Union Carbide's financial statements are examined by financing of $472 million included proceeds from the May Main Hurdman, independent certified public accountants, in issuance in the international capital markets of $150 million accordance with g6nerally accepted auditing standards.
14.75% U.S. dollar guaranteed notes due 1989. These standards provide for a review of internal accounting In addition, revenue bonds totalling $59 million were control systems and tests of transactions to the extent they issued oy local Jthorities to finance pollution control and deem appropriate. The accountants' report appears on page other facilit'es. 37.
During 1982, average levels of short-term borrowing in- The Audit Committee of the Board of Directors, which con-creased steadily as the effects of the recession became sists solely of non-employee directors, is responsible for more intense, reaching $653 million by the end nf the third overseeing the functioning of the accounting system and quarter. By year-end, however, total short-term debt had related controls and the preparation of annual financial been reduced to $328 million. During the year, part of the statements. The Audit Comniittee recommends to the Board short-term borrowings were rolled over into the longer term of Directors the selection of the independent auditors, sub-borrowings above. Short-term debt outstanding at year-end ject to the approval of shareholders. The Audit Committee for the past three years was as follows: periodically meets with the independent auditors, manage-ment and internal auditors to review and evaluate their ac-Milkons of dol!ars 1982 1981 1980 counting, auditing and financial reporting activities and comestic short-term debt $110 $- $ 61 responsibilities. The independent and internal auditors have Ir,ternational short-term debt 218 217 205 full and free access to the Audit Committee and meet with it, Total with and without management present.
$328 $217 $266 Various lines of credit are also availab'e to the Corporation and its subsidiaries. The principal domestic line of credit pro-vides for borrowings up to $1 billion at rates to be negotiated.
This fine is subject to customary review and annual renewal.
Funds obtained from the sale of stock through Union Carbide's Dividend Reinvestment and Stock Purchase Plan amounted to $60 million in 1982 and $50 million in 1931.
25
Consolidated Statement cf Income and Retained Earnings Union Cartade corporation and subsidianes Wiions of dollars (except per share figures) year ended December 31 1982 1981 1980 Net sales S 9,061 $10,168 $ 9,994 Deductions (additions)
Cost of sas 6,687 7,431 7,186 i Research and development 240 207 166 Selling, administrativo, and other expenses 1,249 1,221 1,152 Depreciation 426 386 326 Ir.tir:st on long-term and short-term debt 236 171 153 Other income-net (162) (164) (41)
Income before provision forincome taxes 385 916 1,052 Provir, ion for income taxes 58 258 360 Income of consoiktated companies 327 65G 692 Lt:ss: Minority stockholders' share of income 36 47 49 Plus: UCC share of income of companies carried at equity 19 38 30 Incorne before cumulative effect of change in accounting ,orinciple 310 649 673 Cumulative effect of change in accounting principle for the investment tax credit (Note 5) - - 217 Net income 310 649 890 i Retained earnings at January 1 4,595 4,170 3,486 4,905 4,819 4,376 Dividends declared 235 224 206 Retained earnings at December 31 $ 4,670 $ 4.595 $ 4,170 Per share income before cumulative effect of change in accounting principle * $ 4.47 $ 9.56 $ 10.08 Cumulative effect of change in accounting principle for the investment tax credit * $ -
$ 3.28 Nat income * $ 4.47 $ 9.56 $ 13.36 Dividends declared $ 3.40 $ 3.30 $ 3.10 sed on 69,305.609 shares (67,862,233 shares in 1981 and 66,714,481 shares in 1980), the weighted average number of shares outstanding during the year.
The Notes to Financial Statements on pages 29 :hrough 37 should be read in conjunction with this statement.
l I
l 26
Consolidated Balance Sheet Unen Cutade Corporaten and sucsidianes Mahons of doliars at December at 1982 1981 Assets Casn S 34 $ 93 Time deposits and short-term marketable securities 120 160 154 253 Not:s and accounts receivable 1,420 1513 inv:ntories:
Raw materials and supplies 542 558 Work in process 473 551 Finished goods 725 793 1,740 1,902 Prepaid expenses 187 208 Total current assets 3,501 3,876 Property, plant, and equipment 10,793 10,047 Liss: Accumulated depreciation 4,437 4,253 N;t fixed assets 6,356 5,794 Companies carried at equity 293 307 Other investments and advances 125 104 Totalinvestments and advances 418 411 Other assets 341 342 TItalassets $10316 $10,423 Liabilities and stockholders' equity Accounts payable S 415 -$ 440 Short-term debt 328 217 Paym:nts due within one year on long-term debt 59 108 Accrued income and other taxes 164 193 Other accrued liabilities 788 771 Total current liabilities 1,754 1,729 Long-term debt 2,428 2,101 Def;rred credits 944 1,001 Minority stockholders' equity in consolidated subsidiaries 331 329 i UCC stockholders' equity: l Common stock Authorized-1110,000,000 shares (90,000,000 shares in 1981)
Issued-70,24C ,377 shares (68,668,845 shares in 1981) 739 669 Equity adjustmer.t from foreign currency translation (249) -
R;tained eamings 4,670 4,595
" 160
, 5,264 Less: Treasury stock, at cost-86,888 shares in 1082 and 1981 1 1 Total UCC stockholders
- equity 5,159 5,263 1 1
Tz tal NabNiles and stockholders' equity $10,616 $10,423 The Notes to Financial Statements on pages 29 through 37 should be read in conjunction uth this statement.
27
ConsoHdated Statement cf Change 3 In Financial Position Union Ctrtude Corporation and subsidiaries Million3 of c'oflars, year ended December 31 1982 1981 1980 Cash and time deposits and thort-term marketable securities at beginning of year $ 253 $ 243 $ 449 Furnis provided by Net income 310 649 890 Noncash charges (credits) to net income Depreciation 426 386 326 Def;rred income taxes (34) 133 185 l Cumulative e4ect of change in accounting principle for the investment tax credit (Note 5)
(217) l Other noncash charges-net 13 4 27 !
