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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, 2002

Commission file number 1-1463

UNION CARBIDE CORPORATIONA Subsidiary of The Dow Chemical Company(Exact name of registrant as specified in its charter)

New York

13-1421730(State or other jurisdiction of

(I.R.S. Employer Identification No.)incorporation or organization)


39 Old Ridgebury Road, Danbury, Connecticut 06817-0001(Address of principal executive offices)        (Zip Code)

Registrant's
telephone number, including area code:203-794-2000

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.

At
March 31, 2002, 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
A Subsidiary of The Dow Chemical Company

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                         |                                                 
|PART IIOTHER INFORMATION    |                                                                                               |                                                 
|                             | Item 1.    Legal Proceedings                                                                  |                                                 
|                             | Item 6.    Exhibits and Reports on Form 8-K                                                   |                                                 
|SIGNATURE                    |                                                                                               | 20                                              

2

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Note A)

Union Carbide Corporation and Subsidiaries
Consolidated Statements of Income

|                                                                     |                                                         | Three Months Ended |      
|-------------------------------------------------------------------- | ------------------------------------------------------- | ------------------ | -----
|
|                                                                     | Net trade sales                                         |                    | $    
|                                                                     | Net sales to related companies                          |                    |      
|                                                                     |                                                         |                    |      
|Total Net Sales                                                      |                                                         |                    | 1,118
|                                                                     |                                                         |                    |      
|                                                                     | Cost of sales                                           |                    |      
|                                                                     | Research and development expenses                       |                    |      
|                                                                     | Selling, general and administrative expenses            |                    |      
|                                                                     | Amortization of intangibles                             |                    |      
|                                                                     | Merger-related expenses and restructuring               |                    |      
|                                                                     | Insurance and finance company operations, pretax income |                    |      
|                                                                     | Equity in earnings of nonconsolidated affiliates        |                    |      
|                                                                     | Sundry expensenet                                      |                    |      
|                                                                     |                                                         |                    |      
|Earnings (Loss) before Interest, Income Taxes and Minority Interests |                                                         |                    | 64   
|                                                                     |                                                         |                    |      
|                                                                     | Interest income                                         |                    |      
|                                                                     | Interest expense and amortization of debt discount      |                    |      
|                                                                     |                                                         |                    |      
|Income (Loss) before Income Taxes and Minority Interests             |                                                         |                    | 46   
|                                                                     |                                                         |                    |      
|                                                                     | Provision (Credit) for income taxes                     |                    |      
|                                                                     | Minority interests' share in income                     |                    |      
|                                                                     |                                                         |                    |      
|Net Income (Loss) Available for Common Stockholder                   |                                                         | $                  | 37   
|                                                                     |                                                         |                    |      
|Depreciation                                                         |                                                         | $                  | 76   
|                                                                     |                                                         |                    |      
|Capital Expenditures                                                 |                                                         | $                  | 9    
|                                                                     |                                                         |                    |      

