NJG12 1949

THE DOW CHEMICALCOMPANY / /

,’ /’ ’ ,’ /

,-

1

9

4
r:

9

CABLE

ADDRESS

DOWCHEMCO

BRANCH NEW SAN LOS

SALES YORK

OFFICES CITY

THE

Dow

CHEMICAL
l

COMPANY
REG.U.S.PAT OFF

FRANCISCO ANGELES LOUIS

PHILADELPHIA WASHINGTON SAINT CLEVELAND HOUSTON CHICAGO SEATTLE

MIDLAND

MICHIGAN

July 25, 1949
To the Stockholders : We present herewith the 52nd annual report of the operations of The Dow Chemical Company, its subsidiaries and associated companies, covering the fiscal year ended May 31, 1949. The annual meeting of stockholders will be held on Wednesday, August 24, 1949, at 2 p. m. (Eastern Standard Time) at the Company’s offices in Midland, Michigan. The management solicits proxies from holders of the common stock concurrently with . this statement. The year marked the return of this country to a highly competitive economy, a fact As in all periods of which is being greeted in some circles with apparent apprehension. transition, some localized and temporary hardships are inevitable, yet this trend constitutes a return of the very way of industrial life to which America has attributed its unrivaled economic and industrial progress. While our own company has felt sharply the effect of retarded markets in many lines, we cannot ignore the fact that historically we have made progress in times of keen competition. For our part, also, three significant facts stand out as encouraging notes for the future. First, the chemical industry generally has not raised its prices in recent years to the degree evident in many other industries, hence present price reversals should be less strongly felt. Second, the need for method and product improvement throughout all industry spells further dependence on chemical science. This is evidenced by the constant discovery of new uses for many of our old line products. Third, Dow’s history is a story of diversification, and today, as always, our research is opening new avenues of activity. Thus new products and new markets give promise of helping balance the scale for products which have felt the effect of retarded demand. Our future is our country’s future. cannot be other than optimistic. Toward both the attitude of Dow management

Sincerely,

LELAND
President

I. DOAN

1949

1948

Per Cent Increase

Sales

__--_-_-_-------_---_____________ --_----_-_------__---------

$200,370,952 203,375,613 ______ -_ 25,260,473 2,5 13,7 12 22,746,76 1 5,126,024 4.44 5,859,434 189,986,299 19,866

$170,696,037 174,353,190 2 1,066,646 2,461,296 18,605,350 4,994,824 3.72 4,994,824 172,912,545 18,669

17 17 20 2 22 3 19 17 10 6

Total Income

Net Income -_-----_---___-_-__Dividends-Preferred Net Income Applicable Number

Stock --___----_----_to Common Stock - -_ -

of Shares of Common

Stock Outstanding Stock _------__Stock - _ _ -

Earnings per share-Common Cash Dividends Stockholders’ Number

Declared-Common

Investment

__----------_----Preferred and Common

of Stockholders,

During the year the Company distributed Common one share for each forty shares held. NOTE-In

Stoc:k to its stockholders

in the ratio of

the following pages will be found complete consolidated and surplus statements, consolidated bal ante sheet, and notes.

income

I

N considering the happenings of the past year it is inevitable that one event, above all others, is foremost in the minds of all Dow management-the death of our late president, Dr. Willard H. Dow, in a tragic aircraft accident on March 31 of this year. The nation’s press has commented widely and sincerely on the loss sustained not only by our company, but by all industry as well, through the untimely passing of a fine gentleman and brilliant leader. In that vein little can be said that has not already been said.

