DAYTON HUDSON CORP, 10-K, 1995-04-18

DAYTON HUDSON CORP
10-K, 1995-04-18
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===============================================================================

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 28, 1995
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 55402-2055
(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, 1995 was $5,491,986,566, based on the closing price
of $71.50 per share of Common Stock as reported on the New York Stock
Exchange -- Composite Index and $916.25 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, 1995: 71,719,871
shares of common stock, par value $1.

DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Registrant's 1994 Annual Report to Shareholders are
incorporated into Parts I and II.
2. Portions of Registrant's Proxy Statement dated April 19, 1995 are
incorporated into Part III.

===============================================================================
<PAGE>

PART I

ITEM 1. BUSINESS.
--------
The first paragraph of Fourth Quarter Results, Page 17; Analysis of Financial
Condition, Page 18; Performance Objectives, Page 19; Internal Credit, Page
20; Business Segments, excluding years 1989-1991, Page 21; Quarterly Results,
Page 31; Page 34 and the list of store locations on Page 35 of Registrant's
1994 Annual Report to Shareholders are incorporated herein by reference.
Registrant was incorporated in Minnesota in 1902.

ITEM 2. PROPERTIES.
----------
Leases, Page 25 and the list of store locations on Page 35 of Registrant's
1994 Annual Report to Shareholders are incorporated herein by reference.

ITEM 3. LEGAL PROCEEDINGS.
------------------
Paragraph 2 of Commitments and Contingencies, Page 25 of Registrant's 1994
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, 1995 and their
positions and ages, are as follows:

<TABLE>
<CAPTION>
NAME TITLE AGE
- ---- ----- ---
<S> <C> <C>
Robert J. Ulrich Chairman, Chief Executive Officer, Chairman of 51
the Executive Committee and Director of
Registrant; Chairman and Chief Executive Officer
of Target (a division of Registrant)

Stephen E. Watson President and Director of Registrant; Chairman 50
and Chief Executive Officer of the Department
Store Division (a division of Registrant)

Kenneth B. Woodrow President of Target 50

Larry V. Gilpin Senior Vice President, Team, Guest and Community 51
Relations of Target

Robert G. McMahon Senior Vice President, Property Development of 46
Target

John E. Pellegrene Senior Vice President, Marketing of Target 58

Gregg W. Steinhafel Executive Vice President, Merchandising of Target 40

Paul W. Sauser President and Chief Operating Officer of Mervyn's 47
(a subsidiary of Registrant)

Raj Joneja Executive Vice President, Merchandising and 47
Marketing of Mervyn's

James T. Hale Senior Vice President, General Counsel and 54
Secretary of Registrant

Douglas A. Senior Vice President and Chief Financial Officer 39
Scovanner of Registrant

Gerald L. Storch Senior Vice President, Strategic Planning 38
of Registrant

Edwin H. Wingate Senior Vice President, Personnel of Registrant 62

JoAnn Bogdan Controller and Chief Accounting Officer 42
of Registrant
</TABLE>

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, 1995 is set
forth below.

Robert J. Ulrich Chief Executive Officer of Registrant since April 1994,
Chairman of the Board and Chairman of the Executive Committee of Registrant
since July 1994 and Chairman and Chief Executive Officer of Target since
1987.

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.

Kenneth B. Woodrow President of Target since 1994, Vice Chairman of Target
from 1993 to 1994 and Executive Vice President of Target from 1989 to 1993.

Larry V. Gilpin Senior Vice President of Target since 1981.

Robert G. McMahon Senior Vice President of Target since 1991 and Vice
President of Target from 1990 to 1991. Prior to joining Target in 1990, Mr.
McMahon was Chief Executive Officer of Bartley Lindsay Co., a privately held
company that was subject to an involuntary petition filed in June 1990 under
Chapter 11 of the Federal Bankruptcy Code.

John E. Pellegrene Senior Vice President of Target since 1988.

Gregg W. Steinhafel Executive Vice President of Target since 1994 and Senior
Vice President and General Merchandise Manager of Target from 1987 to 1994.

Paul W. Sauser President and Chief Operating Officer of Mervyn's since 1993
and Senior Vice President and General Merchandise Manager of Target from 1989
to 1993.

Raj Joneja Executive Vice President of Mervyn's since 1994. Vice President of
Amcena Corporation (a retail company) from 1989 to 1994.

James T. Hale Senior Vice President, Secretary and General Counsel of
Registrant since 1981.

Douglas A. Scovanner Senior Vice President and Chief Financial Officer of
Registrant since 1994. Treasurer of Registrant in 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.

Gerald L. Storch Senior Vice President of Registrant since 1993. Principal
with McKinsey & Company (a consulting firm) from 1982 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.
-------
Dividends Declared Per Share and Common Stock Price, Page 31 of Registrant's
1994 Annual Report to Shareholders are incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA.
------------------------
The data on years 1990-1994 in the Summary Financial and Operating Data
(excluding Other Data), Page 33; Notes to Consolidated Financial Statements,
Pages 21, 23, 25, 27 and 29-31 (excluding years 1989-1991 on page 21) and the
Report of Independent Auditors, Page 32 of Registrant's 1994 Annual Report to
Shareholders are incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------
Management's Discussion and Analysis, Pages 14-20; the fourth texual
paragraph of Pension Plans, Page 29, and the second and third texual
paragraphs of Postretirement Health Care Benefits, Page 30 of Registrant's
1994 Annual Report to Shareholders are incorporated herein by reference.

2
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------
Pages 21-31 and 33 (excluding years 1989-1991 on Page 21 and years 1984-1989
and Other Data in the Summary Financial and Operating Data on Page 33) and
the Report of Independent Auditors, Page 32 of Registrant's 1994 Annual
Report to Shareholders are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE.
---------------------
Not Applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
---------------------------------------------------
Election of Directors, Pages 1-7 and Compliance with Section 16(a) of the
Securities Exchange Act of 1934, Page 29 of Registrant's Proxy Statement
dated April 19, 1995, are 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 19-20 of
Registrant's Proxy Statement dated April 19, 1995, are incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
---------------------------------------------------------------
Outstanding Shares and Voting Rights, Pages 27-29 of Registrant's Proxy
Statement dated April 19, 1995, 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 28, 1995,
January 29, 1994 and January 30, 1993.

Consolidated Balance Sheets at January 28, 1995 and January 29, 1994.

Consolidated Statements of Cash Flows for the Years Ended January 28, 1995,
January 29, 1994 and January 30, 1993.

Consolidated Statements of Common Shareholders' Investment for the Years
Ended January 28, 1995, January 29, 1994 and January 30, 1993.

Information which is an integral part of the financial statements: Notes to
Consolidated Financial Statements on Pages 21, 23, 25, 27 and 29-31,
excluding years 1989-1991 on Page 21, and the Report of Independent Auditors
on Page 32 in Registrant's 1994 Annual Report to Shareholders.

FINANCIAL STATEMENT SCHEDULES:

For the Years Ended January 28, 1995, January 29, 1994 and January 30, 1993

II -- Valuation and Qualifying Accounts

b) REPORTS ON FORM 8-K

Not Applicable.

3
<PAGE>

c) EXHIBITS

<TABLE>
<CAPTION>
<S> <C>
(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 ("1992
10-K").

B. By-Laws, as amended through October 12, 1994.
Incorporated by reference to Exhibit 3 to Registrant's Form
10-Q Report for the quarter ended October 29, 1994 ("Third
Quarter 1994 10-Q").

(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&EVA(R)) (a)

B. Director Stock Option Plan of 1995 (b)

C. Executive Incentive Plan (Personal Score) (c)

D. Excess Benefit Plan (d)

E. Supplemental Pension Plan I

F. Executive Long-Term Incentive Plan of 1981, as amended
and restated. (e)

G. Supplemental Pension Plan II

H. Supplemental Pension Plan III

I. Deferred Compensation Plan (f)

J. Deferred Compensation Plan for Directors (g)

K. Income Continuance Policy (h)

L. SMG Income Continuance Policy (i)

M. SMG Executive Deferred Compension Plan

N. Director Deferred Compensation Plan

(11) Statements re Computation of Per Share Earnings

(12) Computations of Ratios

(13) 1994 Annual Report to Shareholders (only those portions
specifically incorporated by reference herein shall be
deemed filed with the Commission)

(16) Not Applicable

(18) Not Applicable

(19) Not Applicable

(21) List of Subsidiaries

(22) Not Applicable

(23) Consent of Independent Auditors

(24) Powers of Attorney

(27) Financial Data Schedule

(28) Not Applicable

(99)(I) Registrant's 11-K Report (filed under Form SE)

(II) Registrant's Proxy Statement dated April 19, 1995 (only
those portions specifically incorporated by reference shall
be deemed filed with the Commission) (j)

</TABLE>

Copies of Exhibits (10)A.-(10)N., (21) and (99)(I) will be furnished
upon written request and payment of Registrant's reasonable expenses
in furnishing the exhibits.

4
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
(a) Incorporated by reference to Exhibit A to Registrant's Proxy Statement
dated April 19, 1995.

(b) Incorporated by reference to Exhibit B to Registrant's Proxy Statement
dated April 19, 1995.

(d) Incorporated by reference to Exhibit (10)D. to Registrant's 1992 10-K.

(e) Incorporated by reference to Exhibit (10)B. to Registrant's Third
Quarter 1994 10-Q.

(f) Incorporated by reference to Exhibit (10)I. to Registrant's 1992 10-K.

(g) Incorporated by reference to Exhibit (10)J. to Registrant's 1992 10-K.

(h) Incorporated by reference to Exhibit (10)A. to Registrant's 1992 10-K.

(i) Incorporated by reference to Exhibit (10)B. to Registrant's 1992 10-K.

(j) Incorporated by reference to Registrant's Proxy Statement dated April
19, 1995 (only those portions specifically incorporated by reference
shall be deemed filed with the Commission).

</TABLE>

(R) EVA is a registered trademark.
-----------------------------------

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/ DOUGLAS A. SCOVANNER
----------------------------------
Douglas A. Scovanner
Senior Vice President and
Chief Financial Officer

Dated: April 18, 1995

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
Chairman of the Board and
Dated: April 18, 1995 Chief Executive Officer

/S/ DOUGLAS A. SCOVANNER
---------------------------------
Douglas A. Scovanner
Senior Vice President and
Dated: April 18, 1995 Chief Financial Officer

/S/ J.A. BOGDAN
---------------------------------
JoAnn Bogdan
Controller and
Dated: April 18, 1995 Chief Accounting Officer

RAND V. ARASKOG MICHELE J. HOOPER
ROBERT A. BURNETT MARY PATTERSON MCPHERSON
LIVIO D. DESIMONE SOLOMON J. TRUJILLO
ROGER A. ENRICO ROBERT J. ULRICH
WILLIAM W. GEORGE JOHN R. WALTER
ROGER L. HALE STEPHEN E. WATSON Directors
BETTY RUTH HOLLANDER

Douglas A. Scovanner, 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/ DOUGLAS A. SCOVANNER
----------------------------------
Douglas A. Scovanner
Dated: April 18, 1995 Attorney-in-Fact

6
<PAGE>

DAYTON HUDSON CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS 1994, 1993 AND 1992

(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
1994.............................. $35 $66 $55 $46
1993.............................. 37 53 55 35
1992.............................. 46 56 65 37
- ----------------------
</TABLE>
(1) Accounts determined to be uncollectible are charged against reserve, net
of collections on accounts previously charged against reserve.

<PAGE>

Exhibit 10E

11-28-94
Date Amended: 12-14-94
Effective: 1-1-95

DAYTON HUDSON CORPORATION

SUPPLEMENTAL PENSION PLAN I

ARTICLE I

GENERAL
-------

Sec. 1.1 Name of Plan. The name of the pension plan set forth herein is
"Dayton Hudson Corporation Supplemental Pension Plan I" (the "Plan"). It was
originally known as the "Dayton-Hudson Corporation Supplemental Pension Plan".

Sec. 1.2 Purpose. The Plan has been established by Dayton Hudson
Corporation (the "Company") to provide retirement income that the Dayton Hudson
Corporation Employees' Retirement Plan (the "DHC Plan") as in effect from time
to time, The Retirement Plan of The J. L. Hudson Company (the "Hudson Plan") as
in effect from time to time, the Mervyn's Pension Plan (the "Mervyn's Plan") as
in effect from time to time, and the Dayton Hudson Corporation Excess Benefit
Plan (the "Excess Plan") as in effect from time to time cannot provide to
certain Participants in such plans because of the limitations imposed by the
Internal Revenue Code of 1986, as amended from time to time, relative to using
deferred compensation in connection with computing pension benefits under
qualified plans. The Plan is intended to be a "top hat plan" as defined in
Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended from time to time, ("ERISA") and shall be
interpreted and administered accordingly.

