<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
----------------------------
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 29, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition period from __________ to __________
Commission File Number 1-6049
DAYTON HUDSON CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-0215170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Nicollet Mall, Minneapolis, Minnesota 55402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612/370-6948
----------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
Common Stock, par value $1 per share New York Stock Exchange
Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant on March 31, 1994 was $5,604,931,234, based on the closing price
of $73.00 per share of Common Stock as reported on the New York Stock
Exchange -- Composite Index and $935.00 per share of Series B ESOP
Convertible Preferred Stock as determined by Duff & Phelps. (Excluded from
this figure is the voting stock held by Registrant's Directors and Executive
Officers.)
Indicate the number of shares outstanding of each of Registrant's classes of
common stock, as of the latest practicable date. April 1, 1994: 71,548,293
shares of common stock, par value $1.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Registrant's 1993 Annual Report to Shareholders are
incorporated into Parts I and II.
2. Portions of Registrant's Proxy Statement dated April 20, 1994 are
incorporated into Part III.
================================================================================
<PAGE>
PART I
ITEM 1. BUSINESS.
--------
Financial Policies and Debt Ratio, Pages 17-18; Capital Expenditures, Page
18; Business Segments, excluding years 1988-1990, Page 21; Quarterly Results,
Page 31; Page 34 and the list of store locations on Page 35 of Registrant's
1993 Annual Report to Shareholders are incorporated herein by reference.
Registrant was incorporated in Minnesota in 1902.
ITEM 2. PROPERTIES.
----------
Leases, Page 25; Long-Term Debt, Page 27 and the list of store locations on
Page 35 of Registrant's 1993 Annual Report to Shareholders are incorporated
herein by reference.
ITEM 3. LEGAL PROCEEDINGS.
-----------------
Paragraph 2 of Commitments and Contingencies, Page 25 of Registrant's 1993
Annual Report to Shareholders is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
---------------------------------------------------
Not Applicable.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT.
------------------------------------
The executive officers of the Registrant as of April 1, 1994 and their
positions and ages, are as follows:
<TABLE>
<CAPTION>
Name Title Age
- ---- ----- ---
<S> <C> <C>
Kenneth A. Macke* Chairman of the Board, Chief Executive Officer, 55
Chairman of the Executive Committee and Director of
Registrant
Stephen E. Watson President and Director of Registrant; Chairman and 49
Chief Executive Officer of the Department Store
Division (a division of Registrant)
Henry T. DeNero Vice Chairman 48
James T. Hale Senior Vice President and Secretary 53
Douglas A. Scovanner Senior Vice President and Treasurer 38
Robert J. Ulrich* Chairman and Chief Executive Officer of Target 50
(a division of Registrant) and Director of
Registrant
Joseph C. Vesce Chairman and Chief Executive Officer of Mervyn's 45
(a subsidiary of Registrant)
Edwin H. Wingate Senior Vice President 61
JoAnn Bogdan Controller and Chief Accounting Officer 41
</TABLE>
- --------------------
*Mr. Macke was Chief Executive Officer of Registrant until April 13, 1994.
Mr. Ulrich was elected Chief Executive Officer of Registrant on April 13,
1994.
1
<PAGE>
Each officer is elected by and serves at the pleasure of the Board of
Directors. There is no family relationship between any of the officers named
nor is there any arrangement or understanding pursuant to which any person
was selected as an officer. The period of service of each officer in the
positions listed and other business experience as of April 1, 1994 is set
forth below.
Kenneth A. Macke Chairman of the Executive Committee of Registrant since
1985, Chairman of the Board of Registrant since 1984 and Chief Executive
Officer of Registrant since 1983.
Stephen E. Watson President of Registrant since 1990. Chairman and Chief
Executive Officer of the Department Store Division from 1985 to 1989 and
since 1991. Executive Vice President of Registrant in 1989.
Henry T. DeNero Vice Chairman of Registrant since 1992. Director of McKinsey
& Company, Inc. (a management consulting firm) from 1985-1992.
James T. Hale Senior Vice President, Secretary and General Counsel of
Registrant since 1981.
Douglas A. Scovanner Senior Vice President and Treasurer of Registrant since
1994. Senior Vice President, Finance of Fleming Companies, Inc. (a food
wholesaler) from 1992 to 1994. Vice President and Treasurer of Coca-Cola
Enterprises, Inc. (a soft drink bottler) from 1986 to 1992.
Robert J. Ulrich Chairman and Chief Executive Officer of Target since 1987.
Joseph C. Vesce Chairman of Mervyn's since 1993. Chief Executive Officer of
Mervyn's since 1992. President of Mervyn's from 1988 to 1993.
Edwin H. Wingate Senior Vice President of Registrant since 1980.
JoAnn Bogdan Controller and Chief Accounting Officer of Registrant since
1993. Assistant Controller of Registrant from 1988 to 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
-----------------------------------------------------------------
MATTERS.
-------
Shareholder Return, Page 18 and Dividends Declared Per Share and Common Stock
Price, Page 31 of Registrant's 1993 Annual Report to Shareholders are
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
-----------------------
The data on years 1989-1993 in the Summary Financial and Operating Data
(excluding Other Data), Page 33; Notes and Analysis, Pages 21, 23, 25, 27 and
29-31 (excluding years 1988-1990 on page 21) and the Report of Independent
Auditors, Page 32 of Registrant's 1993 Annual Report to Shareholders are
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS.
---------------------
Financial Policies and Debt Ratio, Pages 17-18; Capital Expenditures, Page
18; Analysis of Operations, Pages 19-20, paragraph 2 of Income Taxes, Page
23; Commitments and Contingencies, Page 25; Analysis of Cash Flow and Lines
of Credit, Page 27; the fourth texual paragraph of Pension Plans, Page 29;
the second and third texual paragraphs of Postretirement Health Care
Benefits, Page 30 and LIFO Provision, Page 31 of Registrant's 1993 Annual
Report to Shareholders are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
-------------------------------------------
Pages 21-31 and 33 (excluding years 1988-1990 on Page 21 and years 1983-1988
and Other Data in the Summary Financial and Operating Data on Page 33) and
the Report of Independent Auditors, Page 32 of Registrant's 1993 Annual
Report to Shareholders are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE.
--------------------
Not Applicable.
2
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------
Election of Directors, Pages 1-6 and Compliance with Section 16(a) of the
Securities Exchange Act of 1934, Page 28 of Registrant's Proxy Statement
dated April 20, 1994, is incorporated herein by reference. See also Item X of
Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION.
----------------------
Executive Compensation, Pages 7-13 and Director Compensation, Pages 17-18 of
Registrant's Proxy Statement dated April 20, 1994, are incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
--------------------------------------------------------------
Outstanding Shares and Voting Rights, Pages 26-28 of Registrant's Proxy
Statement dated April 20, 1994, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
----------------------------------------------
Not Applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
----------------------------------------------------------------
a) FINANCIAL STATEMENTS:
Consolidated Results of Operations for the Years Ended January 29, 1994,
January 30, 1993 and February 1, 1992.
Consolidated Statements of Financial Position at January 29, 1994 and
January 30, 1993.
Consolidated Statements of Cash Flows for the Years Ended January 29, 1994,
January 30, 1993 and February 1, 1992.
Consolidated Statements of Common Shareholders' Investment for the Years
Ended January 29, 1994, January 30, 1993 and February 1, 1992.
Information which is an integral part of the financial statements: Notes and
Analysis on Pages 21, 23, 25, 27 and 29-31, excluding years 1988-1990 on Page
21, and the Report of Independent Auditors on Page 32 in Registrant's 1993
Annual Report to Shareholders.
FINANCIAL STATEMENT SCHEDULES:
For the Years Ended January 29, 1994, January 30, 1993 and February 1, 1992
V - Property and Equipment
VI - Accumulated Depreciation of Property and Equipment
VIII - Valuation and Qualifying Accounts
IX - Short-Term Borrowings
X - Supplementary Income Statement Information
b) REPORTS ON FORM 8-K
Not Applicable.
3
<PAGE>
c) EXHIBITS
<TABLE>
<CAPTION>
<C> <S>
(2) Not Applicable
(3)A. Articles of Incorporation
Incorporated by reference to Exhibit (3)A. to Registrant's Form 10-K Report
for the year ended January 30, 1993 ("1993 10-K").
B. By-Laws
Incorporated by reference to Exhibit (3)B. to Registrant's 1993 10-K.
(4) Instruments defining the rights of security holders, including indentures.
Registrant agrees to furnish the Commission on request copies of instruments
with respect to long-term debt.
(9) Not Applicable
(10)A. Executive Incentive Plan (PTOC) (a)
B. Executive Incentive Plan (ROI) (b)
C. Executive Incentive Plan (Personal Score)
D. Excess Benefit Plan (c)
E. Excess Benefit Plan II (d)
F. Executive Long-Term Incentive Plan of 1981, as amended
and restated. Amendment dated April 14, 1993 (e)
G. Supplemental Pension Plan I (f)
H. Supplemental Pension Plan II (g)
I. Deferred Compensation Plan (h)
J. Deferred Compensation Plan for Directors (i)
K. Income Continuance Policy (j)
L. SMG Income Continuance Policy (k)
(11) Statements re Computation of Per Share Earnings
(12) Computations of Ratios
(13) 1993 Annual Report to Shareholders (only those portions specifically
incorporated by reference herein shall be deemed filed with the Commission)
(18) Letter re Change in Accounting Principles
(19) Not Applicable
(21) List of Subsidiaries
(22) Not Applicable
(23) Consent of Independent Auditors
(24) Powers of Attorney
(28) Not Applicable
(29) Not Applicable
(99)(I) Registrant's 11-K Report (filed under Form SE)
(II) Registrant's Proxy Statement dated April 20, 1994 (only those portions
specifically incorporated by reference shall be deemed filed with the
Commission) (l)
(III) Schedule of Operating Profit and LIFO Provision
</TABLE>
Copies of Exhibits (10)A.-(10)L., (21), (99)(I) and (99)(III) will be furnished
upon written request and payment of Registrant's reasonable expenses in
furnishing the exhibits.
4
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
(a) Incorporated by reference to Exhibit A to Registrant's Proxy Statement dated April 20, 1994.
(b) Incorporated by reference to Exhibit B to Registrant's Proxy Statement dated April 20, 1994.
(c) Incorporated by reference to Exhibit (10)D. to Registrant's 1993 10-K.
(d) Incorporated by reference to Exhibit (10)E. to Registrant's 1993 10-K.
(e) Incorporated by reference to Exhibit (10)F. to Registrant's 1993 10-K.
(f) Incorporated by reference to Exhibit (10)G. to Registrant's 1993 10-K.
(g) Incorporated by reference to Exhibit (10)H. to Registrant's 1993 10-K.
(h) Incorporated by reference to Exhibit (10)I. to Registrant's 1993 10-K.
(i) Incorporated by reference to Exhibit (10)J. to Registrant's 1993 10-K.
(j) Incorporated by reference to Exhibit (10)A. to Registrant's 1993 10-K.
(k) Incorporated by reference to Exhibit (10)B. to Registrant's 1993 10-K.
(l) Incorporated by reference to Registrant's Proxy Statement dated April 20, 1994
(only those portions specifically incorporated by reference shall be deemed filed with the Commission).
