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I CO 1968 Annual Report <r;> CZ) T c-r Cove- The chemical engineer with his blueprints for a new plant anti the research workers conducting an experiment symbolize Dow 's intensive preparations for future progress Expenditures for capital programs and R & D reached record levels m 1968. CD CD Dow is a worldwide enterprise offering more than 1.100 proau and services in the following major classifications: chemicals pias/ 0ptflATI pharmaceuticals, metals, agricultural chemicals, packaging, cons^*' yutllON products, servicing of oil and gas wells, and industrial cheiT^ cleaning. Dow's products result, in the mam, from the recovery 8 upgrading of chemicals found in underground brines, salt depoj,' petroleum and seawater This is accomplished through the miens, application of technology developed in large part by the Company*4 own research organization. "Dow people" number some 47.000 ar represent 43 nations Ta*e; Cements Listing Operations Summary. 1 Quarterly Results .. 1 Directors & Officers 2 President s Letter 3 Product Groups . .. 4-13 Dowell . . .14 Government Business............... .14 World Operations . 15-17 Research . 18 Industrial Relations 19 Partly Owned Companies 20 Finance & Earnings 21 Financial Statements 22-29 Dow Directory Back Cover y [flights of the Year in W ' o ils P'ast,CsS ^RATIONS SUMMARY :onSurner ,, *uio*s cherT1'Cai -rv an, Me; Sales . aepos,,s ,n'ens,Ve ro;al income ornPanv, 0epreciation and Depletion ooo ano pmied States and Foreign Taxes on income.............. Met Income........................... Earnings per Share (in dollars)......................... Cash Dividends Declared .. (Common Stockholders Equity................................. '96B ' 63. 3 1 ::3 3 36 . 4 51 73 5 i 0C9 6 1967 % Changs S 1.382.7 1.431 6 136.0 87 7 132 3 4.41 66 1 935.6 + 19.5 + 20 4 + 15.6 + 49 + 27 + 23 + 96 + 7.9 (Average Number of Shares 1 of Common Stock Outstanding....................... [Common Stockholders...... Employees (Dow and i Consolidated Subsidiaries!..................... 3C 156 725 89 600 47 400 30.006.753 90.700 36.400 + 0.5 - 12 +30.2 QUARTERLY1 RESULTS tonar faM 3,31 6/30 9/30 12/31 Sat a s in Mi'tions 963 Earnings 3*r Shan 3 . o3 : -'12 -2 ~ ~5 5 Si 08 1 19 1 17 l 02 05; Salsa in Mtllians 1IS7 S 331.3 351.2 351 6 348.6 Eanuafa 9" Shaft1 SI 03 1 18 1 16 99 05J Total : 652 5 54 51 SI .382.7 S4.41 ' Based on average number o* shares OMtsianding 1 Reoresents Dow s eauiy >' > net earnings erf a Swiss banking subsidiary DOW WAGE/SELLING PRICE INDEX SALES BY GEOGRAPHIC AREA r Directors & Officers Board of Directors Carl A Gerstacker Chairman Donald K. Ballman Earle B Barnes Robert B Bennett A. P. Beutel C B. Branch Melvin Calvin William R Dixon Herbert D Doan Leland I Doan Herbert H Dow John M Henske Julius E. Johnson Max Key Zoltan Merszei Macautey Whiting G. James Williams Executive Committee Leland I Doan Chairman Donald K. Ballman A. P Beutel C. B. Branch Herbert D Doan Carl A. Gerstacker Herbert H. Dow Secretary. Alternate Memper Finance Committee C.arl A Gerstacker Chairman Donald K. Ballman Robert B Bennett Leland I Doan Herbert H Dow H. H. Lyon Certified Public Accountants Haskins & Sells Officers & Assistant Officers Herbert D Doan President. Chief Executive Officer Carl A Gerstacker Chairman of the Board Leland I Doan Chairman of the Executive Committee C B Branch Executive Vice President Donald K Ballman Senior Vice President Earle B. Barnes Vice President. General Manager of the U S Area A. P, Beutel Vice President. Director of Government Affairs John M. Henske Vice President. Director of the Corporate Product Department Julius E Johnson Vice President, Director of Research and Development G James Williams Vice President. Commercial Director of the U S Area Robert B. Bennett Treasurer Herbert H Dow Secretary H H Lyon Controller. Assistant Secretary William A. Groening. Jr. General Counsel. Assistant Secretary David C. Baird Assistant Secretary. Director of Purchases J. M. Leathers Assistant Secretary. Operations Director of the U S Area A. P Hanmer Assistant Secretary. Assistant Controller John Van Stirum Assistant Treasurer Wilson A. Gay Assistant Treasurer David N LeVert Assistant Treasurer Carl Schimmelman Auditor To the great regret of all of us ' Earl W. Bennett, Honorary Chairmj Vice President, and Director, ret* in March 1969 at the age of 89 Het continue as Honorary Chairman font Dr. Bennett's career with Dow n legend m his own time He joined n Company as an office boy m 190 three years after it was founded * became Chairman of the Board in 194 It is doubtful that his 69 years service and 42 years as a Direai will ever be equaled If companies have personalities hi reflect those of its people, then Do Chemical's personality has a larg amount of Earl Bennett in it Success ful companies are built by extraon nary people This was never nai true than in the case of Dow andtr Bennett Transfer Agents OO ^ The Cleveland Trust Company*--1 Morgan Guaranty Trust Company of New York Registrars The National City Bank of Cleveland Chemical Bank New York Trust Company president's Letter v . Sales growth outpaced advance in earnings TO THE STOCKHOLDERS President Doan (r) with CartA. Gerstacker fey. chairman of the board, and C. B Branch, executive vice president. js. Dr TfTian retirea ^e will or hfe w is a ed th 1900 d. ana 1949 ars ot ' rector s that i Dow large :cessaordimora i I and j Following the gratifying results of 1967. when we were one of the few chemical companies to show a substantial improvement (7%) over the previous year. Dow's earn ings registered a more modest gain of 2% in 1968. in creasing to 54 51 per share from 54.41 in the previous year. Consolidated sales advanced by 19% to 51.652 5 million. It was the seventh consecutive year of advance for earnings and the 14th for sales. Several new elements affected our financial perform ance. making year-to-year comparisons difficult The consolidation of recently acquired subsidiary companies boosted our sales by $169 million (60% of the total sales increase), and these companies contributed 23 cents per share to our earnings (an additional 13 cents per share was earned but reserved for minority stock holders) Our earnings also benefited from the inclusion of profit, amounting to 23 cents per share, on the sale of temporary investments. Income from temporary in vestments has become a normal, recurring part of our increasingly diversified business. On the minus side, our domestic business suffered from a paradoxical situation At the same time that in flation was boosting our labor and construction costs, price weakness in several sectors of the chemical in dustry depressed our weighted index of U S. selling Drices for the year by more than 4% (compared to an average of 2.7% per year in the previous five years) In addition, the new 10% federal income tax surcharge reduced our net earnings by 27 cents per share. Despite sharply increased capital spending, we had fewer plant completions, and tax benefits from the 7% investment credit were reduced to 29 cents per share from 35 cents in 1967. The slower pace of our U S business was partially offset by substantial sales and earnings gains abroad as. once again, geographical diversification proved its worth Our non-U S sales accounted for 33% of total consolidated sales, up from 25% in 1967 This was due in part to the fact that all but one of the subsidiaries whose sales and earnings were newly consolidated in 1968 are outside the United States We continued to take measures necessary to assure our future growth Capital expenditures were at a record level of 5306 million, of which 25% was outside the United States Expenditures for research and develop ment. on which we rely for new products and technology to keep us in the forefront of the industry, reached a record S80 million Products introduced during the past five years accounted for 7% of 1968 sales We also effected a major change in the structure of the Company with the establishment of a separate Area management for the United States. Our purposes are (1) to enable the Corporate management to focus primarily on Dow's over-all strategy and growth worldwide and (2) to assure that Dow's approach to the highly competi tive U S market will be as concentrated as possible We added substantially to our Life Sciences business by increasing to a maiority our interests in Lepetit S.p.A. of Italy and Bio-Science Laboratories of Van Nuys. Cali fornia. With the consolidation of these companies and LIFE of Ecuador. Dow became a global human-health enterprise. Because of its specialized nature, we are operating Life Sciences as a unified global business rather than applying the geographical pattern of our other businesses For 1969. sales of chemicals and related products should increase at a more rapid pace than new produc tion capacity, so that the industry's capacity utilization should be up from the 1968 level of 82% (Dow's rate was 84%). Therefore, we are predicting somewhat lower manufacturing costs and greater price stability Capital spending in the current year will again total above 5300 million. Longer-range. we expect to extend our performance of the 1963-68 period, when earnings per share increased by an average of 10% per share per year oo --I co -T-- CO | March 11. 1969 Herbert D Doan 5 Market position improved in a year of mixed results Protacted--Drops of liquid stand up on a fabric r,e with a chemical finish by Dow's Textile Process 5yj/ * Dow's chlorinated solvents were used as earners m a broad range of fabrics with stain and water repellent? 