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,
2002                                                       |       | Dec. 31,
2001
|-------------------------- | --------------------------------------------- | -------------------------------------------------------------------- | ----- | -------------
|Assets                     |                                               |                                                                      |       |              
|Current Assets             |                                               |                                                                      |       |              
|                           | Cash and cash equivalents                     |                                                                      | $     | 32           
|                           | Accounts and notes receivable:                |                                                                      |       |              
|                           |                                               | Trade (net of allowance for doubtful receivables2002: $9; 2001: $8) |       |              
|                           |                                               | Related companies                                                    |       |              
|                           |                                               | Other                                                                |       |              
|                           | Inventories:                                  |                                                                      |       |              
|                           |                                               | Finished and work in process                                         |       |              
|                           |                                               | Materials and supplies                                               |       |              
|                           | Deferred income tax assetscurrent            |                                                                      |       | 281          
|                           |                                               |                                                                      |       |              
|                           | Total current assets                          |                                                                      |       | 2,106        
|                           |                                               |                                                                      |       |              
|Investments                |                                               |                                                                      |       |              
|                           | Investments in related companies, at cost     |                                                                      |       | 480          
|                           | Investments in nonconsolidated affiliates     |                                                                      |       | 483          
|                           | Other investments                             |                                                                      |       | 57           
|                           | Noncurrent receivables                        |                                                                      |       | 351          
|                           | Noncurrent receivables from related companies |                                                                      |       | 583          
|                           |                                               |                                                                      |       |              
|                           | Total investments                             |                                                                      |       | 1,954        
|                           |                                               |                                                                      |       |              
|Property                   |                                               |                                                                      |       |              
|                           | Property                                      |                                                                      |       | 7,705        
|                           | Less accumulated depreciation                 |                                                                      |       | 4,934        
|                           |                                               |                                                                      |       |              
|                           | Net property                                  |                                                                      |       | 2,771        
|                           |                                               |                                                                      |       |              
|Other Assets               |                                               |                                                                      |       |              
|                           | Goodwill (Note E)                             |                                                                      |       | 26           
|                           | Other intangible assets (Note E)              |                                                                      |       | 26           
|                           | Deferred income tax assetsnoncurrent         |                                                                      |       | 354          
|                           | Deferred charges and other assets             |                                                                      |       | 286          
|                           |                                               |                                                                      |       |              
|                           | Total other assets                            |                                                                      |       | 692          
|                           |                                               |                                                                      |       |              
|Total Assets               |                                               | $                                                                    | 7,523 |              
|                           |                                               |                                                                      |       |              

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,
2002    |       | Dec. 31,
2001 |    
|------------------------------------------ | ---------------------------------------------------- | ----------------- | ----- | ------------- | ---
|Liabilities and Stockholder's Equity       |                                                      |                   |       |               |    
|Current Liabilities                        |                                                      |                   |       |               |    
|                                           | Notes payable:                                       |                   |       |               |    
|                                           |                                                      | Related companies |       | $             | 585
|                                           |                                                      | Other             |       |               | 7  
|                                           | Long-term debt due within one year                   |                   |       | 13            |    
|                                           | Accounts payable:                                    |                   |       |               |    
|                                           |                                                      | Trade             |       |               | 225
|                                           |                                                      | Related companies |       |               | 777
|                                           |                                                      | Other             |       |               | 55 
|                                           | Income taxes payable                                 |                   |       | 58            |    
|                                           | Accrued and other current liabilities                |                   |       | 232           |    
|                                           |                                                      |                   |       |               |    
|                                           | Total current liabilities                            |                   |       | 1,952         |    
|                                           |                                                      |                   |       |               |    
|Long-Term Debt                             |                                                      |                   | 1,718 |               |    
|                                           |                                                      |                   |       |               |    
|Other Noncurrent Liabilities               |                                                      |                   |       |               |    
|                                           | Pension and other postretirement benefitsnoncurrent |                   |       | 717           |    
|                                           | Other noncurrent obligations                         |                   |       | 979           |    
|                                           |                                                      |                   |       |               |    
|                                           | Total other noncurrent liabilities                   |                   |       | 1,696         |    
|                                           |                                                      |                   |       |               |    
|Minority Interest in Subsidiaries          |                                                      |                   | 7     |               |    
|                                           |                                                      |                   |       |               |    
|Stockholder's Equity                       |                                                      |                   |       |               |    
|                                           | Common stock (1,000 shares authorized and issued)    |                   |       |              |    
|                                           | Additional paid-in capital                           |                   |       |              |    
|                                           | Retained earnings                                    |                   |       | 2,237         |    
|                                           | Accumulated other comprehensive loss                 |                   |       | (87           | )  
|                                           |                                                      |                   |       |               |    
|                                           | Net stockholder's equity                             |                   |       | 2,150         |    
|                                           |                                                      |                   |       |               |    
|Total Liabilities and Stockholder's Equity |                                                      | $                 | 7,523 |               | $  
|                                           |                                                      |                   |       |               |    

