Document a49RyDa84EaZDnjR0j9E6aM4B

f?5AT- STO U 04665 A A!C^^?cSMl -;.i.'...'*r>st*;->".*y;V-..i%'Ai'-vj-rT->-.' . ;>*V .(-r {iy. * \? b- Directors and Officers S7 0 (HU G6 6 Board of Directors Executive Committee C.\RE A. <iERSTACKER.........................................................................Chairman of the Board DONAI.I) K, BALL.MAN .......... .......................... ............... Former Senior Yke President EARLE B. BARNES................................................................................................... Ykc President ROBERT B. BENNETT....................................................................................................Treasuicr CLYDE H. BOYD .................................... ........ President, Dmv Chcmual of Canada. Limited C. B. BRANCH................................................................................. .......... Piesideni MLLY1N CALYIN........................................................................................... t'mvciMiv Protestor. I'lihersitv oj Caliioi nia WILLIAM R. DIXON........... ................................. ................. ............. -\s^isi;mt to the Direttor. Corporate Admimsi ration HERBERT D. DOAN....... .................................................................. President. Doan Associates Lot nut Piesideni ol iheCompam lIERBERf 11. DOW ............................................................................... ........................... . Vno.in 111.ICS L. JOHNSON................................................ ......... Vue President j. M. LEA I HERS............................................... ......................................................... \ uv Pieddcm H. H. LYON................................................................................................................... Vier Piesideni /Ol. 1` \\ MEUS/EI........................ .............................................. ................. ........... Vice Pirodrni PAt L 1'. OREM ICE..,.--....................... . --........................ iinamiai Ye Piesideni M \CAC! .EY \\ ill 1 INC ............................ (ienei a I Manager, i l\di oearhmis Depat t met it. Dow (.hemiml l .S. \. (..JAMES WILLIAMS.............................................................................................. Yke Pirwdrm C. B. Branch, (.hairman. Earle B. Baines. Call A. Gersiae her. Julius E. Johnson. fE H. I win. /olt.m Mers/ci. Paul K Ore* fhee, lletheit IE Dow. Scirclarv \r Mtrinate .Member Finance Committee (Ail A Gersi.u kci\ Chairman: ROn-tt B Brimt'ii, Herben H Dow, William \ (iiuomi'4. ft.. A. P. Ihiimier. Iiank Mai lt t\v. Paul I , ( )i i'llii e. Audit Committee Meiheii D. Do.m. Chuuman: Mehin (.al\ m. 1 lei hrrl I I Dow'. Officers & Assistant Officers Public Interest Committee C. B BRANCH................... CARI. \ GERM \CKER E \Ri.i B BARNES ........ Wll.l.i\M \ CkOl'.NIXl ji i n s i;. Johnson.,. . | M I.EAIIII.ES ........... H IE i NON.......... ........... /Ol i \\ MERs/EI ........ I' M 1. 1 OR!.! I ICE...... C | \M1 s WILLIAMS.. Rl )i;l R i P. BEVXK 1 r iir.RBl-RI M DOW...... \ P II \\MER............ H RM ! \ A I'M'i.l S ... 1) \\ ID C. BAIRD........... R W. B \RKER................. 1.01^ ). llohRI.EiX...... t.ER'l REDE U 1 I KLR... W 11 M \ \. l O ....... D \\ ID \ 1 1 Yi-k 1 , . . i) \l E \ i'A U A l ER..... ........................................................ President. Chic I E\ci mi \ e < )tht <*t ................................................................................ Chairman ol die Bo.nd .............................................................................................. . Vue Pte-idrnl Pres idem. Dow (.heum a I 1 .S.A. | Is..................................................... \ ii e Pieddent. (eiin al ( i noise 1 .................................................................................................... \ ue Pi rodent Ceneul Manager. Eile S< lenees Depaitmem Ditcciot. ( orporale Roseau h N 1 )e\el<>omem ...................................................................................................... \ it c' Pi csidcin E\eiuti\e Yke Piesideni. Dow Chemual l S.A .......... \ u e Pi esulent. Direc 101 ol ( os pm ate A< InmiH i al ion ............................................................ ........................................ \ ue Piesidem Piesideni. lOw (.heinie.il l'.mvpe. S. Y ............................................................................... Ehum lal Yiee President ..................................................................................................... \ire P; r-ideni Executive Yke President. Dow ( hemnat l .S \ ............................................................................................................... Iieasuici ................................................................................................................... So i rial \ ................................................................. < onti nliri. As'isi.tiU So iri.n \ ....................................... .................................................... \sst.stum ( Am roller ............................................................................................. VssM.mtSo i elai \ .............. ................... .........................................................\sdstuiU Sr l O.U \ .............................................................................................. \ssistant Se< rei.irw .................................................................................. ............\ssisi am Si < i ei .m v ............................................................................................ \ssisi ant i i easm ei ..................................................................... . .. \s'isiam Isimmiio ..................................................................................................................... \odiHfi Heilieii If. Dove. Chaiiman: E.u'le B I'anus. \le|>. m (.abiu. Ilriheii D Du.m. {..nl \ (*ei si.u kei . Julius {- . jmuson: Jamrs \\ l'e-aiee. hwilitlU' Sveiei.u ' Transfer Agents 1 he ( keel.md I i iisf Compain. Mmuan Guai.mtv 1 MM Compnm ol Xtw N ni k Registrars i he Xathuial Cn\ Bank <] (.levelat'd: Mor"an ( nia: .i nn 1 I usl (.ompam o! \ew \ > n k Certified Public Accountants Haskins a srii. '/S 9 *0001S STOO Highlights Operations Summary tin millions] 1973 Net sales........................................................... Depreciation..................................................... Research and development expenditures............................................... United States and foreign income taxes............................................... Net income before extraordinary items.............................................................. Earnings per share before extraordinary items (in dollars) ....................................... Cash dividends paid per share (in dollars).......................................................... S3,067.9 263.1 118.4 202.6 271.2 2.94 .95 1972 $2,403.7 234.9 % Change +27.6 + 12.0 104.7 +13.1 127.1 + 59.4 189.0 +43.5 2.07* +42.0 .90* + 5.6 Average common shares outstanding........ Common stockholders................................... Employees....................................................... 92.113.861 88,849 49,800 91.324,016* 84.838 48,800 'Restated to reflect one-for-one stock distribution made May 9, 1973. + .9 + 4.7 + 2.0 Quarterly Results Sales (in millions] Earnings per Share before extraordinary items Cin dollars] Quarter Ended 1973 1972 1973 1972* 3/31 6/30 9/30 12/31 S 702.8 747.4 784.0 833.7 S 550.2 607.2 604.2 642.1 S .63 .86 .81 .64 TOTAL S3.067,9 S2.403.7 S2.94 'Restated to reflect one-for-one stock distribution made Mav 9. 1973. S .45 .58 .57 .47 S2.07 ANNUAL MEETING The 1974 annual meeting of stockholders will be held at 2 p.m. (EDT) Wednesday. May 8. in the Midland Center for the Arts. St. Andrews and Eastman Roads. Midland. Michigan. A forma! notice of the meeting, with a proxy statement and form of proxy, will be mailed to each stockholder separately from this report. Cover; A so/nr flare symbolizes a limit less energy source of the future, a prime long term objective of a world newly aware that today's energy resources hove their limits rind require fresh conservation efforts. The Dow Chemical Company has csta.ulishcci a reputation as a leader in industrial resources conservation. Oh t CP CP CP co CO CO a\vr stccxncicars fo ear 1073 was another outstanding joined only by the `deaths of nine people while working for the ?%pany. Five of these were employed -- GruPP0 Lepetit (three in Argentina, "'pinBrazil, and one in Italy), three by ",n -ell, and one by the Texas Division ^p'0w Chemical U.S.A. We mourn josses; we are determined to invent their repetition. Nothing comes ^ore this in our priorities. With this exception. Dow people .veryWhere-- in every part of the world, every department, every 'unction --demonstrated their unusual ability- mobility and flexibility. We ^ave every reason to be proud of them. The tabular part of this report show's their financial achievements: Sales exceeded S3 billion for the first time in the Company's history, up 28% from the previous year. Net income for the year, before minor extraordinary items, increased 44% to S271 million, or S2.94 per share. This compares with S189 million, or S2.07 per share in 1972. Our return on stockholders' equity was 19%, an increase from 15% in 1972. Companies which are 20%-50% owned by Dow also registered significant increases. Our equity in earnings from this source reached more than S43 million, an increase of approximately 70% over the previous year. Research and development expenditures reached S116 million. more than 13% over the previous year and a new high for the 14th consecutive year. (A special report starts on page 15 which describes the cor.*ributions to sales and earnings re.- citing from our research and development programs.! Capital investment continued at record levels with 5402 million in 1973. Of that total. 5250 million was spent on new or expanded facilities in the United States, while S142 million went into expansion in other countries. For 1P~4. we are pm Acting capita! expenditures in lit.' 5500 million rar.ae. -'ur record profits resulted from -^Precedenleu demands in the U.S. and %road for Dow's products and services. Hroughout the ye.tr. our Manufacturing facilities operated at Pproximatdy 90% of capacity, which 0rnli practical purpv^s represents full capacity for our highly integrated operations. The last time such high operating rates were achieved was in 1966. However, profit margins on sales still have not reached 1966 levels. Higher profits are essential to continued high levels of employment and progress. The Company must research new products and processes to offset the rising costs of energy, and build new plants to meet continued growth in demand for its products and services. This we are doing. There are two specific highlights which, while small relative to our total activities, convey a story I believe worth telling. In January. 1974, the government of Chile returned all of the Dow properties in Chile, and the loyal, patriotic Chilenos and Chilenas. of whom I wrote in the 1972 annual report, came home. We are delighted for them and they for us. They had maintained a long, courageous and lonely struggle because, as patriotic citizens, they believed their country needed Dow principles, citizenship and technology. 1 believe stockholders have no better proof of the total quality of our Company. The other unusual highlight occurred in a totally different ideology, but for identical reasons. In September, we announced an agreement with Organsko Kemijska Industrija (OKI) of Yugoslavia to form a joint enterprise for the manufacture of polystyrene resins. Why did OKI wish to do this? Because we have a singular reputation for quality of technology, environmental responsibility, citizenship and business management --precisely the same elements which have resulted in our return to Chile. I should also make special mention of our continuing environmental considerations as well as our energy situation. We see a direct relationship between the two. As you know, Dow employees for years have worked to improve our pollution control standards at every manufacturing facility we operate. Their efforts have paid off consistently. In the U.S.. for instance, we estimate that we will have reduced liquid process wastes 80% to 90% by the end of 1974 as compared to the five year period of 1965-69. Also, we are significantly reducing air emissions from our processes. During 1973. the worldwide ennrgv situation worsened and we were especially thankful that the foresight of J. M. (Levi) Leathers and S. V. T. Marshall and many others enabled us to weather the problem in a way that ^ enables us to maintain a strong * competitive position. We remain ^ convinced that energy conservation c~> and waste prevention in our manufacturing processes are usually ^ complementary and compatible. Each is part of total resource conservation, and this along with safety is one of our most vital concerns. We believe that foreseeable energy problems do not require any significant changes in Company policy or programs with respect to the control of liquid and solid wastes and process emissions to the atmosphere. In closing. I would like to note that we have received dozens of letters from retirees whose pension program was improved by the Board of Directors in December. The affection and continuing loyalty expressed in these letters is yet another example of how much fun it is to be the president of this Company, a operaiicns ,.TED5TATES-In 1973. for the `.vi ronsecutive year, the percentage 7^ase hi sales for Dow s U.S. '* ations exceeded the increase of the ' ^ouS year. Sales were up 20%, while Sating income was up 16%. -\,ernment controls kept prices from Creasing sufficiently to cover naeased operating costs, particularly " rapidly rising costs of fuels and ^trochemical feedstocks. he year was characterized by high t' rating rates and shortness of supply fnmany products, including many on Allocation. Raw material shortages t-gre common and these shortages Tjjnited our ability to produce the Increased volume of many products Cgeded by the market. Among the i -,ajor products whose production was curtailed were styrene (because of a shortage of benzene) and phenol (because of a shortage of cumene). The largest percentage increases in U.S. sales were registered by polystyrene and polyethylene plastics and by ,:ganic chemicals. The largest profit .aprovement was shown by organic chemicals, as the drastic oversupply situation of recent years was corrected and prices strengthened accordingly. 