49

TH ANNUAL REPORT
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 CHEMICAL

OF COMPANY:

DOW

We annual interest as nearly

present

herewith

the 49th

annual

report

of the Company

operations.

An

report

OS the summotion

of the financial conversely, picture and

condition

of the Company operations.

is of vital to present with or Q the we make

to every stockholder; diversified

it is the duty of the management of the Company the almost detail products it would innumerable products

OS possible the complete activities to write to read. if we attempted

However,

our extremely

con make,
volume amount intention

in great

be necessary

to publish with

too big for anyone of literature of keeping

Throughout Company currently

the year, informed.

however,

we publish operations

o large

concerning

and Company

the stockholders

EARN I NGSThe income after first item of interest to $3.95 5,476 paid $I,21 is the statement per shore on the during May of earnings. 1,248,706 The consolidated net stock, Another This it In was of

was equivalent

shares

of common stock. per shore.

deducting

the year on the preferred 3 1, 1945 attained were $6.02 last year, for amounted

The compa-

rable earnings item of interest is less by 18% excellent addition occasioned the mately

for the fiscal year ending is the dollar than volume

of sales, which

to $101,813,839. of the war. year

the peak of $124,570,200 in sales, labor The the decrease

but we consider

in view

of the cancellation rates,

of many contracts by write-offs item other

at the cessation charges

to the decrease by increased of the war.

in earnings than

the current

and unusual

as a result

cessation

largest

amortization

WQS approxi-

$1,700,000

for obsolescence.

AMORTIZATIONDuring mately tificates During the war period the Company war and its subsidiaries expended approxiThese were purchased under cerof the cost of such facilities with the end of the emergency token on the five-year the Company period to end the effect that, ended was over Q period. basis. was OS of based

$44,000,000 of necessity

for emergency permitting

facilities.

the amortization period ending year amortization and by Presidential

period of five years, or a shortened yeors prior to the current With permitted September 30, the end of the war 1945.

proclamation,

for income

tax purposes Adjustments amortization and to

to shorten the amortization were mode on the books with

on the shortened approximately ber 30, 1945 amortization mately Revenue.

period, amounted

for years prior to the current $6,300,000.

year was increased Septem-

$13,100,000

the amortization

for the four months

approximotely

As Q result of the increased of approxiof Internal

$11,300,000

for prior years, refunds were tentatively

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

Because

certain

of the facilities to be economically in the amount depreciation

which useful,

were

fully

amortized were $9,600,000. will

for

income

tax

purposes were deemed will be

such facilities which

reinstated

on the

books OS of May 3 1, 1946,

of approximately

subject to regular
income

in the future,

This amount not be deductible for

Federal

tax purposes. to the state-

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

One 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 not be any excessive mode during bitter available, during profits wartime pill before taxes. Even though The the final the we taxes ran as high price of very few OS 85.5 individual At times per cent, products there WQS a sound reason for renegotiation.

represented when

cost to the government, of renegotiation. to think that by the for building

and to prevent applying over and greater gain was over NEW all

the pyramiding the skill

of costs is therefore to swallow we might

justification stopped to penalty

it was Q rather plant

be subject should

most efficient

we were gained

capable

of building.

experience prosperity

the war operation

Be that as it may make for more lasting

the war is peace and to to and

in peacetime. of improved in larger reason paid period, our

It has always volume with a total operation did

been the practice and still not have that

of the Company

pass on the benefits for the Company apparently during Q two-year the

by lower

costs to our customers, lower costs. to pay any

Company charge

This practice renegotiation Company

charges

the war period

the exception

Midland

Ammonia

of $12,675.

