THE Dow CHEMICALCOMPANY

MIDLAND, MICHIGAN

ANNUAL REPORT FOR YEAR ENDED MAY 31,1943

The 1 1, 1943. of proxy will rently

next

annual

meeting

of stockholders

will

be held on Wednesday, with a proxy statement separately from

August and form

A formal be mailed

notice

of the meeting holder proxies

together

to each time

of common will

stock

but concur-

herewith,

at which

be solicited

by the management.

THE DOW CHEMICAL COMPANY
MIDLAND, MICHIGAN

Directors E. 0. BARSTOW E. W. BENNETT J. S. CRIDER L. I. DOAN A. B. DOW W. H. DOW M. E. PUTNAM C. J. STROSACKER W. R. VEAZEY

Officers Chairman of the Board, President and General Manager Vice President and Treasurer Vice President and Secretary Vice President Vice President - Vice President Assistant Treasurer W. H. DOW E. W. BENNETT L. I. DOAN E. 0. BARSTOW C. J. STROSACKER M. E. PUTNAM J. S. CRIDER -

Assistant Assistant Assistant Assistant Assistant /b&;z;t .

Treasurer Secretary Secretary Secretary Secretary Secretary

and Assistant -

Secretary F. H. BROWN A. P. BEUTEL -L. A. CHICHESTER R. L. CURTIS C. M. SHIGLEY D. -J. LANDSBOROUGH C. PENHALIGEN

Registrars 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 140 Broadway New York City Cleveland Trust Company Cleveland, Ohio York

The

TO THE

THE DOW

STOCKHOLDERS CHEMICAL forty-sixth financial by

OF COMPANY: annual report for & of your the Sells, Company fiscal whose year is presented ended May herewith. 31, 1943 The have as part

The consolidated

statements Haskins

been audited of this report. FINANCIAL The

Messrs.

certificate

is reproduced

STATEMENTSconsolidated balance of sheet, for the statement the year and of consolidated ended its May 31, income 1943 1,559.94. and stateare shown to Current

ment of consolidated herein. The total

earned assets

surplus

Company current

Subsidiaries

amounted

$1 19,008,3 14.06, which figure includes liabilities amounted to $3 1,098,048.92. EARN I NGSThe to $300,000.00, the number This compares consolidated After the with net income deducting net

assets of $35,91

of the income for

Company on was

and the

its Subsidiaries preferred at May the capital per end to $6.35 3 1, 1942.

amounted

$8,225,301.36.

dividends stock

stock
share

of
on

consolidated $7.14

equivalent ended

of shares of common

capital

outstanding

of the

year.

per share

the year

DIVIDENDSThe per share, preferred amounted NET Company stock distributed four equal during the quarterly the year. dividends dividends Including disbursed aggregating dividends to $3.00 on the

to the common capital to $4,046,1 18.00.

stockholders

of $300,000.00,

shareholders

SALESNet sales for the year to $78,359,997.24 ended for May 31, 1943 amounted May 31, to $105,427,854.78, 1942. as

compared TAXES-

the

year

ended

Total an equivalent per common WAGES AND The pares time with there employment

major

taxes

for the year amounted on common

to $20,453,773.46,

which

represents with $9.76

cost per share share for 1942. SALARIES wages

stock of $16.38.

This compares

PAIDpaid amounted paid in the Chemical employees to approximately fiscal in the year ending is 16,340 military $38,355,000. May 31, 1942. employees, This The comtotal

total

$22,898,000 by The are 2593 Dow past

Company

and at the present

service.

GENERALDow Magnesium nesium wholly plants owned subsidiary Corporation States and was organized Government. to build Dow

and operate certain
Corporation

Magis a

for the United

Magnesium

is now engaged

in operating

these plants.