Perhaps it is more in point to comment that Willard Dow has not only left us a splendid and inspiring heritage, but the means with which to take it up. Basic policies have long been well formulated and clear-cut, and experienced leadership, well versed in these policies, is in evidence through all segments of the organization. It is in point also that this leadership has automatically found a unity of purpose in dedicating itself wholeheartedly to the task of carrying forth the operations of The Dow Chemical Company in keeping with the progressive ideas and human ideals which he daily evinced. From an operational standpoint, the fiscal year 1948-49 was markedly successful. Sales again reached a new high, as did net earnings, and while reduced demand for many of our products was experienced during the closing months of the year, some strengthening in others aided the over-all sales picture. Earnings rose from $2 l,O66,646 to $25,260,473. This, after preferred dividends, amounted to $4.44 per share on 5,126,024 shares of common stock outstanding as of May thirty-first as against earnings of $3.72 per share on the 4,994,824 shares outstanding at the close of the previous fiscal year. The increase in stock outstanding resulted primarily from a 21/z per cent stock dividend during the third quarter of the year. Some 43 million dollars were spent during the year in property and plant additions.

SALES
The increased sales figure, while influenced somewhat by necessary price adjustments, resulted largely from greater volume of production. The income dollar was accounted for approximately as follows: Industrial Chemicals 60 %, Plastics 20%) Agricultural Chemicals 8 % , Pharmaceuticals 6 % , Magnesium 6 $%.

Industrial Chemicals
As might be expected, we have felt keenly the reduced demand for industrial chemicals which has been evident throughout the country since the latter part of 1948.

3

Even so, operation of our expanded facilities at or near capacity during the first half of our fiscal year gave us a considerable increase in total volume, and it will be noted that industrial chemicals accounted for an even greater portion of our sales dollar than in 1947-48.

Plastics
Plastics sales have exhibited a fine growth during the year. Our major material, Styron, has become widely accepted in the plastics molding industry where its light weight, low price and general utility have made it a favored material for housewares, refrigerator parts and numerous other volume items. Saran, an exclusively Dow product, finds much of its market in the field of fancy fabrics. In other forms its uses are most often industrial, dictated by its exceptional resistance to a wide range of chemicals. Our third basic plastic, Ethocel, is a relatively high priced material and in general is used only where its special properties are needed. Styrofoam, primarily an insulating material, is also finding considerable use in the decorative and novelty field. Production has been doubled during the past year.

Agricultural Chemicals
Agricultural chemicals have likewise enjoyed broadened markets. Of particular interest has been the increased consumption of weed killers and soil fumigants. We were among the pioneeers in these fields and during the past year have brought several new formulations into either the commercial or field development stage.

Pharmaceuticals
Pharmaceuticals current year. have held up well and appear to have a sound outlook for the

Magnesium
Sale of magnesium and magnesium products reached almost 23 million pounds this year as against 13.6 million for the year 1947-48. More encouraging, the magnesium division realized a profit for the first time since the war and the outlook is now perhaps the most promising in our history. While the stepped-up military aircraft program is an important factor, commercial outlets for the metal in recent months have gained definite The transportation, printing, textile and materials handling industries now momentum. show indications of becoming large users of magnesium alloys.

4

EMI'LOYEES
Our over-all employment remained at a level essentially constant with that of the previous year. Despite the 25-day strike at our Midland Division last July we have enjoyed excellent company-wide labor relations, and an improvement in general plant efficiency has been evident. In addition to direct wages amounting to $53,482,000, an additional $4,048,000 was paid out in indirect benefits, including employees group insurance, workmen’s compensation insurance, old age and unemployment taxes and our pension and profitsharing plan which latter accounted for $2,177,000 of the total. This plan was placed in operation during the 1948 fiscal year. Our group insurance plan, to which both employees and the company contribute, has been in operation since 1934, with periodic improvements, and about 99 per cent of our people are covered by it. In response to a stock offering to our employees last November 3,326 employees subscribed for a total of 48,498 shares. Subscriptions are due to be completed in December of this year.