CONSTRUCTIONWhen materials all during only the construction three from most become the war more available, one new were and plant built. more plants after As another a will be built. the As Q matof

ter of fact, tion, but authorized the next nanced which

come

up for consideraaccumulation which now stands on the may take ficapitol,

necessary additions

result,

new product and con

developments is a program probably require

books at a total

of something or four years

over $40,000,000. to complete although

This very

be substantially additional

earnings

and depreciation, obtained. to capital, ago, retired was the cash

it may

con be readily With reference and the again

it should there

be brought 1, 1945. the

to your attention

that

in our These not of

financial were needed financing the at

report

of o year entirely time, when it

appeared wise more

$12,000,000 notes

in debentu.res. with the

called

on September was

Since these funds were thought in the meantime

thought

to call urgently

needed,

saving

interest

charges.

EMPLOYMENTAs of May ment. Texas On that for and responsible 31, 1946 we ore not for employment operating from the peak of our wartime In addition, plants of the 5,144 we employore still in Velasco, employees

dote 1,275

our total

WQS 12,362. these plants,

employees California.

the government-owned

Los Angeles,

Including

who above joined

left

our employ and

to join

the ormed 2,266

forces,

2,13 1 hove

returned

to us OS of the by us hove

dote,

in addition,

ex-service

men not formerly

employed

our organization. PLANTS-

GOVERNMENT

the

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, We are hove

California. plant, but

leased and are operating
responsible the Chemical for Warfare

Q portion Service

of the Ludington, Michigan plant. within located

Michigan As of April our plant

no longer

the Marysville,

of this year we bought

plant

in Midland, Michigan. We facilities which we installed COMPANY To subdividing relation well foundation soda and Dow of OPERATIONS-

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

discuss general Company operations, they con the fields of our activities, but always bearing chemical production must necessarily show use of our own The caustic products.

be best in mind

summarized by that the interuses as the and very The caustic

many chloride Only

overlapping example, to produce market, a small

as intraplant chlorine.

As a characteristic of sodium and customers. sold to the

of our production Company produced

is the electrolysis largest

soda is finished

Chemical

is one of the is liquefied

percentage

of the chlorine

and sold as such, and that

is from our Pittsburg,

California plant. of other products, product. We are approximately our operations INDUSTRIAL

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 probably the largest producer United of chlorine in the world, Let producing States production. us subdivide

30 per cent of the total as follows: AND HEAVY

CHEMICALSore classed such industrial chemicals OS caustic soda, calchloride, industrial solvents, phenol and phenolic compurposes, As a group, requirements, Dowicides and fumigants, represent hove the dyes and better glamour than prodin others. these products they seldom

cium pounds

Under this heading chloride, magnesium not used for

pharmaceutical

dye intermediates, one-half ucts the public so necessary

and many to all

of our soles volume. eye they so well

Since they are the stondby

group of fundamental

industrial deserve.

PHARMACEUTICALSThis purposes chemicals is the group of products which final is used either production OS such for pharmaceutical of those materiols. of sales. These volume

or as on intermediate represent approximately

to the

10 per cent

of our dollar

PLASTICS

AND

RELATED these are

COMPOUNDSmore publicized has truly now than any other materials group of chemicals, fifty years,

Possibly for although the fact Company remains

the

American we hove four

public

hod plastic plastics groups

for nearly

not become plastics

produces

mojor

conscious until recently. The Styrene and polymerized Styrene

known pony, Ethers plastics the edly

OS Styron Styraloy such

and

the sister

compound

known trade and Methyl war

as Alpha names Butadiene

Methyl

Styrene, and group

Saran

or

the vinyl-vinylidene

group

sold under and ond

various Styrene

by licensees polymer, Each clearly

of our

Com-

which

is a modified Methyl type,

Cellulose of these

as Ethyl, of each judgment vast new

Carboxy The period.