Total funds from operations 715 1,172 1,211 Long-term debt Nsw borrowings 421 457 164 Reductions (81) (153) (73)
Incr:ase in short-term debt and current portion of long-term debt 62 15 109 incr:ase in common stock 70 62 50 Total funds from financing 472 381 250 Portions of metals business sold (Note 4)
Inventories -
109 -
N t fixed assets - 169 -
Long- and short-term debt assum3d by purchaser -
(60) -
Oth:r assets and liabilities-net -
(9) -
Nat assets sold - 209 -
Decrease (increase) in notes and accounts receivable 93 82 (165) -
Decrease (increase)in inventories 142 (124) (113)
Reductions of net fixed assets Disposals 18 66 55 Translation adjustments 76 - -
Total funds from other sources 329 233 (223)
Tctalfurnis provided 1,516 1,786 1,238 Fund 3 used for Dividends 235 224 206 Capita! expenditures 1,179 1,186 1,129 incr:ase (decrease) in investments and other assets 9 177 (22)
Decrease in payables and accruals ?S 111 78 Equity adjustments from foreign currency translation 108 - -
Other-net 29 78 53 74tal funds used 1,615 1,776 1,444 nit increase (decrease)in funds (99) 10 (206)
Cash and time deposits and short term marketable securities at ,
l end cf year $ 154 $ 253 $ 243 Amounts reported for 1982 changes in certain balance sheet accounts are exclusive of changes in account balances resulting from the aggregate equity ad-justment from foreign currency translation at the beginning of the year of $(141) million relating pnmarily to fixed assets. See fJote 2.
Amounts reported for 1981 changes in balance sheet accounts are exclusive of changes in account balances resulting from the sale of portions of the metals bu;iness, which are reported separ&tely in this statement.
l Tha Notes to Financial Statements on pages 29 through 37 rhould be read in conjunction with this statement.
28
NotD tD FinancialEtatement3
- 1. Summary of Significant Accounting Policies Research and development-Research and development costs are charged to expense as incurred. Depreciation ex-Principles of consolidation-The consolidated financial state- pense applicable to recearch and devc!opment facilities and ments include the assets, liauilities, revenues, and expenses equipment is included in Depreciation in the income state-of all significant subsidiaries except Ucar Capital Corpora- ment ($8 million in 1982, $7 million in 1981 and 1980).
tion, which is carried at equity in net assets. All significant int:rcompany transactions have been eliminated in con-Income taxes-Provision has been made for deferred in-solidation. Investments in :ignificant companies 20 to 50 per- come taxes where differences exist between the period in l c:nt owned are carried at equity in net assets, and Union which transactions affect taxable income and the period in Carbide's share of their earnings is included in income- which they en'er into the determination of income in the Other investments are carried generally at cost or less. financial statements.
Benefits from investment and energy tax credits and re-Marketable securities-Marketable securities are carried at search and experimentation tax credits are included current-the lower of cost or market. Carrying value was substantially ly in net income.
the sama as market value at December 31,1982 and 1981.
Retirement program-The Corporation's contribution tc the Inventories-Inventory values, which do not include y,3 retirement program in each year is based on the recom-oepreciation, are stated at cost or market, whichever is mendation of an independent actuarial firm using the entry lownr. Cost is determined generally on the "last in, first-out" age normal method. Accrued costs are funded for all em-(LIFO) method for U.S. companies and for certain sub- playees age 25 and over, with unfunded prior service costs sidiaries operating outside the United States. The " average beino amortized over periods up to 30 years.
cost" method is used by most other subsidiaries. Program costs of consolidated international subsidiaries App:oximately 67% of inventory amounts before applica- are accounted for substantially on an accrual basis.
tion of the LIFO method at December 31,1982 (64 percent at December 31,1981) have been valued on the LIFO basis. It Net income per share-Net income per share is based on the is estimated that if inventories had been valued at current weighted average number of shares of common stock out-cosw, they would have been approximately $1,176 million standing in each year. There would have been no material and $1,187 million higher than reported at Decerr.ber 31, dilutive effect on net income per share for 1982,1981 or 1980 1982, and December 31,1981, respectively.
if convertible securities had been converted and if dilutive Reduction of inventory quantities in 1982 resulted in a liq- stock options had been exercised.
uidation of certain LIFO inventory quantities, principally domestic chemicals and plastics inventories, acquired at 2. Foreign Curre. ncy Translation lower costs prevailing in prior years. The effect of this liquidation was to decrease cost of sales in 1982 by approxi- Effective January 1,1982, Union Carbide adopted Statement mately $56 million and increase 1982 net income by $30 of Financial Accounting Standards No. 52, Foreign Currency million, or $0.43 per share. Translation, which replaces Statement No. 8. Had the provi-sions of Statement No. 52 been applied in 1981, net income Fixed assets and depreciation-Fixed assets are carried at and net income per share would have been approximately cost. Expenditures for replacements are capitalized and the $6 million and $0.10 per share higher than reported. Com-replaced items are retired. Gains and losses from the sale of putation of the effect on 1982 net income of adopting State-propsrty are inc!uded in income. ment No. 52 is not practical under the system of translation Depreciation is calculated a a straight-line basis. The required by the Statement.
Corporation and its subsidianes 'jenerally use accelerated The following is an analysis of the new component of depreciation methods for tax purposes where appropriate. stockholders' equity, Equity adjustment from foreign currency translation, included in the 1982 balance sheet in accordance Patents, trademarks, and goodwil- Amounts paid fur pur- with the provisions of Statement No. 52.
chased patents and for cecuritie; of newly acquired subsid-iari:s in cxcess of the fair value of the net assets of such un,onsof dollars 1982 subsidiaries have been charged to patents, trademarks, and Aggregate equity adjustment at beginning of year 5 (141) goodwill. The portion of such amounts determined to be at-A ents n te tributable to patents is amortized over their remaining lives
,p, n ad ustrnents) (108) and the balance is amortized over the estimated period of ben: fit, but not more than 40 years. Balance at Decembw 31 $(24 29
3, Ucar Capital Corporation 6. International Operations Ucar Capital Corporation (Capital). a wholly-owned finance The following are financial summaries of consolidated inter-subsidiary, purchases without recourse certain customer national subsidiaries and international companies carried at obligations from Union Carbide at a cMount sufficient to equity:
yi;ld earnings of riot less than one and one-half times its fix-cd charges. In the Consolidated Statement of income and Consolidated Subsidianes R:tained Eamings, Capitars income before irrome taxes, Milhons of dollars 1982 1981 1980 which amounted to $11 million in 1982 ($10 million in 1981 and $9 million in 1980), is included in Otherincome-net as a Net sales b3.010 $3,189 $3.149 reduction of discount expense, and the related inconie tax is Net income $ 121 $ 146* $ 2396 included in Provision forincome taxes. UCC Share $ 86 s 1018 $ 192b l The average effect;ve interest rate on Capitafs borrowings, T a s p3 $3a21 n 055 which consist of $100 milliori of 15-year notes due from 1983 Less: Total habikties 1.709 1.433 1.460 l to 1992 and $117 million of commercial paper ($68 million in Net assets $1.634 $1.688 $1.595 1981), was 10% in 1982 (9.7% in 1981 and 8.4% in 1980). In UCC Equity $L309 SL366 $t299 1981, borrowings also included $38 million of 5-year notes, which matured in September 1982. 'Had the new accounting standard for translation of foreign currencies ;
d pted in 1982 been in effect in 1981 (see Note 2). net income would Additional financiai information ie:atin9 to cap;tal ;s have Deen approximately $18 milhon (UCC share $16 milhon) higher than presented below: reported.
