UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTER ENDED March 31, 2005

Commission file number1-1463

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

|New York(State or other jurisdiction of
incorporation or organization)                                                    |  |  |  | 13-1421730(I.R.S. Employer
Identification No.)
|------------------------------------------------------------------------------------------------------------------------- |  |  |  | ----------------------------------------------
|400 West Sam Houston Parkway South, Houston, Texas    77042(Address of principal executive offices)            (Zip Code)
|(Registrant's telephone number, including area code:)713-798-2016                                                        
|Not applicable(Former name, former address and former fiscal year, if changed since last report)                         
|                                                                                                                          |  |  |  |                                               

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

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

At March 31, 2005, 1,000 shares of common stock were outstanding, all of which were held by the registrant's parent, The Dow Chemical Company.

The
registrant meets the conditions set forth in General Instructions H(1)(a) and (b) for Form 10-Q and is therefore filing this form with a reduced disclosure format.



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Union Carbide Corporation  Table of Contents

|                             |                                                                                                | PAGE                                            
|---------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------
|PART IFINANCIAL INFORMATION |                                                                                                |                                                 
|                             | Item 1. Financial Statements                                                                   |                                                 
|                             |                                                                                                | Consolidated Statements of Income               
|                             |                                                                                                | Consolidated Balance Sheets                     
|                             |                                                                                                | Consolidated Statements of Cash Flows           
|                             |                                                                                                | Consolidated Statements of Comprehensive Income 
|                             |                                                                                                | Notes to the Consolidated Financial Statements  
|                             | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |                                                 
|                             |                                                                                                | Disclosure Regarding Forward-Looking Information
|                             |                                                                                                | Results of Operations                           
|                             |                                                                                                | Other Matters                                   
|                             | Item 3. Quantitative and Qualitative Disclosures About Market Risk.                            |                                                 
|                             | Item 4. Controls and Procedures.                                                               |                                                 
|PART II  OTHER INFORMATION  |                                                                                                |                                                 
|                             | Item 1. Legal Proceedings.                                                                     |                                                 
|                             | Item 6. Exhibits.                                                                              |                                                 
|SIGNATURES                   |                                                                                                | 23                                              
|EXHIBIT INDEX                |                                                                                                | 24                                              

2

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PART I.  FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Union Carbide Corporation and Subsidiaries  Consolidated Statements of Income

|                                            |                                                    | Three Months Ended |      
|------------------------------------------- | -------------------------------------------------- | ------------------ | -----
|
|                                            | Net trade sales                                    |                    | $    
|                                            | Net sales to related companies                     |                    |      
|                                            |                                                    |                    |      
|Total Net Sales                             |                                                    |                    | 1,684
|                                            |                                                    |                    |      
|                                            | Cost of sales                                      |                    |      
|                                            | Research and development expenses                  |                    |      
|                                            | Selling, general and administrative expenses       |                    |      
|                                            | Amortization of intangibles                        |                    |      
|                                            | Equity in earnings of nonconsolidated affiliates   |                    |      
|                                            | Sundry income (expense)  net                      |                    |      
|                                            | Interest income                                    |                    |      
|                                            | Interest expense and amortization of debt discount |                    |      
|                                            |                                                    |                    |      
|Income before Income Taxes                  |                                                    |                    | 403  
|                                            |                                                    |                    |      
|                                            | Provision for income taxes                         |                    |      
|                                            |                                                    |                    |      
|Net Income Available for Common Stockholder |                                                    | $                  | 280  
|                                            |                                                    |                    |      
|Depreciation                                |                                                    | $                  | 67   
|                                            |                                                    |                    |      
|Capital Expenditures                        |                                                    | $                  | 43   
|                                            |                                                    |                    |      

See Notes to the Consolidated Financial Statements.

3

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Union Carbide Corporation and Subsidiaries  Consolidated Balance Sheets

|In millions (Unaudited) |                                                                                    | March 31,
2005                                                         |       | Dec. 31,
2004
|----------------------- | ---------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ----- | -------------
|Assets                  |                                                                                    |                                                                        |       |              
|Current Assets          |                                                                                    |                                                                        |       |              
|                        | Cash and cash equivalents                                                          |                                                                        | $     | 23           
|                        | Accounts receivable:                                                               |                                                                        |       |              
|                        |                                                                                    | Trade (net of allowance for doubtful receivables  2005: $4; 2004: $4) |       |              
|                        |                                                                                    | Related companies                                                      |       |              
|                        |                                                                                    | Other                                                                  |       |              
|                        | Notes receivable from related companies                                            |                                                                        |       | 526          
|                        | Inventories                                                                        |                                                                        |       | 194          
|                        | Deferred income tax assets  current                                               |                                                                        |       | 65           
|                        | Asbestos-related insurance receivables  current                                   |                                                                        |       | 164          
|                        |                                                                                    |                                                                        |       |              
|                        | Total current assets                                                               |                                                                        |       | 1,552        
|                        |                                                                                    |                                                                        |       |              
|Investments             |                                                                                    |                                                                        |       |              
|                        | Investments in related companies                                                   |                                                                        |       | 462          
|                        | Investments in nonconsolidated affiliates                                          |                                                                        |       | 868          
|                        | Other investments                                                                  |                                                                        |       | 23           
|                        | Noncurrent receivables                                                             |                                                                        |       | 10           
|                        | Noncurrent receivable from related company                                         |                                                                        |       | 223          
|                        |                                                                                    |                                                                        |       |              
|                        | Total investments                                                                  |                                                                        |       | 1,586        
|                        |                                                                                    |                                                                        |       |              
|Property                |                                                                                    |                                                                        |       |              
|                        | Property                                                                           |                                                                        |       | 7,343        
|                        | Less accumulated depreciation                                                      |                                                                        |       | 5,290        
|                        |                                                                                    |                                                                        |       |              
|                        | Net property                                                                       |                                                                        |       | 2,053        
|                        |                                                                                    |                                                                        |       |              
|Other Assets            |                                                                                    |                                                                        |       |              
|                        | Goodwill                                                                           |                                                                        |       | 26           
|                        | Other intangible assets (net of accumulated amortization  2005: $125; 2004: $124) |                                                                        |       | 20           
|                        | Deferred income tax assets  noncurrent                                            |                                                                        |       | 322          
|                        | Asbestos-related insurance receivables  noncurrent                                |                                                                        |       | 972          
|                        | Prepaid pension expense                                                            |                                                                        |       | 682          
|                        | Deferred charges and other assets                                                  |                                                                        |       | 64           
|                        |                                                                                    |                                                                        |       |              
|                        | Total other assets                                                                 |                                                                        |       | 2,086        
|                        |                                                                                    |                                                                        |       |              
|Total Assets            |                                                                                    | $                                                                      | 7,277 |              
|                        |                                                                                    |                                                                        |       |              