Sec. 1.3 Qualified Plan. Each of the DHC Plan, the Hudson Plan and the
Mervyn's Plan is sometimes referred to herein as a "Qualified Plan".
<PAGE>

Sec. 1.4 Participation. An employee of the Company or a subsidiary of the
Company becomes and remains a Participant in this Plan only if he is a
Participant in the DHC Plan and/or the Hudson Plan and/or the Mervyn's Plan, and
only if he is a member of a select group of management of the Company or a
subsidiary of the Company and is a highly compensated employee of the Company or
a subsidiary of the Company. In order to meet the criteria of being a member of
a select group of management of the Company or a subsidiary of the Company and
being a highly compensated employee of the Company or a subsidiary of the
Company, the employee must be designated a member of the Senior Management Group
("SMG") by the Chief Executive Officer of the Company or of an equivalent rank
on any revised classification system.

Sec. 1.5 Miscellaneous. The terms in this Plan shall have the same
meaning as those used in the Qualified Plans unless the context clearly
indicates the contrary.

ARTICLE II

PENSION BENEFITS
----------------

Sec. 2.1 Amount of Pension. Each Participant in this Plan shall be
entitled to a pension under this Plan that is the actuarial equivalent of the
excess, if any, of (a) the pension the Participant would be entitled under the
benefit formula of the Qualified Plans applied (i) without respect to the
maximum benefit limitations in said Plans required by Section 415 of the
Internal Revenue Code of 1986, as amended from time to time, (ii) as if Section
4.7(b) of the Qualified Plans read as follows:

2
<PAGE>

normally would be paid, be valued at the amount of bonus that would have
been paid in that year and shall not be included in Certified Earnings in
the year it is paid",

for each year the Participant was a Participant in this Plan, and (iii) as if
Section 4.7 of the Qualified Plans included in Certified Earnings for a Plan
Year compensation that would have been paid in that year in the absence of an
election to defer payment of the compensation to a later date pursuant to the
provisions of a deferred compensation plan, over (b) the pension the Participant
is entitled to receive from the Qualified Plans and the Excess Plan.

Sec. 2.2 Method of Payment. The pension payable under this Plan shall be
paid in a single sum at such time during the calendar year next following the
calendar year in which the Participant's Termination of Employment occurs as may
be determined by the administrative committee under the DHC Plan. Actuarial
equivalents under this Plan shall be determined by the Actuary for the Qualified
Plans using such factors and assumptions as the Actuary considers appropriate
for the purpose.

Sec. 2.3 Vesting. A Participant is entitled to benefits under this Plan
for deferrals of compensation made after January 1, 1993 only if:

a) The Participant has a termination of employment after age 55 and
is entitled to a pension under the DHC Plan, the Hudson's Plan or the
Mervyn's Plan; or

b) The Participant's termination of employment occurred because of a
reduction in force; or

c) The Participant's termination of employment is a result of a
written mutual agreement that contains a release in the form determined by
the Company.

3
<PAGE>

ARTICLE III

MISCELLANEOUS
-------------

Sec. 3.1 Unfunded. Pensions under this Plan shall be unfunded. No
person entitled to a benefit under this Plan shall, by virtue of this Plan, have
any interest in any specific asset or assets of the Company. Such persons have
only an unsecured contract right to receive payments in accordance with this
Plan.

Sec. 3.2 Benefits May Not Be Assigned or Alienated. Except as required
by law, the interests of persons entitled to benefits under this Plan may not
in any manner whatsoever be assigned or alienated, whether voluntarily or
involuntarily, or directly or indirectly.

Sec. 3.3 Not Employment Agreement. This Plan is not an employment
agreement and does not assure the continued employment of any employee or
Participant for any time or period.

Sec. 3.4 Administration. The administrative committee under the DHC Plan
shall control and manage the operations and administration of this Plan and
make all decisions and determinations incident thereto.

Sec. 3.5 Claims Procedure. The administrative committee under the DHC
Plan shall establish a claims procedure consistent with ERISA requirements.

ARTICLE IV

AMENDMENT, TERMINATION AND APPLICABLE LAW
-----------------------------------------

Sec. 4.1 Amendment and Termination. This Plan may be amended or
terminated by the Board of Directors of the Company at any time. No amendment
or termination shall adversely affect a benefit to which a Participant is
entitled under Article II prior to the effective date of such amendment or
termination, unless the Participant becomes entitled to an amount equal to

4
<PAGE>

or greater than such benefit under another plan or practice adopted by the
Company, as a substitute to this Plan.

Sec. 4.2 Applicable Law. The provisions of this Plan shall be construed
and enforced according to the laws of the State of Minnesota to the extent that
such laws are not preempted by the laws of the United States of America. All
controversies, disputes, and claims arising hereunder shall be submitted to the
United States District Court for the District of Minnesota.

<PAGE>

Exhibit 10G

11-29-94
Date Adopted: 12-14-94
Effective: 1-1-95

DAYTON HUDSON CORPORATION

SUPPLEMENTAL PENSION PLAN II

ARTICLE I

GENERAL
-------

Sec. 1.1 Name of Plan. The name of the pension plan set forth herein is
"Dayton Hudson Corporation Supplemental Pension Plan II" (the "Plan").

Sec. 1.2 Purpose. The Plan has been established by Dayton Hudson
Corporation (the "Company") to provide retirement income that the Dayton Hudson
Corporation Employees' Retirement Plan (the "DHC Plan") as in effect from time
to time, The Retirement Plan of The J. L. Hudson Company (the "Hudson Plan") as
in effect from time to time, the Mervyn's Pension Plan (the "Mervyn's Plan") as
in effect from time to time, the Dayton Hudson Corporation Excess Benefit Plan
(the "Excess Plan") as in effect from time to time, and the Dayton Hudson
Corporation Supplemental Pension Plan I ("Supplemental Pension Plan I") as in
effect from time to time cannot provide to certain Participants in such plans
because of the limitations imposed by the Internal Revenue Code of 1986, as
amended from time to time, relative to compensation above a certain maximum in
connection with computing pension benefits under qualified plans. The Plan is
intended to be a "top hat plan" as defined in Sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended
from time to time, ("ERISA") and shall be interpreted and administered
accordingly.

Sec. 1.3 Qualified Plan. Each of the DHC Plan, the Hudson Plan and the
Mervyn's Plan is sometimes referred to herein as a "Qualified Plan".
<PAGE>

Sec. 1.5 Miscellaneous. The terms in this Plan shall have the same
meaning as those used in the Qualified Plans unless the context clearly
indicates the contrary.

ARTICLE II

PENSION BENEFITS
----------------

2
<PAGE>

normally would be paid, be valued at the amount of bonus that would have
been paid in that year and shall not be included in Certified Earnings in
the year it is paid",

for each year the Participant was a Participant in this Plan, (iii) as if
Section 4.7 of the Qualified Plans included in Certified Earnings for a Plan
Year compensation that would have been paid in that year in the absence of an
election to defer payment of the compensation to a later date pursuant to the
provisions of a deferred compensation plan, and (iv) without respect to the
maximum compensation limitation in said Qualified Plans required by Section
401(a)(17) of the Internal Revenue Code of 1986, as amended from time to time,
over (b) the pension the Participant is entitled to receive from the Qualified
Plans, the Excess Plan and Supplemental Pension Plan I and/or would have been
entitled to receive from Supplemental Pension Plan I had the Participant been
vested.

ARTICLE III

MISCELLANEOUS
-------------

Sec. 3.1 Unfunded. Pensions under this Plan shall be unfunded. No person
entitled to a benefit under this Plan shall, by virtue of this Plan, have any
interest in any specific asset or

3
<PAGE>

assets of the Company. Such persons have only an unsecured contract right to
receive payments in accordance with this Plan.

Sec. 3.2 Benefits May Not Be Assigned or Alienated. Except as required by
law, the interests of persons entitled to benefits under this Plan may not in
any manner whatsoever be assigned or alienated, whether voluntarily or
involuntarily, or directly or indirectly.

Sec. 3.3 Not Employment Agreement. This Plan is not an employment
agreement and does not assure the continued employment of any employee or
Participant for any time or period.

Sec. 3.4 Administration. The administrative committee under the DHC Plan
shall control and manage the operations and administration of this Plan and make
all decisions and determinations incident thereto.

Sec. 3.5 Claims Procedure. The administrative committee under the DHC
Plan shall establish a claims procedure consistent with ERISA requirements.

ARTICLE IV

AMENDMENT, TERMINATION AND APPLICABLE LAW
-----------------------------------------

Sec. 4.2 Applicable Law. The provisions of this Plan shall be construed
and enforced according to the laws of the State of Minnesota to the extent that
such laws are not preempted

4
<PAGE>

by the laws of the United States of America. All controversies, disputes, and
claims arising hereunder shall be submitted to the United States District Court
for the District of Minnesota.

<PAGE>

Exhibit 10H

11-29-94
Date Amended: 12-14-94
Effective: 1-1-95

DAYTON HUDSON CORPORATION

SUPPLEMENTAL PENSION PLAN III

ARTICLE I

GENERAL
-------

Sec. 1.1 Name of Plan. The name of the pension plan set forth herein is
"Dayton Hudson Corporation Supplemental Pension Plan III" (the "Plan"). It was
originally known as the "Dayton-Hudson Corporation Supplemental Pension Plan
II".

Sec. 1.2 Purpose. The Plan has been established by Dayton Hudson
Corporation (the "Company") to provide retirement income in addition to the
retirement income provided by the Dayton Hudson Corporation Employees'
Retirement Plan (the "DHC Plan") as in effect from time to time, The Retirement
Plan of The J. L. Hudson Company (the "Hudson Plan") as in effect from time to
time, the Mervyn's Pension Plan (the "Mervyn's Plan") as in effect from time to
time, the Dayton Hudson Corporation Excess Benefit Plan (the "Excess Plan") as
in effect from time to time, the Dayton Hudson Corporation Supplemental Pension
Plan I ("Supplemental Pension Plan I") as in effect from time to time, and the
Dayton Hudson Corporation Supplemental Pension Plan II ("Supplemental Pension
Plan II") as in effect from time to time to certain Participants in such plans.
The Plan is intended to be a "top hat plan" as defined in Sections 201(2),
301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974,
as amended from time to time, ("ERISA") and shall be interpreted and
administered accordingly.
<PAGE>

Sec. 1.3 Qualified Plan. Each of the DHC Plan, the Hudson Plan and the
Mervyn's Plan is sometimes referred to herein as a "Qualified Plan".

Sec. 1.4 Participation. An employee of the Company or a subsidiary of the
Company becomes and remains a Participant in this Plan only if he is a
Participant in the DHC Plan and/or the Hudson Plan and/or the Mervyn's Plan,
only if he is at least age 55 and only if he is a member of a select group of
management of the Company or a subsidiary of the Company and is a highly
compensated employee of the Company or a subsidiary of the Company. In order to
meet the criteria of being a member of a select group of management of the
Company or a subsidiary of the Company and being a highly compensated employee
of the Company or a subsidiary of the Company, the employee must be designated a
member of the Senior Management Group ("SMG") by the Chief Executive Officer of
the Company or of an equivalent rank on any revised classification system and
have a grade 32 or higher under the Company's compensation grading system or an
equivalent grade on any revised grading system.

Sec. 1.5 Miscellaneous. The terms in this Plan shall have the same
meaning as those used in the Qualified Plans unless the context clearly
indicates the contrary.

ARTICLE II

PENSION BENEFITS
----------------

Sec. 2.1 Amount of Pension. Each Participant in this Plan who has a
Termination of Employment under a Qualified Plan after age 55 and who is not
entitled to payments under an Income Continuance Plan or Policy of the Company
and/or a subsidiary of the Company, shall be entitled to a pension under this
Plan that is the actuarial equivalent of the excess, if any, of (a) the pension
the Participant would be entitled under the benefit formula of the Qualified
Plans

2
<PAGE>

applied (i) without respect to the maximum benefit limitations in said Plans
required by Section 415 of the Internal Revenue Code of 1986, as amended from
time to time, (ii) as if Section 4.7(b) of the Qualified Plans read as follows:

"Any bonus earned by a Participant pursuant to a plan or policy of the
Company, that is paid in a calendar year other than the calendar year in
which such bonus would normally be paid under such plan or policy, shall be
included in Certified Earnings in the year it normally would be paid, be
valued at the amount of bonus that would have been paid in that year and
shall not be included in Certified Earnings in the year it is paid",

for each year the Participant was a Participant in the Supplemental Pension Plan
I, (iii) as if Section 4.7 of the Qualified Plans included in Certified Earnings
for a Plan Year compensation that would have been paid in that year in the
absence of an election to defer payment of the compensation to a later date
pursuant to the provisions of a deferred compensation plan, (iv) without respect
to the maximum compensation limitation in said Qualified Plans required by
Section 401(a)(17) of the Internal Revenue Code of 1986, as amended from time to
time, and (v) as if the Participant at Termination of Employment was, for
purposes of applying Appendix B of the Qualified Plans, five years older than
his actual age (except that no Participant shall be deemed at Termination of
Employment to be older than his age on the 65th anniversary of the date of his
birth) over (b) the pension the Participant is entitled to receive from the
Qualified Plans, the Excess Plan, Supplemental Pension Plan I and Supplemental
Pension Plan II.

