Dow Chemical Company Annual Report - 1946

TH ANNUAL REPORT

49

FORTHE YEAR ENDED MAY 31,1946

THE DOW CHEMICAL COMPANY MIDLAND

MICHIGAN

The next annual meeting of stockholders will be held on Wednesday, August 28, 1946, at two o’clock in the afternoon (Eastern Standard Time) at the Company’s office in Midland, Michigan. A formal notice of the meeting, together with a proxy statement and form of proxy, will be mailed to each holder of common stock separately from but concurrently herewith, at which time proxies will be solicited by the management.

TO THE THE

STOCKHOLDERS

DOW

We annual

present

report

interest

COMPANY:

herewith

the 49th

OS the summotion

to every stockholder;

as nearly

con make,

diversified

conversely,

amount

of literature

intention

and

to write

too big for anyone

the almost

operations.

of the Company

Company

operations.

innumerable

detail

Throughout

the stockholders

of the Company

condition

of the Company

in great

to read.

concerning

of keeping

report

it would

the year,

products

currently

with

we make

be necessary

and Company

to present

However,

products

however,

An

is of vital

it is the duty of the management

picture

activities

if we attempted

annual

of the financial

OS possible the complete

our extremely volume

OF

CHEMICAL

or

to publish

we publish operations

Q

o large with

the

informed.

EARN I NGSThe income after

first

item of interest

was equivalent

deducting

$I,21

rable earnings

is the dollar

is less by 18%

mately

of the

volume

in sales,

$1,700,000

labor

war.

of earnings.

3 1, 1945

of sales, which

amounted

attained

the decrease item

stock.

The compa-

per shore.

last year,

than

net stock,

Another

to $101,813,839.

for

This

but we consider of the war.

the current

and unusual

other

consolidated

of common

at the cessation

in earnings

by write-offs

largest

The

shares

were $6.02

of many contracts

rates,

The

1,248,706

the year on the preferred May

the peak of $124,570,200

by increased

cessation

during

of the cancellation

to the decrease

occasioned the

than

in view

addition

paid

for the fiscal year ending

item of interest excellent

5,476

is the statement per shore on the

to $3.95

charges

amortization

year

it In

was

as a result

of

WQS approxi-

for obsolescence.

AMORTIZATIONDuring mately

the war

$44,000,000

tificates

period

the Company

for emergency

of necessity

permitting

its subsidiaries expended approxiThese were purchased under cer-

period ending

of the cost of such facilities with

yeors prior to the current

year amortization

With

and by Presidential

permitted

the end of the war

for income

September

30,

1945.

on the shortened approximately ber

and

facilities.

the amortization

period of five years, or a shortened During

war

30,

1945

amortization mately Revenue.

tax purposes Adjustments

period, amounted

and to

token

approximotely

proclamation,

basis.

the Company period to end the effect that,

was OS of based

year was increased

for the four months

$6,300,000.

period.

on the five-year

for years prior to the current

the amortization

for prior years, refunds were tentatively

$11,300,000

was

to shorten the amortization were mode on the books with

amortization

$13,100,000

over Q

the end of the emergency

ended

Septem-

As Q result of the increased

of income and excess profits taxes allowed and paid by the Bureau

of approxiof Internal

Because

certain

purposes were deemed

of the facilities

books OS of May 3 1, 1946, will

Federal

income

were

useful,

in the amount

subject to regular

be

which

to be economically depreciation

fully

amortized

such facilities

of approximately

in the future,

for

were

income

reinstated

tax

on the

$9,600,000.

which

This amount not be deductible for

will

tax purposes.

For the effect of the foregoing transactions reference is mode men ts of consolidated income and surplus included in this report.

to

the

state-

RENEGOTIATIONOne other item of importance to stockholders is renegotiation. Under the provisions of the lows covering the war activities, it was specifically determined that there

should

OS 85.5

not be any excessive

per cent,

individual

products

and to prevent At

times

the pyramiding

all

the

most efficient over and greater

mode during

it was Q rather

applying

skill

plant

prosperity

was

apparently

the

Q two-year

NEW

our

period,

period

paid

operation

Company

with

did

charge

to

to penalty

think

for

not

that

building

of the Company

lower costs.

have

that

to pay

Midland

any

by the

the war is peace and

costs to our customers,

and still

the exception

a total

of renegotiation.

stopped

been the practice

by lower

few

and

to to

This practice renegotiation

Ammonia

Company

of $12,675.