See Notes to the Consolidated Financial Statements.

4

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Union Carbide Corporation and Subsidiaries
Consolidated Balance Sheets

|In millions (Unaudited)                    |                                                        | March 31,
2005    |       | Dec. 31,
2004 |    
|------------------------------------------ | ------------------------------------------------------ | ----------------- | ----- | ------------- | ---
|Liabilities and Stockholder's Equity       |                                                        |                   |       |               |    
|Current Liabilities                        |                                                        |                   |       |               |    
|                                           | Notes payable:                                         |                   |       |               |    
|                                           |                                                        | Related companies |       | $             | 7  
|                                           |                                                        | Other             |       |               | 4  
|                                           | Long-term debt due within one year                     |                   |       | 266           |    
|                                           | Accounts payable:                                      |                   |       |               |    
|                                           |                                                        | Trade             |       |               | 250
|                                           |                                                        | Related companies |       |               | 266
|                                           |                                                        | Other             |       |               | 48 
|                                           | Income taxes payable                                   |                   |       | 123           |    
|                                           | Asbestos-related liabilities  current                 |                   |       | 109           |    
|                                           | Accrued and other current liabilities                  |                   |       | 233           |    
|                                           |                                                        |                   |       |               |    
|                                           | Total current liabilities                              |                   |       | 1,306         |    
|                                           |                                                        |                   |       |               |    
|Long-Term Debt                             |                                                        |                   | 1,006 |               |    
|                                           |                                                        |                   |       |               |    
|Other Noncurrent Liabilities               |                                                        |                   |       |               |    
|                                           | Pension and other postretirement benefits  noncurrent |                   |       | 468           |    
|                                           | Asbestos-related liabilities  noncurrent              |                   |       | 1,467         |    
|                                           | Other noncurrent obligations                           |                   |       | 419           |    
|                                           |                                                        |                   |       |               |    
|                                           | Total other noncurrent liabilities                     |                   |       | 2,354         |    
|                                           |                                                        |                   |       |               |    
|Minority Interest in Subsidiaries          |                                                        |                   | 4     |               |    
|                                           |                                                        |                   |       |               |    
|Stockholder's Equity                       |                                                        |                   |       |               |    
|                                           | Common stock (1,000 shares authorized and issued)      |                   |       |              |    
|                                           | Additional paid-in capital                             |                   |       |              |    
|                                           | Retained earnings                                      |                   |       | 2,713         |    
|                                           | Accumulated other comprehensive loss                   |                   |       | (106          | )  
|                                           |                                                        |                   |       |               |    
|                                           | Net stockholder's equity                               |                   |       | 2,607         |    
|                                           |                                                        |                   |       |               |    
|Total Liabilities and Stockholder's Equity |                                                        | $                 | 7,277 |               | $  
|                                           |                                                        |                   |       |               |    

See Notes to the Consolidated Financial Statements.

5

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Union Carbide Corporation and Subsidiaries  Consolidated Statements of Cash Flows

|                     |  |                                                                                        |  | Three Months Ended |     
|-------------------- |  | -------------------------------------------------------------------------------------- |  | ------------------ | ----
|
|Operating Activities |  |                                                                                        |  |                    |     
|                     |  | Net Income Available for Common Stockholder                                            |  | $                  | 280 
|                     |  | Adjustments to reconcile net income to net cash provided by operating activities:      |  |                    |     
|                     |  | Depreciation and amortization                                                          |  |                    | 73  
|                     |  | Provision for deferred income tax                                                      |  |                    | 122 
|                     |  | Earnings/losses of nonconsolidated affiliates less than
            dividends received |  |                    | 104 
|                     |  | Gain on sales of property, net                                                         |  |                    |    
|                     |  | Other gain, net                                                                        |  |                    |    
|                     |  | Gain on sale of ownership interest in nonconsolidated affiliate                        |  |                    | (70 
|                     |  | Changes in assets and liabilities that provided (used) cash:                           |  |                    |     
|                     |  | Accounts and notes receivable                                                          |  |                    | 6   
|                     |  | Related company receivables                                                            |  |                    | (307
|                     |  | Inventories                                                                            |  |                    | (8  
|                     |  | Accounts payable                                                                       |  |                    | 17  
|                     |  | Related company payables                                                               |  |                    | (136
|                     |  | Other assets and liabilities                                                           |  |                    | (77 
|                     |  |                                                                                        |  |                    |     
|                     |  | Cash provided by operating activities                                                  |  |                    | 4   
|                     |  |                                                                                        |  |                    |     
|Investing Activities |  |                                                                                        |  |                    |     
|                     |  | Capital expenditures                                                                   |  |                    | (43 
|                     |  | Proceeds from sales of property                                                        |  |                    |    
|                     |  | Investments in nonconsolidated affiliates                                              |  |                    |    
|                     |  | Distributions from nonconsolidated affiliates                                          |  |                    | 41  
|                     |  | Increase in noncurrent receivable from related company                                 |  |                    | (1  
|                     |  | Proceeds from sales of investments                                                     |  |                    |    
|                     |  |                                                                                        |  |                    |     
|                     |  | Cash used in investing activities                                                      |  |                    | (3  
|                     |  |                                                                                        |  |                    |     
|Financing Activities |  |                                                                                        |  |                    |     
|                     |  | Changes in short-term notes payable                                                    |  |                    |    
|                     |  |                                                                                        |  |                    |     
|                     |  | Cash provided by financing activities                                                  |  |                    |    
|                     |  |                                                                                        |  |                    |     
|Summary              |  |                                                                                        |  |                    |     
|                     |  | Increase in cash and cash equivalents                                                  |  |                    | 1   
|                     |  | Cash and cash equivalents at beginning of year                                         |  |                    | 22  
|                     |  |                                                                                        |  |                    |     
|                     |  | Cash and cash equivalents at end of period                                             |  | $                  | 23  
|                     |  |                                                                                        |  |                    |     

See Notes to the Consolidated Financial Statements.