'Capital spending in the U.S. totaled '1260 million, up 22% from 1972. Two [very large facilities were started up in 1973. One was a styrene monomer ;plant with a capacity of a billion pounds per year in the Texas Division -- the largest such plant ever ouilt. The other, in the same division, r-as a billion-pound-per-vear ethvlene biant. Another plant completion of unusual Merest was an ABS (acrylonitrile;:otadiene-styrene) facility at the Aliyn's Point Plant in Connecticut y'nicli doubled our U.S. capacity for '''is plastic molding material with high -mpnct resistance. -UROPE/AFRICA --Dow's Europe/ o'nca operations made 1973 another iu'5tanding year with a 40% increase in "les and an operating income increase :* 8-I%. This included an improvement YGreppo Lepetit S.p.A.. which sharply from a relatively 'tak profit performance in 1972. ''"ft: The worldwide energy shortage increased (he importance of Dowell `.Vision's acidizing, fracturing, and Hunting services --all aimed at in''eusing the output of oil and gas wells. Local manufacturing facilities in Europe accounted for over 80% of our sales in the area, and sales from production at these plants increased by more than S200 million. Shifting currency values had a positive effect on the sales total. Although production levels were high, many products were in tight supply. Prices generally moved up to realistic levels, compensating for increased costs in raw materials and labor. Special emphasis was laid again on cost reduction programs. Of the major product groups, hydrocarbons, agricultural chemicals, and plastic molding materials showed the greatest sales and operating income increases. Germany and The Netherlands led the major countries in sales increases. Spain showed a fine performance in improving profits, and a second public offer raised Dow ownership in Dow-Unquinesa S.A, from 85% to 95%. ' At the Dow Europe installation at Stade. Germany, startup of the final units was completed in the first major chlor-alkali facility, and an additional series of interrelated projects was authorized. Scheduled for completion in 1975. these projects will include new facilities for chlorine, methyl chloride. Chlorothcnc solvents, methylene chloride, propylene oxide, and ethylene dichloride. Also authorized was an expansion of ethylene capacity at the Construction of a plant for Styron polystyrene at Guaruja, Brazil, is observed by two Dow employees from a completed plant for Voranol polyols. CD Terneuzen complex in The Netherlands for completion in 1975. LATIN AMERICA-Solid growth again was exhibited by our Latin American operations. Sales increased 30% and operating income 27%. The area operating income performance was moderated by that of the Lepetit operations, which were negatively affected by plant relocation expenses in Mexico and pharmaceutical price controls in Argentina. Sales growth of greater than 30% occurred in Argentina. Brazil, Central America, Colombia, Ecuador, Mexico, and Peru. Voranol polyols, high density polyethylene. Tordon herbicide, ethylene glycols, and styrenebutadiene latex made especially noteworthy gains. Among major product groups, agricultural and veterinary products gained most. The first styrene-butadiene latex plant in Brazil was brought on stream bv Dow during the year; the facility at Guaruja will serve the paper and textile industries. Also at Guaruja, a plant for Styron polystyrene will be on stream in 1974, and we have authorized for 0004672 Dow Cunada serves major marker chlor-alkaii products with this ne-v worldscale facility at Sarnia, On^.. It replaces three smaller plants tJlQ/` used the mercury-cell process. oo CD CD CD --1 CjO mid-1976 completion, an expansion that will approximately double our polystyrene capacity in the country. At Aratu, in the Brazilian state of Bahia, ground was broken for a major facility which ultimately will represent an investment of more than $100 million; the first units will produce propylene oxide and glycols and chlorinated solvents, with chlorine-caustic soda production units expected to be added later. The new Chilean government has returned to Dow control the Petroquimica-Dow S.A. manufacturing facilities (70% Dow owned) at Concepcion and those of Dow Quimica Chilena S.A. (100% Dow owned) at Santiago. The two plants, which had been seized by the previous government in 1972. were found by a Dow inspection team to be operational but in need of maintenance and renovation, which are now underway. CANADA --On a sales increase of 25%, operating income in Canada increased by 25%. Among product groups, the best percentage increases were posted by plastic molding materials, organic and specialty chemicals, and agricultural chemicals. Individual products making prime contributions in these respective groups were Styron polystyrene, ethylene glycol antifreeze, and pesticides. Our Canadian facilities accounted for more than 75% of Dow sales in Canada and operated at an average of about 85% capacity. At the major plant of Dow Chemical of Canada. Limited, in Sarnia. Ontario, a strike by members of the Oil. Chemical, and Atomic Workers 4 International Union was initiated in October and continued until late December; however, the plant was operated by salaried personnel, and deliveries to customers were maintained. Dow Canada's three mercury-cell chlorine-caustic plants were shut down in 1973, and a new world-scale chloralkali facility of the diaphragm type, which uses no mercury, was completed and brought on stream at Sarnia. Dow Canada is proceeding with plans fora world-scale petrochemical complex involving a 1.2 billion pound ethylene plant and a pipeline system to transport ethylene and light hydrocarbon liquids to other chemical plants in Alberta and Ontario. This project, the pipeline portion of which would be a joint venture with Dome Petroleum Limited, has the support of the provincial government of Alberta and awaits approval by the National Energy Board of Canada. The ethylene plant would be four times the size of the next largest plant in Canada today and would be a significant factor in alleviating shortages of ethylene which have existed there in the past few years. PACIFIC --Sales in the Pacific were up 57% and operating income was up 126%. Strength in product prices and devaluation of the dollar contributed to this performance, which was the best for any geographic area. Since our business in the Pacific is highly dependent on imports, primarily from the U.S.. product availability problems paralleling those of the U.S, were encountered for most of the year. Strong growth in the Japanese .economy, coupled with the energy crisis and production problems at several Japanese chemical plants, augmented the demand for imported chemicals. Sales of chlorine derivative; were strong. Following a six-month recession in 1972. the Australian economy strengthened considerably in 1973. Sales of Voranol polyols and Tordon herbicide were particularly good. Dow lost its bid to build a petrochemical plant in the state of South Australia, Several significant steps taken durins the year were designed to strengthen the base of Dow production facilities;:, the area. Dow acquired a majority interest in its New Zealand holding. Ivon Watkins-Dow, Plans for Dow's first wholly owned production facilities in Asia were announced--a plant for the production of Dowpon ar. Dalapon herbicides near Medan, Indonesia, and a S20 million polystyrene plant in Hong Kong. Dow's business in the healthy and growing economies of Korea. Taiwan, Hong Kong, the Philippines, and Singapore more than doubled in 1973- Sales of Dursbon insecticide for use in rice cultivation were exceptionally good in the Philippines and India. I ,/pr;^ril!Ci ius iti*il tsz W~i \\^ j _ ,-s share'Qf the sales of companies, , ,}jiCh our ownership ranges from ;% to 50% totaled approximately $540 lljlion. up 32% from 1972. Dow's ity in the net income of these ^ppanies, which is included in ^ financial statements, was S43.3 Million, compared to S25.2 million in ;2, both before extraordinary items. i.-tivities of the major companies are ported below. w W-)U i2r UW ! i t-J l; _> l'i'< pai t c =3 jow Badische Company and its Vjbsidiaries attained a sales increase of uvj and a profit increase of more than above the previous year. Demand Exceeded ability to produce in every product line except double-knit fabrics. Specially impressive was the growth 3 demand and sales of acrylic fibers y.d metallic yarns. Anew flame-retardant acrylic fiber for :52 in carpets was successfully commercialized during the year, and vain sales to the carpet industry continued to make excellent gains. Growth in facilities was highlighted by .;20fo expansion of the plant for caprolactam, a raw material for r.ion-6, in Freeport, Texas. Among Dow Badische subsidiaries, mteworthy events included: A particularly good year for the polyester yarn business of Universal Textured Yarns. Inc. (100% owned), as the use of these products grew substantially in the woven goods market and imports dropped. A record year in demand and profits for Lurex B.V.. a 100% owned metallic yarn company based in The Netherlands. Year-long capacity operation bv Sylvania Spinning Corporation, a 50% owned carpet-yarn spinning op -ration. es and operating income of Dow -orning Corporation were well above -'2. The company supplied silicone ;1Q silicon products to customers "ound the world from 23 plants in nine unmes. '-ccessful new products introduced -i 1 !% ahead of 1972. A new product =::,g system was formalized and is `Ovcding a more effective approach to :='v-product commercialization, -^standing developments in new -oducts and applications included: A new construction sealant that combines excellent stretchability wiih very low springbuck. A soft, round mammary prosthesis that is the standard of the industry. The production-line use of Silastic silicone rubber sealant as formed-inplace gaskets by major automotive companies. Continued acceptance of silicone rubber in the automotive market, with major manufacturers opting to use an all-silicone ignition wire on 1975-model cars. A broad-range improvement program at Dow Coming's plant in Midland. Michigan, and construction of a new corporate center near Midland were in full swing at year's end. Dowell Schlumberger, which performs the same oil-field services in the rest of the free world as our Dowell Division in North America, continued its growth with substantial earnings increases in 1973. Increased operations in Indonesia, the Middle East. Algeria, and Nigeria contributed to the company's outstanding performance. Nationals from developing countries are now being trained for positions as Dowell Schlumberger service and sales engineers at a new training center in France operated in conjunctionwith the parent Schlumberger organization. Asahi-Dow Ltd. made an excellent recovery from the mild recession At Dow Badische Company's technical^ assistance center in Williamsburg, Virginia, a technician combines a trial blend of fibers for a customer. CO ""si experienced by the Japanese chemical industry in 1972. Sales for the first half of the company's fiscal year ended September 30.1973, were up nearly 50%. and profits were in a healthy rolinnnr] In addition to the economic boom enjoyed by Japan during most of 1973. an effective price improvement program, continuing attention to product mix. and improved utilization of personnel aided Asahi-Dow's performance. In its first full year of manufacturing operations. Korea Pacific Chemical Corporation operated at capacity and achieved an excellent level of profitability. The company, owned jointly with Korea General Chemical Corporation, a Korean government enterprise, manufactures low density polyethylene and vinyl chloride monomer at Ulsan. Republic of Korea. -..i pf0 -> * -jMJCALS- -Caustic soda; chlorine, il^^hiorine derivatives generally '5<%i& .gd from a balanced supply 1.50 ,,antinonnin 1972 tlouggHlojbuadlishmojritliadggets in ^ -3 Caustic soda use in chemical ? iprmediates, acid waste treatment, ^fmnina production, and the paper rjUstry showed appreciable innccrreases. .-'syr&i-i3c18h..lor-i-n-e-caustic facilities were ^ensively modernized at Midland M* ichiI gan., a#1 nd LP-J 1ittsKb1u1 rg, fC" fat IltifToftrT1nTftitaft. In ' jj^3 the last of our chlorine cells based -r0n mercury in North America was shut '' *i<*jo'vn- Globally, more than 99% of our chlorine cells use no mercury. The demand for chlorine derivatives, particularly ethylene dichloride for vinyl chloride monomer, was very strong throughout the world. I Chlorinated solvents also continued to * grow at a healthy rate. Growth of the Chlorothene solvents as replacements for other solvents less ecologically !C.i suitable continued in the metal t'jdeaning industry. Two new U.S. facilities to produce [nominated fire retardants for plastics were authorized. Sales of ethylene dibromihe were lower in 1973, reflecting the impact of low-lead ; gasoline in the market place. New magnesium oxide production facilities were authorized in Texas to increase capacity and enlarge product mix. Ethylene glycol was extremely short globally, particularly for polyester fiber production. Our production efficiencies > for ethylene oxide were improved I markedly. Profit performance in ethylene oxide and glycol showed hamatic improvement. Propylene oxide moved to a slightly short position. Voranol polyols for urethane foam exhibited outstanding sales growth. Glycerine and epichlorohvdrin were strongly up in sales, with firm pricing. Dhen "d production was curtailed by a shortage of cumene, its raw material. METALS -- Global sales of primary Magnesium showed substantial growth. I and there was a worldwide shortage of 'his metal. Sales outside the U.S. were UP even more than U.S. sales. The demand for magnesium for use as an | Le/t; In addition to its use as a aiosquito larvicide in the U.S., Dursban I lr|secticide is being used to control i !flsect pests which invest cotton crops \,ri several areas abrocd. resulting in improved yields from cotton plantings. (Giirsban is now a motor Dow product. ahoying'age fit with aluminum-";:-T continued to* firm in'theTl.S4reflecting the aluminum industry's higher level of operation. Because magnesium production in the U.S. was insufficient to meet demand, purchases were made from the government stockpile. The use of magnesium in the steel industry continues to grow; steel desulfurization, the newest such use, is beginning to consume significant quantities of magnesium and shows excellent growth potential. With the emphasis on lighter weight automobiles, the potential for magnesium in diecast auto parts is significantly greater. The growth of fabricated magnesium products, measured in both physical volume and revenue, was significantly larger than in the last several years. At mid-year, our fabricating facilities for aluminum were sold to Taber Metals, Inc., thus removing Dow from that line of business. PLASTICS --Sales and operating income of