Dow Chemical Company Annual Report - 1947

THANNUAL REPORT

50

FOR THE YEAR ENDED MAY 31,1947

THE DOW CHEMICAL MIDLAND,

MICHIGAN

COMPANY

The 27,

1947,

next

annual

at two o’clock

meeting

of stockholders

in the afternoon

will

(Eastern

office

in Midland,

proxy,

A formal notice of the meeting, together will be mailed to each holder of common

rently

herewith,

be held on Wednesday,

Standard

Time)

August

at the Company’s

Michigan.

at which

time

proxies

will

with a proxy statement stock separately from

be solicited

and form of but concur-

by the management.

TO

THE

THE

STOCKHOLDERS

OF

CHEMICAL

COMPANY:

DOW

We

present

anniversary of The

herewith

has more

Dow

Chemical

one to be presented change

was

1947.

the corporation liabilities

of

The

on the 31,

increase

NUMBER

OF

The

now

this

report

at a special

successor

equivalent

to

is the

first

corporation.

a Delaware

is the

This

of the operation

This

meeting

held

corporation,

to all

the

assets

is and

the

1946

after

more

$9.22

of

for

the due

helped

fiscal

to offset

general

the

increase

the the

year

ending were

large

after-the-war

a new all-time

for the

increase

on

during

statements)

the sales of $101,813,839

sales of $124,570,200

the

the

to the

share

paid

financial

Sales this year reached

than

per

$1,215,476

earnings A

comparison,

year.

the peak

costs and

deducting

in note

a fair

fiscal

is 28%

than

was

attained

last

fiscal

year.

1945

in

high

labor

costs,

the

in the cost of doing business.

STOCKHOLDERS-

stockholders. of

It

comparable

as set forth

material

As of July

stock

stock.

stock,

in sales substantially

in raw

ownership

of the stockholders Company,”

income

stock.

more

increase

ferred

net

This

and 4.5%

The

for

operations.

year

a Delaware

by action

but this is hardly

during

of $130,426,839. year,

corporation, Company,

Chemical

common

(revised

per share,

charge-offs

of

preferred

1946

the fiftieth

corporation.

consolidated

May

being

SALES-

shares

year

Chemical

you own

Michigan

AND

1,248,706

$4.40

in which the

EARN I NGS

Dow

report of the Company

just

a Michigan

Dow

approved “The

annual

than

Company, by The

recently

on July 22,

the 50th

significance

151

1,

1947 This

shares

there

were

8,249

is an increase per common

common

stockholders

and

of 63 % over five years ago, with

stock

owner

and

70

shares

4,366

pre-

an average

for each

preferred

owner.

EMPLOYMENTAs Company the in

of

31,

is responsible

styrene the

May

plant

1947 was

of the

government-owned

the 13,975

Polymer styrene

total

employment

employees. Corporation plant

for

which

This included at Sarnia,

in Los Angeles.

The

Dow

Chemical

96 employees

Ontario During

and the

306

operating employees

past

year

we

have

had

two

interruptions

in the government and

the

strikes

Los Angeles in the

ago we were are

Company,

four

seems

to

and

In general

apparent

plant

at

be said more

plants,

our

labor

at

for

relations

are very

of high wages

time

we

by

the

for the United

good,

government. and

Greater

necessitates

major

of a year

present

Canadian

relationship.

days

purchased

operated

the

one

24

the first As

the

been

is still

Ontario

understanding

the payment

and

and

lasted

production.

have

California

Sarnia,

in Texas

strike

these were

in lost

Texas

Velasco,

one

Texas

be noted

resulting

at Los Angeles,

a

that

at

strikes, The

government-owned

the

about

by

It should

Company

plants.

it can

bring

caused

in Los Angeles. days.

the

the plant

government

on the part

25

Two

two.

States

becoming

of

operating

while

plant

strike

history

operating

in operation

styrene

each

year

appreciation

high productive

is

effort

of everyone.

FINANCINGDuring approximately for

the

made

we spent

one half

was for the purchase

government

an unsecured been

In addition,

we

near

raise

of certain

Freeport,

additional

at an interest

have

arranged

at an

interest

for

of

We

credit

1.5 %

amount did

under

a year,

of expenditures

this

by selling

an insurance

a year

of our new

of which

we had constructed

from

of 2.70%

shares

a bank

rate

This

$35,000,000

rate

of 400,000

facilities

Texas. funds.

by borrowing

expenditures,

and

by a sale

which

Preferred

Stock.

