50

TH ANNUAL REPORT
FOR THE YEAR ENDED MAY 31,1947

THE DOW CHEMICAL
MIDLAND, MICHIGAN

COMPANY

The 27, 1947, office

next

annual

meeting

of stockholders

will

be held on Wednesday, Time)

August

at two o’clock

in the afternoon

(Eastern

Standard

at the Company’s

in Midland,

Michigan. with a proxy statement stock separately from and form of but concur-

proxy, rently

A formal notice of the meeting, together will be mailed to each holder of common herewith, at which time proxies will

be solicited

by the management.

TO THE

THE DOW

STOCKHOLDERS CHEMICAL

OF COMPANY:

We anniversary of The Dow

present

herewith

the 50th than

annual just

report of the Company being the fiftieth for year this

operations.

This

has more Chemical

significance Company, by The approved Dow

of the operation report is the first This held is and

a Michigan Chemical

corporation, Company,

one to be presented change was recently 1947.

a Delaware

corporation. meeting

by action Chemical stock.

of the stockholders Company,” It is the now

at a special a Delaware to all

on July 22,

“The

Dow

corporation, the assets

the corporation liabilities of the

in which Michigan

you own

successor

corporation.

EARN I NGS The 1,248,706 year May $4.40 on the 31,

AND

SALESnet income stock, The was after equivalent deducting earnings A of the due to $9.22 per share on the the

consolidated shares of

common stock.

$1,215,476 for the

paid fiscal

during year

preferred (revised

comparable in note

ending were

1946

as set forth

financial to the

statements) large

per share,

but this is hardly the This more 1946 fiscal

a fair year.

comparison,

after-the-war high last year. the

charge-offs

during

Sales this year reached

a new all-time attained 1945 labor fiscal costs,

of $130,426,839. year, The and 4.5% increase

is 28%

more

than

the sales of $101,813,839 for the increase in

than

the peak

sales of $124,570,200 helped the to offset the

in sales substantially material costs and

increase

in raw

general

increase

in the cost of doing business.

NUMBER

OF

STOCKHOLDERS1, 1947 This shares there were 8,249 common stockholders and 4,366 pre-

As of July ferred stockholders. of 151

is an increase per common

of 63 % over five years ago, with owner and 70 shares

an average preferred

ownership stock

stock

for each

owner.

EMPLOYMENTAs Company the in of May 31, 1947 was the 13,975 total employment for which The Dow Chemical operating employees year we

is responsible plant

employees. Corporation plant

This included at Sarnia,

96 employees and the 306

styrene the

of the

Polymer styrene

Ontario During

government-owned

in Los Angeles.

past

have

had

two

interruptions styrene strike of

in operation plant 25 the

caused It should resulting

by

strikes, The Texas

one

in Texas lasted

and 24

one days

in the government and the Los Angeles in the

in Los Angeles. days.

strike

be noted in lost plants, Texas

these were production.

the first As present

major

strikes

history operating two.

Company

of a year time by we the

ago we were are operating

four Two

government-owned plants. at Velasco,

and have is still for the

at

the

been

purchased

Company, States

while

the plant and the

at Los Angeles, plant at our

California Ontario relations

operated Canadian good,

for the United government. and each year is

government In general

Sarnia, labor

it can about that a

be said more

are very

seems

to

bring apparent

understanding

relationship. necessitates

Greater

appreciation

becoming

the payment

of high wages

high productive

effort

on the part

of everyone.

FINANCINGDuring approximately for the the year one half at for we spent over $84,000,000 in capital expenditures, of which i

was for the purchase Velasco us to near

of certain Texas. funds. $35,000,000 of 2.70%

facilities This We did from a year

we had constructed of expenditures by selling $30,this

government it necessary of 2.35%

Freeport,

amount

made 000,000 upon

raise

additional

debentures, note

by borrowing rate

an insurance and

company which Stock. up than

an unsecured been

at an interest of 400,000 for rate

by a sale Preferred may not

has just

consummated we have at an

shares

of our new under

Second we due

In addition, to $25,000,000 May 31,

arranged interest

a bank of 1.5 %

credit

which

borrow later

a year,

to become

1949.