Union Carbide Corporation and Subsidiaries  Consolidated Statements of Comprehensive Income

|                                              |                                                      | Three Months Ended
|--------------------------------------------- | ---------------------------------------------------- | ------------------
|
|Net Income Available for Common Stockholder   |                                                      | $                 
|                                              |                                                      |                   
|Other Comprehensive Income (Loss), Net of Tax |                                                      |                   
|                                              | Translation adjustments                              |                   
|                                              | Minimum pension liability adjustment                 |                   
|                                              | Net gain on cash flow hedging derivative instruments |                   
|                                              |                                                      |                   
|                                              | Total other comprehensive income                     |                   
|                                              |                                                      |                   
|Comprehensive Income                          |                                                      | $                 
|                                              |                                                      |                   

See Notes to the Consolidated Financial Statements.

6

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Union Carbide Corporation and Subsidiaries  Notes to the Consolidated Financial Statements

(Unaudited)

NOTE A    CONSOLIDATED FINANCIAL STATEMENTS

The unaudited interim consolidated financial statements of Union Carbide Corporation and its subsidiaries (the "Corporation" or "UCC") were prepared in accordance
with accounting principles generally accepted in the United States of America ("GAAP") and reflect all adjustments (consisting of normal recurring accruals) which, in the opinion of management, are
considered necessary for the fair presentation of the results for the periods presented.

The
Corporation is a wholly owned subsidiary of The Dow Chemical Company ("Dow"). In accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share," the presentation of earnings per share is not required in financial statements of wholly owned subsidiaries.

The
Corporation's business activities comprise components of Dow's global operations rather than stand-alone operations. Dow conducts its worldwide operations through global businesses.
Because there are no separable reportable business segments for UCC under SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," and no detailed business
information is provided to a chief operating decision maker regarding the Corporation's stand-alone operations, the Corporation's results are reported as a single operating segment.

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

Certain
reclassifications of prior year's amounts have been made to conform to the presentation adopted for 2005. These statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2004.

NOTE B    ACCOUNTING CHANGES

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

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

In
December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assetsan amendment of APB Opinion No. 29." The statement addresses the
measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for
exchanges that do not have commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Corporation is
currently evaluating the impact of adopting this statement.

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

7

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In
December 2004, the FASB issued FSP No. FAS 109-2, "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American
Jobs Creation Act of 2004," which provides a practical exception to the SFAS No. 109 requirement to reflect the effect of a new tax law in the period of enactment by allowing additional time
beyond the financial reporting period to evaluate the effects on plans for reinvestment or repatriation of unremitted foreign earnings. The American Jobs Creation Act of 2004 (the "Act") introduced a
special one-time dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer, provided certain criteria are met. Although the Act was signed into law in
October 2004, the practical application of a number of the provisions of the repatriation provision remain unclear. Tax authorities are expected to provide clarifying language on key elements
of the repatriation provision. The clarifying language is expected to affect the Corporation's evaluation of the economic value of implementing any individual opportunity and its ability to meet the
overall qualifying criteria. As a result, the Corporation will be unable to complete a final determination of the Act's effect on its plan for reinvestment or repatriation of foreign earnings until
the clarifying language is released. Based on preliminary identification of potential repatriation and reinvestment opportunities, the Corporation expects that adoption of the repatriation provision
of the Act will have an immaterial effect on the consolidated financial statements.

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

NOTE C    RESTRUCTURING

2004 Restructuring

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

As
of March 31, 2005, the Corporation's workforce had been reduced by 330 people due to this restructuring and severance of $18 million has been paid. At March 31,
2005, an accrual of $3 million remained for approximately 35 employees who will end their employment with UCC in 2005.

NOTE D    INVENTORIES

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

|InventoriesIn millions |  | March 31,
2005 |     | Dec. 31,
2004
|---------------------- |  | -------------- | --- | -------------
|Finished goods         |  | $              | 53  |              
|Work in process        |  |                | 29  |              
|Raw materials          |  |                | 34  |              
|Supplies               |  |                | 78  |              
|                       |  |                |     |              
|Total inventories      |  | $              | 194 |              
|                       |  |                |     |              

The
reserves reducing inventories from the first-in, first-out ("FIFO") basis to the last-in, first-out ("LIFO") basis amounted to
$156 million at March 31, 2005 and $139 million at December 31, 2004.