Second

which

we

to become

$30,-

company

may

due

borrow

up

not

later

than

products

were

sub-

1949.

COMPANY

OPERATIONS-

During divided

note

consummated

to $25,000,000 31,

us to

debentures,

in capital

over $84,000,000

Velasco

for

of 2.35%

has just

May

at

it necessary

000,000 upon

the year

about

the

fiscal

year

as stated

just

in the

Industrial

closed

last

sales of the

annual

report,

Company

namely, 55%

Chemicals

10%

Pharmaceuticals Plastics

and

Agricultural

related

15%

compounds

10%

Chemicals

10%

Magnesium

MAGNESIUMThe the past place,

the

completed,

operations

fiscal

year.

adjustment

to

was expensive;

secondary

scrap

third,

completion

the

of our This

metal

was

Magnesium brought

peacetime second,

have

operations,

reduced

contracts

not

by a number which

the sale of enormous

has appreciably of certain

Division

about

the

been

has volumes

demand

for the fabrication

profitable

of causes. now

been

during

In the just

first about

of government-owned for

virgin

of airplane

metal; wings

and and

i

our

retirement

again

from

to secondary

most successfully limiting

casting

uses.

in the

world

growth

plants

AND

During was

the year

incorporated gas from

in Matagorda

County

than

a new under

SARAN

YARNS

The

Saran

Company

ture

fibres

fine

creates

and

could

wholly

is the proper plant,

has

to

mill,

volume

has fulfilled

of

stimulation rolling

established

undoubtedly

operates

and instead

in expanding

as a single,

owned

recently

known

die

and with

its

position

its obligation

others

pioneering

will

in

carry

its

company.

subsidiary,

purchased

as Citrus

lines

and

Grove

should

Brazos

of Texas

Oil

in Texas. Field,

supply

and

Gas Com-

for the primary This

can

purpose

field,

be readily

located joined

up to 20,000,OOO

to

cubic

feet

by The

Dow

of ten or more years.

COMPANY-

and

Company The

interest

was

organized

National

out of Saran.

a great

draperies

this

Company

metal;

the laws of the State

pipe

Yarns

Chemical

we

a gas field and

Company-owned

is available,

and

Referring

industry

metal

extrusion

metal

Chemical

process.

COMPANY-

of gas per day for a period

THE

Dow

as a commercial

GAS

of producing

we feel

modern

slow

that every metal

and, we believe,

is the The

fact

of secondary

in our foundry,

continue

possibilities

OIL

existing

will

is a difficult,

it is a known

of magnesium,

Magnesium

uses to greater

fabrication

Operations

magnesium

BRAZOS

metal,

of metals.

establishing

of

a good volume

industry,

and alloy

growing

type

scrap when

the further

a prosperous

pany,

this

The

in this

gossamer

fine

fiftieth

annual

Plastic

demand

is owned

Products for

development.

materials

and

fine

Company. fibres

Weaving

suggests

jointly

of

of fine

only a partial

It will

all

manufac-

kinds

fabrics,

necessarily upholsteries,

list of the possibilities.

GENERALIn

the

sidiaries.

Their

repetition

here

subsidiaries Company

respective hardly

and and

are all operating

seems

associated The

Saran

report

operations

it

necessary.

Yarns and

proper

Fortunately,

companies,

profitably

is only

to mention

have been summarized

with

Company showing

the which

steady

we

can

exception are

growth

each

our various

in previous again

of

report

Brazos

less

than

and progress

sub-

reports that

Oil

and all

and

Gas

a year

old,

in their

respec-

tive fields.

CONCLUSIONEveryone 1947 ganda

was and

conclusion

knows

a period

the

of uncertainty

unsound on

that

almost

economic every

time and

thinking problem.

covered

by

our

fiscal

economic

unbalance.

produced

a condition

For example,

year

ending

May

False economic which

newspapers,

challenged

politicians,

31,

propasane almost

everyone and

talked

in terms

rationally,

pattern give

there

implies

that

recognition

always

been

ployees.

the

Company

second,

rests well

Although a

many

distinct

only

expedited,

many

other

tivity,

and

return

on

situation desire

projects

only

insofar

for a country

During

the

work

ten

years

current

5.2

located

in Midland,

building

in Sarnia,

one

Chemical

intelligently

we

Our

Texas

Canada,

as well

3.75

Company,

for our

the war was

period

possible

the

facts

because

items

are

unproduc-

show It lack

tremendously.

figures

investment times.

in 1937

a proper

is a

grave

of national

Our

large

California

sales

to $130,000,000

has multiplied

Three

4.7

times.

production

plants

and a fourth

to manufacturing

to read the enclosed

by knowing

Company

and

the

its future

“Fifty

Years”

of

growth

background prospects. H.

