Dow Chemical Company Annual Report - 1947

8/14/2019 Dow Chemical Company Annual Report - 1947

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50HANNUAL REPORTFOR THE YEAR ENDED MAY 31,1947

THE DOW CHEMICAL COMPANYMIDLAND, MICHIGAN


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The next annual meeting of stockholders will be held on Wednesday, August27, 1947, at two oclock in the afternoon (Eastern Standard Time) at the Companysoffice in Midland, Michigan.

A formal notice of the meeting, together with a proxy statement and form ofproxy, will be mailed to each holder of common stock separately from but concur-rently herewith, at which time proxies will be solicited by the management.


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TO THE STOCKHOLDERS OFTHE DOW CHEMICAL COMPANY:

We present herewith the 50th annual report of the Company operations. Thisanniversary has more significance than just being the fiftieth year of the operationof The Dow Chemical Company, a Michigan corporation, for this report is the firstone to be presented by The Dow Chemical Company, a Delaware corporation. Thischange was recently approved by action of the stockholders at a special meeting heldon July 22, 1947. The Dow Chemical Company, now a Delaware corporation, isthe corporation in which you own stock. It is the successor to all the assets andliabilities of the Michigan corporation.

EARN I NGS AND SALES-The consolidated net income was equivalent to $9.22 per share on the

1,248,706 shares of common stock, after deducting $1,215,476 paid during theyear on the preferred stock. The comparable earnings for the fiscal year endingMay 31, 1946 (revised as set forth in note A of the financial statements) were$4.40 per share, but this is hardly a fair comparison, due to the large after-the-warcharge-offs during the 1946 fiscal year. Sales this year reached a new all-time highof $130,426,839. This is 28% more than the sales of $101,813,839 attained lastyear, and 4.5% more than the peak sales of $124,570,200 for the 1945 fiscal year.The increase in sales substantially helped to offset the increase in labor costs, theincrease in raw material costs and the general increase in the cost of doing business.

NUMBER OF STOCKHOLDERS-As of July 1, 1947 there were 8,249 common stockholders and 4,366 pre-

ferred stockholders. This is an increase of 63 % over five years ago, with an averageownership of 151 shares per common stock owner and 70 shares for each preferredstock owner.

EMPLOYMENT-As of May 31, 1947 the total employment for which The Dow Chemical

Company is responsible was 13,975 employees. This included 96 employees operatingthe styrene plant of the Polymer Corporation at Sarnia, Ontario and 306 employeesin the government-owned styrene plant in Los Angeles. During the past year we


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have had two interruptions in operation caused by strikes, one in Texas and onein the government styrene plant in Los Angeles. The Texas strike lasted 24 daysand the Los Angeles strike 25 days. It should be noted these were the first majorstrikes in the history of the Company resulting in lost production. As of a yearago we were operating four government-owned plants, and at the present time weare operating two. Two plants. at Velasco, Texas have been purchased by theCompany, while the plant at Los Angeles, California is still operated for the UnitedStates government and the plant at Sarnia, Ontario for the Canadian government.

In general it can be said our labor relations are very good, and each yearseems to bring about a more understanding relationship. Greater appreciation isbecoming apparent that the payment of high wages necessitates high productive efforton the part of everyone.

FINANCING-During the year we spent over $84,000,000 in capital expenditures, of which

approximately one half was for the purchase of certain facilities we had constructedfor the government at Velasco near Freeport, Texas. This amount of expendituresmade it necessary for us to raise additional funds. We did this by selling $30,-000,000 of 2.35% debentures, by borrowing $35,000,000 from an insurance companyupon an unsecured note at an interest rate of 2.70% a year and by a sale whichhas just been consummated of 400,000 shares of our new Second Preferred Stock.In addition, we have arranged for a bank credit under which we may borrow upto $25,000,000 at an interest rate of 1.5 % a year, to become due not later thanMay 31, 1949.