1968. Other ma/Cr markets for chlorinated solvents ^ metal parts cleaning and drycleaning. Dow's worldwide chemical sales advanced in 1968 for the seventh Con seco. ;ve year, but earnings suffered a moderate decline as the result of higher labor, equipment and con struction costs and severe price attrition on such commodity products as caustic soda, ethylene glycols and solvents in the United States Our line of commodity and special chemicals performed well in the mar ketplace. and new products and pro duction capacity enhanced our over-all marketing position Organic Chemicals In 1968 s burgeoning economy, demand for ethylene and propylene oxides and phenol was strong. These widely used industrial chemicals are the base of our organic chemicals business. Oxide derivatives also performed well Sales of Voranot polyols, based on polypropylene oxide, far exceeded expectations as we maintained our position of No 1 supplier of these materials for the manufacture of urethane foams Sales of our glycol-base antifreezes --including the Dow-label Weatherset and Sentinel brands --were at an alltime high Dowtherm 209 coolant, based on methoxy propanol and de signed primarily for diesel engines, continued to win favor with trucking fleets It also made strong headway with diesel power plants in construc tion. logging, mining and off-shore drilling Phenol's performance was encour aging, mainly because of price strengthening. When our new 400 million pounds per year plant at Oyster Creek. Texas, comes on stream in 1971. Dow will be the world's largest phenol producer The production proc ess to be used will produce 250 million pounds per year of acetone as a co product and will make us a commercial supplier of this widely used solvent and organic intermediate. Liquid Tire Chain traction improver, a patented blend of resins in a solvent carrier system, did well in its second market season. From the original U S market, sales spread to Canada, seven European nations and Japan. An auto matic dispenser system for Liquid Tire Cham was introduced as optional equipment in one of America's largest selling cars Dow De-Icing Fluid 146. an ethylene glycol-based product for deicing and defrosting parked aircraft, was incor porated (with ordinary sand I in a new system for treating icy airport run ways. Ethylenimine. a highly reactive inter mediate. started coming into its own with increased sales to customers and our own use of the product to make derivatives. Thanks to a unique Dow process, low-cost ethylenimine became commercially available In 1963. and much research and develop ment work has been devoted to deter mining its range of end uses since then. Inorganics/ Solvents The development of fire-retardant chemicals, which we see as a major growth area in the next decade, be came a broad corporate effort involving a multiplicity of Dow departments in 1968 One near-term result will be the introduction this year of a brominebased compound to reduce the flam mability of plastics and fibers. Dow's line of proprietary chlorinated solvents continued to be solid per formers, furthering the Company s rep utation as the world's largest producer of these products GO Following Its introduction in the Los ere Angeles area the previous year Chkm 3ro' thene VG solvent "went national' m c-?ur 1968 This product offers the rneta W. .rket working industry the best cleaning ternative where air pollution ana pe: -P- c sonal safety are of concern Markets? o3er to European metalworkers will i* C$P( started this year Sales of Aerothene solvents iron than tripled in 1968 These origin \ tailor-made solvents for aerosoiswen developed by Dow as more effio*r \ ' and economical substitutes for y* \ 0l! viously used materials They are ro 1 utilized as carriers for the active 'n 4 r tre*'*v ;,eaH ,0 5 Aesthetic~Dow Domes were added to the Com party's hrte ot products and services tor control of the environment- The plastic domes tshown here tn an installation at the Elmira. New York, sewage treatment facilityj provide economical, attractive enclosures for the entrapment of odors. M 8' ST00 9 te Los 'htoro al' m netaing ald perxetmg ill be more I jredients m aerosol products ranging | Tom hair sprays to insecticides Toas! sure our continued growth in this mar| 'ft we opened an aerosol develop- . "ent laboratory in Midland. Michigan, Dow Per C-S solvent, whose built-in | Jetergents greatly simplify drycleaning ^Derations, continued to gain in pop- . -Jnty . . were icient ' Pre' ; now ve in- functional Chemicals Methocel methylcellulose products exceptionally well in 1969. due pri- tanly i0 the introduction of Methocef -'2HS as a thickening agent for paint Our business in surface active agents --used in paints, detergents and many other applications --was as sisted by the introduction of Dowfax 3B-1 surfactant, a biodegradable prod uct Surfactants produce chemical changes on surfaces or at interfaces, and our plant capacity for these highly technical materials will be doubled in 1969 Sales of Versene chelating agents, which increase the stability of com pounds containing metallic ions, were well ahead of plan Major gains were registered m the use of these products to stabilize micro-nutrients used in fertilizers Our polyethylemmine (PEI) com pounds performed very well, especially Tytiex \2 flocculant for the paper in dustry. PEI sales are expected to double in the current year. Separan flocculant sales to the paper industry, which lagged in 1968. should advance this year with the introduction of new cationic versions for papermaking. Results for our antimicrobials were mixed. Plant capacity for Dowicif 100 preservative (used in paints, waxes and other products) was doubled, and the new Dowicil S-13 antimildew chem ical for exterior latex paints was intro- 5 I Chemicals CONTINUED duced. Dowicide 9 preservative for use in detergent-disinfectant formulations continued to progress, and expanded production capacity will be available this year. On the minus side, our anti microbials based on phenol suffered from a temporary shortage of that raw material, and Tuasal bacteriostat was dropped from our product line because of price attrition. Our large group of process chemicals (mining chemicals and explosives, heat-transfer media, welding fuel, and water-conditioning chemicals) expe rienced excellent growth. Our Environmental Control Systems business registered a moderate gain. The over-all water-pollution control market across the U S grew but little because of other demands on govern ment budgets at all levels. Dow's line of products for waterpollution abatement was increased with the introduction of Dow Domes -- hemispheres fabricated from Styro foam brand plastic foam and covered with latex-modified reinforced cement. They are designed to contain the odors and improve the appearance of waste water-treatment units. We also intro duced a commercial process for re moving lake-killing phosphorous com pounds from municipal sewage efflu ents (such removal will be mandatory in many areas in 1972). The Dow proc ess can be used in new or existing treatment plants with a minimum cap ital expenditure. Dow industrial Service Dow Industrial Service (DIS) per formed pre-operational and operational cleaning of nuclear power generating plants Such experience puts DIS in an excellent position to grow with this increasingly important segment of the electric utility industry DIS also added an alkaline copper remover system to its industrial-clean ing services. Based on chelating agents, it removes foreign material from industrial boilers at a significant saving m downtime " Secondary Oil Recovery Sales of Pusher chemicals by our Secondary Oil Recovery Department (SORD) more than doubled in 1968 and are expected to double again in the current year About 80% of the 1968 expansion was in Canada and other areas outside the United States. Extended contracts have been nego tiated for large flooding operations t. California and South America V though emphasis on non-U S areas s expected to continue in 1969 US growth is accelerating i Pusher chemicals, by decreasing the) mobility of the water used in flooding| operations, help drive more oil through reservoir rock to producing wells SORD's marketing approach includes the concept of "risk venture' pane pation. under which Dow initially as sumes part of the risk of process per formance but is compensated ai < higher rate as a proiect continues 6 0f I *** I ^) er f' ) Sales steady as gains by magnesium bateTM6 slight aluminum decrease I New Magnesium Source -- The protect to ex tract magnesium from Great Sa/t Lake brine ponds progressed m 1968. Dow originally produced the light metal from Michigan brines, later switched to seawater from the Gulf of Mexico, which will continue as the major source. ST 00 0 4 h6 3 Total metal sales were at approxi mately the same level as in 1967 A Sight decline in aluminum mill prod- ins was offset by gains for magne- aum mill products and ingot A labor Mpute at our mill in Madison. Illinois, attributed to the reduction in our lummum mill-product shipments. I An S11 million contract for 25 mil- lego- | on pounds of extruded landing mats ns in 3s our largest single order for alumi- Al I um during 1968 Production under ias is I 'e contract will continue until late U S I 369 The mats are used for construct ig the oding rough 's Portable airfields for military airxi Our Madison Plant has been a '3cr supplier of mats since 1963. :,oducing more than 1.100 miles of '-foot-wide item ludes -ther sigmficent purchases of our ortiCily 3S* s pet al a s 'in'mum extrusions, sheet, plate and i; were made by manufacturers of . '^mercial aircraft, building products, ^vision antennas, ladders, lawn` '"er parts, boats, refrigerators, and military vehicles and aerial-drop plat forms. After years of supplying magnesium to manufacturers of photoengraving plate we began marketing a finished magnesium photoengraving plate under our own trademark. Dowetch Deadline. The printing plants of a num ber of leading U S newspapers switched from zinc engraving plate to our new product, which is used in conjunction with Dowetch photoen graving chemicals. The use of magnesium impact-ex truded cans for batteries gained momentum with the installation of production facilities by three of the major battery manufacturers. The mar ket for magnesium batteries in the foreseeable future undoubtedly will be limited to military and specialized consumer markets where its premium price can be justified by the need for higher capacity per unit weight Defense requirements plus increased Utah State Department of Highways purchases by the aluminum industry for alloying purposes and larger-thananticipated needs of the European automotive industry resulted in a shortage of primary magnesium by mid-1968 Congressional authoriza tion to release 55.000 tons of ingot from the government stockpile brought some relief in the last two months of the year. Our primary plant at Freeport. Texas, now producing at an annual rate of 95.000 tons, is scheduled to bring an additional 30.000 tons on stream in 1969 New business received by Precision Fabrication Services IPFS), our Denverbased precision-machining operation, included contracts totaling $1 5 mil lion for the machining of complex alu minum parts for commercial aircraft PFS will move to larger quarters in 1969. and installation of additional numerically controlled machine tools is planned. 