3
<PAGE>

committee under the DHC Plan. Actuarial equivalents under this Plan shall be
determined by the Actuary for the Qualified Plans using such factors and
assumptions as the Actuary considers appropriate for the purpose.

ARTICLE III

MISCELLANEOUS
-------------

Sec. 3.1 Unfunded. Pensions under this Plan shall be unfunded. No person
entitled to a benefit under this Plan shall, by virtue of this Plan, have any
interest in any specific asset or assets of the Company. Such persons have only
an unsecured contract right to receive payments in accordance with this Plan.

Sec. 3.2 Benefits May Not Be Assigned or Alienated. Except as required by
law, the interests of persons entitled to benefits under this Plan may not in
any manner whatsoever be assigned or alienated, whether voluntarily or
involuntarily, or directly or indirectly.

Sec. 3.3 Not Employment Agreement. This Plan is not an employment
agreement and does not assure the continued employment of any employee or
Participant for any time or period.

Sec. 3.4 Administration. The administrative committee under the DHC Plan
shall control and manage the operations and administration of this Plan and make
all decisions and determinations incident thereto.

Sec. 3.5 Claims Procedure. The administrative committee under the DHC
Plan shall establish a claims procedure consistent with ERISA requirements.

4
<PAGE>

ARTICLE IV

AMENDMENT, TERMINATION AND APPLICABLE LAW
-----------------------------------------

<PAGE>

Exhibit 10M

11-29-94
Adopted: 12-14-94
Effective: 1-1-97

DAYTON HUDSON CORPORATION
SMG EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE I
GENERAL
-------

Sec. 1.1 Name of Plan. The name of the Plan set forth herein is the
Dayton Hudson Corporation SMG Executive Deferred Compensation Plan. It is
referred to herein as the "Plan".

Sec. 1.2 Purpose. The purpose of the Plan is to provide a means whereby
Dayton Hudson Corporation (the "Company") may afford financial security to a
select group of employees of the Company and its subsidiaries who have rendered
and continue to render valuable services to the Company or its subsidiaries and
who make an important contribution towards the Company's continued growth and
success, by providing for additional future compensation so that such employees
may be retained and their productive efforts encouraged.

Sec. 1.3 Effective Date. The Effective Date of the Plan is January 1,
1997.

Sec. 1.4 Company. "Company" means all of the following:

(a) Dayton Hudson Corporation, a Minnesota corporation.

(b) Any successor of Dayton Hudson Corporation (whether direct or
indirect, by purchase of a majority of the outstanding voting stock of
Dayton Hudson Corporation or all or substantially all of the assets of
Dayton Hudson Corporation, or by merger, consolidation or otherwise).

(c) Any person that becomes liable for the obligations hereunder of the
entities specified in (a) and (b) above by operation of law.

Sec. 1.5 Participating Employers. The Company is a Participating Employer
in the Plan. With the consent of the Company, by action of the Board or any
duly authorized officer, any wholly-owned subsidiary of the Company may, by
action of its board of directors or any duly authorized officer, also become a
Participating Employer in the Plan effective as of the date specified by it in
its adoption of the Plan; but the subsidiary shall cease to be a Participating
Employer on the date it ceases to be a wholly-owned subsidiary of the Company.
The other Participating Employers on the Effective Date are:
<PAGE>

Dayton's Commercial Interiors, Inc. (Minnesota)
Dayton's Travel Service, Inc. (Minnesota)
Mervyn's (California)
DHC Milwaukee, Inc. (Wisconsin)
DHC Wisconsin, Inc. (Wisconsin)
Marshall Field & Company (Delaware)
Marshall Field Stores, Inc. (Delaware)
Retailers National Bank

Sec. 1.6 Construction and Applicable Law. The Plan is intended to be an
unfunded benefit plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,
subject to the applicable requirements of ERISA. The Plan shall be administered
and construed consistently with said intent. It shall also be construed and
administered according to the laws of the State of Minnesota to the extent such
laws are not preempted by laws of the United States of America. All
controversies, disputes, and claims arising hereunder shall be submitted to the
United States District Court for the District of Minnesota.

Sec. 1.7 Rules of Construction. The Plan shall be construed in accordance
with the following:

(a) Headings at the beginning of articles and sections hereof are for
convenience of reference, shall not be considered as part of the text
of the Plan, and shall not influence its construction.

(b) Capitalized terms used in the Plan shall have their meaning as defined
in the Plan unless the context clearly indicates to the contrary.

(c) All pronouns and any variations thereof shall be deemed to refer to
the masculine or feminine as the identity of the person or persons may
require. As the context may require, the singular may be read as the
plural and the plural as the singular.

(d) 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) 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.

2
<PAGE>

ARTICLE II
DEFINITIONS
-----------

Sec. 2.1 Base Salary. "Base Salary" is the salary an Employee is
expected to earn in a Benefit Deferral Period, assuming the Employee is employed
for the full Benefit Deferral Period.

Sec. 2.2 Beneficiary. "Beneficiary" means the person or persons
designated as such in accordance with Article VI.

Sec. 2.3 Benefit Deferral Period. "Benefit Deferral Period" means that
period of one Plan Year as determined pursuant to Article IV over which a
Participant defers a portion of such Participant's Base Salary and/or Bonus.

Sec. 2.4 Bonus. "Bonus" is the bonus, under any bonus plan of a
Participating Employer. Any part of a "Bonus" earned in a Benefit Deferral
Period, but otherwise payable in the year following the Benefit Deferral Period
is governed by the deferral election made for the Benefit Deferral Period.

Sec. 2.5 Board. "Board" means the board of directors of the Company, and
includes any committee thereof authorized to act for said board of directors.

Sec. 2.6 Continuing Participating Salary. "Continuing Participating
Salary" shall be set by the Vice President of Personnel. The "Continuing
Participating Salary" shall be within $1,000 of 1.25 times the amount determined
under Code Section 414(q)(1)(C). The amount is $50,000 (as indexed for cost of
living increases for each calendar year after 1987 as provided in the applicable
Treasury regulations) for the prior year.

Sec. 2.7 Credited Service. "Credited Service" of a Participant means the
number of years of service for vesting purposes a Participant would have under
the applicable defined benefit pension plan of the Company and/or a
Participating Employer.

Sec. 2.8 Crediting Rate Alternative. "Crediting Rate Alternative" means
the S&P Crediting Rate or the Variable Interest Crediting Rate.

Sec. 2.9 Cumulative Deferral Amount. "Cumulative Deferral Amount" means
the total cumulative amount by which a Participant's Base Salary and/or Bonus
must be reduced over the period prescribed in Section 4.1. If for a Plan Year
a Matching Allocation for a Participant pursuant to the SRSP cannot be made
because the Before Tax Deposits or After Tax Deposits elected by the Employee
are reduced to comply with the provisions of the SRSP, "Cumulative Deferral
Amount" also includes the amount of the Matching Allocation that cannot be made.
"Cumulative Deferral Amount" also includes amounts transferred from the HCCAP.

Sec. 2.10 Deferral Account. "Deferral Account" means the accounts
maintained on the books of account of the Company pursuant to Section 4.2.

3
<PAGE>

Sec. 2.11 Employee. "Employee" means any person employed by a
Participating Employer on a salaried basis.

Sec. 2.12 Enhancement. "Enhancement" means an additional .1667% per
month added to the S&P Crediting Rate and the Variable Interest Crediting Rate.

Sec. 2.13 Enrollment Agreement. "Enrollment Agreement" means the
written agreement entered into by the Company and an Employee pursuant to which
the Employee becomes a Participant in the Plan. In the sole discretion of the
Company, authorization forms filed by any Participant by which the Participant
makes the elections provided for by this Plan may be treated as a completed and
fully executed Enrollment Agreement for all purposes under the Plan.

Sec. 2.14 ERISA. "ERISA" means the Employee Retirement Income Security
Act of 1974 as from time to time amended.

Sec. 2.15 HCCAP. "HCCAP" is the Company's Highly Compensated Capital
Accumulation Plan.

Sec. 2.16 Initial Participating Salary. "Initial Participating Salary"
shall be set by the Vice President of Personnel. The "Initial Participating
Salary" shall be within $1,000 of 1.3 times the amount determined under Code
Section 414(q). The amount is $50,000 (as indexed for cost of living increases
for each calendar year after 1987 as provided in the applicable Treasury
regulations) for the prior year. For 1995 the amount is $85,000.

Sec. 2.17 Named Fiduciary. The Company and the Vice President of
Personnel are a "Named Fiduciary" for purposes of ERISA with authority to
control and manage the operation and administration of the Plan. Other persons
are also Named Fiduciaries under ERISA if so provided thereunder or if so
identified by the Company, by action of the Board or the Chief Executive
Officer. Such other person or persons shall have such authority to control or
manage the operation and administration of the Plan as may be provided by ERISA
or as may be allocated by the Company, by action of the Board or the Chief
Executive Officer or the Vice President of Personnel.

Sec. 2.18 Participant. "Participant" means an eligible Employee who has
filed a completed and executed Enrollment Agreement or authorization form with
the Company and is participating in the Plan in accordance with the provisions
of Article IV. "Participant" also means an Employee of the Company who has a
Cumulative Deferral Amount based on Matching Allocation that could not be made
to the SRSP.

Sec. 2.19 Person. "Person" means an individual, partnership,
corporation, estate, trust, or other entity.

Sec. 2.20 Plan Year. "Plan Year" means the period commencing with the
Effective Date and ending December 31, 1997 and each subsequent calendar year.

4
<PAGE>

Sec. 2.21 Reduced Salary. "Reduced Salary" is the salary below which a
Participant can not reduce his or her Base Salary. The "Reduced Salary" for a
Benefit Deferral Period shall be set by the Vice President of Personnel. The
"Reduced Salary" shall be within $1,000 of the amount expected to be determined
under Code Section 414(q)(1)(C). The amount is $50,000 (as indexed for cost of
living increases for each calendar year after 1987 as provided in the applicable
Treasury regulations) for the year. For 1995 the amount is $68,000.

Sec. 2.22 S&P Crediting Rate. "S&P Crediting Rate" means the earnings or
losses for a month on the S&P Index Fund of the SRSP.

Sec. 2.23 SMG. A "SMG" is a member of the Senior Management Group of the
Company or a Participating Employer, as that term is defined by the Vice
President of Personnel.

Sec. 2.24 SRSP. "SRSP" is the Dayton Hudson Corporation Supplemental
Retirement, Savings, and Employee Stock Ownership Plan.

Sec. 2.25 Termination of Employment. The "Termination of Employment" of
an employee from his Participating Employer for purposes of the Plan shall be
deemed to occur upon his or her resignation, discharge, retirement, death,
failure to return to active work at the end of an authorized leave of absence or
the authorized extension or extensions thereof, failure to return to work when
duly called following a temporary layoff, or upon the happening of any other
event or circumstance which, under the policy of his Participating Employer as
in effect from time to time, results in the termination of the employer-employee
relationship; provided, however, that "Termination of Employment" shall not be
deemed to occur upon a transfer between any combination of Participating
Employers, affiliates, and predecessor employers.

Sec. 2.26 Variable Interest Crediting Rate. "Variable Interest
Crediting Rate" means the earnings or losses for a month on the Variable
Interest Fund of the SRSP.

Sec. 2.27 Year of Vesting. A "Year of Vesting" is a full year of
participation under HCCAP or a full year of participation in a deferred
compensation plan of the Company.

ARTICLE III
ELIGIBILITY
-----------

Sec. 3.1 Eligibility. An Employee shall be a Participant while, and only
while, he or she is a regular employee of a Participating Employer, subject to
the following:

(a) An Employee will become a Participant only if he or she has a Base
Salary equal to or greater than the Initial Participating Salary.

(b) An Employee must be an SMG, or he or she cannot become a Participant.

5
<PAGE>

(c) If an employee's Base Salary is below the Continuing Participating
Salary, he or she will continue to be a Participant, but no further
deferrals will be allowed and no SRSP match will be added to the
Cumulative Deferral Amount.

