THE Dow CHEMICALCOMPANY

MIDLAND,MICHIGAN

THE DOW CHEMICAL COMPAtdY
i
MIDLAND, MICHIGAN

Directors
E. 0. BARSTOW
W. H. DOW
J. S. CRIDER

L. I. DOAN
G. E. COLLINGS
C. J. STROSACKER

E. W. BENNETT
J. T. PARDEE
W. R. VEAZEY

Officers
Chairman of the Board
President and General Manager
Vice President
Vice President
Vice President, Sec’y and Treasurer
Assistant Treasurer
Assistant General Manager
Auditor and Assistant Secretary
Assistant Secretary
-

-

J. T. PARDEE
W. H. DOW
G. E. COLLINGS
J. T. PARDEE
E. W. BENNETT
J. S. CRIDER
A. P. BEUTEL
L. A. CHICHESTER
F. H. BROWN

Registrors
The New York Trust Company
100 Broadway
New York City
The National City Bank of Cleveland
Cleveland, Ohio

Transfer Agents
Guaranty

Trust Company of New York
140 Broadway
New York City

The Cleveland Trust Company
Cleveland, Ohio

HASKINS
CERTIFIED

&
PUBLIC

SELLS
TNE

ACCOUNTANTS

NATIONAL

DANK

BUlLDIN

DETROW

The Dow Chemical

Cowany:

POehavemadean~tionof~conso~tedbalance
sheet of TheDow Chemical GOqxmy and its stibsi.~
of Hay 31, 1938 and of the related

companies as

statements of consolidated

income and earned surplus for the year eded

that date.

In connec-

tion therewith, we made a revkw of the accounting methods and
esraminedor tested accounting records of the coqanies

and other

supporting evidence in a manner and to the extent which we consfdered appropriate in view of the systems of internal
control.

The physical quantities
were certified to us by officials
321our opinion,
panying consolidated
solidated

based upon such exmination,

income and earned surplus fairly
conditicn

the accom-

statements of con-

gresent,

of accounting consistently

the companies, their financial
results

and condition of the inventordes
of the coz@anLes.

balance sheet and related

with accepted principles

accounting

in accordance
followed by

at I&LJC
31, 1938 and the

of their operations for the year ended that date.

July 131 1938.

THE DOW CHEMICAL

COMPANY

( Incorporated in Michigan)

AND SUBSIDIARY COMPANIES
CONSOLIDATED

BALANCE SHEET, MAY 31, 1938

/

ASSETS
CURRENT ASSETS:
Cash -------------------------------------------------United
States
Government
securities-t
cost (face value,
$200,000.00;
market value, $225812.50)
_----------_--_--Notes and accounts receivable :
Customers, $2,389,180.33,
associated company,
$28,520.87,
employees, $9,234.09,
and sundry, $77,189.69
___________ -__-- ______
$ 2,504,124.98
Less reserves for doubtful accounts _--------147,21 1.85
lnven tories :
Finished goods and work in process (at lower of
cost or market) ___-__--_---------_---Materials and supplies (at cost-approximately
market)
----------------------------

217,750.oo

2,356,913.13

$ 6,333,653.23

Total current assets --------------------_______c____
I NVESTMENTS:
Preferred and common capital stocks of an associated company (at cost, which is less than the
Company’s book equity in the stocks as indicated by the balance sheet of the associated
----------------------------company)
$
Miscellaneous
securities
(at cost, less reserve,
--------------------------$53,156.98)
Receivable from individuals on sales of houses and
lots ----------------------------------

2,09 1,662.63

8,425,3 15.86
$13,276,542.97

782,500.OO
79,496.98
18,798.39

Total investments -___-_-_---_-_---_____-____-__--FIXED ASSETS:
Real estate, plants, and equipment-t
cost (less
$24,101,543.69
reserves for depreciation, $14,285,985.73
1 ____
Patents---at
cost (less reserves for amortization,
$23,759.53 1 --------------------------55,513.87
Total fixed assets -----c---------------------------DEFERRED CHARGES-UNEXPIRED
INSURANCE
PREMIUMS,
UNAMORTIZED
NOTE AND DEBENTURE DISCOUNT
AND EXPENSE,
----------------------------------AND MISCELLANEOUS
TOTAL

$ 2,276,563.98

______________________________________

880,795.37

24,157,057.56

170,006.49

$38,484,402.39

THE DOW CHEMICAL

COMPANY

( Incorporated in Michigan)

AND SUBSIDIARY COMPANIES
CONSOLIDATED

BALANCE SHEET, MAY 31, 1938

LIABILITIES
CURRENT LIABILITIES:
Accounts payable-Trade
and miscellaneous ___-_--___--______
Employees’ compensation awards ______-______
-_--___------_Serial notes, 2r/,%,
series due January 1, 1939 ________-________

