THANNUAL REPORT

50 FOR THE YEAR ENDED MAY 31,1947

THE DOW CHEMICAL COMPANY

MIDLAND, MICHIGAN
 The next annual meeting of stockholders will be held on Wednesday, August
27, 1947, at two o’clock in the afternoon (Eastern Standard Time) at the Company’s
office in Midland, Michigan.

A formal notice of the meeting, together with a proxy statement and form of
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.
TO THE STOCKHOLDERS OF
THE DOW CHEMICAL COMPANY:

We present herewith the 50th annual report of the Company operations. This
anniversary has more significance than just being the fiftieth year of the operation
of The Dow Chemical Company, a Michigan corporation, for this report is the first
one to be presented by The Dow Chemical Company, a Delaware corporation. This
change was recently approved by action of the stockholders at a special meeting held
on July 22, 1947. “The Dow Chemical Company,” now a Delaware corporation, is
the corporation in which you own stock. It is the successor to all the assets and
liabilities 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 the
year on the preferred stock. The comparable earnings for the fiscal year ending
May 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-war
charge-offs during the 1946 fiscal year. Sales this year reached a new all-time high
of $130,426,839. This is 28% more than the sales of $101,813,839 attained last
year, 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, the
increase 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 average
ownership of 151 shares per common stock owner and 70 shares for each preferred
stock 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 operating
the styrene plant of the Polymer Corporation at Sarnia, Ontario and 306 employees
in the government-owned styrene plant in Los Angeles. During the past year we
have had two interruptions in operation caused by strikes, one in Texas and one
in the government styrene plant in Los Angeles. The Texas strike lasted 24 days
and the Los Angeles strike 25 days. It should be noted these were the first major
strikes in the history of the Company resulting in lost production. As of a year
ago we were operating four government-owned plants, and at the present time we
are operating two. Two plants. at Velasco, Texas have been purchased by the
Company, while the plant at Los Angeles, California is still operated for the United
States 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 year
seems to bring about a more understanding relationship. Greater appreciation is
becoming apparent that the payment of high wages necessitates high productive effort
on the part of everyone.

FINANCING-

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

i
approximately one half was for the purchase of certain facilities we had constructed
for the government at Velasco near Freeport, Texas. This amount of expenditures
made 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 company
upon an unsecured note at an interest rate of 2.70% a year and by a sale which
has 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 up
to $25,000,000 at an interest rate of 1.5 % a year, to become due not later than
May 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 first
place, the adjustment to peacetime operations, which has now been just about
completed, was expensive; second, the sale of enormous volumes of government-owned
secondary scrap metal has appreciably reduced the demand for virgin metal; and
third, the completion of certain contracts for the fabrication of airplane wings and
our retirement from this type of fabrication is a difficult, slow process. Referring
again to secondary scrap metal, it is a known fact that every metal industry operates
most successfully when a good volume of secondary metal is available, and instead of
limiting the further growth of magnesium, we feel this is the proper stimulation to
a prosperous industry, Operations in our foundry, extrusion plant, rolling mill, die
casting and alloy plants will continue and, we believe, in expanding volume and with
growing uses. Magnesium is the modern metal and has established its position
in the world of metals. The Dow Chemical Company has fulfilled its obligation in
establishing magnesium as a commercial metal; undoubtedly others will carry its
uses 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 purpose
of producing gas from a gas field recently purchased in Texas. This field, located
in Matagorda County and known as Citrus Grove Field, can be readily joined to
existing Company-owned pipe lines and should supply up to 20,000,OOO cubic feet
of 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 necessarily
creates 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 and
repetition here hardly seems necessary. Fortunately, we can again report that all
subsidiaries and associated companies, with the exception of Brazos Oil and Gas
Company 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 sane
conclusion on almost every problem. For example, newspapers, politicians, almost
everyone talked in terms of a nationwide pattern for wage increases. Fundamentally
and rationally, there cannot be any national pattern for any wage scale. A national
pattern implies that every industry is on the same basis to start with and does not
give recognition to the fact that many factories in various parts of the country have
always 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 conditions
are the second, and both are coupled up with the tangible and intangible benefits
the Company provides. All these add up to a standard of living our Company
represents 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 period
was a distinct set-back to our progress. During that period it was possible to
proceed with only those items of basic necessity for the emergency, and necessarily
many laboratory projects were shelved. This past year many new construction items
were expedited, but while many of these are nearing completion, the facts are that
many other developments have come to a near stopping point because of excessive
costs. 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 proper
return on the investment will we proceed with further projects. It is a grave
situation for a country when progressive development is delayed for lack of national
desire to give an honest day’s work for an honest day’s pay.