CONSTRUCTIONWhen

ter of fact, tion,

but

materials

only

the

nanced

three from

which

most

needed

at

financing

the again

interest

built.

another

As

new product

over $40,000,000. to complete

to capital,

entirely time,

after

and

con

although

a

will

be built.

come

result,

the

accumulation

developments

of

now stands on the

This

is a program

very

probably

it may

As Q mat-

up for considera-

which

may take

be substantially

require

additional

fi-

capitol,

obtained.

of o year

and

more plants

plant

were and

and depreciation,

reference

report

called

necessary

of something

earnings

With

more available, one new

additions

or four years

con be readily

financial were

the war

construction

books at a total the next

become

all during

authorized

the

reason

volume

of very

cost to the government,

Be that as it may make for more lasting

should

operation

price

justification we

be subject

It has always

taxes ran as high

The

the final the

of building.

the war

Even though

when

might

capable during

in larger

the war

represented

to swallow we

of improved

for the Company

over

pill

in peacetime.

gain

taxes.

renegotiation.

of costs is therefore

available,

gained

pass on the benefits

during

before

wartime

bitter

we were

experience

charges

profits

there WQS a sound reason for

it

when

ago,

it should there

retired was the

be brought

appeared

on September

thought

cash

was

to your attention

$12,000,000 1, 1945.

wise

to call

more

urgently

the

that

in debentu.res.

in our These

Since these funds were notes

needed,

with

the

thought

in the meantime

not of

saving

charges.

EMPLOYMENTAs of May ment.

On that

responsible Texas

and

for

31,

dote

1946

we ore not for

our total

1,275

Los Angeles,

employment

employees California.

operating

from

the peak

WQS 12,362.

of our wartime In

addition,

the government-owned

Including

these

plants,

employ-

we

ore

still

plants

in Velasco,

of the 5,144

employees

who

left

our employ and

to join

above

dote,

joined

our organization.

GOVERNMENT

the

the ormed

in addition,

2,266

We

but

are

leased and are operating

hove

no longer

of this year we bought

responsible

COMPANY

to us OS of the

employed

by us hove

Warfare

of

chemical

foundation

production

chlorine.

The

Company

of the chlorine

produced

California plant. of other products, product.

We

must

use of our own

Chemical

within

our plant

is one of the is liquefied

show

be best in mind

summarized by that the inter-

many

overlapping example,

of sodium

soda is finished largest

and

chloride

to produce

sold to the

customers.

Only

and sold as such, and that

uses as the

market, a small

very

caustic and

The

percentage

is from our Pittsburg,

The balance of our chlorine is used to produce on indefinite number in which the chlorine may or may not appear in the final salable

are

probably

the

largest

our operations

as follows:

INDUSTRIAL

AND

HEAVY

used for

dye intermediates,

pharmaceutical

purposes,

others.

in the world,

production.

industrial

eye they so well

Dowicides

As a group, requirements,

and

Let

producing

us subdivide

fumigants,

these products

Since they are the stondby

of our soles volume. to all

of chlorine

States

ore classed such industrial chemicals OS caustic soda, calchloride, industrial solvents, phenol and phenolic com-

and many

so necessary

producer United

CHEMICALS-

Under this heading chloride, magnesium

the public

located

Michigan As of April

As a characteristic

is the electrolysis

caustic

30 per cent of the total

not

necessarily

products.

approximately

one-half

plant

plant.

ore bidding for the purchase of some of the government and operated for the government during the war.

of our production

soda and

pounds

Service

of the Ludington, Michigan

discuss general Company operations, they con the fields of our activities, but always bearing

as intraplant

cium

Q portion

the Marysville,

OPERATIONS-

To subdividing relation

for

the Chemical

in Midland, Michigan. We facilities which we installed

ucts

returned

We ore still operating the government-owned styrene plant and a portion of magnesium plant in Velasco, Texas as well as the styrene plant in Los Angeles,

plant,

Dow

2,13 1 hove

men not formerly

PLANTS-

California.

well

forces,

ex-service

they

represent

dyes and better

group of fundamental seldom

hove

the

than prod-

glamour

in

deserve.

PHARMACEUTICALSThis purposes

is the group

chemicals

represent

PLASTICS

AND

Possibly for

although

the fact Company

of products

or as on intermediate approximately

RELATED these

the

remains produces

are

American we hove four

which

to the

final

is used either production

10 per cent

OS such for pharmaceutical of

of our dollar

those

materiols.

volume

These

of sales.