8

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NOTE E    GOODWILL AND OTHER INTANGIBLE ASSETS

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

|Other Intangible Assets              |                                    |  |   |     |  |   |      |   |   |   
|------------------------------------ | ---------------------------------- |  | - | --- |  | - | ---- | - | - | --
|
|
|Intangible assets with finite lives: |                                    |  |   |     |  |   |      |   |   |   
|                                     | Licenses and intellectual property |  | $ | 36  |  | $ | (35  | ) | $ | 1 
|                                     | Patents                            |  |   | 4   |  |   | (2   | ) |   | 2 
|                                     | Software                           |  |   | 104 |  |   | (87  | ) |   | 17
|                                     | Other                              |  |   | 1   |  |   | (1   | ) |   |  
|                                     |                                    |  |   |     |  |   |      |   |   |   
|                                     | Total                              |  | $ | 145 |  | $ | (125 | ) | $ | 20
|                                     |                                    |  |   |     |  |   |      |   |   |   

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

|Estimated Amortization Expense
for Next Five YearsIn millions
|-------------------------------------------------------------
|2005                                                         
|2006                                                         
|2007                                                         
|2008                                                         
|2009                                                         
|2010                                                         
|                                                             
|

NOTE F    COMMITMENTS AND CONTINGENT LIABILITIES

Environmental Matters

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably
estimated, based on current law and existing technologies. The Corporation had accrued obligations of $104 million at December 31, 2004 for environmental remediation and restoration
costs, including $39 million for the remediation of Superfund sites. At March 31, 2005, the Corporation had accrued obligations of $105 million for environmental remediation and
restoration costs, including $38 million for the remediation of Superfund sites. This is management's best estimate of the costs for remediation and restoration with respect to environmental
matters for which the Corporation has accrued liabilities, although the ultimate cost with respect to these particular matters could range up to twice that amount. Inherent uncertainties exist in
these estimates primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability, and evolving technologies for handling site remediation and restoration.
It is the opinion of the Corporation's management that the possibility is remote that costs in excess of those accrued or disclosed will have a material adverse impact on the Corporation's
consolidated financial statements.

Litigation

The Corporation and its subsidiaries are involved in a number of legal proceedings and claims with both private and governmental parties. These cover a wide range
of matters, including, but not limited to: product liability; trade regulation; governmental regulatory proceedings; health, safety and environmental matters; employment; patents; contracts; taxes;
and commercial disputes.

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

9

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

Through
the third quarter of 2002, the Corporation had concluded it was not possible to estimate its cost of disposing of asbestos-related claims that might be filed against it and
Amchem in the future due to a number of reasons. During the third and fourth quarters of 2002, the Corporation worked with Analysis, Research & Planning Corporation ("ARPC"), a consulting firm
with broad experience in estimating resolution costs associated with mass tort litigation, including asbestos, to explore whether it would be possible to estimate the cost of disposing of pending and
future asbestos-related claims that have been, and could reasonably be expected to be, filed against the Corporation and Amchem. ARPC concluded that it was not possible to estimate the full range of
the cost of resolving future asbestos-related claims against UCC and Amchem because of various uncertainties associated with the litigation of those claims. Despite its inability to estimate the full
range of the cost of resolving future asbestos-related claims, ARPC advised the Corporation that it would be possible to determine an estimate of a reasonable forecast of the cost of resolving pending
and future asbestos-related claims likely to face UCC and Amchem if certain assumptions were made. As a result, the following assumptions were made and then used by ARPC:



Based
on the resulting study completed by ARPC in January 2003, the Corporation increased its December 31, 2002 asbestos-related liability for pending and future claims for
the 15-year period ending in 2017 to $2.2 billion, excluding future defense and processing costs. Approximately 28 percent of the recorded liability related to pending claims
and approximately 72 percent related to future claims.

In
November 2003, the Corporation requested ARPC to review the Corporation's asbestos claim and resolution activity during 2003 and determine the appropriateness of updating the
study. In response to that request, ARPC reviewed and analyzed data through November 25, 2003 to determine the number of asbestos-related filings and costs associated with 2003 activity. In
January 2004, ARPC stated that an update at that time would not provide a more likely estimate of future events than that reflected in its study of the previous year and, therefore, the
estimate in that study remained applicable. Based on the Corporation's own review of the asbestos claim and resolution activity and ARPC's response, the Corporation determined that no change to the
accrual was required at December 31, 2003.

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



The
resulting study completed by ARPC in January 2005 stated that the undiscounted cost of resolving pending and future asbestos-related claims against UCC and Amchem, excluding
future defense and processing costs, through 2017 was

10

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estimated
to be between approximately $1.5 billion and $2.0 billion, depending on which of two accepted methodologies was used. At December 31, 2004, the recorded asbestos-related
liability for pending and future claims was $1.6 billion. Based on the low end of the range in the January 2005 study, the recorded asbestos-related liability for pending and future
claims at December 31, 2004 would be sufficient to resolve asbestos-related claims against UCC and Amchem into 2019. As in its January 2003 study, ARPC did provide estimates for a longer
period of time in its January 2005 study, but also reaffirmed its prior advice that forecasts for shorter periods of time are more accurate than those for longer periods of time.

Based
on ARPC's January 2003 and January 2005 studies, the Corporation's recent asbestos litigation experience, and the uncertainties surrounding asbestos litigation and
legislative reform efforts, the Corporation determined that no change to the accrual was required at December 31, 2004.

At
each balance sheet date, the Corporation compares current asbestos claim and resolution activity to the assumptions in the most recent ARPC study to determine whether the accrual
continues to be appropriate. Based on the Corporation's review of 2005 activity, the Corporation determined that no change to the accrual was required at March 31, 2005.

The
asbestos-related liability for pending and future claims was $1.6 billion at March 31, 2005 and December 31, 2004. At March 31, 2005, approximately
38 percent of the recorded liability related to pending claims and approximately 62 percent related to future claims. At December 31, 2004, approximately 37 percent of the
recorded liability related to pending claims and approximately 63 percent related to future claims.

At
December 31, 2002, the Corporation increased the receivable for insurance recoveries related to its asbestos liability to $1.35 billion, substantially exhausting its
asbestos product liability coverage. Combined with the previously mentioned increase in the asbestos-related liability at December 31, 2002, this resulted in a net charge of
$828 million, $522 million on an after-tax basis, in the fourth quarter of 2002.

The
insurance receivable related to the asbestos liability was determined after a thorough review of applicable insurance policies and the 1985 Wellington Agreement, to which the
Corporation and many of its liability insurers are signatory parties, as well as other insurance settlements, with due consideration given to applicable deductibles, retentions and policy limits, and
taking into account the solvency and historical payment experience of various insurance carriers.

