Moody's Investor Service -- Executive Summary and
        Testimony of Daniel Heimowitz


            Daniel Heimowitz, Director of Public Finance was invited to
        speak on Wednesday, July 26, 1995 before a Congressional
        Subcommittee.  This is his Executive Summary and Testimony.   


                             U.S. HOUSE OF REPRESENTATIVES
                                 EXECUTIVE SUMMARY OF
                                     TESTIMONY OF
                                  DANIEL N. HEIMOWITZ
                            MOODY'S INVESTORS SERVICE, INC.

            Daniel Heimowitz is the Director of the Public Finance
        Department of Moody's Investors Service.


            Moody's has for almost 90 years published rating opinions and
        now maintains 56,000 ratings on 22,000 issuers of municipal debt.
        Moody's maintains ratings on Orange County and
on various
        participants in the Orange County Investment Pool.   


            After the Federal Government's own securities, Municipal Bonds
        are the most default-free of publicly offered bonds.  The low cost
        and relative ease of market access for issuers large and small
        reflects that strong track record.  Municipal issuer practices are
        generally sound, with adherence to good management practices and
        attention to maintaining creditworthiness even under fiscal
        pressures.  Since defaults on debts issued by established
        municipalities and paid out of general municipal resources are
        extremely rare, prior events offer limited precedent, making it
        difficult to predict the ultimate market impact of the Orange County


         I.  Orange County's Investment Practices and the Level of Orange
        County's Investment Losses.


            In rating general obligation bonds, such as those issued by
        Orange County, Moody's weighs and relies on current and historical
        evidence regarding a municipality's economy, financial performance,
        debt burden, fiscal management and administrative skill.  This
        information is provided by issuers in a number of forms, including
        in the Official Statements that accompany municipal bonds and the
        audited financial statements prepared by professionals retained by
        municipal issuers.   


            While Moody's, other market participants, the County's own
        management, the State of California, the local governments investing
        in the Pool, and the SEC, among others, was aware of the above-
        market rate of earnings reported by the Orange County Pool over an
        extended period of time, we were shocked by the unprecedented
        magnitude of the County's investment loss.  The County's debt was
        not directly linked to its investment practices, rather, the
        County's debt was secured by the County's general resources.   


            Based on the factors noted above, Orange County was perceived as
        financially strong and sophisticated and otherwise responsible and
        well-managed.  As such, nothing led Moody's to believe that Orange
        County's investment practices were a threat to repayment of its own
        debt or the debt issued by local governments investing in the County
        Pool.  In addition, Moody's experience with other municipalities
        that took investment risk and incurred losses was that they stepped
        up and made payments on their debt obligations.  This is the
        behavior the market has grown to expect and by which Orange County
        was and is being measured.   


            The Orange County investment experience has altered beliefs and
        practices in the market.  Orange County incurred losses through
        commonly used investment practices but, as Moody's found in a
        nationwide survey of municipal investment practices, its behavior
        was beyond historical norms.  Even though Orange County presents a
        unique situation, Moody's has nevertheless responded to these events
        by implementing changes to the information that all issuers must
        provide in support of their investment practices and by giving
        investment practices greater weight and closer, more continuous


            As with past financial crises, the Orange County experience has
        brought to the public a greater understanding and appreciation of
        risk, which in turn has focused individual issuers, states and
        industry associations on better investment practices and improved
        investment disclosure.  We encourage these efforts.   


         II.  Orange County's Decision to File for Bankruptcy.


            Until Orange County's bankruptcy filing the market had no prior
        experience with a large, sophisticated, and very wealthy general
        purpose municipal government's operating in bankruptcy.  Given the
        enormous stigma and complexities of operating under bankruptcy,
        there is no reason at this time to believe that a bankruptcy filing
        will be viewed as a viable alternative to addressing the fiscal
        challenges faced by municipal governments.   


            A broader concern raised by the bankruptcy filing is how
        difficult it has been for Orange County to deal with its fiscal
        crisis.  This, in turn, has drawn market attention to the need to
        rethink just how resilient even a wealthy municipal-debtor might be
        when dealing with a fiscal crisis.  The extreme magnitude of the
        Orange County experience has heightened the municipal market's
        awareness of investment risk and resulted in a greater appreciation
        of the very real fiscal constraints under which the states and their
        localities now operate.   