b lncludes a charge of $28 milhon representing accrual of the loss on the Milhons of dollars. December 31 1982 1981 sale of ferroalloys operations in Norway See Note 4-Total assets $288 $267 Less: Total liabikties 225 210 Companies Carried At Equity Net assets $ 63 $ 57 Millions of dollars 1982 ;981 1980 Net sales' $ 978 $1.182 $1.106 4, Sale of Portions of the Metals Business (Vet income $ 60 $ 81b $ 61 in June 1981, the Corporation completed the sale of portions UCC Share $ 19 $ 37 b $ 29 of its metals business, including ferroalloys operations in the Total assets 51.046 $1.201 $1.201 United States and Norway, for net proceeds after expenses Less: Total habihties 612 715 780 of $181 million plus assumption by the purchaser of $60 Net assets S 434 $ 486 $ 421 millinn in long- and short-term debt. A charge of $22 million UCC Equity $ 177 $ 204 5 172
($27 million after tax, or 50.40 per share) representing the "Exclusle of $113 mdhon net sales to UCC and its conso;idated sub-loss on this transaction was included in Otherincome-net sidiaries in 1982 ($145 mdhon in 1981 and $82 milhon in 1980).
in 1980" b Had the new accounting standard for translation of foreign currencies adopted in 1982 been in effect in 1981, net income would have been ap-5,1980 Accounting Change for the proximately $23 milhon (UCC share $10 mdhon) lower than reported.
Investrnent Tax Credit in 1980 Union Carbide changed from the deferred method of accounting for the investment tax credit to the flow- Audited industry and geographic segment data are presented through method. The cumulative effect of deferred invest- in the tables and accompanying footnotes appearing on ment tax credits for the periods through December 31,1979, pages 12 through 17 and in the Notes to Segment Review which amounted to $217 million, or $3.28 per share, was Pppearing on page 18.
reported as a non-recurring credit in the 1980 Consolidated Union Carbide's businesses and products are described Statement of Income and Retained Earnings under the cap- on pages 11 through 19 and also on pages 4 through 9.
tion Cumulative effect of change in accounting principle for the investment tax credit. l l
i 30
- 8. Income Taxes The following is an analysis of income tax expence:
Millions of dollars 1982 1981 1980 l
Current Deferred Current Deferred Current Deferred U.S. Fed:ral income taxes f 1 $ 5 $ 35 $ 148 $ 62 $ 167 U.S. investment tax credit (6) (49) (9) (44) (44) (9)
U S. energy tax credit (3) -
(8) -
(7) -
U.S. research and experimentation tax credit (8) -
(3) - - -
1 U.S. state and local taxes based on income - -
4 -
13 -
Non-U.S. income taxes 108 10 106 29 151 27
$ 92 $ (34) $ 125 $ 133 $ 175 $ 185 Provision for income taxes S 58 $258 $360 Deferred U.S. Federal income taxes include $71 million in nized for book purposes as a reduction in the provision for 1982 ($110 million in 1981 and $127 million in 1980) related to deferred income taxes in current and prior years.
depreciation timing differences. Additionally,1982 includes Portions of the income of several subsidiaries operating in
$(60) million applicable to pension timing differences; $(14) Puerto Rico and outside the United States are exempt from million related to timing ditterences for long-term contracts income taxes under local tax statutes. Non-U.S. income taxes accounted for on a percentage of completion basis; $14 mK- were reduced by $30 million in 1982 ($57 million in 1981 and lion related to sales of tax benefits through tax leases; and $33 million in 1980) as a result of these exemptions, which
$(9) million related to costs associated with an advance sale expire priricipally in 1989.