DIVISIONS
Midland Division
While numerous construction and expansion projects were carried on in the Midland Division, the greatest consideration was given to our present and future power needs. Accordingly, construction was started on a new power house which will not only permit retirement of some older less efficient equipment, but accommodate increased power needs as well. Keen interest in the most modern and efficient of power generating equipment has been a tradition of our company since its earliest days. It is significant, therefore, that a new type, high pressure boiler, which has aroused attention throughout industry, was installed at the main power house during the year. This boiler permits the use of cheaper fuels from a larger selection of sources. Similar equipment will be installed in the new power house, which will ultimately represent a capital investment of some 8 million dollars and is expected to be ready for operation before the end of the current fiscal year. We are now taking 7 million gallons per day of Lake Huron water secured in connection with a Saginaw-Midland joint waterworks project. While this is a small part of our daily requirements, it affords us a superior water for boiler feed and special process use. On the production front, a large plant for the manufacture of 2,4-Dow weed killer was completed and placed in operation. Additional facilities were also provided for production of Saran, improved ion exchange resins, phenol and other products.

5

Texas Division
Expansion of Texas Division facilities accounted Company’s total capital expenditures during the year. for a substantial part of the

A vinyl-vinylidene chloride plant having a capacity of 5 million pounds per month was completed to supply the broadening market for our Saran formulations. As of May 17 we completed purchase of the remaining portion of the government’s magnesium facilities at Freeport which are connected with our own plant, and on the same date acquired a deed to the government’s interest in the fresh water project which has been financed jointly by Dow and the government during the war. During the year we also purchased from the government 687 acres of unimproved land adjacent to the Velasco plant site. As a condition of the purchase of the Velasco styrene plant early in 1947, the Company was obligated to construct an ethylene plant capable of producing sufficient ethylene to make 6,500 tons a month of styrene, the quantity which the Company As a result of the subsequent availwas obligated to sell the government if required. ability of additional supplies of natural rubber, the government reduced the Company’s commitment from 6,500 tons of styrene a month to 4,000 tons and released the Company from its obligation to build the ethylene plant. Since our existing ethylene facilities are considered ample for present and reasonably foreseeable requirements, construction of the proposed ethylene plant was abandoned during the year, resulting in a write-off of $2,089,000. With a few exceptions, the facilities of the Texas Division operated during the year at or near capacity, and total shipments of products amounted to an increase of 28.5 per cent over tonnage moved during the previous fiscal year.

Great Western Division
Extension of facilities Western Division. in both old and new lines marked the year for our Great

Of special note is a new ern has long been the world’s refining of nonferrous metal cient process and is expected Expansions

Great Westplant for the manufacture of xanthates. leading producer of these materials used extensively in the ores. The new plant will utilize a new and more effito provide for an increase in capacity of 20 per cent.

of the chlorine

and caustic soda facilities have increased our west coast

capacity of these two basic companion products by approximately 30 per cent, while a comparable increase in ammonia capacity was also completed during the year.

6

Our growing importance in the field of agricultural chemicals led to the construction of enlarged facilities at Seal Beach for development and production in this line. The apparent usefulness of certain synthetic amino acids as supplements in animal and poultry feeds has stimulated our interest in large scale, low cost production of some of these otherwise costly chemicals. Accordingly, a plant to produce methionine on a commercial scale is under construction at Pittsburg and is expected to be ready for operation later this year.

Bay City Division
Our magnesium foundry and fabrication division at Bay City, Michigan, did its best volume of business since the war. We have facilities for the production of sand and permanent mold castings and fabricated assemblies. These tie in with facilities in Midland for the production of rolled sheet, die castings and extrusions, and no significant extensions at either location were necessary during the year. The Saran fabrication department, which occupies a portion of the Bay City plant, is finding a modest but growing market for Saran lined steel pipe.

Ludington Division
The major projects completed at Ludington, Michigan, during the year were a new bromine plant, which began operation in January, and a series of new brine wells. Ludington continued the production of lime and magnesium chloride, the latter being converted to flake in Midland and sold largely for the manufacture of magnesium oxychloride cements. This division was originally the cell feed section of a wartime magnesium plant.