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 (Loss)                                                                        |                                                                                           | $
|                                        | Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                                                                           |  
|                                        |                                                                                          | Depreciation and amortization                                                             |  
|                                        |                                                                                          | Credit for deferred income tax                                                            |  
|                                        |                                                                                          | Earnings/losses of nonconsolidated affiliates less than (in excess of) dividends received |  
|                                        |                                                                                          | Minority interests' share in income                                                       |  
|                                        |                                                                                          | Net gain on sales of property                                                             |  
|                                        |                                                                                          | Other net (gain) loss                                                                     |  
|                                        |                                                                                          | Merger-related expenses and restructuring                                                 |  
|                                        |                                                                                          | Tax benefitnonqualified stock option exercises                                           |  
|                                        | Changes in assets and liabilities that provided (used) cash:                             |                                                                                           |  
|                                        |                                                                                          | Accounts and notes receivable                                                             |  
|                                        |                                                                                          | Related company receivables                                                               |  
|                                        |                                                                                          | Inventories                                                                               |  
|                                        |                                                                                          | Accounts payable                                                                          |  
|                                        |                                                                                          | Related company payables                                                                  |  
|                                        |                                                                                          | Other assets and liabilities                                                              |  
|                                        |                                                                                          |                                                                                           |  
|                                        | Cash used in operating activities                                                        |                                                                                           |  
|                                        |                                                                                          |                                                                                           |  
|Investing Activities                    |                                                                                          |                                                                                           |  
|                                        | Capital expenditures                                                                     |                                                                                           |  
|                                        | Proceeds from sales of property                                                          |                                                                                           |  
|                                        | Investments in nonconsolidated affiliates                                                |                                                                                           |  
|                                        | Advances to nonconsolidated affiliates                                                   |                                                                                           |  
|                                        | Purchases of investments                                                                 |                                                                                           |  
|                                        | Proceeds from sales of investments                                                       |                                                                                           |  
|                                        |                                                                                          |                                                                                           |  
|                                        | Cash used in investing activities                                                        |                                                                                           |  
|                                        |                                                                                          |                                                                                           |  
|Financing Activities                    |                                                                                          |                                                                                           |  
|                                        | Changes in short-term notes payable                                                      |                                                                                           |  
|                                        | Changes in notes payable to related companies                                            |                                                                                           |  
|                                        | Payments on long-term debt                                                               |                                                                                           |  
|                                        | Purchases of treasury stock                                                              |                                                                                           |  
|                                        | Proceeds from sales of common stock                                                      |                                                                                           |  
|                                        | Distributions to minority interests                                                      |                                                                                           |  
|                                        | Dividends paid to stockholders                                                           |                                                                                           |  
|                                        |                                                                                          |                                                                                           |  
|                                        | Cash provided by financing activities                                                    |                                                                                           |  
|                                        |                                                                                          |                                                                                           |  
|Effect of Exchange Rate Changes on Cash |                                                                                          |                                                                                           | 
|                                        |                                                                                          |                                                                                           |  
|Summary                                 |                                                                                          |                                                                                           |  
|                                        | Decrease in cash and cash equivalents                                                    |                                                                                           |  
|                                        | Cash and cash equivalents at beginning of year                                           |                                                                                           |  
|                                        |                                                                                          |                                                                                           |  
|                                        | Cash and cash equivalents at end of period                                               |                                                                                           | $
|                                        |                                                                                          |                                                                                           |  

See Notes to the Consolidated Financial Statements.

6

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Union Carbide Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income

|                                                   |                                  | Three Months Ended |   
|-------------------------------------------------- | -------------------------------- | ------------------ | --
|
|Net Income (Loss) Available for Common Stockholder |                                  | $                  | 37
|                                                   |                                  |                    |   
|Other Comprehensive Income (Loss), Net of Tax      |                                  |                    |   
|                                                   | Unrealized losses on investments |                    |   
|                                                   | Translation adjustments          |                    |   
|                                                   |                                  |                    |   
|                                                   | Total other comprehensive loss   |                    |   
|                                                   |                                  |                    |   
|Comprehensive Income (Loss)                        |                                  | $                  | 33
|                                                   |                                  |                    |   

See Notes to the Consolidated Financial Statements.