of uranium. Deferred Non-U.S. income taxes include $9 The consolidated effective income tax rate was 15.1% in million in 1982 ($28 million in 1981 and $35 million in 1980) 1982,28.2% in 1981 and 34.2% in 1980. An analysis of the rtlated to depreciation timing differences. The effects of tim- difference between the provisian for income taxes and the ing differences for other items are not material. amount computed by applying the statutory Federal income At December 31,1982, the Corporation had $112 million of tax rate to consolidated income before provision for income
- investment Tax Cref. carryforward, which has been recog- taxes is as follows
1982 1981 1980 Percent Percent Percent Millions of Millions of Millions of of pretax of pretax of pretax dollars income dolla.s income dollars income Tax at statutory Federal rate $ 177 46.0 $ 422 46.0 $ 484 46.0 Taxes related to operations in Puerto Rico and outside the United States (36) (9.4) (61) (6.6) (44) (4.1)
U.S. investment, energy, and research and expenmentation tax credits (66) (17.1) (64) (7.0) (60) (5.7)
Allowable depletion in excess of cost depletion (10', (2.6) (10) (1,1) (11) (1.1)
Domestic International Sales Corporation (7) (1.8) (15) (1.6) (17) (1.7)
Other, net - -
(14) (1.5) 8 0.8
$ 58 15.1 $ 258 28.2 $ 360 34.2 a
l 31 l
5lncome Taxes (Con't) 10. Supplementam Balance Sheet Detail The following is a summary of the U.S. and Non-U.S. Sm-ponents of income before provision for income taxes: Milhons of dollars at December 31 1982 1981 Notes and accounts receivable Milhons of dollars '982 1981 1980 Trade $ 1.247 $ 1.344 Other 201 197 incoma before provision for income taxes: 1,448 1,541 U 9. $ 62 $ 501 $ 585 Less: Allowance for doubtfti accounts 28 28 N +U S fincludes Puerto Ricu) 323 415 467
$ 1.420 $1.513
$ 385 $ 916 $1,052 Fixed assets The Corporation provides for taxes on undstributed earn. Land and improvements $ 530 $ 516 Bu ings of affiliates included in consolidated reta;ned earnings to a h nery and equipment the extent such earnings are planned to be remitted and not Construction in progress and other 951 871 reinvested indefinitely. Undistributed earnings of affiliates in-tended to be reinvested indefinitely amounted to $1.9 billion $10.793 $10.047 Ct December 31,1982. other assets Deferred charges $ 83 $ 91 9 Otherincorne-Net Long-term receivables 194 194 Patents, trademarks, and goodwill 64 57
! The following is an analysis of Other income-net: $ 341 $ 342 l Short-term debt Millions of dollars 1982 1981 1980 Commercial paper $ 110 $ -
Investment income (pnncipally Bank loans 218 217 from short term investments) $ 52 $ 42 $ 46 $ 328 $ 217 For:ign currency adjustments 5 67a j Net discount expense. on sales other accrued NabiNiles of customer cbhgations to Accrued accounts payable $ 358 $ 395 Ucar Capital Corporation (21) (20) (17) Payrolls 151 143 Sales of tax benefits through Other 279 243 taxSeasesb 53 10 -
Sales and disposals of $ 788 $ 771 businesses and other assets 21 14 (14) Deferred credits Other 52 51 25
_ income taxes * $ 765 $ 810 a 162 $ 164 $ 41 Deferred revenue from sales of certain customer obligations to Ucar Capital Corporation 114 107
- Had the new acr1wting standard for translation of foreign currencies Other 65 84 adopted in 1982 been in effect in 1981, foreign currency adjustments would have been approximately $10 milhon. $ 944 $ 1,001 "Rapresents the sale of tax benefits (investment U.d energy tax credits
- Deferfed income taxes rec.ted to current items are included in accrued and deprec;ation) on $243 milhon of equipment expenc+tures ($46 milhon income and other taxes in tPs amount of $9 million in 1982 ($20 million in
, in 1981). The effect in 1982, after providing for incume taxes and adjusting 1981).
l for the lower investment tax credit, was to increase net income by $4 rnilhon.
(Includes a charge of $22 milhon rep esenting accrual of the loss on the sale of portions of the Corporation's metals business. See Note 4.
32
- 11. Long-Term Debt Pollution control and other facility obligations represent state, commonwealth, and local governmental bond financ-ing of pollution control and other facilities and are treated for Milhons of dollars at December 31 1982 1981 accounting and tax purposes as debt of Union Carbide Cor-Union Carbide Corporation poration. These tax exempt bonds mature at various dates
'l 50% Notes due semiannually to 1984 $ 30 $ 45 from 1983 through 2012 and have an average annual effec-l 3 625% Notes due semiannually to 1990. tive interest rate of 8.19%. At December 31,1982, the Cor-l hsued at a discount (effective rate 4.50%) 20 23 poration had a contingent obligation with respect to $42 e ue an ah, to 994 20 2 million of pollution abatement facility obligations assumed by I 5.30% Sinkinn Fund Debentures, with equal purchasers of Union Carbide facilities.
annual sinkmg fund payments to 1997 140 151 Intemational subsidiaries' debt includes $220 million ($75 7.50% Sinking Fund Debentures due 2006- million in 1981) due in U.S. dollars. At December 31,1982, h an ual k fu payme s $323 million of intemational consolidated assets was pledged 1987 to 2005 200 200 as security for $95 million of international subsidiaries' debt.
8.50% Sinking Fu'id Debentures due 2005. Payments due on long-term debt in the four years after with annual siniing fund payments. 1983 are: 1984, $110 million; 1985, $125 million; 1986,$263 1986 to 2004 300 300 million; 1987, $124 million.
9.125% Notes due 1986, issued at a discount VariCus lines of credit are available to tho Corporation and 00 9.35% Sinking Fund Debent tres due 2009. its subsidiaries. The principal domestic line of credit, which is with annual sinking fund paymenM, subject to customary review and annual renewal, provides 1990 to 2^08 200 200 for borrowings up to $1 billion at rates to be negotiated. At 1E00% Notes due a.inually,1984 to 1987 100 100 December 31,1982, there were no outstanding borrowings de c v rt e nto e n k under this arranoement. The Corporation compensates
$65 875 per share 150 150 banku for credit lines and services by maintaining bai k 14.50% Notes due 1991, issued at a discount balances and/or paying fees.
(e'fect ye rate 14.69%) 150 150 Pollution control and other facihty obhgations 183 126 Obhganons under capitalleases 38 37 gggggg The following is an analysis of Interest on long-term and Dornestic subsidiary short-term debt:
4.75% Guaranteed Debentures due 1982, conwrtible into Union Carbide Corporation Milhons of dollars 1982 1981 1980 commo' stock at $56 00 per share -
36 -
Interest incurred on debt S 309 $ 229 $ 199 International subsidiaries Less: Interest capitahzed 73 58 46 8.375% Canadian Dollar Notes due 1992 17 18 9 25% Canadian Dollar Notes due 1982 -
25 $ 236 $ t71 $ 153 9.75% Canadian Dollar Debentures due 1886 17 19 10.75% Canadian Dollar Sebentures due 1995 55 58 14.75% U.S. Dollar Guaranteed Notes due 1989 150 -
16.00% Canadian Dollar Debentures due 1989 41 -
Canadian Dollar Bank Loan at onme rate 82 -
i Other debt-vanous maturities and interest rates 283 241
$ 2,487 $ 2.209 Less: Paymonts due within one year 59 108
$ 2.428 $ 2,101 During 1982, $11 million of the 5.30% Sinking Fund Debentures were purchased by the Corporation to apply against future sinking fund requirements. Previously, the Corporation and a subsidiary had purchased $99 million of the debentures.