The
Corporation's receivable for insurance recoveries related to its asbestos liability was $636 million at March 31, 2005 and $712 million at December 31,
2004. At March 31, 2005, $463 million ($464 million at December 31, 2004) of the receivable for insurance recoveries was related to insurers that are not signatories to the
Wellington Agreement and/or do not otherwise have agreements in place regarding their asbestos-related insurance coverage.

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

|Receivables for Costs Submitted to Insurance CarriersIn millions |  | March 31,
2005 |     | December 31,
2004
|---------------------------------------------------------------- |  | -------------- | --- | -----------------
|Receivables for defense costs                                    |  | $              | 90  |                  
|Receivables for resolution costs                                 |  |                | 410 |                  
|                                                                 |  |                |     |                  
|Total                                                            |  | $              | 500 |                  
|                                                                 |  |                |     |                  

The Corporation's insurance policies generally provide coverage for asbestos liability costs, including coverage for both resolution and defense costs. As
previously noted, the Corporation increased its receivable for insurance recoveries related to its asbestos liability at December 31, 2002, thereby recording the full favorable income statement
impact of its insurance coverage in 2002. Accordingly, defense and resolution costs recovered from insurers reduce the insurance receivable. Prior to increasing the insurance receivable related to the
asbestos liability at December 31, 2002, the impact on results of operations for defense costs was the amount of those costs not covered by insurance. Since the Corporation expenses defense
costs as incurred, defense costs for asbestos-related litigation (net of insurance) have impacted, and will continue to impact, results of operations. The pretax impact for defense and resolution
costs, net of insurance, was $18 million in the first quarter of 2005 and $25 million in the first quarter of 2004, and was reflected in "Cost of sales."

In
September 2003, the Corporation filed a comprehensive insurance coverage case in the Circuit Court for Kanawha County in Charleston, West Virginia, seeking to confirm its
rights to insurance for various asbestos claims (the "West Virginia action"). Although the Corporation already has settlements in place concerning coverage for asbestos claims with many of its
insurers, including those covered by the 1985 Wellington Agreement, this lawsuit was filed against insurers that are not signatories to the Wellington Agreement and/or do not otherwise have agreements
in place with the Corporation regarding their asbestos-related insurance coverage. The Corporation continues to believe that its recorded receivable for

11

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insurance
recoveries from all insurance carriers is collectible. The Corporation reached this conclusion after a further review of its insurance policies, with due consideration given to applicable
deductibles, retentions and policy limits, after taking into account the solvency and historical payment experience of various insurance carriers; existing insurance settlements; and the advice of
outside counsel with respect to the applicable insurance coverage law relating to the terms and conditions of its insurance policies. In early 2004, several of the defendant insurers in the West
Virginia action filed a competing action in the Supreme Court of the State of New York, County of New York. As a result of motion practice, the West Virginia action was dismissed in August 2004
on the basis offorum non conveniens(i.e., West Virginia is an inconvenient location for the parties). The comprehensive insurance coverage litigation
is now proceeding in the New York courts.

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

Because
of the uncertainties described above, management cannot estimate the full range of the cost of resolving pending and future asbestos-related claims facing the Corporation and
Amchem. Management believes that it is reasonably possible that the cost of disposing of the Corporation's asbestos-related claims, including future defense costs, could have a material adverse impact
on the results of operations and cash flows for a particular period and on the consolidated financial position of the Corporation.

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

Purchase Commitments

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

|Fixed and Determinable Portion of Take or Pay Obligations
at December 31, 2004In millions
|-----------------------------------------------------------------------------------------
|2005                                                                                     
|2006                                                                                     
|2007                                                                                     
|2008                                                                                     
|2009                                                                                     
|2010 through expiration of contracts                                                     
|                                                                                         
|Total                                                                                    
|                                                                                         

Guarantees

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

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

12

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|Guarantees at March 31, 2005In millions |  | Final
Expiration |  | Maximum Future
Payments |     | Recorded
Liability
|--------------------------------------- |  | ---------------- |  | ----------------------- | --- | ------------------
|Guarantees                              |  | 2014             |  | $                       | 109 |                   
|                                        |  |                  |  |                         |     |                   

|Guarantees at December 31, 2004In millions |  | Final
Expiration |  | Maximum Future
Payments |     | Recorded
Liability
|------------------------------------------ |  | ---------------- |  | ----------------------- | --- | ------------------
|Guarantees                                 |  | 2014             |  | $                       | 114 |                   
|                                           |  |                  |  |                         |     |                   

NOTE G    PENSION AND OTHER POSTRETIREMENT BENEFITS

|Net Periodic Benefit Cost (Credit) for All Significant Plans |  |   |     |   |   |     |  
|------------------------------------------------------------ |  | - | --- | - | - | --- | -
|
|
|
|Service cost                                                 |  | $ | 7   |   | $ | 7   |  
|Interest cost                                                |  |   | 54  |   |   | 56  |  
|Expected return on plan assets                               |  |   | (85 | ) |   | (88 | )
|Amortization of prior service cost (credit)                  |  |   |    |   |   | 1   |  
|Amortization of net loss                                     |  |   | 1   |   |   |    |  
|                                                             |  |   |     |   |   |     |  
|Net periodic benefit cost (credit)                           |  | $ | (23 | ) | $ | (24 | )
|                                                             |  |   |     |   |   |     |  

Employer Contributions

Pension Plans

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

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

Other Postretirement Benefits

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

The
Corporation funds most of the cost of these health care and life insurance benefits as incurred. As previously disclosed in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 2004, UCC does not expect to contribute assets to its other postretirement benefit plans in 2005. Consistent with that expectation,
no contributions were made in the first quarter of 2005. Benefit payments to retirees under these plans are expected to be $63 million in 2005. In the first quarter of 2005, benefit payments of
$11 million were made.

