dow chemical company annual report - 1948

8/14/2019 Dow Chemical Company Annual Report - 1948

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-.----.-- _I__- - _ ~- -. .-----I-_--_--_.- 11

/i ~MPLOYIMIENT-OWNERSHIP /jiI -,-~~~-- -_--. --.-_--.-- 1 /

The spread in ownership of The DowChemical Company has maintained a healthypace in step with the growth of the business.aver the past ten years we have averaged ap-proximately one owner for each employee,greatest differences being in 1943 when therewere three employees for every two stockhold-ers and at the present, there now being aboutthree stockholders for every two employees.

The considerable change in ownership be-tween 1947 and 1948 reflects two impor-tant moves made during the past fiscal year.First, the issue of the new Second Preferredstock, which added some 4,000 new mem-bers to our Preferred stockholder list. Second,

EMPLOYEES

-MIDLAND DIVISION

6.000

42 / 43 46 47

the four-for-one split of Common stockwhich served to bring the market price with-in the range of many more individual invest-ors and thus spread Dow Common stockamong 25 per cent more people.

In reviewing the employment figures, thegrowth in importance of Dows various divi-sions and subsidiaries from year to year is per-haps more interesting than the increase in to-tal personnel. The growth chart shows thatwhereas ten years ago the Midland divisionaccounted for three-fourths of all Dow em-ployees, today it accounts for but little morethan half of the total of 14,564 men andwomen.

STOCKHOLDERS

16.000

6,000

40 41 42 44 45 46


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ACCdUNTANTS CERTIFICATE

HASKINS & SELLSCERTIFIED PUBLIC ACCOUNTANTS

THE NATIONAL BANK BUILDING

DETROIT

The Dow Chemical Company:

We have examined the consolidated balance sheet of The Dow Chemical Com-pany and its subsidiary companies as of May 3 1, 1948 and the related statementsof consolidated income and surplus for the year ended that date. Our examinationwas made in accordance with generally accepted auditing standards and includedsuch tests of the accounting records and such other auditing procedures as we consid-ered necessary in the circumstances.

In our opinion, the accompanying consolidated balance sheet and statements ofconsolidated income and surplus present fairly the financial condition of the com-panies at May 3 1, 1948 and the results of their operations for the year ended thatdate, in conformity with generally accepted accounting principles applied on a basisconsistent with that of the preceding year.

H&skins & Sells

July 20, 1948


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THE DOW CHEMICAL CI CONSOLIDATE

MAY 31, 19

ASSETSMay 31

1947urrent Assets:Cash ---------_----_-------------------------------United States Government securities-at cost _ - - - - - - - - -_ _ _ _ - _Notes and accounts receivable :

Customers-------____-___--------------------------A,ssociated companies --------_------___------------Employees ----------___--_-_--____________________Sundry ---_------________--____________________---

1948~-$ 10,378,446$ 12,403,572

$ 73692 15-$ 3,270,OOO$ 22,;4670g

105176 1732.316

$ 15,241,37 18 1,24384,9221.195.401

Total -_-------------____---------------- $ 16,602,937280,58 1

$ 16,322,356

$ 24,046,1 1 1447,267

$ 23,598,844Less reserves for doubtful receivables - - - - - - _ - _ ----- ----_-

Net receivables _-_____------------------Inventories:

Finished goods and work in process (at lower of cost or market)Materials and supplies (at cost-approximately market) :Raw materials -----------_--_---_________________Supplies _------------_--__-_____________________

Materia ls and supplies in transit ---- -- ________________

$ 2 1,797,697 $ 18,147,2674,473,6979,487,323606,252

$ 32,7 14,539_$ 59,876,21 1

4,125,8409,882,504967,545$ 36,773,585$ 83,154,448

Total -------------__--_--------------Total current assets _-------_-----_-__-

Investments and Non-Current Receivabks:Notes receivable and capital stock (at cost) of associated com-

panies (at May 3 1, 1948, approximately $1 ,OOO,OOO less thanthe equity in net assets as shown by unaudited balance sheetsof companies) ---__-_- ____ ---------_-_--- ____ - _____Non-current notes and accounts receivable (including employees

receivables, 1948, $45,092; 1947, $43,680) _ _ _ __ ___ __ _ __

$ 2,965,OOO $ 3,565,OOO287,026 3 19,954666,804 619,601

4,773,723 4,957,549$ 8,692,553 $ 9,462,104

Sundry securities (at cost) _____ -_---_- _________________Claims for refund of prior years Federal taxes on income __ __ __-

Total investments and non-current receivablesProperty:

Plant properties (exclusive of facilities acquired under certificatesof necessity) (at cost) :Land ___-___________--__-------------------------Depreciable property (less reserves for depreciat ion, 1948,$49,405,273; 1947, $38,734,396) ______________-___

Facilities acquired under certificates of necessity (at reinstatedvalues, less reserves for depreciat ion since reinstatement, 1948,$1,219,838; 1947, $609,919) _____ - _____ -_--_-------Housing properties (exclusive of facilities acquired under certifi-cates of necessity) -at cost (less reserves for depreciation, 1948,$345,883; 1947, $284,291) ___________________ -_----

Total property --------__----_-----___Patents -at cost or nominal value (less resewes for amortization,

1948, $1 13,374; 1947, $1 11,l 11) ________ -___--- -----

$ 2,379,229166,045,046

$ 1,843,603130,937,138

8,370,405 8,980,324

1,5 19,405$143.280.470

1,360,673$178,155,353

$ 284,062 $ 306,164Deferred Charges-Unexpired insurance premiums, unamortized dis-

count and expense on funded debt, and sundry -- __-------_ -Total --------_----- _______ -__

$ 7 12,9271,186,965$271,473,381 $213,637,876

See note


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SUBSIDIARY COMPANIES--- - - ~~ .~

LA NCE SHEET ~31, 1947 .

LIABILITIESMay 31

Current Liabilities:Accounts payable-Trade and sundry - - _____ _-___ _ ___ ___ __Federal and Canadian income taxes ---_---- --__----____---Dividends payable __-- ____ --__-----__---___-_-________lnstalments on long-term indebtedness payable within one year _-Accrued liabilities:Payrolls ------------------------------------------

Taxes-Social security, property, state income and franchiseand sundry -------------- --------------------- --ilnterest_____-____--_--__-__-----------------------Sundry __----_-----_----_______________________---

Total current liabilities --_--_-___---__-_--

Long-Term Indebtedness:Fifteen year 2.35% debentures, due November 1, 196 1 -- --- - -Promissory notes, due January 1, 1972 - _______ __- ______ _--Mortgage note, due January 1, 1958 (instalments due within oneyear included in current liabilities) -----___----------_-Lease purchase contract, due March 1, 1952 (instalments duewithin one year included in current liabilities) __----__-----

Total long-term indebtedness _ _ _ _ _ - _ _ _ _ - - - -

Reserves for Fire and Accident Losses, Damage Claims, ElectrolyticCell Replacements (1947), and Sundry _________ --__----

Minority Interests in Subsidiary Companies _ _ _ _ __ _ _ _ - _ _ _- _ - - - $ 984,7 19Capitol Stock:

Cumulat ive Preferred Stock, Series A (authorized, 600,000 shareswithout par value; outstanding, 303,869 shares) --cumulativeannual dividend $4 per share ________ --- ____ ---_---___

Second Preferred Stock (convertible) (authorized and outstanding,400,000 shares without par value) -cumulative annual divi-dend $3.25 per share __________-______-____ - _____ ---

Common Stock ( 1948, authorized, 12,000,OOO shares of $15 parvalue each; reserved for conversion of Second Preferred Stock,842,106 shares; outstanding, 4,994,824 shares) -See Note ATotal capital stock _____ --___-~--~_~-~~--

Surplus:Capital surplus ________________ -__---__------ ____ ----- $ 407,098 $ 1,030,191Earned surplus __-- _______ - ____ -----__------__--__---

Total surplus ______ - ______ - --- _____ ----27,196,187 50,720.265

$ 27,603,285 $ 51 v750.456

Total _--__-_----___-----_-------- $271.473,381 13.637,8762

1948$ 11x583

1 1,273,56 11,877,575

285,000

1947$ 13,338,756

8,145,8331,552,575

1,482,978 1,2 12,1982,458,12 1 1,889,444

483,528 453,2 19196,804 186,849

$ 29,064,150 $ 26,778,874

$ 30,000,00035,000,000

2,056,250150,000

$ 67,206,250

$ 1,305,717

$ 30,386,903 $ 30,386,900

40,000,000

74,922,360 37,293,909$145,309,260 $ 67,680,809

$ 30,000,00035,000,000

$ 65,000,OOO

$ 1,470,494

$ 957,243 -


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THE DOW CHEMICAL COMPANY.STATEMENT OF

CONSOLIDATED INCOMEFOR THE YEARS ENDED MAY 31, 1948 AND 1947

Year Ended May 311948 1947

Sales and Other Revenue:Sales___-------------------------------Dividends received from an associated companyInterest from associated companies --____----Other interest income __---_-_-_- __________Fees received in connection with operation of

government owned plants ___--------____Reversal of reserve for electrolytic cell replace-

ments no longer required ___-____------_-Other income -- _____ ----------__--_--_-_Total __------- ______________