DOW

President August

Michigan 4,

1947

now

operations

trade.

WILLARD Midland,

that

of excessive

labor

and

for

to

and necessarily

projects.

expanded

the time

only

by industry.

new construction

is delayed

and in Pittsburg,

to take

it hap-

day’s pay.

give a distribution

as international

is urged

understand

capital

it

devel-

have a stand-

we feel

future

further

Company

home

established

point

in the

with

have

our

benefits

enough,

to construction

in round

multiplied

in Freeport,

for national

Dow

have

Ontario,

Every stockholder

can

times.

stockholders

stopping

development

$25,000,000

Notably

completion,

entirely

for an honest

day’s

living

individual

period

em-

years.

local conditions

companies,

past year many

to build

progressive

that

have

to all their

for the emergency,

nearing

to a near almost

able

for

The

come

proceed

from

of

have

we

past

year,

This

of these are

lives.

of living

During

are

has expanded

ideal

shelved.

of

every

enormously,

necessity

will

volume

most

progress.

of basic

does not

and intangible

standard

scale

and

for many

of comparison,

all other

increased

many

when

a

with

as we

investment

to give an honest

the

our

costs can be attributed

the

Our common

sales

benefits

tangible

and their

top in the

and

were

developments

These

costs.

the family

items

but while

the

to

with

A national

parts of the country

such a leadership

measure

up

Fundamentally

scale.

to start

intangible

in the sam e sense that

the

to

those

other

in comparison

up near

basis

in various

up with

add

increases.

for any wage

has enjoyed

is the first

around

set-back

with

in many

these

production

laboratory

were

All our own

of living

factories

coupled

we as a Company,

ard which

proceed

and

Company

are

provides.

ops a standard

was

both

for wage

pattern

is on the same many

as a whole

and

as uniquely

pens that

that

in wages

industry

the

industry

Dow Chemical

The chemical

represents

every

leaders

pattern

be any national

to the fact

The

are

of a nationwide

cannot

THE

DOW

CHEMICAL

COMPANY

Directors E. 0.

L. I. DOAN

BARSTOW

E. W.

BENNETT

M.

A. B. DOW

J. S. CRIDER

W.

E. PUTNAM C. J. STROSACKER W. R. VEAZEY

H. DOW

Officers President

-

-

Vice

President

and Secretary

-

-

-

-

-

Assistant

Treasurer

Assistant

Secretary

Assistant

Secretary

Assistant

Secretary

Assistant

Secretary

Transfer

The

Cleveland

Bank

Trust

-

-

and Assistant

of New

Company

H. DOW BENNETT

L. I. DOAN E. 0.

BARSTOW

C. J. STROSACKER -

-

M.

E. PUTNAM

-

J. S. CRIDER

Secretary

F. H. BROWN A. P. BEUTEL L. A. CHICHESTER R. L. CURTIS

D. J. LANDSBOROUGH

-

of New

E. W. -

-

-

W.

-

-

C. PENHALIGEN

Agents

Company City

-

Treasurer

-

-

-

Assistant

Auditor

National

-

and Treasurer

Vice President

The

-

President

Vice President

Trust

-

Vice

Vice President

Guaranty

-

Stock York York

Registrars

Common

The

Preferred

Guaranty

Common

and Preferred

The

New

York

Trust

Trust

Company

National

City

Company

Bank

of New

York

of Cleveland

HASKINS CERTIFIED

& SELLS

PUBLIC

THE

Dow Chemical We

ical

related that have

and

have

examined

generally included were

applied

systems from

accepted

United

accounting

auditing

records

standards

control;