13

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NOTE H    RELATED PARTY TRANSACTIONS

The Corporation sells products to Dow to simplify the customer interface process. Products are sold to and purchased from Dow in accordance with the terms of
Dow's long-standing intercompany pricing policies. The application of these policies results in products being sold to and purchased from Dow at market-based prices. The Corporation also
procures certain commodities and raw materials through a Dow subsidiary and pays a commission to that Dow subsidiary based on the volume and type of commodities and raw materials purchased. The
commission expense is included in "Sundry income (expense)net" in the consolidated statements of income. Purchases from that Dow subsidiary were approximately $603 million in the
first quarter of 2005 and $442 million in the first quarter of 2004.

The
Corporation has a master services agreement with Dow whereby Dow provides services, including, but not limited to, accounting, legal, treasury (investments, cash management, risk
management, insurance), procurement, human resources, environmental, health and safety, and business management for UCC. Under the master services agreement with Dow, for general administrative and
overhead type services that Dow routinely allocates to various businesses, UCC is charged the cost of those services based on the Corporation's and Dow's relative manufacturing conversion costs. This
arrangement results in a quarterly charge of approximately $4 million (included in "Sundry income (expense)net").

For
services that Dow routinely charges based on effort, UCC is charged the cost of such services on a fully absorbed basis, which includes direct and indirect costs. Additionally,
certain Dow employees are contracted to UCC and Dow is reimbursed for all direct employment costs of such employees. Management believes the method used for determining expenses charged by Dow is
reasonable. Dow provides these services by leveraging its centralized functional service centers to provide services at a cost that management believes provides an advantage to the Corporation.

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

As
part of Dow's cash management process, UCC is a party to revolving loans with Dow that have LIBOR-based interest rates with varying maturities. At March 31, 2005, the
Corporation had a note receivable of $463 million from Dow under a revolving loan agreement. A separate revolving credit agreement with Dow that allows the Corporation to borrow or obtain
credit enhancements up to an aggregate of $1 billion was amended and restated on May 28, 2004 to include cash collateral provisions and to extend the maturity date to May 28,
2005; however, Dow may demand repayment with a 30-day written notice to the Corporation. The related collateral agreement was also amended and restated on May 28, 2004 to provide
for the replacement of certain existing pledged assets, primarily equity interests in various subsidiaries and joint ventures, with cash collateral. A subsequent amendment to the revolving credit
agreement, effective as of December 30, 2004, further extended the maturity date to December 30, 2005 and modified the repayment terms. At March 31, 2005, $795 million was
available under the revolving credit agreement. The cash collateral was reported as "Noncurrent receivable from related company" in the consolidated balance sheets.

14

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Union Carbide Corporation and Subsidiaries

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

Pursuant to General Instruction H of Form 10-Q "Omission of Information by Certain Wholly-Owned Subsidiaries," this section includes only
management's narrative analysis of the results of operations for the three-month period ended March 31, 2005, the most recent period, compared with the three-month period ended March 31,
2004, the corresponding period in the preceding fiscal year.

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

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

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

RESULTS OF OPERATIONS

The Corporation reported net income of $280 million for the first quarter of 2005 compared with $91 million for the first quarter of 2004. The
substantial improvement was due to higher selling prices, a significant increase in earnings from the Corporation's joint ventures compared with last year, and a gain on the sale of a portion of the
Corporation's ownership interest in EQUATE Petrochemical Company K.S.C ("EQUATE").

Total
net sales for the first quarter of 2005 were $1,684 million compared with $1,311 million for the first quarter of 2004, an increase of 28 percent. Selling
prices to Dow are based on market prices for the related products. Average selling prices were substantially higher in the first quarter of 2005 compared with the first quarter of 2004 due to improved
industry fundamentals and the continuing increase in feedstock and energy costs. Volume gains in polyethylene were offset by lower ethanol sales volume (due to the Corporation's exit of the industrial
ethanol business in the second quarter of 2004), and a decline in ethylene glycol volume (due to scheduled plant turnarounds), resulting in a decrease in overall volume compared with last year.

Cost
of sales increased 24 percent in the first quarter of 2005 compared with the first quarter of 2004 principally due to higher raw material costs. However, gross margin as a
percent of sales for the first quarter of 2005 was 14.4 percent compared with 11.2 percent for the first quarter of last year, as higher selling prices more than offset the impact of
higher feedstock and energy costs.

Equity
in earnings of nonconsolidated affiliates increased to $153 million in the first quarter of 2005 from $85 million in the first quarter of 2004. The increase of
$68 million in first quarter equity earnings was due to strong results reported by EQUATE and UOP LLC.

Sundry
income (expense)net includes a variety of income and expense items such as the gain or loss on foreign currency exchange, dividends from investments, commissions,
charges for management services provided by Dow, and gains and losses on sales of investments and assets. Sundry income (expense) for the first quarter of 2005 was net income of $52 million
compared with net expense of $38 million for the first quarter last year. Net sundry income for the first quarter this year included a $70 million pretax gain on the sale of a portion of
the Corporation's interest in EQUATE. In November 2004, the Corporation sold a 2.5 percent interest in EQUATE to National Bank of Kuwait for $104 million. In March 2005,
these shares were sold to private Kuwaiti investors thereby completing the restricted transfer, which resulted in the first quarter gain and reduced the Corporation's ownership interest from
45 percent to 42.5 percent. Sundry expense for the first quarter of 2004 included the unfavorable impact of a litigation settlement related to one of the Corporation's joint ventures.

The
effective tax rate for the first quarter of 2005 was 30.5 percent compared with 35.5 percent for the same quarter last year. The effective tax rate fluctuates based on,
among other factors, where income is earned, the level of after-tax income from joint ventures, and the level of income relative to tax credits available.