COMPANY OPERATIONS-During the fiscal year just closed sales of the Company products were sub-

divided about as stated in the last annual report, namely,Industrial Chemicals 55%Pharmaceuticals 10%Plastics and related compounds 15%Agricultural Chemicals 10%Magnesium 10%

MAGNESIUM-The operations of our Magnesium Division have not been profitable during

the past fiscal year. This was brought about by a number of causes. In the firstplace, the adjustment to peacetime operations, which has now been just aboutcompleted, was expensive; second, the sale of enormous volumes of government-ownedsecondary scrap metal has appreciably reduced the demand for virgin metal; andthird, the completion of certain contracts for the fabrication of airplane wings and


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our retirement from this type of fabrication is a difficult, slow process. Referringagain to secondary scrap metal, it is a known fact that every metal industry operatesmost successfully when a good volume of secondary metal is available, and instead oflimiting the further growth of magnesium, we feel this is the proper stimulation toa prosperous industry, Operations in our foundry, extrusion plant, rolling mill, diecasting and alloy plants will continue and, we believe, in expanding volume and withgrowing uses. Magnesium is the modern metal and has established its positionin the world of metals. The Dow Chemical Company has fulfilled its obligation inestablishing magnesium as a commercial metal; undoubtedly others will carry itsuses to greater possibilities than we could as a single, pioneering company.

BRAZOS OIL AND GAS COMPANY-During the year a new wholly owned subsidiary, Brazos Oil and Gas Com-

pany, was incorporated under the laws of the State of Texas for the primary purposeof producing gas from a gas field recently purchased in Texas. This field, locatedin Matagorda County and known as Citrus Grove Field, can be readily joined toexisting Company-owned pipe lines and should supply up to 20,000,OOO cubic feetof gas per day for a period of ten or more years.

THE SARAN YARNS COMPANY-The Saran Yarns Company was organized and is owned jointly by The Dow

Chemical Company and The National Plastic Products Company. It will manufac-ture fine fibres out of Saran. The demand for fine fibres of all kinds necessarilycreates a great interest in this development. Weaving of fine fabrics, upholsteries,draperies and gossamer fine materials suggests only a partial list of the possibilities.

GENERAL-In the fiftieth annual report it is only proper to mention our various sub-

sidiaries. Their respective operations have been summarized in previous reports andrepetition here hardly seems necessary. Fortunately, we can again report that allsubsidiaries and associated companies, with the exception of Brazos Oil and GasCompany and The Saran Yarns Company which are each less than a year old,are all operating profitably and showing steady growth and progress in their respec-tive fields.

CONCLUSION-Everyone knows that the time covered by our fiscal year ending May 31,

1947 was a period of uncertainty and economic unbalance. False economic propa-ganda and unsound economic thinking produced a condition which challenged saneconclusion on almost every problem. For example, newspapers, politicians, almost


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everyone talked in terms of a nationwide pattern for wage increases. Fundamentallyand rationally, there cannot be any national pattern for any wage scale. A nationalpattern implies that every industry is on the same basis to start with and does notgive recognition to the fact that many factories in various parts of the country havealways been leaders in wages and in many other intangible benefits to all their em-ployees. The Dow Chemical Company has enjoyed such a leadership for many years.The chemical industry as a whole is the first measure of comparison, local conditionsare the second, and both are coupled up with the tangible and intangible benefitsthe Company provides. All these add up to a standard of living our Companyrepresents as uniquely our own in the sam e sense that every individual home devel-ops a standard of living around the family and their lives. Notably enough, it hap-pens that we as a Company, in comparison with all other companies, have a stand-ard which rests well up near the top in the scale of living established by industry.

Although production and sales increased enormously, we feel the war periodwas a distinct set-back to our progress. During that period it was possible toproceed with only those items of basic necessity for the emergency, and necessarilymany laboratory projects were shelved. This past year many new construction itemswere expedited, but while many of these are nearing completion, the facts are thatmany other developments have come to a near stopping point because of excessivecosts. These costs can be attributed almost entirely to construction labor unproduc-tivity, and only insofar as we are able to build in the future and show a properreturn on the investment will we proceed with further projects. It is a gravesituation for a country when progressive development is delayed for lack of nationaldesire to give an honest days work for an honest days pay.

