Dow Chemical Company Annual Report - 1936

8/14/2019 Dow Chemical Company Annual Report - 1936

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The Dow Chemical Company

Condensed Financial ReportMay 31,1936


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To th e Stockholders of The Dow Chem icalCompany :The Compa ny is pleased t o present h ere-

with th e following pages of inform at ionconcerning its financial stat us. The ear n-ings per shar e of the 945,000 sha res ofcommon stock ar e $4.42 a fter ma kingallowan ce for depreciat ion, income taxand th e preferr ed stock dividends. Thestated earnings per share does not include$387,398.90 net pr ofit on sa le of 7,286sha res of Compa nys rea cquir ed comm oncapital st ock, equivalent to an addit iona l40 cents per sha re. We cordially inviteall stockh older s to visit our home officeand th e principal ma nufacturing plant atMidland, Michigan.

Very truly yours,WILLARD H. DOW,

President.July 8, 1936.


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THE DOW CHEI(Incorporate

BALANCE SHE

ASSETSCURRENT ASSETS:Cash .*............................ $ 1,508,901.56

Unit ed Sta tes Governm ent secur ities-atcost (face valu e, $800,000.00; mar ketvalue, $867,062.50) . . . . . . . . . . . . . . . 847,812.50

Notes an d account s receivable (cus tom-ers, $2,094,906.90; employees, $ll,-788.45 ; an d su nd ry, $47,228.58) ---lessrese rve, $104,845.64 . . . . . . . . . . . . . . . 2,049,078.29

Inventories of finished goods, work inprocess, and mat erials and supplies-at cost . . . . . . . . . . . . . . . . . . . . . . . . . . 5,415,540.04

Tota l cur ren t as set s . . . . . . . . . . . . . . . . . . . . . . . $ 9,821,332.39CLAIMS AGAINSTBANKS IN LIQUIDATION less reserve for

loss, $35,000.00) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,473.08RECEIVABLEROM NDIVIDUALSN SALESOF HOUSE SANDLOTS 2l610.24RE CEIVABLE ROMSUBSIDIARYNDAFFILIATED OMPANIES. . 318,240.37INVESTMENTS T COST

Subsidiar y an d affiliat ed compa nies (lesstha n th is compa nys book equity ther e-in ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,155,580.00

Miscellan eous secur ities . . . . . . . . . . . . . . 192,814.63Tota l invest men ts . . . . . . . . . . . . . . . . . . . . . . . . .

FIXEDASSETS1,348,394.63

Real estat e, plants, an d equipment (lessres erves for depreciation, $10,716,-817.63) . . . . . . . . . . . . . . . . . . . . . . . . . $17,369,649.61

Patents (less reserve for amortization,$7,335.08) . . . . . . . . . . . . . . . . . . . . . . 26,410.18

Tota l fixed as set s . . . . . . . . . . . . . . . . . . . . . . . . . 17,396,059.79DEF ERR ED HARGES-UNEXP IRED NSURANCE REMIUMS,UN-

AMORTIZED OTE DISCOUNT,AND DEFE RRE D ELLINGEx-P E N S E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,269.41

TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,041,379.91

NOTES: Under an agreement providing for the formationsidiary organized in 1935, the company has agreed to pamounts sufficient to provide funds for plant expansio:the Board of Directors of the subsidiary, to an extent nin the Class A preferred capital stock of the subsidiary,At May 31, 1936, there was a contingent liabi lity


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MAY 31, 1936

LIABILITIESCURRENT LIABILITIES:Accoun ts payable-Tra de an d miscella-

neous . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,110,295.74Em pIoyees comp ens at ion awa rd s . . . . . . 53,983.30Serial notes, 21/s, series due J an ua ry1, 1937 . . . . . . . . . . . . . . . . . . . . . . . . . . 720,OOO.OOFeder al income ta x-curr ent year . . . . . 660,733.08

Oth er ta xes accru ed-including localpropert y t axes, Feder al capita l st ocktax, and unem ployment ,msura nce ta xes 186,628.67Accru ed int ere st payable . . . . . . . . . . . . . 30,000.00Total cur rent liabilities . . . . . . . . . . . . . . . . . . . . $ 2,761,640.79

SERIALNOTES,21/s (exclus ive of $720,000.00 included incurrem liabilities) -$720,000.00 MATURINGON J ANUARY1 OF EACH OF TH E YEARS 1938 TO 1940, INCL USI VE . . . 2,160,000.00

R ES ER VE OR F I R E ANDACCIDENT IN SU R ANCE . . . . . . . . . . . 193,693.14P R EF ER R E D AP I TAL S TOC K-S HAR ES $100.00 PAR VALUE

EACH (aut horized, 60,000 sh ar es of 5% cumu lat ive; out-sta nding, 30,000 sh ar es of 7% cumulat ive which havebeen called for exchan ge for 5% st ock on *a sh ar e-for-sha re basis; all 7% sh ar es not excha nged to be redeem edas of August 15, 1936, a t $105.00 per sh ar e plus accru eddividen ds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000.00COMMON CAPI TAL STOCK (authorized, 2,000,000 shareswithout par value; issued and out sta nding, 945,000 sha res 12,685,OOO.OOEARNEDS UR P LUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,241,045.98

TOTAL . . . . . . . . . . . . . . . . . .

Dow Chemical Company, a partially owned sub-preferred capital stock of the subsidiary inworking capital, as the need for funds is determined byAs of May 31, 1936, the investmentamounted to $665,000.00..91 on commercial letters of credit.