7

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Union Carbide Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

(Unaudited)

Note AConsolidated Financial Statements

Except as otherwise indicated by the context, the terms "Corporation" and "UCC" as used herein mean Union Carbide Corporation and its consolidated subsidiaries.
The unaudited interim consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) which, in the opinion of management, are considered necessary for a fair
presentation of the results for the periods covered.

Since
February 6, 2001, the Corporation has been a wholly owned subsidiary of The Dow Chemical Company ("Dow") as a consequence of the Corporation merging with a wholly owned
subsidiary of Dow effective that date (the "merger" or "Dow merger"). 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 D for further discussion. 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 the Corporation under SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," and no 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.

Certain
reclassifications of prior years' amounts have been made to conform to the presentation adopted for 2002. These statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in a Form 10-K filed by the Corporation on March 20, 2002 for the year ended December 31, 2001.

Note BAccounting Changes

The Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," in June 1998.
SFAS No. 133 requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In
June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging ActivitiesDeferral of the Effective Date of FASB Statement No. 133." In
June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities," an amendment of SFAS No. 133. Effective January 1,
2001, the Corporation adopted SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138, and as interpreted by the FASB and the Derivatives Implementation Group through "Statement
133 Implementation Issues." Due to the Corporation's limited use of financial instruments to manage its exposure to market risks, primarily related to changes in foreign currency exchange rates, the
adoption of SFAS No. 133 did not have a material impact on the Corporation's consolidated financial statements.

In
September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." This statement, which
replaces SFAS No. 125, revises the standards for accounting for securitizations and other transfers of financial assets and collateral, and requires certain disclosures, but it carries over
most of the provisions of SFAS No. 125 without reconsideration. SFAS No. 140 was effective for transfers and servicing of financial assets and extinguishments of liabilities occurring
after March 31, 2001. It was effective for recognition and

8

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reclassifications of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of SFAS No. 140
did not have a material impact on the Corporation's consolidated financial statements.

In
July 2001, the FASB issued SFAS No. 141, "Business Combinations," which replaces Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations."
Under SFAS No. 141, all business combinations initiated after June 30, 2001 are accounted for using the purchase method. The application of SFAS No. 141 did not result in the
reclassification of any amounts previously recorded as goodwill or other intangible assets.

In
July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets," which replaces APB Opinion No. 17, "Intangible Assets," and establishes new
accounting and reporting requirements for goodwill and other intangible assets, effective for fiscal years beginning after December 15, 2001. Under this statement, goodwill and intangible
assets that are deemed to have indefinite useful lives are not amortized, but are subject to impairment testing. Impairment testing is required to be performed at adoption and at least annually
thereafter. On an ongoing basis (absent any impairment indicators), Dow's global businesses plan to perform impairment tests during the fourth quarter of each year, in conjunction with the annual
budgeting process. Effective January 1, 2002, UCC ceased all amortization of goodwill, which is its only intangible asset with an indefinite useful life, and tested recorded goodwill for
impairment by comparing fair value, determined using a discounted cash flow method, with carrying value. The results of the Corporation's goodwill impairment test indicated no impairment.

As
required by SFAS No. 142, the Corporation also reassessed the useful lives and the classification of its identifiable intangible assets and determined them to be appropriate.
See Note E for additional disclosures regarding the adoption of SFAS No. 142.

In
August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which requires an entity to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred and a corresponding increase in the related long-lived asset. The liability is adjusted to its present value each period and the
asset is depreciated over its useful life. A gain or loss may be incurred upon settlement of the liability. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The
Corporation is currently assessing the impact of adopting this statement.

In
October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which replaces SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," and provisions of APB Opinion No. 30, "Reporting the Results of
OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of segments of a
business. The statement creates one accounting model, based on the framework established in SFAS No. 121, to be applied to all long-lived assets including discontinued operations.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The Corporation determined that its current accounting policy for the impairment of long-lived
assets is consistent with SFAS No. 144.