During the past ten years we have expanded tremendously. Our salesvolume has expanded from $25,000,000 in round figures in 1937 to $130,000,000for the current year, 5.2 times. Our capital investment has multiplied 4.7 times.Our common stockholders have multiplied 3.75 times. Three large production plantslocated in Midland, in Freeport, Texas and in Pittsburg, California and a fourth nowbuilding in Sarnia, Ontario, Canada, give a distribution to manufacturing operationsmost ideal for national as well as international trade.

Every stockholder is urged to take the time to read the enclosed Fifty Yearsof The Dow Chemical Company, for only by knowing the background of growthcan one intelligently understand our Company and its future prospects.

Midland, MichiganAugust 4, 1947

WILLARD H. DOWPresident


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THE DOW CHEMICAL COMPANY

DirectorsE. 0. BARSTOW L. I. DOAN

E. W. BENNETT A. B. DOWJ. S. CRIDER W. H. DOW

M. E. PUTNAMC. J. STROSACKER

W. R. VEAZEY

OfficersPresident - - - - - - W. H. DOWVice President and Treasurer - - E. W. BENNETTVice President and Secretary - - - L. I. DOANVice President - - - - E. 0. BARSTOWVice President - - - - C. J. STROSACKERVice President - - - - M. E. PUTNAM

Assistant Treasurer - - - - J. S. CRIDERAssistant Treasurer and Assistant Secretary F. H. BROWNAssistant SecretaryAssistant SecretaryAssistant SecretaryAssistant SecretaryAuditor -

Transfer AgentsGuaranty Trust Company of New YorkThe National City Bank of New YorkThe Cleveland Trust Company

A. P. BEUTELL. A. CHICHESTER

R. L. CURTISD. J. LANDSBOROUGH

C. PENHALIGEN

Stock RegistrarsCommon The New York Trust CompanyPreferred Guaranty Trust Company of New York

Common and Preferred The National City Bank of Cleveland


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HASKINS & SELLSCERTIFIED PUBLIC ACCOUNTAN TS

THE NATIONAL SANK BUILDING

DETROIT

ACCOUNTANTS CERTIFICATE

The Dow Chemical Company:We have examined the consolidated balance sheet of The Dow Chem-

ical Company and its subsidiary companies as of May 3 1, 1947 and therelated statements of consolidated income and surplus for the year endedthat date, have reviewed the accounting procedures of the companies, andhave examined their accounting records and other evidence in support ofsuch financial statements. Our examination was made in accordance withgenerally accepted auditing standards applicable in the circumstances andincluded all auditing procedures we considered necessary, which procedureswere applied by tests to the extent we deemed appropriate in view of thesystems of internal control; it was not practicable to confirm receivablesfrom United States Government departments and agencies but we havesatisfied ourselves with respect to such receivables by means of other audit-ing procedures.

In our opinion, the accompanying consolidated balance sheet and state-ments of consolidated income and surplus fairly present the financial con-dition of the companies at May 3 1, 1947 and the results of their operationsfor the year ended that date, in conformity with generally accepted account-ing principles and practices applied on a basis consistent with that of thepreceding year.

HASKINS G SELLSJuly 25, 1947.


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ASSETSCURRENT ASSETS:

Cash ---_____________________________________------United States Government securities-at cost _--------_____Notes and accounts receivable :Customers ______________-_-_--__ - ___-_ -_----- -_--_Associated companies _______________ -___------_---___Employees ___--- ____________ -_---- ____ -- __________Sundry -_--------_____________I________________~~~

Total ---____-____-____--_________________Less reserves for doubtful receivables ----__----_-________Net receivables -----__-_---------_____

Billed and unbilled receivables from United States Government andits agencies (other than for sale of product) ___--------___Claims for refund of prior years Federal income and excess profitstaxes resulting from carry-back of unused excess profits creditI 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 ____---_-----