SLIBSIDIAAY GOMPANES
Brazos Oil and Gas Company
This wholly owned subsidiary was organized originally to insure our Texas Division of ample long-range gas resources for both power and process use. Its usefulness in that direction has been so apparent that during the past fiscal year it extended its operations into Michigan and California for our two other major divisions, and it now has leasehold interests covering some 150,000 acres in these three states.

Cliffs Dow Chemical Company
This subsidiary, in which we own a two-thirds interest, manufactures charcoal, methanol, acetic acid and other chemicals from the distillation of wood. The demand for most Cliffs Dow products has been sharply off during the past six months.

7

Dowel1 Incorporated
The American oil industry generally had a good year and Dowel1 prospered with it. At the same time major oil discoveries in Alberta prompted a most substantial increase in Dowell’s Canadian operations. Altogether, Dowell’s volume of business exceeded that of any previous year. It is ever increasing its services to the oil industry and enjoys an outlook of sound and consistent growth.

Dow Chemical of Canada, Limited
Our Canadian company operates a styrene plant for the Canadian government and Its sales were subis also engaged in the production of chemicals for our own account. stantially up, and further growth may be expected from facilities recently completed. A sizeable chlorine and caustic soda plant was placed in partial operation last March and is gradually being brought up to full capacity. This plant utilizes a Dowmodified mercury cell. Major improvements were made to the Styron plant and to the ethylene glycol plant which produces permanent-type anti-freeze for the Canadian market. A substantial portion of our Canadian Styron production was sold abroad. Under the Canadian income tax law ciation at accelerated rates on machinery hour shift in any twenty-four hour period. on certain process equipment used on a come was charged during the latter part This amount approximately $5 90,000. covers the entire fiscal year ended provision is made for the allowance of depreand equipment used in excess of an eightThe Canadian company has used such rates multiple shift basis with the result that inof the year with accelerated depreciation of was in addition to regular depreciation and

May 3 1, 1949.

Midland Ammonia Company
This subsidiary, in which we own 75 per cent of the capital stock, produces synthetic ammonia from the hydrogen generated in our chlorine cells at Midland. Operations were carried on at increased capacity during the past year.

ASEXIGIATED COMPANIES
Dow Corning Corporation
Considerable expansion was undertaken during the year by Dow Corning poration, which we own jointly with Corning Glass Works. Cor-

While the unusual properties of the silicones make them especially useful in various industries, some of them have obvious consumer applications, and market development has been carried on in both directions.

8

Best known for cleaning of A recent market were being sold Meanwhile, high temperature

consumer development has been “Sight Savers,” silicone-treated tissues eye glasses, which were placed on the market a year and a half ago. survey indicates that as of the close of the fiscal year, “Sight Savers” in more than 80 per cent of all drug stores in the United States. industrial markets electrical insulating consumed increased quantities of Dow Corning’s compounds, silicone resins, oils and greases.

Ethyl-Dow Chemical Company
Ethyl-Dow, owned jointly with Ethyl Corporation, is our oldest associated company. Its market has continued to grow and its Freeport facilities operated at nearcapacity in the manufacture of ethylene dibromide for use in anti-knock leaded gasolines. This represents a stable market and the outlook is for continued effective and profitable operation.

The Saran Yarns Company
The manufacture of limited quantities of Saran fine fiber for poses was begun during the year in this company’s new plant at The plant represents a capital investment of about a million dollars space for additional equipment which will be added as markets material are developed. developmental purOdenton, Maryland. and provides ample for this new textile

Saran Yarns, which is owned jointly with The National Plastic Products Company, is working with virtually all branches of the textile industry in exploring possible fields of application for this plastic fiber which is noted for its fire retardant and wear resistant characteristics.

Company research activities are keeping pace with the expansion of Company business. The coordination and direction of research is centered in an Executive Research Committee of three members, whose efforts are aided by a General Research Committee of thirty members. Research is continuing to improve our existing manufacturing processes as well as the quality of our stable line of products. The diversity of our manufacture also demands a great deal of research in analysis and testing methods. However, the greatest effort is directed especially to those products, both new and old, which Dow, through economic and raw material advantage, can most profitably manufacture.

