SUMMARY

OF OPERATIONS

COMPANY

OPERATIONS

1948 Sales Total Net _______-__-__-_---_-------------lncomec ---Income ____ - --____--_c_-____-_____ -- --____-Stock ----_--__--____ Stock --_-$170,696,037 174,353,190 2 1,066,646 2,461,296 18,605,350

1941 $130,426,839 132,787,648 12,729,990 1,215,476 11,514,515

Per Cent Increase

31 31 65 102 62

-__--_--_-__-

Dividends-Preferred Net Income Applicable

to Common

Earnings shares

per share, Common

Stock on 4,994,824 3.72 _______ 4,994,824 172,9 12,545 __ 18,669 2.3 1 4,058,295 1 19,43 1,265 12,615 61 23 45 48

___-_-_--__-__-__-____________ Stock _____ -_-__-__-

Dividends-Common Stockholders’ Number

Investment

___________ and Common

Stockholders

Preferred

FINANCIAL

INFORMATION

Current Current Other

Assets

---

____ - ____ -___--___--___ -- _______ Property -__.-_---___--and Deferred

$ 83,154,448 29,064,150

$ 59,876,21 26,778,874

1

39 9

Liabilities Investments,

Charges Long-term

___--_____-__________________ Debt __- ____ --___---__--___---

188,3 18,933 67,206,250

153,761,665 65,000,OOO

22 3

NOTE :

In the following and surplus

statement,

pages will be found a complete consolidated income consolidated balance sheet and notes.

----I-_--_--_.-

1. -.----.--

_I__-

-

_ ~-

-

.--

11

/i ~MPLOYIMIENT-OWNERSHIP I -,-~ ----_--. --.--~~L--.-_-

/j i 1

/

The

spread

in ownership

of The

Dow

the

four-for-one

split

of

Common

stock

Chemical Company has maintained

a healthy

which served to bring the market price within the range of many more individual ors and ‘thus spread Dow Common invest-’ stock

pace in step with the growth of the business. aver the past ten years we have averaged approximately one owner for each employee,

among 25 per cent more people. In reviewing the employment figures, the

greatest differences being in 1943 when there were three employees for every two stockholders and at the present, there now being about three stockholders The considerable tween for every two employees. change in ownership be-

growth in importance

of Dow’s various divi-

sions and subsidiaries from year to year is perhaps more interesting tal personnel. than the increase in to-

The growth chart shows that division

1947 and 1948 reflects two impor-

whereas ten years ago the Midland accounted for three-fourths

tant moves made during the past fiscal year. First, the issue of the new Second Preferred stock, which added some 4,000 bers to our Preferred stockholder new memlist. Second,

of all Dow em-

ployees, today it accounts for but little more than half of the total of 14,564 men and women.

EMPLOYEES

STOCKHOLDERS

-MIDLAND

DIVISION 16.000

6.000

6,000

‘42

/

‘43

‘46

‘47

‘40

‘41

‘42

‘44

‘45

‘46

ACCdUNTANTS’

CERTIFICATE

HASKINS
CERTIFIED PUBLIC

&

SELLS
ACCOUNTANTS

THE

NATIONAL

BANK

BUILDING

DETROIT

The Dow Chemical Company:

We

have examined

the consolidated companies

balance

sheet of The Dow Chemical

Com-

pany and its subsidiary of consolidated

as of May 3 1, 1948 and the related statements

income and surplus for the year ended that date. Our examination with generally accepted auditing standards and included as we consid-

was made in accordance

such tests of the accounting records and such other auditing procedures ered necessary in the circumstances.