7 Plastics Broader markets, new products produce an outstanding year ST 0 0 3 U84 Buoyant --Styrofoam brand buoyancy 70.000 feet of docks afloat in Westlake y,,"1 S planned community in the Los Angeles area ^ are produced in life /acker orange for this aopj, ^ Dow plastic products for the construction were much in demand in 1968. ^ Dow s worldwide plastics operations reached record levels in 1968. Both sales and earnings were up substan tially, reflecting improvements in prod uct mix. plant operations and market ing techniques as well as a buoyant economy Gains were recorded by all of our five global areas (especially Europe and Latin America) and our three major product lines--molding and extrusion materials, coatings and monomers, and construction materials. Although the supply-demand bal ance for many plastics improved dur ing the year, depressed prices and production imbalances continued to affect some key products, especially polyethylene. Molding/Extrusion Materials Markets for our major plastic prod uct. Stynon polystyrene, continued to broaden, and Dow maintained its leadership as the world's largest poly styrene producer. A promising new market is being developed in the furniture industry for major structural components and thin-shell decorative parts. Other new applications range from automotive parts and beverage containers to disposable serviceware for hospitals and institutions. Packag ing uses for Styron are growing rapidly, whether the product is thermoformed into a wide variety of tub-shaped con tainers or foamed into sheets from which egg cartons and apple, pear and meat trays are fabricated. Additions to polystyrene production facilities will bring our worldwide capacity to more than 1 6 billion pounds by 1970 One of our chlorinated polyethylene (CPE) resins advanced to commercial status, and others are expected to fol low in 1969 Blended with vinyls and other thermoplastics. CPE resins im part desirable properties, such as improved impact strength: or they can be used as primary resins in flexible, semiflexible and rigid products. Dow is the sole U. S producer of CPE resins Dow's position in polyethylene was strengthened by increased production, via a new process, of high-density resins with improved toughness, proc essability and end-product perform ance. Applications include beverage cases, housewares, sporting goods, toys and automotive parts. The market for low-density poly ethylene. which grew little in 1967. strengthened in 1968. particularly for films, bags and other types of packs ing. and coatings for paper and paa board. Consumption also was creased by the communications dustry's use of Zelabon plastic-:metals in the manufacture of caD` In Canada, over 12.000 miles of un: ground cable clad witn Zetabon w laid by the provincial telephone s terns of Alberta and British Colum Coatings/ Monomers Our line of coatings products monomers continued to thrive in marketplace. Additional produ: capacity was authorized for ep 8 I i/d ^ Concrete -block walls can be laid up m record P ijUji2ing a thin bead of Threadhne brand adhesive mortar m , I if*' 0f conventional mortar. Latex modified stucco (followed by . -fj I : application of latex pamt if desired} provides an attractive Ju'0r) ) (^r ^0w c0sf svsferr? was utilized m 1968 in a central city S^V | -^ing protect m Detroit Big inch-- Growing use of Derakane vinyl ester resms. a Dow development, is indicated by this reinforced plastic effluent pipe in stallation m Canada. The 48 inch pipe is compounded of equal volumes of glass fiber and Derakane :kag- *$'ns styrene-butadiene latexes, a per- j^yudene chloride. Saran F resms and s in- |"*rene monomer s m- \ Vi unusually dramatic performance ;-c'ab pa Dow product occurred during the aoies *-entry of the Apollo 8 spacecraft to naer- '? earth s atmosphere following ns were `ocn-orbiting mission, when the heat sys- ''e/p. fabricated from a Dow epoxy mb`<3 -wc performed as required -cnversely m a high-voiume com- ':.'rj,al role Dow eooxv resins were 'tea as the base of the coating for . and miles of 36-inch-diameter pipe n the `:f>ng North Sea gas from the East chon ghsh coast at Norfolk, to Rugby 'po*> Sales of Derakane vmyl ester thermo set resins rode upward with the de mand for corrosion-resistant pipes and vessels and other products of the reinforced-plastics industry In a re lated development, we began commer cial sales of a new bulking agent for use with Oerakane in remforced-plashc formulations. Our new styrene-monomer facility, due on stream at Freeport, Texas, m 1971. will have an annual capacity of a bilhon pounds and will increase our global capacity to over 2 5 billion pounds We proceeded with plans to expand our production of vinyl chloride mono mer. but elected to phase out of poly vinyl chloride molding resms by the end of 1969 Emphasis will be placed instead, on plastics offering better * profit potential ^ Construction Materials `* CP Styrofoam and Dorvon polystyrene^ foams Thurane polyurethane foam and^-^ Ethafoam polyethylene foam performed^-, well Outstanding examples of the^. massive application of Styrofoam brandy-, insulation board to commercial con-^^ strucnon were a cold-storage ware house m Manchester England, utiliz ing 900.000 board feet new terminal buildings at Frankfurt international airport, where 22 000 of a proiected J9 ? Plastics CONTINUED Packaging New uses for films, foils and containers No-Returns --Dows the,, formed polystyrene container- adapted by a leading medical f( ment producer serve as dispo, fluid and tissue specimen jars in p/tals and doctors offices * Admirable -- Home furnishings provided a promising new market for Styton poly styrene. The richly detailed front panel, side panels and moldings of this humidi fier are economical, lightweight poly styrene components with the appearance of fine wood. total of 130.000 square meters were installed, a new 20-story apartment house in Minneapolis; the new 16story 250 Bloor East office building in Toronto, and a new 1.000-unit townhouse project m Quebec A new Dow insulation product light weight ceramic foam, will be available tor customer evaluation late in 1959. Other Dow construction materials recording strong gams in 1968 in cluded Deraspan brand insulation panels (cores of Styrofoam between skms" of plywood or other material) and Moraf brand piping products for corrosive liquids Sales of Dow packaging materials rose in 1968 on the strength of new ap plications in a variety of fields. Our thermoformed polystyrene con tainers were adapted by a medical equipment manufacturer for use as disposable receptacles for fluid speci mens and tissue in hospitals Valuable laboratory space is saved and the cleaning and sterilizing operations as sociated with conventional containers are eliminated Literally millions of single servings, single doses and single applications of foods, pharmaceuticals and cosmetics were marketed in Dow materials as the unit concept of packaging gained in popularity. Saran Wrap film, long used for the commercial wrapping of cheese and processed meats, was utilized by a leading supermarket chain to wrap freshly ground beef and pork sausage Lexel film, a shrinkable material, was introduced for in-store wrapping of fresh red meat. Saranex co-extruded film gained ac ceptance for extended shelf-life pack aging of freshly ground coffee for the institutional market The automation of mail-sorting re sulted in sizable sales of Trycite oriented polystyrene film to companies many facturing window envelopes for in U.S government The unusual cianr\ of Trycite increases the accuracy j optical-scanning equipment Dow specialists collaborated U.S. pharmaceutical manufacturers n* ^ the design of improved packaging src'~^ wrapping techniques for a number / => products. '^ Dow continued to develop complete'- -1 packaging systems for specific proc' ~ ucts Outstanding examples were y"=~ automated packaging system t</ Florida oranges and another, ir Ne*< r> York state, for seeds and fertilizers " each case. Dow designed both ! system of containers and the f.lling equipment Total packaging systems are expected to make a significant con tribution to future earnings Dow packaging materials and svs terns in 1968 continued a growth re cord in sales and earnings in selecte: areas. Several products and projecrs ^ of marginal performance were ehm' . nated to permit concentration online1- > most profitable to Dow --those`'l which our skills as converters arc j gravure printers can be best compinea with Dow s basic resources m p'as!^ I films and resins. 10 life Sciences Year of progress in a field of unusual growth potential Faces of Lepetit--The consolidation of Lepetit S.p.A.. Italian based global pharma ceutical enterpnse. added some 7.000 em ployees to the Dow organization. A represent ative group of Lepetit people is shown at company headquarters in Milan. Tianu>r the :larity -y of with ers in g and >er of >plete prode an i for New rs. in i the piling terns con- sysh re acted iects `limilines em and nned astic Dow views human health care as a lC that offers new opportunities for ovvth and diversification and in which % can make an increasing ano mean,,gfjl contribution We and our af filiated companies in the life sciences )re oParatm9 as a unified, global group ^businesses with a charter to choose nnovative patterns and procedures to jjpedite greater participation The Pitman-Moore medical operall0n based in Indianapolis, reported a continued increase in sales and share 0f market for Novahtstine deconges tants. our line of cough and cold reme dies. as a major outbreak of influenza J struck the nation. Neo-Pofycin antibiotic ' ointment also showed continued growth. Proserum normal serum albu min was introduced as a new product Our new-drug application was ap proved for Quide. a major tranquilizer, which was demonstrated to be safe and effective in clinical tests with insti tutionalized schizophrenic patients Large-scale use of Urugen one-shot measles vaccine reinforced hopes of eradication of common measles in the Jnited States We are expanding our I world marketing position for the vac cine. More than 29 million doses have been distributed through private and mass-immunization programs since its licensing in 1965. saving an estimated 2.919 lives. 9.633 cases of mental re laxation. 29.192 cases of encephalitis and an enormous cost to society in terms of medical treatment More than 600.000 doses have been do nated to the needy by Dow in the U S and abroad The Biohazards Department of Pit man-Moore developed an emergency virus isolation facility and a proto type mobile virus and containment lab oratory under contracts with the National Cancer Institute to safeguard the health of leukemia-virus re searchers. The mobile laboratory found immediate use in a search by govern ment scientists for an organism that caused deaths in West Germany among persons who had contact with tissues or cell cultures from African * Vy green monkeys. Biohazard skills in design of virus- containment facilities have led to a new contract to test the integrity of biological-barrier systems to be used in the Lunar Receiving Laboratory of NASA for the Apollo lunar-landing program. Our new Diagnostic Products Busi ness concentrated on building a spe cialized marketing arm and registered encouraging growth with sales above plan. A seventh test was added to the Diagnostest blood-chemistry test ing system developed for use in physi cians' offices and in laboratories. Good acceptance of the system has led to expanded marketing in the United States and to its introduction in Canada and Puerto Rico. Our European affiliate. Lepetit S.p A.. Italy's largest pharmaceutical manu facturer. observed its centennial with a record performance in Italy and abroad Consolidation of Lepetit fol lowing the expansion of our interest from minority to majority added in ex cess of 5100 million to Dow's total consolidated sales Lepetit's principal products are antibiotics, corticoster oids (hormonal substances used in the treatment of arthritis and other dis eases), vitamins and gastrointestinal