         III.  The Effect of Orange County on the Trust Between Issuers and


            A far more difficult adjustment will be necessary if Orange
        County's actions and inactions result in an undermining or erosion
        of the trust between issuers and investors which is a fundamental
        underpinning of the municipal market.   


            The market has looked for Orange County to state unequivocally
        its intention to make good on its debt obligations in full and to
        state that its losses would not interfere with the County's
        recognition of its obligations to its creditors.  As such, we were
        disappointed by the resounding rejection of the sales tax proposal.
        Presented as a means for the County to make good on its obligations,
        it received at best lukewarm support from most County officials, and
        was actively opposed by a number of city councils.  We believe these
        events are beginning to fray the edges of public trust.   


            Far greater potential damage to public trust will occur if
        Orange County follows through on its threats to invalidate certain
        debt obligations.  Any such attempt will give the market substantial
        pause and could be extremely disruptive.  It would be naive to think
        that Orange County could surgically extract itself from obligations
        which in retrospect it wished it had not undertaken without damaging
        the system by which state and local governments issue debt.   


            The market continually adjusts to new information, resulting in
        improved relative risk assessment, and has and will continue to
        adjust to the events in Orange County.  However, if the County takes
        any actions which undermine the market's trust, it would likely
        affect all issuers and could result in higher costs, difficulty in
        access to the public market for municipal issuers, and a rethinking
        of the fundamental underpinnings of the public finance market.   




         July 26, 1995



        Chairman Baker, Members of the Committee, good afternoon.

            I am Daniel Heimowitz, Director of the Public Finance Department
        of Moody's Investors Service.  I would like to thank the Committee
        for inviting me to speak today on a topic of great significance to
        me professionally and to the industry in which I work.   


            Moody's is a publisher of rating opinions.  Moody's has been
        publishing opinions on bonds since 1909 and now maintains 56,000
        ratings on the debt obligations of 22,000 municipal issuers.  A
        rating is not a prediction of an outcome in a particular case.  It
        is the expression of an opinion about the relative likelihood of
        different possible future outcomes.   


            With regard to Orange County, Moody's issued rating opinions on
        a range of the County's securities, having rated the County's debt
        since 1938.  We have continued to follow the Orange County situation
        closely since the December 6, 1994 bankruptcy filing and have issued
        numerous credit comments updating the market on the status of events
        as they have unfolded.  (Moody's comments and press releases on the
        events in Orange County and an explanation of Moody's bond ratings
        have been provided to the Committee.)  


            After the Federal Government's own securities, Municipal Bonds
        are the most default-free of publicly offered bonds.  The low cost
        and relative ease of market access for issuers large and small
        reflects that strong track record.  Municipal issuer practices are
        generally sound, with adherence to good management practices and
        attention to maintaining creditworthiness even under fiscal
        pressures.  Defaults on debts issued by established municipalities
        and paid out of general municipal resources are extremely rare.
        Consequently, prior events offer limited precedent, making it
        difficult to predict the ultimate market impact of the Orange County


            The three areas that I would like to discuss today relating to
        Orange County are:  


            These points, in turn, address issues raised by the Committee,
        including the likelihood that other municipalities may follow Orange
        County's lead, and whether the events surrounding Orange County's
        collapse will alter beliefs or practices fundamental to the
        municipal marketplace.   


         I.  Orange County's Investment Practices and the Level of Orange
        County's Investment Losses


            In rating general obligation bonds and other debt paid from
        general resources, similar to the debt issued by Orange County,
        Moody's weighs and relies on current and historical evidence
        regarding a municipality's economy, financial performance, debt
        burden, fiscal management and administrative skill.  This
        information is provided by issuers in a number of forms, including
        the Official Statements that accompany municipal bonds and the
        audited financial statements prepared by professionals retained by
        municipal issuers.   