During the past ten years we have expanded tremendously. Our sales
volume has expanded from $25,000,000 in round figures in 1937 to $130,000,000
for 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 plants
located in Midland, in Freeport, Texas and in Pittsburg, California and a fourth now
building in Sarnia, Ontario, Canada, give a distribution to manufacturing operations
most ideal for national as well as international trade.

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

WILLARD H. DOW
President
Midland, Michigan
August 4, 1947
 THE DOW CHEMICAL COMPANY

Directors

E. 0. BARSTOW L. I. DOAN M. E. PUTNAM

E. W. BENNETT A. B. DOW C. J. STROSACKER
J. S. CRIDER W. H. DOW W. R. VEAZEY

Officers

President - - - - - - W. H. DOW

Vice President and Treasurer - - E. W. BENNETT

Vice President and Secretary - - - L. I. DOAN

Vice President - - - - E. 0. BARSTOW

Vice President - - - - C. J. STROSACKER

Vice President - - - - M. E. PUTNAM

Assistant Treasurer - - - - J. S. CRIDER

Assistant Treasurer and Assistant Secretary F. H. BROWN

Assistant Secretary A. P. BEUTEL

Assistant Secretary L. A. CHICHESTER

Assistant Secretary R. L. CURTIS

Assistant Secretary D. J. LANDSBOROUGH

Auditor - C. PENHALIGEN

Transfer Agents Stock Registrars

Guaranty Trust Company of New York Common The New York Trust Company
The National City Bank of New York Preferred Guaranty Trust Company of New York
The Cleveland Trust Company Common and Preferred The National City Bank of Cleveland
 HASKINS & SELLS THE NATIONAL SANK BUILDING

CERTIFIED PUBLIC ACCOUNTANTS 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 the
related statements of consolidated income and surplus for the year ended
that date, have reviewed the accounting procedures of the companies, and
have examined their accounting records and other evidence in support of
such financial statements. Our examination was made in accordance with
generally accepted auditing standards applicable in the circumstances and
included all auditing procedures we considered necessary, which procedures
were applied by tests to the extent we deemed appropriate in view of the
systems of internal control; it was not practicable to confirm receivables
from United States Government departments and agencies but we have
satisfied 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 operations
for the year ended that date, in conformity with generally accepted account-
ing principles and practices applied on a basis consistent with that of the
preceding year.

HASKINS G SELLS

July 25, 1947.