</TABLE>
5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
DAYTON HUDSON CORPORATION
By /s/ Henry T. DeNero
--------------------------
Henry T. DeNero
Vice Chairman and Chief Financial Officer
Dated: April 19, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, the
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Bob Ulrich
-------------------------
Robert J. Ulrich
Dated: April 19, 1994 Chief Executive Officer
/s/ Henry T. DeNero
-------------------------
Henry T. DeNero
Vice Chairman and
Dated: April 19, 1994 Chief Financial Officer
/s/ J.A. Bogdan
-------------------------
JoAnn Bogdan
Controller and
Dated: April 19, 1994 Chief Accounting Officer
RAND V. ARASKOG MICHELE J. HOOPER
ROBERT A. BURNETT KENNETH A. MACKE
LIVIO D. DESIMONE MARY PATTERSON MCPHERSON
ROGER A. ENRICO ROBERT J. ULRICH
WILLIAM W. GEORGE JOHN R. WALTER
ROGER L. HALE STEPHEN E. WATSON Directors
BETTY RUTH HOLLANDER
Henry T. DeNero, by signing his name hereto, does hereby sign this document
pursuant to powers of attorney duly executed by the Directors named, filed
with the Securities and Exchange Commission on behalf of such Directors, all
in the capacities and on the date stated, such persons being a majority of
the Directors of the Registrant.
By /s/ Henry T. DeNero
----------------------------
Henry T. DeNero
Dated: April 19, 1994 Attorney-in-Fact
6
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY AND EQUIPMENT
FISCAL YEARS 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------- ---------- --------- ----------- -------- ----------
BALANCE AT BALANCE AT
BEGINNING (1) OTHER END OF
CLASSIFICATION OF PERIOD ADDITIONS RETIREMENTS CHANGES PERIOD
- -------------- ---------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
1993:
Land......................... $ 998 $ 130 $ 8 $- $1,120
Buildings and Improvements... 4,342 460 49 - 4,753
Fixtures and Equipment....... 2,197 363 398 - 2,162
Construction-in-Progress..... 223 25 - - 248
------ ------ ---- --- ------
$7,760 $ 978 $455 $- $8,283
====== ====== ==== === ======
1992:
Land......................... $ 897 $ 105 $ 4 $- $ 998
Buildings and Improvements... 3,883 473 14 - 4,342
Fixtures and Equipment....... 1,983 335 121 - 2,197
Construction-in-Progress..... 198 25 - - 223
------ ------ ---- --- -------
$6,961 $ 938 $139 $- $7,760
====== ====== ==== === =======
1991:
Land......................... $ 723 $ 175 $ 1 $- $ 897
Buildings and Improvements... 3,455 466 38 - 3,883
Fixtures and Equipment....... 1,745 387 149 - 1,983
Construction-in-Progress..... 210 (12) - - 198
------ ------ ---- --- ------
$6,133 $1,016 $188 $- $6,961
====== ====== ==== === ======
</TABLE>
- -------------------------
(1) Represents acquisitions of fixed assets and additions to and transfers from
construction-in-progress.
7
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
FISCAL YEARS 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------- ---------- ---------- ----------- --------- ----------
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS CHANGES PERIOD
- -------------- ---------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
1993:
Buildings and Improvements..... $1,125 $200 $ 37 $- $1,288
Fixtures and Equipment......... 1,072 298 322 - 1,048
------ ---- ---- --- ------
$2,197 $498 $359 $- $2,336
====== ==== ==== === ======
1992:
Buildings and Improvements..... $ 950 $183 $ 8 $- $1,125
Fixtures and Equipment......... 909 276 113 - 1,072
------ ---- ---- --- ------
$1,859 $459 $121 $- $2,197
====== ==== ==== === ======
1991:
Buildings and Improvements..... $ 800 $161 $ 11 $- $ 950
Fixtures and Equipment......... 808 249 148 - 909
------ ---- ---- --- ------
$1,608 $410 $159 $- $1,859
====== ==== ==== === ======
</TABLE>
- ------------------------
Depreciation is computed using the straight-line method and the following
lives:
<TABLE>
<CAPTION>
<S> <C>
Land improvements....................... 20 years
Buildings and building improvements..... 8 to 55 years
Leasehold improvements.................. Lease term or useful life of asset, whichever is less
Fixtures and equipment.................. 3 to 8 years
</TABLE>
8
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- ---------- --------- ---------- ----------
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND (1) END OF
DESCRIPTIONS OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ------------ ---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts
1993............................ $37 $53 $55 $35
1992............................ 46 56 65 37
1991............................ 44 65 63 46
</TABLE>
- --------------------------
(1) Accounts determined to be uncollectible are charged against reserve, net of
collections on accounts previously charged against reserve.
9
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
FISCAL YEARS 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------- ---------- ------------- ----------- ----------- -------------
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE END OF AVERAGE DURING DURING DURING
SHORT-TERM BORROWINGS PERIOD INTEREST RATE THE PERIOD THE PERIOD THE PERIOD
- --------------------- ---------- ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
1993:
Commercial paper $200 3.0% $ 896 $298 3.2%
Short-term bank
borrowings - - - - -
1992:
Commercial paper (1) $223 3.1% $1,211 $460 3.7%
Short-term bank
borrowings - - 41 5 4.2%
1991:
Commercial paper (1) $465 4.2% $ 941 $365 5.7%
Short-term bank
borrowings - - 220 37 5.5%
</TABLE>
- -------------------------------
(1) $200 million of the commercial paper outstanding at the end of 1992 and 1991
was classified as long-term debt in the Consolidated Statements of Financial
Position, as explained in the Commercial Paper note in Registrant's 1993
Annual Report to Shareholders.
10
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FISCAL YEARS 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B
- -------- ---------------------
1993 1992 1991
---- ---- ----
CHARGED TO COSTS AND
EXPENSES
---------------------
<S> <C> <C> <C>
Taxes other than income taxes (1)
Real and personal property taxes. $141 $125 $110
Payroll taxes.................... 190 178 164
Other............................ 12 10 9
--- --- ---
$343 $313 $283
Advertising costs................. $494 $437 $423
Included in Revenues
----------------------
Sales by leased departments....... $165 $163 $153
Finance charge revenue............ 192 186 182
</TABLE>
- ----------------------
(1) Taxes paid as Lessee in accordance with certain lease agreements have been
included in cost of retail sales, buying and occupancy and are not included
herein.
Amounts for maintenance and repairs, depreciation and amortization of
intangible assets, pre-operating costs and similar deferrals, and royalties
are not presented as such amounts are less than 1% of total revenues.
11
<PAGE>
EXHIBIT (10)C.
DAYTON HUDSON CORPORATION
EXECUTIVE INCENTIVE PLAN
(PERSONAL SCORE)
Article I
Sec. 1.1 Name. The name of the short term incentive plan set forth herein is
"Dayton Hudson Corporation Executive Incentive Plan (Personal Score)".
It is sometimes hereinafter referred to as the "Plan". "Company"
refers to Dayton Hudson Corporation and its subsidiaries. Division
refers to an operating company, test strategy, staff group or other
subdivision of the Company.
Sec. 1.2 Compensation Policy and Plan Intent. The Plan has been designed to
provide financial incentives ("incentive bonuses") to designated upper
level executive employees, who through their efforts directly and
significantly impact the achievement of Company goals and objectives.
Such incentive bonuses are intended to reflect the executive's
personal achievements.
Sec. 1.3 Eligibility. Participation in this Plan is restricted to those upper
level executive employees who, through their position and performance,
have a decided impact upon the performance of the Company and/or a
Division, and therefore upon the operating results of the Company.
The Compensation Committee shall determine which individuals or groups
of individuals by title or position or rank shall participate in the
Plan.
Divisions which participate in the Plan shall at times hereinafter be
referred to as "Participating Divisions". Executives participating in
the Plan are referred to as "participants" at times herein.
Those Divisions which do not participate in this Plan shall at times
hereinafter be referred to as "Non-Participating Divisions".
Sec. 1.4 Transfer and Termination. A participant who transfers to another
Division or the Company, or who terminates employment for the purpose
of early or normal retirement from the Company, or who dies or becomes
disabled shall be eligible for incentive compensation at Plan Year end
if they were an actual participant in the plan at the commencement of
such Plan Year. The incentive bonus, when determined, pursuant to the
provisions hereof shall be prorated to reflect that portion of the
Plan Year (including all if such is the case) during which the
participant was enrolled and participating in the Plan as a
participant. Participants in this category will be treated in
accordance with the following guidelines:
a. Transfers Between Participating Divisions. In the event of a
transfer between then Participating Divisions, a pro rata share
of the incentive
<PAGE>
bonus shall be contributed by each Participating Division if the
participant has been designated as such in each Participating
Division from the commencement of the Plan Year, or in the case
of the successor Participating Division, from his/her
commencement of employment to Plan Year end.
b. Transfers Between Participating Division and Non-Participating
Division and Retirement, Death or Disability of Participating
Executive. In the event a participant transfers from a
Participating Division to a Non-Participating Division, a pro
rata incentive bonus calculated on the basis of the number of
months (a major portion of a month to be considered a whole
month) during the Plan Year the executive was a Participant in
the Plan, over 12, will be awarded in the due course of the
Plan's administration. The same formula shall be utilized for
executives who transfer from a Non-Participating Division to a
Participating Division. The same method of calculating an
incentive bonus shall also be utilized in calculating incentive
bonuses for participants who die, become disabled or who retire
from the Company during the year. Any such incentive bonuses
would be paid only in the normal course of administration of the
Plan.
c. New Executive Employees. Upon recommendation of the Chief
Administrative Officer or the Chief Executive Officer of a
Division, whichever is applicable, and following approval thereof
by the Chairman of the Company, a new executive employee who will
have been employed by a Participating Division prior to the end
of a Plan Year may be designated as a participant in the Plan,
subject to the conditions of the Plan.
d. Termination Other Than Retirement, Death or Disability. A
participant who terminates his/her employment during the Plan
Year for any reason other than retirement, death or disability,
shall not be eligible for and shall not receive an incentive
bonus for the subject Plan Year. A participant who terminates
following the completion of the subject Plan Year, but prior to
the payout of such incentive bonus shall receive the incentive
bonus under procedures which would, only for such purpose, treat
them as still employed at the time of the Plan payout.
e. Promotion or Job Change. A participant who has a promotion
and/or a job change during a Plan Year will have his/her
incentive bonus calculated using each grade level separately.
The score and grade level shall determine the bonus percentage
and that percentage shall be applied to the Midpoint of Salary
Range while in the grade level. The total incentive bonus will
be the sum of the bonuses for each grade level.
2
<PAGE>
f. Market Pricing Adjustment. A participant whose grade level is
adjusted during the Plan Year due to a "market pricing
adjustment" will have his/her bonuses calculated for the entire
period using the adjusted grade. If a, b and/or e are
applicable, those sections shall also apply and this section f
shall be applicable only for the period that the "market pricing
adjustment" relates to.
Sec. 1.5 Process For Determination of Incentive Bonuses
----------------------------------------------
a. Compensation Policy and Intent of Plan
--------------------------------------
Incentive bonuses under the Plan are based on the participant's
individual accomplishments in his/her assigned job during the
Plan Year.
b. Defined Incentive Bonus Terms
-----------------------------
"Bonus Matrix"
The "Bonus Matrix" is a table setting forth figures which
indicate, at varying participant scoring levels and
interrelated with varying job grade level classifications,
the percentage of incentive bonus attributable to each score
in relationship to the participant's Midpoint of Salary
Range. The "Bonus Matrix" may be changed from time to time
at the election of the Compensation Committee but any change
in the Bonus Matrix shall have prospective application only.
"Midpoint of Salary Range"
The "Midpoint of Salary Range" of a participant during the
related incentive bonus fiscal year is the midpoint for
his/her job grade as set forth in the salary range by job
grade that is applicable.
c. Determination of Bonus
----------------------
(1) Non-Pooled
----------
Incentive bonuses for each participant will be calculated by
taking the participant's bonus percentage from the Bonus
Matrix, using his/her personal score above the specified
minimum and job grade and multiplying it by his/her Midpoint
of Salary Range.