Cellulose. requirements

is unique

in its applications. market war but of the provide

demonstrated

necessity create

discriminatory markets Plastics except

demands in peacetime hove confirmed the Plastics as new moterials will undoubtwhether they will a displace given old method of accomplishing result. of soles.

markets,

it is questionable about

OS they

a better

as Q group represent CHEMICALS-

at present

20 per cent of our dollar

volume

AGRICULTURAL

To this group of chemicals benefits to humanity. agriculture necessarily a basic greater try, industry and improved Inasmuch means

con be attributed as agriculture company American to opply

one of the most quickly industry, it clearly to aid chemicals people, every

noticeable such in such killers is in

is our largest

and prosperous behooves and include weed assist

Q prosperous

as o chemical agricultural

effort

production. improvement

Agricultural of the health materials, truly

compounds and growth

as ore required germination hormones,

for the

of livestock The

and poul-

the improved

of seeds, spray

soil fumigants, beneficial

fertilizers necessity. volume

and preservatives and a chemical of soles.

for foodstuffs.

opportunities approximately

hove by no means 10 per cent MAGNESIUM-

been exhausted,

to agriculture

every sense on economic of our dollar

This group of chemicals

represents

During the war magnesium cent of our sales volume, although profits. business. and bring pleosed uses ore nesium With An the cessation intensive that development our production developing. Texas there buying plant.

production the profits

and fabrication were less than large program

WQS OS high OS 30 per 10 per cent of the total facilities, year of but no WQS required in volume production ore growing to develop we ore and new magrapidly consumer

of hostilities,

we hod but with

production

and advertising facilities hove

old uses bock constantly

into production, We

the close of the fiscal gaining the which started industry justifiably

to report

ore steadily again

in our Freeport, although The

The aviation other is becoming

is still the largest conscious

of magnesium, lightness

ore mony public

applications

to close seconds.

of magnesium

ond strength. AND ASSOCIATED COMPANIESnot be complete unless some reference were mode

SUBSIDIARIES

A report such OS this would to the activities CLIFFS high war DOW of the various CHEMICAL The importont losses, and

subsidiory

and associated is a subsidiary, the war Cliffs further was Dow

companies. whose activities dividends position.
was

COMPANY during is that should point with which

remain

at o to the with

level and whose effort. starting

production

of no small has paid their

importance

since making

up their

the close of the war

they ore now proceeding

construction DOW the

improvements

improve owned company

MAGNESIUM express purpose

CORPORATION, of being on

a wholly operating

subsidiary, for the

organized

for

government-owned

magnesium pony will DOW ment

plonts. be dissolved.

Its job

is nearly

done

and

possibly

within

the

year

the

com-

CHEMICAL styrene

OF CANADA, plant designed

LIMITED, by Dow

Q wholly and

owned by

subsidiary, for the of Dow

WQS originally governfor the Canada

organized

for the purpose

of being

on operating

company operated

Canadian

Canadian government. With the cessation to build Q Canadian plant, and within a few the Canadian and market. other Limited will Additional expansion be The Dow plants products, of Canado, is contemplated Chemical

of hostilities we hod the opportunity months it will be producing Styron for way to produce future. representotive glycol and allied for the near Compony Dow Chemical for all opera-

ore under

tions and soles in Canada. DOWELL INCORPORATED, applications of chemicals Originally hove application founded steadily enlarged. of acidizing in that o wholly owned subsidiary, has originated many new the production of more oil for the petroleum industry. of acidizing oil producing formations, its functions

for

for the purpose

Dowell was the originator of plastic plugging and of the It is truly treatment to industrial boilers for scale removal. it has rendered company The parent substantial service but has not been able to earnings in new in the is on of oil very substantially Incorporated production because of the need to reinvest has gained received. Dowell

-a service compony,

pay dividends to the parent and expanding equipment. large volume of chemical unsung, modest at Q time when

company

soles and in royalties

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

to greater

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 to are silicone They Silastic, capable Dow products represent a combination fluids and was of values of constant not found All Through in other plastic groups. range from of free flowing material, viscosity, plastics. and first oils and lubricants, Gloss

Q rubber-like withstanding Corning

thermosetting the originator

of the products Corning producer

temperatures

OS high as 500°F.