 THE DOW CHEM
AND SUBSIDIA

CONSOLIDATED BALANCE SHEET,

ASSETS

May 31
CURRENT ASSETS: 1947 1946
Cash ---_____________________________________------ $ 7,569,3 15.44 $ 10,418,121.52
United States Government securities-at cost _--------_____ $ 3,270,OOO.OO _$ 10,760,000.00
Notes and accounts receivable :
Customers ______________-_-_--__ - ___-_ -_------_--_ $ 15,1 -y;.g $ 10,587,967.06
Associated companies _______________ -___------_---___ 226,709.20
Employees ___--- ____________ -_---- ____ -- __________ 84:922:37 85,059.68
Sundry -_--------_____________I________________~~~ 8 13,76 1.89 730,165.03
Total ---____-____-____--_________________ $ 16,159,061.80 $ 1 1,629,900.97
Less reserves for doubtful receivables ----__----_-________ .280;58 1.06 330,929.50
Net receivables -----__-_---------_____ $ 15,878,480.74 $ 1 1,298,97 1.47
Billed and unbilled receivables from United States Government and
its agencies (other than for sale of product) ___--------___ $ 443,876.12 $ 298.399.82
Claims for refund of prior year’s Federal income and excess profits
taxes resulting from carry-back of unused excess profits credit $ 1,175,106.93
I nventories :
Finished goods and work in process (at lower of cost or market) $ 18,147,266.91 $ 1 1,241,092.35
Materials and supplies (at cost-approximately market) :
Raw materials --- ______________ -- _______ -------__ 4,473,697.12 2,655,128.53
Supplies -__-____________________________________ 9,487,322.82 5,0 14,100.24
Materials and supplies in transit _____________________ - 606,25 1.84 370,428.07
Total --____________________________ $ 32,7 14,538.69 !J 19,280,749.19
Total current assets ____---_----- $ 59,876,2 10.99 $ 53,23 1,348.93
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 sheets
of companies) ------__---- ______ ------__- __________ $ 3,565,OOO.OO $ 5,988,OOO.OO
Non-current notes and accounts receivable (including employees’
receivables, 1947, $43,679.84; 1946, $47,907.49) ________ 3 19,954.47 289,260.36
Sundry securities (at cost) --- __________ ------- _________ 6 19,600.72 659,189.l 1
Claims for refund of prior years’ Federal income taxes ------_- 4,957,549.16 4,956,096.9 1
Total investments and non-current
receivables _____ ---------_--_ $ 9,462,104.35 $ 1 1,892,546.38
PROPERTY:
Plant properties (exclusive of facilities acquired under certificates
of necessity) (at cost) :
Land -------------------------------------------c $ 1,843,603.3 I $ 1 ,159,733.61
Depreciable property (less reserves for depreciation, 1947,
$38,734,395.54; 1946, $34,668,856.85) ______________ 130,937,138.22 55,776,776.65
Facilities acquired under certificates of necessity (at reinstated
values, less reserves for depreciation since reinstatement,
1947, $609,918.82) (see Note A) __________________ --_ 8,980,324.09 9,590,242.9 I
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) _______________ 1,5 19,404.66 1,2 10,332.42
Total property -__________ - _____ $143,280,470.28 $ 67,737,085.59
PATENTS--at cost or nominal value (less reserves for amortization,
1947, $111,110.59; 1946, $87,531.81) __________________ $ 306,163.81 $ 309,742.59

DEFERRED CHARGES-Unexpired insurance premiums and sundry

and, at May 31, 1947, unamortized discount and expense on
funded debt -----------_____________________________ $ 7 12,926.93 $ 329,27 1.7 1
TOTAL -----____---------- $213.637.876.36 $133,499,995.20

See notes to f-rr.