3
<PAGE>
(2) Pooled
------
A bonus pool is calculated by multiplying the percentage
from the Bonus Matrix using the personal score for each
participant above the specified minimum by the participant's
Midpoint of Salary Range.
The bonus for each participant will be based on a ratio of
his/her bonus to do all bonuses paid under the Executive
Incentive Plan (Personal Score). The percentage determined
by that ratio will be multiplied by the bonus pool.
d. Maximum Bonus
-------------
The maximum bonus payable under the Plan is equal to 250% of the
salary of the Chief Executive Officer (the "CEO") or named
executive officer, as the case may be, set forth in the previous
year's Proxy Statement. If the CEO or named executive officer
held a different office or was not employed in his/her position
for the full year covered by that Proxy Statement, the maximum
bonus is 250% of the highest salary rate reported in such year.
Provided, however, in either case the aggregate of all bonuses
paid to the CEO or named executive officer under any combination
of the Plan, ROI Plan and PTOC Plan may not exceed 250% of the
relevant salary. The aggregate of all bonuses paid to any other
executive not listed above under any combination of the Plan, ROI
Plan and PTOC Plan may not exceed 250% of his/her base salary.
Article II
Sec. 2.1 Payment of Bonus. Normally the total incentive bonus for a Fiscal
Year will be paid in cash as soon as administratively feasible after
the amount of the incentive bonus has been computed.
However, any participant who is a participant in a deferred
compensation plan or arrangement of the Company, may have his/her
incentive bonus deferred pursuant to that plan or arrangement.
Article III
Sec. 3.1 Beneficiary. Any incentive bonus payments which become distributable
after the death of a participant shall be distributed as they become
due to such person or persons, or other legal entity as the
participant may have designated in writing delivered to his/her
Participating Division's personnel office on an approved form. The
participant may, from time to time, revoke or change any such
designation by
4
<PAGE>
writing delivered to such Participating Division's personnel office on
an approved form. If there is no unrevoked designation on file with
such corporate personnel office at the participant's death, or if the
person or persons designated therein shall have all predeceased the
participant, such distributions shall be made to the participant's
spouse, or in the absence of a spouse, children and if the participant
has no spouse or children, to the participant's estate. If a
participant has deferred his/her incentive bonus pursuant to a plan or
arrangement, the plan or arrangement shall govern the beneficiary
designation.
Article IV
Sec. 4.1 Administration and Interpretation of Plan. This Plan shall be
interpreted by the Compensation Committee of the Company and its
interpretations shall be final and binding on participants,
Participating Divisions, and all other parties in interest.
The Plan shall be administered by the Compensation Committee selected
by the Board of Directors. The Plan Committee reserves the right,
from time to time, to prescribe rules and regulations, not
inconsistent with the provisions of the Plan, and to modify or revoke
such rules and regulations at such time and in such manner as it may
deem proper. A copy of this Plan and all such rules and regulations
will be supplied to each person participating in the Plan and a copy
of the then current Plan shall be maintained in the Company's
personnel office and at the personnel office of each Participating
Division and shall be available, upon request, for review by any
participant or his duly authorized agent. All persons in the Plan
shall be bound by the terms of the Plan and of all rules and
regulations pursuant thereto, all as now in effect or hereafter
amended, promulgated or passed which shall likewise be maintained at
the Company and each Participating Division personnel office.
Article V
Sec. 5.1 Rights of Participants and Beneficiaries. The Plan is not an
employment agreement and does not assure or evidence to any degree the
continued employment or the claim to continued employment of any
participant for any time or period or job.
No participant or beneficiary shall, by virtue of this Plan, have any
interest in any specific asset or assets of the Company or any
Participating Division. A participant or beneficiary has only an
unsecured contract right to receive cash payments in accordance with
and at the times specified by the Plan.
No participant shall have the right or ability to assign, pledge, or
otherwise dispose of any part of an incentive bonus hereunder (except
as provided in Section 3.1 hereof).
5
<PAGE>
Article VI
Sec. 6.1 Overview. It is specifically understood that the Chairman of the
Board and Chief Executive Officer of the Company shall at all times
retain the authority to veto or rescind any appointment or designation
of an individual as a participant (except an Executive Officer) under
this Plan but it is the intent of the Plan that such authority shall
be exercised with restraint and only for circumstances deemed by said
officer to be of importance for preserving the integrity of the Plan's
policy and/or its performance.
Article VII
Sec. 7.1 Termination of Plan. This Plan may be amended or terminated at any
time by the Board of Directors of the Company. Such amendment or
termination, will not, without the participant's written consent,
affect his/her incentive bonus or bonuses previously earned.
Article VIII
Sec. 8.1 Miscellaneous Definitions.
-------------------------
a. "Compensation Committee": shall mean that committee of the Board
of Directors of the Company designated as such on January 12,
1994 or as it is thereafter designated during the term hereof and
if during the term hereof no such named committee shall be
designated by the Board of Directors it shall mean the Committee
of the Board most nearly performing the duties of the
Compensation Committee as defined at the time of its elimination
as a Board Committee.
b. "Plan Year": Plan Year shall be the applicable financial "Fiscal
Year" of the Company.
c. "Retire or Retirement": Retire or Retirement means a termination
of employment pursuant to an arrangement contained in any formal
private retirement plan or written agreement then in effect by
the Company or any participating Division relative to the subject
participant.
d. "Chairman": Chairman shall at all times refer to the incumbent
Chairman of the Board of Directors of the Dayton Hudson
Corporation.
6
<PAGE>
Article IX
Sec. 9.1 Miscellaneous Provisions
------------------------
a. Headings. Headings at the beginning of sections hereof are for
convenience of reference, shall not be considered a part of the
text of the Plan, and shall not influence its construction.
b. Capitalized Definitions. Capitalized terms used in the Plan
shall have their meaning as defined in the Plan unless the
context clearly indicates to the contrary.
c. Gender. Any references to gender also include the opposite
gender.
d. Use of Compounds of Word "Here". Use of the words "hereof",
"herein", "hereunder", or similar compounds of the word "here"
shall mean and refer to the entire Plan unless the context
clearly indicates to the contrary.
e. Construed as a Whole. The provisions of the Plan shall be
construed as a whole in such manner as to carry out the
provisions thereof and shall not be construed separately without
relation to the context.
7
<PAGE>
EXHIBIT (11)
DAYTON HUDSON CORPORATION
COMPUTATION OF PER SHARE EARNINGS
(IN MILLIONS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
Year Ended
------------------------------------------------------------
January 29, 1994 January 30, 1993 February 1, 1992
---------------- ---------------- ----------------
Primary Computation Earnings Shares Earnings Shares Earnings Shares
- ------------------- -------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
Net Earnings $ 375 $ 383 $ 301
Less: Dividend requirements on ESOP preferred shares a/ (17) (24) (25)
----- ----- -----
Adjusted net earnings $ 358 $ 359 $ 276
===== ===== =====
Average common shares outstanding 71.5 71.3 71.2
Average number of common share equivalents:
Stock options 0.1 0.2 0.2
Performance shares 0.2 0.1 0.1
----- ----- -----
Adjusted common equivalent shares outstanding-primary 71.8 71.6 71.5
===== ===== =====
PRIMARY EARNINGS PER SHARE $4.99 $5.02 $3.86
===== ===== =====
Fully Diluted Computation
- -------------------------
Net Earnings $ 375 $ 383 $ 301
Less: Earnings impact of ESOP preferred share conversion a/ (12) (17) (19)
----- ----- -----
Adjusted net earnings $ 363 $ 366 $ 282
===== ===== =====
Average common and common equivalent shares-primary 71.8 71.6 71.5
Assumed conversion of ESOP preferred shares 4.3 4.3 4.4
----- ----- -----
Adjusted common equivalent shares outstanding-fully diluted 76.1 75.9 75.9
===== ===== =====
FULLY DILUTED EARNINGS PER SHARE $4.77 $4.82 $3.72
===== ===== =====
</TABLE>
a/ At the beginning of 1993, with the adoption of Statement of Financial
Accounting Standard No.109, "Accounting for Income Taxes", the tax benefit to
the Corporation for dividends paid on ESOP preferred stock was limited to
allocated shares of ESOP preferred stock. Average allocated ESOP preferred
shares outstanding were 1.6 million for the year ended January 29, 1994.
<PAGE>
EXHIBIT (12)
DAYTON HUDSON CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
FOR THE FIVE YEARS ENDED JANUARY 29, 1994
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
January 29, January 30, February 1, February 2, February 3,
1994 1993 1992 1991 1990
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Earnings:
Consolidated net earnings............ $ 375 $ 383 $ 301 $ 412 $ 410
Income taxes......................... 232 228 171 249 268
------ ------ ----- ------ -----
Total earnings.................... 607 611 472 661 678
------ ------ ----- ------ -----
Fixed charges:
Interest expense..................... 459 454 421 333 283
Dividends on preferred stock (pre-tax
basis)............................ 39 39 39 39 2
Interest portion of rental expense... 45 43 39 46 45
------ ------ ----- ------ -----
Total fixed charges............... 543 536 499 418 330
Less:
Dividends on preferred stock (pre-tax
basis)............................ (39) (39) (39) (39) (2)
Capitalized interest................. (5) (6) (11) (8) (10)
------ ------ ----- ------ -----
Fixed charges in earnings......... 499 491 449 371 318
------ ------ ----- ------ -----
Earnings available for fixed charges... $1,106 $1,102 $ 921 $1,032 $ 996
====== ====== ===== ====== =====
Ratio of earnings to fixed charges..... 2.04 2.06 1.85 2.47 3.02
====== ====== ===== ====== =====
</TABLE>
<PAGE>
EXHIBIT (13)
Financial Review
- --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
FINANCIAL POLICIES
Our principal financial policies are as follows:
MAINTAIN STRONG INVESTMENT GRADE DEBT RATINGS. Our long-term debt ratings are
A+, A3 and A from Duff & Phelps, Moody's and Standard & Poor's, respectively.
Our commercial paper debt ratings are D-1+, P-2 and A-1 from Duff & Phelps,
Moody's and Standard & Poor's, respectively.
MAINTAIN A YEAR-END DEBT RATIO WITHIN A RANGE OF 45% TO 65%. This debt ratio
range enables management to take advantage of changes in the economy and the
retail environment.
Our debt ratio declined to 59% at the end of 1993 and we expect it to move
toward the middle of the range over time while continuing to support our
expansion.
<TABLE>
<CAPTION>
DEBT RATIO 1993 1992 1991
- --------------------------------------------------------------------
<S> <C> <C> <C>
DEBT AND EQUIVALENTS
Notes payable and current
portion of long-term debt* $ 373 $ 394 $ 453
Long-term debt* 4,279 4,330 4,227
Present value of operating leases 504 419 411
- --------------------------------------------------------------------
Total debt and equivalents $5,156 $5,143 $5,091
====================================================================
CAPITALIZATION
Debt and equivalents $5,156 $5,143 $5,091
Deferred income taxes and other 536 450 381
Convertible preferred stock 368 374 377
Common shareholders' investment 2,737 2,486 2,231
- --------------------------------------------------------------------
Total capitalization $8,797 $8,453 $8,080
====================================================================
YEAR-END DEBT RATIO 59% 61% 63%
====================================================================
</TABLE>
* Includes capital leases.
Dayton Hudson Corporation and Subsidiaries Page 17
<PAGE>
Financial Review
- --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
FINANCIAL POLICIES continued
FUNDING OF CAPITAL EXPENDITURES. Capital expenditure commitments are
limited to what can be financed by projected internally-generated funds and
committed financing.
CAPITAL EXPENDITURES
Capital expenditures totaled $978 million in 1993 and are expected to be
approximately $1.3 billion in 1994. Capital expenditure priorities are as
follows:
KEEP existing facilities fresh and exciting to maintain and grow current
market share.