(d) The employee must sign an enrollment and insurance consent form, in
the form that the Company determines in order to defer Base Salary
and/or Bonus. The insurance consent form will allow Company to
purchase life insurance on the employee with the Company as
beneficiary.

Sec. 3.2 No Guarantee of Employment. Participation in the Plan does not
constitute a guarantee or contract of employment with any Participating
Employer. Such participation shall in no way interfere with any rights a
Participating Employer would have in the absence of such participation to
determine the duration of the employee's employment.

ARTICLE IV
PARTICIPATION AND BENEFITS
--------------------------

Sec. 4.1 Election to Participate. Any Employee of a Participating
Employer who is eligible to participate may enroll in the Plan by filing a
completed and fully executed Enrollment Agreement or authorization form with the
Company. Pursuant to said Enrollment Agreement or authorization form, the
Employee shall irrevocably designate a dollar amount by which the Base Salary
and/or the percentage of the Bonus of such Participant would be reduced over the
Benefit Deferral Period next following the execution of the Enrollment
Agreement, provided, however, that:

(a) Minimum Deferral. The reduction of Base Salary for any Plan Year
shall not be less than Five Thousand Dollars ($5,000.00).

(b) Reduction in Earnings. Except as otherwise provided in this Section
4.1, the Base Salary and/or Bonus of the Participant for the Benefit
Deferral Period shall be reduced by the amount specified in the
Enrollment Agreement (including any authorization form) applicable to
such Plan Year.

(c) Maximum Reduction in Earnings. A Participant may not elect a
Cumulative Deferral Amount that would cause the reduction in Base
Salary in any Plan Year to exceed eighty percent (80%) of the Base
Salary and ninety percent (90%) of the Bonus payable during such Plan
Year plus the amount of any payout made pursuant to Section 5.2, or
such greater amount or percent of base pay and/or incentive pay or
greater total amount as the Company may permit in its sole discretion.
In no event can Base Salary be reduced below Reduced Salary. In the
event that a Participant elects a Cumulative Deferral Amount that
would violate the limitation described in this paragraph (c), the
election shall be valid except that the Cumulative Deferral Amount so
elected shall automatically be reduced to

6
<PAGE>

comply with such limitation, whichever is most appropriate in the sole
discretion of the Company.

Sec. 4.2 Deferral Accounts. The Company shall establish and maintain
separate Deferral Accounts for each Participant. The amount by which a
Participant's Base Salary or Bonus are reduced pursuant to Section 4.1 shall be
credited by the Company to the Participant's Deferral Accounts at the end of the
month in which such Base Salary or Bonus would otherwise have been paid. The
Participant's Deferral Account shall be credited with the annual SRSP lost
Matching Allocation on the last day of February following the year of the lost
Matching Allocation. Such Deferral Accounts shall be debited by the amount of
any payments made by the Company to the Participant or the Participant's
Beneficiary pursuant to this Plan. A separate Deferral Account shall be
maintained for each type of deferral election made and for each Crediting Rate
Alternative.

Sec. 4.3 HCCAP. All persons who become Participants in this Plan on
January 1, 1997 will have the balance of their HCCAP Account transferred to this
Plan effective January 1, 1997. All persons who become Participants in this
Plan after January 1, 1997 will have the balance in their HCCAP account
transferred on the January 1 they become Participants. The Deferral Accounts
transferred from HCCAP will be paid in immediate lump sum payouts after
Termination of Employment.

Sec. 4.4 Crediting Rate Alternatives. The Participant shall select the
Crediting Rate Alternatives, using full percentages, that are to be applied to
his or her Deferral Accounts. Participants may change their Crediting Rate
Alternatives quarterly (January, April, July or October) by completing a Rate of
Return Alternative Change Form. The Change Form must be received by the
Compensation Department of the Company at least fifteen days and not more than
forty days before the beginning of the applicable quarter. If a Participant
does not make an election, the Crediting Rate Alternative will be the S&P
Crediting Rate.

Sec. 4.5 Benefit Payment Elections. At the time a Participant executes an
Enrollment Agreement, he or she must also elect the method of benefit payment
and the time to start the benefit. The elections are to be made for each Plan
Year.

(a) Method of Benefit Payment. Benefits for each Plan Year can be paid in
a lump sum, five annual installments or ten annual installments.

(b) Commencement of Benefit. The benefit for each Plan Year may be
started as soon as possible following Termination of Employment or
one year following Termination of Employment.

Sec. 4.6 Crediting. Each Deferral Account will be credited at the end of
a month at the following rates on the balance in the Deferral Account on the
first day of the month.

7
<PAGE>

(a) Employee. Each Deferral Account of an Employee will be credited using
the Crediting Rate Alternative plus the Enhancement.

(b) Terminated Employee. Each Deferral Account of an Employee who has had
a Termination of Employment will be credited using the Crediting Rate
Alternative.

(c) Vesting. Each Employee who has a Termination of Employment and does
not have five Years of Vesting will have his or her Deferral Accounts
revalued using only the Crediting Rate Alternative and not receiving
the Enhancement. Provided, however, if an Employee's Termination of
Employment is because of death or permanent and total disability, the
Employee will be treated as if he or she have five years of vesting.

Sec. 4.7 Time of Payment. If a Participant has a Termination of
Employment after age fifty-five or an involuntary termination after age fifty
with ten years of Credited Service, the participant's Deferral Accounts will be
paid pursuant to his or her elections. If a Participant has a Termination of
Employment that does not qualify under the first sentence of this section, the
Participant's Deferral Accounts will be paid in a lump sum as soon as possible
following Termination of Employment.

Sec. 4.8 Statement of Accounts. The Company shall submit to each
Participant, within one hundred twenty days after the close of each Plan Year, a
statement in such form as the Company deems desirable, setting forth the balance
standing to the credit of each Participant in his Deferral Accounts.

ARTICLE V
CERTAIN BENEFIT PAYMENTS
------------------------

Sec. 5.1 Termination of Enrollment in Plan. With the written consent of
the Company, a Participant may terminate his or her enrollment in the Plan by
filing with the Company a written request to terminate enrollment. The Company
will consent to the termination of a Participant's enrollment in the Plan in the
event of an unforeseeable financial emergency of the Participant. An
unforeseeable financial emergency shall mean an unexpected need for cash arising
from an illness, casualty loss, sudden financial reversal or other such
unforeseeable occurrence. Cash needs arising from foreseeable events such as
the purchase of a house or education expenses for children shall not be
considered to be the result of an unforeseeable financial emergency. Upon
termination of enrollment, no further reductions shall be made in the
Participant's Base Salary or Bonus pursuant to his or her Enrollment Agreement,
and the Participant shall immediately cease to be eligible for any benefits
under the Plan other than payments from his or her Deferral Accounts. In its
sole discretion, the Committee may pay the Deferral Accounts on a date earlier
than the Participant's Termination of Employment with the Participating
Employer, in which event the amounts shall be calculated as if the Participant
had a Termination of Employment with the Participating Employer on the date of
such payment.

8
<PAGE>

Following termination of enrollment in the Plan, a Participant's Deferral
Account shall be credited at the Crediting Rate Alternative with no Enhancement.

Sec. 5.2 Early Payment. The Company shall pay to the Participant, if he
is an Employee of the Company or a Participating Employer, the amount by which
the Participant's Base Salary and/or Bonus were reduced in any Plan year
pursuant to Section 4.1 during the eighth (8th) year following the Plan Year
("Early Payment"), provided that such amount has not previously been paid out
under other provisions of the Plan. Such Early Payment shall not include any
amounts credited to the Participant's Deferral Account pursuant to Section 4.6
or the SRSP Lost Matching Contribution. Notwithstanding any other provisions of
this Plan, the Participant may elect prior to the beginning of any year in which
such an Early Payment will be made to him or her to deposit all or a part of
such amount in his or her Deferral Accounts.

Sec. 5.3 Survivor Benefits

(a) Death While Employed. If a Participant dies while employed by a
Participating Employer, the Company will pay the amount in his or her
Deferral Accounts to the Participant's Beneficiary as soon as possible
after death in a lump sum.

(b) Death After Termination of Employment. If a Participant dies after
Termination of Employment, and has not received all of his or her
payments, and the Participant's Beneficiary is his or her spouse,
payments shall be made to the spouse pursuant to the Participant's
payout elections. If the Participant's spouse dies before receiving
all payments, the remaining amount in the Deferral Accounts will be
paid in a lump sum as soon as possible after the spouse's death to the
spouse's estate. If a Participant dies after Termination of
Employment, has not received all of his or her payments, and the
Participant's Beneficiary is a Person other than his or her spouse,
then payment shall be made in a lump sum as soon as possible after the
Participant's death.

Sec. 5.4 Small Benefit. In the event that the Company determines in its
sole discretion that the amount of any benefit is too small to make it
administratively convenient to pay such benefit over time, the Company may pay
the benefit in the form of a lump sum, notwithstanding any provision of this
Article or Article IV to the contrary.

Sec. 5.5 Withholding. To the extent required by the law in effect at the
time payments are made, the Company shall withhold from payments made hereunder
or any other payment owing by the Company to the Participant the taxes required
to be withheld by the federal or any state or local government.

Sec. 5.6 Lump Sum Payout Option. Notwithstanding any other provisions of
the Plan, at any time after Termination of Employment, but not later than ten
years after Termination of Employment of the Participant, a Participant or a
Beneficiary of a deceased Participant may elect to receive an immediate lump sum
payment of 100% of the balance of his or her Deferral

9
<PAGE>

Accounts, if any, reduced by a penalty, which shall be forfeited to the Company,
equal to eight percent of the amount of his or her Deferral Accounts he or she
elected to receive, in lieu of payments in accordance with the form previously
elected by the Participant, or provided elsewhere in this Plan. However, the
penalty shall not apply if the Company determines, based on advice of counsel or
a final determination by the Internal Revenue Service or any court of competent
jurisdiction, that by reason of the foregoing provision any Participant or
Beneficiary has recognized or will recognize gross income for federal income tax
purposes under this Plan in advance of payment to him of Plan benefits. The
Company shall notify all Participants (and Beneficiaries of deceased
Participants) of any such determination. Whenever any such determination is
made, the Company shall refund all penalties which were imposed hereunder on
account of making lump sum payments at any time during or after the first year
to which such determination applies (i.e., the first year when gross income is
recognized for federal income tax purposes). Interest shall be paid on any such
refunds at Variable Interest Crediting Rate for each Plan Year, compounded
annually. The Committee may also reduce or eliminate the penalty if it
determines that this action will not cause any Participant or Beneficiary to
recognize gross income for federal income tax purposes under this Plan in
advance of payment to him of Plan benefits.

ARTICLE VI
BENEFICIARY DESIGNATION
-----------------------

Each Participant shall have the right, at any time, to designate any person
or persons as Beneficiary or Beneficiaries to whom payment under this Plan shall
be made in the event of the Participant's death prior to complete distribution
to the Participant of the benefits due under the Plan. Each Beneficiary
designation shall be come effective only when filed in writing with the Company
during the Participant's lifetime on a form prescribed by the Company.

The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. Any finalized divorce or marriage
(other than a common law marriage) of a Participant subsequent to the date of
filing of a Beneficiary designation form shall revoke such designation unless in
the case of divorce the previous spouse was not designated as Beneficiary and
unless in the case of marriage the Participant's new spouse had previously been
designated as Beneficiary.

If a Participant fails to designate a Beneficiary as provided above, or if
his or her Beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of the
Participant's benefits, then the Company shall direct the distribution of such
benefits to the Participant's spouse, if any, and if there is no spouse to the
Participant's estate.

10
<PAGE>

ARTICLE VII
ADMINISTRATION OF PLAN
----------------------

Sec. 7.1 Administration by Company. The Company is the "administrator"
of the Plan for purposes of ERISA. Except as expressly otherwise provided
herein, the Company shall control and manage the operation and administration
of the Plan, make all decisions and determinations incident thereto, and
construe the provisions thereof. In carrying out its Plan responsibilities,
the Company shall have discretionary authority to construe the terms of the
Plan. Except in cases where the Plan expressly requires action on behalf of
the Company to be taken by the Board, action on behalf of the Company may be
taken by any of the following:

(a) The Board.

(b) The Chief Executive Officer of the Company.

(d) Any person or persons, natural or otherwise, or committee, to whom
responsibilities for the operation and administration of the Plan are
allocated by the Company, by resolution of the Board or by written
instrument executed by the Chief Executive Officer or the Vice
President of Personnel of the Company and filed with its permanent
records, but action of such person or persons or committee shall be
within the scope of said allocation.

Sec. 7.2 Certain Fiduciary Provisions. For purposes of the Plan:

(a) Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.