Note CMerger-related Expenses and Restructuring

On March 29, 2001, management made certain decisions relative to employment levels, duplicate assets and facilities and excess capacity resulting from the
Dow merger. These decisions were based on management's assessment of the actions necessary to achieve synergies as a result of the merger. The economic effects of these decisions, combined with
merger-related transaction costs and certain asset impairments, resulted in a pretax special charge in the first quarter of 2001 of $1,275 million which was reduced by $52 million in
subsequent quarters.

9

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The
special charge included $629 million for employee-related costs, which consisted predominantly of provisions for employee severance, change of control obligations, medical and
retirement benefits, and outplacement services. The charge was increased by $3 million during 2001 as the original estimates of amounts expected to be paid were further refined. The integration
plans include a workforce reduction of approximately 4,200 people. The charge for severance was based upon the severance plan provisions communicated to employees. According to the initial integration
plans, the Corporation expected to expend approximately 66 percent of the employee-related costs within the first two years following the merger, though the timing of severance payments is
dependent upon employee elections. Expenditures with respect to employee-related costs associated with pension and postretirement benefit plans will occur over a much more extended period. The
Corporation is in the process of determining these costs and the period of time over which they will be expended. In the first quarter of 2002, severance of $57 million was paid to
approximately 450 former employees, bringing the program-to-date amount to $384 million paid to approximately 3,350 former employees.

The
special charge included $41 million for transaction costs, which consisted primarily of investment banking, legal and accounting fees. All of these costs had been paid at
March 31, 2001.

The
special charge included $605 million for the write-down of duplicate assets and facilities directly related to the Dow merger, the loss on divestitures required to
obtain regulatory approval for the Dow merger, asset impairments and lease abandonment reserves. Duplicate assets consist principally of capitalized software costs, information technology equipment
and research and development facilities and equipment, all of which were written off during the first quarter. The fair values of the impaired assets, which include production facilities and
transportation equipment, were determined based on discounted cash flows and an appraisal, respectively. These components of the special charge will require limited future cash outlays, and will
result in a decrease in annual depreciation of approximately $62 million. In November 2001, the decision to close a research and development facility in Bound Brook, New Jersey was
reversed, in light of difficult economic conditions; the facility will now remain open until at least 2005. Consequently, $55 million of the special charge was reversed during the fourth
quarter. At December 31, 2001, $77 million of the reserve remained for the abandonment of leased facilities and demolition costs; at March 31, 2002, $73 million of the
reserve remained.

The
following table summarizes the activity in the special charge reserve:

In millions

Labor-related
Costs

Transaction
Costs

Write-down of
Duplicate Assets
and Facilities

Total2001:Special charge

$
629

$
41

$
605

$
1,275Adjustments to reserve


3





(55
)

(52
)Charges against reserve

$
(327
)

(41
)

(473
)

(841
)Balance at Dec. 31, 2001

$
305




$
77

$
3822002:Charges against reserve

$
(57
)



$
(4
)

(61
)Balance at March 31, 2002

$
248




$
73

$
321


Note DRelated Party Transactions

In the second quarter of 2001, the Corporation commenced selling products to Dow to simplify the customer interface process. Products are sold to Dow in
accordance with the terms of Dow's longstanding intercompany pricing policies. The application of these policies results in products being sold to Dow at market-based prices. The Corporation procures
certain commodities and raw materials

10

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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
expensenet" in the consolidated statement of income. Purchases from that Dow subsidiary during the first quarter of 2002 were approximately $236 million.

Subsequent
to the merger, the Corporation entered into a master services agreement with Dow whereby Dow provides services, including accounting, legal, treasury (investments, cash
management, risk management, insurance), procurement, and business management for UCC. This arrangement results in a quarterly charge of approximately $4 million (included in "Sundry
expensenet") for management of the functions in addition to direct charges from the various service providers based upon the terms of the agreement.