INVESTMENTS AND NON-CURRENT RECEIVABLES:Notes receivable and capital stock (at cost) of associated com-panies (at May 31, 1947, approximately $390,000 less than

the equity in net assets as shown by unaudited balance sheetsof companies) ------__---- ______ ------__- __________Non-current notes and accounts receivable (including employeesreceivables, 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-currentreceivables _____ ----- ----_--_PROPERTY:Plant properties (exclusive of facilities acquired under certificates

of necessity) (at cost) :Land -------------------------------------------cDepreciable property (less reserves for depreciation, 1947,$38,734,395.54; 1946, $34,668,856.85) ______________Facilities acquired under certificates of necessity (at reinstatedvalues, less reserves for depreciation since reinstatement,1947, $609,918.82) (see Note A) __________________ --_Housing properties (exclusive of facilities acquired under cer-tificates of necessity) -at cost (less reserves for depreciation,1947, $284,290.95; 1946, $225,348.11) _______________Total property -__________ - _____

PATENTS--at cost or nominal value (less reserves for amortization,1947, $111,110.59; 1946, $87,531.81) __________________DEFERRED CHARGES-Unexpired insurance premiums and sundryand, at May 31, 1947, unamortized discount and expense onfunded debt -----------_____________________________

TOTAL -----____----------

THE DOW CHAND SUBSIDIA

CONSOLIDATED BALANCE

May 311947 1946$ 7,569,3 15.44$ 3,270,OOO.OO$ 15,1 -y;.g

84:922:378 13,76 1.89$ 16,159,061.80.280;58 1.06$ 15,878,480.74$ 443,876.12

$ 18,147,266.914,473,697.129,487,322.82606,25 1.84

$ 32,7 14,538.69$ 59,876,2 10.99

$ 3,565,OOO.OO3 19,954.47 289,260.366 19,600.72 659,189.l 14,957,549.16 4,956,096.9 1

$ 9,462,104.35

$ 1,843,603.3 I130,937,138.22

8,980,324.09

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

$ 306,163.81

$ 7 12,926.93$213.637.876.36

$ 10,418,121.52_$ 10,760,000.00$ 10,587,967.06226,709.20

85,059.68730,165.03$ 1 1,629,900.97330,929.50$ 1 1,298,97 1.47$ 298.399.82$ 1,175,106.93$ 1 1,241,092.35

2,655,128.535,0 14,100.24370,428.07!J 19,280,749.19$ 53,23 1,348.93

$ 5,988,OOO.OO

$ 1 1,892,546.38

$ 1 ,159,733.6155,776,776.65

9,590,242.9 I

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

$ 309,742.59

$ 329,27 1.7 1$133,499,995.20

See no


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THE DOW CHAND SUBSIDIA

ASSETSCURRENT ASSETS :

Cash ---___-_----__---_-_---------~~~~~~~~~~~~~~~~~United States Government securities-at cost -_------------Notes and accounts receivable:Customers _----__-----__--- ____ ----- - _____________Associated companies __----- ------_-- ___________ - ____Employees -------------------L--------~~~~~~~~~-~~Sundry __------__----------____________________---

Total -____--_-_--___---__________________Less reserves for doubtful receivables _ _ - - - - - _ _ ___ ___ __ -_-Net receivables -_-_-___---_-_---------

Billed and unbilled receivables from United States Government andits agencies (other than for sale of product) ----------__-_Claims for refund of prior years Federal income and excess profitstaxes resulting from carry-back of unused excess profits creditInventories: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 _- -_- ________

INVESTMENTS AND NON-CURRENT RECEIVABLES:Notes receivable and capital stock (at cost) of associated com-panies (at May 31, 1947, approximately $390,000 less thanthe equity in net assets as shown by unaudited balance sheetsof companies) ---_--__---- _________ ---_--- ------___

Non-current notes and accounts receivable (including employeesreceivables, 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-currentreceivables ____------------__