States

ourselves

respect

surplus

and

the year

and

evidence

other

was made

applicable

not

for

1947

Chem-

of the companies,

in the circumstances

departments

which

appropriate

practicable and

to such receivables

the

ended and

in support

in accordance

necessary,

we deemed

it was

Government

with

and

3 1,

Dow

procedures

we considered

by tests to the extent

sheet of The

as of May

Our examination

procedures

of internal

satisfied

income

the accounting

statements.

all auditing

balance

companies

of consolidated

reviewed their

such financial

CERTIFICATE

the consolidated

its subsidiary

statements

date,

BUILDING

Company:

have examined

Company

SANK

DETROIT

ACCOUNTANTS’

The

NATIONAL

ACCOUNTANTS

and

procedures

in view

to confirm agencies

of

with

of the

receivables

but

we

by means of other

have 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

at May date,

practices

consolidated

surplus

3 1, 1947

in conformity applied

fairly

balance present

the financial

and the results of their with

generally

on a basis consistent

accepted with

1947.

con-

operations account-

that

year. HASKINS

July 25,

sheet and state-

G SELLS

of the

THE

DOW

AND

CHEM

SUBSIDIA

CONSOLIDATED

BALANCE

SHEET,

ASSETS May CURRENT Cash United

ASSETS: ---_____________________________________-----States

Government

securities-at

cost

_--------_____

Notes and accounts receivable : Customers ______________-_-_--__ - ___-_ -_------_--_ Associated companies _______________ -___------_---___ ___--____________ -_---____ -- __________ Employees Sundry -_--------_____________I________________~~~

Net

receivables

7,569,3

15.44

$

3,270,OOO.OO 15,1 -y;.g

--____________________________ current

assets

____---_-----

INVESTMENTS AND NON-CURRENT RECEIVABLES: Notes receivable and capital stock (at cost) of associated companies (at May 31, 1947, approximately $390,000 less than the equity in net assets as shown by unaudited balance sheets of companies) ------__---______ ------____________

and non-current ---------_--_

PROPERTY: Plant properties (exclusive of facilities acquired under certificates of necessity) (at cost) : Land -------------------------------------------c Depreciable property (less reserves for depreciation, 1947, $38,734,395.54; 1946, $34,668,856.85) ______________ Facilities acquired under certificates of necessity (at reinstated values, less reserves for depreciation since reinstatement, 1947, $609,918.82) (see Note A) __________________ --_ Housing properties (exclusive of facilities acquired under cercost (less reserves for depreciation, tificates of necessity) -at 1947, $284,290.95; 1946, $225,348.11) _______________ Total PATENTS--at cost or nominal 1947, $111,110.59; 1946,

property

-__________

- _____

value (less reserves for amortization, $87,531.81) __________________

DEFERRED CHARGES-Unexpired insurance premiums 1947, unamortized discount and and, at May 31, funded debt -----------_____________________________ TOTAL

-----____----------

10,760,000.00

$

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

16,159,061.80 .280;58 1.06

$

1 1,629,900.97 330,929.50

$

15,878,480.74

$

1 1,298,97

$

$

443,876.12

1.47

18,147,266.91

$

298.399.82

$

1,175,106.93

$

1 1,241,092.35

4,473,697.12 9,487,322.82 606,25 1.84 $

32,7

$

59,876,2

$

Non-current notes and accounts receivable (including employees’ receivables, 1947, $43,679.84; 1946, $47,907.49) ________ Sundry securities (at cost) --- __________ ------_________ Claims for refund of prior years’ Federal income taxes ------_Total investments receivables _____

_$

and

I nventories : Finished goods and work in process (at lower of cost or market) Materials and supplies (at cost-approximately market) : Raw materials --- ______________ -- _______ -------__ Supplies -__-____________________________________ Materials and supplies in transit _____________________ Total

10,418,121.52

$

of prior year’s Federal income and excess profits from carry-back of unused excess profits credit

Total

$

84:922:37 8 13,76 1.89

-----__-_---------_____

Billed and unbilled receivables from United States Government its agencies (other than for sale of product) ___--------___

1946

$

$

Total ---____-____-____--_________________ Less reserves for doubtful receivables ----__----_-________

Claims for refund taxes resulting

31

1947

2,655,128.53 5,0 14,100.24 370,428.07 !J

14,538.69

$

10.99

$

3,565,OOO.OO 3 19,954.47 6 19,600.72 4,957,549.16

$

9,462,104.35

$

1,843,603.3

19,280,749.19 53,23

1,348.93

5,988,OOO.OO 289,260.36 659,189.l 4,956,096.9

I

$

1 1,892,546.38

$

1 ,159,733.61

130,937,138.22

1 1

55,776,776.65

9,590,242.9

8,980,324.09

1,5 19,404.66

I

1,2 10,332.42

$143,280,470.28

$

67,737,085.59

$

306,163.81

$

309,742.59

$

7 12,926.93

$

329,27

and sundry expense on $213.637.876.36

1.7 1

$133,499,995.20

See notes to f-rr.