COMPOUNDSmore

publicized

public

has

not become

mojor

plastics

now

than

hod plastic truly

plastics

groups

-

any other materials

group

of chemicals,

for nearly

fifty

years,

conscious until recently. The Styrene and polymerized Styrene

known

OS Styron

and

the vinyl-vinylidene pony,

Styraloy

Ethers

such

plastics the

which

is unique

necessity create

markets Plastics

Methyl type,

judgment vast

new

ond

Carboxy

AGRICULTURAL

market but

provide

a basic

industry

greater

and

Butadiene

war

and

Each

group

requirements

Saran

of our

polymer,

Cellulose.

clearly

or

Com-

Cellulose of these

demonstrated

demands in peacetime hove confirmed the Plastics as new moterials will undoubt-

it is questionable

at present

method

about

whether

of

they

will

accomplishing

a

20 per cent of our dollar

means

as agriculture

Q prosperous

as o chemical

company

agricultural

as ore required

the improved

displace given

volume

hormones,

of our dollar

people, every

old

result. of soles.

truly

of livestock

and poulkillers

opportunities

to agriculture

represents

in

such

weed

The

beneficial

such

assist

include

soil fumigants,

This group of chemicals

volume

and

chemicals

for foodstuffs.

and a chemical

behooves

to aid

of the health

noticeable

and prosperous

it clearly

effort

materials,

and preservatives

necessity.

industry,

Agricultural

improvement

been exhausted,

every sense on economic

American to opply

of seeds, spray

fertilizers

one of the most quickly

is our largest

production.

for the

germination

hove by no means

con be attributed

Inasmuch

improved

10 per cent

and

Styrene,

by licensees

period.

a better

To this group of chemicals

and growth

Methyl

names

CHEMICALS-

benefits to humanity. agriculture necessarily

try,

as Alpha

trade Methyl

The

war

markets,

OS they

as Q group represent

compounds

Styrene

and

of the

known

various

in its applications.

of each

except

compound

sold under

is a modified

as Ethyl,

discriminatory edly

the sister

group

is in

approximately

of soles.

MAGNESIUMDuring the war magnesium cent of our sales volume, although profits.

With

the cessation

business.

An

and bring

old uses bock

pleosed

intensive

to report

uses ore nesium

our production

although

to close seconds. lightness

Texas

The

there

AND

war

DOW

effort.

ASSOCIATED

the

CHEMICAL The

starting

construction DOW

hove

ore mony public

of the various

level and whose

up their

but with

production

program

ore steadily

other

gaining

started

the

industry

year

in volume

we ore

of

mag-

consumer

ore growing

conscious

no

and new

production

which

justifiably

but

to develop

is still the largest

applications

is becoming

facilities,

WQS required

the close of the fiscal

again

The aviation

rapidly

of magnesium

COMPANIES-

A report such OS this would to the activities

high

large

WQS OS high OS 30 per 10 per cent of the total

ond strength.

SUBSIDIARIES

CLIFFS

we hod

facilities

We

plant.

buying

and fabrication were less than

and advertising

into production,

developing.

in our Freeport,

of magnesium,

of hostilities,

development

that

constantly

production the profits

importont

purpose

which

being

Cliffs

was Dow

should

on

further

a wholly operating

some

reference

were

mode

companies. whose

activities

of no small has paid

the close of the war

CORPORATION, of

the war

is that

with

unless

and associated is a subsidiary,

during

point

losses, and

MAGNESIUM express

COMPANY

production

improvements

not be complete

subsidiory

owned

dividends

at o to the

since making

they ore now proceeding

improve

company

remain

importance

their

subsidiary, for

with

position.

the

was

organized

government-owned

for

magnesium

plonts.

pony will DOW

Its job

CHEMICAL

organized ment

is nearly

done

and

OF CANADA,

for the purpose

styrene

plant

LIMITED,

of being

designed

Q wholly

on operating

by

Dow

and

within

Canadian

products,

market.

and

of Canado,

other

Limited

Additional expansion

will

plants

the

year

the

com-

Dow

subsidiary, for

by

the

Dow

WQS originally

Canadian of

govern-

Canada

for

the

of hostilities we hod the opportunity months it will be producing Styron for

ore under

is contemplated

be The

owned

company operated

Canadian government. With the cessation to build Q Canadian plant, and within a few the

possibly

be dissolved.

way

to produce

for the near

Chemical

Compony

glycol

future.

and allied

Dow Chemical for all opera-

representotive

tions and soles in Canada. DOWELL INCORPORATED, applications of chemicals Originally hove

founded

steadily

application

for

for the purpose

enlarged. in that

it has rendered

pay dividends to the parent and expanding equipment. of chemical

unsung, modest at Q time when

of acidizing

oil producing

formations,

its functions

Dowell was the originator of plastic plugging and of the It is truly treatment to industrial boilers for scale removal.

of acidizing

-a service compony,

large volume

o wholly owned subsidiary, has originated many new the production of more oil for the petroleum industry.

company The

substantial

because

parent

service but has not been able to

of the need to reinvest

company

soles and in royalties

has gained

received.

earnings

in new

very substantially

in the

Dowell

hero of World War I I in its contribution every barrel was in demand.