preparations Bio-Science Laboratories of Van Nuys. California, also consolidated in 1968. recorded an outstanding per formance in both sales and earnings Bio-Science, which specializes in so phisticated laboratory testing, is introducing a new enzyme test and another for the discovery of chromo some abnormalities, the latter based on karyotyping Laboratorios Industriales Farmaceuticos Ecuatorlanos (LIFE), another newly-consolidated affiliate, com pleted new production, research and administration facilities at its head quarters in Quito. Ecuador. Coordinated research in human health continues, with key laboratories at Zionsville. Indiana, and at Lepetit in Milan. Clinical tests are underway on several new molecules, including United States tests tor specialized applications of rifampin antibiotic. The product, discovered by Lepetit. has earned substantial use in many other countries, especially in the treatment of tuberculosis Human clinical tests of our hollowfiber artificial kidney at the Northern California Hemodialysis Center of San Francisco General Hospital progressed favorably and clinical research pro grams at other dialysis centers were scheduled for early 1969 under a grant from the National Institute of Arthritis and Metabolic Diseases b I U U ii U l8 m- Agricultural Chemicals Strong showing of individual products contrasts dip in prices, herbicide sales Grassless -- World production o/0owm killer was expanded 25% m !968 u^^^\ from destruction of weed grasses in crooi^ to maintenance of drainage ditches ang^' sides, to control of unwanted grasses m dra lawns. Spraying with Dowpon ehmma^ Bermuda grass infestation in this outst^* residential lawn in Pasadena, California. T'3 Price attrition in some product areas and curtailment of herbicide purchases by the U S government tended to re strict the over-all performance of Dow's agricultural chemicals. On the strongly positive side were the introduction of new products that promise long-term profitability and the fine performances of some established products that con tinued to grow in importance. Coyden coccidiostat received federal clearance for sale in the United States late in the year Although actual do mestic marketing could not begin until January 1969. the product contributed substantial revenue from sales in world markets, particularly Canada, the United Kingdom. France. South Africa and Australia. Latin American sales of the product were impressive. Zoamtx coccidiostat continued to move very well in the U S , holding a mapr share of market in the nation's important poultry areas. The product doubled its share of market in Japan. Two new Dow-label cattle vaccines, I8R-P 1.3 and IBR P I.3.-BVD. were in duced with excellent acceptance. The vaccines aid in the preconditioning of cattle headed for finishing in feedlots. Marketing of Ked/or feed compound will begin in the U S in 1969 This is a non-toxic, slow-release. non-protein source of nitrogen for cattle and sheep. Dow fumigant sales increased again as the practice of soil fumigation ex panded in American agriculture Con centrated sales efforts in the peanut areas of the southeast and in the cot ton country of the Texas high plains resulted in substantially increased mar ket penetration by Fumazone 85 soil fumigant Telone soil fumigant, used ex tensively in the production of sugar beets, potatoes and cotton, also per formed well. Limited marketing of Piictran miticide began, withfirst sales in Italy and Chile. The product is expected to be ready for U S. fruitgrowers in 1971. Piictran is highly effective against a broad range of mite species, and its toxicity falls well within acceptable ranges Current US registrations for Dursban insecticide permit its use by professional applicators for mosquito control in non-crop areas, and it was so utilized by mosquito-abalemen: districts in California and along the Gulf Coast Dursban also is being used by U S pest-control operators to kill ccc> ' roaches and other household msec' \ pests. Abroad, it continues to grow" I importance as a most effective nc11' / cide for cattle. I 12 X raS Consumer Produ r:<; ">9e ^aq ion. * all Dow food wraps and household ~tir>n cleaners gained in popularity Zestful--Ziploc brand plastic bags, introduced m test-market in 1968. keep food flavor and freshness at a peak thanks to a unique closure. New style bags also are ideal for freezer and refrigerator food storage. m om s, pow's consumer products compiled j Jf1 excellent record of growth in earn1 ,ngs and share of market Forecast . sales and profits were exceeded for every national brand. Satan Wrap plastic film, Dow's oldest c0nsumer product, enjoyed the best I year of its 15-year history and con tinued its leadership among plastic I food wraps nationwide. A newly deI signed package, the latest in a series ^improvements. was placed in distriI bution Satan Wrap is promoted nation- I any with an in-depth advertising pro^ gram in 12 leading national magazines. | Handi-Wrap brand plastic film pre served its unbroken record of annual sales gains since its introduction eight | years ago. It again outsold all other polyethylene wraps combined. Dow Bathroom Cleaner scored an im pressive sales gain and outsold all other aerosol bathroom cleaners combined in an intensely compet- . itive market. Now in its fourth year of national i sales. Dow Oven Cleaner performed I better than forecast and achieved the I No. 2 ranking m its product category, j The only leading oven-cleaning product with ammonia power. Dow 1 Oven Cleaner is promoted nationally | on television and through leading . consumer publications. I Squid Tire Cham traction improver, | sold through automotive and other ' specialized outlets by our chemicals marketing group, also was made avail able through grocery outlets in a coenl ' ordinated effort by our consumerthe product marketers. Television and magazine advertising heightened the J.S i consumer campaign >ck- Development of promising new con .ect sumer products continued in 1968 and v id , one. Ziploc brand plastic food-storage cki- bags, was test-marketed with enl couragmg results. These bags feature I a patented zipper-type closure that seals in freshness and flavor and is more efficient and easy to use than the wire-twist ties used with other bags. Ziploc bags, made of extra-thick plas- tic, are ideal for freezing or storing all types of food An enlargement of the marketing area for Ziploc bags is ar>ticipated in 1969 as part of an expanding program of product development Dowell Government Significant gains recorded despite a sluggish market Drop in product safes exceeds services rise Portable--Dowell service unit, skid-mounted for handling ease, is hoisted aboard drilling platform. This scene was reenacted numerous times in 1968 >n U. S drilling areas, including the Alaskan North Slope. America's newest oil producing region. Dowell accomplishments were high lighted by significant sales and earn ings improvements Well stimulation, one of Dowell's two nnaior services, registered a modest gain, while ce menting service sales were up sub stantially These improvements are especially significant when related to a market that experienced little growth during the year The outlook tor 1969 is much brighter and Dowell anticipates continued sales increases. Drilling forecasts indicate a gain of almost 1% in new wells, pos sibly signaling the end of the long de cline in drilling activity Customer interest continues to be centered in the offshore areas of the Gulf Coast. West Coast and Alaska. Dowell was successful in placing many service units on new platforms and other off-shore installations in addi tion, several units were placed on the Alaskan North Slope, where major new discoveries were reported. Dowell research during the year centered on the solution of specific, long-standing problems Several new products and services resulted, and the outstanding technological ad vances achieved are expected to con tribute impressively to Dowell sales growth by providing customers with better engineered services and more profitable production increases. Diversification into related services was continued by placing Melograf service in full-scale operation This new service provides non-destructive testing of all types of pressure vessels An immediate success. Melograf is ex pected to expand rapidly and become a maior contributor to the divisions continued growth 14 Dow s over-all direct business U S government agencies decl',"^' moderately, sales of services g/1*1 I significantly, but product sales ^ down. Our indirect business-sa|ej 1 products to other suppliers for USe9 the fulfillment of government` Conti*,, -- was up. Our government business oftj leads to new and modified uses/ existing Dow products and seryir- and thus to the opening of new m* kets Government business also ^ suits in the development of new Dr(W ucts. services and technology wtiuj can often be applied commercial^ both here and abroad Through our Government Affairs partment. we acquire a broad knowi. edge of government needs at the fed eral. regional, state and local levels The department identifies those needs to which a Dow capability can beeffec tively applied Acting as a service ae partment for all of Dow s product departments, it then develops bus- ness relationships between the appro priate Dow units and government agencies Primary areas of activity for Dow m government business are product sales, contract research and develop ment. service contracts, product-'C D application projects, and management of government facilities. Our over-all approach is based on long-term, peace-time commerce with government in the fields of health CI p food, pollution abatement, desalinaQ3 tion of seawater, housing, and similar areas that can lead to higher tivmg standards in the U S. and abroad In the five years since our Govern ment Affairs Department was estab lished. the Company has contributed to the solution of problems m virus- cancer research, artificial-kidney de velopment. water and waste treatment and the conquest of space We expect that such cooperative ventures w tween Dow and government policy makers, planners and scientists w11 continue and that the results *|j benefit ever-increasing numbers -l people i^/orld Operations Marked growth in global marketing, construction Or Earle B. Barnes became general manager of the U S. Area of management when it was formed in September In background: the vinyl chloride plant at Dow s new Oyster Creek Division in Texas From this modern office building tn Zurich. Zoltan Merszei president of Dow Chemical Europe S.A . directs Dow ooera lions in the Europe /Afnca Area w'th 'nea "ned -vere Js Of in 3cts ften > for ''ces rrar> re- )rod- hich :ial|y De- OWI- fedve/s eeds ffec de duct )USl'Pronent Dow duct tlopUCIient on vith ilth m3* iilar vtng ernt at>uted r uSdeent uect beiicy- W'H vviH o* | united States (Although the physical volume of joods shipped gained appreciably `torn 1967. sharp price declines on a -umber of commodities limited the dolI at increase in U. S. Area