In our opinion, consolidated

the accompanying

consolidated

balance

sheet and condition

statements

of

income and surplus present fairly the financial

of the com-

panies at May 3 1, 1948 and the results of their operations date, in conformity with generally accepted year. accounting

for the year ended that applied on a basis

principles

consistent with that of the preceding

H&skins & Sells

July 20, 1948

THE
I

DOW

CHEMICAL

COMPAI

CONSOLIDATED
MAY 31, 1948 A

ASSETS
May Current Cash United Notes Assets: ---------_----_------------------------------States Government securities-at : cost _ - - - - - - - - -_ _ _ _ - _ and accounts receivable $ $ 1948 ~10,378,446 12,403,572 31 1947

$
-$
$ 1 11 $ $

73692 15
3,270,OOO
15,241,37 1 8 1,243

Customers-------____-___---------------------------------_------___-----------A,ssociated companies Employees ----------___--_-_--____________________ Sundry ---_------________--____________________--Total Net Inventories: Finished goods and work in process (at lower of cost or market) -_-------------____---------------receivables - - - - - - _ - _ -----

$ 22,;4670g
105176 732.316 $ 24,046,1

84,922

1.195.401 16,602,937

Less reserves for doubtful

----_-

receivables

_-_____------------------

447,267 $ 23,598,844 $ 2 1,797,697 4,125,840 9,882,504 967,545 $ 36,773,585 $ 83,154,448

280,58
16,322,356

1

$

18,147,267

Materials and supplies (at cost-approximately market) : Raw materials -----------_--_---_________________ Supplies _------------_--__-_____________________ Materials and supplies in transit -----________________ Total Total Investments and Non-Current -------------__--_-------------current assets _-------_-----_-__-

4,473,697 9,487,323 606,252 $ 32,7 14,539 1 _$ 59,876,21

Receivabks:

Notes receivable and capital stock (at cost) of associated com$1 ,OOO,OOO less than panies (at May 3 1, 1948, approximately the equity in net assets as shown by unaudited balance sheets of companies) ---__-_____ ---------_-_--____ - _____ Non-current notes and accounts receivable (including employees’ receivables, 1948, $45,092; 1947, $43,680) _ _ _ __ ___ __ _ __ Sundry Claims securities for refund (at cost) Total Property: Plant properties (exclusive of facilities acquired under certificates of necessity) (at cost) : Land ___-___________--__------------------------Depreciable property (less reserves for depreciation, 1948, _____ -_---__________________ taxes on income __ __ __receivables of prior years’ Federal

$

2,965,OOO 287,026 666,804 4,773,723 8,692,553

$

3,565,OOO 3 19,954
619,601

investments

and non-current

$

$

4,957,549 9,462,104

$

2,379,229
166,045,046

$

1,843,603 130,937,138

$49,405,273;

1947,

$38,734,396)

______________-___

Facilities acquired under certificates of necessity (at reinstated values, less reserves for depreciation since reinstatement, 1948, $1,219,838; 1947, $609,919) _____ - _____ -_--_------Housing properties (exclusive of facilities acquired under cates of necessity) -at cost (less reserves for depreciation, certifi1948,

8,370,405

8,980,324

$345,883;

1947,

$284,291)
Total property value $1 11,l

___________________
--------__----_-----___ (less 11) resewes ________ premiums, and sundry for

-_----

1,360,673 $178,155,353

1,5 19,405

$143.280.470

Patents -at 1948, Deferred

cost

or

nominal 1947,

amortization,

$1 13,374;

-___-------unamortized -- __-------_ _______ -__ dis-

$
$

284,062

$
$

306,164 7 12,927

Charges-Unexpired and expense

insurance debt,

count

on funded

1,186,965

Total

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

$271,473,381

$213,637,876

See notes

to fine

_

AND _..-

SUBSIDIARY --- - ~~ .~

COMPANIES

BALANCE
D MAY 31, 1947

SHEET
.