Incorporated

to greater

is on

production

of oil

DOW CORNING CORPORATION, on associated company, is one of the youngest of It mode Q substantial contribution to the war effort and is an organizathe group. It is in the growing stage and making steady progress. tion of great potentialities. The

silicone

groups. to are

products

They

Silastic,

of

Dow

of silicone

water,

the

so that

was

COMPANY

enlargement at

and

of values of constant

thermosetting

not

found

oils and

plastics.

All

OS high as 500°F.

the originator

the

of

present

peacetime

and first

Ml DLAND

AMMONIA operator,

monia

plants

plastic

lubricants,

of the products

Through

Corning

commercial

is on associated

facilities

for

the

company.

production

Gloss

producer

The

demands from

sea

time the plants hove much greater capacity than A write-off of war investments brought about a

COMPANY, paying

war

of bromine

requirements justify. Since May 31, 1946 Q substantial reduction reduction of earnings. for construction has been mode with the parent companies.

is a steady

in other

viscosity,

in this country.

CHEMICAL

necessitated

fluids

temperatures

Corporation

compounds

ETHYL-DOW

material,

withstanding

Corning

a combination

free flowing

Q rubber-like

capable

Works,

represent

range from

of debt

incurred

a subsidiary located within the plant at Midland, and is one of the most efficient am-

steody

dividends,

in the country.

CONCLUSIONThe wor The

Dow

is over.

Chemical

At

Company

least,

To soy that

record of the Company. and its alloys, in the

production

of butadiene

the

were

of

it is a thing

ore concerned.

highest

of the post OS for OS the operations We

ore

our contributions

of styrene order

justifiably

in the production

and in our knowledge

of scientific

proud

and

practical

of

the

of war

of magnesium

of the production value

is a gross

understatement.

Al I the

inestimable

to the country

value

Generally

speaking,

wonderful hardly

be fair

desire

helped.” acclaim,

interests

was of the

have

believe

United

they

did

record our

every

ability

not

make

has

war

War

been

and

were of such dollars

it

know

and

did our bit, profits,

so simple is not

they

justification

to

own

it would

II with

mode,

alone.

of one’s

Stockholders,

Stockholders

right

We

large

and

to

in protecting

of America.

do in wartime,

report

in

to tell

such as World

the

hove

measured

to attempt

in a

to hove

greatest

States

We

been.

companies

But

of the Company

be

taste

cataclysm

except

to our

cannot

good

Because

where

used

the operations

they

cause.

to pass over Q world

in a Company

investment

in all that

considered

to any

OS “We

to get world

owners

may

it is not

contributions

Q statement

efforts

ore feel

furthering

their

the

best

as big or as little

as so many

this fact was simply explained

people

our port

as it like

to

under the head-

ing of renegotiation. We are bock operating on a peacetime basis and running a Company which believes the maintenance of the highest efficiency of operation and the lowest costs will return the greatest benefits to both the consumer and the producer. The chemical industry as a whole has been noted for steadily declining costs to consumers, still

and

with

record.

the present

hysteria

Our basic raw material, Labor

industry.

rates and other

We

about

higher

prices,

salt, we mine benefits

hove been generous,

there

is little

mechanically

in our Company

reason

in our two

to change largest

are of the highest

but it is a notorious

fact

that

paid

manpower

the

plants. in the on the

average

is at about the lowest efficiency it has ever been. As long OS we continue to talk and think in terms of raising wages in order to meet higher costs of living, nothing can stop the continually ascending spiral of inflation. Inflation OS such is the

measure

ciency gives

higher

lines and sooner duce

of human

gives quickly

costs and

general

or later more.

desire

reduced creates

hardship recognize

Hove

more.

not

to work

costs and scarcity,

for everyone. as the only No

frontier

and produce.

more production.

Improved Conversely,

with the consequent The wi II to work

solution was

to all

our

ever developed

Hard work has gotten chemical industry is no exception. Work and more work and hard work will develop future industry must pioneer for industry of tomorrow.

manpower

effi-

low production

spiral of inflation, bread is the blessing we wi II

man-made by wishing

problems. it so, and

Prothe

us what we hove today. frontiers. The chemical

With the further development of all the projects which were necessarily tabled during the war, our growth is practically unlimited in our field. The chemical industry one does not progress without the other. and growth ore synonymous terms This follows into other industries as well, because with the development of products of chemical origin, new industry is created in other fields. Plastics, new pharmaceuticals and agricultural chemicals as well as many others are clearly symbolic of this. When we say this statement is There will never be an end to new developments. Either we have become so wise we con comwrong, one of two things has happened. prehend the entire universe, or else it is an indication we have gone to seed on our job. And so, with the close of our 49th year we find we have more to accomplish We see more employment with more securitv for the industry and than ever before. We see the blessing of work with the pleasure ot accomplishing greateveryone in it. er goals and the complete satisfaction of having a job to do and having it well done. WILLARD Midland, Michigan August 5, 1946