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. The noncurrent receivable from related
companies of $583 million is primarily related to the funding of ethylene and polyethylene plants in Canada which are now owned by Dow Chemical Canada Inc. This note receivable has a
LIBOR-based interest rate and matures in 2008.

Note EGoodwill and Other Intangible Assets

Accumulated amortization for goodwill upon adoption of SFAS No. 142 was $50 million. The following table provides pro forma results for the three
months ended March 31, 2001, compared with actual results for the three months ended March 31, 2002, as if the non-amortization provisions of SFAS No. 142 had been
applied:

Three months endedIn millions

March 31,
2002

March 31,
2001Reported net income (loss)

$
37.0

$
(871.0
)Add back:Goodwill amortization, net of tax





1.0Equity method goodwill amortization, net of tax





0.5Adjusted net income (loss)

$
37.0

$
(869.5
)


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

|                                     |                                    | At March 31, 2002 |   | At December 31, 2001
|------------------------------------ | ---------------------------------- | ----------------- | - | --------------------
|
|Intangible assets with finite lives: |                                    |                   |   |                     
|                                     | Licenses and intellectual property |                   | $ | 35                  
|                                     | Patents                            |                   |   | 5                   
|                                     | Software                           |                   |   | 178                 
|                                     | Other                              |                   |   | 1                   
|                                     |                                    |                   |   |                     
|                                     | Total                              |                   | $ | 219                 
|                                     |                                    |                   |   |                     

11

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Amortization
expense for other intangible assets was $2 million for the three months ended March 31, 2002, and $2 million for the three months ended March 31,
2001. Estimated amortization expense for 2002 and the five succeeding fiscal years is as follows:

In millions

Estimated
Amortization
Expense2002

$
8.32003


5.32004


4.82005


0.92006


0.32007


0.2


Note FCommitments and Contingent Liabilities

Environmental

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 $145 million at March 31, 2002 for environmental matters, including
$37 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. In some of these legal proceedings and claims, the cost of remedies that may be sought or damages claimed is substantial.

Separately,
the Corporation is involved in a large number of asbestos-related suits filed, for the most part, in various state courts at various times over the past three decades. These
suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both general and punitive damages, often in very large amounts. 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 divested
subsidiaryAmchem Products, Inc. ("Amchem").

Typically,
the Corporation is only one of many named defendants, many of which, including UCC and Amchem, were members of the Center for Claims Resolution ("CCR") which sought to resolve
asbestos cases on behalf of its members. The CCR has ceased operating in this manner although it still administers certain settlements. The Corporation now utilizes Peterson Asbestos Claims Enterprise
for claims processing and insurance invoicing.

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The
rate at which plaintiffs file asbestos-related suits against the Corporation and Amchem has been influenced by the bankruptcy filings of several former CCR members. The Corporation
expects more asbestos-related suits to be filed against it and Amchem in the future. The Corporation cannot estimate the range of liability that will result from these future cases. The Corporation
will aggressively defend or reasonably resolve, as appropriate, both pending and future cases. To date, substantially all of the amounts paid by the Corporation to resolve asbestos-related suits have
been covered by third-party insurance.

For
pending cases, the Corporation had asbestos-related litigation accruals of $233 million and related insurance recovery receivables of $223 million at
December 31, 2001. At March 31, 2002, the Corporation had asbestos-related litigation accruals of $270 million and related insurance recovery receivables of $258 million.
In addition, at March 31, 2002, the Corporation had other litigation accruals, unrelated to environmental or asbestos litigation, of $15 million and related insurance recovery
receivables of $15 million.