sales to 4.5% Dows heavy U S. capital expendi-ures program was marked by coni siderable geographical diversification : Approximately $100 million worth of I new plants came on stream. I The Hanging Rock Plant, near Ironton Ohio, added polystyrene to its me of plastic materials and products. Centrally located and supplied with -aw materials via low-cost water trans portation. Hanging Rock is well on the ay to becoming a diversified plastics ' rompiex. and is scheduled to be the norld s largest single polystyrene cant by the early 1970's. Polystyrene from Hanging Rock will x the raw material for a new Dow dant near Newark. Ohio, producing - rloie oriented polystyrene film, due m stream in mid-1969 Flexibility in vinylidene-chloride and VAPP welding and flame-cutting fuel production resulted from the startup * new plants in the Louisiana Division i Vinyii(jene chloride is the raw male '3's for Saran Wrap plastic film and r-e of the components of Saranex film ) The division also approximately doubled its capacity for ethylene dichloride and trichloropropene and boosted its chlorinated-solvents ca pacity by 50%. In the Western Division plant at Pittsburg. California, work was started on major chlorine and chlorinatedsolvents expansions The polystyrene capacity of the Torrance. California, plant was doubled, reflecting the growth of the western plastics indus try We also made progress in diversi fying our production of magnesium with the conclusion of an agreement for processing magnesium-chloride bitterns from Great Salt Lake into feed stocks. A site for a magnesium-reduc tion plant is being negotiated Work on a new aluminum-extrusion plant was started at Russellville. Ar kansas The plant will house an 8.000ton press which, with the 14.000-ton press at the Madison, Illinois, facility, will put us in an excellent competitive position m the expanding market for large aluminum extrusions. Dow's heaviest domestic capital pro grams were centered in the Midland and Texas Divisions and mainly em phasized expansion in existing prod uct lines At Freeport. Texas, large additions were brought on stream for ally chlo ride, ethylene oxide, glycerine ethyl ene diamine. trichloroethylene, caustic soda, polyethylene, epoxy resins and magnesium-ingot casting A plant for pentachloropyridine. an intermediate for Dursban insecticide, was completed Work was started on a new styrene monomer plant with an annual capacity of a billion pounds, the world's largest At Midland. Michigan, expansions were completed in 2.4-D acid, bisphenol A, ethanolamines. Dowpon grass killer and tertiary butyl catechol New bromide-bromate and ethyl cellu lose plants were started up. At Bay City. Michigan, a new plant for plasticlined piping systems was completed Much of the domestic construction program was the responsibility of Dow's Engineering and Construction Services, which performed design en gineering and construction adminis tration on 132 maior projects for 23 operating locations of the Company Freeport was left as our only domes tic ammonia production location Plants in three other divisions --Mid land. Louisiana and Western -- were shut down because of low prices and over-supply in the U S We are utilizing Dow Canada as our basic source for 15 r ST UUU4 4 a I World Operations CONTINUED ' ST 0 0 0 H92 serving the merchant ammonia market Output at the Freeport plant is used captively in manufacturing other chemicals Over six million gallons of new stor age capacity, mainly for chlorinated solvents, was constructed at Dow terminals m Chicago. Illinois, and Bayonne. New Jersey. In addition, a terminal capable of storing a million gallons of caustic soda was estab lished in Florida --Dow's first storage facility in that state Europe/Africa European sales of Dow products, both locally produced and imported, increased 18% during 1968. Dow Chemical Europe S A , our management company for Europe and Africa, took a number of steps to im prove Dow's over-all position on the European Continent, one of the world's most advanced economies. Plans were launched for a chlorinecaustic-chlorinated solvents facility at Stade. West Germany, first units of which are due on stream in late 1971 The investment for this initial segment of a projected chemical complex will be in the S100 million range. Continued expansion was authorized at Terneuzen. The Netherlands, where current investment has already passed the SI 00 million mark only four years after the first units went on stream. The pace of growth in the foreseeable future is estimated at 10-15% annually Terneuzen stood out as the center of Dow Europe's construction activity m 1968 A plant for Chlorothene NU solvent was completed and styrene capacity was expanded. Work pro gressed on a giant naphtha cracker, with an annual capacity of 400.000 metric tons of ethylene, and a related unit for low-density polyethylene. At King's Lynn. England, a facility for Styrofoam brand insulation went on stream and plants for styrene-buta diene latex and Dowpon grass killer were expanded We became full owners of a former associated com pany. Distrene Limited. Barry. Wales, a polystyrene producer At Greffern. West Germany, an epoxy resins plant started production and. on the opposite bank of the Rhine River, construction of a plant to pro duce Coyden coccidiostat was begun at Drusenheim France We acquired a half-interest in PhrixWerke A G . German producer of syn thetic fibers and textile equipment, through an investment commitment of S40 million in new capital The other half-interest is owned by Badische Anilin- & Soda-Fabrik Canada Despite continuing price erosion, sales of Dow Chemical of Canada. Limited increased by 10%. The best percentage gams were registered by consumer products, plastic molding, extrusion and construction materials and chlorinated solvents. Organic chemicals and animal-health products posted above-average sales increases. Construction commenced on a SI 2 million ethylene-oxide plant at the Sarnia. Ontario, works. The plant will utilize the direct-oxidation process, thus releasing the present chlorohydrin reactors for the production of propylene oxide. The new plant will increase Sarnia's oxide capacity by 50% A new production unit for Voranol polyols, raw materials for ure thane foams, was completed. In Alberta, a new chlorine-caustic plant was brought on stream at Fort Saskatchewan with an initial capacity of 300 (and an ultimate capacity of 600) tons per day These products are utilized primarily by the pulp and paper industry of Western Canada. In the Montreal area, a new plant for Styrofoam brand insulation is planned to supply the growing demand for the product in Quebec and the maritime provinces The Toronto sales office Hong Kong's centra/ business dist (background) is borne base for Robert \ Lundeen. general manager of Dow Pac Photographed at Pitman-Moore. W/llian R. Dixon heads Dow's world-wide human health business, described on page II 16 >am Longtime resident of Latin Amenca. Paul 'an f Oreftice is general manager of the 11 ' iatm American Area was relocated in a new building at 250 Bloor Street East --itself an out standing example of the application of Styrofoam in modern construction Latin America The Latin American Area experi enced the fastest percentage of growth in the Company as sales, rebounding from a slow 1967, increased by 23% Agricultural chemicals were the lead ing performer, with strong contribu tions from recently introduced prod ucts such as Tordon herbicide and Coyden coccidiostat Investment in local facilities con tinued at a vigorous pace A new aspirin plant came on stream in Mex ico Engineering or construction was initiated for a styrene-butadiene latex plant in Argentina, an epoxy resins plant in Brazil and the Petroqui'micaDow plants for vinyl chloride, poly vinyl chloride and low-dens/ty poly ethylene in Chile New terminal facilities were inaugu rated in Argentina and Mexico as part of a program to provide better distri bution through ownership of bulk ter minals m all major countries of the area. Dow submitted a proposal to the government of Argentina for a chem ical complex to be located at Bahia Blanca to manufacture chlorine, ethyl ene and their derivatives Drilling proceeded m the state of Bahia in Northeast Brazil to prove salt deposits that would supply a proposed chlorine, caustic soda and derivatives plant Pacific Pacific Area sales were up by 9% m 1968. For 10 months of the year. Dow marketed products previously sold by an Australian associated company. CSRC-Dow (Pty.) limited, which be came a wholly-owned Dow subsidiary early in 1968 Two new plants (latex and epoxy resins) were authorized at the Altona. Victoria, complex of Dow Chemical (Australia), and two new companies were formed With Chungju Fertilizer, a major Korean government-owned com pany. to build low-density poly ethylene and vinylchloride mono mer plants at Ulsan. Korea, subiect to Government of Korea approval With Malaysian investors to build a plant for Dowpon grass killer near Kuala Lumpur (the new company has been named Pacific Chemicals Berhad) Continuing its dramatic growth. Asahi-Dow Limited, our 50%-owned company in Japan, authorized expan sions in vinylidene chloride monomer. Saran resins and film. Styrofoam brand insulation, styrene, styrene-butadiene latex and low-density polyethylene At Brisbane. Australia, the ammonia and urea plants of Austral-Pacific Ferti lizers. in which we own a strong^ minority interest, proceeded on sched-""1 ule toward the targeted completion*--* dates early in 1969 ^ New Dow offices were opened mc--' Taipei. Taiwan, and Bangkok. Thai--- land. At area headquarters in Ffong-- Kong. Dow continued to maintain th^ most complete management staff of"0 any American chemical company doing business in Asia and the Pacific Corporate Product Department The Corporate Product Department was established in 1968 to expedite the flow of new products, technology and methodology among Dow s geo graphic components Although most of the flow currently is outward from the United States, our operations abroad are making increasingly important contributions The new department also coordi nates worldwide strategy for products of multi-area importance and keeps capital allocation and production plan ning around the world in phase The sprawling Sarnia Works is head quarters for L. D. Smithers. president of Dow Chemical of Canada. Limited. 