molding and extrusion resins rose sharply. Styron polystyrene was again the major contributor. Global production of Styron was held to less than full capacity for most of the year because of a shortage of benzene, a primary raw material. Tyril styrene-acrylonitrile resins, designed for applications requiring high chemical resistance, showed notable sales and operating income gains. Both high- and low-density polyethylene contributed strongly to the performance of molding materials. Global pricing in both of these products was significantly improved, and production facilities operated at capacity all year. Chlorinated polyethylene applications were significantly expanded to include pond liner and wire and cable use. Excellent profit and sales growth was shown by this product, which was introduced in 1969. Substantial gains were made in the sales and operating income of coating materials and monomers. Epoxy resins were particularly strong in the U.S. Vinyl chloride monomer showed outstanding profit growth, as did vinvltoluene. Plastic foams had another year of solid growth. The first liquified natural gas tanker insulated with Styrofoam brand plastic foam went into service between Algeria and Japan. Ethafoam brand plastic foam was approved by the U.S. Coast Guard for use in life jackets. PACKAGING--Operating income for this product group was again up. with the most significant strength being shown by commercial films. Dow Window Film sales were very strong as the replacement of glassine envelope windows by plastic film expanded. New capacity for Trycite polystyrene film was added, and two further expansions were authorized. Dow Adhesive Film, a specialized polyethylene film with adhesive properties, showed excellent growth in carpet under-layment usage; it smooths the foam surface, facilitating carpet installation. Several developmental applications for the film look promising, such as the coating of steel culverts for corrosion resistance. During 1973, Dow and the American Can Company of Greenwich. Connecticut, agreed in principle that American Can would purchase Dow's converted flexible products facilities at Cleveland, Ohio, and Fresno. Califoria. LIFE SCIENCES--All major units contributed to a substantial increase in sales and a sharp increase in operating' income. cy~) The operating income of Gruppo Lepetit S.p.A. recovered strongly frotSP 1972 despite continuing high labor cfefc in Italy. Lepetit's improved sales c performance was generally balanced^' across major product groups, with ^ medical-surgical products showing the* largest percentage increases. Sales oP"3 Rifadin antibiotic again increased as geographic penetration was expanded. Bio-Science Enterprises opened a diagnostic laboratory in New York City and a jointly-owned diagnostic laboratory in Sao Paulo, Brazil, bringing to four the number of laboratories outside the Continental U.S. (the others are in Hawaii, Canada and Germany). Research expenditures again increased, and many new products are proceeding satisfactorily through various research phases. Among the most promising is a new anti-inflammatory compound discovered by Lepetit for use in the treatment of arthritis; clinical trials are nearing completion in several countries and have been initiated in the U.S. New-drug applications have been submitted in the U.S. and Canada for Probucol hypocholesterolemic. an anti cholesterol drug. 7 The Norman Lady, which transp0-. liquified natural gas from Algeria]; Japan, utilizes a total of 1.5 miIJj0n'J board feet of Styrofoam brand pjQ'(;; foam insulation to maintain its L.\~cargo in five spherical storage tanV -260T. GO CD y In order to provide improved global coordination in Life Sciences, its organization was structured into three businesses: Pharmaceuticals. Diagnostic Products, and Diagnostic Services. Lepetit completed a large new fermentation facility at Brindisi, Italy, and packaging facilities at Anagni, Italy. A new production facility is being completed near Cuernavaca by Laboratories Lepetit de Mexico. AGRICULTURAL PRODUCTSSales and operating income rose strongly. Prices were either firm or higher globally. Dursban insecticide became a major product, as its sales and profits showed exceptional growth. Plant capacity was tripled for this broad-range insecticide, which offers excellent ecological properties along with effective insect control. Tordon herbicide contributed significantly to group profit performance, and its use in jungle clearance in Latin America added to sales. Plictran miticide. a joint development with M&T Chemicals. Inc.. Division of American Can Company, was approved in the U.S. for preventing mite damage to apples, pears, and citrus fruits. Phenoxy herbicides (2.4-D and 2.4.5-T) showed strong pricing, and supply and demand were essentially in balance globally. Sales of Dowpon herbicide benefited from increased use for grass control on rubber plantations. Modest increases in sales and income for poultry coccidiosiats were accomplished despite continued competitive pressure. 0 CONSUMER PRODUCTS-This product group showed sharp profit improvement on good sales gains. Saran Wrap and Handi- Wrap brands of plastic film maintained their preeminent position in the U.S. plastic roll wrap market. Saran Wrap showed significant profit growth. The dispensing properties of Saran Wrap were markedly improved by a change in carton design. The profit growth of Handi-Wrap was outstanding in 1973. Ziploc plastic bags were the fastestgrowing products in the storage bag business. A significant plant expansion for Ziploc bags will be completed in 1975. Dow Oven Cleaner maintained its No. 2 position. Dow pioneered in safety-cap regulations for aerosol oven cleaners and introduced the first safety-cap container nationally. Dow Bathroom Cleaner maintained a strong No. 2 position in a rapidly growing business. Marketing of Touch of Sweden hand lotion was expanded from a regional to a national basis. Aztec sun care products, which had been in regional marketing in 1971. will be reintroduced and marketed nationally in 1974; they have been repositioned in the market to emphasize Dow's patented sunprotection technology. DOWELL DIVISION --Despite shortages of materials, equipment, supplies, and personnel. Dowell again reported a record year both in revenues and operating income. Highlights of the year included completion of the Scranton. Pennsylvania, mine backfilling project and establishment in Tulsa. Oklahoma. f i k of a new training program for > equipment operators. The mine 4 backfilling project is indicative of j Dowell's increasing involvement in ' areas outside the petroleum.industry, ; Potential in these other areas will be -3 limited only by equipment and ^ personnel availability. The training program is a prime example of Dowell! concern for two of the most important i aspects of its operations: personnel j safety and job performance. New [ equipment operators learn from i instructors who have spent years in tf.;| field, in the laboratories, or in the { shops. They drive oilfield roads, make i hook-ups. "pressure-up." and learn ; exactly how they must function safer. I as a team member. j On a much broader scale, the worldwide energy shortage presents a most challenging opportunity and an extremely bright business outlook to Dowell for the foreseeable future. 1 Dowell expects to contribute very 1 significantly to the industry's all-out effort to increase U.S. petroleum [ production. : v, \ l k L ; f Energy: ; sorne answers Employees of The Dow Chemical Company are frequently asked questions on various aspects of the Company's energy situation. Some of the most frequently asked questions, and their answers, follow. Q. How efficient is the chemical industry in the use of energy? A. Highly efficient, and we are confident that Dow is one of the most efficient in the industry. For example. Dow can use steam not only for power generation but also for its manufacturing processes. Some Dow plants have a combined efficiency on power and steam of approximately 60%, while a typical utility has an energy efficiency of only 33%. Yet compared to other energy users, even the utility represents a very high degree of efficiency. An incandescent lamp is only about 4% efficient in converting electrical energy into light. For that matter, when you eat a steak, you utilize only about 10% of the energy ^ stored in the steak. Q. Plastics have been used extensively c to replace metals. Considering the energy that is required to produce j plastics, would it now be wise to switch back to metal? A. Actually, to produce a cubic inch of a plastic such as polystyrene or polyethylene, only about one-third to one-fifth of the energy is required in comparison to the energy necessary for a cubic inch of some metal. This means that chemical products, and particularly plastics, are actually energy bargains. The real problem a t the moment for consumers is that they don't know which products are the most energy intensive in their manufacture and distribution. If they w'ere in a position to compare products on the basis of their over-all energy intensity, it u'ould be wise in many instances to make increased use of plastics. In any case, there is a national need for manufacturers to determine the energy content of their products and for prices to reflect energy costs so b/ d Because of its continued reliance on coal as its pajor energy source. Dow's Midland Division had no serious fuel problem in 1973. Even so, employees continued to reduce the number of Btu's used in their operations as part of a Company-wide program to make better use of energy resources. Before and after: In the battle to conserve energy in Dow's Texas Division facilities at Freeport, briot. lights became a thing 0/ the pustf^' various manufacturing areas. ;* : -: rz a.^-a.'f^t'-y-. ! L' iB CO CD CD t i O j !: CD I , 401;; i i\ lQ that consumers will be in a position to make intelligent, energy-conserving decisions. Q. How do chemical ran- materials differ from the oil and gas used for fuels? A. The existing petrochemical plants in the United States have been built to use certain feedstocks and cannot run on other feedstocks without enormous changes --in some cases, without totally new plants. For example. 80% of the U.S. produced ethylene requires liquefied petroleum gases as feedstocks. The feedstocks that are commonly used by the petrochemical industry are crude oil derivatives and natural gas plus liquefied petroleum gases. These materials pass through many processing steps and become rawmaterials for industries such as synthetic fibers, plastics, synthetic rubber, agricultural chemicals, pharmaceuticals, and many others. These products, in turn, are vita! for "downstream" industries such as the 10 tire, rubber, automotive, construction and garment industries. When you burn fuel for heat, it isn't necessary to be as selective in vour choice of hydrocarbons as it is in the choice of feedstocks for the petrochemical industry. Dow scientists believe we should try to reserve liquefied petroleum gas. naphtha, benzene and toluene for petrochemical feedstocks and burn the remaining portion of the heavier fossil fuels such as fuel oil and coal. Ultimately, they believe that as other energy resources become available, we will be in a position to reserve all of our limited fossil fuels for use as chemical raw materials. Also. Dow scientists are confident that we will continue to develop various other sources such as fusion and solar energy: these will be virtually limitless and -.'.-ill obviate the necessity of relying on fossil fuels. Geothermal energy, while not limitless, nevertheless appears to have great potential as a major energy source for > the future. j Q. When did Dow become aware of tr I [, energy crisis and what has the Company done about it? A. Fortunately, a number of Dow people foresaw the problem several , years ago and started planning j, accordingly--even though fuel was ' ' such a low cost item at that time that >' j . was still not economically sound to t t invest major capital in energy j1 conservation. Then, about five year; ! j ago, Dow- employees started fighting j ''war on Btu's". In essence, this meaF , continuing reduction of the British ; thermal units (a universal measurer; energy) that go into each pound of product that the Company produces j The results have been remarkable. 2;- have been commented on increasing by the news media. For example, during the past two years. Dow has . managed to decrease its Btu's by 20`>.c an over-all basis; the reduction goal! 1974 is another 7%. l. 1 < /o xas !. brig/,! ''fist in S. , Oivf:\'0.umore sp.g'Gific.'fxamples," ; jjxtH light hydrocarbon facility 'hfch Dow built in 1967 uses roximately 20% less energy per ^und of olefin produced than the erage f *he ^`rst ^ve light hydrocarbon plants which were built in jj,'e i940's and 1950's. And the seventh hydrocarbon facility, completed ,^973 in the Texas Division at freeport. uses 32% less than the ,verage of the first five --and with a i yield increase of 15% and a waste discharge reduction of better than 90%. yen more impressive are the energy savings that have been made in other jev facilities such as those for polyethylene and ethylene dichloride. getween 1956 and 1973. there has been a 60% reduction in existing plants in the energy necessary to produce a pound of polyethylene, and labor productivity has been doubled in the same period. The most recently completed polyethylene facility uses 80% less energy per pound of polyethylene than afacility completed in 1956. Asfoi ethylene dichioride. the new jumbo plant recently completed in the Texas Division uses 85% less energy per pound of product than the facilities which were completed less than five years ago. Q. Why didn't Dow start making these improvements earlier? A. Until fairly recently, hydrocarbon fuel was so inexpensive compared to iree for the capital expenditures that would have been required for most energy ireofth; conservation projects that it wouldn't aave been economically feasible to mount a major technological effort to 1W veral conserve energy. Q. Does Dow own much of its energy end power sources ? \'' a S h L.nv owns more than 10% of its e that it natural gas supplies, and controls about id to J0% of the pipelines which collect the feedstocks necessary/ for ethylene. The yc-ars balance is purchased through contracts eating ' '"'ith proven reliable suppliers. Also, we meant Produce more than 50% of our own it: -ii Power, and this gives us greater ><\;re of ;Texibility and control than if we had to !