Costs and Other Charges:Cost of sales (excluding provision for deprecia-

tion and contributions under pension andprofit-sharing plan) __---_--_---__- _____

Provision for depreciation --_-- ________ - ____Contributions under pension and profit-sharing

plan ------_-------------------------Selling and administrative expenses __--__-__Interest and amortization of discount and ex-

pense on funded debt __________ - ____ --__Provision of reserve for product damage claims -Other income charges --__-_------_-----__Minority interests in income of subsidiary com-

panies --------------------__________Total --------------_--_-____

$170,696,037 $130,426,839500,000 250,000

75,128 177,010322,798 166,809406,022 1,154,45 1

1,170,7781,182,427$174,353,190

$1 10,986,394 $ 92,485,43214,178,366 8,595,259

1,810,21810,686,476

1,672,7591 ooo,ooo

374,493132,474

$140,841,180

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

9,508,597757,843337,466164,668

$111,849,265

Income before Provision for Federal and CanadianIncome Taxes ------- __________ -------__

Provision for Federal and Canadian Income Taxes 12,445,364 8,208,393

$ 33,512,OlO $ 20,938,383

Income for the Year --------------_-________ $ 2 1,066,646 $ 12,729,990

See notes to financial statements.


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SUBSIDIARY COJvlPANIESSTATEMENT

CONSOLIDATEDOF

SURPLUSFOR THE YEARS ENDED MAY 31, 1948 AND 1947

CAPITAL SURPLUSBalance at Beginning of the Year ____________Credit-Premium received on sale of Second Pre-

ferred Stock - ____ ---_---___-- ____ ---___Total _-__----_----------____

Charges:

Year Ended May 311948 1947

$ 1,030,191 $ 1,030,191200,000

!$ 1,230,191 $ 1,030,191Transferred to Common Stock account in connec-tion with merger (See Note A) __-----_---Expenses in connection with merger and sale ofSecond Preferred Stock (portion equivalent topremium received on sale) _________ --_--

Total -___----_-_-__---______Balance at End of the Year _--___---__---_--_EARNED SURPLUS

$ 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 :

$50,720,265 $43,264,0461,066,646 12,729,990$7 1,786,9 11 $55,994,036

CommonStock------------------------Cumulative Preferred Stock-Series A _--___ $ 4,994,824Second Preferred Stock _______ -_-----_-- 1,215,476Transferred to Common Stock account in connec- 1,245,820tion with merger (See Note A) -------_--_Expenses in connection with merger and sale of

37,005,358Second Preferred Stock (portion not chargedto capital surplus) __________ --___---__- 129,246

Total --__-__-_----_-- _______ $44,590,724BalanceatEndoftheYear ________ --__--__-__ !$27,196,187

NOTES TO FINANCIAL STATEMENTS

$ 4,058,2951,2 15,476

$ 5,273,77 1$50,720,265

A-On July 2;, 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), awholly-owned subsidiary organized for that purpose.changed to The Dow Chemical Company The name of the new corporation was thereuponand the Michigan corporation dissolved. In connectionwith the merger and the attendant conversion of each share of common capital stock without parvalue into four shares of Common Stock of a par value of $15 a share, $623,093 of capital surplusand $37,005,358 of earned surplus was transferred to the common stock account.

B-The Companys Federal income and excess profits tax returns have been examined by the Treasury Depart-ment through the year ended May 3 1, 1945. An examination of the returns for the years ended May31, 1946 and 1947 is now in progress and, in connection with this examination, an agent of the Treas-ury 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 depreci-ation rates used by the Company. It is possible that there may be additional assessments of Federalincome tax resulting from revision of depreciation rates and from other adjustments arising from theexamination. The Company may protest the findings of the agent.determine the amounts of resulting assessments, if any, It is not possible at this time toand no provision has been made therefor inthese financial statements.


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RA-NDOM COMMENT

Source of the sales dollar, from the variousgroups of products, was approximately thesame as last year except that plastics account-ed for a slightly larger, and magnesium for aslightly smaller, proportion. The break-down in revenue was about as follows: In-dustrial Chemicals 54%) Plastics 20%) Ag-ricultural Chemicals 10 $?j, Pharmaceuticals10 % , Magnesium 696.

xxxOn December 3 I,1947 we purchased from

WAA the Ludington, Michigan, facilitieswhich we had built and operated during thewar for production of magnesium cell feed,and had been operating under lease sinceshortly after the end of hostilities. This unitis now producing lime and brine products.

xxxBrazos Oil and Gas Company, a wholly-

owned subsidiary organized during the 1946-47 fiscal year has during the past fiscal yearcarried on extensive exploratory and develop-ment operations to insure a long range gassupply for our Texas operations.