            While Moody's, along with other market participants, the
        County's own management, the State of California, the almost 200
        local governments investing in the County's Pool, and the SEC, among
        others, was aware of the above-market rate of earnings reported by
        the Orange County Pool over an extended period of time, we were
        shocked by the unprecedented magnitude of the Orange County
        investment loss.  The County's debt was not directly linked to the
        investment practices of the Pool, rather, the County's debt was
        secured by the County's general resources.   


            Orange County is one of the wealthiest counties in the nation.
        In assessing the County's general resources, Moody's focused on the
        strong and diverse economic base of the County as an indication of
        the County's general economic wherewithal and ability to repay debt
        obligations.  Prior to the events of late 1994, Orange County had
        moderate levels of debt and a history of sound fiscal management
        that was reflected in growing operating reserves that had
        accumulated over time.  It was viewed, and its representatives,
        Messrs.  Citron and Raabe, presented it, as a sophisticated
        investor.  These were all positive credit factors that supported
        Moody's ratings, which were in the A to Aa range.   

        Hexcel Reports Second Quarter Results; Improved Sales
        and Margins Generate Net Income of $1.8 Million  


            PLEASANTON, Calif.--July 27, 1995--Hexcel
Corporation (NYSE/PSE:HXL)

today reported results for the second quarter ended July 2, 1995.


            Net sales were $91.0 million, a 7% increase over net sales of
        $85.0 million for the second quarter of 1994.  Gross margin was
        $18.1 million for the second quarter of 1995, or 19.8% of sales, and
        net income was $1.8 million or $0.10 per share.  This compares with
        a 1994 second quarter gross margin of $14.2 million, or 16.7% of
        sales, and a net loss of $4.4 million or $0.60 per share.  There
        were approximately 18.0 million shares outstanding during the second
        quarter of 1995, reflecting the results of the company's recently
        completed equity offering, versus 7.3 million shares in the second
        quarter of 1994.


            The quarterly sales increase reflects improvements in several of
        the company's markets, especially in Europe, and higher sales to
        customers in the recreation industry.  The increase is also
        attributable to the decline in the U.S. dollar relative to other
        major currencies; over 40% of the company's sales are to
        international markets.  Honeycomb sales were slightly lower,
        reflecting the sale of the Chandler, Arizona manufacturing facility
        in the fourth quarter of 1994.


            The increase in gross margin is the result of higher sales and
        the beneficial impact of the company's restructuring activities.
        The operating results of the company's honeycomb, composites and
        fabrics businesses all improved.  However, the company is not yet
        experiencing the expected benefits from the consolidation of its
        honeycomb operations.  Successfully completing the restructuring of
        these operations remains one of management's highest priorities.


            For the year-to-date ended July 2, 1995, net sales were $176.2
        million, compared with $162.6 million for the comparable period of
        1994.  The 1995 year-to-date gross margin was $32.9 million, or
        18.6% of sales, and the net loss was $0.7 million or $0.05 per
        share.  Gross margin for the same period of 1994 was $25.8 million,
        or 15.9% of sales, and the net loss was $9.4 million or $1.29 per
        share.  The year-to-date results include bankruptcy reorganization
        expenses of $3.0 million for 1995 and $6.9 million for 1994.  As
        previously reported, Hexcel emerged from bankruptcy reorganization
        proceedings on February 9, 1995.  As a result of state income taxes
        and taxable income for certain European entities, the company
        recorded tax provisions of $1.6 million and $0.7 million for the
        1995 and 1994 year-to-date periods, respectively.


            Commenting on the second quarter results, John J. Lee, Chief
        Executive Officer of the company, said, "The company generated
        income from continuing operations for the first time since the third
        quarter of 1992.  This marks an important milestone in the company's
        turnaround, and reflects the tremendous efforts of a dedicated
        workforce.  Nevertheless, we recognize that the company's return to
        an acceptable level of profitability is not yet complete, and that
        the competitive environment is more difficult than ever.  We must
        continue to improve profitability and pursue market opportunities,
        and are committed to doing so."


            As previously reported, Hexcel and Ciba-Geigy Limited have
        signed a non-binding letter of intent, subject to various
        conditions, to combine Ciba-Geigy's worldwide Composites Division
        with Hexcel's business.  The combined company would specialize in
        lightweight, high-strength structural materials for the aerospace
        and other industries.