THE

DOW

AND

CHEM

SUBSIDIA

CONSOLIDATED

BALANCE

SHEET,

ASSETS Mav CURRENT Cash United

ASSETS :

1947

---___-_----__---_-_---------~~~~~~~~~~~~~~~~~ States

Government

securities-at

cost

-_------------

Notes and accounts receivable: Customers _----__-----__--____ -----_____________ Associated companies __-----------_-___________ - ____ Employees -------------------L--------~~~~~~~~~-~~ Sundry __------__----------____________________--Total -____--_-_--___---__________________ Less reserves for doubtful receivables _ _ - - - - - _ _ ___ ___ __ -_Net

receivables

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

Billed and unbilled receivables from United States Government its agencies (other than for sale of product) ----------__-_ Claims for refund taxes resulting

$

7,569,3

$

3,270,OOO.OO

$

31 ’

15.44

3

15,l ;y;.;;

--__------_-___--___-~-~~~~~~~ current

assets

_- -_-

________

INVESTMENTS AND NON-CURRENT RECEIVABLES: Notes receivable and capital stock (at cost) of associated companies (at May 31, 1947, approximately $390,000 less than the equity in net assets as shown by unaudited balance sheets of companies) ---_--__---_________ ---_---------___

Total investments and non-current receivables ____------------__ PROPERTY: Plant properties (exclusive of facilities acquired under certificates of necessity) (at cost) : Land _________--_______-------------------------~ (less reserves for depreciation, 1947, Depreciable property $38,734,395.54; 1946, $34,668,856.85) _____--------Facilities acquired under certificates of necessity (at reinstated less reserves for depreciation since reinstatement, values, 1947, $609,918.82) (see Note A) -- ___________________ Housing properties (exclusive of facilities acquired under certificates of necessity) - at cost (less reserves for depreciation, 1947, $284,290.95; 1946, $225,348.11) ___------------

PATENTS--at cost or nominal 1947, $1 11,l 10.59; 1946,

property

__-----

__________

value (less reserves for amortization, $87,531.81) _-- _______________

DEFERRED CHARGES-Unexpired insurance premiums 1947, unamortized discount and and, at May 31, funded debt ___ ____________--______------------TOTAL -----_-_-----

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

$

16,159,061.80 280,58 1.06

$

1 1,629,900.97 330,929.50

$

15.878.480.74

$

1 1,298,97

$

$

443,876.12

1.47

and sundry expense on ---______

18,147,266.91

$

298,399.82

$

1,175,106.93

$

1 1,241,092.35

4,473,697.12 9,487,322.82 606,25 1.84 $

32,7

$

59,876,2

$

Non-current notes and accounts receivable (including employees’ receivables, 1947, $43,679.84; 1946, $47,907.49) -_-___-_ Sundry securities (at cost) _- __________ -- ______ -- _______ Claims for refund of prior years’ Federal income taxes -----_-_

Total

$

and

Inventories: Finished goods and work in process (at lower of cost or market) Materials and supplies (at cost-approximately market) : Raw materials ----__-------------___ _____________ Supplies --------_---------------~~---~--~~~~~~~~ Materials and supplies in transit _- ____ --__-___-----__Total

10,418,121.52 10,760,000.00

84:922:37 813,761.89

of prior year’s Federal income and excess profits from carry-back of unused excess profits credit