 THE DOW CHEM
AND SUBSIDIA

CONSOLIDATED BALANCE SHEET,

ASSETS

Mav 31
CURRENT ASSETS : 1947 ’ 1946
Cash ---___-_----__---_-_---------~~~~~~~~~~~~~~~~~ $ 7,569,3 15.44 $ 10,418,121.52
United States Government securities-at cost -_------------ $ 3,270,OOO.OO 3 10,760,000.00
Notes and accounts receivable:
Customers _----__-----__--- ____ ------ _____________ $ 15,l ;y;.;; $ 10,587,967.06
Associated companies __-----------_-- ___________ - ____ 226,709.20
Employees -------------------L--------~~~~~~~~~-~~ 84:922:37 85,059.68
Sundry __------__----------____________________--- 813,761.89 730,165.03
Total -____--_-_--___---__________________ $ 16,159,061.80 $ 1 1,629,900.97
Less reserves for doubtful receivables _ _ - - - - - _ _ ___ ___ __ -_- 280,58 1.06 330,929.50
Net receivables -_-_-___---_-_--------- $ 15.878.480.74 $ 1 1,298,97 1.47
Billed and unbilled receivables from United States Government and
its agencies (other than for sale of product) ----------__-_ $ 443,876.12 $ 298,399.82
Claims for refund of prior year’s Federal income and excess profits
taxes resulting from carry-back of unused excess profits credit $ 1,175,106.93
Inventories:
Finished goods and work in process (at lower of cost or market) $ 18,147,266.91 $ 1 1,241,092.35
Materials and supplies (at cost-approximately market) :
Raw materials ----__-------------___ _____________ 4,473,697.12 2,655,128.53
Supplies --------_---------------~~---~--~~~~~~~~ 9,487,322.82 5,0 14,100.24
Materials and supplies in transit _- ____ --__-___-----__- 606,25 1.84 370,428.07
Total --__------_-___--___-~-~~~~~~~ $ 32,7 14,538.69 $ 19,280,749.19
Total current assets _- -_- ________ $ 59,876,2 10.99 ji 53,23 1,348.93
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 sheets
of companies) ---_--__---- _________ ---_---------___ $ 3,565,OOO.OO $ 5,988,OOO.OO
Non-current notes and accounts receivable (including employees’
receivables, 1947, $43,679.84; 1946, $47,907.49) -_-___-_ 3 19,954.47 289,260.36
Sundry securities (at cost) _- __________ -- ______ -- _______ 6 19,600.72 659,189.l 1
Claims for refund of prior years’ Federal income taxes -----_-_ 4,957,549.16 4,956,096.9 1
Total investments and non-current
receivables ____------------__ $ 9,462,104.35 $ 1 1,892,546.38
PROPERTY:
Plant properties (exclusive of facilities acquired under certificates
of necessity) (at cost) :
Land _________--_______-------------------------~ $ 1,843,603.3 1 $ 1,159,733.61
Depreciable property (less reserves for depreciation, 1947,
$38,734,395.54; 1946, $34,668,856.85) _____--------- 130,937,138.22 55,776,776.65
Facilities acquired under certificates of necessity (at reinstated
values, less reserves for depreciation since reinstatement,
1947, $609,918.82) (see Note A) -- ___________________ 8,980,324.09 9,590,242.9 1
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) ___------------ 1,5 19,404.66 1,2 10,332.42
Total property __----- __________ $143,280,470.28 $ 67,737,085.59
PATENTS--at cost or nominal value (less reserves for amortization,
1947, $1 11,l 10.59; 1946, $87,531.81) _-- _______________ $ 306.163.8 1 $ 309,742.59
DEFERRED CHARGES-Unexpired insurance premiums and sundry
and, at May 31, 1947, unamortized discount and expense on
funded debt ___ ____________--______------------- ---- $ 7 12,926.93 $ 329,27 1.7 1
TOTAL -----_-_----- ______ $2 13,637,876.36 $133,499,995.20

See notes to fm,

2AL COMPANY
f COMPANIES
-
IAY 31, 1947 AND MAY 31,1946

LIABILITIES
May 31
CURRENT LIABILITIES: 1947 1946

Accounts payable-Trade and sundry -------- --_--_--___-_ $ 13,338,755.56 $ 6,382,397.32

Federal income and excess profits taxes _--_- -__-_-___- _____ 8,145,832.88 3,527,261.45
Dividends payable --- ____ - ____-_--_-_-_____-_ --__-_--- 1,552,575.00 1,240,398.50
Accrued liabilities:
Payrolls ______-___---_---_------------------------ 1,2 12,197.62 6,660,264.06
Taxes-Social security, property, state rncomc and franchise,
and sundry -__---_---_____---__~~~~~~~~---~-~~~~~ 1,889,444.39 1,103,627.59
Interest -___--___-____-__-______________________-- 453,2 18.58
Rents ___-____----_-------____________________---- 8,766.88 43,456.76
Sundry ---------_---___________________________--- 178,082.72 159,902.34
Total current liabilities --____-___ $ 26,778,873.63 $ 19,l 17,308.02

FUNDED DEBT:
Fifteen year 2.35% debentures, due November 1, 1961 _-_-__ $ 30,000,000.00
Promissory notes, due January 1, 1972 _-------_--___--_-- 35,000,000.00
Total funded debt __-__--___--__ $ 65,000,000.00

RESERVES FOR FIRE AND ACCIDENT LOSSES, DAMAGE CLAIMS,

ELECTROLYTIC CELL REPLACEMENTS, AND SUNDRY __ - - - - $ 1,470,494.52 $ 1,465,068.98

MINORITY INTERESTS IN SUBSIDIARY COMPANIES _______-__ $ 957,242.83 $ 942,572.92

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 _______________ --__-----__-- ____ $ 30,386,900.00 $ 30,386,900.00
Common capital stock (authorized, 2,000,OOO shares without par
value; outstanding, 1,248,706 shares) ---_--------_--_-_ 37,293,908.83 37,293,908.83
Total capital stock _--__--_---___ $ 67,680,808.83 $ 67,680,808.83