IMPROVE distribution and systems to cost-effectively support sales growth.
BUILD new stores in existing markets to increase market share and leverage
our existing expense structure.
BUILD stores in new markets to enhance growth and increase market share.
Due to sufficient capital resources, we were able to maintain our capital
expenditure priorities while allocating the majority of our spending towards new
store growth. Most new store capital continues to be allocated to Target due to
its proven record of successful expansion and profitable growth.
In order to retain flexibility, the majority of our planned capital
spending for the next several years remains uncommitted.
SHAREHOLDER RETURN
DIVIDENDS. To support our objective of providing shareholders with an
attractive total return on their investment, it is our policy to make regular
annual increases in dividends declared on common stock. Dividends declared in
1993 increased 5% to $1.62 per share, compared with $1.54 per share declared in
1992. The quarterly dividend paid in the first quarter of 1994 was increased to
$.42 per share, indicating an annualized dividend of $1.68 per share.
MARKET VALUE PER SHARE. The common stock price reflects the market's view
of our performance and future prospects, as well as industry and general
economic conditions. At March 24, 1994 there were 11,787 shareholders of record
and the common stock price was $74.75 per share.
Dayton Hudson Corporation and Subsidiaries Page 18
<PAGE>
Analysis of Operations
- --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
Our 1993 financial performance did not meet our expectations. Net earnings
were $375 million compared with $383 million in 1992 and $301 million in 1991.
The shortfall from our expectations was primarily due to poor performance at
Mervyn's.
Despite not meeting our net earnings expectations, total operating profit
reached a record $1,109 million compared with $1,086 million in 1992 and $910
million in 1991. Target posted a 15% increase in operating profit and the
Department Store Division (DSD) reported an 18% increase. Mervyn's declined 37%.
Operating profit in 1993 was aided by a substantial LIFO credit, mainly due to
Mervyn's and DSD's adoption of internally-generated price indices (see
discussion on page 31).
TARGET'S record operating profit improved strongly from 1992, reflecting
solid revenue growth and improved expense control somewhat offset by a lower
gross margin rate.
MERVYN'S operating profit declined significantly as a result of lower
revenues, a lower gross margin rate and a higher operating expense rate.
DSD achieved record operating profit due to higher revenues and improved
gross margin and operating expense rates.
Fully diluted earnings per share were $4.77 in 1993 versus $4.82 in 1992
and $3.72 in 1991. Target, our primary growth vehicle, has contributed the
largest share to overall earnings in the past three years. Due to the
significant growth at Target, our lowest margin division, overall revenue growth
and the operating expense rate were favorably affected, while the gross margin
rate was unfavorably affected. The table below identifies the major factors in
the change in earnings per share:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
VARIANCE ANALYSIS 1993 1992 1991
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Prior year's earnings per share $4.82 $3.72 $ 5.20
Change due to:
Revenues (a) .59 .81 .75
Gross margin rate (b) (.52) (.77) (1.27)
Operating expense rate (c) .16 1.32 (.09)
Start-up expenses (d) .06 (.03) (.14)
Interest expense, net (.08) (.31) (.54)
Corporate expense and other, net (e) (.03) .08 (.19)
Unusual items (primarily earthquake) (.23) - -
- -----------------------------------------------------------------------
EARNINGS PER SHARE $4.77 $4.82 $ 3.72
=======================================================================
</TABLE>
(a) Includes sales, finance charge revenue and other.
(b) Excludes buying and occupancy costs.
(c) Includes buying and occupancy costs, portions of selling, publicity and
administrative expense, depreciation and taxes other than income taxes.
(d) Includes costs associated with opening new stores and remodeling existing
stores; included in selling, publicity and administrative expense.
(e) Includes corporate headquarters expense, corporate charitable contributions
and other miscellaneous items.
REVENUES
The Corporation reported a 7% increase in total revenues and a 1% increase
in comparable-store revenues in 1993 despite deflation of retail prices at all
operating divisions. Target's solid revenue increase was primarily due to its
new store expansion and continued success of its value-pricing strategy.
Mervyn's revenue decline reflects the slow process of re-orienting the consumer
from a heavy promotional shopping environment to a more balanced value-pricing
and promotional strategy. Additionally, both Target and Mervyn's have a
substantial presence in the California market, which remained depressed
throughout 1993. DSD's revenues were up slightly due primarily to added
promotional events.
Revenue growth in 1992 was the result of expanding the value-pricing
strategy at Target, along with new store growth, increased promotions and
increases in base business at all operating divisions. Revenue growth in 1991
was driven by new store expansion and the full-year contribution of Marshall
Field's operations. Overall price changes in 1992 and 1991 were minimal and, as
a result, reported comparable-store revenue increases closely approximate real
growth.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
REVENUE GROWTH 1993 1992 1991
- -------------------------------------------------------------------------------------
ALL COMP. All Comp. All Comp.
STORES STORES* Stores Stores* Stores Stores*
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Target 13% 5% 15% 5% 11% 4%
Mervyn's (2) (6) 9 3 2 (1)
DSD 1 1 3 2 17 1
- -------------------------------------------------------------------------------------
Total 7% 1% 11% 4% 9% 2%
=====================================================================================
</TABLE>
*Comparable-store revenues are revenues from stores open longer than a year.
One measure used to evaluate store productivity is revenues per square
foot. Higher revenues per square foot at Target reflect increased base business,
partially offset by the inherent lower productivity of new stores. DSD's growth
was due to enhanced productivity, especially at the Marshall Field's stores.
Mervyn's decline reflects lower revenues.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
REVENUES PER SQUARE FOOT* (dollars) 1993 1992 1991
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Target $213 $209 $205
Mervyn's 204 223 224
DSD 221 219 215
=====================================================================
</TABLE>
*Thirteen-month average retail square footage.
Dayton Hudson Corporation and Subsidiaries Page 19
<PAGE>
Analysis of Operations
- --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
GROSS MARGIN RATE
Our gross margin rate declined in 1993, reflecting our lowering of opening
retail prices to meet the needs of the value-conscious consumer, partially
offset by a LIFO credit. Also, the 1993 holiday season was one of the most
promotional. Looking forward, with accelerated growth from Target and strategies
focusing on value at all the operating divisions, the gross margin rate may
continue to decline.
TARGET'S gross margin rate declined slightly in 1993, reflecting the
ongoing impact of its value-pricing strategy. This impact was partially offset
by a corresponding improvement in the promotional markdown rate along with a
LIFO credit.
MERVYN'S 1993 gross margin rate declined reflecting higher clearance
markdowns associated with reducing inventories. Also, implementation of a value
strategy pressured the gross margin rate despite an improvement in the
promotional markdown rate.
DSD'S gross margin rate increased in 1993 reflecting a lower cost of
merchandise, in addition to a LIFO credit. Implementation of a value-pricing
strategy and higher promotional markdowns partially offset the improvement.
The gross margin rate in 1992 declined slightly reflecting increased
consumer value-consciousness in a competitive retail environment. The 1991 gross
margin rate declined reflecting a weak economy and strong customer response to
advertised merchandise.
OPERATING EXPENSE RATE
Our overall operating expense rate continued to improve in 1993 with
expense management at each of the operating divisions and the benefit of cross-
divisional synergies in technology, logistics and advertising. Operating expense
rate reductions will continue to be a major focus in 1994.
TARGET'S operating expense rate improved in 1993, reflecting sales leverage
and expense efficiencies within the stores.
MERVYN'S operating expense rate deteriorated substantially in 1993 despite
its continued focus on expense disciplines. The rate increase reflects slightly
higher operating expenses on lower revenues.
DSD'S operating expense rate improved in 1993 due to distribution expense
efficiencies, partially offset by increased advertising expenses associated with
incremental promotional events.
In 1992, the operating expense rate improved significantly through
disciplined expense management at each operating division. The 1991 operating
expense rate increased slightly, reflecting weak comparable-store revenue growth
at Mervyn's and DSD.
START-UP EXPENSES
Start-up expenses declined in 1993 due to a reduction in the number of new
stores opened. Start-up expenses increased in 1992 and 1991 due to Target's
accelerated store growth and ongoing remodeling programs at all the operating
divisions. A total of 62 new stores were opened in 1993 compared with 68 in 1992
and 63 in 1991. Start-up expenses are recognized evenly throughout the year in
which the expenses are incurred.
INTEREST EXPENSE
Total interest expense increased in 1993, 1992 and 1991 due to an increase
in average debt required to finance the business. Lower interest rates somewhat
offset the impact of increased average debt levels.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
COMPONENTS OF INTEREST EXPENSE, NET 1993 1992 1991
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Interest on debt $438 $431 $397
Interest on capital leases 15 15 14
Interest cost capitalized (5) (6) (11)
Interest income (2) (3) (2)
- ---------------------------------------------------------------------
Interest expense, net $446 $437 $398
=====================================================================
</TABLE>
UNUSUAL ITEMS
In January 1994, 11 Target stores and 13 Mervyn's stores sustained various
levels of damage associated with the Los Angeles earthquake. The portion of
uninsured losses included in operating profit and recorded in selling, publicity
and administrative expense, were $7 million and $15 million for Target and
Mervyn's, respectively.
The Tax Reform Act of 1993 required a one-time after-tax charge to earnings
of $4 million, or $.05 per share, as a result of applying the higher tax rate to
deferred tax balances (see page 23).
Dayton Hudson Corporation and Subsidiaries Page 20
<PAGE>
Notes and Analysis
- -----------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
<TABLE>
<CAPTION>
BUSINESS SEGMENTS 1993 1992 1991
- -----------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Target $11,743 $10,393 $ 9,041
Mervyn's 4,436 4,510 4,143
Department Store Division 3,054 3,024 2,931
Other - - -
- -----------------------------------------------------------------------
Total $19,233 $17,927 $16,115
=======================================================================
OPERATING PROFIT
Target $ 662 $ 574 $ 458
Mervyn's 179 284 284
Department Store Division 268 228 168
- -----------------------------------------------------------------------
Total 1,109 1,086 910
Interest expense, net 446 437 398
Corporate and other 56 38 40
- -----------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES $ 607 $ 611 $ 472
=======================================================================
OPERATING PROFIT AS A PERCENT OF REVENUES
Target 5.6% 5.5% 5.1%
Mervyn's 4.0 6.3 6.9
Department Store Division 8.8 7.5 5.7
=======================================================================
ASSETS
Target $ 5,495 $ 4,913 $ 4,393
Mervyn's 2,750 3,042 2,686
Department Store Division 2,240 2,292 2,317
Corporate and other 293 90 89
- -----------------------------------------------------------------------
Total $10,778 $10,337 $ 9,485
=======================================================================
DEPRECIATION
Target $ 263 $ 236 $ 208
Mervyn's 146 135 117
Department Store Division 88 87 84
Corporate and other 1 1 1
- -----------------------------------------------------------------------
Total $ 498 $ 459 $ 410
=======================================================================
CAPITAL EXPENDITURES
Target $ 716 $ 571 $ 605
Mervyn's 180 294 303
Department Store Division 80 72 106
Corporate and other 2 1 2
- -----------------------------------------------------------------------
Total $ 978 $ 938 $ 1,016
=======================================================================
</TABLE>
Operating profit is LIFO earnings from operations before corporate expense,
interest and income taxes.