Total

1946 $

2,655,128.53 5,0 14,100.24 370,428.07 $

14,538.69

ji

10.99

$

3,565,OOO.OO

9,462,104.35

$

1,843,603.3

1

1 1,892,546.38

$

1,159,733.61

9,590,242.9

7 12,926.93

$2 13,637,876.36

1

1,2 10,332.42

1,5 19,404.66 $

$143,280,470.28

$

1 1

55,776,776.65

8,980,324.09

306.163.8

5,988,OOO.OO

$

130,937,138.22

$

1,348.93

289,260.36 659,189.l 4,956,096.9

3 19,954.47 6 19,600.72 4,957,549.16 $

19,280,749.19 53,23

1

67,737,085.59

$

309,742.59

$

329,27

1.7 1

$133,499,995.20

See notes

to fm,

2AL f -

COMPANY

COMPANIES

IAY 31, 1947 AND

MAY

31,1946

LIABILITIES May CURRENT Accounts

payable-Trade

Federal

and

sundry

--------

and excess profits taxes _--_--- ____ - ____-_--_-_-_____-_ payable

Accrued

$

--_--_--___-_

income

Dividends

-__-_-___-

_____ --__-_---

Payrolls

______-___---_---_-----------------------security,

property,

state

rncomc

and

Sundry

current

year

2.35% notes,

debentures, due

due

January

1,

Total

RESERVES

FOR

FIRE

ELECTROLYTIC

MINORITY

1,240,398.50

1,2 12,197.62

6,660,264.06

1,889,444.39

1,103,627.59

18.58 43,456.76

8,766.88

159,902.34

178,082.72

liabilities

--____-___

$

26,778,873.63

$

30,000,000.00

$

65,000,000.00

$

19,l

17,308.02

November

1972 funded

ACCIDENT

debt

LOSSES,

REPLACEMENTS,

IN

1,

_-_-__

35,000,000.00

__-__--___--__

DAMAGE

AND

SUBSIDIARY

1961

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

CLAIMS,

SUNDRY

COMPANIES

__ - - - -

_______-__

$

1,470,494.52

$

1,465,068.98

$

957,242.83

$

942,572.92

STOCK:

without

value;

AND

CELL

INTERESTS

Cumulative

Common

3,527,261.45

1,552,575.00

DEBT:

Promissory

dend

6,382,397.32

8,145,832.88

453,2

---------_---___________________________--Total

CAPITAL

$

franchise,

and sundry -__---_---_____---__~~~~~~~~---~-~~~~~ Interest -___--___-____-__-______________________-Rents ___-____----_-------____________________----

Fifteen

1946

13,338,755.56

liabilities:

Taxes-Social

FUNDED

31

1947

LIABILITIES:

preferred par value;

$4.00 capital

stock,

per share

(authorized,

303,869

_______________

stock

outstanding,

Series A

outstanding, (authorized, 1,248,706

shares divi-

--__-----__--

____

2,000,OOO shares)

Total

600,000

shares) -annual shares

without

$

30,386,900.00

$

67,680,808.83

---_--------_--_-_

capital

stock

$

30,386,900.00

$

67,680,808.83

par 37,293,908.83

_--__--_---___

37,293,908.83

SURPLUS: Capital Earned

surplus surplus

_-__--__------__--_----

_____ ____-__ Total

--__-----__-

surplus

_--

_______

TOTAL;,------------------

statements.