15

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OTHER MATTERS

Accounting Changes

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

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make judgments, assumptions and estimates that
affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Note A to the Consolidated Financial Statements in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 2004, describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements.
Following are the Corporation's critical accounting policies impacted by judgments, assumptions and estimates:



16

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| |  | Increase (Decrease) in Market-Related Asset Value
due to Recognition of Prior Asset Gains and LossesIn millions | 
| |  | --------------------------------------------------------------------------------------------------------------- | 
| |  | 2005                                                                                                            | 
| |  | 2006                                                                                                            | 
| |  | 2007                                                                                                            | 
| |  | 2008                                                                                                            | 
| |  |                                                                                                                 | 
| |  | Total                                                                                                           | 
| |  |                                                                                                                 | 



17

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Asbestos-Related Matters

Introduction

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

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

18

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The
table below provides information regarding asbestos-related claims filed against the Corporation and Amchem for the three months ended March 31, 2005 and 2004:

|                                                  |  | 2005    |   | 2004    |  
|------------------------------------------------- |  | ------- | - | ------- | -
|Claims unresolved at January 1                    |  | 203,416 |   | 193,891 |  
|Claims filed                                      |  | 10,084  |   | 12,034  |  
|Claims settled, dismissed or otherwise resolved   |  | (14,818 | ) | (7,688  | )
|                                                  |  |         |   |         |  
|Claims unresolved at March 31                     |  | 198,682 |   | 198,237 |  
|Claimants with claims against both UCC and Amchem |  | 68,278  |   | 68,198  |  
|                                                  |  |         |   |         |  
|Individual claimants at March 31                  |  | 130,404 |   | 130,039 |  
|                                                  |  |         |   |         |  

A
review of a representative sample of cases outstanding at December 31, 2004 showed that in more than 98 percent of the cases filed against the Corporation and Amchem, no
specific amount of damages is alleged or, if an amount is alleged, it merely represents jurisdictional amounts or amounts to be proven at trial. This percentage increased with the more recently filed
cases included in the review. Even in those situations where specific damages are alleged, the claims frequently seek the same amount of damages, irrespective of the disease or injury. Plaintiffs'
lawyers often sue dozens or even hundreds of defendants in individual lawsuits on behalf of hundreds or even thousands of claimants. As a result, even when specific damages are alleged with respect to
a specific disease or injury, those damages are not expressly identified as to UCC, Amchem or any other particular defendant. In fact, there are no personal injury cases in which only the Corporation
and/or Amchem are the sole named defendants. For these reasons and based upon the Corporation's litigation and settlement experience, the Corporation does not consider the damages alleged against it
and Amchem to be a meaningful factor in its determination of any potential asbestos liability.

Estimating the Liability

Through the third quarter of 2002, the Corporation had concluded it was not possible to estimate its cost of disposing of asbestos-related claims that might be
filed against it and Amchem in the future due to a number of reasons. During the third and fourth quarters of 2002, the Corporation worked with Analysis, Research & Planning Corporation
("ARPC"), a consulting firm with broad experience in estimating resolution costs associated with mass tort litigation, including asbestos, to explore whether it would be possible to estimate the cost
of disposing of pending and future asbestos-related claims that have been, and could reasonably be expected to be, filed against the Corporation and Amchem. ARPC concluded that it was not possible to
estimate the full range of the cost of resolving future asbestos-related claims against UCC and Amchem because of various uncertainties associated with the litigation of those claims. Despite its
inability to estimate the full range of the cost of resolving future asbestos-related claims, ARPC advised the Corporation that it would be possible to determine an estimate of a reasonable forecast
of the cost of resolving pending and future asbestos-related claims likely to face UCC and Amchem if certain assumptions were made. As a result, the following assumptions were made and then used by
ARPC:



Based
on the resulting study completed by ARPC in January 2003, the Corporation increased its December 31, 2002 asbestos-related liability for pending and future claims for
the 15-year period ending in 2017 to $2.2 billion, excluding future defense and processing costs. Approximately 28 percent of the recorded liability related to pending claims
and approximately 72 percent related to future claims.

In
November 2003, the Corporation requested ARPC to review the Corporation's asbestos claim and resolution activity during 2003 and determine the appropriateness of updating the
study. In response to that request, ARPC reviewed and analyzed data through November 25, 2003 to determine the number of asbestos-related filings and costs associated with 2003 activity. In
January 2004, ARPC stated that an update at that time would not provide a more likely estimate of future events than that reflected in its study of the previous year and, therefore, the
estimate in that study remained applicable. Based on the Corporation's own review of the asbestos claim and resolution activity and ARPC's response, the Corporation determined that no change to the
accrual was required at December 31, 2003.

19

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



The
resulting study completed by ARPC in January 2005 stated that the undiscounted cost of resolving pending and future asbestos-related claims against UCC and Amchem, excluding
future defense and processing costs, through 2017 was estimated to be between approximately $1.5 billion and $2.0 billion, depending on which of two accepted methodologies was used. At
December 31, 2004, the recorded asbestos-related liability for pending and future claims was $1.6 billion. Based on the low end of the range in the January 2005 study, the
recorded asbestos-related liability for pending and future claims at December 31, 2004 would be sufficient to resolve asbestos-related claims against UCC and Amchem into 2019. As in its
January 2003 study, ARPC did provide estimates for a longer period of time in its January 2005 study, but also reaffirmed its prior advice that forecasts for shorter periods of time are
more accurate than those for longer periods of time.

Based
on ARPC's January 2003 and January 2005 studies, the Corporation's recent asbestos litigation experience, and the uncertainties surrounding asbestos litigation and
legislative reform efforts, the Corporation determined that no change to the accrual was required at December 31, 2004.

At
each balance sheet date, the Corporation compares current asbestos claim and resolution activity to the assumptions in the most recent ARPC study to determine whether the accrual
continues to be appropriate. Based on the Corporation's review of 2005 activity, the Corporation determined that no change to the accrual was required at March 31, 2005.

The
asbestos-related liability for pending and future claims was $1.6 billion at March 31, 2005 and December 31, 2004. At March 31, 2005, approximately
38 percent of the recorded liability related to pending claims and approximately 62 percent related to future claims. At December 31, 2004, approximately 37 percent of the
recorded liability related to pending claims and approximately 63 percent related to future claims.