(b) A Named Fiduciary, or a fiduciary designated by a Named Fiduciary
pursuant to the provisions of the Plan, may employ one or more persons
to render advice with regard to any responsibility such fiduciary has
under the Plan.

(c) Any time the Plan has more than one Named Fiduciary, if pursuant to
the Plan provisions fiduciary responsibilities are not already
allocated among such Named Fiduciaries, the Company, by action of the
Board or its chief executive officer, may provide for such allocation.

(d) Unless expressly prohibited in the appointment of a Named Fiduciary
which is not the Company acting as provided in Sec. 7.1, such Named
Fiduciary by written instrument may designate a person or persons
other than such Named Fiduciary to carry out any or all of the
fiduciary responsibilities under the Plan of such Named Fiduciary.

11
<PAGE>

(e) A person who is a fiduciary with respect to the Plan, including a
Named Fiduciary, shall be recognized and treated as a fiduciary only
with respect to the particular fiduciary functions as to which such
person has responsibility.

Sec. 7.3 Evidence. Evidence required of anyone under this Plan may be by
certificate, affidavit, document, or other instrument which the person acting in
reliance thereon considers to be pertinent and reliable and to be signed, made,
or presented by the proper party.

Sec. 7.4 Records. Each Participating Employer, each fiduciary with
respect to the Plan, and each other person performing any functions in the
operation or administration of the Plan shall keep such records as may be
necessary or appropriate in the discharge of their respective functions
hereunder, including records required by ERISA or any other applicable law.
Records shall be retained as long as necessary for the proper administration of
the Plan and at least for any period required by ERISA or other applicable law.

Sec. 7.5 General Fiduciary Standard. Each fiduciary shall discharge his
duties with respect to the Plan solely in the interests of Participants and with
the care, skill, prudence, and diligence under the circumstances then prevailing
that a prudent man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like
aims.

Sec. 7.6 Waiver of Notice. Any notice required hereunder may be waived by
the person entitled thereto.

Sec. 7.7 Agent for Legal Process. The Company shall be the agent for
service of legal process with respect to any matter concerning the Plan, unless
and until the Company designates some other person as such agent.

Sec. 7.8 Indemnification. In addition to any other applicable provisions
for indemnification, the Participating Employers jointly and severally agree to
indemnify and hold harmless, to the extent permitted by law, each director,
officer, and employee of the Participating Employers against any and all
liabilities, losses, costs, or expenses (including legal fees) of whatsoever
kind and nature which may be imposed on, incurred by, or asserted against such
person at any time by reason of such person's services as a fiduciary in
connection with the Plan, but only if such person did not act dishonestly, or in
bad faith, or in willful violation of the law or regulations under which such
liability, loss, cost, or expense arises.

ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN
---------------------------------

12
<PAGE>

however, that no amendment shall be effective as to the benefits under the Plan
payable to any Participant which have accrued prior to the date of such
amendment, but may change the Crediting Rate Alternatives to be credited to such
benefits following the date of the amendment. Written notice of any amendment
shall be given each Participant then participating in the Plan.

Sec. 8.2 Termination.

(a) Company's Right to Terminate. The Board of Directors of the Company
may at any time terminate the Plan, if in its judgement, the
continuance of the Plan, the tax, accounting, insurance or other
consequences thereof, or potential payouts thereunder would not be in
the best interests of the Company, provided, however, that the Company
may only terminate this Plan with respect to any particular
participant if it terminated the Plan with respect to all similarly
situated Participants.

(b) Automatic Termination. The Plan shall terminate upon a determination
by the Company that a final decision of a court of competent
jurisdiction or the U.S. Department of Labor holding that the Plan is
not maintained "primarily for the purpose of providing deferred
compensation for a select group of management or highly-compensated
employees," and therefore is subject to Parts 2, 3 and 4 of Title I of
ERISA, would require that the Plan be funded and would result in
immediate taxation to Participants of their vested Plan benefits.

(c) Payments Upon Termination. Upon any Plan termination under this
Section 8.2, the Participants will be deemed to have terminated their
enrollment under the Plan as of the date of such termination. Base
salary and bonus shall cease to be deferred as of date determined by
the Company, and the Participating Employer will pay all Participants
the value of each Participant's Deferral Accounts, determined as if
each Participant had a Termination of Employment on the date of such
termination of the Plan, at such times and pursuant to such terms and
conditions as the Board of Directors of the Company in its sole
discretion shall determine.

ARTICLE IX
MISCELLANEOUS
-------------

Sec. 9.1 Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors, and assigns shall have no legal or equitable
rights, claims, or interests in any specific property or assets of the Company
or a Participating Employer, nor shall they be beneficiaries of, or have any
rights, claims, or interests in any life insurance policies, annuity contracts,
or the proceeds therefrom owned or which may be acquired by Company
("Policies"). Such Policies or other assets of Participating Employers shall
not be held under any trust (except they may be placed in a Rabbi Trust) for the
benefit of Participants, their Beneficiaries, heirs, successors, or

13
<PAGE>

assigns, or held in any way as collateral security for the fulfilling of the
obligations of Participating Employers under this Plan. Any and all of a
Participating Employer's assets and Policies shall be, and remain, the general,
unpledged, unrestricted assets of the Participating Employer. Participating
Employers obligations under the Plan shall be merely that of an unfunded and
unsecured promise of a Participating Employer to pay money in the future.

Sec. 9.2 Nonassignability. Neither a Participant nor any other person
shall have any right to sell, assign, transfer, pledge, anticipate, mortgage,
commute or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or interest
therein which are, and all rights to which are, expressly declared to be
unassignable and non-transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the payment of any
debts, judgements, alimony or separate maintenance owed by a Participant or any
other person, not be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency

Sec. 9.3 Protective Provisions. Each Participant shall cooperate with the
Company by furnishing any and all information requested by the Company in order
to facilitate the payment of benefits hereunder, taking such physical
examinations as the Company may deem necessary and taking such other relevant
action as may be requested by the Company. If a Participant refuses so to
cooperate, the Company shall have no further obligation to the Participant under
the Plan, other than payment to such participant of the cumulative reductions in
base salary and or bonus theretofore made pursuant to this Plan. If a
Participant commits suicide during the two (2) year period beginning on the
later of (a) the date of adoption of this Plan or (b) the first day of the first
Plan Year of such Participant's participation in the Plan, or if the Participant
makes any material misstatement of information or nondisclosure of medical
history, then no benefits will be payable hereunder to such Participant or his
Beneficiary, other than payment to such Participant of the cumulative reductions
in Base Salary and or Bonus theretofore made pursuant to this Plan, provided,
that in the Company's sole discretion, benefits may be payable in an amount
reduced to compensate the Company for any loss, cost, damage or expense suffered
or incurred by the Company as a result in any way of such misstatement or
nondisclosure.

Sec. 9.4 Validity. In the event any provision of this Plan is held
invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.

Sec. 9.5 Notice. Any notice or filing required or permitted to be given
to the Company under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company, directed to the attention of the President of the Company. Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.

14
<PAGE>

Sec. 9.6 Applicable Law. This Plan shall be governed and construed in
accordance with the laws of the State of Minnesota as applied to contracts
executed and to be wholly performed in such state.

<PAGE>

Exhibit 10N

12-10-94
Adopted: 12-14-94
Effective: 1-1-97

DAYTON HUDSON CORPORATION
DIRECTOR DEFERRED COMPENSATION PLAN

ARTICLE I
GENERAL
-------

Sec. 1.1 Name of Plan. The name of the Plan set forth herein is the
Dayton Hudson Corporation Director Deferred Compensation Plan. It is referred
to herein as the "Plan".

Sec. 1.2 Purpose. The purpose of the Plan is to provide a means whereby
Dayton Hudson Corporation (the "Company") may allow certain directors a way to
defer compensation.

Sec. 1.3 Effective Date. The Effective Date of the Plan is January 1,
1997.

Sec. 1.4 Company. "Company" means all of the following:

(a) Dayton Hudson Corporation, a Minnesota corporation.

(c) Any person that becomes liable for the obligations hereunder of the
entities specified in (a) and (b) above by operation of law.

Sec. 1.6 Construction and Applicable Law. The Plan is intended to be an
unfunded benefit plan maintained for the purpose of providing deferred
compensation for certain directors. The Plan shall be construed and
administered according to the laws of the State of Minnesota. All
controversies, disputes, and claims arising hereunder shall be submitted to the
United States District Court for the District of Minnesota.
<PAGE>

Sec. 1.7 Rules of Construction. The Plan shall be construed in accordance
with the following:

(a) Headings at the beginning of articles and sections hereof are for
convenience of reference, shall not be considered as part of the text
of the Plan, and shall not influence its construction.

(b) Capitalized terms used in the Plan shall have their meaning as defined
in the Plan unless the context clearly indicates to the contrary.

(d) 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) 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.

ARTICLE II
DEFINITIONS
-----------

Sec. 2.1 Beneficiary. "Beneficiary" means the person or persons
designated as such in accordance with Article VI.

Sec. 2.2 Benefit Deferral Period. "Benefit Deferral Period" means that
period of one Plan Year as determined pursuant to Article IV over which a
Participant defers a portion of such Participant's Earnings.

Sec. 2.3 Board. "Board" means the board of directors of the Company, and
includes any committee thereof authorized to act for said board of directors.

Sec. 2.4 Crediting Rate Alternative. "Crediting Rate Alternative" means
the S&P Crediting Rate or the Variable Interest Crediting Rate.

Sec. 2.5 Cumulative Deferral Amount. "Cumulative Deferral Amount" means
the total cumulative amount by which a Participant's Earnings must be reduced
over the period prescribed in Section 4.1.

Sec. 2.6 Deferral Account. "Deferral Account" means the accounts
maintained on the books of account of the Company pursuant to Section 4.2.

2
<PAGE>

Sec. 2.7 Director. "Director" means any person who is a director of the
Company or another Participating Employer but is not an Employee of a
Participating Employer.

Sec. 2.8 Earnings. "Earnings" means the total fees paid to a Participant
for service on the Board (or any committee thereof) or a board of a
Participating Employer.

Sec. 2.9 Employee. "Employee" means any person employed by a
Participating Employer.

Sec. 2.10 Enhancement. "Enhancement" means an additional .1667% per month
added to the S&P Crediting Rate and the Variable Interest Crediting Rate.

Sec. 2.11 Enrollment Agreement. "Enrollment Agreement" means the written
agreement entered into by the Company and a Director pursuant to which the
Director becomes a Participant in the Plan. In the sole discretion of the
Company, authorization forms filed by any Participant by which the Participant
makes the elections provided for by this Plan may be treated as a completed and
fully executed Enrollment Agreement for all purposes under the Plan.

Sec. 2.12 Participant. "Participant" means an eligible Director who has
filed a completed and executed Enrollment Agreement or authorization form with
the Company and is participating in the Plan in accordance with the provisions
of Article IV.

Sec. 2.13 Person. "Person" means an individual, partnership, corporation,
estate, trust, or other entity.

Sec. 2.14 Plan Year. "Plan Year" means the period commencing with the
Effective Date and ending December 31, 1997 and each subsequent calendar year.

Sec. 2.15 Retirement. "Retirement" shall mean when the Director ceases to
be a director of all Participating Employers.

Sec. 2.16 S&P Crediting Rate. "S&P Crediting Rate" means the earnings or
losses for a month on the S&P Index Fund of the SRSP.

Sec. 2.17 SRSP. SRSP is the Dayton Hudson Corporation Supplemental
Retirement, Savings, and Employee Stock Ownership Plan.

Sec. 2.18 Variable Interest Crediting Rate. "Variable Interest Crediting
Rate" means the earnings or losses for a month on the Variable Interest Fund of
the SRSP.

3
<PAGE>

ARTICLE III
ELIGIBILITY
-----------

Sec. 3.1 Eligibility. A Director shall be a Participant while, and only
while, he or she is a director of a Participating Employer, subject to the
following:

(a) The Director must sign an enrollment and insurance consent form, in
the form that the Company determines in order to defer Earnings. The
insurance consent form will allow Company to purchase life insurance
on the Director with the Company as beneficiary.

Sec. 3.2 No Guarantee of Continued Directorship. Participation in the
Plan does not constitute a guarantee or contract with any Participating Employer
guaranteeing that the Director will continue to be a director. Such
participation shall in no way interfere with any rights the shareholders of a
Participating Employer would have in the absence of such participation to
determine the duration of the director's service.

ARTICLE IV
PARTICIPATION AND BENEFITS
--------------------------

Sec. 4.1 Election to Participate. Any Director of a Participating
Employer who is eligible to participate may enroll in the Plan by filing a
completed and fully executed Enrollment Agreement or authorization form with the
Company. Pursuant to said Enrollment Agreement or authorization form, the
Director shall irrevocably designate a dollar amount by which the Earnings of
such Participant would be reduced over the Benefit Deferral Period next
following the execution of the Enrollment Agreement, provided, however, that:

(a) Minimum Deferral. The reduction of Earnings for any Plan Year shall
not be less than Five Thousand Dollars ($5,000.00).