(! wf 'el;, entirely on public utilities. The i.:ces. j '6si.lt is that we are probably in a better Me. nM* Position on energy than are many of singly ;'Ur competitors and many companies ir> other industries. :-'ls .. Q' Is it economically feasible to switch Production facilities from gas to oil or Miff' 0 coal? h For some time now we have been improving our capability to burn different types of fuels, and to switch from one to another and back again. The basic idea is to maintain the flexibility to burn the most economic fuel that is available at any given time. In some cases, we can even burn one or two or three fuels at the same time. In the future, our tendency will probably be to switch to heavier fuels --in other words, from gas to oil and from oil to coal. We can do this in most cases. However, it is impossible to burn coal in some of our existing facilities. Q. Would curtailing chemical exports be a good way to stretch chemical feedstocks and energy supplies ? A. No. For one thing, exports provide one-sixth of Dow's U.S. jobs. Also, the U.S. must continue to generate the necessary balance of payments to purchase foreign goods. This includes oil. which must be purchased overseas in sizable quantities for years to enme -- that is. until we in the U.S. can The huge new Walter Roush Ethylene Plant at Freeport, Texas (named in honor of the man who in 1973 retired as manager of Dow's Technology Centers was designed to be highly efficient in its use of energy. More than 80% of the steam it uses is generated by waste heat recovery. C/P -1 CD CD cm CD CO CD fl .'l , .1 I.. if Dow scientists believe that geothermal develop our own alternate resources. continuing to be, we view the over-aL . ' energy will be an important source for We must also remember that if this energy situation as a major opportunity! the Company in the future. This unit !i: stands atop an enormous store of ?,? underground steam in northern California. nation is to continue to be a major chemicals producer, we must import some feedstocks such as the benzene required to make styrene. In addition, it for Dow rather than as a potential I disaster. j Q. What plans does Dow have for obtaining new feedstock and energy j is essentia] to purchase substantial supplies so the company can continue quantities of ores and metals from to grow? foreign nations. All of this adds up to a situation in which we must continue to export chemicals and other products. Q. How will skyrocketing prices for oil and gas affect Dow? A. We are working to obtain new oil and gas supplies in all oil producing parts of the world. In the U.S.. for example, we are stepping up our exploration of oil and gas significantly A. Obviously, our manufacturing costs Dow's Oil and Gas Division has are being affected, and we will increased expenditures to develop oil definitely require price increases -- and gas reserves five-fold during the particularly on chemicals which are past three years. We are also building ^ hydrocarbon intensive. However, we fuel pipelines to almost all of our maje- believe we can also protect our profits plants. In addition, we have projects by continuing to make more effective under way which should eventually use of our energy. Generally speaking, give us the capability to use feedstock we feel that the highest profits will go from oil shale, just as we plan to greaw to the most efficient users. Since our accelerate our technology to use liquid efforts at making more effective use of from coal. Also, we are increasingly our available energy have been very interested in geothermal energy, and successful, and show every sign of see this as a potentially promising 12  source in the relatively near ijWre- " . -.-.s;-' ' ......::'"7 7 lear energy is still another ibility- The Midland Division, ?^jCb was one of the first in the nation * ^cognize the looming shortage of fflls, started working toward a nuclear - ;v,er base several years ago. In fact, of the most significant energy Conservation projects that we know of jjjvolves tbe use obtaining steam xbaust from the nuclear facility. This ctearn will be utilized as process steam Instead of being lost to cooling water as jlis in a conventional nuclear plant. q, vVhat products or technology does powhave to help solve the energy crisis? .\, The list is almost endless. They include insulation materials, heat transfer media, hollow fibers technology for industrial and other applications, and a wide variety of plastics and chemicals and metals which rank as truly impressive energy savers. Dow also has a number of engineering techniques for conserving energy--techniques which have been _ . shared with the engineering profession I in various journals. / nPilastics are particularly important for many applications in that they are light in weight and corrosion resistant. Increasingly, plastics (which are generally better in energy content than the metals they replace) are being used in automobiles. The lighter weight of ver-all these plastics has a favorable impact on ortunity the long range fuel economy of ial automobiles. Dow is also selling Derakane vinyl for ' er~y niinue ester resin to replace metal in many corrosive plant applications. The longer hte of the Derakane will prove to be an energy saver. w oil :g r can tlv. One of Dow's most notable energy tonservers is Styrofoam brand plastic 'Oam insulation. Dow also markets Vorano! polyols which are used as one component of urethane foams for insulation. ip oil t.e c ig sj: As for hollow fibers. Dow has Pioneered the development of a family them which can be used to purify a yarur.y of materials. Many of the nolh.w fiber devices use purification v : 'achniques which are very similar to ck I 'hose found naturally in the at!} | environment -- an important point. .lid.- 1 considering nature's way of selecting I. '-le most energy efficient processes. Sea ;vafer purification using hollow fibers ls an example of n relatively low energy ''V r.I - vvwvwM mm ^ r'r- , purification technique. Dowell has also long been active in providing services to the petroleum industry. These services, such as acidizing and hydraulic fracturing, are designed to stimulate the production of oil from wells; through DowellSchlumberger, they are offered on a worldwide basis. And Pusher chemicals for secondary oil recovery, used in conjunction with water injection in oil fields, are Dow products designed to increase the recovery of oil. Many of Dow's agricultural chemicals produce impressive energy savings. For example, herbicides are often sprayed by air to clear rangeland of unwanted brush. In addition, railroad tracks, irrigation and water transport systems, Increased insulation of process pipes is just one method of conserving energy at Dow's Louisiana Division and other locations throughout the world. Midland Division engineers estimate that particularly in colder climates, heat savings can be 10 to 20 times greater when insulation is used compared to when it is not. GO 1! CD CD (DO CD CD IS) Below: Two gas-fired turbines generate electricity at Dow Canada's facility at Sarnia, Ontario. Waste heat from the turbines is used to produce steam. The over-all system operates at the exceptional efficiency level of 86%. 13 i' Above: Recycling of waste heat has taken on increased importance at Dow's chlor-alkali facility at Stade, West Germany. The result will be annual savings of approximately $300,000 in comparison to when the complex went on stream about one year ago. Right: Hollow fibers technology, which involves driving water through exceedingly thin, hollow plastic fibers as a means to reject salt content, is a top-priority project for Dow scien tists. The amount of enemy required to desalt water through this emerging form of technology is about onetenth of that required by evaporation or distillation. 'ti V- ` / : # SF** , f%y f ytz ' i ( t This 775-foot stack at a Canadian kraft paper mill is made of Derakane brand roadsides and industrial sites all lend themselves to various herbicide fertilizer, the contribution of this ,4 product to saving energy resources w _ vinyl ester resin, a Dow product. Derakane is expected to deliver a longer life and thus save energy as compared to a meta! stack. application techniques that require substantially less use of energy than mechanical clearing techniques. Still other energy saving agricultural be impressive. j Still another example involves : chemicals being used on a * developmental basis for the production | products are on the horizon. For of cement. These reduce the pow'er i instance. Dow is awaiting registration necessary for the manufacture of { i of a product. N-Serve nitrogen cement by approximately 30%. and at | i stabilizer, that serves a unique the same time increase the effective function. N-Serve is selectively active capacity of the cement industry. In an against a bacteria that transforms age where the use of cement is J. ammonia into less usable forms of increasingly on the rise throughout thfr'l nitrogen. By inhibiting the activity of these bacteria. N-Serve preserves the ammonia in a form that remains in the soil ready for use by growing plants. By increasing the efficiency of the fertilizer. N-Serve conserves hydrocarbon feedstocks. Considering that 40.000 cubic feet of natural gas are world, this contribution will be essential in the future. CD c> f cp CO CO required to produce one ton of anhydrous ammonia, a widely used 14  s. I. ^|y| : p:ilL ^ '<-> {tests; *.la# <5 - ' * * ' '! j J ' *'r- '^V* S~*V4' .-* .1 y/v;--x:. ,*=.?;. ,V.S, / ( - ->'-y" ' N V.S ^^ V' r'.*'- ...:' "' - \"3 b$M <jf' ^S-, *-* - Ji `v *'* ~....................... '*' ' ""' J <v A.^-v..-.. Two analytical chemists analyze q new chemical compound by laser Raman spectroscopy'. The device. which can analyze minute samples V was used to detect an impurity in ' 'J. Dursban insecticide and led to a in significant improvement in the S? manufacturing process for this ? important Dow product. sc K i.-. 7* ! $118 million, up 13% from 1972. This was equivalent to nearly 25% of pre-tax profits. The Company's major product groupings (Chemicals/Metals. Plastics/ Packaging, and Bioproducts/Consumer Products) each accounted for roughly a third of the R&D budget. PRODUCT RESEARCH-Ten of 1973's new products are listed in the box on page 17. Some of these maybecome major products for Dow, as have Tordon herbicide. Coyden coccidiostat, Rifadin antibiotic, and Dursban insecticide in recent years. However, we cannot tell at this time which ones will achieve this stature. Preceding page: Drs. Ben A. Teffertiller and Clarence E. h'aberinann were the principals among more than 50 Dow R&D people involved in developing a new. award-winning process for making acrylamide. Acrylamide flocculants are used in the sugar, coal, and minerals industries and in wastewater treatment. Silhouetted in the background is the inventors' experimental apparatus. 1G since it typically takes five to 10 years for a new product to make a major impact on Company sales and earnings. Contrary to popular belief, brand new products aren't the only target of Dow's product research efforts. Considerable attention also is paid to improving and modifying existing products; such efforts not only can enhance a product's performance in its current use but often open up entirely new markets. As a result, what started out as a single product may eventually become a "family" of products. Styrene-butadiene (S/B) latex is an outstanding example of this. Originally a binder for water-base paints. S/B latex is now a large product family, with special formulations for pigmented paper coatings, carpet backing, foamed carpet padding, adhesives, highstrength Portland cement mortars, and binders for asbestos-based vinyl floor coverings and non-woven fabrics --all as the result of continuing research on the basic product. There are even families within this family, as shown in the chart on page 17. I! 3GO \ -- 1 <> 1 CD jit CD H j CD lit CD ;[ j co:j j cn : I v: t A1 u >t i, PROCESS RESEARCH --Dow process research both develops commercial processes for new products and improves existing processes. Through j rigorous study of each reaction step anc t innovations in equipment design and j construction, research scientists j increase the yield of salable product ^ from a given amount of raw material, j boost the total output of production f. plants, eliminate waste and unwanted by-products, reduce energy demand, and save on capital costs. In the past three to five years we have significantly increased the output of i our plants, thereby reducing the amount of investment required per ! j pound of product. A 35% reduction in polyethylene investment and a 45% j reduction for polystyrene are just two , examples. Dramatic evidence of sirnil3- progress in conserving power and ( steam and in pollution abatement wih ; be found in the articles on energy (pa?: ` 9) and social responsibility (page 18)- ; Dow was recognized in 1973 with a merit award in the Kirkpatrick Award competition sponsored by Chemical Engineering magazine. We wpre j . Aice the introduction of the first Dow aTene-butadiene latex for paper process 'oatinss in 1949. the basic product has ;i;il 'ren ccntinouslymodified and Tiproveb. As each new formulation ough tep and : and honored fora new catalytic process for .uct :rial. .on inted rnd. ''e production of acrylamides, used in ndustrial flocculating agents (see photo, page 15). The new Dow Process --the result of a four-year Pfogrrm --not only produces higher i':elcs and product purity but also have : of ;!;minates undesirable by-products and educes costs. "ocess research is immensely r s-oductive and. in fact, is essential to n in 'aintain and improve Dow's -ampetitive position. About S20 million ; > vo ,vas devoted to our process research inilar jrg: -ms in 1973 and resulted in | :nnu.b savings of approximately S45 will j-Pillion. , vase (Sl:PPORTIVE RESEARCH-A 5 ^bstantial number of Dow people are ard (''gaged inactivities that broadly :i I :IJPport the over-all R&D effort. These X wins market acceptance, it tends to replace previous formulations, whose sales then decline. But as the chart shows, total sales of Dow latexes for paper have continued to mount rapidly. -- Analytical chemists, who work closely with research chemists to determine the structure of new chemicals and the composition of the products of new reactions. -- Toxicologists, w'ho determine the health impact of chemicals to assure the safety of employees and consumers. -- Ecologists, who guard against any adverse effect of our products on the environment. -- Computer specialists, who simulate chemical processes and analyze data from research experiments. In summary. Dow's ongoing commitment to R&D has provided continuous benefits to customers and, ultimately, the public. It also has helped keep Dow ahead of. or competitive with, other companies in the product lines that are important to the economic health of the Company. t A sampling-of 1873 new products .7 from Dow research ' A 'Anti-snag > treatment .for 'double- ' ;yh;W knit) fabrics.r-ivlWithstahtis wash- ) ^:\:`vingTand drycleaningt ;&V;'. A >.. IT: ^Viscosity improyer'TbrTceihent | 17 A production fTltReduces: energy'"! r' consumption by ;as much as 30%. 