Dayton Hudson Corporation and Subsidiaries Page 21
<PAGE>
Consolidated Results of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Millions of Dollars, Except Per-Share Data) 1993 1992 1991
================================================================================
<S> <C> <C> <C>
REVENUES $19,233 $17,927 $16,115
COSTS AND EXPENSES
Cost of retail sales, buying and occupancy 14,164 13,129 11,751
Selling, publicity and administrative 3,175 2,978 2,801
Depreciation 498 459 410
Interest expense, net 446 437 398
Taxes other than income taxes 343 313 283
- --------------------------------------------------------------------------------
Total Costs and Expenses 18,626 17,316 15,643
- --------------------------------------------------------------------------------
Earnings Before Income Taxes 607 611 472
Provision for Income Taxes 232 228 171
- --------------------------------------------------------------------------------
NET EARNINGS $ 375 $ 383 $ 301
================================================================================
PRIMARY EARNINGS PER SHARE $ 4.99 $ 5.02 $ 3.86
FULLY DILUTED EARNINGS PER SHARE $ 4.77 $ 4.82 $ 3.72
================================================================================
AVERAGE COMMON SHARES OUTSTANDING (MILLIONS):
Primary 71.8 71.6 71.5
Fully Diluted 76.1 75.9 75.9
================================================================================
</TABLE>
The financial statements should be read in conjunction with the Notes and
Analysis contained throughout pages 21-32.
Dayton Hudson Corporation and Subsidiaries Page 22
<PAGE>
Notes and Analysis
- -------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
FINANCE CHARGE REVENUES
Finance charge revenues on internal credit sales were $192 million on sales of
$3.5 billion in 1993, $186 million on sales of $3.5 billion in 1992 and $182
million on sales of $3.3 billion in 1991.
INCOME TAXES
At the beginning of 1993, the Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which
requires the use of the liability method of accounting for deferred income
taxes. Prior-year financial statements have not been restated for the provisions
of SFAS No. 109. The cumulative and the current-year effects of the adoption
were not significant. Income taxes for 1992 and 1991 were calculated according
to SFAS No. 96, "Accounting for Income Taxes," which was superseded by SFAS No.
109.
The Corporation's effective tax rate was 38.2% for 1993 compared with 37.3%
for 1992 and 36.3% for 1991. The increase in the 1993 tax rate over 1992
reflects the one percentage point increase in the federal statutory tax rate and
the associated one-time adjustment to increase deferred tax balances, partially
offset by tax savings from the reenactment of the Targeted Jobs Tax Credit.
Also, with the adoption of SFAS No. 109, the financial reporting deductibility
of ESOP preferred stock dividends earned was reduced to shares allocated to
participant accounts versus all outstanding ESOP shares. The higher effective
tax rate in 1992 over 1991 was primarily due to increased state tax rates.
Effective tax rates vary from the federal statutory rate as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
PERCENT OF EARNINGS BEFORE
INCOME TAXES 1993 1992 1991
- ---------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 35.0% 34.0% 34.0%
State income taxes, net of
federal tax benefit 4.6 4.7 4.0
Cumulative effect of adopting
SFAS No. 109 (1.4) - -
Dividends on preferred stock (.5) (1.5) (2.0)
Other .5 .1 .3
- ---------------------------------------------------------------
Effective tax rate 38.2% 37.3% 36.3%
===============================================================
</TABLE>
INCOME TAXES continued
The components of the provision for income taxes were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
INCOME TAX PROVISION 1993 1992 1991
- ---------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $166 $176 $112
State 37 41 25
- ---------------------------------------------------------------
203 217 137
- ---------------------------------------------------------------
Deferred:
Federal 23 8 31
State 6 3 3
- ---------------------------------------------------------------
29 11 34
- ---------------------------------------------------------------
Total $232 $228 $171
===============================================================
</TABLE>
The components of the net deferred tax liability were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
JANUARY 29, January 30,
NET DEFERRED TAX LIABILITY 1994 1993
- ---------------------------------------------------------------
<S> <C> <C>
Gross deferred tax assets:
Deferred compensation $ 55 $ 47
Self-insured benefits 69 44
Postretirement health care obligation 41 38
Other 59 74
- ---------------------------------------------------------------
224 203
- ---------------------------------------------------------------
Gross deferred tax liabilities:
Inventory 37 -
Property and equipment 304 290
Purchase accounting differences 33 33
Other 34 35
- ---------------------------------------------------------------
408 358
- ---------------------------------------------------------------
Net deferred tax liability $184 $155
===============================================================
</TABLE>
EARNINGS PER SHARE
Primary earnings per share equal net earnings, less dividend requirements on
ESOP preferred stock (net of tax benefits in 1993 related to unallocated shares
associated with the adoption of SFAS No. 109), divided by the average number of
common shares and common stock equivalents outstanding during the period.
Fully diluted earnings per share are computed based on the average number of
common shares and common stock equivalents outstanding during the period. The
computation assumes conversion of the ESOP preferred stock into common stock.
Net earnings also are adjusted for the additional expense required to fund the
ESOP debt service (net of tax benefits in 1993 related to unallocated shares
associated with the adoption of SFAS No. 109), which results from the assumed
replacement of the ESOP preferred dividends with common stock dividends.
References to earnings per share relate to fully diluted earnings per share.
Dayton Hudson Corporation and Subsidiaries Page 23
<PAGE>
Consolidated Statements of Financial Position
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JANUARY 29, JANUARY 30,
(Millions of Dollars) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 321 $ 117
Accounts receivable 1,536 1,514
Merchandise inventories 2,497 2,618
Other 157 165
- -------------------------------------------------------------------------------
Total Current Assets 4,511 4,414
PROPERTY AND EQUIPMENT
Land 1,120 998
Buildings and improvements 4,753 4,342
Fixtures and equipment 2,162 2,197
Construction-in-progress 248 223
Accumulated depreciation (2,336) (2,197)
- -------------------------------------------------------------------------------
Net Property and Equipment 5,947 5,563
OTHER 320 360
- -------------------------------------------------------------------------------
TOTAL ASSETS $10,778 $10,337
===============================================================================
LIABILITIES AND COMMON SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Notes payable $ 200 $ 23
Accounts payable 1,654 1,596
Accrued liabilities 903 849
Income taxes payable 145 125
Current portion of long-term debt 173 371
- -------------------------------------------------------------------------------
Total Current Liabilities 3,075 2,964
LONG-TERM DEBT 4,279 4,330
DEFERRED INCOME TAXES AND OTHER 536 450
CONVERTIBLE PREFERRED STOCK 368 374
LOAN TO ESOP (217) (267)
COMMON SHAREHOLDERS' INVESTMENT
Common stock 72 71
Additional paid-in capital 73 58
Retained earnings 2,592 2,357
- -------------------------------------------------------------------------------
Total Common Shareholders' Investment 2,737 2,486
- -------------------------------------------------------------------------------
TOTAL LIABILITIES & COMMON SHAREHOLDERS' INVESTMENT $10,778 $10,337
===============================================================================
</TABLE>
The financial statements should be read in conjunction with the Notes and
Analysis contained throughout pages 21-32.
Dayton Hudson Corporation and Subsidiaries Page 24
<PAGE>
Notes and Analysis
- --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
CASH EQUIVALENTS
Cash equivalents represent short-term investments with a maturity of three
months or less at the time of purchase. Short-term investments are recorded at
cost, which approximates fair value.
ACCOUNTS RECEIVABLE
Customer accounts receivable are classified as current assets and include
some which are due after one year, consistent with industry practice. Accounts
receivable generally are written off when any portion of the balance is 12
months past due, or when the required payments have not been received for six
consecutive months. The allowance for doubtful accounts was $35 million and $37
million at year-end 1993 and 1992, respectively.
CREDIT CARD SUBSIDIARY
Retailers National Bank (the Bank), a national credit card bank and a
wholly owned subsidiary, was chartered on January 7, 1994. The Bank, at
inception, acquired the outstanding accounts receivable of DSD and Target. It
issues DSD-named credit cards, which are accepted at DSD and Target stores. Net
earnings for the Bank were insignificant for 1993. The following is the
condensed statement of financial position for the Bank.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
JANUARY 29, 1994
- --------------------------------------------------------------------------------
<S> <C>
Accounts receivable, net $668
Other assets 16
- --------------------------------------------------------------------------------
Total Assets $684
================================================================================
Liabilities, principally deposit due to the Corporation $634
Investment of the Corporation 50
- --------------------------------------------------------------------------------
Total Liabilities and Investment $684
================================================================================
</TABLE>
INVENTORIES
Inventories and the related cost of sales are accounted for by the retail
inventory accounting method using the last-in, first-out (LIFO) basis. Under
this method, the cost of retail sales, as reported in the Consolidated Results
of Operations, represents current cost, thereby reflecting the effect of
changing prices. The accumulated LIFO provision was $80 million and $171 million
at year-end 1993 and 1992, respectively (see page 31 for further discussion of
the LIFO provision).
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost less accumulated depreciation.
For financial reporting purposes, depreciation on property is computed using the
straight-line method over estimated useful lives. Accelerated depreciation
methods generally are used for income tax purposes.
ACCOUNTS PAYABLE
Outstanding drafts included in accounts payable were $239 million and $372
million at year-end 1993 and 1992, respectively.
LEASES
Assets held under capital leases are included in property and equipment and
are charged to depreciation and interest over the life of the lease. Operating
leases are not capitalized and lease rentals are expensed. Rent expense on
buildings, included in buying and occupancy, includes percentage rents which are
based on a percentage of retail sales over stated levels. Total rent expense was
$100 million, $94 million and $92 million in 1993, 1992 and 1991, respectively.
Many of the long-term leases include options to renew, with renewal terms
varying from five to 30 years. Certain leases also include options to purchase
the property. Future minimum lease payments required under noncancelable lease
agreements existing at the end of 1993 were:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Operating Capital
FUTURE MINIMUM LEASE PAYMENTS Leases Leases
- ------------------------------------------------------------------------------
<S> <C> <C>
1994 $ 99 $ 20
1995 98 20
1996 91 19
1997 71 19
1998 64 18
After 1998 501 189
- ------------------------------------------------------------------------------
Total future minimum lease payments 924 285
Less: Interest* (411) (153)
Executory costs (9) (5)
- ------------------------------------------------------------------------------
Present value of minimum lease payments $504 $127**
==============================================================================
</TABLE>
* Calculated using the average interest rate in the year of inception for each
lease (weighted average interest rate - 9.6%).
** Includes current portion of $5 million.
COMMITMENTS AND CONTINGENCIES
Commitments for the purchase of real estate, construction of new
facilities, remodeling of existing facilities and other equipment purchases over
the next year amounted to approximately $186 million at January 29, 1994.
The Corporation is exposed to claims and litigation arising out of the
ordinary course of business. Considering the insurance coverage in place for a
major portion of the claims and litigation, and noting that the ultimate
resolutions cannot be accurately predicted, management, after consulting with
legal counsel, believes that the presently identified claims and litigation will
not have a material adverse effect on the Corporation's results of operations or
its financial condition.
Dayton Hudson Corporation and Subsidiaries Page 25
<PAGE>
Consolidated Statements of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 375 $383 $ 301
Reconciliation to cash flow:
Depreciation 498 459 410
Deferred tax provision 29 11 34
Other noncash items affecting earnings 60 48 26
Changes in operating accounts providing/(requiring) cash:
Accounts receivable (22) (84) (23)
Merchandise inventories 121 (237) (365)
Accounts payable 58 272 57
Accrued liabilities 63 142 59
Income taxes payable 20 27 (62)
Other 17 (37) -
- ------------------------------------------------------------------------------------------------------
Cash Flow Provided by Operations 1,219 984 437
- ------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for property and equipment (969) (918) (1,009)
Disposals of property and equipment 79 10 19
- ------------------------------------------------------------------------------------------------------
Cash Flow Required for Investing Activities (890) (908) (990)
- ------------------------------------------------------------------------------------------------------
Net Financing Sources/(Requirements) 329 76 (553)
- ------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
(Decrease)/increase in notes payable (23) (242) 161
Additions to long-term debt 528 550 756
Reductions of long-term debt (581) (290) (280)
Principal payments received on loan to ESOP 61 58 49
Dividends paid (138) (133) (128)
Other 28 2 (1)
- ------------------------------------------------------------------------------------------------------
Cash Flow (Used)/Provided by Financing Activities (125) (55) 557
- ------------------------------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents 204 21 4
Cash and Cash Equivalents at Beginning of Year 117 96 92
- ------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 321 $117 $ 96
======================================================================================================
</TABLE>
The reclassification of $200 million of long-term debt to notes payable,
associated with the subsequent event discussed on page 27, is not reflected
in financing activities in the Statements of Cash Flows because it did not
involve cash. Amounts in these statements are presented on a cash basis
and therefore may differ from those shown in other sections of this annual
report.
