Dow Chemical Company Annual Report - 1943

8/14/2019 Dow Chemical Company Annual Report - 1943

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THEDow CHEMICALCOMPANYMIDLAND, ICHIGAN

ANNUAL REPORTFOR YEAR ENDEDMAY 31,1943


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The next annual meeting of stockholders will be held on Wednesday, August1 1, 1943. A formal notice of the meeting together with a proxy statement and formof proxy 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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THE DOW CHEMICAL COMPANYMIDLAND, MICHIGAN

E. 0. BARSTOWE. W. BENNETTJ. S. CRIDER

Directo rsM. E. PUTNAMC. J. STROSACKERW. R. VEAZEYL. I. DOANA. B. DOW

W. H. DOW

Off icersChairman of the Board, President and

General Manager - - - - W. H. DOWVice President and Treasurer - - E. W. BENNETTVice President and Secretary - - L. I. DOANVice President - - -Vice President - - - - - E. 0. BARSTOWC. J. STROSACKERVice President - - - - - M. E. PUTNAMAssistant Treasurer - - - - J. S. CRIDER

Assistant Treasurer and Assistant Secretary F. H. BROWNAssistant Secretary - - - A. P. BEUTELAssistant Secretary - - - -L. A. CHICHESTERAssistant Secretary - - - - R. L. CURTISAssistant Secretary - - - C. M. SHIGLEY/b&;z;t Secretary - - D. -J. LANDSBOROUGH. C. PENHALIGEN

Regis t ra rsThe New York Trust Company100 BroadwayNew York City

The National City Bank of ClevelandCleveland, Ohio

Transfe r AgentsGuaranty Trust Company of New York140 BroadwayNew York City

The Cleveland Trust CompanyCleveland, Ohio


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TO THE STOCKHOLDERS OFTHE DOW CHEMICAL COMPANY:

The forty-sixth annual report of your Company is presented herewith. Theconsolidated financial statements for the fiscal year ended May 31, 1943 havebeen audited by Messrs. Haskins & Sells, whose certificate is reproduced as partof this report.FINANCIAL STATEMENTS-

The consolidated balance sheet, statement of consolidated income and state-ment of consolidated earned surplus for the year ended May 31, 1943 are shownherein. The total assets of the Company and its Subsidiaries amounted to$1 19,008,3 14.06, which figure includes current assets of $35,91 1,559.94. Currentliabilities amounted to $3 1,098,048.92.

EARN I NGS-The consolidated net income of the Company and its Subsidiaries amountedto $8,225,301.36. After deducting dividends on the preferred capital stock of

$300,000.00, the consolidated net income was equivalent to $6.35 per share onthe number of shares of common capital stock outstanding at the end of the year.This compares with $7.14 per share for the year ended May 3 1, 1942.DIVIDENDS-

The Company distributed four equal quarterly dividends aggregating $3.00per share, to the common stockholders during the year. Including dividends on thepreferred capital stock of $300,000.00, the dividends disbursed to shareholdersamounted to $4,046,1 18.00.

NET SALES-Net sales for the year ended May 31, 1943 amounted to $105,427,854.78, as

compared to $78,359,997.24 for the year ended May 31, 1942.TAXES-

Total major taxes for the year amounted to $20,453,773.46, which representsan equivalent cost per share on common stock of $16.38. This compares with $9.76per common share for 1942.WAGES AND SALARIES PAID-

The total wages paid amounted to approximately $38,355,000. This com-pares with $22,898,000 paid in the fiscal year ending May 31, 1942. The totalemployment by The Dow Chemical Company is 16,340 employees, and at the presenttime there are 2593 past employees in the military service.GENERAL-

Dow Magnesium Corporation was organized to build and operate certain Mag-nesium plants for the United States Government. Dow Magnesium Corporation is awholly owned subsidiary and is now engaged in operating these plants.


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In the same way, Dow Chemical Company of Canada, Limited, was organizedto be the operating company in Canada for the Canadian Government plant designedby The Dow Chemical Company for the Canadian Government. This also is awholly owned subsidiary which undoubtedly will have more important activities astime goes on.