7 Imbiber Bead containment devices' ] l";Af:7for" hydrocarbon spills.:TkAbsorb J hydrocarbons from water and. soil./.h -^.'"Plastic resiii for use in fabricating ,-1 f h>ysan.3\yich-type 'auto body panels). %' iTechnology- for '..hydrogen)sulfide ..vl J" '- removal in ;coal gasificationi plants ] ; and natural gas-production: A- Propellant deviceito. assist thejh-i '-i " flatidh'df.automotiye air-safety) -1 . fcushions.A.f _ .j .) Ali-hv bather!, brake. fluid -. j jd- ExceedsyU.S'-'Department of..;j 'TTransportatioh'sfmbst.stringent -1 \ . requirements. 7'1 viTy- h y'b 3 )7First' commercially available In- 1 :|y sulation panels for cold-storage ! . '.v'buildings-that meet Factory In-' 1 surance Association criteria for 1 : ;. higher fire resistance.'.- wj j . Dow.HRP (heat-resistant plastic), i, styrene-based polymer for use in i appliances and other products j y: associated with relatively high ! temperatures. - '! j ^ ] j j Fospirate insecticide for. housed 1 y ,, hold pets... Currently registered j ;' for use in dog collars to. control-f 1 fleas,.. Research on other uses in j ! progress. ;j 9I ST 0 0 16 8 6 17 taocial respons:bili^v a progress report Y; :r -TT- : i,... . ...........'. .; ^ 3' r C^..-`A:7vi::;>A\ -r' I - - ,:.v_; ' - ..-- 5, -. -- tiiuj.'-->'v. .v ,-.^-= -- ._:nl im -^T-u--i . - ~ *"*' ...... - a*rfSi&iSiS2,2^. 2.LL--- S.iTi J3T n3'TiEaan3iEW2M3aS2S ' " TiCr blUTT ^:^TT`e^;T^~'-:'"Tra'>'v' r*.i; v .'V r pM 92gsf'&?& - ifii: ?:-ir ^;vBHv-a; vJ-'^d % r,,^r.-/^'^"'-- r.-.-r/rw- -^.r *c- '.X':-1**-:*--> i it _.5^ v. ---'^Ti,'f;_ ?' <rrr**rfr~rsj o -rrrr,.'r>.. " '* --..*~4 ' C*:rj?-T? r-, -r"^ .-; .--V r-;> 'r;^:;.' - ' 3 ;> fTT? " - i-j- - ., '' C^.} O t~~~ -r^* ;r. p ' :.' --1 ' ; J ^T: c~3 -' V' -~-p;..'-- ` T'\ -T"_ j r;-^ f- -* n4 ~.i__!' ' ' ' '-'*-' - "'3 - -' -'4 " '' ^ '~i r 'v- ^ ~'-v^ , - '. >' ~ *rr> .y -.;> .;,` Z? 'r'-' ;. ~S'C?^ ^-'1 '< ^ r--} V r--^ --*v v*^*1 r-''''"% v ~ :" -.v _;*--s-^ ^ ;- *. ,1C .5 C.3 _.... O'--:- V..:^Zi . / V" > r-.-j .-v .w, ;,---. .-.c, t'-'v *<-^. :\ ^ *:'> .-^3 ^- ' `^ * -* _ ; ' *.. :.' -; ' ' ' '-1 ^' : Tt ''-> f.>T".r. ,'*T -~K' 1 v'%' j f* r.-`,'S>*' '."^'''"J* >. -"*J* rV-^* -s - *7 -` X -- - > .* '<_^ `'.wU'.!!;: -- - C'..;.; r. 7:r " ^r'. :r; - ;<'>|f,'"0^,'|?";'',----- N-v ,i'rr. ' ^s--~' v^ . >\ yrz--:^r:-." " "' '^ *!''- r:'v/"V . '** ' Vi.- *' ^cy, . -* .- v - ~r ' 1 r.. :.' ^ U. ./ v ..-* V. .S >-j_ ^ t - -TV <*?tit r-~ ^ :0 '-~3.A r` T. f*T\ t '*-**.} - r' ' '''', * . j :i Employees of The Dow Chemical tr- Company have increasingly beco^g involved in responsive. activities which are sS0tlc^i*r,,. ._,- These activities include a continuiu, drive to reduce water and air pollulj w an intensification of product c tC-ty. stewardship, increased hiring of ,r';' members of minorities, professional advancement of women, and improving the Company's safety performance on a worldwide basis W:.; T._ Some examples of what is being accomplished in these diverse and vitiffe-^ activities follow. v>.^* POLLUTION ABATEMENT--Durir '.^T. the past year, 554 pollution abatement ?- " projects were completed at a cost ofjr'^- million. Our annual net savings of jus! :,::.\underSl million are more modest thaii^' in previous years. This is to be IT'S, expected, since the further we progress in pollution reduction, the more expensive it becomes per unit of reduction to produce savings. i.tsofet. tirme. :-;vtensi Increasingly, we are finding successItrLi^nni containing our liquid wastes. Our c/Tf fthou facilities at Dalton, Georgia, and --J yciisti Hanging Rock. Ohio, are already at fa? point where their liquid process wafci____ and cooling water are completely cp recycled. In addition, we expect our facilities at Pevely. Missouri, and cp'ealth Allyn's Point, Connecticut, to be in aoJuard position to totally contain their iiqui(S| :,-rte( process wastes within the near future. :::intec At Pittsburg. California, the locations: i-.qien; our largest facility on the West Coast, Tel re all liquid process waste is being Uaferi completely contained and all cooling 'Tien water will be recycled by the end of pDo this year. '-els v ' erk p PRODUCT STEWARDSHIP-Don- l-oorr continued to intensify its stewardship over the products it makes. This activity represents the coordination and acceleration of a number of ongoing activities, some of 40 years 0. roc eosu -Dov. -:e le\ more standing. jver >cy < A good example of this is Dow's stewardship of vinyl chloride, curren-: j r p' being investigated by the National Institute for Occupational Safety and hn ` 40.) (/ntit These wastewater treatment ponds in the Texas Division cool and neutral)25 plant effluents and reduce their '['is ei irn j dUl biological oxygen demand through <f combination of aeration and bocteri<n action. Spread over 30 acres, the ponp and related facilities were completed11 (*0 ; nor l -Up. 1973 at a cost of nearly S5 million. \I i ! ir;mical become h are scia;v ;ontinuino ,irPolluti? ct :^gof fessional ad. safety de basis, oeing rs6 and vi|j T-. Vlr Vi ~i'Zl2c &y Duriit abatement a cost of $? ings of just nodest tha^ be we progress nore `.safety awareness program with the ait of r:me. "Life Is Fragile," was :s. Pensively promoted throughout the jmpany and won national success in ignition. It included the distribution s. Our ['liTousands of safety pennants to and [relists of all ages. eady at the i cess water ; ___ letely pect our ri. and kalth as a possible carcinogenic to be in a rzard at certain exposure levels. Ileir liquid '-teen years ago. Dow scientists ear future, location oi est Coast, ianted out the merits of an industrial haiene guide that was one-tenth the f'-el recommended by the American ing inference of Governmental Industrial !1 cooling ; end of l.-gienists and began working toward [a Dow's own locations. The Dow -els were based on animal toxicity . P -- Dow wardship i ;rk performed in our Toxicology [I -orruorv. This =our opinion that this level of iination fosure. which is met or bettered in r of [Dow U.S. plants, has been and is a 0 years'or ilevel of exposure. ; employees are carrying out our . w's I ;-`cy of product stewardship on our current^' jer products as well. With that ti'inn! 1 sc; ve in mind, the Company has Ictv and j :en:.ally completed product data files I DCO products and product families [ratified as requiring this measure. :nds in 'l ;s enables Dow to assess the :traliz-` j cronmental impact of these j ducts on a worldwide basis. ;/i a 'acrid (-N'ORITY HIRING --In 1973, ponrif : lority employment increased 19%. letuclir 1 Spared to a 2% increase for over-all employment. At year's end. The first safety cap for aerosol oven cleaners was introduced nationally by Dow in 1973. An example of the Company's ongoing Product Stewardship program, the childresistant.cap is supplied with both the 8-ounce and 1'6-ounce cans of Dow Oven Cleaner. minority persons--defined by the government as Blacks, Orientals, American Indians, and Spanish Americans --accounted for7.3% of Dow's total U.S. employment, compared to 6.3% at the same time a year ago. ADVANCEMENT OF WOMEN-We believe our female work force constitutes an important reservoir of talent and that women should be challenged to the fullest in the jobs they perform. During 1973. a system was developed to better classify and use women's job interests, skills, and education. Female employees, with guidance from their supervisors, are assessing their personal capabilities and setting career goals for themselves. Worldwide in 1973.22% of our women employees were advanced at least one step. Many of these were within the secretarial-clerical classifications. The Company is seeking to advance and hire more women into professionalmanagement categories. SAFETY PERFORMANCE-In spite of the severity of injuries and the nine Progress in minority hiring and advancement was recorded in all three of Dow's major activities-- manufacturing, research, and marketing. Here, a Dow field salestyqn confers with a buyer for a leading__ j customer in the Cleveland area. ^ CD ------------------------------------------------------------------- CD- cn deaths which occurred in 1973, Dov^ continued to have one of the best safety records in the industry. Our 1973 frequency rate was 0.80 disabling injuries per million man hours worked. The Midland Division, which earned the Company President's Award, completed twro periods of 5 million man hours without a lost-time accident and the Rocky Flats Division has completed 6 million man hours. Three facilities -- King's Lynn. England; Barry, Wales; and Allyn's Point, Connecticut--each completed five years without a disabling injury, while employees at Pevely. Missouri, have completed seven years. According to data compiled by the Manufacturing Chemists' Association, the chemical industry average for disabling injuries in 1973 was 3.76 per million man hours worked. Among the top six U.S. chemical companies. Dow's record was third best for the year. Also. Dow' employees' on-the-job record was appreciably better than their off-the-job performance. Traditionally, there are from four to si> times more disabling injuries away from work, and that ratio remained intact during 1973. Financial review ~ 1973 was a year of constant monetary turmoil. The dollar was officially devalued in February and then continued to lose ground. By midsummer, the dollar had lost some 20% to 40% of its value against most other major currencies. In the last quarter, we saw a reversal of this trend, but the dollar still closed the year well below its value at the beginning. At the same time, inflation rates reached new highs in all major industrialized nations. Since Dow, in 1973. had 46% of its sales and 34% of its plant investment outside of the U.S., we were obviously affected by these events. As foreign currencies strengthened during the first nine months of 1973, the effect was to increase the dollars of sales and earnings derived from foreign business while creating exchange losses on foreign currency debt. Then, as the dollar strengthened in the last three months, the situation was reversed. For the year, Dow dollar sales were up about S100 million due to the shifting currency relationships. Likewise, operating income was favorably impacted but exchange losses partially offset this increase. The result was a net favorable impact on earnings of approximately S.08 per share. Other items affecting 1973 earnings also warrant special mention. Our selling prices increased about 5% during the year to compensate for the high worldwide increase in Dow's labor, raw material, and energy costs. At the same time, these conditions created so-called "inventory profits" as low cost inventories were liquidated and replenished with higher cost materials. We estimate that during 1973. such inventory profits amounted to some S.15 per share. During the second quarter, we sold an investment property which resulted in a profit equivalent to S.09 per share. An extraordinary profit of S.05 per share was obtained from the tax benefit of an operating loss carry-forward of the Dow Badische Company. Dow was also very active in the area of financing in 1973. While cash resources from earnings, depreciation and working capital were again adequate to meet plant expansion requirements, the Company did some major long-term financing in order to place itself in a liquid position. During the year, we issued S100 million of 29 'T 3 D TVS 3 9 7.625% 30-year debentures in the U.S. as well as 80 million Swiss Francs of 6-1/4% 15-year Swiss bonds. As a result of these financing operations, Dow repaid all U.S. bank borrowings and commercial paper. Consolidated short-term debt at the year's end was S253 million, the lowest level since 1967. Offsetting this, the Company owmed S298 million in short term marketable securities. Capital spending in 1973 was S402 million. The Company expects to increase capital expenditures substantially over the next few years, and the program of refinancing short term into long was designed to prepare the Company for these higher expenditures. Early in 1974. the U.S. government removed the regulations which restricted the free flow of capital out of the country. At the same time, several other Western governments reduced their barriers. While Dow has been able to operate successfully in the face of these restrictions, their removal will undoubtedly add to our international financial flexibility. Dow shares were listed on the Toky: Stock Exchange near the end of 197-1 One of the first non-Japanese firms:, be listed on the Tokyo exchange, the Company was the first U.S. Industrie Inc firm to he listed. In recent years. Don shares have been listed on a growit'.f Pn number of stock exchanges through- Inr the world, and particularly in Europ' Mi' In; Another event of significance was th listing of Dow Common Stock on the Ex Tokyo Stock Exchange on Decembe: > 18.1973. Dow was the first foreign ; * \r industrial company listed and oneoonly six non-Japanese firms to be accepted for trading in Tokyo. DuriE- Ea the first months of trading. Dow stoc was the most active foreign stock Japan. It is the Company's belief with almost half of its business out?> of the U.S.. we should make it easkr our employees and other non-U.S- ( citizens to acquire our stock. The l>5^ in Tokyo was a move in that direct'-1' and follows previous listings in mJD European countries. During 107-;.v", also expect to have Dow stock track1' on the Toronto Stock Exchange. iucts and Services !jt sales..................................... j&jperating costs and expenses: ACost of sales....................... 'Selling and administrative. '^W'iProducts and services operating income ^Non-Products and Services investment and financial: Profit (loss) on investment turnover................ Income from sundry investments.................... Equity in earnings of non-consolidated *30':- subsidiaries......................................................... 