Defense and Resolution Costs

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

|Defense and Resolution Costs at March 31In millions |  | 2005 |     | 2004
|--------------------------------------------------- |  | ---- | --- | ----
|Defense costs for the period                        |  | $    | 18  |     
|Aggregate defense costs to date                     |  |      | 362 |     
|Resolution costs for the period                     |  |      | 67  |     
|Aggregate resolution costs to date                  |  |      | 993 |     

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

20

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Insurance Receivables

At December 31, 2002, the Corporation increased the receivable for insurance recoveries related to its asbestos liability to $1.35 billion,
substantially exhausting its asbestos product liability coverage. Combined with the previously mentioned increase in the asbestos-related liability at December 31, 2002, this resulted in a net
charge of $828 million, $522 million on an after-tax basis, in the fourth quarter of 2002.

The
insurance receivable related to the asbestos liability was determined after a thorough review of applicable insurance policies and the 1985 Wellington Agreement, to which the
Corporation and many of its liability insurers are signatory parties, as well as other insurance settlements, with due consideration given to applicable deductibles, retentions and policy limits, and
taking into account the solvency and historical payment experience of various insurance carriers.

The
Corporation's receivable for insurance recoveries related to its asbestos liability was $636 million at March 31, 2005 and $712 million at December 31,
2004. At March 31, 2005, $463 million ($464 million at December 31, 2004) of the receivable for insurance recoveries was related to insurers that are not signatories to the
Wellington Agreement and/or do not otherwise have agreements in place regarding their asbestos-related insurance coverage.

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

|Receivables for Costs Submitted to Insurance CarriersIn millions |  | March 31,
2005 |     | December 31,
2004
|---------------------------------------------------------------- |  | -------------- | --- | -----------------
|Receivables for defense costs                                    |  | $              | 90  |                  
|Receivables for resolution costs                                 |  |                | 410 |                  
|                                                                 |  |                |     |                  
|Total                                                            |  | $              | 500 |                  
|                                                                 |  |                |     |                  

The
Corporation's insurance policies generally provide coverage for asbestos liability costs, including coverage for both resolution and defense costs. As previously noted, the
Corporation increased its receivable for insurance recoveries related to its asbestos liability at December 31, 2002, thereby recording the full favorable income statement impact of its
insurance coverage in 2002. Accordingly, defense and resolution costs recovered from insurers reduce the insurance receivable. Prior to increasing the insurance receivable related to the asbestos
liability at December 31, 2002, the impact on results of operations for defense costs was the amount of those costs not covered by insurance. Since the Corporation expenses defense costs as
incurred, defense costs for asbestos-related litigation (net of insurance) have impacted, and will continue to impact, results of operations. The pretax impact for defense and resolution costs, net of
insurance, was $18 million in the first quarter of 2005 and $25 million in the first quarter of 2004, and was reflected in "Cost of sales."

In
September 2003, the Corporation filed a comprehensive insurance coverage case in the Circuit Court for Kanawha County in Charleston, West Virginia, seeking to confirm its
rights to insurance for various asbestos claims (the "West Virginia action"). Although the Corporation already has settlements in place concerning coverage for asbestos claims with many of its
insurers, including those covered by the 1985 Wellington Agreement, this lawsuit was filed against insurers that are not signatories to the Wellington Agreement and/or do not otherwise have agreements
in place with the Corporation regarding their asbestos-related insurance coverage. The Corporation continues to believe that its recorded receivable for insurance recoveries from all insurance
carriers is collectible. The Corporation reached this conclusion after a further review of its insurance policies, with due consideration given to applicable deductibles, retentions and policy limits,
after taking into account the solvency and historical payment experience of various insurance carriers; existing insurance settlements; and the advice of outside counsel with respect to the applicable
insurance coverage law relating to the terms and conditions of its insurance policies. In early 2004, several of the defendant insurers in the West Virginia action filed a competing action in the
Supreme Court of the State of New York, County of New York. As a result of motion practice, the West Virginia action was dismissed in August 2004 on the basis offorum
non conveniens(i.e., West Virginia is an inconvenient location for the parties). The comprehensive insurance coverage litigation is now proceeding in the New York courts.

Summary

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

Because
of the uncertainties described above, management cannot estimate the full range of the cost of resolving pending and future asbestos-related claims facing the Corporation and
Amchem. Management believes that it is reasonably possible

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that
the cost of disposing of the Corporation's asbestos-related claims, including future defense costs, could have a material adverse impact on the results of operations and cash flows for a
particular period and on the consolidated financial position of the Corporation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

ITEM 4. CONTROLS AND PROCEDURES.

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Corporation carried out an evaluation, under the supervision and
with the participation of the Corporation's Disclosure Committee and the Corporation's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the
design and operation of the Corporation's disclosure controls and procedures pursuant to Exchange Act Rule 15d-15(b); and whether any change has occurred in the Corporation's
internal control over financial reporting pursuant to Exchange Act Rule 15d-15(d). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded
that the Corporation's disclosure controls and procedures are effective and that no change in the Corporation's internal control over financial reporting occurred during the Corporation's most recent
fiscal quarter that materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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

ITEM 6. EXHIBITS.



Exhibit No.

Exhibit Description23

Analysis, Research & Planning Corporation's Consent.31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

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


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Union Carbide Corporation and Subsidiaries  Signatures

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

|                  |  | UNION CARBIDE CORPORATIONRegistrant
|----------------- |  | -----------------------------------
|Date: May 2, 2005 |  |                                    
|                  |  |                                    
|                  |  | By:                                
|                  |  |                                    
|                  |  | By:                                

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Union Carbide Corporation and Subsidiaries

(Unaudited)

|EXHIBIT NO. |  | DESCRIPTION                                                              |  | 
|----------- |  | ------------------------------------------------------------------------ |  | 
|23          |  | Analysis, Research & Planning Corporation's Consent.                     |  | 
|31.1        |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |  | 
|31.2        |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |  | 
|32.1        |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | 
|32.2        |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | 

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