H. DOW President

HASKINS CERTIFIED

& SELLS

PUBLIC

THE

NATIONAL

BANK

BUILDING

ACCOUNTANTS DETROIT

ACCOUNTANTS’

The Dow Chemical We ical

related that

and

have

examined

generally included were

applied

systems from

accepted

United

accounting

records

standards

procedures

control;

States

ourselves

it was

Government

with

and

respect

surplus

Dow

1946

for

Chemand

the year

of the companies,

and

evidence

other

was made

applicable

in the circumstances

departments

which

appropriate

practicable and

to such receivables

the

ended and

in support

in accordance

necessary,

we deemed not

31,

procedures

we considered

by tests to the extent

sheet of The

as of May

Our examination

auditing

of internal

sotisfied

income

the accounting

statements.

all auditing

balance

companies

of consolidated

reviewed their

such financial

the consolidated

its subsidiary

statements

date,

have

Company:

have examined

Company

CERTIFICATE

and

procedures

in view

to confirm agencies

of

with

of the

receivables but

we

by means of other

hove audit-

ing procedures. In our opinion,

the accompanying

ments

of consolidated

dition

of the companies

for the year ended that ing principles preceding

and

income

and surplus

at May dote,

practices

consolidated

31,

1946

in conformity applied

fairly

balance present

the financial

and the results of their with

generally

with

1946.

account-

that

year. 0

con-

operations

accepted

on a basis consistent

HASKINS

July 26,

sheet and state-

SELLS

of the

THE

DOW

AND CONSOLIDATED

CHEhc

SUBSIDFA BALANCE

SHEET,

ASSETS May CURRENT ASSETS: Cash _---__-_-------------------------------------United States Government securities __-_______--___-______ Notes and accounts receivable: Customers --_----c-------------------------------Associated companies --------------------_________^_ Employees --_-----------------------------------------------------------------------------Sundry Total ----------------Less reserves for doubtful receivables _ Net receivables _____________________ Billed and unbilled receivables from United States Government and its agencies (other than for sale of product) ---------Claims for refund taxes resulting Inventories: Finished goods Materials and

of prior years’ Federal income and excess profits from carry-back of unused excess profits credits and work in process (at lower of cost or market) supplies (at cost-approximately market) ____ Total ______________________________ Total current assets _____L_____ -_

INVESTMENTS AND NON-CURRENT RECEIVABLES: Notes receivable and capital stock (at cost) of associated com$3 1,000 in excess panies (at May 31, 1946, approximately of the equity in net assets as shown by unaudited balance sheets of companies) -------------------------------Postwar refund of excess profits taxes _______ -__- __________ Non-current notes and accounts receivable (including employees’ receivables, 1946, $47,907.49; 1945, $16,558.68) _- ______ Sundry securities (1945, less reserve, $63,4 13.93 1 _ _ __ ___ _ ___ Total investments and non-current receivables _ _ _ __ __ _ __ _ - __ __ _ _ PROPERTY: Plont properties and equipment (exclusive of facilities acquired under certificates of necessity)---at cost (less reserves for depreciation, 1946, $34,668,856.85; 1945, $33,722,644.65) __ Facilities acquired under certificates of necessity-net book value (See Note A) _____________________________________ Housing properties (exclusive of facilities acquired under certificates of necessity)--at cost (less reserves for depreciation, 1946, $225,348.11; 1945, $178,489.23) -___-__________ Total property ----------------PATENTS-at cost or nominal value (less reserves for amortization, --------------_---_ 1946, $87,53 1.8 1; 1945, $7 1,862.94) DEFERRED CHARGES-Unexpired insurance premiums and sundry debenture discount and and, at May 31, 1945, unamortized expense _________-______---_-----------------------_ - __ _ _ _ _ __ _ _ _ __ _ _ _ TOTAL

NOTES:

A-As

1946 $ 10,4m

31

-1945 1.52

$

17,505,643.48

$

10,760,000.00

$ 22,885,OOO.OO

$

10,587,967.06 226,709.20 85,059.68 730,165.03

$1 1,537,408.91

$ 11,629,900.97 330,929.50

$1

$

$

11,298;97

1.47

$

298,399.82

$

1,175,106.93

$

11,241,092.35 8,039,656.84 19,280,749.19

$

$

272,105.12

$

9,4 15,374.86 6,8 14,096.49 16,229,47 1.3 5

$ 68,709,964.67

5,988,OOO.OO $ 18,936.49 482,7 13.56 659,189.l 1

$

1

1,2 10,332.42 $ 67,737,085.59

20,098,29

309,742.59

$

$

329,27

$

1.7 1

1.30

1,262,702.59 $ 67,639,970.98

$

$128,756,287.98

9,247,987.76

$ 46,278,977.09

10.26

9,590,242.9

5,688,OOO.OO 2,597,03 1.2 1 304,292.44 658,664.1 1

$

7,148,839.16

$ 56,936,5

11,817;744.7;