(b) Reduction in Earnings. Except as otherwise provided in this Section
4.1, the Earnings of the Participant for the Benefit Deferral Period
shall be reduced by the amount specified in the Enrollment Agreement
(including any authorization form) applicable to such Plan Year.

(c) Maximum Reduction in Earnings. A Participant may not elect a
Cumulative Deferral Amount that would cause the reduction in Earnings
to exceed one hundred percent (100%) of Earnings payable during such
Plan Year. In the event that a Participant elects a Cumulative
Deferral Amount that would violate the limitation described in this
paragraph (c), the election shall be valid except that the Cumulative
Deferral Amount so elected shall automatically be reduced to comply
with such limitation.

4
<PAGE>

Sec. 4.2 Deferral Accounts. The Company shall establish and maintain
separate Deferral Accounts for each Participant. The amount by which a
Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by
the Company to the Participant's Deferral Accounts at the end of the month in
which such Earnings would otherwise have been paid. Such Deferral Accounts
shall be debited by the amount of any payments made by the Company to the
Participant or the Participant's Beneficiary pursuant to this Plan. A separate
Deferral Account shall be maintained for each type of deferral election made and
for each Crediting Rate Alternative.

Sec. 4.3 Crediting Rate Alternatives. The Participant shall select the
Crediting Rate Alternatives, using full percentages, that are to be applied to
his or her Deferral Accounts. Participants may change their Crediting Rate
Alternatives quarterly (January, April, July or October) by completing a Rate of
Return Alternative Change Form. The Change Form must be received by the
Compensation Department of the Company at least fifteen days and not more than
forty days before the beginning of the applicable quarter. If a Participant
does not make an election, the Crediting Rate Alternative will be the S&P
Crediting Rate.

Sec. 4.4 Benefit Payment Elections. At the time a Participant executes an
Enrollment Agreement, he or she must also elect the method of benefit payment
and the time to start the benefit. The elections are to be made for each Plan
Year.

(a) Method of Benefit Payment. Benefits for each Plan Year can be paid in
a lump sum, five annual installments or ten annual installments.

(b) Commencement of Benefit. The benefit for each Plan Year may be
started as soon as possible following Retirement or one year following
Retirement.

Sec. 4.5 Crediting. Each Deferral Account will be credited at the end of
a month at the following rates on the balance in the Deferral Account on the
first day of the month.

(a) Director. Each Deferral Account of Director will be credited using
the Crediting Rate Alternative plus the Enhancement.

(b) Former Director. Each Deferral Account of a Director who has had a
Retirement will be credited using the Crediting Rate Alternative.

Sec. 4.6 Statement of Accounts. The Company shall submit to each
Participant, within one hundred twenty days after the close of each Plan Year, a
statement in such form as the Company deems desirable, setting forth the balance
standing to the credit of each Participant in his Deferral Accounts.

5
<PAGE>

ARTICLE V
CERTAIN BENEFIT PAYMENTS
------------------------

Sec. 5.1 Termination of Enrollment in Plan. With the written consent of
the Company, a Participant may terminate his or her enrollment in the Plan by
filing with the Company a written request to terminate enrollment. The Company
will consent to the termination of a Participant's enrollment in the Plan in the
event of an unforeseeable financial emergency of the Participant. An
unforeseeable financial emergency shall mean an unexpected need for cash arising
from an illness, casualty loss, sudden financial reversal or other such
unforeseeable occurrence. Cash needs arising from foreseeable events such as
the purchase of a house or education expenses for children shall not be
considered to be the result of an unforeseeable financial emergency. Upon
termination of enrollment, no further reductions shall be made in the
Participant's Earnings pursuant to his or her Enrollment Agreement, and the
Participant shall immediately cease to be eligible for any benefits under the
Plan other than payments from his or her Deferral Accounts. In its sole
discretion, the Committee may pay the Deferral Accounts on a date earlier than
the Participant's Retirement with the Participating Employer, in which event the
amounts shall be calculated as if the Participant had a Retirement with the
Participating Employer on the date of such payment. Following termination of
enrollment in the Plan, a Participant's Deferral Account shall be credited at
the Crediting Rate Alternative with no Enhancement.

Sec. 5.2 Survivor Benefits

(a) Death While Employed. If a Participant dies while a Director of a
Participating Employer, the Company will pay the amount in his or her
Deferral Accounts to the Participant's Beneficiary as soon as possible
after death in a lump sum.

(b) Death After Retirement. If a Participant dies after Retirement, and
has not received all of his or her payments, and the Participant's
Beneficiary is his or her spouse, payments shall be made to the spouse
pursuant to the Participant's payout elections. If the Participant's
spouse dies before receiving all payments, the remaining amount in the
Deferral Accounts will be paid in a lump sum as soon as possible after
the spouse's death to the spouse's estate. If a Participant dies
after Retirement, has not received all of his or her payments, and the
Participant's Beneficiary is a Person other than his or her spouse,
then payment shall be made in a lump sum as soon as possible after the
Participant's death.

Sec. 5.3 Small Benefit. In the event that the Company determines in its
sole discretion that the amount of any benefit is too small to make it
administratively convenient to pay such benefit over time, the Company may pay
the benefit in the form of a lump sum, notwithstanding any provision of this
Article or Article IV to the contrary.

Sec. 5.4 Withholding. To the extent required by the law in effect at the
time payments are made, the Company shall withhold from payments made hereunder
or any other payment

6
<PAGE>

owing by the Company to the Participant the taxes required to be withheld by the
federal or any state or local government.

Sec. 5.5 Lump Sum Payout Option. Notwithstanding any other provisions of
the Plan, at any time after Retirement, but not later than ten years after
Retirement of the Participant, a Participant or a Beneficiary of a deceased
Participant may elect to receive an immediate lump sum payment of 100% of the
balance of his or her Deferral Accounts, if any, reduced by a penalty, which
shall be forfeited to the Company, equal to eight percent of the amount of his
or her Deferral Accounts he or she elected to receive, in lieu of payments in
accordance with the form previously elected by the Participant, or provided
elsewhere in this Plan. However, the penalty shall not apply if the Company
determines, based on advice of counsel or a final determination by the Internal
Revenue Service or any court of competent jurisdiction, that by reason of the
foregoing provision any Participant or Beneficiary has recognized or will
recognize gross income for federal income tax purposes under this Plan in
advance of payment to him of Plan benefits. The Company shall notify all
Participants (and Beneficiaries of deceased Participants) of any such
determination. Whenever any such determination is made, the Company shall
refund all penalties which were imposed hereunder on account of making lump sum
payments at any time during or after the first year to which such determination
applies (i.e., the first year when gross income is recognized for federal income
tax purposes). Interest shall be paid on any such refunds at the Variable
Interest Crediting Rate for each Plan Year, compounded annually. The Committee
may also reduce or eliminate the penalty if it determines that this action will
not cause any Participant or Beneficiary to recognize gross income for federal
income tax purposes under this Plan in advance of payment to him of Plan
benefits.

ARTICLE VI
BENEFICIARY DESIGNATION
-----------------------

7
<PAGE>

distribution of the Participant's benefits, then the Company shall direct the
distribution of such benefits to the Participant's spouse, if any, and if there
is no spouse to the Participant's estate.

ARTICLE VII
ADMINISTRATION OF PLAN
----------------------

Sec. 7.1 Administration by Company. The Company is the "administrator" of
the Plan. Except as expressly otherwise provided herein, the Company shall
control and manage the operation and administration of the Plan, make all
decisions and determinations incident thereto, and construe the provisions
thereof. In carrying out its Plan responsibilities, the Company shall have
discretionary authority to construe the terms of the Plan. Except in cases
where the Plan expressly requires action on behalf of the Company to be taken by
the Board, action on behalf of the Company may be taken by any of the following:

(a) The Board.

(b) The Chief Executive Officer of the Company.

Sec. 7.2 Certain Fiduciary Provisions. For purposes of the Plan:

(a) Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.

8
<PAGE>

to carry out any or all of the fiduciary responsibilities under the
Plan of such Named Fiduciary.

Sec. 7.4 Records. Each Participating Employer, each fiduciary with
respect to the Plan, and each other person performing any functions in the
operation or administration of the Plan shall keep such records as may be
necessary or appropriate in the discharge of their respective functions
hereunder, including records required by applicable law. Records shall be
retained as long as necessary for the proper administration of the Plan and at
least for any period required by applicable law.

Sec. 7.6 Waiver of Notice. Any notice required hereunder may be waived by
the person entitled thereto.

9
<PAGE>

ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN
---------------------------------

Sec. 8.1 Amendment. The Board of Directors of the Company may at any
time amend the Plan in whole or in part for any reason, including but not
limited to tax, accounting or insurance changes, which may result in termination
of the Plan for future deferrals, provided, however, that no amendment shall be
effective as to the benefits under the Plan payable to any Participant which
have accrued prior to the date of such amendment, but may change the Crediting
Rate Alternatives to be credited to such benefits following the date of the
amendment. Written notice of any amendment shall be given each Participant then
participating in the Plan.

Sec. 8.2 Termination.

(a) Company's Right to Terminate. The Board of Directors of the Company
may at any time terminate the Plan, if in its judgement, the
continuance of the Plan, the tax, accounting, insurance or other
consequences thereof, or potential payouts thereunder would not be in
the best interests of the Company, provided, however, that the Company
may only terminate this Plan with respect to any particular
Participant if it terminated the Plan with respect to all similarly
situated Participants.

(b) Payments Upon Termination. Upon any Plan termination under this
Section 8.2, the Participants will be deemed to have terminated their
enrollment under the Plan as of the date of such termination.
Earnings shall cease to be deferred as of date determined by the
Company, and the Participating Employer will pay all Participants the
value of each Participant's Deferral Accounts, determined as if each
Participant had a Retirement on the date of such termination of the
Plan, at such times and pursuant to such terms and conditions as the
Board of Directors of the Company in its sole discretion shall
determine.

ARTICLE IX
MISCELLANEOUS
-------------

10
<PAGE>

Employer. Participating Employers obligations under the Plan shall be merely
that of an unfunded and unsecured promise of a Participating Employer to pay
money in the future.

Sec. 9.2 Nonassignability. Neither a Participant nor any other person
shall have any right to sell, assign, transfer, pledge, anticipate, mortgage,
commute or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or interest
therein which are, and all rights to which are, expressly declared to be
unassignable and non-transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the payment of any
debts, judgements, alimony or separate maintenance owed by a Participant or any
other person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency

Sec. 9.3 Protective Provisions. Each Participant shall cooperate with the
Company by furnishing any and all information requested by the Company in order
to facilitate the payment of benefits hereunder, taking such physical
examinations as the Company may deem necessary and taking such other relevant
action as may be requested by the Company. If a Participant refuses so to
cooperate, the Company shall have no further obligation to the Participant under
the Plan, other than payment to such participant of the cumulative reductions in
Earnings theretofore made pursuant to this Plan. If a Participant commits
suicide during the two (2) year period beginning on the later of (a) the date of
adoption of this Plan or (b) the first day of the first Plan Year of such
Participant's participation in the Plan, or if the Participant makes any
material misstatement of information or nondisclosure of medical history, then
no benefits will be payable hereunder to such Participant or his Beneficiary,
other than payment to such Participant of the cumulative reductions in Earnings
theretofore made pursuant to this Plan, provided, that in the Company's sole
discretion, benefits may be payable in an amount reduced to compensate the
Company for any loss, cost, damage or expense suffered or incurred by the
Company as a result in any way of such misstatement or nondisclosure.

Sec. 9.6 Applicable Law. This Plan shall be governed and construed in
accordance with the laws of the State of Minnesota as applied to contracts
executed and to be wholly performed in such state.