In the same way, to be the operating by The Dow owned wholly Chemical subsidiary

Dow

Chemical in Canada for

Company the

of Canada,

Limited,

was organized plant This designed also is a as

company

for the Canadian Canadian will have

Government Government. more important

Company which

undoubtedly

activities

time goes on. Dow important owned Corning strategic Dow Corporation materials Chemical item was organized for Government for the purpose This of producing some Company is jointly

account.

by The

Company

and Corning

Glass Works. of The Dow Chemiwe we

One other
cal Company

of general made

interest

to the stockholders

is the record

by this Company

in all of our Government

contracts. plants, Also, The

In the case of the various contracts with have made several records of completing have for been able and to develop greater our all-round record has been,

the Government to build defense construction ahead of schedule. than the plants doubt, most were originally without creditable.

capacity

designed stockfor six

holders are entitled to feel great pride all wartime activity. In recognition Army-Navy The the Company renegotiation reached ever, to advise “E” Awards accompanying of Government permitting

in the accomplishments of these outstanding to the major producing the 31, has

of your Company accomplishments, plants. condition At this

have been made financial

statements year and

record ending subcontracts

financial 1943.

of time

at the close of its taxable contracts determination

May

a point

of the effect,

if any.

begun but has not It is only proper, how-

of these proceedings

and the possibility

of adjustments.

WILLARD

H. DOW, President

Midland, July 22,

Michigan 1943

THE AND

DOW

CHEk
( I ncorpora tee

SUBSIDIA
BALANCE SHEET,

CONSOLIDATED

ASSETS
/
CURRENT Cash United Notes ASSETS: -_----------------^-___^________________-----States Treasury tax notes, Series C ____--____________ $ $ May 1943 6,573,225.15 2,325,OOO.OO $ 31 1942 6,29 1,790.83

and accounts

receivable: $ 10,337,8 13.70 1

Customers Associated Sundry

---------------------------------------companies ________________________________

$

9,420,886.92
107,152.55 32,6 14.47 142,767.41

168,286.6 32,640.26 262,924.16 $ JO,80 1,664.73

Employees,,_,,__,,,__,,,,_,,,,,,,,,___,____,_____------------------------------------------Total Less reserves -----------------------------------receivables __--_---____--______ $

$ 1

9,703,421.35 240,593.48

for doubtful Net

249,570.5 10,552,094.22

receivables

_____-_________________

$ $

9,462,827.87

Billed and unbilled accounts receivable from United States Government and its agencies (other than for the sale of product) -_Inventories: Finished Materials goods and work and Total supplies in process (at (at lower of cost or market) market) ____

$

1,744,306.40

1,263,792.85

$

7,925,689.72 6,79 1,244.45

$

5,486,230.36 6,708,152.47

cost-approximately

-----------------------------------Total current assets --_---_______

$ $

14,716,934.17 35,91 1,559.94

$ $

12,194,382.83 29,2 12,794.38

INVESTMENTS

AND

NON-CURRENT

RECEIVABLES:

Notes receivable panies (equity panies, May $3,458,524.24) Post-war refund

and capital stock (at cost) of associated comas shown by unaudited balance sheets of com31, 1943, $3,392,540.64; May 3 1, 1942, ___------___________________________ of excess profits tax - _____________________ employees’ 31, 1942,

$

2,243,OOO.OO 1,645,8 19.84

$

2,238,OOO.OO

Non-current notes and accounts receivable (including receivables, May 3 1, 1943, $64,336.75; May $73,364.16) _______________-____________________^_ Sundry May securities 31, 1942, (less reserves, $121,212.88) May 3 1, 1943, -------------------------

876,282.99 529,340.05

50 1,936.19 465,547.05

$108,413.93;

Total investments and non-current receivables __________________ PROPERTY (including emergency facilities for national defense, completed and in progress, with a gross book value (cost) subject to amortization, May 31, 1943, $38,890,695.21; May 3 1, 1942, $24,409,906.33 1: Plant properties and ciation $27,248,904.73) and equipment---at cost (less reserves for depreamortization, 1943, $35,334,98 1.48; 1942, ___________________---------------cost (less $288,347.06; Total reserves 1942, property for depreciation $160,730.78) ----------------and --_-

$

5,294,442.88

$

3,205,483.24

$

75,04

1,878.06 17.47

$ 68,356,269.77
1,469,527.95

Housing properties-t amortization, 1943,

2,200,6 $

77,242,495.53

$ 69,825,797.72

PATENTS--At cost or nominal value (less reserves for amortization, 1943, $56,943.28; 1942, $50,10 1.18 1 ------------------DEFERRED CHARGES-Unexpired insurance premiums, unamortized debenture discount and expense, and sundry ________________ TOTAL __- _____ - _a____