~
LIABILITIES
May 31 1947 $ 1 13,338,756 8,145,833 1,552,575

Current

Liabilities: payable-Trade and Canadian payable __-and income ____ sundry taxes -- _____ _-___ _ ___ ___ __ $

1948 11x583 1 1,273,56 1,877,575 one year _285,000 1,482,978 income and franchise 2,458,12 483,528 196,804 $ 29,064,150 --_--_-___---__-_-1 ---_------__----____--payable within

Accounts Federal Dividends lnstalments

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

on long-term

indebtedness

Accrued liabilities: Payrolls -----------------------------------------Taxes-Social and sundry Sundry security, property, state -------------------------------------i

1,2 12,198 1,889,444 453,2 186,849 $ 26,778,874 19

lnterest_____-____--_--__-__----------------------__----_-----_----_______________________--Total current liabilities

Long-Term Fifteen

Indebtedness: year 2.35% notes, debentures, due January 1, due November 1972 - _______ 1, 196 1 -- --__- ______ -_-one 2,056,250 due 150,000 $ 67,206,250 $ 65,000,OOO $ 30,000,000 35,000,000 $ 30,000,000 35,000,000

Promissory

Mortgage note, due January year included in current

1, 1958 liabilities)

(instalments due within -----___----------_1, 1952 liabilities) (instalments __----__-----

Lease purchase contract, due March within one year included in current Total long-term

indebtedness

_____- ____- - - -

Reserves Cell

for

Fire

and

Accident (1947),

Losses, and

Damage Sundry

Claims,

Electrolytic --__---$ 1,305,717 $ 1,470,494

Replacements

_________

Minority

Interests

in

Subsidiary

Companies

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

$

984,7

19

$

957,243 -

Capitol

Stock:

Cumulative Preferred Stock, Series A (authorized, 600,000 shares without par value; outstanding, 303,869 shares) --cumulative annual dividend $4 per share ________ --- ____ ---_---___ Second Preferred Stock (convertible) (authorized and outstanding, 400,000 shares without par value) -cumulative annual dividend $3.25 per share __________-______-____ - _____ --Common Stock ( 1948, authorized, 12,000,OOO shares of $15 par value each; reserved for conversion of Second Preferred Stock, 842,106 shares; outstanding, 4,994,824 shares) -See Note A Total capital stock _____ --___-~--~_~-~~--

$

30,386,903

$

30,386,900

40,000,000

74,922,360 $145,309,260 $

37,293,909 67,680,809

Surplus: Capital Earned

surplus surplus

________________ __-Total _______ surplus - ____

-__---__----------__------__--__--- ______ ---______

____ _____

--------

$
$

407,098 27,196,187 27,603,285

$ $

1,030,191 50,720.265 51 v750.456

Total

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

$271.473,381

$2 13.637,876

ial statements.

THE
STATEMENT OF

DOW

CHEMICAL

COMPANY.

CONSOLIDATED
FOR THE YEARS ENDED MAY 31,

INCOME
1948 AND 1947

Year 1948 Sales and Other Revenue: Sales___------------------------------Dividends Interest Other Fees received from an associated companies with company from associated income owned --____---__________ operation of 406,022 1,170,778 1,182,427 $174,353,190

Ended

May

31 1947

$170,696,037 500,000 75,128 322,798

$130,426,839 250,000 177,010 166,809 1,154,45 1

interest received

__---_-_-_plants

in connection

government

___--------____

Reversal of reserve for electrolytic cell replacements no longer required ___-____------_Other income -- _____ Total ----------__--_--_-_ ______________ __-------

6 12,539 $132,787,648 _____-----

Costs and Other Cost of sales

Charges: (excluding provision for depreciapension and _____ - ____ $1 10,986,394 14,178,366 1,810,218 expenses __--__-__ and ex1,672,759 1,ooo,ooo 374,493 com132,474 $140,841,180 164,668 $111,849,265 337,466 757,843 - ____ --__ claims 10,686,476

tion and contributions under profit-sharing plan) __---_--_---__Provision plan Selling Interest Provision Other Minority panies for depreciation under --_-Contributions pension and

________

$ 92,485,432 8,595,259

profit-sharing

------_------------------------and administrative and amortization of discount damage

9,508,597

pense on funded income

debt __________ --__-_------_-----__

of reserve for product charges interests Total in income

of subsidiary

--------------------__________ --------------_--_-____

Income

before

Income

Taxes

Provision -------

for Federal and Canadian __________ -------__

$

33,512,OlO

$ 20,938,383

Provision

for Federal

and Canadian

Income

Taxes

12,445,364

8,208,393

Income

for the Year

--------------_-________

$ 2 1,066,646

$

12,729,990

See notes

to financial

statements.