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 the ultimate outcome of all known and future claims, after provisions for insurance,
will not have a material adverse effect on the consolidated financial position of the Corporation, but could have a material effect on consolidated results of operations in a given quarter or year.
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

The Corporation has purchase agreements including one major agreement in 2001 (two in 2000) for the purchase of ethylene-related products in the United States.
Total purchases under these agreements were $63 million in 2001 and $171 million in 2000. The fixed and determinable portion of obligations under these purchase commitments at
December 31, 2001 are presented in the following table:

Fixed and Determinable Portion of Take or Pay and
Throughput Obligations at December 31, 2001    (in millions)2002

$
172003


172004


62005 through expiration of contracts


Total

$
40


Other

The Corporation had additional contingent obligations relating primarily to performance agreements at December 31, 2001 totaling $173 million, of
which $19 million related to guarantees of debt.

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

Pursuant to General Instruction H of Form 10-Q, this section includes only management's narrative analysis of the results of operations for the
three months ended March 31, 2002, the most recent fiscal year-to-date period, compared with the three months ended March 31, 2001, the corresponding
year-to-date period in the preceding fiscal year.

References
below to "Dow" refer to The Dow Chemical Company and its subsidiaries.

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 $37 million for the first quarter of 2002, compared with a net loss of $871 million last year. The results
for the first quarter of 2001 were impacted by a special charge of $1,275 million ($770 million after tax) related to the Dow merger (see Note C to the Consolidated Financial
Statements).

Total
net sales for the first quarter of 2002 decreased 27 percent to $1,118 million from $1,536 million in the first quarter last year. Significant price declines
occurred in polyethylene, polypropylene and ethylene oxide/ethylene glycol which more than offset increased volumes for these products. The decline in net sales this year is also partially
attributable to the absence of sales from former subsidiaries in Europe, Latin America and Canada in the first quarter of 2002. Net trade sales for the first quarter declined 91 percent
compared with last year as trade sales have been replaced by sales to Dow in order to simplify the customer interface process. Sales to Dow in the first quarter of 2002 were $971 million.

Cost
of sales declined $470 million (32 percent) in the first quarter of 2002 compared with last year, primarily due to lower feedstock and energy costs and, as a result,
gross margin improved to 9.5 percent from 3.9 percent last year.

Earnings
before interest, taxes, and minority interests ("EBIT") was $64 million in the first quarter of 2002, compared with a loss of $1,307 million last year. The results
for the first quarter of 2001 were impacted by merger-related expenses and restructuring charges of $1,275 million (see Note C to the Consolidated Financial Statements).

In
the first quarter of 2002, research and development expenses declined $14 million, and selling, general and administrative expenses declined $41 million compared with
last year. These declines were attributable to the realization of cost synergies associated with the merger.

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Equity
in earnings of nonconsolidated affiliates decreased from $12 million in the first quarter of 2001 to $3 million in the first quarter of 2002. The decline is
primarily due to lower earnings from EQUATE Petrochemical Company and UOP LLC.

Sundry
expense-net for the first quarter of 2002 was $3 million, compared with $1 million last year. The increased expense in 2002 relates primarily to related
company commissions and management services fees (see Note D to the Consolidated Financial Statements).

Interest
income for the first quarter of 2002 increased to $15 million from $2 million last year. This increase is primarily due to interest on the noncurrent receivable
from related companies. Interest expense and amortization of debt discount for the first quarter decreased to $33 million from $51 million for the first quarter of 2001. This is due to a
reduction in short-term borrowings of $935 million at March 31, 2002 compared with March 31, 2001.

Asbestos-Related Matters

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. In some of these legal proceedings and claims, the cost of remedies that may be sought or damages claimed is substantial.

Separately,
the Corporation is involved in a large number of asbestos-related suits filed, for the most part, in various state courts at various times over the past three decades. These
suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both general and punitive damages, often in very large amounts. 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 divested
subsidiaryAmchem Products, Inc. ("Amchem").

Typically,
the Corporation is only one of many named defendants, many of which, including UCC and Amchem, were members of the Center for Claims Resolution ("CCR") which sought to resolve
asbestos cases on behalf of its members. As members of the CCR, the Corporation's and Amchem's strategy was to settle claims as two relatively small (percentage wise) members of the CCR group. The CCR
has ceased operating in this manner although it still administers certain settlements. The Corporation now utilizes Peterson Asbestos Claims Enterprise for claims processing and insurance invoicing.