9

INCOJME AN11 INVESTMENT

240

I20

U

o ul Z 0 -I -I I

80

40

I940

1941

I942

I943

I944

I945

I946

I947

I948

I949

10

The chart on the opposite during the past ten years.

page illustrates

the substantial

growth of our Company

Our total income this year was more than five times the 1940 figure. met the greatly increased demand for our products by large expenditures and equipment.

We have for plants

The investment figures used are made up principally of working capital and net The investment at the end of this fiscal year was about six times plant investment. the 1940 figure. The ten year figures for income and investment
INCOME

are as follows:
INVESTMENT

1940 ------_---------------1941 ----_-_-_------------~~
1942 _--------_______-_-----

$ 39,231,OOO 49,165,OOO 80,394,000 108,767,OOO 124,657,OOO 127,987,OOO 104,5 79,000 132,787,OOO 174,353,ooo 203,375,OOO

$ 43,393,ooo 67,003,OOO 83,346,OOO Ss,sb 1,000 119672,000 123,847,OOO 114,383,OOO 186,SS 8,000 242,409,OOO 259,566,OOO

1943 ----------------------1944 --________------------1945 ------------*----------1946 --_-------------------1947 ---L----~-~-----

1948 ----------------------1949 -----------------------

11

Eth’lI’LOY EES ANI) STOCI/IHIILIIEtlS

I8

STOCKHOLDERS

I6

EMPLOYEES

I2

6

1940

1941

I942

I943

I944

I945

I946

I947

I948

I949

The substantial increase the past ten years is illustrated

in employees and stockholders of our company in the graph on the opposite page.

during

We have stockholders in every state in the United States, and it is interesting note that the owners now outnumber the employees.

to

In this connection it should be pointed out that in computing the number of stockholders no attempt has been made to eliminate duplications resulting from the ownership of more than one class of stock by a single individual. On the other hand, however, numerous organizations, such as brokers and nominees, appear on our records as single stockholders whereas in reality they represent many individual investors. Also of interest is the fact that in 1940 almost 70 per cent of our personnel were employed at the Midland Division, whereas today this division accounts for about 50 per cent of our 14,25 7 employees. Our Texas Division’s payroll numbers 3 100 employees and Great Western’s 900, while other divisions, subsidiaries, associated companies and offices account for an aggregate of about 3 100 persons.

13

IIISTI~Il~llTION

OF INCOIIE

I1OLLAI\

ACCOUNTANTS' CERTlFICATE

HASKINS’
CERTIFIED

& SELLS
PUBLIC ACCOUNTANTS

THE

NATIONAL

BANK

BUILDING

DETROIT

26

RESIDENT

PARTNERS

HAROLD ARTHUR WILLIAM

W. W. F.

SCOTT, KOELBEL, ROYER.

c. P. A. c. I’. A. C. P. A.

The Dow Chemical We Company have

Company: the consolidated companies balance sheet of The Dow Chemical

examined

and its subsidiary

as of May 3 1, 1949 and the related stateOur examination and accordauditing

ments of consolidated

income and surplus for the year then ended. with generally accepted auditing records

was made in accordance ingly included

standards, such

such tests of the accounting necessary

and

other

procedures

as we considered

in the circumstances. consolidated fairly balance sheet and statements the financial position of the

In our opinion, of consolidated companies

the accompanying and surplus

income

present

at May 3 1, 1949 and the results of their operations with generally accepted year. accounting

for the year then applied on a

ended, in conformity

principles

basis consistent with that of the preceding

HASKINS

& SELLS

July

15, 1949

15

THE

DOW

CHEMICAL

COMPANY

I:()NSOLIIIATEII
MAY 31, 1949.