_______

-_

$

-__------_--__--__-_

1,030,190.83

$

50,720,265.72 --_---_-

$

5 1,750,456.55

$2 13.637.876.36

1,030,190.83 43,264,045.62

$

44,2,94,236.45

$133,499,995.20

THE

DOW

AND

CHEMICAL

SUBSIDIARY

STATEMENT

COMPANY

COMPANIES

OF CONSOLIDATED

FOR TkiE YEARS ENDED

MAY

INCOME

31, 1947 AND

Year 1947 SALES AND

OTHER received

Interest

from

$130,426,838.70 an associated

from associated

Other

interest

Fees

received

income

companies

_--------_

--_-__-___-

in connection

AND

OTHER

Cost of sales

____ - ____

with

for

for

Selling

1946,

and

Premium

debt

charges

INCOME

BEFORE

INCOME

AND

PROVISION PROFITS taxes

of

8,595,258.66

--_-----_ and

11,520,066.77 7,94 1,906.36

ex-

of debentures

757,843.13

107,7 18.62 1 12,500.OO

__

1,689,878.62 337,466.33

of subsidiary

FOR

FOR FEDERAL

INCOME

AND

TAXES

in

1946,

resulting

YEAR

credits,

from

1

95,694.56

$1 1 1,849,264.95

$ 96,932,946.39

$ 20,938,383.44

$

FEDERAL

TAXES

(less,

488,495.98

com164,667.g

PROFITS

years

$ 74,976,685.48

1.59

not

____ -_--__

PROVISION

FOR THE

$ 92,485,43

--_--__-___________-___

of unused excess profits

INCOME

$104,579,729.22

$132,787,648.39

9,508,597.33

EXCESS

prior

449,492.06

6 12,539.38

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

Minority interests in income panies-----------------------------Total

1,449,270.22

1,154,450.88

of equipment rendered of the war _--____---

by cessation

income

549,335.69

__-______

of discount ----__--

on redemption

Losses on abandonment obsolete

expenses

amortization

paid

3 17,792.17

166,809.19

provision

facilities

$3,837,940.90)

pense on funded

Other

(including

of emergency

and administrative

Interest

177,O 10.24

construction

provision for deprecia----_----_---_-_-

depreciation

amortization

reinstated,

$101,813,839.08

CHARGES:

(excluding

tion and amortization) Provision

31 ’ 1946

250,OOO.OO

company

and operation of government owned plants Other income ______ -___--__--_-_______ Total ___________ -__---___-_-

COSTS

Ended Mav

REVENUE:

Sales---------------------------------Dividends

1946

-_--

7,646,782.83

EXCESS

reduction

in

carry-back

8,208,392.84

$1,754,592.60)

---_-_-___--

______

See notes

to financial

$

12,729,990.60

statements.

939,567.73

$

6,707,215.10

THE DOW CHEMICAL COMPANY AND SUBSIDIARY COMPANIES STATEMENT

OF CONSOLIDATED

FOR THE YEARS ENDED

CAPITAL BALANCE

AT

and

company

of

a

in the

YEAR

from

_---

BALANCE INCOME

CASH

AT FOR

a restatement

$

638,841.93

and

$

1,030,190.83

$

1,030,190.83

re39 1,348.90

OF

THE

YEAR

___

YEAR ___-__--_--_--__---_--____--_--------___

$43,264,045.62 12,729,990.60

$4 1,5 18,424.52 6,707,2

15.10

$55,994,036.22

$48,225,639.62

$ 4,058,294.50

$ 3,746,l

DIVIDENDS:

Common

capital

Cumulative

AT

stock

preferred Total

BALANCE

END

--__-____---------__ capital

stock,

Series A __

--_--____--_--------___ OF THE

YEAR NOTES

A-During

1,030,190.83

SURPLUS

BEGINNING THE Total

1946

$

subsidiary

allocation of the subsidiary’s capital stock ____ BALANCE AT END OF THE YEAR -----_----

EARNED

31

stock

capital

partially-owned

resulting

1946

Year Ended May 1947

OF THE

in equity

surplus

SURPLUS

31, 1947 AND

SURPLUS

BEGINNING

CREDIT-Increase

MAY

__----__-_ TO

FINANCIAL

1,2 15,476.OO

18.00

1,215,476.00

$ 5,273,770.50

$ 4,961,594.00

$50,720,265.72

$43.264.045.62

STATEMENTS

the war period the Company and its subsidiaries acquired emergency facilities under certificates of necessity with an aggregate cost of $44,369,812. Following the Presidential proclamation of September 29, 1945 ending the emergency period with respect to such facilities, the unamortized portion thereof was written off. As of May 31, 1946 certain of the facilities with an original cost of $19,673,909, which were deemed to be economically useful, were reinstated in the books at a net book value of $9,590,243, representing cost less depreciation, measured by depreciation at normal rates plus an amount equivalent to the estimated Federal income tax, at the current rate of 38%, which will result from the future nondeductibility of depreciation of such facilities.