The
rate at which plaintiffs file asbestos-related suits against the Corporation and Amchem has been influenced by the bankruptcy filings of several former CCR members. Cases filed
against the Corporation and Amchem contain a large percentage of claims that do not allege a particular injury ("Non-Specific Claims").

Dow
now owns 100 percent of the Corporation and has been retained to provide its experience in mass tort litigation to manage the Corporation's response to asbestos-related
liability. The Corporation has hired new outside counsel to serve as national trial counsel to aggressively defend or reasonably resolve, as appropriate, both pending and future cases. The Corporation
expects more asbestos-related suits to be filed against it and Amchem in the future. The Corporation cannot estimate the range of liability that will result from these future cases. As a consequence
of all of the above-stated facts, the Corporation lacks any remotely comparable loss history from which to assess either the number of or the value of future claims. To date, substantially all of the
amounts paid by the Corporation to resolve asbestos-related suits have been covered by third-party insurance.

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For
pending cases, the Corporation had asbestos-related litigation accruals of $233 million at December 31, 2001 and related insurance recovery receivables of
$223 million. At March 31, 2002, the Corporation had asbestos-related litigation accruals of $270 million and related insurance recovery receivables of $258 million. The
litigation accruals were determined by considering the number of pending claims filed against the Corporation and Amchem, taking into account claims administration records indicating the severity of
the alleged injury. Because many of the pending claims are Non-Specific Claims, the Corporation has calculated several probable liability outcomes based on estimates and historic
distributions of personal injury claim types and settlement and resolution amounts. The liability estimates at March 31, 2002 ranged from a low of $236 million to a high of
$325 million. Upon review by management, it was determined that the most reasonable estimate was $270 million, which is well within the estimable range. The Corporation's asbestos
litigation accrual at March 31, 2002, reflected the receipt of notification in the first quarter of additional claims filed in 2001, as well as new claims filed in the first quarter of 2002 and
the use of the latest average resolution values to calculate probable outcomes. The number of claims filed in the first quarter of 2002 was substantially below the high level of claims filed in the
middle of last year.

The
insurance receivables for asbestos-related liability were 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 insurance receivable associated with the most reasonable probable liability outcome for pending
claims is $258 million and has been recorded at March 31, 2002. This resulted in a net income statement impact to the Corporation of $2 million for asbestos-related expense in the
first quarter of 2002. In all of the probable outcomes for pending claims, sufficient insurance coverage exists to provide a similar percentage of coverage for the accrued liability. If the maximum
probable outcome were in fact to materialize, the impact would be an additional charge of $3 million to income, which is not material to the consolidated financial statements. In addition,
insurance is available for future claims.

The
amounts recorded for the litigation accrual and related insurance receivable are based upon currently known facts. If the number of claims and the cost to resolve such claims differ
from the current assumptions used by management in arriving at its estimates for the recorded amounts, this may impact management's future assessments of the ultimate outcome of asbestos-related legal
proceedings.

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 the ultimate outcome of all known and future claims, after provisions for insurance,
will not have a material adverse effect on the consolidated financial position of the Corporation, but could have a material effect on consolidated results of operations in a given quarter or year.
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.

OTHER MATTERS

Accounting Changes

See Note B to the Consolidated Financial Statements for a discussion of accounting changes.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires
management to make judgments,

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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, 2001, describes the significant accounting policies and methods used in the preparation of the Consolidated
Financial Statements. Following are some of the Corporation's critical accounting policies impacted by judgments, assumptions and estimates.



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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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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 2002. 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 AND REPORTS ON FORM 8-K



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SIGNATURE

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.

|Date: May 3, 2002 |  |     |  | UNION CARBIDE CORPORATIONRegistrant                                                                                                       
|----------------- |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|                  |  | By: |  | /s/FRANK H. BRODFrank H. Brod Vice President and ControllerThe Dow
Chemical Company
Authorized Representative of
Union Carbide Corporation

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