COMPANY

OPERATIONSthe fiscal year in the just last closed annual sales of the report, Company products were sub-

During divided about

as stated

namely, 55% 10%

Industrial

Chemicals

Pharmaceuticals Plastics and related compounds

15% 10% 10%

Agricultural Magnesium

Chemicals

MAGNESIUMThe the past place, operations year. of our This to was Magnesium brought Division have which not has volumes demand been now profitable been just during first about

fiscal

about

by a number

of causes.

In the

the

adjustment

peacetime second,

operations,

completed, secondary third, the

was expensive; scrap metal

the sale of enormous reduced the

of government-owned for virgin metal; wings and and

has appreciably of certain

completion

contracts

for the fabrication

of airplane

our again

retirement

from

this scrap

type metal,

of

fabrication

is a difficult, fact

slow

process. industry

Referring operates of to die

to secondary

it is a known

that every metal metal this is available,

most successfully limiting

when

a good volume

of secondary we feel

and instead stimulation rolling volume its mill,

the further industry,

growth

of magnesium,

is the proper plant,

a prosperous casting growing in the

Operations will

in our foundry,

extrusion

and alloy uses. world

plants

continue is the

and, we believe, modern Chemical metal and

in expanding has

and with position in its

Magnesium of metals. The

established

Dow

Company

has fulfilled others

its obligation will carry

establishing

magnesium

as a commercial than we

metal;

undoubtedly

uses to greater

possibilities

could

as a single,

pioneering

company.

BRAZOS

OIL During

AND

GAS

COMPANYwholly owned subsidiary, Brazos Oil and Gas Compurpose located joined cubic to feet

the year

a new under

pany,

was

incorporated gas from County

the laws of the State recently as Citrus and

of Texas

for the primary This field,

of producing in Matagorda existing

a gas field and known lines

purchased Grove

in Texas. Field, can

be readily

Company-owned

pipe

should

supply

up to 20,000,OOO

of gas per day for a period

of ten or more years.

THE

SARAN The

YARNS Saran

COMPANYCompany The was organized Plastic and is owned Company. fibres of all jointly by The Dow

Yarns and

Chemical ture fine

Company fibres a great and

National The

Products for fine

It will kinds

manufacnecessarily

out of Saran. interest gossamer in this fine

demand

creates draperies

development. suggests

Weaving

of fine

fabrics,

upholsteries,

materials

only a partial

list of the possibilities.

GENERALIn sidiaries. repetition subsidiaries Company the Their here and and fiftieth annual report it is only proper to mention our various reports that and suband all Gas old,

respective hardly

operations necessary. companies, Yarns and

have been summarized Fortunately, with the which we can

in previous again Brazos than

seems

report Oil

associated The Saran

exception are each

of

Company showing

less

a year

are all operating tive fields.

profitably

steady

growth

and progress

in their

respec-

CONCLUSIONEveryone 1947 ganda was and knows that the time and covered by our fiscal year ending May 31,

a period unsound on

of uncertainty economic every

economic produced

unbalance. a condition

False economic which challenged

propasane almost

thinking problem.

conclusion

almost

For example,

newspapers,

politicians,

everyone and

talked

in terms there that

of a nationwide

pattern

for wage

increases.

Fundamentally A national does not have em-

rationally, implies

cannot every

be any national industry that and

pattern

for any wage basis to start

scale. with

pattern give

is on the same many factories other

and

recognition been The

to the fact in wages

in various intangible

parts of the country benefits to all their for many

always ployees.

leaders

in many

Dow Chemical industry and

Company

has enjoyed

such a leadership of comparison, tangible

years.

The chemical are the the

as a whole both are All our own around

is the first

measure the a

local conditions benefits Company develit hap-

second,

coupled these add

up with up to

and intangible of living our

Company

provides.

standard every lives.

represents

as uniquely

in the sam e sense that the family and their with scale

individual Notably

home

ops a standard pens that ard which

of living

enough,

we as a Company, rests well up near

in comparison the and our top in the sales

all other of living

companies, established we feel it

have a standby industry. the war was period to

Although was a distinct with

production set-back to

increased

enormously, that

progress.