$

$

$ 53,23 1,348.93

193.527.9 1 4 1;344.80 350,707.80 2,122,989.42 305.244.70

64,9 1 1.46

484,064.20 $146,146,899.07

of September 30, 1945 the Company and its subsidiaries had emergency Following the Presidential proclamation of September 29, 1945 ending the off. The portion of the amount written off applicable to the year ended h remainder, applicable to prior years, was charged to earned surplus. As ( were deemed to be economically useful, were reinstated in the books at a I equivalent to the estimated Federal income tax which will result from the

B-Operations of the Company and its subsidiaries through December 3 1, 1945 it the Government the right under certain conditions to renegotiate war contn been completed through May 31, 1945, although the tentative agreement No refunds were required for any year except that, not yet been executed. It is the opinion of officials of the ( years ended May 3 1, 1942 and 1943. the seven months ended December 31, 1945.

CAL

COMPANY

Y COMPANIES MAY 31, 1946 AND

MAY

31, 1945

LIABILITIES May CURRENT

LIABILITIES:

Accounts payable-Trade and sundry __-_____--___________ Federal income and excess profits taxes ____________________ Serial debentures maturing within one year _________________ Dividends payable _____________________ - ______________ Accrued liabilities: Payrolls -----------------------------------------Taxes-Social security, property, Federal capital stock, state

$

Total

current

liabilities

1945

6,382,397.32 3,527,26 1.45

664,94

COMPANIES

CLAIMS, _______

__________

CAPITAL STOCK: Cumulative preferred stock, Series A (authorized, 600,000 shares without par value; outstanding, 303,869 shares) --annual dividend $4.00 per share ___-_____-_________ -_-_______ Common capital stock (authorized, 2,000,OOO shares without par value; outstanding, 1,248,706 shares) -----------------Total

capital

stock _____________

SURPLUS: Capital surplus --------------_----------------------Earned surplus _____-_____--__________________________ Total

surplus __________________

TOTAL

1,280,932.89 63,039.69 144,06 1.70 107,600.l 1

43,456.76 159,902.34

RESERVES FOR FIRE AND ACCIDENT LOSSES, DAMAGE ELECTROLYTIC CELL REPLACEMENTS, AND SUNDRY

IN SUBSIDIARY

926,805.20

978,456.95

___-______

$

12,996,8

__ _ _ _ __ _ -_ _ __ _ __ c _

lities acquired under certificates of necessity with an aggregate cost of $44,369,812.42. rgency period with respect to such facilities, the unamortized portion thereof was written 3 1, 1946, based upon the shortened amortization period, was charged to income and the 4ay 31, 1946 certain of the facilities with an original cost of $19,673,908.82, which look value of $9,590,242.91, representing cost less normal depreciation and an amount re nondeductibility of depreciation thereon. le transactions which are subject to the provisions of war profits control legislation giving and subcontracts for the purpose of limiting profits. Renegotiation proceedings have viding for no refund) with respect to the Company for the year ended May 31, 1945 has 76 case of one subsidiary, refunds not relatively material in amount were required for the Iany that excessive profits within the meaning of the legislation have not been realized for

6,2=93.3 1 17,304,690.07 750,000.00 1,240,398.50

1.12

14.44

FUNDED DEBT--Debentures (Redeemed as of September 1, 1945) (Serial debentures maturing within one year included in current liabilities) ________________________________________--

INTERESTS

$

1,240,398.50

income and franchise, and sundry -------------------Interest __________________-_____________________-Rents ------------------------------------------Sundry ------------------------------------------

MINORITY

31

1946

$ 28,l

12,121.47

$ 11,250,000.00

$

1.465.068.98

$

1,455,163.22

$

944,365.36

$

1,3 12,455.09

$ 30,386,900.00

$ 30,386,900.00

37,293,908.83

37,293,908.83

I

67.680.808.83

$ 67,680,808.83

$

1,030,190.83 44,639,039.54

$

638,841.93 35,697,508.53

$ 45,669,230.37

$ 36,336,350.46

$128,756,287.98

$146,146,899.07

THE DOW CHEMICAL AND SUBSIDIARY STATEMENT

COMPANY

COMPANIES

OF CONSOLIDATED

FOR THE YEARS ENDED MAY

INCOME

31, 1946 AND

1945

Year 1946 SAbLESsAND OTHER REVENUE: --_--_---------_----------------Dividends received from an associated company interest from associated companies ------__Other interest income _----_-_-_--_-_---_Fees received in connection with construction and operation of government owned plants -_ Other income ---_--__---_.-.-___---------Total ---_---__---__---_--___