Works,

Corporation

commercial

of silicone ETHYL-DOW necessitated water, peacetime

compounds

in this country. COMPANY of present is on associated for the company. The war demands from sea

CHEMICAL the at the

enlargement

facilities

production

of bromine

so that

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

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

Ml DLAND
is a steady monia

AMMONIA
operator,

COMPANY,
paying steody

dividends,

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

plants

in the country.

CONCLUSIONThe wor The Dow is over. At least, it is a thing of the post OS for OS the operations We ore justifiably proud of the in the production and practical of war

Chemical

Company

ore concerned. of styrene order

record of the Company. and its alloys, in the of butadiene were of

To soy that production the highest

our contributions of scientific

of magnesium is a gross

and in our knowledge

of the production value

understatement. inestimable Generally wonderful hardly desire owners interests may have believe Q statement value speaking,

Al I the

efforts

in all that cause. Because

the operations cannot taste in a record our right be good But the every We war

of the Company measured to been in to tell War

were of such dollars alone. own of one’s

to the country it is not to any helped.” acclaim, where to our States did not

they

considered

to attempt report has and

contributions OS “We

Stockholders, II with it to they mode, know

it would so simple is not ore feel the our port their best as it like to

be fair

to pass over Q world except they greatest make

cataclysm to hove hove ability large

such as World Stockholders

to get world was of the been. companies

in a Company used United We

justification and

investment

in protecting did our bit, profits,

furthering people

of America. and

as big or as little

as so many

do in wartime,

this fact was simply explained

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 the present hysteria about higher prices, there is little reason to change largest paid the record. Our basic raw material, Labor industry. average We rates and other salt, we mine benefits mechanically in our two plants. in the on the

in our Company

are of the highest fact that

hove been generous,

but it is a notorious

manpower

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 higher of human costs and desire creates not to work and produce. Improved Conversely, manpower effigives quickly general Hove reduced costs and scarcity, more production. low production

ciency gives sooner duce

lines and

hardship recognize more.

for everyone. as the only No frontier

with the consequent The wi II to work to all our was ever developed

spiral of inflation, bread is the blessing we wi II problems. it so, and Prothe by wishing

or later more.

solution

man-made

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.

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 PUBLIC

& SELLS
ACCOUNTANTS

THE

NATIONAL

BANK

BUILDING

DETROIT

ACCOUNTANTS’

CERTIFICATE

The Dow Chemical We ical

Company: the consolidated balance sheet of The 31, for Dow Chemand the

have examined and

Company

its subsidiary of consolidated

companies income

as of May and surplus

1946

related that have

statements have

the year

ended and of

date,

reviewed their

the accounting records

procedures and other

of the companies, evidence in support

examined

accounting

such financial generally included were

statements. auditing

Our examination standards

was made

in accordance

with and

accepted all auditing

applicable

in the circumstances necessary, appropriate which

procedures

we considered we deemed not

procedures of the receivables

applied

by tests to the extent control; it was

in view

systems from

of internal States

practicable and

to confirm agencies but

United

Government respect

departments

we

hove audit-

sotisfied

ourselves

with

to such receivables

by means of other

ing procedures. In our opinion, ments dition of consolidated of the companies the accompanying income at May dote, consolidated fairly balance present sheet and statecon-

and surplus 31, 1946

the financial

and the results of their with generally accepted with

operations accountof the

for the year ended that ing principles preceding year. and

in conformity applied

practices

on a basis consistent

that

HASKINS

0

SELLS

July 26,

1946.