Dow Corning Corporation was organized for the purpose of producing someimportant strategic materials for Government account. This Company is jointlyowned by The Dow Chemical Company and Corning Glass Works.

One other item of general interest to the stockholders of The Dow Chemi-cal Company is the record made by this Company in all of our Government contracts.In the case of the various contracts with the Government to build defense plants, wehave made several records of completing construction ahead of schedule. Also, wehave been able to develop greater capacity than the plants were originally designedfor and our all-round record has been, without doubt, most creditable. The stock-holders are entitled to feel great pride in the accomplishments of your Company forall wartime activity. In recognition of these outstanding accomplishments, sixArmy-Navy E Awards have been made to the major producing plants.

The accompanying financial statements record the financial condition ofthe Company at the close of its taxable year ending May 31, 1943. At this timerenegotiation of Government contracts and subcontracts has begun but has notreached a point permitting determination of the effect, if any. It is only proper, how-ever, to advise of these proceedings and the possibility of adjustments.

WILLARD H. DOW,President

Midland, MichiganJuly 22, 1943


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THE DOW CH( I ncoAND SUBSIDIA

CONSOLIDATED BALA NCE ASSETSMay 31/

CURRENT ASSETS: 1943$ 6,573,225.15

1942$ 6,29 1,790.83ash -_----------------^-___^________________------

United States Treasury tax notes, Series C ____--____________ $ 2,325,OOO.OONotes and accounts receivable:

Customers ----------------------------------------Associated companies ________________________________Employees,,_,,__,,,__,,,,_,,,,,,,,,___,____,_____-Sundry -------------------------------------------

Total ------------------------------------Less reserves for doubtful receivables __--_---____--______

$ 10,337,8 13.70168,286.6 1

32,640.26262,924.16

$ JO,80 1,664.73249,570.5 1

Net receivables _____-_________________Billed and unbilled accounts receivable from United States Govern-ment and its agencies (other than for the sale of product) -_-Inventories:

$ 10,552,094.22 $ 9,462,827.87

$ 1,744,306.40 $ 1,263,792.85

$ 9,420,886.92107,152.55

32,6 14.47142,767.41

$ 9,703,421.35240,593.48

Finished goods and work in process (at lower of cost or market)Materials and supplies (at cost-approximately market) ____

Total ------------------------------------Total current assets --_---_______

$ 7,925,689.726,79 1,244.45

$ 5,486,230.366,708,152.47

$ 12,194,382.83$ 29,2 12,794.38

INVESTMENTS AND NON-CURRENT RECEIVABLES:Notes receivable and capital stock (at cost) of associated com-panies (equity as shown by unaudited balance sheets of com-panies, May 31, 1943, $3,392,540.64; May 3 1, 1942,$3,458,524.24) ___------___________________________Post-war refund of excess profits tax - _____________________Non-current notes and accounts receivable (including employees

receivables, May 3 1, 1943, $64,336.75; May 31, 1942,$73,364.16) _______________-____________________^_Sundry securities (less reserves, May 3 1, 1943, $108,413.93;May 31, 1942, $121,212.88) ---------------- ---------

Total investments and non-currentreceivables __________________PROPERTY (including emergency facilities for national defense,

completed and in progress, with a gross book value (cost) subjectto amortization, May 31,1942, $24,409,906.33 1 : 1943, $38,890,695.21; May 3 1,Plant properties and equipment---at cost (less reserves for depre-

ciation and amortization, 1943, $35,334,98 1.48; 1942,$27,248,904.73) ___________________----------------Housing properties-t cost (less reserves for depreciation andamortization, 1943, $288,347.06; 1942, $160,730.78) --_-

$ 14,716,934.17$ 35,91 1,559.94

$ 2,243,OOO.OO1,645,8 19.84

$ 2,238,OOO.OO

876,282.99 50 1,936.19465,547.0529,340.05

$ 5,294,442.88 $ 3,205,483.24

$ 75,04 1,878.062,200,6 17.47

$ 68,356,269.771,469,527.95

Total property ----------------- $ 77,242,495.53 $ 69,825,797.72PATENTS--At cost or nominal value (less reserves for amortization,