COSTS AND OTHER CHARGES: Cost of sales (excluding provision for deprecia--m--------s----tion and amortization) Provision for depreciation ---_--------___-Provision for amortization of emergency facili-----ties (See Note A to balance sheet) Selling and administrative expenses _---__-_Interest and amortization of discount and expense on debentures ---_----------_---Premium paid on redemption of serial debentures Losses on abandonment of equipment rendered obsolete by cessation of the war __-_-_---Other income charges ---_-_---_--_---_--Minority interests in income of subsidiary com-----------------------------panies Total

INCOME INCOME

_----_----_---___---___

BEFORE PROVISION FOR FEDERAL AND EXCESS PROFITS TAXES -----

PROVISION FOR FEDERAL INCOME AND EXCESS PROFITS TAXES: Normal tax and surtax ---_---_-----__---Excess profits tax _- ___---_---___--_ - ____ ------_----------m--m-Total Less reduction of Federal income and excess profits taxes for prior years resulting from carry-back of unused excess profits credits ---------------Net provision INCOME

FOR THE

YEAR

----------

_________

Ended

$101,813,839.08 3 17,792.17 549,335.69

May

31

1945 $124,570,200.83 500,000.00 294,955.42 232,190.77

1,449,270.22 635,872.53

2,085,080.04 305,109.60

$5104,766,109.59

$127,987,536.66

$ 73,621,770.59 6,l 18,317.12

$ 82,03 1 ,153.29 5,332,O 14.66

6,308,4 19.22 7,929,767.12

8,353,549.70 6,840,949.68

107,7 18.62 1 12,500.OO

265,618.84

1,689,878.62 488,080.07

90,480.38 67,028.97

96,502.65 9; 96.472.954.01

$102,980,795.52

$

8,293,155.68

$ 25,006,741.14

$

3,107,244.96 212,041.69

$

$

3,3 19,286.65

$

16,267,979.6

$

2,144,179.72

$

16,267,979.6

$ ~-

6,148,975.96 -_- -.

$ 8,738,761.53 -I___-_-

4,307,365.49 11,960,614.12 1

1,175,106.93 -

1

THE DOW CHEMICAL AND SUBSIDIARY STATEMENT

COMPANIES

OF CONSOLIDATED

FOR THE YEARS ENDED MAY

CAPITAL BALANCE

AT

BEGINNING

EARNED

31, 1946 AND

---_--

$

NOTES:

AT

END

A-The

638,841.93

Mav 31 ’ 1945 $

638,841.93

$

1,030,190.83

$ -

638,841.93

SURPLUS OF THE YEAR

$35,697,508.53

------

__-------OF THE

____ -___YEAR

6,148,975.96

____

____________

$33,160,739.50 8,738,761.53

7,754,149.05 $49,600,63

--_------___-__-_---___

CHARGE-Cash dividends (See Note B) : Common capital stock __---_-__-_________ Cumulative preferred capital stock, Series A ___

BALANCE

Ended

39 1,348.90

CREDITS: Net income for the year _----_-_------_-_Adjustments relating to facilities acquired under certificates of necessity-net (See Note A)

Total

1945

Year 1946

OF THE YEAR

AT BEGINNING

Total

SURPLUS

SURPLUS

CREDIT-Increase in equity in the capital stock and surplus of a partially-owned subsidiary company resulting from a restatement and reallocation of the subsidiary’s capital stock ---BALANCE AT END OF THE YEAR ,,----:, __---

BALANCE

COMPANY

3.54

$41,899,501.03

$ 3,746,1 18.00 1,2 15,476.OO

$ 4,682,647.50 1.5 19.345.00

$ 4.961.594.00

$ 6,20 1,992.50

$44,639,039.54

$35,697,508.53

net credit to earned surplus for adjustments to facilities acquired under certificates of consisted of the following: Additional amortization applicable to prior sulting from shortening the amortization Presidential proclamation on September

relating necessity years reperiod by 29, 1945

less reinstatement as of May 31, 1946 of facilities deemed to be economically useful (at cost, less normal depreciation to May 31, 1946 and an estimated amount equivalent to Federal income taxes that will result from the future nondeductibility of depreciation on such assets) -------w---v-----

$13,138,137.91

9,590,242.9

__

$ 3,547,895.00

Reduction in Federal income and excess profit taxes of prior years resulting from the deduction of the additional amortization (credit) - ________--_-

1 1,293,799.97

Net

Net credit minority Adjustment

amortization

adjustment

to earned surplus before adjustment interest ---_--___-__-------------for minority

interest

pany __-__------------___---------------

Net

credit

(debit)

to earned

B--Dividends, on the basis five regular quarterly four regular quarterly

surplus

in a subsidiary

_____---_--.-.-___---

1

for

$ 7,745,904.97 com8,244.08 $ 7,754,149.05

of the dates on which they were declared, include dividends for the year ended May 31, 1945 and dividends for the year ended May 3 1, 1946.