12: -Administrative expenses..................................... ^ /Equity in earnings of associated companies and a'.jf minority investments exceeding 20%.............. Interest expense -- net. -Cci Sundry income (expense) -- net ,4 Non--products and services loss . Tokvo : 1973. irnis to the i::.tria! Income Before Provision for Taxes on Income. . Doiv nving Provision for Taxes on Income............................. lUgho;' urope Income Before Minority Interests......................... Minority Interests' Share in Income................... ::s the Income Before Extraordinary Items.................... n ;he uber Extraordinary Items................................................. no of Net Income.................................................................. i 11 ring s: )ck Earnings per Share in ' at i . diir: Income before extraordinary items . Extraordinary items......................... :r If! Net Income........................................... -tifj n.nH I .n\' i I Restated to reflect one-for-one stock distribution made May 9, 1973. n j Accounting Principles and Notes to Financial Statements .... A.. ivC- "SW Year Ended December 31 1973 1972 $3,067,888,218 2,229,392,459 330.285,968 2,559,678,427 508.209,791 $2,403,709,379 1,760,779,411 284,938,970 2,045,718,381 357,990,998 13,216,221 1,707,433 5,407,800 (1,264,190) 19,067,264 43,272.153 (83,403,897) (4,066.491) (25,130.971) (1,391,813) 2,766,499 4,035,377 (1,456,533) 3,953,530 25,214,716 (85,834,176) 22,709,166 (33,956.764) 483.078.820 202,600,000 280.478.820 9,330.808 271,148.012 4.419.500 S 275.567.512 324,034:234 127,100,000 196,934.234 7,963,037 188,971,197 217,709 $ 189.188.906 $2.94 .05 S2.99 $2,07* $2.07' v* ' 0 6 9 H i 0 0 IS i Consolidated Balance Sheet ASSETS Current Assets Cash.............................................................................. Marketable securities and interest-bearing deposits (at cost -- approximately market)........................... Accounts and notes receivable: Trade, less allowance for doubtful receivables (1973, $21,806,936; 1972, $12,500,820)................ Miscellaneous.............................................................. Deferred income tax benefits....................................... Inventories: Finished and in process............................................. Materials and supplies............................................... Investments Capital stock -- at cost plus equity in accumulated earnings (less reserves -- 1973, $2,554,456; 1972, $1,985,488): Banking and insurance subsidiaries....................... Associated companies (50%-owned)..................... Other............................................................................ Sundry -- at cost (less reserves -- 1973, $3,580,064; 1972, S3,217,251)................................... Noncurrent receivables (less reserves -- 1973, $4,563,921; 1972, $2,679,614)......................... Plant Properties............................. Less -- accumulated depreciation Goodwill Deferred Charges and Other Assets TOTAL See Accounting Principles and Notes to Financial Statements 20 December 31 1973 1972 $ 19,796,580 297,885,419 582,594,345 140,299,069 21,922,473 325,896,628 171,632,875 1,560,027,389 $ 19,682,558 K 142,837,705 475,008,228 108,396,543 12,044,690 303,863,266 119,994,216 r 1,181,827,206 .In- CO t CD i CD f 49,827,403 199,150,224 47,794,043 43.057,280 88.667,474 428.496,424 3,301,341.698 1,522,917.360 1,778.424.338 83.811,404 45.433.173 S3,896,192.728 ^Wy 41,828,54a" In 164.392,066 |D( 50,602,868 (Lf t 44,747,309 52.275,393 353.846.186 2,980,845,425 1,331.177.286 1,649,668.139 i i U: I Cu l Rt 1 He 79,890,532 47.496,582 t ! t i $3,312,728,645 i Consolidated Balance Sheet i STOO04692 1972. t LIABILITIES Lent Liabilities 9.682,SS"8brses payable 9 - Lg.term debt due within one year.......... ' 37,705 foounts payable............................................. L|ed States and foreign taxes on income. ' 008 fccrued ant* ot^er current liabilities.......... -.396,5431 644,690 ' -863,266 994,216 327^206 ong-Term Debt. L 't (her Liabilities and Reserves 3.545 2,066 ',668 linority interests in subsidiary companies. eferred employee benefits........................... (Deferred investment grants............................. Referred income taxes..................................... Loss on foreign investments........................... .309 308 10 S Stockholders' Equity Common stock (1973 -- issued, 97,133,834 shares) 25 Capital surplus.......................................................... 36 Retained earnings.................................................... 19 | Less -- treasury stock at cost ' (1973 - 4.873,981 shares)..................................... i TOTAL ( { See Accounting Principles and Notes to Financial Statements December 31 1973 1972 $ 214,008,963 38,950,674 354,775,529 167,349,570 230,032,944 1,005.117,680 $ 269,646,540 37,613,103 218,935,508 101,681,612 170,145,274 798.022.037 1,225,885,957 1,094.947,875 44,133,961 32,325,976 1,322,916 51,887,647 6,000,000 135.670,500 38,339,482 29,800.839 1,177,640 14,961,015 6,000.000 90.278.976 485,669,171 321,321,422 843,475.141 1,650,465,734 120,947,143 1,529,518.591 241,260.353 542,797.165 657,817,916 1,441,875.434 112,395.677 1,329.479.757 S3.896.192.728 S3.312.728.645 7Tr^rr, 2,000-------------------------------------------- 2.00 1,000 1.00 Balan t" to e to CO clu j Bala 'Add CCD5 cccoss T ctcxos cCcssD CCrcsS3i CClxS tx CCNr^*SJ Crf-s*S. i rr ccos r* in ccr-o:t CCcsOO CctxOs COCDS cCCsDS OOtx Ctx5 r* *flL'Stat<?d to reflect onc-for-onn stuck distribution mart-: t Mfx r- rrsr-*.- 0 -n-^ I  C: L_> GnSClICicC^Q wCct/billci ib ui mi t-* * -----~ : Year Ended December 31 '. 'V.': - 1 VT'' r,,- Sgalance at Beginning of the Year................................................... .................... 1973 ..... ' '....... . $542,797,165 1972 . . $520,935,018 Add (Deduct): Excess of selling or market price over par .... va]ue of common stock issued to employees........................ .................... 'Income tax benefit realized from sale of ' common stock to employees....................................................... ...................... Excess of face value of debentures over par value of common stock issued on conversion........................ .................... Transactions related to acquisition of subsidiaries.................... .................... Transfer to common stock relative to one-for- . one stock distribution................................................................... 17,655,932 2,315,031 61,146 90,875 21,568,281 189,252 104,614 Balance at End of the Year............................................................... ...................... $321,321,422 $542,797,165 * 69* 0001 $: Consolidated Statement of Retained Earnin i Balance at Beginning of the Year............ Add (Deduct): Net income.................................................... Adjustments related to consolidation of subsidiaries............................................ Retirement of treasury shares............... Cash dividends........................................... Year Ended December 31 1973 1972 S657,817.916 $553,448,631 275,567,512 (41,780) (89.868.507) 189,188,906 189,291 (2,677,183) (82,331,729) ( Balance at End of the Year $843,475,141 $657,817,916 | ^ee Accounting Principles and Notes to Financial Statements Cash Dividends .Paid Per Share11 Cash Flew Per Share* Before extraordinary items $ 1.00 .90 .80 -- $ 6.00------- -------5.00 .70 .60------------- 4.00-------------- ---------- - .50 - - 3.00 i. t t 1 CD t <=> \ co --1 CD CO |sr C010 1 In: nv i { ; in .40 i 2.00 Ih .30 .20 .10 L"5 CO CO C5 O r* ts.co CO to CD CD CO t*x rx c:c: c: a C3 C3 C 03 03 1-*r* r*. C~i ci 'Restated to reflect one-for-one stock distribution mode May 9, 5 973 G 1.00 iJn ` C: C: ; D. i if. ' D' rr in CO CD C3 Cl CO Cs. CO CO Cl c; r- rH r- CO 09 O N CO CO N r-> CO 03 09 C3 03 r* ri r" . :r. v In t 'Restated to reflect one-for-one stock distribution made May 9. tO/3 .1 Lurce of Working Capital ,gt income before extraordinary items................................. ^arges (credits) to income not involving working capital: Depreciation........................................................................... ~ Equity in earnings of non-consolidated companies, less" dividends received............................................ Other-net............................................................................. : proceeds from sale of investments, less gains reflected in net income....................................................................... Provided from operations................................... Extraordinary items................................................................. ./issuance of long-term debenture notes................................. - Increase (decrease) in other long-term debt......................... i Sale of common stock to employees................... ................... Increase in other liabilities and reserves............................... Decrease (increase) in deferred charges and other outlays . 1 Disposal of plant property and sundry.................................. Use of Working Capital New plant and equipment................................... Cash dividends....................................................... purchase of treasury stock................................... Increase (decrease) in noncurrent investments Acquisitions of subsidiaries and purchase of minority interests............................................... Increase in Working Capital Increase in Current Assets Cash and marketable securities................................... Receivables................................................................... Deferred taxes. ............................................................. inventories..................................................................... Decrease (Increase) in Current Liabilities ^'otes payable and current portion of long-term debt ^counts payable.......................................................... mcome taxes and accruals :......................................... ; Increase in Working Capital....................................... I SEe Accounting Principles and Notes to Financial Statements Year Ended December 31 (in thousands) 1973 1972 5271,148 263,114 (33,168) 7,473 5,921 514,488 93,300 37,046 22,763 45,914 1,094 12.140 . 726,745 $188,971 234,886 (23,335) 9,835 16,325 426,682 935 100,000 (2,088) 23,700 5,480 (8,682) 18,274 564,301 401,663 89,869 8,614 50,745 4,749 555,640 $171,105 358,993 82,332 (49,014) 2.606 394.917 $169,384 5155,162 139,488 9,877 73,673 54,300 (135.840) (125.555) 5171,105 $ 56,406 89,140 1,953 28,398 96,185 (38,421) (64,277) 5169.384 5ST0 0 0'i636 Accounting Principles Consolidation The accompanying consolidated statements include the assets, liabilities, revenues and expenses of all significant subsidiaries except for a bank and insurance company, both wholly owned. Because of the nature of their operations, the accounts of the bank and insurance company are not consolidated. However, their earnings are included in consolidated net income under the equity method of accounting. Investments in companies which are 20%-50% owned are carried on the equity basis. Other investments are carried at cost less reserves, where applicable. Translation of Foreign Currencies Property in foreign countries is translated into United States dollars at the exchange rates which prevailed at the dates the assets were acquired. All other assets and liabilities are translated generally at current rates of exchange. Revenues and expenses are translated at the average exchange rates for the year, except that depreciation reflects the historical rate. Unrealized losses on forward exchange contracts are recognized currently while gains are recorded at maturity. All exchange gains or losses in developing countries (principally Latin America) are credited or charged to income currently. In developed countries, net gains or losses on translation of long-term debt, net of losses or gains arising from forward contracts and from the translation of assets and other liabilities, are deferred and amortized over the life of the debt. Inventories Finished materials and work in process are stated at standard cost, which approximates current production cost, or market if that is lower. Standard cost includes labor, material, depreciation and other overhead. Raw materials and supplies are stated at cost under the firstin. first-out method. Plant Properties and Depreciation Land, buildings and equipment are carried at cost less accumulated depreciation. Depreciation is based on the estimated service lives of depreciable assets, using the declining balance method in the United States and Canada. In other countries, the straight line method is used. Expenditures for renewals and betterments are capitalized, and maintenance and repairs are charged to income. Prior to 1972, assets that were fully depreciated were eliminated from property and the reserve for depreciation at the end of each year. In 1972. the Company adopted the practice of retaining on the books those assets which became fully depreciated but still remain in use. In the case of disposals, the assets and related reserves are removed from the accounts and the net amount, less proceeds from disposal, is charged or credited to income. Goodwill The excess of the cost of investments in consolidated subsidiaries over carrying value of assets acquired is shown as goodwill. Goodwill arising since October 1970 is amortized over 40 years. In the opinion u management, goodwill arising prior to that date requir^' | P*'- amortization. 'h r3-' Retirement Plans The Company and certain subsidiarjj have plans which provide retirement benefits for eligible* * employees. The major plan covers substantially all full tj, employees. The policy is to accrue and fund pension costal computed by an actuary. j Investment Turnover The profit or loss resulting from Lar the disposal of assets held for investment and resale is segregated in the statement of income as investment turnover. ) Du: St.i Taxes on Income and Investment Credits The companies compute and record income taxes currently payable based upon their determination of taxable income which may be different from pretax accounting income. Wr Fur OH. G- These differences may arise from recording in pretax accounting income transactions which enter into the determination of taxable income in another period. The hi C. effect of these timing differences is recognized by ( lo:. adjustment currently to the provision for taxes. in. Provision is made for income taxes on unremitted earning l*u of subsidiaries as required under United States income ta> t by laws. and of 20%-50% owned companies to the extent that | such earnings are determined to be not permanently f tfl: invested. Further, the Company expects that a portion oftij l?v income of principal foreign subsidiaries will be distributed 1 l1/. and additional taxes, if any, applicable to such distributions - are provided in the year in which the income is earned, j T: Laws governing the determination of United States and j lo. certain foreign income taxes provide for investment credit-J ,1!. which are allowable generally upon completion of qualifif-i n facilities. Such credits are reflected as a reduction of incon-; d. tax expense on the flow-through basis in the year in which . rs- they are earned. j C. i ii In addition to tax credits, certain foreign countries provide investment incentives in the form of tax-free grants which j sk si. offset development and start-up expenses of new facilitief t to which they relate. The excess, if any, of grants earned b; over expenses incurred are amortized over the life of the , facilities. i Research and Development All research and h development costs are charged to income as incurred. c/>; CDcd! CD. CO; co> Ne r^csfcss to FinsncisS Stafismencs t 1 | jjivestments The Company's equity in the net assets el3 i JV- vestments accounted for by the equity method Ce - roxiinates the carrying value of such investments, ion of j ^Mends received from companies carried on the equity uiresjj ;vere S11.3 million in 1973 and $5.3 million in 1972. 