SURPLUS:
Capital surplus _-__--__---- _____ --__-----__- _______ -_ $ 1,030,190.83 $ 1,030,190.83
Earned surplus ---__--_---- ____-__ -__------_--__--__-_ 50,720,265.72 43,264,045.62
Total surplus _-- _______ --_---_- $ 5 1,750,456.55 $ 44,2,94,236.45

TOTAL;,------------------ $2 13.637.876.36 $133,499,995.20

statements.
 THE DOW CHEMICAL COMPANY
AND SUBSIDIARY COMPANIES

STATEMENT OF CONSOLIDATED INCOME

FOR TkiE YEARS ENDED MAY 31, 1947 AND 1946

Year Ended Mav 31

1947 ’ 1946
SALES AND OTHER REVENUE:
Sales---------------------------------- $130,426,838.70 $101,813,839.08
Dividends received from an associated company 250,OOO.OO
Interest from associated companies _--------_ 177,O 10.24 3 17,792.17
Other interest income --_-__-___- ____ - ____ 166,809.19 549,335.69
Fees received in connection with construction
and operation of government owned plants 1,154,450.88 1,449,270.22
Other income ______ -___--__--_-__- _____ 6 12,539.38 449,492.06
Total ___________ -__---___-_- $132,787,648.39 $104,579,729.22

COSTS AND OTHER CHARGES:

Cost of sales (excluding provision for deprecia-
tion and amortization) ----_----_---_-_- $ 92,485,43 1.59 $ 74,976,685.48
Provision for depreciation (including provision
for amortization of emergency facilities not
reinstated, 1946, $3,837,940.90) __-______ 8,595,258.66 11,520,066.77
Selling and administrative expenses --_-----_ 9,508,597.33 7,94 1,906.36
Interest and amortization of discount and ex-
pense on funded debt ----__-- ____ -_--__ 757,843.13 107,7 18.62
Premium paid on redemption of debentures __ 1 12,500.OO
Losses on abandonment of equipment rendered
obsolete by cessation of the war _--____--- 1,689,878.62
Other income charges - _-__--_---___-___-- 337,466.33 488,495.98
Minority interests in income of subsidiary com-
panies------------------------------ 164,667.g 1 95,694.56
Total --_--__-___________-___ $1 1 1,849,264.95 $ 96,932,946.39

INCOME BEFORE PROVISION FOR FEDERAL

INCOME AND EXCESS PROFITS TAXES -_-- $ 20,938,383.44 $ 7,646,782.83

PROVISION FOR FEDERAL INCOME AND EXCESS

PROFITS TAXES (less, in 1946, reduction in
taxes of prior years resulting from carry-back
of unused excess profits credits, $1,754,592.60) 8,208,392.84 939,567.73

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

See notes to financial statements.

 THE DOW CHEMICAL COMPANY
AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED SURPLUS
FOR THE YEARS ENDED MAY 31, 1947 AND 1946

Year Ended May 31

CAPITAL SURPLUS 1947 1946
BALANCE AT BEGINNING OF THE YEAR _--- $ 1,030,190.83 $ 638,841.93
CREDIT-Increase in equity in the capital stock
and surplus of a partially-owned subsidiary
company resulting from a restatement and re-
allocation of the subsidiary’s capital stock ____ 39 1,348.90
BALANCE AT END OF THE YEAR -----_---- $ 1,030,190.83 $ 1,030,190.83

EARNED SURPLUS
BALANCE AT BEGINNING OF THE YEAR ___ $43,264,045.62 $4 1,5 18,424.52
INCOME FOR THE YEAR ___-__--_--_--__-- 12,729,990.60 6,707,2 15.10
Total --_--____--_--------___ $55,994,036.22 $48,225,639.62