ASSETS
1949 Current Assets :
Cash United ____---___---_---_-_--~~-~--~~-~-~-~-~---~~-~~~~~~-~~~~~~ States Government securities-at cost -----_------___----______ $ 11,601,292 $ 5,100,784 May 31

1948

$ 10,378,446 $ 12,403,572 $ 22,660,202
547,832 105,761 732.316

Notes and accounts receivable : Customers ____________-___________________________---------Associated companies ----_--__-----_-------------------Employees _--__-_---~-__--~-_---~~~--~---~--~--~~~~~~~~~~~~~~ Total Less reserves --_-__---__----_----____________________~~~~~ receivables _ _--__ ---Net receivables _-_-----------_--__-______

_______

$ 23,252,171 456,639 129,352 1,523,452 $ 25,361,614 829,263

$ 24,046,111
447,267 $ 23,598,844

for doubtful

_______

$ 24532,351

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

_____-

$ 26,068,739
4,503,922 11,367,397 1,232,744

$ 21,797,697
4,125,840 9,882,504 967,545

-

$ 43,172,802
_______

$ 36,773,586 $ 83,154,448

,

$ 84,407,229

Investments

and Non-Current Receivables : $
3,065,OOO 483,833 782,167 3,408,928 $ 2,965,OOO 287,026 666,804 4.773.723

Notes receivable and capital stock (at cost) of associated companies (at May 3 1, 1949, approximately $1,700,000 less than the equity in net assets as shown by unaudited balance sheets of companies) ______-__-______-__ Non-current notes and accounts receivable (including employees’ receivables, 1949, $49,771; 1948, $45,092) _--____--_--------_--m-------m--Sundry Claims securities for refund (at cost) Total -__---___----__----------years’ Federal investments taxes on income and non-current ______ - ____. _ __-------_-_---receivables ___- _ of prior

$

73739,925

$4 8,692,553

Property :
Plant properties (exclusive of facilities acquired under (at cost) : Land __________________------------------------------------certificates of necessity)

$

2,894,564 188,772,362

$

2,379,X29 166,045,046

Depreciable property (less reserves for depreciation, 1949, $62,922,597; 1948, $49,405,273) _-_---_-----_-_------.---------e----T---Facilities acquired under certificates of necessity (at reinstated values, less reserves for depreciation since reinstatement, 1949, $1,829,756; 1948, $1,219,838) _________--_-----_---~~~~~--~~~---~-----~-------Housing properties (exclusive of facilities acquired under certificates of necesfor depreciation, 1949, $420,678; 1948, sity ) - at cost (less reserves

7,760,486

8,370,405

$345,883) ___________ -__--_-_--_--__-_--_--me----mTotal property

____ -_--_

1,440,164 $200,867,576

1,360,673 $178,155,353

__- ______ ------__------__----1949,

Patents-

At cost or nominal value (less reserves for amortization, $136,626; 1948, $113,374) ____--_____----_--_------------------Charges-Unexpired insurance premiums, on funded debt, and sundry --_----_-___-_--_Total

$ $

267,811 1,054,472

$ $

284,062 1,186,965

Deferred
expense

unamortized discount and ____- --_-- _____

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

$294,337,016

$271,473,381 See notes to financial

16

AND

SUBSIDIARY

COMPANIES

AND

1948

LIABILITIES
1949 Current Liabilities :
and sundry _-____ - __-_ - ____ -_-_--_--_-__-_ Accounts payable -Trade Federal and Dominion of Canada income taxes (See Note B) ___-_____-. Dividends payable ________--_-__-_________________________-----Principal amount of debentures for which a sinking fund deposit is due within one year _______________-________________________---------Instalments on other long-term indebtedness due within one year - __ -_ _- _Liability to employees for payments on subscriptions to Common Stock (See Note C) _____-____-_____________________________-----------Accrued liabilities : Payrolls __-____~__~-__-~~______-_~_~~--_--~---_-_~-----__~_,-_ Contributions under pension and profit-sharing plans ---__-----_-____ security, property, state income and franchise, and sundry __ Taxes -Social Interest _--_--___-__-_-_________________________------------Sundry ___--__-__-__-__________________________-------------Total current liabilities _ -_ _- _ _ __ -_ - _ __ _ - _- - - $ 7,906,012 15,305,370 2,678,083 1 ,ooo,ooo 737,500 924,879 1,634,880 1,356,935 2,562,963 502,211 161,169 l/482,978 21,038 2,458,121 483,528 175.766 $ 11,006,583 11,273,561 1,877,575 Mav
I