1 r Plant Properties Properties and accumulated iftj ^oreCiation at December 31,1973 were: 'gible-1 "'R fulltic,: (In thousands) 1 cost7* Accumulated Classifications Cost Depreciation fro is t tr icorne me. x Land............................................ Land and waterway improvements............................ Buildings......................... .............. Machinery and other equipment. Wells and brine systems............. Furniture and fixtures.................. Other............................................. Construction in progress.............. Total............... $ 74,167 88,365 332,496 2,475,898 49,540 39.423 22,395 219,058 $3,301,342 $ 34,133 148.799 1,280,217 27,110 21,542 11,116 $1,522,917 fhe (2J C. Leased Properties Minimum rental liability under long-term leases, substantially all of which pertain to manufacturing facilities and transportation equipment-, is rning; due as follows: le tax t that 1974.................. $51,380,000 1979-1983 ........ S97,965,000 1975 .................. 41.662.000 1984-1988 ........ 68,513.000 noftk buied utions 1976 .................. 1977 .................. 1978.................. 35,570,000 28.220.000 25.897,000 1989-1993 ........ After 1993........ 35,903,000 27,021,000 The present value of minimum rental commitments on long-term financing leases included above was Si45.660.000 credit; and S139.640.000 at December 31,1973 and 1972, ialific; respectively. Present values were determined by ncom: discounting minimum rentals at a weighted average interest .vhich rate of 6.7%. Individual interest rates ranged from 3.0% to I 9.5%. wide | If the financing leases were capitalized and if applicable .hich straight line depreciation and imputed interest were lities substituted for rentals, the effect on net income would not ed be material. the i Rental payments charged to expense were S63.884.000 in J973 and S51.687.000 in 1972. | i i I( I D. Long-Term Debt and Available Credit Facilities Details of long-term debt were: Promissory notes: 4.5%, final maturity 1990............... 5.0%, final maturity 1991................ Debentures: 4.35%. final maturity 1988............. 6.70%, final maturity 1998............. 7.75%, final maturity 1999............. 8.875%, final maturity 2000........... 8.90%, final maturity 2000............. 7.40%, final maturity 2002............. 7.625%, final maturity 2003........... Other (various rates and maturities): Foreign currency loans.............. Dollar loans................................. Less unamortized debt discount Total.................. (in thousands) December 37 3973 3 972 $ 100.000 84.000 67,935 96,000 100,000 150,000 150,000 100.000 93,300 S 105,000 88,000 71,950 96,000 100,000 150.000 150,000 100,000 221,905 64,384 1,227,524 1,638 $1,225,886 176.925 58.737 1,096,612 1.664 51,094,948 The promissory notes and debentures are payable generally in annual installments beginning at various dates. Installments (stated in millions) due on long-term debt in the five years after 1973 are: 1974, $39.0:1975, $47.4:1976. S88.0; 1977, S45.1; 1978, $49.3. The Company has $188 million of committed credit available under agreements with various United States and Canadian banks which require retention of average cash balances aggregating approximately S17 million. These requirements are satisfied by balances available from normal business operations. There were no borrowings at December 31,1973. Other unused committed credit includes $110 million under a revolving credit agreement with a group of foreign banks, and approximately 730 million Deutsche marks under a one billion Deutsche mark agreement with a group of major German banks. CO CD CD CD O, CO CO tMptes to Fir*ar$cial Statements E. Stockholders'Equity At December 31,1973, authorized capital stock consisted of 200,000,000 common shares and 25,000,000 preferred shares of $5 and $1 per share, respectively. Numbers of shares and prices per share quoted in this note have been adjusted to recognize the one-for-one stock distribution as of May 9,1973. The changes in the number and amount of issued shares of common stock during 1973 were: Issued January 1............................ Sold to employees......................... Conversion of debentures......... Issued December 31..................... Shares 96,504,142 625,158 4,534 97,133,834 Amount $482,520,706 3,125,790 22,675 $485,669,171 At December 31,1973, there were 92,259,853 shares of common stock outstanding, after deducting 4,873,981 shares of treasury stock. No preferred shares have been issued. The Company's Award Plan permits the granting, during the ten-year period ending May 1979, of 1,050,000 shares of Restricted or Deferred Stock, or a combination thereof, to selected employees in lieu of cash for services. During 1973, 9,445 shares of Deferred Stock were awarded; no Restricted Stock was issued. At December 31,1973, there were 919,695 shares available for grant. The Plan also extended to May 1979 the previous authority for granting Dividend Units. Other plans for granting to officers and key employees options to purchase common stock at the fair market value at date of grant were authorized in 1972 and 1967. Changes during 1973 in Dividend Units and in the number of shares optioned under the 1972 and 1967 plans were: 1972 Option Plan 1967 Option Plan Dividend Units' Outstanding January 1........... Granted......................................... Exercised..................................... Outstanding December 31 .. . Available for grant December 31............................ Price range on outstanding options at December 31. . . . 387,400 333,820 (4.600) 716.620 778.780 S44.28 to S58.62 675,444 (304,180) 371,264 S20.48 to S45.81 200,240 1,740 201,980 548,020 * A Dividend Unif is the right (o receive for a specified period cash payments equivalent in value to cash dividends paid during such period on one share of common stock. A management incentive plan provides for granting t0 j.f ' employees, including officers and directors, incentive ' awards which are related to consolidated net income. i Awards may be made in cash, Dividend Units, Deferred i Stock and Restricted Stock, or a combination thereof. Tjy 4 aggregate amount charged to expense under this plan in' 1973 and 1972 was $1,705,000 and $1,869,524, respectively ^ In May 1973, the Company made an offering of common 1 stock to its employees at $45.25 a share, payable generally i through payroll deductions. At December 31,1973, there i were unfilled subscriptions for 359,151 shares which mayv ? cancelled at the option of the employee. Partial payments!/'' these subscriptions aggregating $10,237,988 are included i/l current liabilities. '| In computing earnings per share, no adjustment was made * for common shares issuable under stock purchase and ] option plans or upon conversion of debentures because j there would be no material dilutive effect. > V -t F. Extraordinary Items The Company's equity in the } tax benefit of the net operating loss carryforward of a 50V j owned company was $4.4 million in 1973. In 1972, a similar tax benefit amounting to $4.0 million was offset by extraordinary charges against income of $3.8 million, '' primarily the result of plants and projects abandoned. | .. G. Retirement Plans The cost of pension plans for companies in the consolidated group in 1973 and 1972 was $29,683,725 and $24,965,998, respectively. Pension fund assets exceed the actuarially computed value of vested benefits as of January 1,1973. Payments from the pension fund to beneficiaries of the Company's major plan were $10,281,460 in 1973 and $8,734,010 in 1972. { ; ; ' ' i J. i H. Foreign Exchange Losses arising from translation of foreign currencies to U.S. dollars which were deferred at , December 31,1973 and 1972 amounted to $1,495,264 and ; $2,298,268, respectively. j ! . Exchange adjustments incurred during the year plus ' $760,556 amortization of losses previously deferred resulted : in a charge to income for 1973 of $10,304,685. This compares _ with $2,287,106 for the preceding year. t At December 31,1973, there were unrecorded gains of $3,516,330 on outstanding forward contracts. j j : ,0kev ? , vestment Grants Investment grants credited to ''t! e. ! iIncome "amounted to $800,320 in 1973 and $5,097,735 in 1972. "red j- faxes on Income The provision for taxes on income ?-The j [nnsistec*of: nin ively, I :noh :ra!]y Current (in millions) 1973 Deferred Total 1972 Total iere United States. Federal................................ S 96.1 State and local.................. 6.4 Foreign.................................... 73.2 S 2.1 24.8 $ 98.2 6.4 98.0 $ 66.4 6.3 54.4 Total....................... S175.7 $26.9 S202.6 $127.1 'Hade I ] The current tax provision was reduced by investment credits of $20.0 million in 1973 and $11.3 million in 1972. principal events giving rise to deferred tax provisions were: the 50%. nilar j Excess of depreciation claimed for tax purposes over book depreciation --principally foreign......................................... Provision for doubtful accounts and other losses in excess of those allowed for tax .. Tax on undistributed earnings of foreign subsidiaries deemed not to be permanently invested....................................... Other............................................................................ /as Total............................................................ (in millions) 1973 1972 $ 29.0 (8.0) $ 7.6 (2.8) 5.6 3 S 26.9 1.4 1.7 $ 7.9 Effective consolidated tax rates for 1973 and 1972 were in 41.9% and 39.2%. respectively. Major differences between these rates and the United States statutory rate were: Statutory rate.................................................... U.S. investment credits.................................... Taxes on income from foreign sales at rates different from U.S. statutory rate................ Untaxed equity in income of companies whose accounts are not consolidated........ Other . Effective tax rate............................................. Percent 1973 1972 48.0 (3.5) 48.0 (2.0) .2 (2.0) (4.3) 1.5 41.9 (4.1) (.7) 39.2 The Company has provided taxes applicable to the earnings of foreign subsidiaries which are expected to be remitted. No provision has been made for taxes on those unremitted earnings of subsidiaries and 50%-owned companies which are deemed permanently invested. Such unremitted earnings were approximately $400 million and $350 million at December 31,1973 and 1972, respectively. Agreement has been reached with the Internal Revenue Service for all years through 1969. K. Contingent Liabilities and Commitments Suits have been started against the Company and certain subsidiaries because of alleged product damages and other claims. All suits are being contested and the amount of uninsured liability thereunder is considered adequately covered by provisions made. STOOO'U 00 Opinion of Independent Public Accountants THE DOW CHEMICAL COMPANY We have examined the consolidated balance sheet 0f tl Dow Chemical Company and its subsidiary companies ' ^ December 31,1973 and the related consolidated states M of income, retained earnings, capital surplus, and chano c financial position for the year then ended. Our examinr ^S3'e was made in accordance with generally accepted audit1 T standards, and accordingly included such tests of the | accounting records and such other auditing procedures ) we considered necessary in the circumstances. 1 In our opinion, such financial statements present fairly g,. financial position of the companies at December 31,1973"' and the results of their operations and the changes in the1, financial position for the year then ended, in conformity with generally accepted accounting principles applied onj basis consistent with that of the preceding year. /y^Lo&g Detroit, Michigan, February 19,1974 proc land i Ope: jlncc Product Results (dollars in millions) Safes Chemicals/Metals........ Plastics/Packaging,.... Bioproducts/ Consumers Products. TOTAL........................... Products and Services Operating Income Chemicals/Metals........ Plastics/Packaging........ Bioproducts/ Consumers Products. TOTAL........................... Capital Expenditures Chemicals/Metals........ Plastics/Packaging........ Bioproducts/ Consumers Products. TOTAL........................... 1973 SI ,522.3 1,003.9 541.7 S3,067.9 1973 S 206.5 223.5 78.2 S 508.2 1973 S 292.2 78.9 30.5 $ 401.7 1972 SI,169.0 789.6 445.1 S2,403.7 1972 S 156.3 154.5 47.2 S 358.0 1972 S 278.2 49.1 31.7 S 359.0 cz % Change +30.2 +27.1 +21.7 +27.6 % Change + 32.1 +44.7 +65.7 +42.0 % Change + 5.0 +60.7 - 3.5 +11.9 -f* Gro. -^j) Prot _i 1 1973-% of Total Company 49.6 32.7 17.7 100.0 !? t 4 1 t 11 i t | Cap `Exp 1973--% of Total Company 40.6 44.0 15.4 100.0 1973--% of Total Company Vi\ 1 f l \ 1 i Em; ithc j 72.8 19.6 *' > 7.6 100.0 inc ; ;,"_rc in millions) ' ch^sr*^'jrs <amin3u,^ s^,eS duresai f I fairly ti, I 'U9?3 ; 'ln thei-1 -n-nity | lied on; United States.......... Europe/Africa........ Latin America........ Canada.................... Pacific...................... TOTAL.................... products 3nd Services Operating income United States............ Europe/Africa.......... Latin America.......... Canada...................... Pacific......................... TOTAL...................... Gross Plant Properties United States............ Europe/Africa.......... Latin America.......... Canada...................... Pacific........................ TOTAL...................... Capital Expenditures United States............ Europe/Africa.......... Latin America.......... Canada...................... Pacific......................... TOTAL...................... | Employees J thousands) 1 i i United States............ Europe/Africa.......... Latin America.......... Canada ...................... Pacific........................ TOTAL...................... Geographic results 1973 $1,662.5 827,5 232.2 192.9 152.8 $3,067.9 1973 $ 215.5 185.0 43.7 26.2 37.8 $ 508.2 1973 $2,177.7 750.0 75.9 267.1 30.6 $3,301.3 1973 $ 259.8 87.5 16.4 32.2 5.8 S 401.7 1973 29.5 . 