THE AND
CONSOLIDATED

DOW

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_____ -_ 1946 $ 10,4m $ $ 1.52 31

-1945
$ 17,505,643.48 $ 22,885,OOO.OO

10,760,000.00 10,587,967.06 226,709.20 85,059.68 730,165.03

$1 1,537,408.91 $1
$ $

$ 11,629,900.97 330,929.50 $ 11,298;97 1.47

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

11,817;744.7; 272,105.12

$
$ $ $

298,399.82 1,175,106.93 11,241,092.35 8,039,656.84 19,280,749.19

$ $

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

$ 53,23 1,348.93

$ 68,709,964.67

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

$

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

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

$

7,148,839.16

$

9,247,987.76

$ 56,936,5

10.26 1

$ 46,278,977.09 20,098,29 1.30

9,590,242.9

1,2 10,332.42 $ 67,737,085.59 $ 309,742.59

1,262,702.59 $ 67,639,970.98

$ $

64,9 1 1.46

$

329,27

1.7 1

$128,756,287.98

484,064.20 $146,146,899.07

NOTES:

A-As

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: $ 1946 6,382,397.32 3,527,26 1.45 1,240,398.50 664,94 1.12 $ 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 income and franchise, and sundry -------------------Interest __________________-_____________________-Rents ------------------------------------------Sundry -----------------------------------------Total current liabilities ___-______ $ 31 1945 6,2=93.3 1 17,304,690.07 750,000.00 1,240,398.50 926,805.20 1,280,932.89 63,039.69 144,06 1.70 107,600.l 1 $ 28,l 12,121.47

978,456.95 43,456.76 159,902.34 12,996,8 14.44

FUNDED DEBT--Debentures (Redeemed as of September 1, 1945) (Serial debentures maturing within one year included in current liabilities) ________________________________________-RESERVES FOR FIRE AND ACCIDENT LOSSES, DAMAGE ELECTROLYTIC CELL REPLACEMENTS, AND SUNDRY CLAIMS, _______

$ 11,250,000.00

$

1.465.068.98

$

1,455,163.22

MINORITY

INTERESTS

IN SUBSIDIARY

COMPANIES

__________

$

944,365.36

$

1,3 12,455.09

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 _____________

$ 30,386,900.00 37,293,908.83 I 67.680.808.83

$ 30,386,900.00
37,293,908.83 $ 67,680,808.83

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

$

1,030,190.83 44,639,039.54

$

638,841.93 35,697,508.53

$ 45,669,230.37

$ 36,336,350.46

TOTAL

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

$128,756,287.98

$146,146,899.07

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

THE DOW CHEMICAL AND SUBSIDIARY
STATEMENT FOR THE YEARS ENDED MAY

COMPANY

COMPANIES
INCOME 1945 31, 1946 AND

OF CONSOLIDATED

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 ---_---__---__---_--___ $101,813,839.08 3 17,792.17 549,335.69 1,449,270.22 635,872.53 $5104,766,109.59

Ended

May

31

1945
$124,570,200.83 500,000.00 294,955.42 232,190.77 2,085,080.04 305,109.60 $127,987,536.66

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

$ 73,621,770.59 6,l 18,317.12 6,308,4 19.22 7,929,767.12 107,7 18.62 1 12,500.OO 1,689,878.62 488,080.07