Federa I income taxes ------------------------------------Other taxes accrue&including
property taxes, Federal capital stock
taxes, and social security taxes ________________________
---_
Accrued interest payable _- _____________________
- ____ -__--_Total current liabilities -----------------------------FIFTEEN YEAR 3 % DEBENTURES, DUE DECEMBER 1, 1951 (subject
to redemption through sinking fund commencing June 1, 1941) --_RESERVES FOR FIRE AND ACCIDENT
INSURANCE
AND DAMAGE
CLAIMS
___L_________________________________L__------MINORITY
INTEREST
IN CAPITAL
STOCK AND
SURPLUS OR
DEFICIT OF SUBSIDIARY
COMPANIES
______________________
PREFERRED CAPITAL
STOCK-5%
CUMULATIVE
(authorized
and
outstanding, 60,000 shares of $100.00 par value each) -a-------COMMON
CAPITAL
STOCK (authorized,
2,000,OOO shares without
par value; outstanding, 945,000 shares) ---------------------SURPLUS:
Capital surplus (increase during year arising from
sale of preferred capital stock, $73,987.54)
___
$
100,407.54
10,3 16,?49.28
Earned surplus ---------------------------Total surplus --------------------____L_____________

TOTAL

NOTE:

--------------------------------------

$ 1,582,423.64
74,220.O 1
720,OOO.OO
712,175.40
247,412.50
7,500.oo
$ 3,343,73

1.55

5,000,000.00
240,152.97
798,961.05
6,000,OOO. 00
12,685,OOO.OO

lo,41 6,556.82

$38,484,402.39

Accrued dividends on the Class A preferred capitol stock held by a minority interest
of the Cliffs Dow Chemical Company, o subsidiary company consolidated herein,
which hod not been declared by the Board of Directors of that company or provided
for in this balance sheet, amounted to $52,212.00
ot May 3 1, 1938.

THE DOW CHEMICAL

AND

COMPANY

SUBSIDIARY COMPANIES

STATEMENT OF CONSOLIDATED INCOME
FOR THE YEAR ENDED MAY 31, 1938

SALES (net of returns, allowances, cash discounts, and freight)
COST OF SALES (exclusive
GROSS PROFIT
SELLING
PROFIT
TION

AND

of provision for depreciation)

15,761,032.76
$ 9,l 10,163.30

_-___-_----___-----_-~~-~---~~~~~~~-~~~~~-~~
ADMINISTRATIVE

FOR DEPRECIATION

1,921,985.94

EXPENSES -------_a-------___

FROM OPERATIONS
BEFORE PROVIDING
--_-----------------------------------------------

PROVISION

$24,87 1,196.06

__----

----------

FOR DEPRECIA$ 7,188,177.36
2,159,341.38

---------------_-----------mm

_____---_-_----_-___------------PROFIT FROM OPERATIONS
OTHER INCOME:
$
Dividends from an associated company ____---Interest earned, royalties, and miscellaneous ---GROSS INCOME __----------__-----------------------------INCOME CHARGES:
Research and experimental expenses ----___---Interest and amortization
of discount on serial
notes and debentures __--_-----------------------------------------Miscellaneous

$ 5,028,835.98
948,285.75
20 1,200.75

1,149,486.50
$ 6,178,322.48

$ 1,406,328.83
193,25 1.oo
20,509.47

NET INCOME BEFORE PROVIDING
FOR FEDERAL INCOME TAXES __
PROVISION
FOR FEDERAL INCOME TAXES (including $124,370.20
surtax on undistributed profits) -_-----_--_-__-----_--------NET INCOME BEFORE ADJUSTMENT
FOR MINORITY
INTERESTS IN
__----__---___----_-------------SUBSIDIARY
COMPANIES
MINORITY
INTERESTS’ SHARE OF PROFITS AND LOSSES OF SUBSIDIARY
COMPANIES
(net loss) _-_---------_----__-------NET

INCOME

FOR THE YEAR

_--_--__----

_____ - ____________

-

1,620,089.30
$ 4,558,233.18
708,422.84

$ 3,849,810.34
45,458.24

$ 3,895,268.58

THE DOW CHEMICAL

COMPANY

AND SUBSIDIARY COMPANIES
-

STATEMENT OF CONSOLIDATED EARNED SURPLUS
FOR THE YEAR ENDED MAY 31, 1938
BALANCE,

JUNE

CREDIT-NET

1, 1937

INCOME

-----

--------

FOR THE YEAR

----

Total ------L--------------------------------CHARGE-CASH
DIVIDENDS:
Common capital stock ----m----w----------Preferred capital
BALANCE,

MAY

stock -___--___
31,

1938

----

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

_____-_______

-__-___--_--

-___---_--

$ 9,453,742.74
3,895,268.58
$13,349,011.32

$ 2,835,OOO.OO
197,862.04

_______ -__- ____ --__------_-__-__--

3,032,862.04
$10,3 16,149.28

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