PROPERTY:Plant properties (exclusive of facilities acquired under certificatesof necessity) (at cost) :Land _________--_______-------------------------~Depreciable property (less reserves for depreciation, 1947,$38,734,395.54; 1946, $34,668,856.85) _____------ ---Facilities acquired under certificates of necessity (at reinstatedvalues, less reserves for depreciation since reinstatement,1947, $609,918.82) (see Note A) -- ___________________

Housing properties (exclusive of facilities acquired under cer-tificates of necessity) - at cost (less reserves for depreciation,1947, $284,290.95; 1946, $225,348.11) ___----- ------ -Total property __----- __________

PATENTS--at cost or nominal value (less reserves for amortization,1947, $1 11,l 10.59; 1946, $87,531.81) _-- _______________DEFERRED CHARGES-Unexpired insurance premiums and sundry

and, at May 31, 1947, unamortized discount and expense onfunded debt ___ ____________--______------------- ----TOTAL -----_-_----- ______

CONSOLIDATED BALANCE S

Mav 311947 1946$ 7,569,3 15.44 $ 10,418,121.52$ 3,270,OOO.OO 3 10,760,000.00$ 15,l ;y;. ;;

84:922:37813,761.89$ 16,159,061.80280,58 1.06$ 15.878.480.74$ 443,876.12

$ 18,147,266.914,473,697.129,487,322.82606,25 1.84

$ 32,7 14,538.69$ 59,876,2 10.99

$ 3,565,OOO.OO3 19,954.47 289,260.366 19,600.72 659,189.l 14,957,549.16 4,956,096.9 1

$ 9,462,104.35

$ 1,843,603.3 1130,937,138.22

8,980,324.09

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

$ 10,587,967.06226,709.2085,059.68730,165.03$ 1 1,629,900.97330,929.50$ 1 1,298,97 1.47$ 298,399.82$ 1,175,106.93$ 1 1,241,092.35

2,655,128.535,0 14,100.24370,428.07$ 19,280,749.19

ji 53,23 1,348.93

$ 5,988,OOO.OO

$ 1 1,892,546.38

$ 1,159,733.6155,776,776.65

9,590,242.9 1

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

$ 309,742.59$ 7 12,926.93 $ 329,27 1.7 1$2 13,637,876.36 $133,499,995.20

See n


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1947 AND MAY 31,1946

LIABILITIESCURRENT LIABILITIES:

Accounts payable-Trade and sundry -------- --_--_--___-_Federal income and excess profits taxes _--_- -__-_-___- _____Dividends payable --- ____ - ____-_--_-_-_____-_ --__-_---Accrued liabilities:

Payrolls ______-___---_---_------------------------Taxes-Social security, property, state rncomc and franchise,

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

Total current liabilities --____-___

FUNDED DEBT:Fifteen year 2.35% debentures, due November 1, 1961 _-_-__Promissory notes, due January 1, 1972 _-------_--___--_--

Total funded debt __-__--___--__

RESERVES FOR FIRE AND ACCIDENT LOSSES, DAMAGE CLAIMS,ELECTROLYTIC CELL REPLACEMENTS, AND SUNDRY _ _ - - - -

MINORITY INTERESTS IN SUBSIDIARY COMPANIES _______-__

CAPITAL STOCK:Cumulative preferred stock, Series A (authorized, 600,000 shares

without par value; outstanding, 303,869 shares) -annual divi-dend $4.00 per share _______________ --__--- --__-- ____

Common capital stock (authorized, 2,000,OOO shares without parvalue; outstanding, 1,248,706 shares) ---_--------_--_-_

Total capital stock _--__--_---___

SURPLUS:Capital surplus _-__--__---- _____ --__-----__- _______ -_Earned surplus ---__--_---- ____-__ -__------_--__--__-_