During

period

possible

proceed many were many costs. tivity, return situation desire

only

those

items were many have

of basic shelved.

necessity This

for the emergency,

and necessarily items that

laboratory expedited, other These and on

projects but while

past year many nearing

new construction the facts are

of these are come

completion, point

developments

to a near almost

stopping

because

of excessive unproduca proper grave

costs can be attributed insofar investment as we will are we

entirely

to construction in the further future and

labor show It lack

only the

able

to build with

proceed

projects. for

is a

for a country

when

progressive work years

development

is delayed day’s pay.

of national

to give an honest During the past

day’s ten

for an honest we have

expanded figures

tremendously. in 1937

Our

sales

volume for the

has expanded current year,

from 5.2

$25,000,000 times. have Our multiplied Texas

in round capital 3.75

to $130,000,000 4.7 times. plants now

investment times.

has multiplied large

Our common located building most

stockholders

Three

production and a fourth

in Midland, in Sarnia,

in Freeport, Ontario,

and in Pittsburg,

California

Canada,

give a distribution trade.

to manufacturing

operations

ideal

for national

as well

as international to take for our

Every stockholder of can The one Dow Chemical

is urged Company,

the time

to read the enclosed the background prospects.

“Fifty of

Years” growth

only

by knowing and

intelligently

understand

Company

its future

WILLARD Midland, August 4, Michigan 1947

H.

DOW

President

THE

DOW

CHEMICAL

COMPANY

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

E. W.

Officers
President Vice Vice President President E. 0. W. E. W. H. DOW BENNETT L. I. DOAN BARSTOW

and Treasurer and Secretary -

Vice President Vice President Vice President

C. J. STROSACKER M. E. PUTNAM

Assistant Assistant Assistant Assistant Assistant Assistant Auditor

Treasurer Treasurer Secretary Secretary Secretary Secretary -

-

-

Secretary

-

J. S. CRIDER F. H. BROWN A. P. BEUTEL

and Assistant

L. A. CHICHESTER R. L. CURTIS D. J. LANDSBOROUGH C. PENHALIGEN

Transfer
Guaranty The The Trust

Agents
of New of New York York

Stock
Common Preferred Common and Preferred The The New York Trust

Registrars
Trust City Company of New York of Cleveland

Company City Bank Trust

National Cleveland

Guaranty

Company Bank

Company

National

HASKINS
CERTIFIED PUBLIC

& SELLS
ACCOUNTANTS

THE

NATIONAL

SANK

BUILDING

DETROIT

ACCOUNTANTS’

CERTIFICATE

The

Dow Chemical We

Company: the consolidated balance sheet of The 3 1, for Dow Chemand the

have examined and

ical

Company

its subsidiary of consolidated

companies income

as of May and surplus

1947

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

applied

by tests to the extent control; it was

in view

systems from

of internal States

practicable and

to confirm agencies but

receivables we have audit-

United

Government respect

departments

satisfied

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 date, and consolidated fairly balance present sheet and statecon-

surplus

the financial

3 1, 1947

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 July 25, 1947.

G SELLS

THE AND
CONSOLIDATED

DOW

CHEM

SUBSIDIA
BALANCE SHEET,

ASSETS
May CURRENT Cash United ASSETS: ---_____________________________________-----States Government securities-at cost _--------_____ $ $ $ 1947 7,569,3 15.44 $ _$ $ 31 1946 10,418,121.52 10,760,000.00 10,587,967.06 226,709.20 85,059.68 730,165.03 1 1,629,900.97 330,929.50 1 1,298,97 1.47

3,270,OOO.OO 15,1 -y;.g 84:922:37 8 13,76 1.89

Notes and accounts receivable : Customers ______________-_-_--__ - ___-_ -_------_--_ Associated companies _______________ -___------_---___ ___--____________ -_---____ -- __________ Employees Sundry -_--------_____________I________________~~~ Total ---____-____-____--_________________ Less reserves for doubtful receivables ----__----_-________ Net receivables -----__-_---------_____ and Billed and unbilled receivables from United States Government its agencies (other than for sale of product) ___--------___ Claims for refund taxes resulting