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THE DOW CHEMICAL COMPANYSUMMARYOFINCOMti ANDSURPLUSFORTHE

YEAR ENDED MAY 31,1936GROSSP R O F I TFR OM SALES BEF OREP ROVIDING OR DEP RE-

CIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,689,795.85SELLINGAND ADMINIS TR ATIVEXP E NS E S . . . . . . . . . . . . . . . 1,153,766.65P R O F I TFROM OPER ATIONS EF ORE ROVIDING OR DEP RECI-

ATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,536,029.20P ROVISION OR DEP RECIATION. . . . . . . . . . . . . . . . . . . . . . . . 1,451,724.73P R O F I TF R OM OP E R ATIO NS . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,084,304.47OTHER INCOME:

Dividends from su bsidiar y an d affiliatedcompa nies (these dividends ar e lessth an equity in ear nings of such com-panies for the year) . . . . . . . . . . . . . . $ 595,305.oo

Cash discount s on purchases, interestear ned, royalties, a nd miscellaneous. . 203,882.69 799,187.69

GROSS INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,883,492.16INCOMECHARGES

Resear ch an d experiment al . . . . . . . . . . . $ 595,415.46Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,005.24Cas h discoun ts allowed, u ncollectible ac-

counts, and miscellaneous . . . . . . . . . . 206,587.33 900,008.03NET INCOMEBEF ORE ROVIDING OR FE DERAL NCOME TAX $ 4,983,484.13P ROVISION OR FEDER AL NCOMETAX ON NE T I NCO ME . . . . 598,973.83NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,384,510.30SUR P LUS T BE GIN NIN G F THE YEAR . . . . . . . . . . . . . . . . . . . 5,554,643.80SURPLUS REDITS

Profit on sale of 7,286 shares of com-panys reacquired common capitalst ock, $449,158.15, less Feder a l in-come ta x th er eon of $61,759.25 . . . . .Restora tion to sur plus of special res ervefor depr eciat ion creat ed in a prior yearin addition to regula r provision fordepreciat ion . . . . . . . . . . . . . . . . . . . . . .

Adjust men ts of provision for deprecia-tion and obsolescence losses of pr ioryea rs . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 387,398.90

493,096.65

123,775.01 1,004,270.56GROSSSURPLUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,943,424.66SURPLUS H ARGES

Cash dividends :Comm on capit a l st ock . . . . . . . . . . . . . $ 1,879,071.00Pre ferr ed cap,ita l st ock . . . . . . . . . . . . 210.000.00

Total . . . . . . . . . . . . . . . . . . . . . $ 2;089,071.00Good-will wr itt en off . . . . . . . . . . . . . . . . . 587,267.50Additiona l assessm ent s of Feder al in-

come t axes for prior years . . . . . . . . . . 26,040.18 2,702,378.68SURPLUSAT EN D OF T H E YE AR . . . . . . . . . . . . . . . . . . . . . . . . $ 8,241,045.98


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ACCOUNTANTS ERTIFICATEThe Dow Chemical Company:

We ha ve ma de an examina tion of th e balan ce sh eet ofThe Dow Chemical Compan y as of May 31, 1936, an d ofth e related sum mar y of income and surplus for th e yearended that dat e. In conn ection th erewith, we made a reviewof th e accoun ting meth ods and examined or tested accoun t-ing records of th e compan y an d other supportin g evidencein a man ner and to th e extent which we considered appr o-pria te sin view of the system of ,int ern al a ccount ing cont rol.We did not verify th e quan tities in th e inventories but werefurn ished with a cert ificat e of officials of th e compan y as toth e quan tities upon which th e inventory values were based.

The account s of subsidiar y an d affiliated compan iescar ried as investm ent s a t cost of $1,155,580.00 in th eaccompan ying balan ce sh eet were not examin ed by us atMay 31, 1936. Exam inat ions of th e account s of th reeof the companies, the investment in which amounted to$341,579.00, ar e now in progress, an d th e account s ofan oth er of th e compan ies, th e investment in which amoun tedto $665,001.00, were examined by us as of Mar ch 31, 1936.We ha ve not ma de an examina tion of th e account s of oneremaining compan y, th e investmen t in which a mounted to$149,000.00.

In our opinion, based upon such examination andsubject t o th e foregoing, th e accompan ying balan ce sh eetand related summa ry of income and surplus fairly present ,in accordan ce with accepted prin ciples of account ing con-sist ent ly followed by th e comp an y, its fina ncial cond itionat May 31, 1936, an d th e resu lts of its operat ions for th eyear ended that date.

Detroit, July 1, 1936.HASKINS & SELLS.


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THE DOWCHEMICAL COMPANY

DIRECTORS-JULY 8, 1936E. 0. BARSTOW L. I. DOANE. W. BEN NE TT W. H. DOWG. E. COLLINGS J. T. PARDEEJ. S. CRIDER C. J. STROSACKER

W. R. VEAZEY

OFFICERS-JULY 8, 1936Cha irm an of t he Boar d . . . . . . . . . . . . . . J . T. PARDE EPr esident an d Gener al Man ager . . . . . . . . . W. H. DOWVice Pr esid en t . . . . . . . . . . . . . . . . . . . G. E. COLLINGSVice Presiden t . . . . . . . . . . . . . . . . . . . . . J. T. PARDEEVice Pres ident , Secy a nd Treasu rer . . E. W. BENN ETTAssista nt Tr eas ur er . . . . . . . . . . . . . . . . . . J . S. CRIDE RAuditor an d Assista nt Secreta ry . . L. A. CHICH ESTE RAssista nt Secret ar y . . . . . . . . . . . . . . . . . F. H. BROWN

Registra r and Tran sfer AgentTHE CLEVELAND TRUST COMPANY

CLEVELAND, HIO

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Dow Chemical Company Annual Report - 1936