Cash paid for interest (including interest capitalized) was $441 million, $438
million and $389 million in 1993, 1992 and 1991, respectively. Income taxes
paid were $183 million, $189 million and $200 million in 1993, 1992 and 1991,
respectively.
The financial statements should be read in conjunction with the Notes and
Analysis contained throughout pages 21-32.
Dayton Hudson Corporation and Subsidiaries Page 26
<PAGE>
Notes and Analysis
- --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
ANALYSIS OF CASH FLOW (Unaudited)
OPERATING ACTIVITIES. The improvement in 1993 cash flow from operations
reflects a decline in working capital, primarily Mervyn's inventories.
Internally-generated funds represent an important component of our capital
resources.
INVESTING ACTIVITIES. The Corporation's investing activities reflect strategic
capital spending in all three operating divisions, primarily Target.
Approximately 73% of 1993 capital expenditures were made by Target, 19% by
Mervyn's and 8% by DSD. Nearly 63% of total expenditures were for building new
stores, with the balance spent on store remodeling, systems and distribution.
Capital expenditures for 1994 are expected to be approximately $1.3 billion. The
1994 store opening plans are for approximately 60 new Target stores and 10 new
Mervyn's stores, while the remodel program includes approximately 45 stores.
FINANCING ACTIVITIES. Cash flow from operations and proceeds from the issuance
of debt are generally used to fund the Corporation's capital expenditures,
working capital needs, dividend payments and debt maturities and redemptions.
Internally-generated funds were sufficient to finance the Corporation's
investment activities in 1993 and 1992, while a portion of the Corporation's
needs were met by financing activities in 1991. (Refer to the Lines of Credit
note on this page for information regarding the Corporation's available credit.)
LINES OF CREDIT
At year-end, two revolving credit agreements totaling $1 billion were
available from various lending institutions. There were no balances outstanding
at January 29, 1994. A fee is paid for the availability under these agreements
and the Corporation may borrow at various specified rates. Fees paid under these
agreements were $2 million each in 1993, 1992 and 1991.
NOTES PAYABLE
At January 29, 1994, $200 million in commercial paper was outstanding. The
average amount of commercial paper outstanding during the year was $298
million, at a weighted average interest rate of 3.2%.
Interest rate swaps were used to reduce interest rate exposure by effectively
fixing the rate on $200 million of variable-rate commercial paper at
approximately 8.6% until 1999. Subsequent to year end, the interest rate swaps
were terminated at a premium of $22 million. The premium will be amortized into
interest expense through 1999. It is anticipated that future interest rate
savings will offset the premium amortization. At January 30, 1993,
NOTES PAYABLE CONTINUED
$200 million of commercial paper, which supported the underlying obligation of
the swaps, was classified as long-term debt. Long-term revolving credit
agreements backed the commercial paper.
LONG-TERM DEBT
During 1993, $528 million of long-term debt was issued with maturities of 1996
to 2023 at rates ranging from 4.65% to 7.875%, with an average interest rate of
7.1%. At year-end, the weighted average interest rate on total long-term debt
was 9.0% with an average maturity of 15 years. In 1993, the Corporation called
$300 million of notes and debentures at 7.875% to 10.75% due 1996 to 2013. The
replacement of this debt at lower interest rates results in current and future
expense savings.
Long-term debt due beyond one year was:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
JANUARY 29, JANUARY 30,
LONG-TERM DEBT 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Swapped commercial paper backed by revolving credit $ - $ 200
4.65% to 10.0% unsecured notes and sinking
fund notes and debentures due 1995 to 2023,
and other debt 4,157 4,004
Capital lease obligations 122 126
- -------------------------------------------------------------------------------
Total $4,279 $4,330
===============================================================================
</TABLE>
At January 29, 1994, the fair value of the $4,157 million 4.65% to 10.0%
unsecured notes, sinking fund notes and debentures, and other debt was
approximately $4,799 million. The fair value of the $200 million swapped
commercial paper was approximately $231 million at year-end. The fair value of
the long-term debt and swaps was estimated using discounted cash flow analysis,
based on the Corporation's current incremental borrowing rates for similar types
of financial instruments. The carrying amounts of the Corporation's other
borrowings, including the current portion of long-term debt, approximate their
fair values.
As a condition of certain borrowings, related land, buildings and equipment
have been pledged as collateral. At year end, approximately $67 million of
property and equipment served as collateral for these loans.
Required principal payments on long-term debt over the next five years,
excluding capital lease obligations, will be $168 million in 1994, $204 million
in 1995, $68 million in 1996, $123 million in 1997 and $200 million in 1998.
Dayton Hudson Corporation and Subsidiaries Page 27
<PAGE>
Consolidated Statements of Common Shareholders' Investment
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
(Millions of Dollars) Stock Capital Earnings Total
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FEBRUARY 2, 1991 $71 $41 $1,936 $2,048
Consolidated net earnings - - 301 301
Dividends declared - - (128) (128)
Conversion of preferred stock - 2 - 2
Stock option activity - 8 - 8
- -----------------------------------------------------------------------------------------------------
FEBRUARY 1, 1992 71 51 2,109 2,231
Consolidated net earnings - - 383 383
Dividends declared - - (135) (135)
Conversion of preferred stock - 3 - 3
Stock option activity - 4 - 4
- -----------------------------------------------------------------------------------------------------
JANUARY 30, 1993 71 58 2,357 2,486
Consolidated net earnings - - 375 375
Dividends declared - - (140) (140)
Tax benefit on unallocated preferred share dividends - 6 - 6
Conversion of preferred stock - 6 - 6
Stock option activity 1 3 - 4
- -----------------------------------------------------------------------------------------------------
JANUARY 29, 1994 $72 $73 $2,592 $2,737
=====================================================================================================
</TABLE>
COMMON STOCK
Authorized 500,000,000 shares, $1.00 par value; 71,525,082 shares issued
and outstanding at January 29, 1994; 71,383,880 shares issued and outstanding at
January 30, 1993.
PREFERRED STOCK
Authorized 5,000,000 shares; Series B ESOP Convertible Preferred Stock $.01
par value, 425,979 shares issued and outstanding at January 29, 1994; 432,014
shares issued and outstanding at January 30, 1993. Each share converts into ten
shares of the Corporation's common stock, has voting rights equal to the
equivalent number of common shares, and is entitled to cumulative annual
dividends of $56.20. Under certain circumstances, the shares may be redeemed at
the election of the Corporation or the ESOP.
JUNIOR PREFERRED STOCK RIGHTS
The Corporation declared a distribution of shares of preferred share
purchase rights in 1986. Terms of the plan provide for a distribution of one
preferred share purchase right for each outstanding share of Dayton Hudson
common stock. Each right will entitle shareholders to buy one-hundredth of a
share of a new series of junior participating preferred stock at an exercise
price of $150, subject to adjustment. The rights will be exercisable only if a
person or group acquires ownership of 20% or more of Dayton Hudson common stock
or announces a tender offer to acquire 30% or more of the common stock.
The financial statements should be read in conjunction with the Notes and
Analysis contained throughout pages 21-32.
Dayton Hudson Corporation and Subsidiaries Page 28
<PAGE>
Notes and Analysis
- --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
STOCK OPTION PLAN
The Corporation has a stock option plan for key employees. Grants have
included stock options, performance shares and, beginning in 1993, restricted
stock awards. Options have included Incentive Stock Options, Non-Qualified Stock
Options or a combination of the two. Twelve months after the grant date 25% of
the majority of options granted become exercisable with another 25% after each
succeeding 12 months. These options are cumulatively exercisable and expire no
later than 10 years after the date of the grant. Stock options are awarded at
fair market value on the grant date. When exercised, proceeds are credited to
common shareholders' investment and no expense is incurred.
Beginning in 1993, the performance shares earned and restricted stock awarded
generally vest at the end of a four-year period, at which time common stock is
issued and placed in escrow, subject to further restrictions. Prior to 1993,
performance shares earned were paid in cash and common stock. Compensation
expense on performance shares and restricted stock awards is recorded based on
the current market price of the Corporation's common stock and the extent to
which certain goals are being met. Performance share and restricted stock award
expense was less than $1 million in 1993, compared with $3 million and $1
million of performance share expense in 1992 and 1991, respectively.
The number of shares of unissued common stock reserved for future grants under
the plan was 3,106,901 at the end of 1993 and 3,396,070 at the end of 1992.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
OPTIONS, PERFORMANCE SHARES AND RESTRICTED STOCK AWARDS OUTSTANDING
- -------------------------------------------------------------------------------------
OPTIONS
-----------------------------------------
NUMBER PRICE SHARES PERFOR- RESTRICTED
OF PER EXER- MANCE STOCK
SHARES SHARE CISABLE SHARES AWARDS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Feb. 2, 1991 1,072,349 $14.30-$75.50 571,948 219,091 -
Granted 190,513 73.81- 75.19
Canceled (49,706) 30.25- 75.50
Exercised (141,990) 14.30- 69.56
- -------------------------------------------------------------------------------
Feb. 1, 1992 1,071,166 17.44- 75.50 561,774 190,215 -
Granted 198,027 59.81- 67.63
Canceled (14,666) 17.44- 75.50
Exercised (100,109) 17.44- 53.19
- -------------------------------------------------------------------------------
Jan. 30, 1993 1,154,418 30.25- 75.50 590,807 207,758 -
Granted 205,268 65.25- 83.25
Canceled (16,856) 53.00- 78.00
Exercised (70,009) 30.25- 75.50
- -------------------------------------------------------------------------------
JAN. 29, 1994 1,272,821 $30.25-$83.25 654,624 247,689 30,494
===============================================================================
</TABLE>
PENSION PLANS
The Corporation has three defined benefit pension plans which cover all
employees who meet certain requirements of age, length of service and hours
worked per year. The benefits provided are based upon years of service and the
employee's compensation.
Contributions to the pension plans are made solely by the Corporation. To
compute net pension cost, the Corporation's actuarial consulting firm estimates
the total benefits which will ultimately be paid to eligible employees and then
allocates these costs to service periods.
The period over which unrecognized pension costs and credits are amortized,
including prior service costs and actuarial gains and losses, is based on the
remaining service period for those employees expected to receive pension
benefits.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
COMPONENTS OF NET PENSION EXPENSE 1993 1992 1991
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $22 $19 $18
Interest cost on projected benefit obligation 32 30 26
Return on assets-current (50) (30) (79)
-deferred 14 (1) 50
Amortization of transitional asset - - (7)
- -------------------------------------------------------------------------------------
Net pension expense $18 $18 $ 8
=====================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
ACTUARIAL ASSUMPTIONS 1993 1992 1991
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7-1/4% 8-1/2% 8-1/2%
Expected long-term rate of return on plan assets 9-1/2 9-1/2 9-1/2
Average assumed rate of compensation increase 5-1/4 7 7
=====================================================================================
</TABLE>
During 1993, the Corporation changed certain actuarial assumptions used in the
calculation of its projected benefit obligation for the defined benefit plans.