AND

SUBSIDIARY

COJvlPANIES
STATEMENT OF

CONSOLIDATED
FOR THE YEARS ENDED MAY 31,

SURPLUS
1948 AND 1947

CAPITAL

SURPLUS $

Year 1948 1,030,191 200,000 !$ 1,230,191

Ended

May $

31 1947 1,030,191

Balance at Beginning of the Year ____________ Credit-Premium received on sale of Second Preferred Stock - ____ ---_---___-____ ---___ Total _-__----_----------____ Charges: Transferred to Common Stock account in connection with merger (See Note A) __-----_--Expenses in connection with merger and sale of Second Preferred Stock (portion equivalent to premium received on sale) _________ --_-Balance Total -___----_-_-__---______ at End of the Year _--___---__---_--_ EARNED SURPLUS

$

1,030,191

$

623,093

200,000 $ $ 823,093 407,098 $ 1,030,191 -

Balance at Beginning of the Year __--___----_Credit-Income for the year ______--__------Total ___-__--__--------__--Charges: Cash dividends : CommonStock-----------------------Cumulative Preferred Stock-Series A _--___ Second Preferred Stock _______ -_-----_-Transferred to Common Stock account in connection with merger (See Note A) -------_--_ Expenses in connection with merger and sale of Second Preferred Stock (portion not charged to capital surplus) __________ --___---__Total BalanceatEndoftheYear --__-__-_----_-________ _______ --__--__-__

$50,720,265 2 1,066,646 $7 1,786,9 11

$43,264,046 12,729,990 $55,994,036

$ 4,994,824 1,215,476 1,245,820 37,005,358

$ 4,058,295 1,2 15,476

129,246 $44,590,724 !$27,196,187 $ 5,273,77 $50,720,265 1

A-On

NOTES TO FINANCIAL STATEMENTS July 2;, 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 wholly-owned subsidiary organized for that purpose. The name of the new corporation was thereupon changed to “The Dow Chemical Company” and the Michigan corporation dissolved. In connection with the merger and the attendant conversion of each share of common capital stock without par value into four shares of Common Stock of a par value of $15 a share, $623,093 of capital surplus and $37,005,358 of earned surplus was transferred to the common stock account. Company’s Federal income and excess profits tax returns have been examined by the Treasury Department through the year ended May 3 1, 1945. An examination of the returns for the years ended May 31, 1946 and 1947 is now in progress and, in connection with this examination, an agent of the Treasury Department has questioned the propriety of depreciation rates used for a plant in Velasco, Texas, which the Company purchased from the Government in 1947, and is making a review of other depreciation rates used by the Company. It is possible that there may be additional assessments of Federal income tax resulting from revision of depreciation rates and from other adjustments arising from the examination. The Company may protest the findings of the agent. It is not possible at this time to determine the amounts of resulting assessments, if any, and no provision has been made therefor in these financial statements.

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RA-NDOM

COMMENT

Source of the sales dollar, from the various groups of products, was approximately the for a breakInsame as last year except that plastics accounted for a slightly larger, and magnesium slightly smaller, proportion. The down in revenue dustrial Chemicals ricultural Chemicals 10 % , Magnesium was about as follows:

industry.

The paper used in this report, ex-

cept for cover, is Latex 5 12 coated.

Operations expanding duction in

of our Canadian The

subsidiary are

rapidly. February,

first Dow-owned was placed in proDuring the

54%) Plastics 20%) Ag10 $?j, Pharmaceuticals

plant there (polystyrene)

1947.