Total surplus _-- _______ --_---_-

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

1947$ 13,338,755.56

8,145,832.881,552,575.00

1946$ 6,382,397.32

3,527,261.451,240,398.50

1,2 12,197.621,889,444.39

453,2 18.588,766.88

May 31

178,082.72$ 26,778,873.63

43,456.76159,902.34$ 19,l 17,308.02

$ 30,000,000.0035,000,000.00

$ 65,000,000.00

$ 1,470,494.52

$ 957,242.83

$ 30,386,900.00 $ 30,386,900.0037,293,908.83 37,293,908.83

$ 67,680,808.83 $ 67,680,808.83

$ 1,030,190.83 $ 1,030,190.8350,720,265.72 43,264,045.62

$ 5 1,750,456.55 $ 44,2,94,236.45

$2 13.637.876.36 $133,499,995.20

6,660,264.061,103,627.59

$ 1,465,068.98

$ 942,572.92


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THE DOW CHEMICAL COMPANYAND SUBSIDIARY COMPANIESSTATEMENT OF CONSOLIDATED INCOME

FOR TkiE YEARS ENDED MAY 31, 1947 AND 1946

SALES AND OTHER REVENUE:Sales----------------------------------Dividends received from an associated companyInterest from associated companies _--------_Other interest income --_-__-___- ____ - ____Fees received in connection with construction

and operation of government owned plantsOther income ______ -___--__--_-__- _____

Total ___________ -__---___-_-

COSTS AND OTHER CHARGES:Cost of sales (excluding provision for deprecia-

tion and amortization) ----_----_---_-_-Provision for depreciation (including provision

for amortization of emergency facilities notreinstated, 1946, $3,837,940.90) __-______

Selling and administrative expenses --_-----_Interest and amortization of discount and ex-

pense on funded debt ----__-- ____ -_--__Premium paid on redemption of debentures __Losses on abandonment of equipment rendered

obsolete by cessation of the war _--____---Other income charges - _-__--_---___-___--Minority interests in income of subsidiary com-

panies------------------------------Total --_--__-___________-___

Year Ended Mav 311947 1946$130,426,838.70

250,OOO.OO177,O 10.24166,809.19

1,154,450.88 1,449,270.226 12,539.38 449,492.06$132,787,648.39 $104,579,729.22

$ 92,485,43 1.59 $ 74,976,685.48

8,595,258.66 11,520,066.779,508,597.33 7,94 1,906.36

757,843.13 107,7 18.621 12,500.OO

337,466.331,689,878.62

488,495.98164,667.g 1 95,694.56

$1 1 1,849,264.95 $ 96,932,946.39

INCOME BEFORE PROVISION FOR FEDERALINCOME AND EXCESS PROFITS TAXES -_--

PROVISION FOR FEDERAL INCOME AND EXCESSPROFITS TAXES (less, in 1946, reduction intaxes of prior years resulting from carry-backof unused excess profits credits, $1,754,592.60)

INCOME FOR THE YEAR ---_-_-___-- ______ $ 12,729,990.60 $ 6,707,215.10

$ 20,938,383.44 $ 7,646,782.83

8,208,392.84 939,567.73

$101,813,839.083 17,792.17549,335.69

See notes to financial statements.


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THE DOW CHEMICAL COMPANYAND SUBSIDIARY COMPANIESSTATEMENT OF CONSOLIDATED SURPLUS

FOR THE YEARS ENDED MAY 31, 1947 AND 1946

CAPITAL SURPLUSBALANCE AT BEGINNING OF THE YEAR _---CREDIT-Increase in equity in the capital stock

and surplus of a partially-owned subsidiarycompany resulting from a restatement and re-allocation of the subsidiarys capital stock ____

BALANCE AT END OF THE YEAR -----_----EARNED SURPLUS

BALANCE AT BEGINNING OF THE YEAR ___INCOME FOR THE YEAR ___-__--_--_--__--Total --_--____--_--------___

CASH DIVIDENDS:Common capital stock --__-____---------__Cumulative preferred capital stock, Series A __