<PAGE>

EXHIBIT (11)

DAYTON HUDSON CORPORATION
COMPUTATION OF PER SHARE EARNINGS

(IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------------
January 28, 1995 January 29, 1994 January 30, 1993
---------------- ---------------- ----------------
Primary Computation Earnings Shares Earnings Shares Earnings Shares
- ------------------- -------- ------ -------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>

Net Earnings $ 434 $ 375 $ 383
Less: Dividend requirements on ESOP preferred shares a/ (19) (17) (24)
----- ----- -----
Adjusted net earnings $ 415 $ 358 $ 359
===== ===== =====

Average common shares outstanding 71.6 71.5 71.3

Average number of common share equivalents:
Stock options 0.2 0.1 0.2
Performance shares 0.2 0.2 0.1
----- ----- -----
Adjusted common equivalent shares outstanding--primary 72.0 71.8 71.6
===== ===== =====

PRIMARY EARNINGS PER SHARE $5.77 $4.99 $5.02
===== ===== =====

Fully Diluted Computation
- -------------------------

Net Earnings $ 434 $ 375 $ 383
Less: Earnings impact of ESOP preferred share conversion a/ (13) (12) (17)
----- ----- -----
Adjusted net earnings $ 421 $ 363 $ 366
===== ===== =====

Average common and common equivalent shares--primary 72.0 71.8 71.6
Additional shares attributable to the application of the
treasury stock method 0.1 -- --
Assumed conversion of ESOP preferred shares 4.2 4.3 4.3
----- ----- -----
Adjusted common equivalent shares outstanding--fully diluted 76.3 76.1 75.9
===== ===== =====

FULLY DILUTED EARNINGS PER SHARE $5.52 $4.77 $4.82
===== ===== =====
</TABLE>

a/ With the adoption of Statement of Financial Accounting Standard No.109,
"Accounting for Income Taxes" at the beginning of 1993, 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 2.0 million and 1.6 million for the years ended January 28,
1995 and January 29, 1994, respectively.

<PAGE>

EXHIBIT (12)

DAYTON HUDSON CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
FOR THE FIVE YEARS ENDED JANUARY 28, 1995

(MILLIONS OF DOLLARS)

January 28, January 29, January 30, February 1, February 2,
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Earnings:
Consolidated net earnings.............. $ 434 $ 375 $ 383 $ 301 $ 412
Income taxes........................... 280 232 228 171 249
------ ------ ------ ----- ------
Total earnings....................... 714 607 611 472 661
------ ------ ------ ----- ------

Fixed charges:
Interest expense....................... 439 459 454 421 333
Dividends on preferred stock (pre-tax
basis)............................... 39 39 39 39 39
Interest portion of rental expense..... 56 45 43 39 46
------ ------ ------ ----- ------
Total fixed charges.................. 534 543 536 499 418

Less:
Dividends on preferred stock (pre-tax
basis)............................... (39) (39) (39) (39) (39)
Capitalized interest................... (7) (5) (6) (11) (8)
------ ------ ------ ----- ------

Fixed charges in earnings............ 488 499 491 449 371
------ ------ ------ ----- ------

Earnings available for fixed charges..... $1,202 $1,106 $1,102 $ 921 $1,032
====== ====== ====== ===== ======
Ratio of earnings to fixed charges....... 2.25 2.04 2.06 1.85 2.47
====== ====== ====== ===== ======

</TABLE>

<PAGE>

EXHIBIT 13

ANALYSIS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)

We reported record revenues, operating profit, earnings and fully diluted
earnings per share in 1994. Net earnings grew 16% to $434 million compared with
$375 million in 1993 and $383 million in 1992. Fully diluted earnings per share
were $5.52 in 1994 versus $4.77 in 1993 and $4.82 in 1992.

In 1994, all three operating divisions reported an increase in operating
profit. Operating profit is LIFO earnings from operations before corporate
expense, interest and income taxes. Target maintained its strong earnings
momentum, while Mervyn's performance improved and the Department Store Division
(DSD) recorded another year of solid performance.

Total operating profit grew 9% to $1,208 million compared with $1,109 million
in 1993 and $1,086 million in 1992. Target had another record year with an 11%
increase in operating profit, while Mervyn's increased 15% and DSD increased 1%
to a new record. Operating profit in 1994 was affected by a substantial
decrease in the year-over-year LIFO credit. The pre-tax LIFO credit in 1994 was
$19 million versus $91 million in 1993.

The earnings variance analysis, presented below, and associated discussion
represents management's view of the business and differs from the
classifications in the Consolidated Results of Operations. Revenues include
sales, as well as finance charges and other revenues. The gross margin rate
includes cost of retail sales and excludes buying and occupancy costs. The
operating expense rate includes buying and occupancy costs; selling, publicity
and administrative expenses excluding start-up and corporate and other expense;
depreciation and taxes other than income taxes. Start-up expenses are costs
associated with opening new stores and remodeling existing stores.

Due to significant growth at Target, our lowest margin division, the
Corporation's overall revenue growth and operating expense rate were favorably
affected, while the gross margin rate was unfavorably affected. We expect these
trends to continue.

The table below identifies the major factors in the change in earnings per
share:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
EARNINGS VARIANCE ANALYSIS 1994 VS. 1993 1993 vs. 1992
- ----------------------------------------------------------------------
<S> <C> <C>
Prior year's earnings per share $4.77 $4.82
Change due to:
Revenues 1.17 .59
Gross margin rate (.05) (.52)
Operating expense rate (.19) (.02)
Start-up expenses (.14) .06
Interest expense, net .13 (.08)
Corporate and other expense, net (.07) (.03)
Income tax rate (.10) (.05)
- ----------------------------------------------------------------------
EARNINGS PER SHARE $5.52 $4.77
- ----------------------------------------------------------------------
</TABLE>

Dayton Hudson Corporation and Subsidiaries
<PAGE>

ANALYSIS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)

REVENUES

The Corporation reported an 11% increase in total revenues and a 5% increase
in comparable-store revenues in 1994 despite continued deflation of retail
prices at each of the operating divisions. Comparable-store revenues are
revenues from stores open longer than a year. Target's strong revenue increase
reflected both new and existing store growth, effective advertising and
superior merchandising execution. Mervyn's revenue showed a modest improvement
due primarily to new store growth. DSD's revenue increase was mainly due to
growth in home and moderate-price merchandise. The operating divisions'
revenues were also aided by increases in finance charge revenues associated with
growth in our proprietary credit card operations.

The 1993 overall revenue growth reflected Target's new store expansion and the
continued success of its value-pricing strategy, along with DSD's additional
promotional events. Mervyn's revenue decline reflected the effect of orienting
its guests to a more balanced value-pricing and promotional strategy.
Additionally, both Target and Mervyn's results were impacted by their
substantial presence in the California market, which remained depressed
throughout the majority of 1993.

<TABLE>
<CAPTION>
- ----------------------------------------------------
REVENUE GROWTH 1994 1993
- ----------------------------------------------------
ALL COMP. All Comp.
STORES STORES Stores Stores
- ----------------------------------------------------
<S> <C> <C> <C> <C>
Target 16% 7% 13% 5%
Mervyn's 3 - (2) (6)
DSD 3 3 1 1
- ----------------------------------------------------
Total 11% 5% 7% 1%
- ----------------------------------------------------
</TABLE>

One measure used to evaluate store productivity is revenues per square foot.
Higher revenues per square foot at Target reflected solid base business growth,
partially offset by the inherent lower productivity of new stores. Mervyn's
decline primarily represented the inherent lower productivity of new stores in
conjunction with unchanged comparable-store revenues. DSD's growth was due to
higher revenues on an unchanged square footage base.

<TABLE>
<CAPTION>
- ------------------------------------------------
REVENUES PER SQUARE FOOT*
(Dollars) 1994 1993 1992
- ------------------------------------------------
<S> <C> <C> <C>
Target $ 222 $ 213 $ 209
Mervyn's 200 204 223
DSD 228 221 219
- ------------------------------------------------
</TABLE>

* Thirteen-month average retail square feet.

GROSS MARGIN RATE

The overall gross margin rate was essentially unchanged in 1994 reflecting
substantially improved markdowns at each of the operating divisions, offset by a
significantly lower LIFO credit of $19 million compared with $91 million last
year.

. TARGET'S value-pricing strategy generated a favorable impact on its 1994
gross margin rate. A significant improvement in promotional markdowns was
partially offset by a somewhat lower, stabilizing markup. Despite this, its
gross margin rate declined during 1994 reflecting a significantly lower LIFO
credit.

. MERVYN'S gross margin rate reflected a solid improvement in 1994 due to
improved markdowns, partially offset by lower markup. During the year the
competitive pricing strategy was further refined, reducing initial retail
prices, while promotional markdowns improved. Also, the gross margin rate
benefitted from lower clearance markdowns associated with improved inventory
management.

. DSD'S gross margin rate was essentially unchanged in 1994. A significant
improvement in the clearance markdown rate was offset by a lower LIFO credit
and somewhat higher promotional markdowns reflecting incremental sale events.

The 1993 overall gross margin rate declined reflecting our lowering of initial
retail prices to meet the needs of value-conscious consumers, partially offset
by a substantial LIFO credit. Target's gross margin rate declined in 1993
reflecting the ongoing impact of its value-pricing strategy, partially offset by
improvement in the promotional markdown rate and a substantial LIFO credit.
Mervyn's 1993 gross margin rate decline was the result of higher clearance
markdowns associated with reducing inventories. DSD's gross margin rate
improved in 1993 due to lower cost of merchandise and a LIFO credit.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

ANALYSIS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)

GROSS MARGIN RATE (CONTINUED)
Looking forward, with an increasing percentage of overall growth coming from
Target, the gross margin rate is expected to decline over time.

The LIFO provision was as follows:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
LIFO PROVISION: CREDIT/(EXPENSE) 1994 1993 1992
- -----------------------------------------------------------------
<S> <C> <C> <C>
Target - $ 62 $ (2)
Mervyn's $ 8 7 4
DSD 11 22 (11)
- -----------------------------------------------------------------
Total $ 19 $ 91 $ (9)
- -----------------------------------------------------------------
Per Share $.15 $.75 $(.07)
- -----------------------------------------------------------------
</TABLE>

The 1994 LIFO credit reflected higher inventory levels associated with new
store growth as well as deflation in retail prices associated with our value-
pricing strategies, although at a much slower, stabilizing rate. The 1993 LIFO
credit reflected the adoption of internally-generated price indices at Mervyn's
and DSD associated with their lowering of retail prices and deflation in
Target's internal price index, partially offset by a substantial decline in
inventory levels at Mervyn's. The 1992 LIFO expense was primarily due to
inflation at Mervyn's and DSD, partially offset by an increase in inventory
levels at Mervyn's and deflation in prices at Target.

The LIFO provision is calculated based on internally-generated price indices,
inventory levels and markup levels.

OPERATING EXPENSE RATE

The overall operating expense rate increased in 1994 despite strong expense
management at each of the operating divisions. The higher operating expense
rate primarily reflected additional advertising expense at Mervyn's and DSD and
charges associated with the closing and relocation of certain Target stores.
Each of the operating divisions will continue to focus on expense disciplines
and will benefit from our pursuit of a boundaryless organization by sharing
resources and expertise between divisions.

. TARGET'S operating expense rate was essentially unchanged in 1994. The
benefits of sales leverage and expense efficiencies were offset by an
incremental $32 million, or $.26 per share, charge for strategic store
closings and relocations. Looking forward, Target will continue to
aggressively reposition its stores to more strategic locations and close
under-performing stores, although future annual charges are not expected to
be as significant as in 1994.

. MERVYN'S operating expense rate increased significantly in 1994 due to
additional advertising expense, lower sales leverage and a charge of
approximately $20 million, or $.16 per share, for the Colorado Project. The
Colorado Project was the remodeling, remerchandising and grand opening of 11
Colorado stores used as the laboratory for new store design and merchandising
strategies. Mervyn's continues to focus on expense control.

. DSD'S operating expense rate was higher in 1994 due to increased advertising
expenses associated with incremental promotional events somewhat offset by
expense efficiencies.

The 1993 operating expense rate included a pre-tax charge of $22 million, or
$.18 per share, from the Los Angeles earthquake substantially offset by solid
expense management at each of the operating divisions. Target's operating
expense rate improved in 1993, reflecting favorable sales leveraging and expense
efficiencies within the stores, partially offset by charges related to the
earthquake. Despite its continued focus on expense control, Mervyn's operating
expense rate deteriorated in 1993 due to slightly higher operating expenses on a
substantially lower revenue base, as well as charges associated with the
earthquake. DSD's operating expense rate improved in 1993 due to distribution
expense efficiencies, partially offset by increased advertising expense.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

ANALYSIS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)

START-UP EXPENSES

Start-up expenses rose in 1994 due to growth in the number of new stores at
Target and increased remodeling expenses at Mervyn's and DSD. Start-up expenses
declined in 1993 compared with 1992 due to fewer new stores. A total of 72 new
stores were opened in 1994 compared with 62 stores in 1993 and 68 stores in
1992. Start-up expenses are generally recognized evenly throughout the year in
which the expenses are incurred.

INTEREST EXPENSE

Interest expense decreased $20 million in 1994 as a result of lower average
financing requirements and a lower average portfolio interest rate. The lower
rate reflected a modest increase in lower cost floating-rate debt. The interest
expense increase in 1993 was due to additional debt required to finance new
stores and store-remodeling programs partially offset by lower interest rates.