            Hexcel Corporation is an international developer and
        manufacturer of honeycomb, advanced composites, and reinforcement
        fabrics used in the commercial aerospace, space and defense,
        recreation, and general industrial markets. -0-  


        Hexcel Corporation and Subsidiaries
        Condensed Consolidated Statements of Operations


                               The Quarter Ended   The Year-to-Date Ended
                              -------------------  ----------------------
        (In thousands, except      July 2,    July 3,    July 2,     July 3,
         per share data)            1995       1994       1995        1994
        Net sales                 $ 91,023   $ 84,964  $ 176,178   $ 162,646
        Cost of sales              (72,968)   (70,799)  (143,328)   (136,798)
        Gross margin                18,055     14,165     32,850      25,848
        Marketing, general, and
         administrative expenses   (12,106)   (11,813)   (24,272)    (23,704)
        Operating income             5,949      2,352      8,578       2,144
        Interest expenses           (2,079)    (2,255)    (4,442)     (4,750)
        Bankruptcy reorganization
         expenses                     (826)    (4,565)    (2,951)     (6,909)
        Income (loss) from continuing
         operations before income
         taxes                       3,044     (4,468)     1,185      (9,515)
        Provision for income taxes  (1,094)      (426)    (1,604)       (704)
        Income (loss) from  
         continuing operations       1,950     (4,894)      (419)    (10,219)
        Discontinued operations:
          Income from operations, net
           of provision for income
           taxes of $169 and $315 for
           the quarter and year-to-
           date ended July 3, 1994,
           respectively                --         472         --         773
         Losses during phase-out
          period                      (185)        --       (297)         --
           Net income (loss)       $  1,765   $ (4,422) $    (716)  $  (9,446)
        Net income (loss) per share
         and equivalent share:     
        Primary and fully diluted:
          Continuing operations   $   0.11   $  (0.67) $   (0.03)  $   (1.40)   
          Discontinued operations    (0.01)      0.07      (0.02)       0.11
           Net income (loss)      $   0.10   $  (0.60) $   (0.05)  $   (1.29)
        Weighted average shares
         and equivalent shares      18,007      7,310     13,391       7,310

        CONTACT:  Hexcel Corporation, Pleasanton
                  William P. Meehan, 510/847-9500




            MIDLAND, Mich.--July 27, 1995--The following was released by Dow
Chemical Company (NYSE: DOW):

        Second Quarter of 1995 Highlights
        %  Sales were up 34 percent to $5.5 billion.
        %  Operating income increased by $749 million to $1.2 billion.
        %  Earnings more than tripled to $2.46 per share, excluding a
           Dow Corning related charge of $1.24, and a gain of 62 cents
           on the divestment of the pharmaceutical business.
                                     (In millions, except for share amounts)
                                         3 Months Ended      6 Months Ended
                                             June 30             June 30
                                            1995     1994        1995   1994
        Net Sales                         $5,517    $4126     $10,722 $7,914
        Operating Income                   1,207      458       2,282    869
        Income from Continuing Operations  334....    206         898    347
        Net Income ..                       503       250       1,085    421
        Earnings per Common Share from
         Continuing Operations             1.22....   0.75        3.26   1.26
        Earnings Per Common Share          1.84       0.91        3.94   1.53
        ..  Available for Common Stockholders
        .... Includes impact of a Dow Corning related pretax charge of $330
           million or $1.24 per share.

            Note:  Results for 1994 and first quarter 1995 have been
        restated to show Dow's pharmaceutical business as a discontinued
        operation after its sale in second quarter of 1995.


        Review of Quarterly Results


            The Dow Chemical Company today announced sales of $5.5 billion
        in the second quarter of 1995, up 34 percent versus the same period
        in 1994, reflecting a volume gain of 9 percent and a price increase
        of 23 percent.  Operating income was $1.2 billion, almost tripling
        from $458 million in the second quarter of 1994.  Results from
        second quarter 1994 have been restated to reflect the sale of Dow's
        pharmaceutical business in 1995.