Products springing from styrene are stead-ily becoming more numerous. During thepast year we successfully introduced a newproduct-Styrene Latex 5 12-to the paper

industry. The paper used in this report, ex-cept for cover, is Latex 5 12 coated.

Operations of our Canadian subsidiary areexpanding rapidly. The first Dow-ownedplant there (polystyrene) was placed in pro-duction in February, 1947. During the1947-48 fiscal year facilities were completedfor manufacture of glycols and their by-prod-ucts, as well as shops and offices, and a size-able chlorine and caustic soda plant is nowunder construction.

xxxSince the war Dow Corning Corporation

has introduced a number of new siliconeproducts that have found sizeable industrialmarkets. At the same time a consumerproduct, silicone-treated tissues for cleaningeye glasses, has secured national distributionand acceptance under the trade name SightSavers. Silastic products for household usestrengthen Dow Cornings entry into the fieldof consumer products.

After a substantial curtailment immediate-ly following the war, Ethyl-Dows bromineand ethylene dibromide facilities at Freeportwere again operating near capacity during the1947-48 year.

,


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DIRECTORSE. 0. BarstowE. W. BennettA. P. BeutelC. A. CampbellJ. S. Crider

R. L. Curtis*L. I. DoanA. B. DowW. H. Dow

C. A. Gerstacker*N. D. Griswold*M. E. PutnamC. J. StrosackerW. R. Veazey

OFFICERSPresident - - - - - - -Vice President and Treasurer - - -Vice President and Secretary - - -Vice President - - - - - -Vice President - - - - - -Vice President - - - - - -Assistant Treasurer - - - - -Assistant Treasurer and Assistant SecretaryAssistant Secretary - - - - -Assistant Secretary - - - - -Assistant Secretary - - - - -Auditor - - - - - - _ _

- - . . - W. H. Dow. - - - E. W. Bennett- - - - - L. I. Doan- . . - E. 0. Barstow- . - - M. E. Putnam- - . - C. J. Strosacker- - . . - J. S. Crider- . _ - - F. H. Brown- - - . - A. P. Beutel_ - - - L. A. Chichester- - . _ - R. L. Curtis- _ - - Chas. Penhaligen

FINANCE COMMITTEEE. W. Bennett, Chairman C. A. CampbellF. H. Brown C. A. Gerstacker

H. S. KendallChas. Penhaligen

*By action of the Board of Directors June 1, 1948, membership of the Board wasincreased from nine to fourteen and five new members appointed to fill the chairsthus created.

Transfer Agents Stock RegistrarsGuaranty Trust Company of New YorkThe National City Bank of New YorkThe Cleveland Trust Company

CommonPreferred

Common andPreferred

The New York Trust CompanyGuaranty Trust Company of N. Y.The National City Bank of Cleveland


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DOW-ACROSS THE COUNTRY

EXECUTIVE and GENERAL SALES OFFICES

Boston 16, Massachusetts20 Providence Street

Chicago 3, Illinois135 S. LaSalle Street

Cleveland 13, OhioTerminal Tower

Detroit 2, MichiganFisher Building

MIDLAND, MICHIGAN

SALES OFFICESHouston 2, Texas

2205 Commerce BuildingLos Angeles 14, California

634 S. Spring StreetNew York 20, New York

30 Rockefeller PlazaPhiladelphia 2, Pennsylvania

1400 South Penn Square

MANUFACTURING OPERATIONSFreeport, TexasVelasco, Texas

Bay City, MichiganLudington, MichiganMidland, Michigan

SUBSIDIARY COMPANIESCliffs Dow Chemical Company - - - - - -Dow Chemical of Canada, Limited: General Office - - -

Plant - - - -Dow Magnesium Corporation - - - - - - -Midland Ammonia Company - - - - - - -Brazes Oil and Gas Company - - - - - - -Dowel1 Incorporated - - - - - - - -

ASSOCIATED COMPANIES

St. Louis 8, MissouriContinental Building3615 Olive Street

San Francisco 4, California310 Sansome Street

Seattle 1, Washington1702 Textile TowerWashington 5, D. C.

915 Shoreham Building

Pittsburg, CaliforniaSeal Beach, California

- Marquette, Michigan- Toronto, Ontario- Sarnia, OntarioMidland, MichiganMidland, Michigan- Houston, Texas- Tulsa, Oklahoma

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

dow chemical company annual report - 1948

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