Total --_--____--_--------___BALANCE AT END OF THE YEAR __----__-_

Year Ended May 311947

$ 1,030,190.83

$ 1,030,190.83

$43,264,045.6212,729,990.60$55,994,036.22

$ 4,058,294.501,2 15,476.OO

$ 5,273,770.50$50,720,265.72

1946$ 638,841.93

39 1,348.90$ 1,030,190.83

$4 1,5 18,424.526,707,2 15.10$48,225,639.62

$ 3,746,l 18.001,215,476.00

$ 4,961,594.00$43.264.045.62

NOTES TO FINANCIAL STATEMENTSA-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 September29, 1945 ending the emergency period with respect to such facilities, the unamortized portion thereofwas 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 anamount equivalent to the estimated Federal income tax, at the current rate of 38%, which will resultfrom 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 theiremployees, 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 yearsto 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 finan-cial 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 ChemicalCompany (a Michigan corporation) was merged into The Dow Chemical Company (Delaware), a wholly-owned subsidiary organized for that purpose.to The Dow Chemical Company. The name of the new corporation was thereupon changedSince 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 aggregateamount of $74,922,360, and 303,869 shares of Cumulative Preferred Stock-Series A, without parvalue, carried at an aggregate amount of $30,386,900. The merger effects the transfer of $623,093from capital surplus and $37,005,358 from earned surplus to the common capital stock account. Co-incident with the merger the Company is offering for sale to the public through a group of underwriters400,000 shares of Second Preferred Stock.

After the merger the authorized capital stock consists of 600,000 shares of Cumulat ive Preferred Stockwithout par value, 400,000 shares of Second Preferred Stock without par value, and 12,000,OOO sharesof Common Stock of the par value of $15 each.


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16/17


Executive Office: Midland, MichiganGeneral Sales Office: Midland, Michigan

Boston 16, Massachusetts New York 20, New York20 Providence Street 30 Rockefeller Plaza

Chicago 3, Illinois135 So. LaSalle Street

Philadelphia 2, Pennsylvania1400 S. Penn Square

Cleveland 13, OhioTerminal Tower

San Francisco 4, California310 Sansome Street

Detroit 2, MichiganFisher Building

St. Louis 8, MissouriContinental Building3615 Olive Street

Houston 2, Texas2205 Commerce Building

Seattle 1, Washington1702 Textile Tower

Los Angeles 14, California634 South Spring Street

Washington 5, D. C.915 Shoreham Building

Sales Off ices

Factories Locatedat

Midland, MichiganBay City, Michigan

Freeport, TexasVelasco, Texas

Pittsburg, CaliforniaSeal Beach, California


17/17


Subsidiary CompaniesCliffs Dow Chemical CompanyDow Chemical of Canada, Limited: General Office

WorksDow Magnesium CorporationMidland Ammonia CompanyBrazos Oil and Gas CompanyDowel I Incorporated

Chicago 2SalemWichita 2Shreveport 23Boston 16Mt. PleasantDetroit 2Kansas City 8St. Louis 8New York 20Cleveland 13Oklahoma City 2Philadelphia 2Pittsburgh 19BorgerFort Worth 2Houston 2MidlandWichita FallsCalgary

Dowell Incorporated Sales OfficesIllinoisIllinoisKansasLouisianaMassachusettsMichiganMichiganMissouriMissouriNew YorkOhioOklahomaPennsylvaniaPennsylvaniaTexasTexasTexasTexasTexasAlberta, Canada

Associated Companies

Marquette, MichiganToronto, OntarioSarnia, OntarioMidland, MichiganMidland, MichiganHouston, TexasTulsa, Oklahoma

343 S. Dearborn St.P. 0. Box 2925 19 Union National Bank Bldg.326 First National Bank Bldg.Statler Bldg.P. 0. Box 152932 Fisher Bldg.220 B. M. A. Bldg.3615 Olive Street30 Rockefeller Plaza1609 Terminal Tower Bldg.763 First National Bldg.Girard Trust Bldg.401 Grant Bldg.P. 0. Box 1029635 Fort Worth Club Bldg.21 15 Commerce Bldg.P. 0. Box 18581 106 City National Bank Bldg.907 Lancaster Bldg.

Dow Corning Corporation Midland, MichiganEthyl-Dow Chemical Company Freeport, TexasThe Saran Yarns Company Oden ton, Maryland

Documents

Dow Chemical Company Annual Report - 1947