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I I I I I I I I : I I I I I I 1

1 I I t I I : I I I I I I I I I f

THE DOW CHEMICAL

COMPANY

Directors M.

L. I. DOAN

E. 0. BARSTOW E. W. BENNETT

C. J. STROSACKER

A. B. DOW W.

J. S. CRIDER

E. PUTNAM W.

H. DOW

R. VEAZEY

Officers Chairman

of the Board,

General

President

Manager

-

and

-

-

-

Vice

President

and

Treasurer

-

-

Vice

President

and

Secretary

-

-

Vice

President

Vice

President

Vice

President

-

-

Treasurer

Assistant

Treasurer

Assistant

Secretary

-

-

-

Assistant

-

-

E. 0.

M.

-

-

and Assistant

-

BENNEll-

BARSTOW

-

E. PUTNAM J. S. CRIDER

-

Secretary

-

DOW

C. J. STROSACKER

-

-

H.

L. I. DOAN

-

-

-

-

E. W.

-

-

-

W.

F. H. BROWN

-

A.

P. BEUTEL

Assistant

Secretary

-

-

-

-

L. A. CHICHESTER

Assistant

Secretary

-

-

-

-

-

Assistant

Secretary

-

-

-

D. J. LANDSBOROUGH

-

-

-

Auditor

Transfer

-

-

Agents

Guaranty Trust Company of New York The Nationai City Bank of New York The Cleveland Trust Company

-

R. L. CURTIS

C. PENHALIGEN

Stock

Registrars

Common Preferred Common and Preferred

The New York Trust Company Guaranty Trust Company of New York The National City Bank of Cleveland

THE DOW CHEMICAL

Executive Office:

COMPANY

Midland,

General Sales Office:

Michigan

Midland,

Michigan

Sales Office8

Boston 20

16,

Providence 3,

Chicago

New

Massachusetts Street

Illinois

135 So. LaSalle

York

20,

New

30 Rockefeller

York

Plaza

Philadelphia

2, Pennsylvania

1400

Square

Street

S. Penn

San Francisco Cleveland 13, Ohio Terminal Tower

4, California

3 10 Sansome

Street

St. Louis 8, Missouri Detroit

2, Michigan

Fisher Houston 2205

2, Texas Commerce

Los Angeles 634

Continental

Building

3615 Seattle Building

1702

South Spring

915

Street

Street

1, Washington Textile

Washington

14, California

Building

Olive

Tower

5, D. C.

Shoreham

Building

California

Factories Located at

Midland,

Michigan

Pittsburg,

Bay City,

Michigan

Seal Beach, Freeport,

Texas

California

THE DOW CHEMICAL

Subsidiary Cliffs

Dow

Chemical

Dow Chemical

COMPANY

Companies

Company

of Canada,

Marquette,

Limited:

General

Toron to, Ontario

Office

Works Dow

Magnesium

Midland

Ammonia

Michigan

Sarnia,

Ontario

Corporation

Midland,

Michigan

Company

Midland,

Michigan

Tulsa,

Dowel I I ncorpora ted

Dowell

Incorporated

308

Calgary

Associated Dow Corning

Corporation

Chemical

Company

Reaper Building

P. 0. Box 292 519 Union National Bank Bldg. P. 0. Box 1266 326 First National Bank Bldg. 1901 St. Paul Street P. 0. Box 152 932 Fisher Bldg. 220 B. M. A. Bldg. 3615 Olive Street 30 Rockefeller Plaza

Michigan Missouri Missouri New York Ohio Ohio Oklahoma Oklahoma Pennsylvania Texas Texas Texas Texos Texas Alberta, Canada

Tulsa 3 Philadelphia 2 Eorger Fort Worth 2 Houston 2 Midland Wichita Falls

Ethyl-Dow

Soles Offices

Illinois Illinois Kansas Louisiana Louisiana Maryland Michigan

Chicago 3 Salem Wichita 2 Baton Rouge Shreveport 23 Baltimore 18 Mt. Pleasant Detroit 2 Kansas City 8 St. Louis 8 New York 20 Cincinnati 2 Cleveland 13 Oklahoma City 2

Oklahoma

521 Keith Bldg. 1810 Terminal Tower Bldg. 1350 First National Bldg. 524 Kennedy Bldg. 1400 South Penn Square P. 0. Box 1029 635 Fort Worth Club Bldg. 21 15 Commerce Bldg. 503 Petroleum Bldg. 1 106 City National Bank Bldg. 907 Lancaster Bldg.

Companies Midland,

Michigan

Freeport,

Texas