$ $

61,831.12

$
$

65,673.22

497,984.59 14.06

784,482.14

$1 19,008,3

$103,094,230.70

NOTE:

s Operations of the Corporation and its subsidiaries in profits control legislation giving the Government subcontracts with resulting reduction in and ref been begun but have not reached a point permit may have upon these financial statements. -

CAL Y
GY

COMPANY

I Michigan 1

COMPANIES
31, 1943 AND MAY 31, 1942

LIABILITIES
May 1943 CURRENT Notes Federal Serial Accrued Accounts LIABILITIES: payable--Banks payable-Trade income debentures liabilities: -----------------------------------------security, franchise, property, Federal capital and sundry -------------------stock, state 1,3 16,505.23 7 1,229.25 1 16,657.55 153,785.8 $ 3 1,098,048.92 1 $ 1,123,227.3 1 76 1,562.98 and excess maturing --------------------------------and sundry profits within ------------,--------___________ ----------------- _______ taxes 31 1942

$

1,900,000.00
5,588,505.10 20,078,138.67 7 50,000.00

$

1 ,ooo,ooo.oo 5,365,30 10,336,621.85 750,000.00 1.30

one year

Payrol Is

Taxes--social income and Interest Rents Sundry

--------------------------------------------------------------------------------------------------------__________3_________--Total

1,042,074.29 95,47 1.26
167,032.86 124,936.09 19,643,000.63

current liabilities _- _________

FUNDED

DEBT: 21/d % debentures, due September 1, 1950 __________ $ 7,500,000.00 $ 7,500,000.00

Ten year

Serial debentures maturing in the amount of $750,000.00 on September 1, 1944 and annually thereafter until September 1, 1950 (debentures maturing within one year included in current liabilities) ------------------------------------Total funded debt -------__---__ $

5,250,OOO.OO 12,750,OOO.OO $

6,000,000.00 13,500,000.00

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

DAMAGE SUNDRY

CLAIMS,
-_---__ $ 1,636,049.07

$

734,820.3

1

MINORITY

INTERESTS

IN

SUBSIDIARIES

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

$

1,202,278.06

$

1,073,655.1

1

CAP ITAL

STOCK: and outm----spar 37,293,908.83 $ 6,000,000.00 $ 6,000,000.00

5% cumulative (authorized Preferred capital stockstanding, 60,000 shares of $100.00 par value each) Common value;

capital stock (authorized, 2,000,OOO shares without outstanding, 1,248,706 shares) --w---------------Total capital stock ______________

37,293;908.83 $ 43,293,908.83

$ 43,293,908.83

SURPLUS: Capital Earned surplus surplus --------------------------------------- ____------Total -_____-__ surplus -- _____ - _________ $

$
28,99 ------__---_______

36,539.Ol 1,490.17

$
24,8 $

36,539.Ol
12,306.8

1

29,028,029.18

24,848,845.82

TOTAL

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

$1 19,008,3 ----

14.06

$103,094,230.70

s transactions which are subject to the provisions of war right under certain conditions to renegotiate contracts and ng of profits realized. Renegotiation proceedings have determination of the effect, if any, that such proceedings

THE -DOW CHEMICAL AND SUBSIDIARY
STATEMENT FOR THE YEARS ENDED / MAY

COMPANY

COMPANIES
INCOME 1942 Ended May 31 1942 $78,359,997.24 31, 1943 AND Year 1943

OF CONSOLIDATED

NET

SALES

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

$105,427,854.78

LESS : Cost of sales ______

-- ____ -_-expenses

_______------------______-____-------

$ 77,19

1,286.26

$56,338,933.18 3,929,984.30 $60,268,9 $18,09 17.48

Selling and administrative Total PROFIT OTHER FROM

4,472,485.30 $ 81,663,771.56 $ 23,764,083.22

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

SALES --__-------

1,079.76

INCOME: received from associated company -_of 1,877,804.59 504,275.64 $ 3,337,690.23 1,773.45 268,375.06 252,126.83 $ 2,026,l $20,1 12.86

Dividends

$

Interest from associated company ------_---Fees received for construction and operation government owned plants _----____--_-_--_---------_-----------Miscellaneous Total GROSS INCOME INCOME --------___------------