6 96.
xxx

1947-48 fiscal year facilities were completed for manufacture able chlorine of glycols and their by-prodand caustic soda plant is now ucts, as well as shops and offices, and a sizewe purchased from Michigan, facilities during the cell feed, lease since This unit Since the war Dow Corning has introduced products markets. product, a whollyAt a number the same Corporation of new silicone time a consumer distribution use under construction. xxx

On December WAA the

3 I,1947

Ludington,

which we had built and operated war for production of magnesium under and had been operating is now producing

shortly after the end of hostilities.

lime and brine products. xxx

that have found sizeable industrial silicone-treated tissues for cleaning

Brazos Oil and Gas Company,

eye glasses, has secured national and acceptance Savers.” strengthen of consumer

owned subsidiary organized during the 194647 fiscal year has during the past fiscal year carried on extensive exploratory ment operations supply for our Texas operations. and developto insure a long range gas

under the trade name “Sight

Silastic products for household

Dow Corning’s entry into the field products.

After a substantial Products springing ily becoming product-Styrene from styrene are steadDuring the introduced a new ly following and ethylene 1947-48 year. more numerous. Latex 5 12-to

curtailment

immediatebromine

,

the war, Ethyl-Dow’s dibromide

facilities at Freeport

past year we successfully

were again operating near capacity during the

the paper

DIRECTORS E. 0. Barstow E. W. Bennett A. P. Beutel” C. A. Campbell” J. S. Crider R. L. Curtis* L. I. Doan A. B. Dow W. H. Dow C. A. Gerstacker* N. D. Griswold* M. E. Putnam C. J. Strosacker W. R. Veazey

OFFICERS President Vice President Vice President Vice President Vice President Vice President Assistant Assistant Assistant Assistant Assistant Auditor Treasurer Treasurer Secretary Secretary Secretary Secretary _ _ -

. _ -

. . . _

.
. . . _ . -

.
. . _ -

-

W. H. Dow E. W. Bennett

and Treasurer and Secretary -

-

L. I. Doan Barstow

E. 0.

M. E. Putnam C. J. Strosacker J. S. Crider F. H. Brown A. P. Beutel

and Assistant -

L. A. Chichester - R. L. Curtis Chas. Penhaligen

FINANCE E. W. Bennett, F. H. Brown Chairman

COMMITTEE H. S. Kendall Chas. Penhaligen

C. A. Campbell C. A. Gerstacker

*By action increased thus created.

of the Board of Directors from nine to fourteen

June

1, 1948,

membership appointed

of the

Board

was chairs

and five new

members

to fill the

Transfer Guaranty Trust

Agents of New York York

Stock Common Preferred Common and Preferred The New Guaranty

Registrars York Trust Trust Company of N. Y.

Company

The National The Cleveland

City Bank of New Trust Company

Company

The National

City Bank of Cleveland

DOW-ACROSS

THE COUNTRY

EXECUTIVE

and

GENERAL

SALES

OFFICES

MIDLAND,

MICHIGAN

SALES Boston 16, Massachusetts Street Houston 2, Texas

OFFICES St. Louis 8, Missouri Building Continental Building 3615 Olive Street

20 Providence Chicago 3, Illinois

2205 Commerce Los Angeles

14, California Street

San Francisco 310 Sansome Seattle

4, California Street

135 S. LaSalle Street Cleveland Terminal Detroit Fisher 13, Ohio Tower

634 S. Spring

New York 20, New York 30 Rockefeller Philadelphia 1400 South Plaza

1, Washington Tower

1702 Textile Washington

2, Michigan Building

2, Pennsylvania Penn Square

5, D. C. Building

915 Shoreham

MANUFACTURING Freeport, Velasco, Texas Texas

OPERATIONS Pittsburg, California

Bay City, Michigan Ludington, Midland, Michigan Michigan

Seal Beach, California

SUBSIDIARY Cliffs Dow Chemical Dow Chemical Company Limited: General Plant Dow Magnesium Midland Brazes Ammonia Corporation Company Office -

COMPANIES Marquette, - Toronto, Michigan Ontario

of Canada,

Sarnia, Ontario Michigan Michigan Texas

Midland, Midland, -

Oil and Gas Company -

Houston,

Dowel1 Incorporated

- Tulsa,

Oklahoma

ASSOCIATED Dow Corning Corporation Company -

COMPANIES Midland, Michigan Texas

Ethyl-Dow

Chemical

Freeport,

The Saran Yarns

Company

Odenton,

Maryland