31

1948

285,000

$ 34.770.002

$ 29,064,150

Long-Term

Indebtedness : $ 29,000,OOO a
35,000,000 1,821,250 1,460,OOo

Fifteen year 2.35% debentures, due November 1, 1961 (sinking fund deposits due annually-debentures for which a sinking fund deposit is due within one year are included in current liabilities) ----__--------_Promissory notes, due January 1, 1972 (note prepayments due annually beginning January 1, 1953) __________ -- _____ ----------_--_____ Mortgage note, due January 1, 1958 (instalments due within one year are included in current liabilities) __-__--_----_-_---_-_________ _______ Contracts and notes payable for purchase of interests in oil and gas fields (instalments due within one year are included in current liabilities) ----Total long-term indebtedness -----___-_------_

$ 30,000,000
35,000,000 2,056,250 150.000

$ 67,281,250 $ $
1,336,466 962.999

$ 67,206,250 $ $
1,305,717 984,719

Reserves for Fire and Accident Losses, Damage Claims, and Sundry _Minority Interests in Subsidiary Capital 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, 400,000 shares without par value; outstanding, 1949, 398,868 shares) -cumulative annual dividend $3.25 per share _________________-______________________------Common Stock (authorized, 12,000,OOO shares of $15 par value each; outstanding, 1949, 5,126,023.811 shares, including scrip for fractional shares aggregating 690.8 11 shares; reserved for sale to employees and for conversion, 1949, 903,274.589 shares) ______ - ______ - ____ ---_---___-___ Total capital stock ___- __-__-_ -__-_--_---_-__

Companies

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

$ 30,386,900
39,886,800

$

30,386,900 40,000,000

76,890,357 $147.164.057

74,922,360 $145,309,260

Surplus :
Capital surplus _-___-__-__-______ --_-_--_----__-_--_-__________ Earnedsurplus -_--_-___-----___-_----~-~~----~~~--~-~------~--~~ Total surplus ____ _-- ___ _-_ -_- _ __ ___ -_- __ -_ _ _ Total atements on page 22. __- _____ -__- _____ -_-_

$

7,320,340 35,501,902

$

407,098 27,196,187

$ 42,822,242
$294,337,016

$ 27,603,285
$271,473,381

17

THE

DOW

CHEMICAL

COMPANY STATEMENT

AND OF

SUBSIDIARY

COMPANIES

FOR THE YEARS ENDED MAY 31, 1949 AND 1948
Year Ended May 31

Sales and Other Revenue:
Sales _____-__________---_____________________--------------received from interest from an associated companies company ____-____--__--_-__-____ --___---__--

1949
$200,370,952 1 ,ooo,ooo 37,500 537,288 421,934

1948
$170,696,037 500,000 75,128 322,798 406,022 1,170,778

Dividends Interest Other

associated income

--- ____ --__--_-

______ - ___________ with operation

- _______________________ of Government-owned no longer plants __

Fees received Reversal Other

in connection

of reserve income

for electrolytic

cell replacements

required

_-_-_--_____--_-__-_____________________~~~~~~~~ Total ___-_____-_--__-_--_____________________---

1,007,939 $203,375,613

1,182,427 $174,353,190

Costs and Other Charges:
Cost of sales (excluding provision for depreciation and contributions pension and profit-sharing plans) --_-_------_--_----_________ Provision Contributions Selling Interest Provision and for depreciation under pension -__-__-__----__------------------.and profit-sharing expenses of discount plans -_-_____---__--under $123,548,377 18,706,899 2,176,914 13,576,240 debt -__ _-1,673,988 $110,986,394 14,178,366 1,810,218 10,686,476 1,672,759 1,000,000 2,089,091 390,352 -__---_-_------103,279 $162,265,140 374,493 132,474 $140,841,180