11.0 5.3 2.5 1.5 49.8 1972 $1,382.9 591.1 177.7 154.7 97.3 $2,403.7 1972 $ 185.2 100.8 34.4 20.9 16.7 $ 358.0 1972 $1,984.1 670.1 62.8 242.4 21.4 $2,980.8 1972 S 213.4 88.0 11.6 39.7 6.3 $ 359.0 1972 28.9 11.0 5.3 2.5 1.1 48.8 0/7o Change + 20.2 + 40.0 + 30.7 + 24.7 + 57.0 + 27.6 1973 --% of Total Company 54.2 27.0 7.5 6.3 5.0 100.0 % Change + 16.4 + 83.5 + 27.0 + 25.4 +126.3 + 42.0 1973-To of Total Company 42.4 36.4 8.6 5.2 7.4 100.0 % Change + 9.8 + 11.9 + 20.9 + 10.2 + 43.0 + 10.8 % Change + 21.7 - 0.6 + 41.4 - 18.9 - 7.9 + 11.9 1973 --% of Total Company 66.0 ' 22.7 2.3 8.1 0.9 100.0 ' ro 1973-To of Total Company 64.7 21.8 4.1 8.0 1.4 100.0 % Change + 2.1 + 36.4 + 2.0 1973 --To of Total Company 59.2 22.1 10.7 5.0 3.0 100.0 02 tOOOiS = onaensec Comparative Statements Financial Condition (in millions) Current Assets: Cash and marketable securities Receivables (less reserves) Inventories................ .................. Total current assets.......... Current Liabilities: Notes payable............................ Accounts payable and accruals Taxes on income........................ Total current liabilities ... Working Capital................................................................... (A) Property (at cost).......... .......................................................... Depreciation............................................................................... Net property...................................................................(B) Other Assets...........................................................................(C) Investment (A) plus (B) plus (C)...................................... (D) Long-Term Indebtedness......................................................... Other Liabilities and Reserves............................................... Total................................................................................. (E) Common Stockholders' Equity (D) minus (E)........................................................... Income (in millions) Net sales of products and services.................. Cost of sales...........................................:............ Selling and administrative expenses.............. Products and services operating income Investment and sundry income--net............ Interest expense................................................. Non-products and services income (loss) Taxes on income................................................. Minority interests' share in income................ Net income before extraordinary items . Net income after extraordinary items... Other Statistics (in millions) Additions to property............................................................... Depreciation................................................................................ Research and development expenses................................... Taxes (major) ............................................................................ Wages and salaries paid........................................................... Cost of employee benefits....................................................... Number of employees at year-end (thousands)................ Cash dividends declared on common stock......................... Per share of common stock (in dollars)(*): Earnings before extraordinary items................................. Earnings after extraordinary items................................... Cash dividends paid............................................................. Market closing price on December 31............................... (*) Adjusted for stock .splits and stock dividends ST00'3,;703 1973 S 317.7 744.8 497.5 1,560.0 214.0 623.8 167.3 1,005.1 554.9 3,301.3 1.522.9 .1,778.4 557.7 2,891.0 1,225.9 135.6 1,361.5 SI,529.5 S3,067.9 2,229.4 330.3 508.2 58.3 (83.4) (25.1) 202.6 9.3 S 271.2 S 275.6 $ 401.7 263.1 118.4 314.3 611.6 101.8 49.8 89.9 2.94 2.99 .95 57.50 O' :H - ... l87Ct $ 162-3 595.< if. -/"t. a-. 269.6 1 426J I' _________JOLT*' 798pt-'"` . 3834 p 2,980.6 1,649.7 T 4812 1 2,514.7 i 1,094.9 * 90.3 1,105.2 i 5 $1,329.5 S2,403.7 T 1,760.8 : 284.9 358.0 __ 51.8 t (85.8) j,-- (34.0)_Jr__ 127.1 7.9-- $ 189.0 i S 189.2 ; S 359.0 234.9 104.7 218.0 516.4 85.4 48.8 82.3 2.07 2.07 .90 50.75 !62.S H 535.4 ' -1, i?i9 $ 106.1 504.3 395.5 1,005.9 69.6 26.7 01.7 9C.0 v X" 33 10.8 ' -r n.i 9.7 52 .. . 4.7 ... L.9 13 1 "T ;-2 A , f f - i ' i .8 / 9| 9f 3( ; ' f I J I 1 i ! i i 1 368.3 366.8 56.4 791.5 214.4 2,722.9 1.158.8 1,564.1 508.7 2,287.2 1,010.1 80.1 1,090.2 $1,197.0 S2.052.7 1,517.3 250.7 284.7 43.9 (78.5) (34.6) 91.0 4.7 S 154.4 $ 154.7 S 364.6 218.8 95.3 161.8 464.7 72.2 47.8 81.0 1.70 1.70 .89 39.44 -- < 1970 $ 78.6 445.1 368.2 891.9 229.3 350.6 56.8 636.7 255.2 2,524.3 1,086.1 1,438.2 474.7 2,168.1 969.8 70.8 1,040.6 SI,127.5 $1,911.1 1,417.8 233.7 259.6 36.0 (73.5) (37.5) 88.1 4.0 S 130.0 S 102.1 S 348.1 207.7 91.5 136.5 433.2 64.4 47.4 78.5 1.44 1.13 .87 24.54 V."- ' / 1969 S 133.4 430.0 289.1 852.5 337.8 291.1 51.6 680.5 172.0 2,305.1 1.010.1 1,295.0 498.5 1,965.5 798.0 61.0 859.0 $1,106.5 $1,797.1 1,348.7 208.7 239.7 43.9 (54.3) (10.4) 81.5 5.2 $ 142.6 S 142.6 $ 370.6 177.9 87.3 140.7 410.6 56.3 47.4 77.3 1.57 1.57 .83 22.88 1963 $ 54.3 198.7 167.7 420.7 19.1 115.0 41.8 175.9 244.8 1,244.6 687.2 557.4 106.6 908.8 166.8 .9 167.7 $ 741.1 $ 967.7 721.0 110.8 135.9 17.3 (4.6) 12.7 65.8 $ 82.8 $ 82.8 $ 82.1 99.2 62.6 92.8 239.2 21.7 31.2 47.1 .91 .91 .52 22.55 1 1953 $ 202.4 49.8 74.3 326.5 101.6 45.0 52.4 199.0 127.5 602.0 172.9 429.1 16.6 573.2 249.2 31.3 280.5 $ 292.7 S 430.4 311.3 29.4 89.7 4.8 (6.3) (1.5) 50.7 .8 $ 36.7 S 36.7 $ 97.6 52.0 16.2 59.2 104.8 8.7 20.8 20.7 .46 .46 .28 11.10 'iim O O O iS i Distribution of *1973 Income Dollar Dow Wage/Selling Price Index Q0 l 0 0,0 i S 1 Earnings for the year invested in the business Cash dividends Taxes 5.8---------- ;..------- -- 2.8 : --^------ 9.9 " >% 11 Depreciation 1; * 8.3 Wages, salaries and indirect benefits 22.3 ll '. t; Raw materials, supplies and services 50.9 2 - 1 i 200 180160 140 120 100 *et Se//. \ Prices 80 60 40 20 CTi <s m CO CD co CO CD a 99 99 C: r* r* rn CO 99 O CO CO CO tN C9 99 o 99 r* r-t *, TT P9 srs rs 99 99 r* r- I ^gtijns and Holdings f noW Chemical Company now Center fc^pd `Michigan 4BB4Q s)|TD STATES [acturing Locations in 26 States and 1 ,.-ri!ory': Tucson -^" Magnolia- Russellville J!!S3. Costa Mesa. Fresno. Pico Rivera. Torrance, Van Nuys. Walnut Creek V-'-TCDenver. Golden ^^cticiJt--Gales Ferry, Trumbull ";,_Miami " a--Dalton. Lawrenceville. Svlvania .^Honolulu ' c_joliet (under construction) .^aa-Decatur. Indianapolis, Zionsville '-J.pavenport -tucky--CarrHton. Elizabethtown isiana_Breaux Bridge, Napoleonville. riaquemine 'hJan--Bay City. Hemlock. Ludington. l^nesota-Biwabik fjsouri--Cape Girardeau. Pevelv Ew-|ersey -- Carteret, East Rutherford. hVashington York -New York ,,lhCarolina--Boonville. Greensboro, Mebane r.o-Findlay. Ironton. Newark dahoma--Tulsa msvlvania--Royersford isth Carolina -- Allendale. Anderson vas-Freeport. Oyster Creek --inIsland:.--St. Croix )-;inia--Williamsburg li'shington --Wenatchee t ncipal Partly Owned Companies: HisDow Corp.. Miami. Florida (50%) LoPackaging Corp.. Los Angeles. California :-o%) i Badische Company. Williamsburg, Virginia ifl'o) vCorning Corporation. Midland. Michigan 30%) `kartridg Pak Co.. Davenport. Iowa (50%) xspipe Line Company, Houslon. Texas (30%) EUROPE 24 Manufacturing Locations in 10 Countries': Belgium --Seneffe: Tessenderlo (under construction) France -- Drusenheim. Seclin Germany --Greffern. Munich. Stade Greece --Lavrion Italy --Anagni. Brindisi. Garessio. Livorno. Milan. Venice The Netherlands--Amsterdam. Rotterdam. Terneuzen Portugal --Lisbon Spain--Bilbao. Madrid, Tarragona Sweden --Norrkoeping (under construction) United Kingdom--King's Lynn, England: Barry. Wales Principal Partly Owned Companies': Bank Mendes Gans. Amsterdam. The Netherlands (40%) Compagnie des Services Dowell Schlumberger, Paris. France (50%) Dowell Schlumberger Corporation. London. England (50%) Dow-Unquinesa S.A.. Bilbao. Spain (95%) Gruppo Lepetit S.p.A.. Milan. Italy (78%) MIDDLE EAST Iran--Teheran LATIN AMERIDA 13 Manufacturing Locations in 7 Countries': Argentina -- Buenos Aires. Cordoba. San Lorenzo Brazil -- Aratu (under construction). Guoruja. Sao Paulo Chile -- Concepcion. Santiago Colombia --Cartagena Ecuador--Quito El Salvador --San Salvador Mexico --Cuernavaca. Mexico City Principal Partly Owned Companies: Alanor S.A.M.. Buenos Aires. Argentina (22%) Banco Cidade do Sao Paulo S.A.. Sao Paulo. Brazil (45%) Bio-Ciencias/Lavoisier Analises Clinicas. Sao Paula. Brazil (50%) Laboratories Industriales Farmaceulicos Ecuatorianos. Quito. Ecuador (63%) Petroquimica-Dow S.A.. Concepcion. Chile (70%) Piramides Brasilia S.A. Industrie e Comercio. Sao Paulo. Brazil (24%) Prndutos Petroquimicos Nacionais S.A.. Guaru]ii, Brazil (80%) DANADA 12 Manufacturing Locations in 4 Provinces'. Alberta --Fort Saskatchewan British Columbia --Ladner Ontario--Cambridge. Don Mills. Guelph. Kitchener. Sarnia. Thunder Bay. Toronto. Weston Quebec --Montreal. Varennes Principal Partly Owned Companies: Canadian General-Tower Ltd.. Cambridge. Ontario (44%) Conn-Chem Ltd., Toronto. Ontario (20%) Morval -- Durofoam Limited. Kitchener. Ontario (25%) PACIFID 18 Manufacturing Locations in 9 Countries': Australia -- Altona. Brisbane. Smithfield Hong Kong --Hong Kong (under constiuction) India--Bombay Indonesia --Medan (under construction) Japan--Ageo. Chiba. Kanuma. Kawasaki. Mizushima. Nobeoka. Sapporo. Suzuka Korea --Ulsan Malaysia --Kuala Lumpur New Zealand --New Plymouth Thailand --Bangkok Principal Partly Owned Companies: Asahi-Dow Limited. Tokyo. Japan (50%) Consolidated Fertilizers Ltd.. Brisbane, Australia (20%) Ivon Watkins-Dow Limited. New Plymouth. New Zealand (51%) Korea Pacific Chemical Corporation. Seoul. Korea (50%) Pacific Chemicals Berbad. Kuala Lumpur. Malaysia (51%) Polychum Limited. Bombay. India (25%) 'Includes wholly owned companies arid principal partly owned companies. !I Ii STO0iH7O6 J "/w vr ;-J.' CD CD CD *SJ CD -Sj I W$?*eXorS and Officers ^^/S1tt.v..v....v....v...v....v....v....v....v BOYD......................................... g^a^scn .................................... '^^CALV ............................... !*^d-d0AN............................... &^TroHNoN ''' ;^tS^^uNDEENv::.'.':.v:::::.'::: ligTAN MERSZEI ................................... w^ornstein' :::::::::::::: .^^iUAMES williams .......................... Executive Committee .................................................. Chairman of tho Board .................................................................. Vice President .............. Chairman, Chemical Financial Corporation Former Treasurer of the Company C. B. Branch. Chairman: Earle B. Barnes. Carl A. Gerstncker. Julius E. Johnson. H. H Lyon. Zoltan Merszei. Paul F. Oreffice. Herbert H Dow. Secre tary & Alternate Member ..........President. Dow Chemical of Canada. Limited ..............................................................................President .................................. University Professor. Chemistry. University of California ..........................................................................Consultant .............................................. Partner. Doan Associates Former President of the Company Finance Committee ............................................................................. Secretary Carl A. Gerstacker. Chairman: Herbert H. Dow. .......................................................... VicePresidentWilson A. Gay. William A. Groening. Jr.. A. P. ....................................................................Vice President Hanmer, I. Frank Harlow. Paul F. Oreffice ................ President. Dow Chemical Pacific. Limited ................................................ VicePresident ....................................................................Vice President ......................Financial Vice President and Treasurer ....................President, Dow Chemical Latin America General Manager, Petroleum Production & Services, Dow Chemical U.S.A. ....................................................................Vice President Audit Committee Herbert D. Doan. Chairman; Melvin Calvin. Her bert H. Dow- JsSslofficers and Assistant Officers tB. BRANCH............................................. CARL A. GERSTACKER............................ a EARLE B. BARNES..................................... HERBERT H. DOW ................................... ^'rl WILLIAM A. GROENING. Jr........................ A P. HANMER ........................................... &}- L FRANK HARLOW V vl f.lius E. JOHNSON ....... j J.M. LEATHERS ... T';S H. H. LYON ........... } | ZOLTAN MERSZEI A GPA-JLALMFE. SOWREILFLFIIACME S :i UV. BARKER ....... DALE A. BYWATER WLSON A. GAY . . . . D01S J. HOERLEIN . . DAVID N. LeVERT . .. RiRMIN A. PAULUS . Gertrude welker ............................................................... President Chief Executive Officer ......................................... Chairman of the Board .................................. Vice President President. Dow Chemical U.S.A. ............................................................... Secretary ....................................................... Vice President General Counsel ....................................................... Vice President Controller Assistant Secretary ....................................................... Vice President Tax Counsel ....................................................... Vice President General Manager. Life Sciences Department Director. Corporate Research & Development ....................................................... Vice President Executive Vice President. Dow Chemical U.S.A. ....................................................... Vice President Director of Corporate Administration ....................................................... Vice President President. Dow Chemical Europe S.A. ..................................... Financial Vice President Treasurer ........................................................Vice President Executive Vice President. Dow Chemical U.S.A. ................................................ Assistant Secretary ...................................................................Auditor ................................................ Assistant Treasurer ................................................ Assistant Secretary ...............................................Assistant Treasurer .............................................. Assistant Controller ................................................ Assistant Secretary Public Interest Committee Herbert H. Dow. Chairman: Earle B. Barnes. Melvin Calvin. Herbert D. Doan. Carl A. Gerstacker. Julius E. Johnson: James H. Pearce. Executive Secretary- Transfer Agents and Registrars The Cleveland Trust Company: Morgan Guar anty Trust Company of New York Stock Exchange Listings United States: New York. Midwest. Pacific: Europe: Amsterdam. Antwerp. Basel. Bern. Brussels. Dusseldorf. Frankfurt Geneva. Ham burg. Lausanne. London. Zurich: Asia: Tokvo Certified Public Accountants Haskins & Sells 80.nOOO.LS I l f \