            Income from continuing operations, it is important to note,
        excludes the gain on the sale of the pharmaceutical business, as
        well as earnings from that business in prior periods.  Income from
        continuing operations of $672 million was reduced to $334 million as
        a result of a pretax charge of $330 million related to HREF="chap11.dow.html">Dow Corning's
        filing for protection under Chapter 11 of the United States
        Bankruptcy Code.  Dow, a 50 percent shareholder in Dow Corning, has
        fully reserved its net investment in that company and will not
        record any proportional share of future equity earnings from Dow
        Corning.  Excluding this charge, second quarter of 1995 earnings
        from continuing operations more than tripled to $2.46 per share,
        compared to 75 cents per share for the same period last year.


            Net income available to common shareholders was $503 million, or
        $1.84 per share.  This included an after tax gain on the sale of
        Dow's pharmaceutical business of 62 cents per share, as well as the
        Dow Corning charge of $1.24 per share.


            Chemicals and Performance Products had strong second quarter
        sales of $1.5 billion, up 47 percent versus a year ago.  Operating
        income was $425 million, an increase of 338 percent from the second
        quarter of 1994.  Improved prices for chlor-alkali products
        contributed to these strong results.  Performance Products set a
        quarterly record for sales and profitability.


            Plastics had sales of $2.4 billion in the second quarter of
        1995, up 37 percent compared to the same period in 1994.  Operating
        income increased by 188 percent to $712 million.  An improved
        pricing environment versus the second quarter of last year
        contributed to the strong performance of the plastics segment.
        Thermoplastics, Thermosets and Fabricated Products each posted
        record sales and profits for the quarter.


            Hydrocarbons and Energy experienced a 37 percent sales increase
        to $697 million with an operating loss of $21 million versus a gain
        of $27 million in the same period in 1994.  The decline in operating
        income was due in large part to the expiration of two major power
        contracts for Destec Energy Inc.


            Consumer Specialties had $816 million in sales, an increase of 8
        percent versus the same period a year ago. The 1994 results have
        been restated to reflect the sale of Dow's pharmaceutical business.
        Operating income increased to $152 million from $144 million in the
        second quarter of 1994, reflecting continued strength in
        Agricultural Products, as well as restructuring efforts in Consumer


            "We are very pleased with our second quarter results.  Our
        businesses are strong.  We experienced a significant turnaround in
        sales and profits in Europe, while the United States showed
        excellent performance in the quarter," said Enrique C. Falla, Dow
        executive vice president.


            "As we approach the second half of 1995, we are anticipating
        continued improvements over last year.  While there is softening in
        some markets, reflecting inventory adjustments, Dow will continue to
        enjoy strong results for the year as we remain focused on our
        strategy for value growth and our commitment to cost reduction."


                   The Dow Chemical Company and Subsidiaries
                                      Three Months Ended   Six Months Ended
                                       June 30   June 30   June 30   June 30
        In millions, except for         1995      1994      1995      1994
          share amts.
        Net Sales                       $5,517    $4,126   $10,722    $7,914
        Operating Costs and Expenses
        Cost of sales                    3,571     2,978     6,897     5,713
        Insurance and finance co.
         operations, pretax income         (9)      (14)      (22)      (41)
        Research and development
         expenses                          193       190       406       386
        Promotion and advertising
         expenses                          109       113       226       208
        Selling and administrative
         expenses                          437       391       913       759
        Amortization of intangibles          9        10        20        20
        Total operating costs and
         expenses                        4,310     3,668     8,440     7,045
        Operating Income                 1,207       458     2,282       869
        Other Income (Expense)
        Equity in earnings of
         20%-50% owned companies            15        32        40       58
        Interest expense                   (98)     (113)     (199)    (208)
        Interest income and foreign
         exchange                           35        50        73       40
        Net loss on investments (Note B)  (330)        0      (330)       0
        Sundry                               3        30        14       33
        Total other income (expense)      (375)       (1)     (402)     (77)
        Income before provision for taxes
         on income and minority interests  832       457     1,880      792
        Provision for taxes on income      420       174       834      306
        Minority interests' share in
         income                             77        76       145      136
        Net income                         335       207       901      350
        Preferred stock dividends            1         1         3        3
        Income from continuing operations $334      $206      $898     $347
        Discontinued Operations (Note C):
        Income from pharmaceutical business,
         net of taxes on income              0        44        18       74
        Gain on sale of pharmaceutical
         business, net of taxes on income  169         0       169        0
        Net income available for common
         stockholders                     $503      $250    $1,085     $421
        Average common shares
         outstanding                     273.5     275.9     275.2    275.3
        Earnings per common share from
         continuing operations           $1.22     $0.75     $3.26    $1.26
        Earnings per common share        $1.84     $0.91     $3.94    $1.53
        Common stk dividends declared
         per shr                         $0.75     $0.65     $1.40    $1.30
        Depreciation                      $309      $307      $668     $614
        Capital expenditures (Note D)     $575      $271      $778     $523