1943, $56,943.28; 1942, $50,10 1.18 1 -------------------DEFERRED CHARGES-Unexpired insurance premiums, unamortized

debenture discount and expense, and sundry ________________

$ 61,831.12$ 497,984.59

$ 65,673.22$ 784,482.14

TOTAL __- _____ - _a____ $1 19,008,3 14.06 $103,094,230.70

NOTE: s Operations of the Corporation and its subprofits control legislation giving the Gosubcontracts with resulting reduction been begun but have not reached a pmay have upon these financial stateme


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1

31, 1943 AND M AY 31, 1942 LIABILITIES1943

May 311942

CURRENT LIABILITIES:Notes payable--Banks ---------------------------------Accounts payable-Trade and sundry ------------,---------Federal income and excess profits taxes ___________ - _______Serial debentures maturing within one year -----------------Accrued liabilities:

Payrol Is ------------------------------------------Taxes--social security, property, Federal capital stock, state

income and franchise, and sundry --------------------Interest ------------------------------------------Rents --------------------------------------------Sundry --------------------__________3_________---

Total current liabilities _- _________FUNDED DEBT:

Ten year 21/d % debentures, due September 1, 1950 __________Serial debentures maturing in the amount of $750,000.00 onSeptember 1, 1944 and annually thereafter until September 1,

1950 (debentures maturing within one year included in cur-rent liabilities) -------------------------------------Total funded debt -------__---__

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

MINORITY INTERESTS IN SUBSIDIARIES -_-_-___c----__-___ $ 1,202,278.06 $ 1,073,655.1 1CAP ITAL STOCK:

Preferred capital stock- 5% cumulative (authorized and out-standing, 60,000 shares of $100.00 par value each) m----s-Common capital stock (authorized, 2,000,OOO shares without par

value; outstanding, 1,248,706 shares) --w----------------Total capital stock ______________

$ 6,000,000.00 $ 6,000,000.0037,293,908.83 37,293;908.83

$ 43,293,908.83 $ 43,293,908.83SURPLUS:

Capital surplus ---------------------------------------Earned surplus - ____----- --- -_____-__ -- _____ - _________

Total surplus ------__---_______

$ 36,539.Ol28,99 1,490.17

$ 29,028,029.18

$ 36,539.Ol24,8 12,306.8 1

$ 24,848,845.82

TOTAL _ - _ - _ - - _ _ - - - _ _ _

$ 1,900,000.00 $ 1 ,ooo,ooo.oo5,588,505.10 5,365,30 1.30

20,078,138.67 10,336,621.857 50,000.00 750,000.00

1,123,227.3 1 76 1,562.981,3 16,505.23 1,042,074.29

7 1,229.25 95,47 1.261 16,657.55 167,032.86153,785.8 1 124,936.09

$ 3 1,098,048.92 $ 19,643,000.63

$ 7,500,000.00 $ 7,500,000.00

5,250,OOO.OO 6,000,000.00$ 12,750,OOO.OO $ 13,500,000.00

$ 1,636,049.07 $ 734,820.3 1

$1 19,008,3 14.06---- $103,094,230.70

which are subject to the provisions of warunder certain conditions to renegotiate contracts andrealized. Renegotiation proceedings haveof the effect, if any, that such proceedings


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THE -DOW CHEMICAL COMPANYAND SUBSIDIARY COMPANIESSTATEMENT OF CONSOLIDATED INCOME

FOR THE YEARS ENDED MAY 31, 1943 AND 1942/Year Ended May 31

1943 1942NET SALES __-_--------------------------LESS :

$105,427,854.78 $78,359,997.24

Cost of sales ______ -- ____ -_-- _______----Selling and administrative expenses ----------

Total --------------- ______--

$ 77,19 1,286.26 $56,338,933.184,472,485.30 3,929,984.30

$ 81,663,771.56 $60,268,9 17.48PROFIT FROM SALES --__------- ____------- $ 23,764,083.22 $18,09 1,079.76OTHER INCOME:

Dividends received from associated company -_-Interest from associated company ------_----Fees received for construction and operation ofgovernment owned plants _----_- ___--_--Miscellaneous _--_---------_------------