11 Research Record investment in new knowledge, and dividends from past commitments For Innovators --A S2 million axcar^^^rl doubled the size of Dow's Western oJ`r'r' Research Center at Walnut Creek, nia For research people, modern wo^ areas and equipment are vehicles t0 ** vention. upon which much of the c panYs growth depends. ' Dow research, development, pilot plants and technical service in 1968 in volved the expenditure of S84 million, a Company record, and the efforts of 4 300 full-time employees of Dow and consolidated subsidiaries More than 200 Dow scientific and technical people were resident over seas (exclusive of those in recently consolidated foreign subsidiaries). The effective use of R&D personnel has been a significant factor in the Com pany s rapid expansion in world mar kets since it enhances the quality of the contribution we can make to local economies. Dow s research investment in the life sciences and control of the environ ment bore considerable fruit in 1968. and long-standing support of re search in construction-industry prod ucts continued to be productive Major developments The Dow process for removing 18 phosphates from municipal wastewater attained commer cial status in the United States. Dursban insecticide and Coyden coccidiostat (for poultry) won approval of the U S. Food and Drug Administration Progress, wilh a partner com pany. in the development of ceramic foam as a buildinginsulation material resulted in groundbreaking for a Dow plant to manufacture the product. Increased knowledge of fireretardant compounds led to the engineering of a plant to pro duce a new product for protect ing plastics and fibers. Dow's hollow-fiber technology was applied to brackish-water purification and conversion of chemical energy to electrical energy with promising results. Meanwhile, advanced clinical Ar Reis vel ! ob ta Com Tb rnan viso a net accc sala ied pr or turn acac A is o DeP dep- Emc thei witt testing of an artificial kidney .jhe i mer UOyi based on Dow s hollow fibers continued. Dow research also generated new cT>7i technology affecting the productionot urethane chemicals, polystyrene ana allied products, epoxy resins, magne sium metal, oxides, calcium chloride chlorine and caustic soda These devel J5ar ^Tha `ft: *S"re opments were reflected in our capitaispendmg programs Twenty Dow research discoveries gained "new product" status We con tmue to classify a product as new tor aui me tec m' the succeeding four calendar years Under this definition, new products contributed sales of S114 million (7% of total sales) in 1968 Through the creativity of Dow mven- J tors, the Company was issued 49C f U. S. and 1.043 foreign patents i year's end. Dow held 5.284 active J U S patents and 7.844 from foreign | thf da \hits tc t ir bv ar countries. I T*nSl'On Austria! R e i a 11 _ ys>'On dhftOr f0*rinlng9 Programs for `people development' Corn. push job transfers to new high Tapping Talent -- Young supervisors learn management principles and practices in a dis cussion with veteran managers and specialists, part of a program organized by the Corporate Education Department. A variety of such pro grams aids line managment m developing the skills of Dow employees. I important function of Industrial -Rations at Dow is the personal de- | fiopment of individual employees to 'iCt3in the greatest benefit from the jrnpany's human resources t | developmental process takes iany forms application of good super- I visorY practices, such as |Ob perform- I jnce reviews, motivation and reward according to established principles of 1 saiaiy administration, exposure to var- | fd work situations via transfers and .^motions. plus educational oppor| unities within the Company and in the jcademic community I A wide variety of learning programs I s offered by the Corporate Education I Department and various divisional and I departmental training departments. I Employees are encouraged to organize heir own developmental programs with their supervisors according to dney ibers new pn of and gneride. eveloital- eries conw for ears lucts 17% wen490 . At ctive eign (:heir individual needs and the require ments of their |Obs. j The increased emphasis on individ, jal development was reflected in a Higher rate of transfers in 1968 Some I 7700 technical and professional per sons changed |Obs within the Comoany A formal Transfer function in industrial Relations exists to see that noth Company and individual needs j are met most effectively A reduced number of personnel reI tuisitions from divisions and depart| ments resulted in a total of 850 ; echmcal and professional hires i n the United States, down from 1.200 j -n 1967. Some 10.650 persons were added to , 'he employment total with the consoli dation of additional subsidiaries At I :f,e close ol the year, the Company and j is consolidated subsidiaries had a 'otal employment of 47.400 In addi- 1 ';on. 13.600 persons were employed I dy partly-owned companies in the U S and around the world | Retirements under the various pen sion and profit-sharing plans totaled 526 Of these, 431 retired before age 65 Membership in the retirement plans, supported entirely by the Com pany. rose to 18.425 Total assets in these plans rose to $288 million Continued progress was achieved in safety. The frequency of disabling in juries. which had shown a 10 per cent improvement in 1967. was further re duced in 1968 by 33 per cent. Progress in the Companys Equal Employment Opportunity (EEOl pro gram was reflected in the increased representation of minority groups in all ma|0r divisions The number of minority group employees increased by more than 12 per cent during the year Examples of other affirmative ac tions included increased emphasis on recruitment, strengthened relation ships with plant communities and the appointment of a full-time EEO pro gram director Labor agreements expired at nine , US. locations during 1968 With exception, new contracts were neqo- ^ tiated without incident At Marlisnp Illinois, salaried employees main^ tamed production in our metal-propT" ucts plant during a four-month strike., which was resolved in January 1 _ Ten contracts will be negotiated in U S in 1969. Dows total aid program to 500 col leges and universities and to non profit institutions serving our plan; communities exceeded S2 3 million This aid included scholarships, fellow ships. research grants, building ma terials. equipment and medicines In addition, more than 200 professors and university personnel visited Com pany installations. Dow scientists and engineers appeared on more than 40 campuses as speakers, and hundreds of students participated in scientific programs at Dow locations Pi A diversity of ventures yielded a steady income Opulent Options --Dow Badische supplies carpet Zefkrome acryhc fiber in 19 solid colors and 16 mult,chl carefully selected to meet market demands. ^ '5SOne Is Safer--Special tough, high clarity Silastic J;j rubber coating developed by Dow Corning makes right shatter proof with omy .5% loss of light com^ to 5% for competitive shatter proof lamps. At left a ventional bulb shatters under same impact. ^ Dividends from partly owned com panies (those in which our interest is 50% or less) totaled $9.927.281. down from S9.965.218 in 1967 The slight decline reflects the termi nation of dividends from companies which are now majority-owned and whose earnings are consolidated The lines of business of our partly owned companies include chemicals, oil-well servicing packaging machin ery and materials, plastics, silicones and synthetic fibers Dow Badische Company, owned jointly with BASF Overzee N V . experi enced growth in every sector of 1968 operations Sales of Dow Badische chemicals produced at Freeport. Texas, were at an all-time high attributable in part to the summer start-up of a new pro duction facility for caprolactam, a raw material for nylon-6 A new oxo-alcohols plant that will make the company a maior producer of these products and expanded capacity in polycapro lactam are under construction. In fibers, new capacity for Zefran II acrylic fiber was completed and ground was broken for a new Zefkrome acrylic fiber facility, both at Williamsburg. Virginia At Anderson. South Carolina. Dow Badische's new 60-million-poundper-year fibers plant began production The nylon-6 section, which will pro duce 30 million pounds per year, was the first to go on stream The polyester section, with like capacity, was in start-up at the turn of the year Dow Corning Corporation, jointly owned with Corning Glass Works, continued its leadership of the sili cones industry The company also is a leading producer of semiconductor silicon for electronics and of solid- film lubricants, many based on molyb denum disulphide. In addition to consumer products, including the new Wood Adhesive and a non-stick coating for cookware, and such products as implantable artificial finger joints, the company looks to growth in 1969 from potentially high, volume rubber components for au-o , and portable tape players, high-pe' formance wire and cable insulation 1 mold-making materials, gasketing ty I engines, and numerous other appnC/T tions utilizing Dow Comings to tailor-make materials cd| Revenues and income of Dohe Schlumberger. owned jointly withca,: Schlumberger Group of France -w-( creased substantially Sales decinw-' in Trinidad. Nigeria and Continetns I Europe were more than offset by f> | tinued expansion throughout the Mm die and Far East The company rc vides the same oil-well services m iff I remainder of the free world that cv > Dowell Division provides in No'" I America In 1968 it establisned 3r industrial-cleaning division Cliffs-Dow Chemical Company. t": ; thirds Dow-owned, was sold r '9k Additional partly owned conu'3'' activities are described under Wo;-' I Operations 20 Z' 1 finance and Earnings I Product-group profit trends varied; j $139 million new long-term funding highauto `-peruion. g for >1 icasility well i the inlines entai conMidproi the r our lorth n an two96S panv Vorld Sales in all major product categories increased in 1968. ` *tiile earnings showed mixed trends Comparisons with i 1967 for major groupings are given in the table below in fP.lhons of dollars Uimicals. Metals .......... flashes/ Packaging .. Biopnxfucts/ Consumer Products Sales 51 67 .' $ 829 S 753 .; 522 444 . J 302 186 j St.653 SI .383 Pn-Tix Earnings 61 1 '67 SI24 S134 59 44 49 42 $232 ` S220 ' Information concerning the business factors which ( caused the shifts in sales and profits will be found m the product sections of this annual report ; Capital expenditures for new plant and equipment ac- celerated during 1968 and reached S306 million, compared Ito SI92 million in 1967 Cash investments m the capital stock of. and loans to. associated companies and recently | acquired subsidiary companies, totaled about S90 million. :! as against S100 million in 1967 Expenditures in 1969 in these two areas are currently estimated at about the same levels as in 1968. Supporting partially the growth of the Company, we sold some temporary investments and borrowed $100 million on 30-year debenture bonds in the United States. S25 million on three-year notes in Europe, and S14 million (60 million Swiss francs) on 12-year bonds m Switzerland The balance of the funds required to support our growth was generated internally through retained earnings and depreciation The foreign financing provided for our con tinuing overseas facilities programs while at the same time benefiting the U S balance of payments Inflation affected the cost of money in 1968 as well as the cost of personnel, raw materials, and construction About one-half of the SI 3 million increase in net interest expense was attributable to higher interest rates and onehalf to increased borrowing. Cash dividend payments per share, increasing for the 10th consecutive year, totaled $2.35 in 1968. compared to $2.15 in 1967 The annual dividend rate currently is S2 40 per share In summary, Dows 14% profit after tax on average Common Stockholders' equity in 1968 ranks high m per formance in the chemical industry and in industry generally * | Opinion of Independent Public Accountants ! I HASKINS & SELLS | Crmlied Public Accountants I BOO Firsr Ninonai Building DETROIT 48226 , THE DOW CHEMICAL COMPANY: * We have examined the consolidated balance sheet of The Dow Chemical Company and its subsidiary companies as of December 31 1968 and the related statements of consolidated income and surplus for the year then ended Our examination was made m accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances As to amounts included for the Company s wholly- owned Swiss bank, we were furnished with the report of other accountants on their examination of the financial statements of the bank for the year In our opinion based on our examination and the report of other accountants referred to above, the accompanying consolidated . balance sheet and statements of consolidated income and surplus present fairly the financial position of the companies at December 31 1968. and the results of their operations for the year then ended, m conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year, as restated. FEBRUARY 28. 