The net effect of these changes on future years' pension expense is not expected
to be significant.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
December 31,
FUNDED STATUS 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $385 $297
Accumulated benefit obligation 411 316
===========================================================================
Projected benefit obligation 466 380
Fair market value of plans' assets* 454 403
- ---------------------------------------------------------------------------
Plans' assets (less than)/in excess of projected
benefit obligation (12) 23
Unrecognized prior service cost 4 5
Unrecognized net actuarial loss/(gain) 42 (4)
- ---------------------------------------------------------------------------
Prepaid pension asset $ 34 $ 24
===========================================================================
</TABLE>
*Plans' assets consist primarily of equity and fixed income securities.
Dayton Hudson Corporation and Subsidiaries Page 29
<PAGE>
Notes and Analysis
- --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
SUPPLEMENTAL RETIREMENT PLAN
The Corporation sponsors a defined contribution employee benefit plan.
Employees who meet certain eligibility requirements of age, length of service
and hours worked per year can participate in the plan by investing up to 15% of
their compensation.
The Corporation's match equals 100% of each employee's contribution up to 5%
of each participant's total compensation, within ERISA limits. The Corporation's
contribution to the plan is invested in the ESOP.
In 1989, the Corporation lent $379 million to the ESOP at a 9% interest rate
with an estimated maturity of 15 years. Proceeds from the loan were used by the
ESOP to purchase 438,353 shares of Series B ESOP Convertible Preferred Stock of
the Corporation. The original issue value of the ESOP preferred stock of $864.60
per share is guaranteed by the Corporation.
The Corporation's contributions to the ESOP, plus dividends paid on preferred
stock held by the ESOP, are used to repay the loan principal and interest. Cash
contributed to the ESOP was $61 million each in 1993 and 1992, and $53 million
in 1991. Dividends earned on shares held by the ESOP were $24 million each in
1993 and 1992, and $25 million in 1991. Benefits expense, calculated based on
the shares allocated method, was $33 million, $28 million and $25 million in
1993, 1992 and 1991, respectively.
In November 1993, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 93-6 "Employers' Accounting for Employee
Stock Ownership Plans." The statement is effective for fiscal years beginning
after December 15, 1993. Within the SOP, the Corporation may continue its
current accounting.
POSTRETIREMENT HEALTH CARE BENEFITS
Certain health care benefits are provided for retired employees. Employees
eligible for retirement become eligible for these benefits if they meet minimum
age and service requirements and agree to contribute a portion of the cost. The
Corporation has the right to modify or terminate these benefits.
POSTRETIREMENT HEALTH CARE BENEFITS CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
December 31,
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C>
Retirees $51 $52
Fully eligible active plan participants 26 30
Other active plan participants 14 14
Prior service cost (7) (6)
Unrecognized gain 14 4
- -----------------------------------------------------------------------
Total accumulated postretirement
benefit obligation $98 $94
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET PERIODIC COST 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $1 $1 $1
Interest cost on accumulated benefit 8 8 7
- --------------------------------------------------------------------------------
Net cost $9 $9 $8
================================================================================
</TABLE>
An increase in the cost of covered health care benefits of 9.5% is assumed for
fiscal 1994. The rate is assumed to decrease incrementally to 6% in the year
2000 and remain at that level thereafter. The health care cost trend rate
assumption has a significant effect on the amounts reported. For example, a 1%
increase in the health care trend rate would increase the accumulated
postretirement benefit obligation by $7 million at year-end 1993 and the net
periodic cost by $1 million for the year. The discount rate used in determining
the accumulated postretirement benefit obligation was 7.25% for 1993 and 8.5%
for 1992.
During 1993, the Corporation changed certain actuarial assumptions used in the
calculation of its projected benefit obligation for the postretirement health
care benefits. The net effect of these changes on future years' results for the
postretirement health care benefits is not expected to be significant.
SUMMARY OF OTHER ACCOUNTING POLICIES
CONSOLIDATION. The financial statements include the accounts of the
Corporation after elimination of material intercompany balances and
transactions. All subsidiaries are wholly owned.
FISCAL YEAR. Our fiscal year ends on the Saturday nearest January 31.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
FISCAL YEAR Ended Weeks
- ------------------------------------------------------------------------------------
<S> <C> <C>
1993 January 29, 1994 52
1992 January 30, 1993 52
1991 February 1, 1992 52
====================================================================================
</TABLE>
Unless otherwise stated, references to years in this report relate to fiscal
years rather than to calendar years.
Dayton Hudson Corporation and Subsidiaries Page 30
<PAGE>
Notes and Analysis
- --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data)
QUARTERLY RESULTS (Unaudited)
The same accounting policies are followed in preparing quarterly financial
data as are followed in preparing annual data. Costs directly associated with
revenues, such as cost of goods sold and percentage rent on leased stores, are
allocated based on revenues. Certain other costs not directly associated with
revenues, such as benefit plan expenses, bonuses and real estate taxes, are
allocated evenly throughout the year.
The table below summarizes results by quarter for 1993 and 1992:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
1993 1992 1993 1992 1993 1992 1993 1992 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $4,040 $3,719 $4,287 $3,967 $4,625 $4,340 $6,281 $5,901 $19,233 $17,927
Gross Profit(a) $1,067 $1,009 $1,107 $1,068 $1,208 $1,151 $1,687 $1,570 $ 5,069 $ 4,798
Net Earnings $ 30 $ 35 $ 24 $ 42 $ 43 $ 57 $ 278 $ 249 $ 375 $ 383
Earnings Per Share(b) $ .35 $ .40 $ .28 $ .50 $ .53 $ .70 $ 3.62 $ 3.22 $ 4.77 $ 4.82
============================================================================================================================
Fully Diluted Average
Common Shares
Outstanding (Millions) 76.1 75.9 76.0 75.9 76.1 76.0 76.1 76.0 76.1 75.9
Dividends Declared Per
Share $ .40 $ .38 $ .40 $ .38 $ .40 $ .38 $ .42 $ .40 $ 1.62 $ 1.54
Common Stock Price(c)
High $ 83-3/4 $ 70 $ 75 $ 69 $ 71-7/8 $ 78-3/8 $ 74-3/4 $ 79-1/8 $ 83-3/4 $ 79-1/8
Low 69-1/8 60 63-1/4 59 65 61-7/8 65-7/8 72-1/2 63-1/4 59
============================================================================================================================
</TABLE>
(a) Gross profit is revenues less cost of retail sales, buying and occupancy.
(b) Earnings per share are computed independently for each of the quarters
presented. The sum of the quarterly earnings per share may not equal the
total-year amount due to the impact of changes in average quarterly shares
outstanding.
(c) Dayton Hudson Corporation's common stock is listed on the New York Stock
Exchange and the Pacific Stock Exchange.
LIFO PROVISION
The following table shows the quarterly pre-tax LIFO provision and its impact
on earnings per share:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
LIFO Expense/(Credit)* 1993 1992 1991
- -------------------------------------------------------------------------------
Per Per Per
Quarter (Unaudited) Total Share Total Share Total Share
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $ 6 $ .05 $13 $.11 $ 16 $ .13
Second 6 .05 15 .12 13 .11
Third 3 .02 3 .02 3 .02
Fourth (106) (.87) (22) (.18) (70) (.59)
- -------------------------------------------------------------------------------
Total year $(91) $(.75) $ 9 $.07 $(38) $(.32)
===============================================================================
</TABLE>
*LIFO expense/(credit) per share is computed based on fully diluted average
shares outstanding during each period. The sum of quarterly LIFO expense per
share may not equal the total-year amount due to the impact of changes in
average shares outstanding.
The fourth quarter 1993 LIFO credit was primarily the result of the adoption
of internally-generated price indices at Mervyn's and DSD. Previously, Mervyn's
and DSD used the Bureau of Labor Statistics' Department Stores Inventory Price
Index to estimate retail price changes.
These internal price indices capture the inventory valuation impact of lower
retail prices resulting from our value-pricing strategies. This change generated
a LIFO credit of $77 million, or $.63 per share. The cumulative and prior years'
effects of this change are not determinable. In addition to this change, the
1993 LIFO credit was affected by a lower-than-expected internally-generated
price index at Target, partially offset by a substantial decline in inventory
levels at Mervyn's.
The 1992 LIFO expense, as compared with the 1991 credit, was primarily due to
a higher internal price index at Target, partially offset by lower inflation at
Mervyn's and DSD. The 1991 LIFO credit primarily reflects Target's adoption of
an internally-generated price index.
The LIFO provision is adjusted each quarter for estimated changes in year-end
retail inflation rates, inventory levels and markup levels. A final adjustment
is recorded in the fourth quarter for the difference between the prior quarters'
estimates and actual total year LIFO expense.
Dayton Hudson Corporation and Subsidiaries Page 31
<PAGE>
Report of Independent Auditors
- --------------------------------------------------------------------------------
Board of Directors and Shareholders
Dayton Hudson Corporation
We have audited the accompanying consolidated statements of financial position
of Dayton Hudson Corporation and subsidiaries as of January 29, 1994 and January
30, 1993 and the related consolidated results of operations, cash flows and
common shareholders' investment for each of the three years in the period ended
January 29, 1994. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Dayton Hudson
Corporation and subsidiaries at January 29, 1994 and January 30, 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended January 29, 1994, in conformity with generally
accepted accounting principles.
As discussed in the notes to the financial statements, the Corporation changed
its method of estimating retail price indices used in its LIFO inventory
valuation for Mervyn's and the Department Store Division in 1993.
/s/ Ernst & Young
Minneapolis, Minnesota
March 18, 1994
Dayton Hudson Corporation and Subsidiaries Page 32
<PAGE>
Summary Financial and Operating Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Millions of Dollars, Except Per-Share Data) 1993 1992 1991 1990 1989(a)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
- --------------------------------------------------------------------------------------------------------
Revenues $19,233 17,927 16,115 14,739 13,644
- --------------------------------------------------------------------------------------------------------
Cost of retail sales,
buying and occupancy $14,164 13,129 11,751 10,652 9,890
- --------------------------------------------------------------------------------------------------------
Selling, publicity and administrative $ 3,175 2,978 2,801 2,478 2,264
- --------------------------------------------------------------------------------------------------------
Depreciation $ 498 459 410 369 315
- --------------------------------------------------------------------------------------------------------
Interest expense, net $ 446 437 398 325 267
- --------------------------------------------------------------------------------------------------------
Earnings from continuing operations
before income taxes $ 607 611 472 659 678
- --------------------------------------------------------------------------------------------------------
Income taxes $ 232 228 171 249 268
- --------------------------------------------------------------------------------------------------------
Net earnings: Continuing (b) $ 375 383 301 412 410
- --------------------------------------------------------------------------------------------------------
Consolidated $ 375 383 301 412 410
- --------------------------------------------------------------------------------------------------------
FINANCIAL POSITION DATA
- --------------------------------------------------------------------------------------------------------
Working capital $ 1,436 1,450 1,452 1,236 912
- --------------------------------------------------------------------------------------------------------
Property and equipment $ 5,947 5,563 5,102 4,525 3,523
- --------------------------------------------------------------------------------------------------------
Total assets $10,778 10,337 9,485 8,524 6,684
- --------------------------------------------------------------------------------------------------------
Long-term debt $ 4,279 4,330 4,227 3,682 2,510
- --------------------------------------------------------------------------------------------------------
Convertible preferred stock $ 368 374 377 379 379
- --------------------------------------------------------------------------------------------------------
Common shareholders' investment $ 2,737 2,486 2,231 2,048 1,753
- --------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
- --------------------------------------------------------------------------------------------------------
Fully diluted net earnings per share:
Continuing (b) $ 4.77 4.82 3.72 5.20 5.35
- --------------------------------------------------------------------------------------------------------
Consolidated $ 4.77 4.82 3.72 5.20 5.35
- --------------------------------------------------------------------------------------------------------
Cash dividend declared $ 1.62 1.54 1.46 1.35 1.17
- --------------------------------------------------------------------------------------------------------
Market price - high $ 83-3/4 79-1/8 80 78-1/8 66-3/8
- --------------------------------------------------------------------------------------------------------
Market price - low $ 63-1/4 59 56-3/8 47 43
- --------------------------------------------------------------------------------------------------------
Market price - close $ 65-7/8 77-3/4 65-1/8 65-3/4 61-3/4
- --------------------------------------------------------------------------------------------------------
Common shareholders' investment $ 38.27 34.83 31.31 28.82 24.73
- --------------------------------------------------------------------------------------------------------
</TABLE>
The Summary Financial and Operating Data should be read in conjunction with the
Financial Statements, Notes and Analysis on pages 21-32.