Total --------___------------

$ 800,OOO.OO $ 1,350,000.00155,610.OO 155,610.971,877,804.59 268,375.06

504,275.64 252,126.83

GROSS INCOME ------____---_------------$ 3,337,690.23$ 27,10 1,773.45

$ 2,026,l 12.86$20,1 17,192.62

INCOME CHARGES:Interest and amortization of discount andexpense on debentures ------------------Miscellaneous ----__-- ____ -_-___--__-_---

$ 283,790.88 $ 289,964.16190,625.49 284,980.47Total __- ______ ------__-__--_NET INCOME BEFORE PROVIDING FOR FEDERALINCOME AND EXCESS PROFITS TAXES ---_--

$ 474,416.37 $ 574,944.63$ 26,627,357.08 $19,542,247.99

PROVISION FOR FEDERAL INCOME AND EXCESSPROFITS TAXES:Normal tax and surtax ----____-----------Excess profits tax (less, in 1943, post-warrefund, $1,645,819.84) --__------_------

Total _________ --------------

$ 3,542,153.66 $ 3,948,067.3514,706,279.1 1 6,13 1,058.48

$ 18,248,432.77 $10,079,125.83NET INCOME BEFORE DEDUCTING MINORITYINTERESTS IN INCOME OF SUBSIDIARIES _--MINORITY INTERESTS IN NET INCOME OF

SUBSIDIARIES ------ ________ - __________NET INCOME FOR THE YEAR ______---------

$ 8,378,924.3 1 $ 9,463,122.16

153,622.95 24 1,636.40$ 8,225,301.36 $ 9,221,485.76

NOTE : Provisions for depreciation and amortization over a period of sixty months of emer-gency defense facilties were as follows:Year Ended May 31

1943 1942Provision for depreciat ion ___________ $3,722,973.48 $3,628,103.12Provision for amortization of emergency

defense facilities -- ______________ 5,387,679.25 3,075,568.39


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THE DOW CHEMICAL COMPANYAND SUBSIDIARY COMPANIES

STATEMENT OF CONSOLIDATED EARNED SURPLUSFOR THE YEARS ENDED MAY 31,194 3 and 1942

BALANCE AT BEGINNING OF THE YEAR _____CREDITS:Net income for the year -_--_--_------_-_-

Adjustments to net income of prior years (lessprovision for additional Federal income andexcess profits taxes thereon, $238,787.81 1 --Total ____ ---------_----_-___

CHARGE-Cash dividends:Common capital stock ----_------_---_--_-Preferred capital stock --___-__--___--___-

Total _____ -__------__------_BALANCE AT END OF THE YEAR -_-_---_---_

Year Ended May 311943 1942

$24,812,306.818,225,301.36

$33,037,608.17

$ 3,746,1 18.00300,000.00

$ 4,046,1 18.00$28,99 1,490.17

$18,933,844.359,22 1,485.76

617,955.45$28,773,285.56

$ 3,660,978.75300,000.00

$ 3,960,978.75$24,8 12,306.8 1________~


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HASKINS 8c SELLSCERTIFIED PUBllC ACCOUNTANTS

THE NATIONAL BANK BUILDINGRESIDENT ?ARTNERS

HAROLD W. SCOTT, C.C.A. DETROITCYRIL N. BULLOCK . C.?.A.

ACCOUNTANTS CERTIFICATE

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

ical Company and its subsidiary companies OS of May 31, 1943 and therelated statements of consolidated income and earned surplus for the yearended that date, have reviewed the accounting procedures of the companies,and have examined their accounting records and other evidence in supportof such financial statements, Our examination was made in accordancewith generally accepted auditing standards applicable in the circumstancesand included all auditing procedures we considered necessary, which proced-ures were applied by tests to the extent we deemed appropriate in view ofthe systems 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 earned surplus fairly present the financialcondition of the companies at May 3 1, 1943 and the results of their opera-tions for the year ended that date, in conformity with generally acceptedaccounting principles and practices applied on a basis consistent with thatof the preceding year.

HASKINS C SELLSJuly 15, 1943.


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Dow Chemical Company Annual Report - 1943

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