33
- 13. Leases Leases that meet the criteria for capitalization set forth in At December 31 1982 1981 St:tement of Financial Accounting Standards No.13 have For sale under the Dividend Reinvestment been classified and accounted for as capital leases. For non- and Stock Purchase P6an 289,301 1,614,861 capitalized leases, primarily involving distribution equipment For conversion of convertible debentures 2,277,040 2,912,434 and facilities, commitments under noncancelable leases ex. For stock option plans:
d tending for one year or more will require the following future [P[, ,"* ,9,',""'
9 an g "t ' ]re o ns 9 00 payments: For sale to Trustee under the Savings Plan for Employees 423,573 610,460 i Millions of dollars 4,452.990 6,709.391 1983 $ 79 1986 $ 35 1993-1997 $ 68 1984 57 1987 29 1998-2002 41 At December 31,1982, Retained eamings included $26 1985 43 1988-1992 113 After 2002 7 million and $170 million, representing the Corporation's ,
sham of undshM eamMgs of a nonconsoMaN Man j Total lease and rental payments under noncapitalized subsidiary and 20 to 50 percent owned companies, respec-1:ases extendird one month or more were $109 million in tWy, acmuM h W me equh meM De mmspon6 1982 ($98 million in 1981 and $96 million in 1980). ing amounts at December 31,1981, were $20 million and
$150 million, respectively, Dividends received by the Cor.
14, UCC Stockholders'Egadty poration and the Corporation's share of dividends received At December 31,1982, there were 25,000,000 shares of by consolidated subsidiaries from companies carried at preferred stock ($1 par value) authorized and unissued equity aggregated $5 million in 1982, $10 million in 1981 and (10,000,000 shares at December 31,1981). $13 million in 1980.
Issuances of shares of common stock were as follows:
- 15. Retirement Program 1982 1981 1980
_ The retirement program of Unicn Carbide Corporation Dividend Reinvestment and Stock covers substantially all U.S. employees and certain em-Purchase Plan ployees in other countries. Various arrangements for pro-l fo dividend reinvestmen s 1,250,080 923,470 874,822 9 I lssued at n'arket pnce for lernational subsidiaries. Total program costs for 1982
! optional cash payments 75.480 54,507 71,383 amounted to $201 million ($203 million in 1981 and $193 Purchased at market price by million in 1980) of which $177 million ($176 million in 1981 the Trustee under the Savings 133,091 192,471 and $167 million in 1980) related to the U.S. Retirement
! Plan for Employees 186.887 Program,
- '**",$,",[,"e*e'fn c b u s - 54,296 -_
A comparison of accumulated plan benefits and plan net lssued under employee stock assets for the U.S. Retirement Program is presented below:
option plans 59,085* 49,808' 22,348 1,571,532 1,215,172 1,161,024 Millions of dollars at January 1 1982 1981
- 1982 and 1981 issuances are net of $38 shares and 1,728 shares, Actuarial present value of accumulated respectively, which were retumed and cancelled. plan benefits Duing 1980, the Corporation transferred 202 shares of Nor[ Vested trnasury common stock in business ct,mbination transactions. s 1,304 s i,347 Shares of common stock were reserved for issuance as Net Assets Available for Benefits $ 1,732 $ 1,6P1 follows The weighted average assumed rates of return used in determining the actuarial present value of accumulated plan benefits were approximately 10% for 1982 and approximate-ly 9% for 1981. The rates used reflect the expected (market) rates of retum during the periods of benefit deferral as re-quired by Statement of Financial Accounting Standards No.
l
- 36. These rates are approximately equivalent to rates established by the Pension Benefit Guarantee Corporation, a non-profit Federal Government Corporation within the Department of Labor.
34
16, Incentive Programs 17. Commitments and Contingencies In 1978, stockholders approved the five-year Union Carbide The Corporation and its consolidated subsidiaries have vari-Inc ntiva Compensation Plan. The Plan, which became ef- ous purchase commitments for materials and supplies inci-fective January 1,1979, provides for granting stock option dent to the ordinary conduct of business; and commitments awards and annual bonus awards to key employees. for product purchases from a company in which a subsidiary Employees awarded options may also be awarded stock ap- of the Corporation has an investment. The commitments are, preciation rights related to part er all of the optioned shares. in the aggregate, not expected to have a material adverse ef-
, On ex rcise, such rights would enable a holder to receive in fect on the consolidated financial position of the Corporation.
I cash or common stock the amount by which the market in the normal course of business, the Corporation and its l price of the common stock on tne date of exercise exceeds consolidated subsidiaries are involved in a number of legal i
the option price. The number of shares subject to options proceedings and claims with both private and governmental may not exceed 1,500,000 under this Plan. Option prices are parties. These cover a wide range of matters, including trade 100 percent of fair market value on the date of the grant. Op- regulation; product liability; utility regulation; Federal regula-tions, and any related stock appreciation rights, generally tory proceedings; health, safety, and environmental affairs; becoma exercisable two years after such date. Options may patents and trademarks; contracts; and taxes. In some of not hava a duration of more than ten years. Annual bonus then cases, the remedies that may be sought or damages awards are cash bonuses which are intended to provide in- claimed are substantial. In the opinion of counsel, the out-c ntives for meritorious per'ormance and total compensation come of the legal proceedings and claims are not expected levels comparable to those of major competitNe employers. to have a material adverse effect on the consolidated finan-Previously, in 1974, stockholders had approved the Union cial position of the Corporation. Should any losses be sus-Carbide incentive Program for key employees. No further tained, in excess of provisions therefor, they will be charged awards may be made under the 1974 program. to income in the future.
When shares are issued upon exercise of options, no charges are made to income and the entire proceeds when 18. Supplementary Data on Changing Prices received are credited to the common stock account. For (Unaudited) stock appreciation rights granted, income is charged in each quartir for their appreciation. The charge is based on the During the past decade int lation had an increasingly signifi-amount,if any, by which the market price of the common cant impact on the economy, resulting in the concern that stock exceeds the option price set forth in the related stock conventional financial statements were not fully measuring option. the real growth of business enterprises. In response to this The status of options is as follows: concern, the Financial Accounting Standards Board (FASB) issued Statement No. 33, which requires companies to ad-Number of shares of common stock 1982 1981 just historical financial statements for the effects of changing prices. This Statement was recently amended by Statement Outstanding at January 1 877.634 S83.767 No. 70, which reconciles the new foreign currency translation e ed d)nhth y ar 5 method adopted in Statement No. 52 with Statement No. 33 Canceled or expired dunng the year 48.637 26.360 requirements. The presentation of historical cost information Outstanding at December 31 measured in units of constant purchasing power is no longer 1.131.458 877.634 required for corporations that measure a significant part of
- includes 114.273 shares granted in 1982 with stock appreciation nghts at- their operations in currencies other than the U.S. do!!ar.
tached (82.732 shares in 1981). After exercise of 28.069 shares in 1982, there were 340.008 stock appreciation rights outstanding at December The accompanyi ng summary statement of income, sum-31.1982 (253.804 at December 31,1981). mary balance sheet data, and five-year comparisons were prepared in accordance with Statement No. 33 as amended by Statement No. 70. The methodology required is ex-perimental in nature, and because of the different assump-tions and the variety of methods permitted, this information should not be considered precise when making comparisons with other companies.