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

8,353,549.70 6,840,949.68
265,618.84

90,480.38 67,028.97
$102,980,795.52

96,502.65
9; 96.472.954.01

INCOME INCOME

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

$

8,293,155.68

$ 25,006,741.14

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 ---------_________

$ $

3,107,244.96 212,041.69 3,3 19,286.65

$
$

4,307,365.49
11,960,614.12 16,267,979.6 1

1,175,106.93 $ $ ~2,144,179.72 6,148,975.96 -_- -. $ 16,267,979.6 1

$ 8,738,761.53 -I___-_-

THE DOW CHEMICAL AND SUBSIDIARY
STATEMENT

COMPANY

COMPANIES
SURPLUS 1945
Ended Mav 31 ’ 1945 $ 638,841.93

OF CONSOLIDATED

FOR THE YEARS ENDED MAY

31, 1946 AND
Year 1946

CAPITAL
BALANCE AT BEGINNING

SURPLUS
OF THE YEAR ---_-$

638,841.93

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 ,,----:, __---

39 1,348.90 $ 1,030,190.83 $ 638,841.93

EARNED
BALANCE AT BEGINNING

SURPLUS
OF THE YEAR ------

$35,697,508.53
6,148,975.96 7,754,149.05 $49,600,63 3.54

$33,160,739.50 8,738,761.53

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

$41,899,501.03 $ 4,682,647.50 1.5 19.345.00 $ 6,20 1,992.50 $35,697,508.53

CHARGE-Cash dividends (See Note B) : Common capital stock __---_-__-_________ Cumulative preferred capital stock, Series A ___ Total BALANCE NOTES: AT END __-------OF THE YEAR ____ -_______

$ 3,746,1 18.00 1,2 15,476.OO $ 4.961.594.00

____________

$44,639,039.54
relating necessity years reperiod by 29, 1945

A-The

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

$13,138,137.91

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----Net amortization adjustment (debit) __ Reduction in Federal income and excess profit taxes of prior years resulting from the deduction of the additional amortization (credit) - ________--_Net credit minority Adjustment Net to earned surplus before adjustment interest ---_--___-__-------------for minority interest in a subsidiary for

9,590,242.9 $ 3,547,895.00

1

1 1,293,799.97

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

pany __-__------------___--------------credit to earned surplus

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

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

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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THE DOW CHEMICAL

COMPANY

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 General Vice Vice Vice Vice Vice of the Board, Manager and and President Treasurer Secretary and W. E. W. E. 0. H. DOW

President President President President President

BENNEllL. I. DOAN BARSTOW

C. J. STROSACKER M. E. PUTNAM J. S. CRIDER

Assistant

Treasurer

Assistant Assistant Assistant Assistant Assistant Auditor

Treasurer Secretary Secretary Secretary Secretary -

and Assistant -

Secretary -

F. H. BROWN A. P. BEUTEL

L. A. CHICHESTER R. L. CURTIS

D. J. LANDSBOROUGH C. PENHALIGEN

-

Transfer

Agents

Stock
Common Preferred Common and Preferred

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

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

THE DOW CHEMICAL

COMPANY

Executive Office:

Midland, Midland,

Michigan Michigan

General Sales Office:

Sales Office8

Boston 20
Chicago

16,

Massachusetts Street

New

York

20,

New

York

Providence 3, Illinois

30 Rockefeller Philadelphia

Plaza

2, Pennsylvania Square

135 So. LaSalle Cleveland 13, Ohio Terminal Tower Detroit Fisher Houston 2205 2, Michigan Building 2, Texas Commerce

Street

1400

S. Penn

San Francisco 3 10 Sansome

4, California Street

St. Louis 8, Missouri Continental 3615 Seattle Building 1702 Olive Building Street

1, Washington Textile Tower

Los Angeles 634

14, California Street

Washington 915

5, D. C. Building

South Spring

Shoreham

Factories Located at
Pittsburg, California California

Midland, Bay City,

Michigan Michigan Freeport, Texas

Seal Beach,

THE DOW CHEMICAL

COMPANY

Subsidiary
Cliffs Dow Chemical Company Limited: General Works Dow Magnesium Ammonia Corporation Company

Companies
Marquette, Office Michigan

Dow Chemical

of Canada,

Toron to, Ontario Sarnia, Midland, Midland, Tulsa, Ontario Michigan Michigan Oklahoma

Midland

Dowel I I ncorpora ted

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

Incorporated

Soles Offices 308 Reaper Building

Illinois Illinois Kansas Louisiana Louisiana Maryland Michigan Michigan Missouri Missouri New York Ohio Ohio Oklahoma Oklahoma Pennsylvania Texas Texas Texas Texos Texas Alberta, Canada

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 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.

Associated
Dow Corning Ethyl-Dow Corporation Company

Companies
Midland, Freeport, Michigan Texas

Chemical