During the year ended May 3 1, 1947, pursuant to agreements with several of the unions representing their employees, the Company and one of its subsidiaries made retroactive payments of portal-to-portal wages, applicable to prior years, amounting to approximately $6,000,000. In the preparation of these financial statements, the net amount of the adjustments described in the foregoing, together with certain other retroactive adjustments of minor amount, have been applied to the years to which they are applicable. As a result of such adjustments, net income for the year ended May 3 1, 1946 has been increased $558,239, earned surplus at June 1, 1945 has been increased $5,820,916, and the related balance sheet accounts correspondingly adjusted from the amounts shown in the financial statements included in the Annual Report for the year ended May 31, 1946. B-On

July 23, 1947 pursuant to an Agreement of Merger approved by its stockholders, The Dow Chemical Company (a Michigan corporation) was merged into The Dow Chemical Company (Delaware), a whollyowned subsidiary organized for that purpose. The name of the new corporation was thereupon changed to “The Dow Chemical Company”. Since the merger and the attendant conversion of each share of outstanding common capital stock without par value into four shares of Common Stock of a par value of $15 a share, the outstanding capital stock of The Dow Chemical Company (a Delaware corporation) consists of 4,994,824 shares of Common Stock of a par value of $15 per share, carried at an aggregate amount of $74,922,360, and 303,869 shares of Cumulative Preferred Stock-Series A, without par value, carried at an aggregate amount of $30,386,900. The merger effects the transfer of $623,093 from capital surplus and $37,005,358 from earned surplus to the common capital stock account. Coincident with the merger the Company is offering for sale to the public through a group of underwriters 400,000 shares of Second Preferred Stock.

After the merger the authorized capital stock consists of 600,000 shares of Cumulative Preferred without par value, 400,000 shares of Second Preferred Stock without par value, and 12,000,OOO of Common Stock of the par value of $15 each.

Stock shares

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THE

DOW

CHEMICAL

Executive Office:

COMPANY

Midland,

General Sales Office:

Midland,

Michigan Michigan

Sales Off ices

Boston 20

16,

Chicago

New York 20, New York 30 Rockefeller Plaza

Massachusetts

Providence

Street

3, Illinois

135 So. LaSalle Cleveland

Tower

Fisher Building

Commerce

Los Angeles 634

3615

2, Texas

2205

Spring

Olive

Street

Seattle 1, Washington 1702 Textile Tower

Building

Washington

14, California

South

Square

S. Penn

St. Louis 8, Missouri Continental Building

2, Michigan

Houston

2, Pennsylvania

1400

San Francisco 4, California 310 Sansome Street

13, Ohio

Terminal Detroit

Street

Philadelphia

915

Street

5, D. C.

Shoreham

Building

Pittsburg,

California

Factories Located at Midland, Bay City,

Michigan

Seal

Michigan Freeport,

Texas

Velasco,

Texas

Beach,

California

THE

DOW

CHEMICAL

Subsidiary Cliffs

Dow

Chemical

Dow

Chemical

Dow

Magnesium

COMPANY

Companies

Company

of Canada,

Marquette,

Limited:

General

Office

Toronto, Sarnia,

Works

Midland

Ontario

Corporation

Midland,

Michigan

Company

Midland,

Michigan

Ammonia

Brazos Oil and Gas Company

Houston,

Dowel I Incorporated

Tulsa,

Dowell Incorporated Chicago

2

Salem Wichita

2

Shreveport Boston Mt.

23

16

Pleasant

Detroit

2

Kansas

City

8

St. Louis 8

Illinois

343

Illinois

P. 0.

S. Dearborn

Kansas

5 19 Union

Louisiana

326

Massachusetts

Statler

Bldg.

Michigan

P. 0.

Box 152

Michigan

932

Fisher Bldg.

Missouri

220

B. M.

Missouri

3615 30

1609

Oklahoma

City 2

Oklahoma

763

Pennsylvania

Girard

Pennsylvania

401

2

Borger Fort Worth Houston

2

2

Midland Wichita

P. 0. 635

Texas

21 15 Commerce

Texas

P. 0.

Alberta,

1 106

Associated Dow

Corning

Ethyl-Dow The Saran

Corporation

Chemical Yarns

Company

Company

907

Canada

Box 1029 Fort Worth

Freeport, Oden ton,

Club Bldg. Bldg.

Box

1858

City

National

Lancaster

Companies Midland,

Bldg.

Bldg.

Bldg.

Texas

Calgary

Tower

Bldg.

Texas

Texas

Falls

Plaza

National

Trust

Grant

Bldg.

Bldg.

Bldg.

Terminal First

Bank Bank

Street

Rockefeller

New

19

York

A.

Olive

Ohio

Philadelphia

National

First National

20

Pittsburgh

St.

Box 292

13

York

Texas

Oklahoma

Sales Offices

Cleveland

New

Michigan Ontario

Michigan Texas Maryland

Bldg.

Bank

Bldg.