        Notes to the Financial Statements


            Note A:  The unaudited interim financial statements reflect all
        adjustments (consisting of normal recurring accruals) which, in the
        opinion of management, are considered necessary for a fair
        presentation of the results for the period covered.  Certain
        reclassifications of prior year amounts have been made to conform to
        current year presentation.  These statements should be read in
        conjunction with the financial statements and notes thereto included
        in the Company's Form 10-K for the year ended December 31, 1994.


            Note B:  On May 15, 1995, Dow Corning Corporation announced that
        it had filed for protection under Chapter 11 of the United States
        Bankruptcy Code with the United States Bankruptcy Court in Bay City,
        Michigan.  The Company is a 50 percent shareholder in Dow Corning
        Corporation.  The Company's investment in Dow Corning was $374
        million at March 31, 1995.


            Dow Corning reported an after tax net loss of $167 million for
        the second quarter of 1995, of which the Company's share amounted to
        $83 million.  Dow Corning's second quarter loss was a result of a
        $221 million after tax charge taken to reflect a change in
        accounting method for its contribution to a breast implant global
        settlement.  The change in the method of accounting from a present
        value or discounted basis, to an undiscounted basis, resulted from
        uncertainties arising from Dow Corning's filing for protection under
        Chapter 11.


            As a result of Dow Corning's Chapter 11 filing and its 1995
        second quarter loss, the Company has recognized a charge against
        income of $330 million, has fully reserved its net investment in Dow
        Corning and will not recognize its 50 percent share of future equity
        earnings while Dow Corning remains in Chapter 11.  The charge
        impacted the Company's second quarter of 1995 earnings by $1.24 per


            Note C:  On June 28, 1995, the Company completed the sale of its
        approximately 197 million shares of Marion Merrell Dow to Hoechst
        for about $5.1 billion or $25.75 per share.  In addition,
        subsidiaries of the Company have completed the sale of the Company's
        Latin American pharmaceutical business based in Argentina, Brazil
        and Mexico to Roussel Uclaf S.A. for about $133 million. These two
        transactions, net of taxes on income of $382 million, increased the
        Company's second quarter of 1995 earnings by approximately $169
        million or 62 cents per share.


            The Company's consolidated statements of income have been
        restated to reflect the pharmaceutical business as a discontinued
        operation.  Net sales attributable to the pharmaceutical business
        for the three months ended March 31, 1994, June 30, 1994 and March
        31, 1995 were $753, $808 and $757 million, respectively.  Taxes on
        income from the pharmaceutical business for the three months ended
        March 31, 1994, June 30, 1994, and March 31, 1995 were $25, $33 and
        $36 million, respectively.


            Note D:  Capital expenditures for the second quarter of 1995
        increased $304 million compared to the second quarter of 1994 as a
        result of the Company investing $318 million in acquiring assets
        formerly leased.


                                       Three months ended   Six months ended
                                        June 30  June 30   June 30   June 30
                                          1995      1994      1995     1994
        Net gain from disposition of
         pharmaceuticals business        $0.62       ---     $0.62      ---
        Earnings from discontinued
         pharmaceutical operations         ---     $0.16      0.06    $0.27
        Impact of charge related to
         Dow Corning                     (1.24)      ---     (1.24)     ---
        Other earnings                    2.46      0.75      4.50     1.26
        Net earnings per common share    $1.84     $0.91     $3.94    $1.53

        /CONTACT:  Darlene MacKinnon of Dow Chemical, 517-636-2876/