800,OOO.OO 155,610.OO

$

1,350,000.00 155,610.97

------____---_------------

$ 27,10

17,192.62

CHARGES: and

Interest and amortization of discount expense on debentures -----------------Miscellaneous ----__-Total ____ -_-___--__-_--------__-__--_

$
$

283,790.88 190,625.49 474,416.37

$

289,964.16 284,980.47

__- ______

$

574,944.63

NET INCOME BEFORE PROVIDING INCOME AND EXCESS PROFITS PROVISION PROFITS Normal FOR FEDERAL TAXES: tax and surtax INCOME

FOR FEDERAL TAXES ---_-AND EXCESS

$ 26,627,357.08

$19,542,247.99

----____----------post-war

$

3,542,153.66 14,706,279.1 1

$ 3,948,067.35 6,13 1,058.48 $10,079,125.83 1 $ 9,463,122.16 24 1,636.40 $ 9,221,485.76

Excess profits tax (less, in 1943, refund, $1,645,819.84) --__------_-----Total NET INCOME INTERESTS _________ --------------

$ $

18,248,432.77 8,378,924.3 153,622.95

BEFORE DEDUCTING MINORITY IN INCOME OF SUBSIDIARIES _-IN NET ________ YEAR INCOME OF - __________

MINORITY INTERESTS SUBSIDIARIES -----NET INCOME FOR THE

______---------

$

8,225,301.36

NOTE :

Provisions for depreciation gency defense facilties

and amortization were as follows:

over

a period

of sixty May

months 31 1942

of emer-

Year 1943 Provision for depreciation ___________ Provision for amortization of emergency defense facilities -- ______________ $3,722,973.48 5,387,679.25

Ended

$3,628,103.12 3,075,568.39

THE DOW CHEMICAL AND
STATEMENT

COMPANY

SUBSIDIARY

COMPANIES
EARNED 31,1943 SURPLUS

OF CONSOLIDATED

FOR THE YEARS ENDED MAY

and 1942

Year 1943 BALANCE AT BEGINNING OF THE YEAR _____ $24,812,306.81 8,225,301.36

Ended

May

31 1942

$18,933,844.35 9,22 1,485.76

CREDITS: Net income for Adjustments to provision for excess profits

the year -_--_--_------_-_net income of prior years (less additional Federal income and taxes thereon, $238,787.81 1 -____ ---------_----_-___

617,955.45 $33,037,608.17 $28,773,285.56

Total

CHARGE-Cash dividends: Common capital stock ----_------_---_--_Preferred capital Total BALANCE AT END stock _____ OF THE --___-__--___--___-__------__------_ YEAR -_-_---_---_

$ 3,746,1

18.00

$ 3,660,978.75 300,000.00 $ 3,960,978.75 $24,8 12,306.8 ________~ 1

300,000.00 $ 4,046,1 $28,99 18.00

1,490.17

HASKINS
CERTIFIED PUBllC

8c SELLS
ACCOUNTANTS
RESIDENT HAROLD ?ARTNERS W. SCOTT,

THE C.C.A. C.?.A.

NATIONAL

BANK

BUILDING

DETROIT

CYRIL

N.

BULLOCK.

ACCOUNTANTS’

CERTIFICATE

The Dow Chemical

Company: the consolidated balance sheet of The Dow ChemOS of May 31, 1943 and the

We have examined ical Company related statements and have examined of such financial

and its subsidiary of consolidated

companies

income and earned surplus for the year procedures of the companies, was made in accordance in the circumstances in view of records and other evidence in support

ended that date, have reviewed the accounting their accounting statements,

Our examination

with generally accepted auditing and included all auditing

standards applicable

procedures we considered necessary, which procedto confirm receivables but we have

ures were applied by tests to the extent we deemed appropriate the systems of internal control; it was not practicable from United States Government departments and agencies

satisfied ourselves with respect to such receivables by means of other auditing procedures. In our opinion, the accompanying ments of consolidated

consolidated balance sheet and state-

income and earned surplus fairly present the financial with generally accepted with that

condition of the companies at May 3 1, 1943 and the results of their operations for the year ended that date, in conformity accounting of the preceding year. HASKINS July 15, 1943. C SELLS principles and practices applied on a basis consistent