In the accompanying statements the " current cost" method adjusts for " changes in specific prices." The objective of this method is to measure resources and their consumption at 35
Data on Changing Price 3 Milhons of dollars, year ended December 31,1982 Adjusted for changes in At histoncal cost specific pnces (current Summary Statement ofincome A4usted for Changing Prices (" ""*' d "*'*) *"*'-""""*'d"*'*I N:t sales S 9,061 $ 9,061 Cost of sales 6,687 6.767 Depreciation 426 657 Other operating expense-net 1,308 1,308 Int: rest expense 236 236 Provision for income taxes 58 58 Minority share of income 36 23 N;t income $ 310 $ 12 P:r share $ 4.47 $ 0.17 Gain due to decline in purchasing power of net monetary liabilities S 95 Summary Balance Sheet Data Adiusted for Changing Prices l Inv:ntories $ 1,740 $ 2,916 l Property, plant, and equipment, net of accumulated depreciation 6,356 8,030 l UCC stockholders' equity 5,159 8,009 Five-Year Comparisons 1982 1981 1980 1979 1978 N:t sales At historical cost S 9,061 $10,168 $9,994 $9,177 $7,870 in average 1982 dollars 10,795 11,711 12,208 11,648 N;t income
- Current cost-in average 1982 dollars 12 414 555 527 Per share 0.17 6.10 8.33 8.02 Stockholders
- equity Current cost-in average 1982 dollars 8,009 8,193 8,171 8,117 Dividends per share At historical cost 3.40 3.30 3.10 2.90 2.80 In average 1982 collars 3.50 3.63 3.86 4.14 Market price per share (at year-end)
At historical cost 52.88 51.38 50.25 42.00 34.00 in average 1982 dollars 52.30 52.50 55.90 52.41 48.24 Av: rage consumer price index (1967 = 100) 289.2 272.4 246.8 217.4 195.4
- 1980 net income excluded provisions for a then-pending sale of certain metals businesses.
i 36
the curr:nt cost of replacing these resources, rather than the asset as it becomes available. Therefore, the estimated cur-historical cost amounts actually expended to acquire them. rent cost of fixed assets was calculated by the application of This m;thod measures the effects of actual price changes indices, adjusted for technological change, to historical cost directly related to a company rather than those from general of assets. Indices appropriate to domestic operations were inflation. The effect of generalinflatio on current cost data selected on the basis of applicability to major business seg-for foreign operations is measured after translation (translate- ment facilities. For foreign fixed asset calculations, indices ;
restate method) based upon the U.S. Consumer Price Index utilized were selected based on major country / company ,
j for all Urban Consumers (CPI-U). operations. Adjustments for technology change based on 1 j Th3 domestic earnings were severely impacted by the pro- representative facilities were extended to related asset I longed recession in the U.S. and in many of our key over- groups before incorporation into the indices ultimately util-
' seas markets. When measured under the current cost ized. Land values have been based on estimates of current m thod, the 1982 reported net income declined to $12 cost.
million. In comparison, the prior year's current cost net in-
- Depreciation-Current cost depreciation is calculated on a com3 was $390 million in 1981 dollars. The 1982 decline was straight line basis using estimated useful lives consistent mainly in U.S. operations, due to: (a) the increase in depre-W th those used in the historical dollar financial statements.
clation expense when reported on the current cost basis; (b) the cost of sales adjustment resulting from our inventory reduction program of historical cost LIFO inventories; and (c) the requirement in Statement No. 33 that the reported Report ofIndependent Certified provision for income tax not be restated for increased Public Accountants operating costs calculated under the current cost method.
Specific prices of inventories and fixed assets held during To the Stockholders and Board of Directors 1982 increased by $307 million more than the general rate of of Union Carbide Corporation inflation principally due to lower inflation rates. During 1981 and 1980 the general rate of inflation exceeded the specific We have examined the consolidated balance sheet of Union prices of these assets by $345 million and $638 million, Carbide Corporation and subsidiaries at December 31,1982 respectively, and 1981, and the consolidated statements of income and re-Gains due to declines in purchasing power of net tained earnings and of changes in financial position for the monetary liab,litics amounted to $95 million in 1982 ($229 years ended December 31,1982,1981 and 1980 (pages 26 million in 1981 and $270 million in 1980). These unrealized through 37). Our examinations were made in accordance gains reflect the fact that the Corporation's obligations will be with generally accepted auditing standards and, accordingly, repaid in dollars of declining purchasing power. included such tests of the accounting records and such The foreign currency translation adjustment, calculated on other auditing procedures as we considered necessary in the U.S. inflation-adjusted current cost of net assets, reflects the circumstances.
exchange rate changes during the year. This translation ad- In our opinion, the consolidated financial statements iden-justm:nt, net of income taxes, reduced stockholders' equity tified above present fairly the financial position of Union Car-by $88 million in 1982. bide Corporation and subsidiaries at December 31,1982 and Current cost values presented in the supplementary data 1981 and the results of their operations and the changes in w re d termined as follows: their financial position for the years ended December 31,
, an , in conformity with generally accepted
- Inventories and Cost of Sales-LIFO inventories and cost ccounting pnnciples consistentiy applied during the period of sales were adjusted to reflect current material, labor and subsequent to the 1980 change ,in method of accounting for overhaad costs.
the investment tax credit (Note 5), except for the 1982 change o Property, Plant, and Equipment-The current cost of prop- in method of accounting for foreign currency translation erty, plant, and equipment is defined by Statement No. 33 as (Note 2). We concur with the foregoing accounting changes.