____

administrative

-_--_-__-__-_--_--__--------.-and expense claims plant on funded

and amortization of reserve

for product

damage

__-_--_--__---_-----_ in Texas -_--_-_---_---

Loss on abandonment Other Minority income charges

of an uncompleted

_----_-------__--_-_--------------.------of subsidiary companies

interests

in income

Income Provision

before

Provision

for Federal

and Dominion of Canada

of Canada Taxes

Income

Taxes B)

-_ --

$ 41,110,473 15,850,OOO

$ 33,512,OlO 12,445,364

for Federal

and Dominion

Income

(See Note

Income

for the Year _ ___--__-_-_____-_---~~~~--~~-~~~~~~-~-See notes to financial statements on page 22.

$ 2X260,473

$ 21,066,646

18

THE

DOW

CHEMICAL

COMPANY STATEMENT

AND OF

SUBSIDIARY

COMPANIES

CONSOLIIIATEI~
CAPITAL Balance at Beginning
Additions : capitalized by a wholly-owned with a stock dividend ________ on sale of Second Preferred Earned surplus connection Premium received

SLIIWLLIS
1949
Year Ended Mav

FOR THE YEARS ENDED MAY 31, 1949 AND 1948

SURPLUS --__----_-_--_____
in

1948

31

of the Year ___________

$

407,098

$ 1,030,191

subsidiary company -__-__---------_--__ _--_-_--_--__-___

2,900,OOO 200,000 128,131 3,808,553 76.558 $ 7,320,340 $ 1,230,191

Stock

Excess of market value at dates of delivery over par value Stock sold to employees ___________-__--___----_---Excess of approximate issued as a stock market dividend value over par value __--_-______ -_--_--

of Common _______

of Common Stock _____ - ________ issued on _____

Excess of conversion price over par value of Common Stock conversion of Second Preferred Stock __-__-__-__---_--_-Total Deductions : to Common Stock account in connection with A) ______________-__-______________________-------with merger to premium ______-______-_-________________________---

Transferred Note

merger

(See $ 623,093 200,000

Expenses in connection (portion equivalent Total

and sale of Second Preferred Stock received on sale) _--_____-______

__-______________-_-____________________---

$
$ 7,320,340

823,093 407,098

Balance at End of the Year __-_____________________

---_-_----_

$

Balance at Beginning
Addition-Income for Total Deductions : :

EARNED SURPLUS of the Year ~_--~___~_~_--__-_------~-~~~~
the year ________________ ---___-__---__-_----__ ________________-_______________________---

$27,196,187 25,260,473 $52,456,660

$50,720,265 21,066,646 $71,786,911

Dividends

Cash : Cumulative Second Common Preferred Stock-Series A _ ___ __ ___ ___ ___ _-_ -$ 1,215,476 1,298,236 5,859,434 5,681,612 37,005,358 129,246 2,900,OOO $16,954,758 $44,590,724 $27,196,187 $35,501,902

$ 1,215,476
1,245,820 4,994,824

Preferred Stock

Stock ________________________________ -- ______ -__- -_______ - ____-_ - ______ -__-

Common Stock-124,870.6 of $45.50 per share Transferred Note

shares at an approximate _____ -__- ________ -__-__--

market value _______ -_merger (See

to Common Stock account in connection with A) ___-__--___--__-_---____________________-------

Expenses in connection with merger (portion not charged to capital Earned surplus connection

and sale of Second Preferred Stock surplus) __- _______ - ________ -_company -__-__--_-in

capitalized by a wholly-owned subsidiary with a stock dividend _________________ Total

__-____-________________________________---

Balance at End of the Year _- _-__-__

- --__________

-__-statements

_____ -__
on page 22.

See notes to financial