1969 HASKINS 8l SELLS 21 6/ H 00 01 S ; Consolidated Balance Sheet Assets DECEMBER 31 Current Assets: Cash Marketable securities |at cost, less reserve) and time deposits................. Accounts and notes receivable Trade, less allowance for doubtful accounts .......................................... Miscellaneous................... ................................. Inventories --at lower of cost or market......... ........................................... 1968 1967 S 40 236 154 : _/ ' 427 994 286 695 30C 71 167 537 276 328 670 775 855 655 s 26.670 0)^ 77.852 8Cc 215.276.65, 91.76l.76t 216.549.7u. 628.110^ Investments and Non-Current Receivables: Carried at equity in net assets -- Wholly-owned Swiss bank I Note A).................... ................................................... Carried at cost, less reserves: Non-consolidated subsidiaries .................................................................... Associated companies (Note B)................................................................................. Sundry................................................................................................................................ 27.375 678 3 148 633 165 983 1/7 _ 143 806 057 340 31 3 54 5 25.727.66C - 94.937.735 99.756 527 147.961,27s 368.383497 Property (Note D): Plants and other properties --at cost .................... Less --Accumulated depreciation and depletion. . 2 060 427 146 933 403 766 '127 023 380 1.756.022.326 859,872.762 896.149.564 Goodwill (Note A) 44 862 610 Deferred Charges and Other Assets 24 169 752 20.556.612 Total See Notes to Financial Statements 52 312 224 942 $1,9 1 3,199,821 22 The Dow Chemical Company and Subsidiary Companies ^abilities DECEMBER 31 '.OI4 80g 654 766 ;210 452 current Liabilities: ! wtes payable Dng-term debt due within one year , lccounts payable united States and foreign taxes on income ' accrued and other current liabilities ....... Long-Term Debt (Note F) 1968 1967 246 493 51 2 8 775 086 124 959 351 52 472 arg '38 592 1 ! 6 c 71 392 7 2 S 175.534.553 4.962.718 94 363.099 45.728.142 99.643.250 420.231,762 684 534 393 551.628.122 660 730 527 .276 .193 Minority Interests In Subsidiary Companies. 1 Reserve For Loss On Foreign Investments. 41 625 541 784.813 5 000 GOO 5.000.000 326 ! Stockholders' Equity (Note H). 762 ' Common Stock (1968--issued. 31.230.491 shares). 564 Capital surplus.................................................................. Earned surplus.................................................................. 1 less-Treasury stock --at cost (1.000.000 shares) .. 612 156.152 454 562 171 177 358 830 C20 1 077 153.651 ___ 67 531 116 1 009 622 535 155.404,851 553.292.040 294,389.349 1.003.086.240 67.531.116 935.555.124 1.821 Total See Notes to Financial Statements S2.312 224 942 SI,913.199.821 TD CD CD CD ik Statement of Income 'ST0034500 FOR THE YEARS ENDED DECEMBER 31 Sales and Other Revenue: Net sales Equity in earnings Of Swiss banking subsidiary not consolidated (Note A) Dividends received from associated and other companies Interest income........................................ Fees from operation of Government-owned plants Other income ... ... 198 3 1967 Costs and Other Charges: Cost of sales........................ ......... .............................................................. Provision for depreciation and depletion............................................................. Provision for pension and profit-sharing plans (Note E).......................................... Selling and administrative expenses ........................................................ Interest expense ................................. Other income charges............ ........................................................ Income before provision for taxes on income and minority interests Provision for taxes on income (Note I) ............................................ .............................................................. Income before minority interests Minority interests'share in income ........................................................ ........................................................ Net Income (Note C)......................................................................................................... Earnings per share.................................... ................................................ See Notes to Financial Statements Source and Application of Funds ._ : -' '3 - _ i 871,42853- ( 136.038 2# | 13 482 3y | 148.238 405 ' 35.865 By I 5 jgg j 1.211 644 an I 22' c 22 '2 2 _2 '' : " 2: a 219 9434$* 87 681 000 132.262.464 s 132.262 464 S4 41 " 3 r The Dow Chemical Company and Subsidiary Companies 7 FOR THE YEARS ENDED DECEMBER 31 ^pital Surplus. 5 O63 3 852 5.2i8 5.134 2.7i,, 1795 ,.,3nce at beginning of the year idd ^cess of selling price over par value 0f Common Stock issued to employees . Excess of face value of debentures over par value of Common Stock issued on conversion 7,776 3 692 1.280 -322 1.406 `>.822 >_785 1.312 leduct -- Capital surplus related to subsidiary company sold in 1968 glance at end of the year . .............................................. Earned Surplus: jaiance at beginning of the year (as oreviously reported) ........... I wd-Eduity in earnings of Swiss banking subsidiary from date of incorporation I Note A) .................... 464 .000 .464 3alance at beginning of the year (as adjusted)......... Add j Net income for the year ... ! Eauity in net earnings of new subsidiaries from I dates of acquisition to January 1. 1968............... ,464 | Deduct-Cash dividends ' Balance at end of the year See Notes to Financial Statements ^3 1967 S544,411.099 7.118.088 1.762.853 553.292.040 $553,292,040 S227.024.922 1.168.857 228.193.779 132.262.464 360 456.243 66,066.894 S294.389.349 I 0 SVG0 0 1 S : 25 V Notes to Financial Statements ******-, A. Principles of Consolidation C. Gain on Sale of Investments The consolidated financial statements include all signifi Net income for 1968 includes a credit of S6.976 847 | cant subsidiaries, except for a wholly-owned Swiss banking company In 1968 the Company adopted the practice of adjusting its investment in the bank (formerly earned at providing for income taxes of S2.296.295. representing;^ I profit on sale of sundry investments cost) to reflect changes in its equity in the bank's net assets As a result of the change, earnings of the bank are included in consolidated income in 1968. and financial statements for the year ended December 31. 1967 have D. Property been restated for comparative purposes. The effect of the revision has been to increase previously reported net in come for 1967 by SI.409.852 (S05 per share) and to in crease earned surplus at January 1. 1967 by SI.168.857. the accumulated undistributed earnings of the bank prior The amounts shown in the balance sheet as proper^ and the accumulated depreciation and depletion relates thereto at December 31. 1968 are represented by the Ip. lowing general classifications: to that date. In 1967 the Company acquired controlling interests in two companies (Lepetit S.p.A.. an Italian company, and Bio-Science Laboratories) which have been included in the consolidated financial statements from January 1. 1968. During 1968 the Company acquired controlling interests i in three foreign companies (formerly 50% owned), and their operations from the dates of acquisition are also included in the consolidated financial statements. The above-mentioned acquisitions were accounted for as purchases, and the excess of the cost of the Company's investments over the net assets acquired is shown as goodwill in the consolidated balance sheet In the opinion of management, no amortization of goodwill was required in 1968. Claaiitutim (000 Miinrt) Property - *t cm AccwmiliM Octree min nd OctictiN Land.................................. Land and waterway improvements.............. Buildings.......................... Machinery and other equipment....... Wells and brine systems Furniture and fixtures. .. Other ............................... Construction in progress.................... Total....................... S 48.024 36.020 237.852 1.431.249 34.051 22.281 23.973 226.977 S2.060.427 S 18.040 98.557 775.606 19.218 11.980 10.003 < S933.404 B. Associated Companies The Company's equity at December 31. 1968 in the com bined net assets of associated companies (50% owned), as shown by their unaudited financial statements, exceeded the Company's investment at cost (less reserve) by approxi mately S30.000.000. The Company's equity in the net income of these companies was approximately S3,300.000 and S9.400.000 for the years ended December 31. 1968 and 1967. respectively. ( 3 Depreciation in the United States and Canada is com puted primarily under the declining balance method onv,err > the estimated service lives of the respective classes o' assets. In other countries the straight line method is generally used. The total provision for depreciation arc \ depletion for the year ended December 31. 1968 was ^ SI 57.227.205 i 26 afte ,g t^e perty Hated e foi- I, Pension Plans The Company and certain of its subsidiaries have pension ^ pension and profit-sharing plans which provide gener| allv for retirement benefits at age 65 for all eligible em ployees The total cost of such plans for 1968 was Sl4.378.677. of which $2.204.445 relates to pension plans. The Company's policy is to accrue and fund pen sion cost as computed by its actuary: unfunded prior service cost at December 31. 