$ $

16,159,061.80 .280;58 1.06 15,878,480.74 443,876.12

$ $ $ $

$

298.399.82 1,175,106.93 1 1,241,092.35 2,655,128.53 5,0 14,100.24 370,428.07

of prior year’s Federal income and excess profits from carry-back of unused excess profits credit $ 18,147,266.91 4,473,697.12 9,487,322.82 606,25 1.84 $ $ 32,7 14,538.69 10.99

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 --____________________________ Total current assets ____---_-----

$

!J $

19,280,749.19 53,23 1,348.93

59,876,2

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) ------__---______ ------____________ 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 non-current ---------_--_

$

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

$

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

1 1

$

9,462,104.35

$

1 1,892,546.38

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 -__________ - _____

$

1,843,603.3 130,937,138.22

I

$

1 ,159,733.61 55,776,776.65

8,980,324.09

9,590,242.9

I

1,5 19,404.66 $143,280,470.28 $

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

value (less reserves for amortization, $87,531.81) __________________ and sundry expense on

$ $

306,163.81

$ $

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

7 12,926.93

329,27

1.7 1

$213.637.876.36

$133,499,995.20

See notes to f-rr.

THE AND
CONSOLIDATED

DOW

CHEM

SUBSIDIA
BALANCE SHEET,

ASSETS
Mav CURRENT Cash United ASSETS : ---___-_----__---_-_---------~~~~~~~~~~~~~~~~~ States Government securities-at cost -_-----------$ $ $ 1947 7,569,3 15.44 ’ $ 3 $ 31 1946 10,418,121.52 10,760,000.00 10,587,967.06 226,709.20 85,059.68 730,165.03 1 1,629,900.97 330,929.50 1 1,298,97 1.47

3,270,OOO.OO 15,l ;y;.;; 84:922:37 813,761.89

Notes and accounts receivable: Customers _----__-----__--____ -----_____________ Associated companies __-----------_-___________ - ____ Employees -------------------L--------~~~~~~~~~-~~ Sundry __------__----------____________________--Total -____--_-_--___---__________________ Less reserves for doubtful receivables _ _ - - - - - _ _ ___ ___ __ -_Net receivables -_-_-___---_-_--------and Billed and unbilled receivables from United States Government its agencies (other than for sale of product) ----------__-_ Claims for refund taxes resulting

$ $

16,159,061.80 280,58 1.06 15.878.480.74 443,876.12

$ $

$

$
$

298,399.82 1,175,106.93 1 1,241,092.35 2,655,128.53 5,0 14,100.24 370,428.07

of prior year’s Federal income and excess profits from carry-back of unused excess profits credit $ 18,147,266.91 4,473,697.12 9,487,322.82 606,25 1.84 $ ________ $ 32,7 14,538.69 10.99

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 --__------_-___--___-~-~~~~~~~ Total current assets _- -_-

$

$ ji

19,280,749.19 53,23 1,348.93

59,876,2

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) ---_--__---_________ ---_---------___ 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 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) ___-----------Total PATENTS--at cost or nominal 1947, $1 11,l 10.59; 1946, property __----__________

$

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

$

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

1 1

$

9,462,104.35

$

1 1,892,546.38

$

1,843,603.3 130,937,138.22

1

$

1,159,733.61 55,776,776.65

8,980,324.09

9,590,242.9

1

1,5 19,404.66 $143,280,470.28 $ 306.163.8 1 $

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

value (less reserves for amortization, $87,531.81) _-- _______________ and sundry expense on ---______

$
$

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

$

7 12,926.93

329,27

1.7 1

$2 13,637,876.36

$133,499,995.20

See notes

to fm,

2AL f -

COMPANY

COMPANIES
MAY 31,1946

IAY 31, 1947 AND

LIABILITIES
May CURRENT Accounts Federal Dividends Accrued Payrolls LIABILITIES: payable-Trade income and sundry ---------_--_--___-_ -__-_-________ --__-_--$ 1947 13,338,755.56 8,145,832.88 1,552,575.00 1,2 12,197.62 rncomc and franchise, 1,889,444.39 453,2 18.58 43,456.76 159,902.34 $ 19,l 17,308.02 8,766.88 178,082.72 --____-___ $ 26,778,873.63 1,103,627.59 $ 31 1946 6,382,397.32 3,527,261.45 1,240,398.50 6,660,264.06

and excess profits taxes _--_--- ____ - ____-_--_-_-_____-_ payable ______-___---_---_-----------------------security, property, state

liabilities:

Taxes-Social

and sundry -__---_---_____---__~~~~~~~~---~-~~~~~ Interest -___--___-____-__-______________________-Rents ___-____----_-------____________________---Sundry ---------_---___________________________--Total current liabilities

FUNDED Fifteen

DEBT: year 2.35% notes, due debentures, January Total due 1, November debt 1, 1961 _-_-__ $ $ 30,000,000.00 35,000,000.00 65,000,000.00 1972 funded _-------_--___--_-__-__--___--__

Promissory

RESERVES

FOR

FIRE

AND

ACCIDENT REPLACEMENTS,

LOSSES, AND

DAMAGE SUNDRY

CLAIMS, __ - - - $ 1,470,494.52 $ 1,465,068.98

ELECTROLYTIC

CELL

MINORITY

INTERESTS

IN

SUBSIDIARY

COMPANIES

_______-__

$

957,242.83

$

942,572.92

CAPITAL

STOCK: preferred par value; capital stock stock, Series A (authorized, 600,000 shares divi____ without par 37,293,908.83 $ 67,680,808.83 $ 37,293,908.83 67,680,808.83 $ 30,386,900.00 $ 30,386,900.00 outstanding, (authorized, 1,248,706 Total 303,869 shares) -annual --__-----__-shares ---_--------_--_-_ stock _--__--_---___

Cumulative without dend Common value;

$4.00

per share

_______________ shares) capital

2,000,OOO

outstanding,

SURPLUS: Capital Earned surplus surplus _-__--__------__--_---Total _____ ____-__ --__-----__-__------_--__--__-_ _-_______ --_---_$ _______ -_ $ 1,030,190.83 50,720,265.72 5 1,750,456.55 $ $ 1,030,190.83 43,264,045.62 44,2,94,236.45

surplus

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

$2 13.637.876.36

$133,499,995.20

statements.

THE

DOW

CHEMICAL

COMPANY

AND

SUBSIDIARY

COMPANIES
INCOME 1946

STATEMENT

OF CONSOLIDATED MAY

FOR TkiE YEARS ENDED

31, 1947 AND

Year 1947 SALES AND Dividends Interest Other Fees OTHER received REVENUE: $130,426,838.70 an associated companies --_-__-___with company ____ - ____ construction Sales---------------------------------from from associated interest received income _--------_

Ended Mav

31 ’ 1946

$101,813,839.08 3 17,792.17 549,335.69 1,449,270.22 449,492.06 $104,579,729.22

250,OOO.OO 177,O 10.24 166,809.19 1,154,450.88 6 12,539.38 $132,787,648.39

in connection

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

COSTS

AND

OTHER

CHARGES: provision for deprecia----_----_---_-_(including provision not 8,595,258.66 9,508,597.33 ex757,843.13 __ 107,7 18.62 1 12,500.OO 1,689,878.62 337,466.33 com164,667.g $1 1 1,849,264.95 1 95,694.56 $ 96,932,946.39 488,495.98 11,520,066.77 7,94 1,906.36 __-______ --_-----_ and ____ -_--__ of debentures facilities $ 92,485,43 1.59

Cost of sales Provision for Selling Interest Premium obsolete Other for

(excluding depreciation 1946,

tion and amortization) amortization

$ 74,976,685.48

of emergency $3,837,940.90) expenses ----__--

reinstated, and paid

and administrative amortization debt

of discount

pense on funded

on redemption

Losses on abandonment by cessation charges income

of equipment rendered of the war _--____--- _-__--_---___-___-of subsidiary

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

--_--__-___________-___

INCOME INCOME PROVISION PROFITS taxes of

BEFORE AND

PROVISION EXCESS PROFITS INCOME in

FOR

FEDERAL -_--

TAXES AND

$ 20,938,383.44

$

7,646,782.83

FOR FEDERAL TAXES prior (less, years

EXCESS in

1946, from

reduction carry-back

resulting credits,

of unused excess profits

$1,754,592.60)

8,208,392.84

939,567.73

INCOME

FOR THE

YEAR

---_-_-___-See notes

______ to financial

$

12,729,990.60

$

6,707,215.10

statements.