the curr:nt cost of acquiring the same service potential em-bodied by the asset owned. The current cost of an asset will ,
be directly affected by the differences between its operating 4.ta. A+=J4-costs and the operating costs of a technologically superior Certified Public Accountants 900 Becford Street Stamford, Connecticut February 15,1983 (
37
Union Carbide Corpor: tion Directors Management Warren M. Anderson
- Warren M. Anderson Robert D. Kennedy Chairman of the Board and Chief Executive Chairman of the Board and Chief Executive Executive Vice-President Officer of Union Carbide Corporation Officer 3_9_g,g, R. Manning Brown, Jr. Morse G. Diat, Jr. President, Ethylene Oxide /GlycolDivision Director of various corporations; retired Vice-President and Secretary R. G. Chenoweth Chairman of New York Ufe Insurance A. C. MacLeod President. Engineenng andHydrocarbons Division '
- A "Y Vice-President. Employee Relations ,_ g_ gg,g7 Roberto de Jesus Toro" John A. Stichnoth Chairman, Union Carbide Canada Umited Director and Chairman of the Executive Vice-President and GeneralCounsel Committee of the Board of Banco de Ponce W. N. Kissick Alec Flamm t're ident. Union Carbide Canada Umited James L. Ferguson, a s Chairman and Chief Executive Officer of President and Chief Operating Officer J. W. Luchsinger GeneralFoods Corporation H. F. Tomfohrde lll President, Polyolefins Division Alec Flamm' Vice-President, Corporate Strategic Planning A. W. Lutz President and Chief Operating Officer of Robert E. Pyfe President, Ethylene Oxide Der vatives Division Union Carbide Corporation Vice-President L. A. Wilkinson Harry J. Gray'* R. F. Hibbs PresidentMents and Chairman, President, and Chief Executive President. Nuclear Division Coadngs Matenals Wsion Officer of United Technologies Corporation 3 y , 9 ,ggg,gg James M. Hester', J. Clayton Stephenson
"#' * '#'"'*"# & e President President of The New York BotanicslGarden Financial Officer F. P. Holloway Jerome H. Holland"' g 9_ pegnung, President, Electronics Division Director of various organization' Vice-President and Controller R. W. King Jack B. Jackson
- pogg9_zng, President, Medical Products Division Dorector of various organizations Vice-Pres; dent and Treasurer J.B. Law Horace C. Jones g g_ 9g7, Chairman, Union Carbide Eastem, Inc.
Chairman of the Executive-Finance Vice-President, Public Affairs Committee of Burlington Industnes, Inc. N. S. Livingston, Jr.
J. C. Rodand President, Battery Products Division C. Peter McColough
Chairman of Xerox Corporation Vice-President- Federal Govemmer't B. Sokoloff, Jr.
Relations Chairman, Union Carbide Africa and Ian D. Sinclair*
- Middle East, lnc.
Chairman of Canadian Pacific Enterprises John H. Field Umited Executive Vice-President Elio E. Tarika William S. Sneath"* J. R. MacLean Executive Vice-President Director of various corporations; retired President, Unde Division G. E. Bailie Chairman of the Board of Union Carbide F. V. McMillen ' President, Films-Packaging Division Corporation President, Metals Division A. C. Egfer Russe ll E. Train J. W. Rawfings President, Home and Automotive Products Division President of World Wildlife Fund-U.S. Chairman, Union Carbide Southem P. F. Hilton F. Perry Wilson' Africa, Inc. Chairman, Union Carbide Europe, Inc.
Director of various corporations; retired J. B. Reid W. H. Joyce Chairman of the Board of Union Carbide President, Carbon Products Division President, Silicenes and Urethane Intermediates Corporadon K. D. Rutter Division K:thryn D. Wriston Chairman, Union Carbide Pan America, Inc. R. Oldford Director of various organizations President, Union Carbide AgriculturalProducts Company, Inc.
W. F. Silvia
' Member of Audst Commnttee " Member of Executive Committee
?
President, Engineering Products Division (Chairman: Mrs. Wnston) (Chairman: Mr. Anderson)
' Member of Compensation and Management 5 Member of Nominating Committee T.T.Szabo
( Development Committee (Chairman: Sr. de.lesus Toro) President, Specialty Pulymers and Composites (Chairman: Mr. .lones) ' 8'U eMember of Finance and Pension Committee
' Member of Public Pohey Committee (Chairman: Mr. Sinclair) N. L. Zutty (Chairman: Mr. Hester) President. Specialty Chemicals Division 38
Oper: ting Unit 3 Union Cubide Corporation's business Union Carbide Spain worldwide is conducted through the divi- Canada Limited-74.73% Argon, S.A.-50%
sions and subsidiaries listed in boldface Union Carbide /berica, S.A.
type below. Major affiliates owned by the Union Carbide Eastern, Inc. Union Carbide Navarra, S.A.
Corporition as of December 31,1982 Australia Sweden which were activefy producing during 1982 Chemos Industries Pty. Limited-60.02% Unifos Kemi AB-50%
us listed beneath the division or subsid. Union Carbide Australia Limited-60.02% Union Carbide Norden AB iiry h:ving management responsibility for Hong Kong Switzerland them. Subsidiaries and affsliates are 100% Sonca Industries Limited Union Carbide Europe S.A.
by the Corporation unless otherwise Union Carbide Asia Umited United Kingdom India Union Carbide U.K. Umited l' nix Carbide India Umited-50.9% Viskase Limited Union Carbide Agricuftural Products Indonesia P*"Y" P. T. AgrocarbIndonesia-67.6% Union Carbide Pan America,Inc.
Battery Products Division P. T. Union Carbide Indonesia Argentina Japan Union Carbide Argentina S.A.I.C.S.-99.99%
Carbon Products Division Nippon Unicar Company Limited-50% Brazil Electronics Division Union Showa K.K.-50% Eletro Manganes Ltda.-55%
Er'gineering and Hydrocarbons Division Sony-Eveready. Inc.-50% Tungstenio do Brasil Minerios e Metais Ltda.
Union Carbide Services Eastem Umited S.A. White Martins-5014%
Engineering Products Division Korea S A. White Martins Nordeste-50.14%
Ethylene Oxide Derivatises Division Union Gas Company Limited-86.15% Union Carbide do BrasilLtda.
Ethylene OxidelGlycol Division Colombia, S.A.
ni rbide Malaysia Sdn. Bhd.-80% Un Films-Packaging Division Union /'olymers Sdn. Bhd.-60% Costa Rica New Zealand Union Carbide Centro Americana, S 4.