(a) Consisted of 53 weeks.
(b) Includes cumulative income effect of two accounting changes, net, of $2
million ($.03 per share) in 1990.
Dayton Hudson Corporation and Subsidiaries Page 33
<PAGE>
DAYTON HUDSON CORPORATION 1993 FACTS
. One of America's largest general merchandise retailers with revenues of $19.2
billion.
. More than 80% of revenues derived from discount and moderate-price retailing.
. Serves a wide range of consumers through 893 stores housing 94 million square
feet of retail space in 33 states.
. Among America's 20 largest private employers, with a workforce totaling
174,000.
. Largest commitment to community giving of any major general merchandise
retailer with 1993 giving of $24.0 million. Only major retailer to invest
five percent of its federally taxable income in social action and arts
programs in store communities.
TARGET
Target is an upscale discounter which provides quality merchandise at attractive
prices in clean, spacious and customer-friendly stores. It has 554 stores
coast-to-coast.
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991
- ----------------------- ------- ------- -------
<S> <C> <C> <C>
Revenues $11,743 $10,393 $9,041
- --------------------------------------------------
Operating Profit $ 662 $ 574 $ 458
- --------------------------------------------------
Stores 554 506 463
- --------------------------------------------------
Retail Square Feet* 58,087 52,211 47,086
</TABLE>
MERVYN'S
Mervyn's is a moderate-priced family department store chain specializing in soft
goods. The division operates 276 stores in 15 states in the Northwest, West,
Southwest, Southeast, and Michigan.
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991
- ----------------------- ------- ------- -------
<S> <C> <C> <C>
Revenues $4,436 $4,510 $4,143
- --------------------------------------------------
Operating Profit $ 179 $ 284 $ 284
- --------------------------------------------------
Stores 276 265 245
- --------------------------------------------------
Retail Square Feet* 22,273 21,305 19,479
</TABLE>
DEPARTMENT STORES
The Department Store Division emphasizes fashion leadership, quality merchandise
and superior customer service. The Division operates 63 full-service, full-line
department stores through three store groups predominantly in nine Midwestern
states: 19 Dayton's stores, 21 Hudson's stores and 23 Marshall Field's stores.
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991
- ----------------------- ------- ------- -------
<S> <C> <C> <C>
Revenues $3,054 $3,024 $2,931
- --------------------------------------------------
Operating Profit $ 268 $ 228 $ 168
- --------------------------------------------------
Stores 63 63 62
- --------------------------------------------------
Retail Square Feet* 13,824 13,846 13,744
</TABLE>
*In thousands, reflects total square feet less office, warehouse and vacant
space.
Dayton Hudson Corporation and Subsidiaries Page 34
<PAGE>
TARGET LOCATIONS
<TABLE>
<CAPTION>
Retail Sq. Ft. No.
in thousands of stores
<S> <C> <C>
Arizona 1,921 18
Arkansas 186 2
California 12,127 115
Colorado 1,887 18
Florida 4,822 44
Georgia 1,469 15
Idaho 309 3
Illinois 3,211 28
Indiana 2,692 30
Iowa 1,554 17
Kansas 305 3
Kentucky 556 6
Louisiana 202 2
Michigan 3,563 34
Minnesota 4,467 38
Missouri 840 8
Montana 182 2
Nebraska 597 6
Nevada 842 8
New Mexico 403 4
North Carolina 479 5
North Dakota 416 4
Ohio 809 7
Oklahoma 779 8
Oregon 828 8
South Carolina 297 3
South Dakota 391 4
Tennessee 1,298 13
Texas 6,713 63
Washington 1,835 18
Wisconsin 1,925 18
Wyoming 182 2
- ---------------------------------------------------
Total 58,087 554
MAJOR MARKETS
Greater Los Angeles 60
Minneapolis/St. Paul 28
Chicago 18
Dallas/Ft. Worth 17
Detroit 17
Houston 17
San Francisco Bay Area 17
Atlanta 14
Miami/Ft. Lauderdale 13
Phoenix 13
Denver 12
San Diego 12
Seattle/Tacoma 10
</TABLE>
MERVYN'S LOCATIONS
<TABLE>
<CAPTION>
Retail Sq. Ft. No.
in thousands of stores
<S> <C> <C>
Arizona 1,154 14
California 9,558 123
Colorado 927 12
Florida 1,634 18
Georgia 487 6
Idaho 83 1
Louisiana 538 7
Michigan 1,175 15
Nevada 412 6
New Mexico 180 2
Oklahoma 270 3
Oregon 479 6
Texas 3,331 41
Utah 678 7
Washington 1,367 15
- --------------------------------------------------------
Total 22,273 276
MAJOR MARKETS
Greater Los Angeles 47
San Francisco Bay Area 22
Dallas/Ft. Worth 13
Miami/Ft. Lauderdale 13
San Diego 11
Phoenix 10
Detroit 9
Houston 9
Seattle/Tacoma 8
Atlanta 6
Denver 7
Salt Lake City 6
Sacramento 7
</TABLE>
DEPARTMENT STORE LOCATIONS
<TABLE>
<CAPTION>
Retail Sq. Ft. No.
in thousands of stores
<S> <C> <C>
DAYTON'S
Minnesota 2,748 12
North Dakota 299 3
South Dakota 102 1
Wisconsin 349 3
HUDSON'S
Indiana 246 2
Michigan 4,315 18
Ohio 187 1
MARSHALL FIELD'S
Illinois 3,944 15
Ohio 201 1
Texas 721 4
Wisconsin 712 3
- ------------------------------------------------------
Total 13,824 63
MAJOR MARKETS
Chicago 14
Minneapolis/St. Paul 10
Detroit 9
</TABLE>
Dayton Hudson Corporation and Subsidiaries Page 35
<PAGE>
Ernst & Young 1400 Pillsbury Center
Minneapolis, Minnesota 55402
Phone: 612 343 1000
EXHIBIT (18)
March 18, 1994
Mr. Douglas A. Scovanner
Senior Vice President & Treasurer
Dayton Hudson Corporation
777 Nicollet Mall
Minneapolis, Minnesota 55402
Dear Mr. Scovanner:
The notes to consolidated financial statements of Dayton Hudson Corporation
included in its Annual Report on Form 10-K for the year ended January 29, 1994
state that internally-generated indices were used in the valuation of the LIFO
inventories of the Department Store Division and Mervyn's instead of the Bureau
of Labor Statistics indices previously used. You have advised us that you
believe the change is to a preferable method in your circumstances because it
better represents the price changes being experienced at the Department Store
Division and Mervyn's.
There are no authoritative criteria for determining a "preferable" LIFO
inventory method based on the particular circumstances. However, we conclude
that the change in the method of estimating retail price indices is to an
acceptable alternative method which is preferable in your circumstances based on
your business judgment to make this change for the reason cited above.
Very truly yours,
/s/ Ernst & Young
<PAGE>
EXHIBIT (21)
SUBSIDIARIES OF REGISTRANT
--------------------------
As of April 1, 1994, the following are wholly-owned subsidiaries of the
Registrant and are Minnesota corporations except as otherwise indicated:
Bullseye Corporation (Delaware)
Dayton Credit Company
Dayton Development Company
Dayton's Commercial Interiors, Inc.
Dayton's Iron Horse Liquors, Inc.
Dayton's Travel Service, Inc.
Eighth Street Development Company
Mervyn's (California)
Mervyn's, Inc. (Delaware)
Retailers National Bank (national association)
Rooftop, Inc.
Seatamatic, Inc. (Nevada)
Target Stores, Inc.
Capitol Lounge Corp. (Wisconsin)
Clybourn Trading Corp. (Wisconsin)
Commercial Interiors, Inc. (Delaware)
Creative Fields, Inc. (Nevada)
DHC Milwaukee, Inc. (Wisconsin)
DHC Wine & Liquor Shop, Inc. (Wisconsin)
DHC Wisconsin, Inc. (Wisconsin)
Fieldridge, Inc. (Wisconsin)
Greener Fields, Inc. (Texas)
MAFCO, Inc. (Delaware)
Marshall Field & Company (Delaware)
Marshall Field's Chicago, Inc. (Delaware)
Marshall Field's Direct Response Company, Inc. (Illinois)
Marshall Field Direct Response Supply Company, Inc. (Illinois)
Marshall Field of Columbus, Inc. (Ohio)
Marshall Field's Mayfair, Inc. (Wisconsin)
Marshall Field Stores, Inc. (Delaware)
Windows on Wisconsin, Inc. (Wisconsin)
<PAGE>
EXHIBIT (23)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Annual Report (Form
10-K) of Dayton Hudson Corporation of our report dated March 18, 1994, included
in the 1993 Annual Report to Shareholders of Dayton Hudson Corporation.
Our audits also included the financial statement schedules of Dayton Hudson
Corporation listed in Item 14(a). These schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedules referred to above,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in Registration Statement
Numbers 33-42364 and 33-59008 on Form S-3 and Post-Effective Amendment No. 1 to
Registration Statement Number 2-72549 and Registration Statement Numbers
33-6918 and 33-66050 on Form S-8 of our report dated March 18, 1994, with
respect to the consolidated financial statements incorporated herein by
reference and our report included in the preceding paragraph with respect to the
financial statement schedules included in this Annual Report (Form 10-K) of
Dayton Hudson Corporation.
/s/ Ernst & Young
Minneapolis, Minnesota
April 19, 1994
<PAGE>
EXHIBIT (24)
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Rand V. Araskog
------------------------
Rand V. Araskog
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Robert A. Burnett
-------------------------
Robert A. Burnett
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Livio D. DeSimone
-------------------------
Livio D. DeSimone
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Roger A. Enrico
-----------------------
Roger A. Enrico
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ William W. George
-------------------------
William W. George
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Roger L. Hale
---------------------
Roger L. Hale
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Betty Ruth Hollander
----------------------------
Betty Ruth Hollander
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Michele J. Hooper
--------------------------
Michele J. Hooper
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Kenneth A. Macke
------------------------
Kenneth A. Macke
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Mary Patterson McPherson
-----------------------------
Mary Patterson McPherson
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Robert J. Ulrich
------------------------
Robert J. Ulrich
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ John R. Walter
----------------------
John R. Walter
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.
/s/ Stephen E. Watson
-------------------------
Stephen E. Watson
<PAGE>
EXHIBIT (99)(III)
DAYTON HUDSON CORPORATION
SCHEDULE OF OPERATING PROFIT AND LIFO PROVISION
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- ------
<S> <C> <C> <C>
Operating Profit
Target $ 662 $ 574 $ 458
Mervyn's 179 284 284
Dept. Store Division 268 228 168
------ ------ -----
Total $1,109 $1,086 $ 910
====== ====== =====
LIFO (Expense)/Credit
Target $ 62 $ (2) $ 44*
Mervyn's 7* 4 (13)
Dept. Store Division 22* (11) 7
------ ------ -----
Total $ 91 $ (9) $ 38
====== ====== =====
</TABLE>
* Reflects adoption of an internally-generated price index to estimate the
change in its retail prices.