THE DOW CHEMICAL COMPANY AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED MAY SURPLUS 1946
31 1946 638,841.93

FOR THE YEARS ENDED

31, 1947 AND

CAPITAL
BALANCE and AT BEGINNING CREDIT-Increase surplus of company resulting

SURPLUS
OF THE in the YEAR capital _--stock and re$

Year Ended May 1947 1,030,190.83 $

in equity a from

partially-owned a restatement

subsidiary 39 1,348.90 $ 1,030,190.83 $ 1,030,190.83

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

EARNED
BALANCE INCOME AT FOR THE Total

SURPLUS
OF THE YEAR ___ $43,264,045.62 12,729,990.60 $55,994,036.22 $4 1,5 18,424.52 6,707,2 15.10 $48,225,639.62

BEGINNING

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

CASH

DIVIDENDS: capital stock --__-____---------__ capital stock, Series A __ $ 4,058,294.50 1,2 15,476.OO $ 5,273,770.50 __----__-_
TO FINANCIAL

Common Cumulative

$ 3,746,l

18.00

preferred Total

1,215,476.00 $ 4,961,594.00 $43.264.045.62

--_--____--_--------___ OF THE YEAR
NOTES

BALANCE

AT

END

$50,720,265.72
STATEMENTS

A-During

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. Stock shares

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.

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THE

DOW

CHEMICAL

COMPANY

Executive Office: General Sales Office:

Midland, Midland,

Michigan Michigan

Sales Off ices

Boston 20

16,

Massachusetts Street

Providence 3, Illinois

New York 20, New York 30 Rockefeller Plaza Philadelphia 2, Pennsylvania Square

Chicago

135 So. LaSalle Cleveland Terminal Detroit 13, Ohio Tower

Street

1400

S. Penn

San Francisco 4, California 310 Sansome Street St. Louis 8, Missouri Continental Building 3615 Olive Street

2, Michigan

Fisher Building Houston 2205 2, Texas Commerce Building

Seattle 1, Washington 1702 Textile Tower Washington 915 5, D. C. Building

Los Angeles 634 South

14, California Spring Street

Shoreham

Factories Located at
Midland, Bay City, Michigan Michigan Freeport, Velasco, Texas Texas Pittsburg, Seal California California

Beach,

THE

DOW

CHEMICAL

COMPANY

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

Companies
Marquette, Office Toronto, Sarnia, Midland, Midland, Houston, Tulsa, Michigan Ontario Ontario Michigan Michigan Texas

Chemical

of Canada,

Midland

Brazos Oil and Gas Company Dowel I Incorporated

Oklahoma

Dowell Incorporated
Chicago Salem Wichita Shreveport Boston Mt. Detroit Kansas New 16 2 City 8 20 13 City 2 2 19 2 2 23 2 Illinois Illinois Kansas Louisiana Massachusetts Michigan Michigan Missouri Missouri New Ohio Oklahoma Pennsylvania Pennsylvania Texas Texas Texas Texas Falls Texas Alberta, Canada 2 York

Sales Offices
343 P. 0. 326 P. 0. 932 220 3615 30 763 Girard 401 P. 0. 635 P. 0. 1 106 907 1609 S. Dearborn Box 292 National Bank Bank Bldg. First National Bldg. Box 152 Fisher Bldg. B. M. Olive A. Bldg. Plaza Tower Bldg. Bldg. Street Bldg. St.

5 19 Union Statler

Pleasant

St. Louis 8 York Cleveland Oklahoma Philadelphia Pittsburgh Borger Fort Worth Houston Midland Wichita Calgary

Rockefeller Terminal First Grant Trust

National Bldg. Bldg.

Box 1029 Fort Worth Box City 1858 National Bldg. Bank Bldg. Club Bldg. Bldg.

21 15 Commerce

Lancaster

Associated
Dow Corning Corporation Company

Companies
Midland, Freeport, Oden ton, Michigan Texas Maryland

Ethyl-Dow The Saran

Chemical Yarns

Company