Home and Automotive Products Division Union Carbide New Ze aland Limited ~ 60.02% Ecuador Linde Division Union Carbide Ecuador C.A.
Philippines Medical Products Division Union Carbide Philippines, Inc. Mexico Republic of Sri Lanka Union Carbide Mexicana, S.A. de C.V-Metals Division Union Carbide Ceylon Limited-60% 4 5.70 %
Nuclear Division S ngapore Venezuela
. Operates facilities owned by the U.S. Union Carbide de Venezuela, C.A.
Metals and Cres Pte. Umited Gownmat Union Carbide Singapore Pte. Limited Union Carbide Puerto Rico,Inc.
Polyolefins Divi =,lon Thailand Union Carbide Thailand Umited ide c Silicones and Urethane intermediates y,g p g pg Division Union Carbide Europe, Inc. Union Carbide Gralito, Inc.
Solv nt3 and Coatings Materials Belgium Union Carbide Southern Africa,Inc.
Division Union Carbide Benelux N.V.
Republic of South Africa Specialty Chemicals Division induga NM-50%
Elektrode Maatskappy Van Suid Afrika France (Eienooms) Beperk-50%
Specialty Polymers and Compos.tes t La uttorale S.A.-99.96%
Division Tubatse Ferrochrome (Proprietary) Umited-49%
Union Carbide France S.A. Ucar Chrome Company (S.A.)
Union Carbide Africa and Middle East, Inc. Viscora, S.A. (Proprietary) Limited
'- Egypt Germany (West) Ucar Minerals Corporation Un:on Carbide Egypt S.A.E.-75% Union Carbide Deutschland G.m.b.H.
Unix Carbide Industriegase G.m.b.H. Zimbabwe (Unconsolidated subsidiaries) i Ghana Zimbabwe Mining and Smelting Company Union Carbide Ghana Limited-66.67% Greece (Private) Umited twy Coast Union Carbide Hellas Industrialand Union Carbide Zimbabwe (Private) Limited Commercials.A' Union Carbide Cote d1voire Italy Un Carbide Kenya Limited-65%
' ' P Un Nigeria Unisil S.p.A.
Union Carbide Nigena Umited-60% Union Carbide Italia S.p.A.
Sudan Unlon Carbio% Sudan Umited-84%
4 39
Information forInve tors 1983 AnnualMeeting Inquiries about Union Carbide as an investment or ques-tions about the company should be directed to Investor Rela-The 1983 annual meeting of stockholders wil! be held on tions, Section D4, Union Carbide Corporation, Old Ridgebury April 27, in the Grand Ballroom of the Host Intemational
, Road, Danbury, Connecticut 06817 (Tel. 203/794-6446).
Hot:1, Tampa international Airport, Tampa, Florida, begin- . investor insight," a package of financial material that ning at 12 AR recapitulates quarterly results, is available upon written re-A notico of annual meeting and proxy statement, and a quest to investor Relations at the address above.
proxy voting card, are mailed to each stockholder in March, together with a copy of the current annual report. Form 10 K and Other Reports A report on the annual meeting, including a summary of proceedings and the results of voting on items of business, A Form 10-K Report for the year ended Decembar 31,1982 appears in the June quarterly report to shareholders. will be available in April of 1983. A copy may be obtained without charge upon written request to the Secretary at Union ,
General Offices Carbide Corporation, Section D4, Old Ridgebury Road, Dan- l Th3 general offices of Union Carbide Corporation are a na al s a s am maM m sWohs located at Old Ridgebury Road, Danbury, Connecticut 06817 .
in March, June, September, and December.
(Tul. 203/794-2000). a he Corporation annually publishes a list of organizations i receiving charitable, educational, cultural or similar grants of j Stock Exchanges
$5,000 or more made by the Corporation or its subsidianes Union Carbide Corporation stock is traded primarily on the during the preceding year. A copy may be obtained without N;w York Stock Exchange (Ticker Symbol: UK). The stock is charge upon written request to the Secretary at the address also listed on the Midwest Stock Exchange and on the above.
Pacific Stock Exchange in the United States, and overseas Union Carbide Corporation supports the operation of the on the exchanges in Amsterdam, Basel, Brussels, Frankfurt, Union Carbide Corporation Political Action Committee as G:n:va, Lausanne, London, Paris, and Zurich. authorized by, and in accordance with, Federa! law. Share-holders desiring additional information about the activities of Stock Records and Transfer the Committee may write to the Secretary at the address above.
The Corporation acts as its own stock transfer agent through Shareholder Services, Union Carbide Corporation, Tarry- Publications town, N.Y.10591 (Tel. 914/789-3651).
Shareholder Services maintains stockholder records, The following are available from the Public Affairs Depart-transfers stock, and can answer questions regarding ment. To obtain copies, write to Key issues, Box Z-7, Union stockholders' accounts, including dividend reinvestment ac- Carbide Corporation, Old Ridgebury Road, Danbury, Con-counts. Stockholders wishing to transfer stock to someone necticut 06817.
clse or to change the name on a stock certificate, should
. . Natural Gas: A Burning issue for Union Carbide"-Impact contact Shareholder Services for assistance.
, on Union Carbide of Congressional decisions on natural gas The Registrar is Manufacturers' Hanover Trust Company, P
4 N;w York Plaza, New York, N.Y.10004.
- *Ouiet Crisis in American Agriculture"-Challenges facing Dividend Reinvestment U.S. agriculture and the chemical industry that serves it.
Through Union Carbide's Dividend Reinvestment and Stock *
- Energy Efficiency: How Good a Job Can Industry dot-Purchase Plan, stockholders may purchase shares free of How industry responds to economics of the energy market-commissions and service charges. place-and how government can help.
A prospectus explaining the plan in detail may be obtained . Key Public Issues 1983"-Union Carbide's positions on from Shareholder Services, Union Carbide Corporation, P.O. ssues most critical to the Corporation.
Box 340, Tarrytown, N.Y.10591.
- " Natural Gas Policy: Seeking Workable Solutions"-
Inquiries Problems created by the Natural Gas Policy Act of 1978 and Inquiries about stockholder accounts and dividend reinvest-ment should be directed to Shareholder Services, at the ad. * " Electricity Pricing: Choices for the 80's"- American atti-dress and telephone number indicated above. tudes on electricity pricing and economic growth.
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! Union Carbide Corporation Old Ridgebury Road Danbury, CT 06817 i
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