1968 was negligible. Pension lund assets exceed the actuarially computed value of 1 vested benefits j I 140 57 06 18 30 )3 04 -- comover es of od is i and was F. Long-Term Debt Details of long-term debt are shown below: Promissory notes. 4 5% due 1990 . 5 0% due 1991............ Debentures 4.35% due 1988 6.70% due 1998 Debentures, subordinate convertible. 3% due 1982...................... Notes payable under revolving credit agreements, due 1971 Other (various rates and maturities from 1970 to 1984) Foreign currency loans Dollar loans....... Total ................... (00C MMtlri) Dvcwifcsr 3f ISM 1M7 $125,000 100.000 87.909 100.000 $125,000 100.000 93.821 1.453 1.758 154.650 182.650 70.566 45.006 $684,584 26.793 21.606 $551.628 The promissory notes and debentures are payable gen erally in annual installments beginning at various dates as specified in the related indentures or agreements The notes payable under the revolving credit agreements relate principally to an agreement with banks originated in 1952 and extended with certain amendments from year to year thereafter All notes are issued for periods of 90 days at the prime rate and are renewable at the option of the Company until termination in October 1970. with final maturity not more than one year thereafter Installments due on long-term debt in the five years after 1968. exclusive of the revolving credit agreements are. 1969. $8,775,000. 1970. $17,787,000. 1971. $59997.000: 1972. $20,024,000: 1973. SI4.801.000 G. Sale of Common Stock to Employees In May 1968 the Company made an offering of Common Stock to its employees and certain employees of its sub sidiary companies at a price of $68.75 a share, payable on an installment basis generally through payroll deductions At December 31. 1968 there were unfilled subscriptions under the offer for 124.946 shares The subscriptions, which may be canceled at any time at the option of the em ployee but must be settled by April 1969. have not been recorded in the Company s books and are not reflected in these financial statements However, partial payments on these subscriptions aggregating S5.439.490 are included in current liabilities in the consolidated balance sheet at December 31. 1968. H. Stockholders' Equity The authorized Common Stock at December 31. 1968 consisted of 50.000.000 shares of $5 par value each. The changes in the number and amount of issued shares of Common Stock during 1968 are shown on the following page. 27 i om r t o t s Shim Amaaat Issued January 1 Sale to employees... Conversion of debentures .............. 31.080.970 143.285 6.236 Issued December 31 . 31.230.491 $155,404,851 716.425 31.178 $156,152,454 There were 30.230.491 shares of Common Stock out standing at December 31. 1968 after deducting 1.000.000 shares of treasury stock. The stockholders have authorized plans for granting offi cers and key employees options to purchase Common Stock at the fair market value at the date of grant. The op tions must be exercised within five years from the date of issuance Changes during 1968 in the number of shares under option are shown in the following summary. 1967 OfUtB PtM lacaativa PUn Stack DnriM Opliana Uaili" Othff Opliaa Plana Options. Outstanding January 1 47.800 279.911 36.725 692 Granted . . .. Exercised........... 12.647 5.000 22.750 16.888 Outstanding December 31 ... 60.447 268.023 59.475 692 Not Optioned December 31 . 339.553 96 190.525 Price range on outstanding S76.25 $60.00 options at to to December 31 . . $87 00 $76 25 $64.56 * A dividend unit is the right to receive lor a specified period cash payments equivalent in value to cash dividends paid during such period on one share of Common Slock As of December 31. 1968 124.946 shares of Comm0r Stock were reserved for sale to employees under the ofter ing of May 1968: 29.707 shares were reserved for conver sion of convertible debentures; and 668.811 shares We,,, reserved for issuance under stock option plans. I. Taxes on Income It is the practice of the companies to record the income tax effect of significant timing differences between account, mg and taxable income The cumulative net amount of such deferred income taxes is not material. The domestic companies apply the full amount of th investment credit as a reduction of the provision for Un>tw States taxes on income in the year in which the facilities qualify for the credit. The investment credit for 1968 anc 1967 was approximately $8,900,000 and $10.600000 respectively. No provision is made for United States taxes on the unremitted earnings of subsidiary companies as such earnings are considered to be either permanently invested or the tax applicable thereto would not be significant Reference should be made to Note J regarding income tax assessments being contested by the Company j l J. Commitments and Contingent Liabilities The Company is contesting assessments for additional income taxes for the years 1956 through 1964 One of the issues was appealed to the United States Tax Court Ar opinion favorable to the Company was handed down by the Court on January 29. 1969. The period allowed for the ; | / l Government to appeal has not expired. In the opinion ct management, the liability provided in prior years is ade- quate to cover any settlement of contested issues The lease rental payments (stated in millions) due -n | i 1 j each of the five years after 1968 as required by agree- i ments in effect were as follows: 1969. S31 6; 1970. $240 | 1971. S22.7: 1972. $21.8. 1973. $21.3. Other contingent liabilities at December 31. 1968 wet? approximately $35,000,000 and consisted principally ^ guarantees of loans. i ) \ I 28 d C: :faten'ents "T 1967 1966 1965 1964 10 Years 20 Years Ago Ago 1958 1948 FINANCIAL CONDITION (IN MILLIONS) , -grreni Assets jash and marketable securities Receivables (less reserves) ,,ventories Total current assets Current Liabilities Notes payable 1 Accounts payable and accruals Taxes on income Total current liabilities . working Capital R-operty (at costl Depreciation and depletion (A) Net property ' Other Assets . investment (A) plus (B) plus (C) * Long-term Indebtedness | Preferred Stock . Minority Interest Reserves ... I Total Common Stockholders Equity (D| minus (E) . (8) (C) (D| (E| I INCOME (IN MILLIONS) I Sates and Other Revenue Net sales................... Other revenue Total Costs and Other Charges , Cost of sales ` Depreciation and depletion Selling and administrative expenses Pension and profit-sharing plans interest expense Other income charges Ta*es on income Minority interests' snare m income Total Net income for the Year .... .. . . OTHER STATISTICS (IN MILLIONS) Earnings per share on Common Stock |m dollars) () Cash dividends per share paid to stockholders on Common Slock |in dollars) Cash dividends declared on Common Stock Stock dividend at approximate market value . (*l Taxes tmajori Wages paid Cost of employee benefits Number of employees at year end (thousands) Additions to property Adjusted for stock splits and stock dividends S 104.5 307.0 2166 628 1 S 127 2 254 9 195 2 577 3 S 1146 218 9 183 6 517 1 S 104 3 206 0 1876 497 9 S 44 8 85 7 159 7 290 4 S 22 8 23 6 36 8 83 2 -- "' :; 175 5 199 0 45 7 420 2 207 9 1.756 0 859 9 896 1 389 0 1.493 0 551 6 8 5.0 557.4 s 9356 58 8 176 5 53 1 288.4 288.9 1.673.5 823.8 84 9 7 279 2 1.4178 552 3 36 3 161 2 53 1 250 6 266 5 1.523 3 772 7 750 6 259 2 1.276 3 454 6 8 5.0 558 1 S 859 7 8 5.0 460.4 S 815.9 93 8 123 3 46 3 263.4 234 5 1.346 7 724 0 622 7 150 7 1.007.9 2392 9 35 243 6 S 764 3 36 3 71 8 26 7 134 8 155 6 1,038 4 474 4 564 0 20 6 740 2 274 6 22 276 8 S 463 4 3 175 11 3 29 1 54 1 192 3 142 178 1 10 2 242 4 67.2 70 4 10 13 139 9 SI02 5 :~.L 5 72J 3 ecu J 15" 2 2-4 5 "4 4 .. > SI .382.7 48 9 1.431.6 871 4 136 0 150.2 13.5 35 9 66 85 7 SI .309.7 39.4 1.349 1 827 4 122.6 144 2 12 1 28.5 12 1 79 5 $1,176 2 34 1 1.2103 737 6 115 6 133 7 12 9 20 7 80 73 5 SI .077 5 24 6 1.102 1 684 2 98 7 126 7 12 5 94 83 68 5 S 636 2 90 645 2 386 8 82 4 66 7 89 10 9 10 42 4 SI 70 7 37 174 4 mo 14 2 10 7 18 17 15 12 4 zc~ - 1.299 3 1.226.4 S 132 3 S 122 7 1.102 0 1.008 3 599 1 S 108 3 S 93 8 S 46 1 153 3 S 21 1 -- __ - -" - S 4 41 S 4.09 S 3 58 S 3 11 2.15 66 1 1259 325 6 36 2 36 4 192 3 1 95 59 9 1165 302.1 329 35 0 241 5 1 79 54 1 46 8 105 6 279 6 28 7 33 8 248 3 1 71 53 3 97 8 263 2 27 2 33 2 166 1 S 1 66 S 1 06 1 11 30 8 27 3 59 8 183 2 184 26 6 1850 25 50 170 486 44 146 49 0 ST009&505 I I The Dow Chemical Company CORPORATE HEADQUARTERS. MIDLAND. MICHIGAN UNITED STATES AREA Headquarters: Midland. Michigan SALES OFFICES IN 22 CITIES 0 31 MANUFACTUR ING locations in is states Arkansas Mag nolia. Russellville (under construction'* California Fresno. Pittsburg. Torrance. Van Nuys Colorado Denver Rocky Flats Con necticut Gales Ferry Georgia Dalton Hawaii Honolulu - Illinois Madison Indiana Indian apolis. Zionsville Louisiana Plaquemine Michigan Bay City. Ludington, Midland Minnesota Biwabik Missouri Cape Girar deau. Pevely New Jersey Carteret Ohio Cleveland. Findlay. Ironton. Newark (under construction) Oklahoma Tulsa Pennsyl vania Royersford Texas Freeport. Oyster Creek (under construction)* Washington Kalama o principal partly owned com panies* Dolco Packaging Core.. Los An geles. California Dow Badische Company, Williamsburg. Virginia Dow Corning Cor poration. Midland. Michigan Ethyi-Dow Chemical Company Freeport. Texas* The Kartridg Pak Co . Davenport. Iowa * Companies in winch Oow s mteiest is substantial but less than a maionty DOW CHEMICAL EUROPE S.A. Headquarters: Zurich, Switzerland OFFICES IN 1A CITIES s 15 MANUFACTURING LO CATIONS in 7 COUNTRIES France Drusenheim I under construction) Germany Greffern. Stade (under construction) Greece Lavrion Italy Cunao. Livorno Milan. Naples The Netherlands Rotterdam. Terneuien Spam Bilbao. Santander. Tarragona United King dom Kings Lynn. England. Barry, Wales* PRINCIPAL PARTLY OWNED COMPANIES*: Compagnie des Services Dowell Schlumberger. Paris. France* Dowell Schlumberger Cor poration. London England Lurex NV. Amsterdam. The Netherlands* Phrix-Werke A.G.. Hamburg. Germany Plastichimie S.A. Ribecourt. France DOW CHEMICAL OF CANADA. LIMITED Headquarters: Sarnia. Ontario SALES OFFICES IN 6 CITIES o 1 0 MANUFACTUR ING locations in 4 provinces: Alberta Ed monton. Fort Saskatchewan British Colum bia Ladner Ontario Don Mills. Fort William. Sarnia. Toronto (two locations). Weston Quebec Montreal DOW CHEMICAL LATIN AMERICA Headquarters: Coral Gables, Flo OFFICES IN 9 CITIES 7 MANUFACTURING TIONS IN 6COUNTRIES: Argentina Buenos Brazil Sao Paulo (under -constructiChile Concepcion (under constructr Colombia Bogota. Cartagena Fcuadot Mexico Mexico City a principal p OWNED COMPANIES* Atanor S AM 8 Aires. Argentina Poliolefinas Col nas S A . Bogota, Colombia DOW CHEMICAL PACIFIC Headquarters: Hong Kong, B-C.C. OFFICES IN 13 CITIES s MANUFACTURING ERATiONs in Australia Altona. Rhodes laysia Kuala Lumpur (under construct PRINCIPAL PARTLY OWNED COMPANIES* Dow Limited. Tokyo. Japan AustHi-l'*' cific Fertilizers. Brisbane. Australia ly9' Watkms-Dow Limited New Plymouth h Zealand Polychem Limited. BomDav ,n<1*