10-K
UNION CARBIDE CORP /NEW/ filed this Form 10-K on 02/15/2018
Entire Document
 

Research and Development, Selling, General and Administrative Expenses
Research and development expenses were $19 million in 2017, compared with $18 million in 2016. Selling, general and administrative expenses were $6 million in 2017 compared with $7 million in 2016.

Restructuring and Asset Related Charges - Net
In September 2017, the Corporation approved restructuring actions that are aligned with DowDuPont's synergy targets. As a result of these actions, the Corporation recorded a pretax restructuring charge for severance and related benefit costs of $8 million in the third quarter of 2017. In November 2017, the Corporation approved additional restructuring actions in connection with the restructuring program. A pretax restructuring charge for severance and related benefit costs of $2 million was recorded in the fourth quarter of 2017, as well as charges of $62 million for the write-off and write-down of manufacturing and facility assets at multiple UCC sites. The impact of these charges is shown as "Restructuring and asset related charges - net" in the consolidated statements of income. These actions are expected to be complete by the end of 2019.

In the second quarter of 2016, the Corporation approved actions to further improve cost effectiveness with additional workforce reductions. As a result of these actions, the Corporation recorded a pretax restructuring charge for severance and related benefit costs of $1 million for the separation of approximately 5 positions. In the fourth quarter of 2016, the Corporation recorded an additional charge of $2 million related to the separation of an additional 16 positions, and in the second quarter of 2017, an additional charge of $2 million was recorded to adjust the charge for severance and related benefit costs. At December 31, 2017, the liability for severance and related benefit costs associated with the 2016 restructuring was zero, substantially completing the program.

In addition, in the second quarter of 2016, the Corporation recorded an unfavorable adjustment to the 2015 restructuring charge related to additional accruals for exit and disposal activities of $1 million. See Note 5 to the Consolidated Financial Statements for additional information on the Corporation's restructuring activities.

Asbestos-Related Charge
In the fourth quarter of 2016, the Corporation elected to change its method of accounting for asbestos-related defense and processing costs from expensing as incurred to estimating and accruing a liability. As a result of this accounting policy change, the Corporation recorded a pretax charge of $1,009 million for asbestos-related defense and processing costs through the terminal date of 2049. The Corporation also recorded a pretax charge of $104 million to increase the asbestos-related liability for pending and future claims through the terminal date of 2049. These charges were included in "Asbestos-related charge" in the consolidated statements of income. See Notes 1 and 14 to the Consolidated Financial Statements for details on the asbestos-related charge.

Equity in Earnings of a Nonconsolidated Affiliate
Equity in earnings of a nonconsolidated affiliate were zero in 2017, down from $2 million in 2016. In the second quarter of 2017, UCC completed the sale of its ownership interest in Asian Acetyls Co., Ltd. ("ASACCO"), a nonconsolidated affiliate accounted for under the equity method of accounting. ASACCO agreed to purchase all the shares of registered common stock owned by UCC resulting in a pretax gain of $4 million on the sale, included in "Sundry income (expense) - net" in the consolidated statements of income. For additional information on the nonconsolidated affiliate, see Note 10 to the Consolidated Financial Statements.

Sundry Income (Expense) - Net
Sundry income (expense) - net includes a variety of income and expense items such as the gain or loss on foreign currency exchange, commissions, charges for management services provided by Dow, interest income and gains and losses on sales of investments and assets. Sundry income (expense) - net for 2017 was net expense of $11 million compared with net income of $16 million in 2016. Sundry income (expense) - net included the pretax gain on the sales of land and terminal assets at the Corporation's Texas City, Texas site in the second quarters of 2016 and 2017 described below and other asset sales. See Note 6 to the Consolidated Financial Statements for additional information.

Texas City, Texas, Land Sale
On June 27, 2016, UCC signed agreements for the sale of excess land at the Texas City, Texas, manufacturing site. In the second quarter of 2016, UCC recorded a pretax gain of $46 million on the sale of one parcel of land. On April 3, 2017, the sale of the second parcel of land was completed which also included terminal assets and ancillary agreements for the supply of energy and site and terminal services, and a pretax gain of $23 million was recorded in the second quarter 2017.

Interest Expense and Amortization of Debt Discount
Net interest expense (interest expense less capitalized interest) and amortization of debt discount for 2017 was $28 million, compared with $25 million in 2016, primarily driven by a decrease in capitalized interest in 2017 due to the reduction in capital spending. See Notes 9 and 13 to the Consolidated Financial Statements for additional information.

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