CASH DIVIDENDS:
Common capital stock --__-____---------__ $ 4,058,294.50 $ 3,746,l 18.00
Cumulative preferred capital stock, Series A __ 1,2 15,476.OO 1,215,476.00
Total --_--____--_--------___ $ 5,273,770.50 $ 4,961,594.00
BALANCE AT END OF THE YEAR __----__-_ $50,720,265.72 $43.264.045.62

NOTES TO FINANCIAL STATEMENTS

A-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 September
29, 1945 ending the emergency period with respect to such facilities, the unamortized portion thereof
was 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 an
amount equivalent to the estimated Federal income tax, at the current rate of 38%, which will result
from 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 their
employees, 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 years
to 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 Chemical
Company (a Michigan corporation) was merged into The Dow Chemical Company (Delaware), a wholly-
owned subsidiary organized for that purpose. The name of the new corporation was thereupon changed
to “The Dow Chemical Company”. Since 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 aggregate
amount of $74,922,360, and 303,869 shares of Cumulative Preferred Stock-Series A, without par
value, carried at an aggregate amount of $30,386,900. The merger effects the transfer of $623,093
from 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 underwriters
400,000 shares of Second Preferred Stock.
After the merger the authorized capital stock consists of 600,000 shares of Cumulative Preferred Stock
without par value, 400,000 shares of Second Preferred Stock without par value, and 12,000,OOO shares
of Common Stock of the par value of $15 each.
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 THE DOW CHEMICAL COMPANY

Executive Office: Midland, Michigan

General Sales Office: Midland, Michigan

Sales Off ices

Boston 16, Massachusetts New York 20, New York

20 Providence Street 30 Rockefeller Plaza

Chicago 3, Illinois Philadelphia 2, Pennsylvania

135 So. LaSalle Street 1400 S. Penn Square

San Francisco 4, California

Cleveland 13, Ohio
310 Sansome Street
Terminal Tower

St. Louis 8, Missouri

Detroit 2, Michigan
Continental Building
Fisher Building 3615 Olive Street

Houston 2, Texas Seattle 1, Washington

2205 Commerce Building 1702 Textile Tower

Los Angeles 14, California Washington 5, D. C.

634 South Spring Street 915 Shoreham Building

Factories Located
at

Midland, Michigan Pittsburg, California

Bay City, Michigan Seal Beach, California

Freeport, Texas

Velasco, Texas
 THE DOW CHEMICAL COMPANY

Subsidiary Companies

Cliffs Dow Chemical Company Marquette, Michigan

Dow Chemical of Canada, Limited: General Office Toronto, Ontario
Works Sarnia, Ontario
Dow Magnesium Corporation Midland, Michigan
Midland Ammonia Company Midland, Michigan
Brazos Oil and Gas Company Houston, Texas
Dowel I Incorporated Tulsa, Oklahoma

Dowell Incorporated Sales Offices

Chicago 2 Illinois 343 S. Dearborn St.

Salem Illinois P. 0. Box 292
Wichita 2 Kansas 5 19 Union National Bank Bldg.
Shreveport 23 Louisiana 326 First National Bank Bldg.
Boston 16 Massachusetts Statler Bldg.
Mt. Pleasant Michigan P. 0. Box 152
Detroit 2 Michigan 932 Fisher Bldg.
Kansas City 8 Missouri 220 B. M. A. Bldg.
St. Louis 8 Missouri 3615 Olive Street
New York 20 New York 30 Rockefeller Plaza
Cleveland 13 Ohio 1609 Terminal Tower Bldg.
Oklahoma City 2 Oklahoma 763 First National Bldg.
Philadelphia 2 Pennsylvania Girard Trust Bldg.
Pittsburgh 19 Pennsylvania 401 Grant Bldg.
Borger Texas P. 0. Box 1029
Fort Worth 2 Texas 635 Fort Worth Club Bldg.
Houston 2 Texas 21 15 Commerce Bldg.
Midland Texas P. 0. Box 1858
Wichita Falls Texas 1 106 City National Bank Bldg.
Calgary Alberta, Canada 907 Lancaster Bldg.

Associated Companies

Dow Corning Corporation Midland, Michigan

Ethyl-Dow Chemical Company Freeport, Texas

The Saran Yarns Company Oden ton, Maryland