In 1995, interest expense is expected to increase reflecting additional
borrowing requirements for the funding of new stores, remodeling programs and
internal credit expansion. Although we plan to increase floating rate debt
modestly in 1995, we do not anticipate material changes in our average portfolio
interest rate.

CORPORATE AND OTHER EXPENSE, NET

Corporate and other expense includes corporate headquarters expense, corporate
charitable contributions to support our giving program of 5% of federally
taxable income and a variety of other items.

Included in 1994 corporate and other expense was a pre-tax charge of $10
million, or $.08 per share, for the consolidation of the Corporation's credit
operations. The charge primarily represents severance and benefits for
approximately 500 employees. The consolidation of two credit operations into
one is expected to be completed by Summer 1995. The consolidation is expected
to result in cost savings and create a cross-divisional source of credit
information.

INCOME TAX RATE

The effective tax rates were as follows:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------
1994 1993 1992
- ------------------------------------------------------------------
<S> <C> <C> <C>
Effective tax rate 39.2% 38.2% 37.3%
- ------------------------------------------------------------------
</TABLE>

The increase in the 1994 effective tax rate compared with 1993 reflected the
one-time benefit in 1993 from the adoption of SFAS No. 109, "Accounting for
Income Taxes." While the 1993 tax rate benefitted from this adoption, the
increase over 1992 reflected the one percentage point rise in the federal
statutory tax rate and the associated increase to deferred tax balances, as well
as the reduced financial reporting deductibility of preferred stock dividends
associated with SFAS No. 109.

FOURTH QUARTER RESULTS

Due to the seasonal nature of the retail industry, fourth quarter results
represent a substantially larger share of the total year operating results due
to the inclusion of the Christmas season.

The Corporation's fourth quarter earnings per share were $3.62, essentially
unchanged from the same quarter last year despite a pre-tax LIFO credit of $9
million, or $.07 per share, in 1994 versus $106 million, or $.87 per share, in
1993. Net earnings were $279 million for the quarter compared with $278 million
in 1993. Operating profit showed a slight increase in the quarter, with strong
operating results more than offsetting the effect of a significantly lower LIFO
credit.

. TARGET'S modest operating profit increase reflected a 16% revenue increase
partially offset by a lower gross margin rate and a higher operating expense
rate. Comparable-store revenues increased 7%. Despite a modest improvement
in the markdown rate, Target's gross margin rate declined, reflecting a
significant year-to-year change in the LIFO provision.

. MERVYN'S operating profit increased as total revenues rose 5% and comparable-
store revenues were up 2%. The gross margin rate improved as a substantially
lower markdown rate was partially offset by a significantly lower LIFO credit.
The operating expense rate increased slightly.

. DSD'S operating profit declined moderately in the fourth quarter reflecting a
significant decline in the LIFO credit. Partially offsetting the gross margin
rate decline were improved total and comparable-store revenues of 3% and an
improved operating expense rate due to store operational efficiencies.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

ANALYSIS OF FINANCIAL CONDITION
(Millions of Dollars, Except Per Share Data)

In 1994, we strengthened our financial condition through solid financial
performance and improved inventory and payables control. Cash flow from earnings
and depreciation grew 11% in 1994 to $965 million. Internally-generated funds
continue to be an important component of our capital resources.

Accounts receivable growth in 1994 reflected the expansion of our proprietary
credit card operations. In 1994 we changed payment terms on DSD's and Mervyn's
internal credit cards and began testing a Target card. This grew accounts
receivable balances, finance charge revenues and late fees. The growth of
accounts receivable in 1995 is expected to continue, comparable to the growth
experienced in 1994.

Inventories were well controlled throughout 1994. The increase in 1994 year-
end inventories primarily reflected new store growth. Inventory turnover
improved in 1994, the result of better merchandising execution at each operating
division and a greater mix of our business shifting to Target. In conjunction
with a faster inventory turn, our accounts payable leveraging also improved.

Capital expenditures for 1994 were $1,095 million, of which 77% were made by
Target, 13% by Mervyn's, 9% by DSD and 1% by Corporate. During 1994, Target
added 60 new stores and Mervyn's opened 12 new stores. Nearly 65% of total
capital expenditures were for building new stores, 21% for store remodeling and
14% for distribution and systems. Over the past five years, Target's square
footage has grown at a compound annual rate of 10% and is expected to continue
into the future.

Capital expenditures for 1995 are expected to be several hundred million
dollars higher than 1994 capital expenditures. We continue to invest in each of
our operating companies, however, most new store capital continues to be
allocated to Target due to its proven record of successful expansion and
profitable growth. The 1995 store opening plans are for 60-70 new Target
stores, 11 new Mervyn's stores and one new department store. Expansion into
major new markets initially includes Target's six stores in Cleveland/Akron and
Mervyn's seven stores in Minneapolis/St. Paul.

Our capital expenditure priorities are as follows:

. REMODEL existing facilities to maintain and expand current market share.
. IMPROVE DISTRIBUTION AND SYSTEMS to support sales growth.
. BUILD STORES IN EXISTING MARKETS to increase market share as well as
leverage our existing expense structure.
. BUILD STORES IN NEW MARKETS to enhance growth and increase overall 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. In order to retain flexibility, at January 28, 1995 only $367
million was committed for future capital expenditures.

The Corporation's financing strategy is to ensure liquidity and access to
capital markets, to control the amount of floating rate debt and to maintain a
balanced spectrum of maturities. Within these parameters, we seek to minimize
our cost of borrowing.

A key to the Corporation's liquidity and capital market access is maintenance
of strong investment grade debt ratings. Our long-term debt ratings remained at
A+, A3 and A from Duff & Phelps, Moody's and Standard & Poor's, respectively.
Our commercial paper debt ratings remained at D-1+, P-2 and A-1 from these same
firms, respectively. Additional liquidity is provided by a total of $1 billion
in committed lines of credit. Further lines may be put in place in 1995.

In 1994, in addition to internally-generated funds, the Corporation's debt
increased $251 million, net of investments, to fund cash needs. During 1993 and
1992, internally-generated funds were sufficient to meet the Corporation's cash
needs. In 1995, we expect debt to increase by a greater amount than 1994 as we
fund our store expansion and continued growth of the accounts receivable
portfolio.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

PERFORMANCE OBJECTIVES
(Millions of Dollars, Except Per Share Data)

SHAREHOLDER RETURN

Management's primary objective is to maximize shareholder value over time.
This is accomplished through a combination of dividend income and share price
appreciation while a prudent and flexible capital structure is maintained.

On this basis our total return to shareholders in 1994 was approximately 7%.
During this same period the total return on the Standard & Poor's 500 was
approximately 1%, while many large retailers experienced negative returns.

GENERATING SHAREHOLDER VALUE

We manage a portfolio of three retail concepts, each of which is uniquely
positioned for our guests. In addition, each fills a unique role in support of
our primary objective. Target is our largest and fastest growing format. We
believe Mervyn's holds great promise to significantly improve its performance
over the next several years. Our Department Store Division produces substantial
cash flow in excess of its capital reinvestment requirements.

The internal measurement we will begin to use in 1995 to evaluate performance
and guide our capital investment decisions is a form of Economic Value Added(R)
(EVA(R)). EVA(R) is after-tax operating profit less a capital charge for all
investment employed. The capital charge is our after-tax cost of debt and
equity capital which has been adjusted for the age of our stores, recognizing
that mature stores naturally have higher returns than newly opened stores. When
EVA(R) is positive we believe we are generating value which will flow to our
shareholders. We generated positive EVA(R) in 1994, 1993 and 1992, and expect
continued improvement in 1995. A significant portion of executive incentive
compensation will be tied to achievement of targeted levels of annual EVA(R).

During 1994 and in previous years, we used Return on Investment (ROI) as the
internal measurement tool. ROI was 8.5%, 8.3% and 8.9% for 1994, 1993 and 1992,
respectively.

FINANCIAL OBJECTIVES

We believe that managing our business with a focus on EVA(R) will assist us in
achieving our objective of a compound growth in earnings per share of 15% per
year over time. In 1994, earnings per share were $5.52, representing a 16%
increase over 1993. We intend to produce these results over time, while
maintaining a year-end debt ratio in the range of 45% to 65%. We continued to
operate in this range in 1994, ending the year with a debt ratio of 57%.

- ---------------------------------------------------------------
DEBT RATIO 1994 1993 1992
- ---------------------------------------------------------------
DEBT AND EQUIVALENTS
Current portion of long-term debt
and notes payable (a) $ 209 $ 373 $ 394
Long-term debt (a) 4,488 4,279 4,330
Present value of operating leases 601 504 419
- ---------------------------------------------------------------
Total $5,298 $5,156 $5,143
- ---------------------------------------------------------------
CAPITALIZATION
Debt and equivalents $5,298 $5,156 $5,143
Deferred income taxes and other 582 536 450
Convertible preferred stock 360 368 374
Common shareholders' investment 3,043 2,737 2,486
- ---------------------------------------------------------------
Total $9,283 $8,797 $8,453
- ---------------------------------------------------------------

YEAR-END DEBT RATIO (b) 57% 59% 61%
- ---------------------------------------------------------------

(a) Includes capital leases.

(b) The debt ratio includes the impact of off-balance sheet operating leases.
When calculated on a balance sheet basis only, year-end debt ratios were
54%, 56% and 59% for 1994, 1993 and 1992, respectively.

(R) Economic Value Added and EVA are registered trademarks.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

INTERNAL CREDIT
(Millions of Dollars, Except Per Share Data)

Internal credit strategically supports our core retail operations and, in
itself, has been profitable. By expanding our credit operations we not only
earned an attractive return on credit, but retail operating profit was also
enhanced through incremental sales.

The credit operations have different performance characteristics than our
retail operations. Because of the stability of returns, our credit operation's
can support a debt ratio of 88%, which is similar to a finance company. This
higher leveraging rate results in a 6% after-tax cost of capital for our credit
operations as compared to 10% for our retail operations.

- ---------------------------------------------------
DEBT RATIOS 1994 1993 1992
- ---------------------------------------------------
Credit debt ratio 88% 88% 88%
Retail debt ratio 50 53 55
- ---------------------------------------------------
Total Corporation Debt Ratio 57% 59% 61%
- ---------------------------------------------------

In 1994, the operating profit of our credit operations increased to $170
million due primarily to improved finance charge revenues and late fees. The
credit operations after-tax returns were greater than the credit cost of
capital, resulting in a continued increase in positive EVA(R). The following
table illustrates the results of our credit operations:

- -----------------------------------------------------------------
CREDIT OPERATING PROFIT 1994 1993 1992
- -----------------------------------------------------------------
REVENUES:
Finance charge revenues and late fees $ 248 $ 200 $ 191
Merchant and deferred billing fees 65 63 62
- -----------------------------------------------------------------
Total 313 263 253
- -----------------------------------------------------------------

EXPENSES:
Bad debt provision 66 53 56
Operating expenses 77 70 68
- -----------------------------------------------------------------
Total 143 123 124
- -----------------------------------------------------------------
Credit Operating Profit $ 170 $ 140 $ 129
- -----------------------------------------------------------------
Average accounts receivable balance $1,504 $1,329 $1,298
- -----------------------------------------------------------------

Merchant fees represent the sales discount fees charged to our retail
operations. Deferred billing fees represent charges for carrying non-revenue
earning revolving balances. Both the merchant and deferred billing fees are
intercompany transfer prices that are eliminated in consolidation. Operating
expenses, measured on an all-inclusive basis, represent expenses for granting
and operating credit.

In 1995, we will finalize the consolidation of the credit operations, which
will provide efficiencies as well as lower overall operating expenses.
Recognizing credit's strategic support of our core retail operations, credit
revenue and operating profit continue to be recorded in each of the operating
divisions results.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)

BUSINESS SEGMENTS 1994 1933 1992
- ------------------------------------------------------------------------

REVENUES
Target $13,600 $11,743 $10,393
Mervyn's 4,561 4,436 4,510
Department Store Division 3,150 3,054 3,024
Other - - -
- ------------------------------------------------------------------------
Total $21,311 $19,233 $17,927
- ------------------------------------------------------------------------

OPERATING PROFIT
Target $ 732 $ 662 $ 574
Mervyn's 206 179 284
Department Store Division 270 268 228
- ------------------------------------------------------------------------
Total 1,208 1,109 1,086
Interest expense, net 426 446 437
Corporate and other 68 56 38
- ------------------------------------------------------------------------
Earnings before income taxes $ 714 $ 607 $ 611
- ------------------------------------------------------------------------

OPERATING PROFIT AS A PERCENT OF REVENUES
Target 5.4% 5.6% 5.5%
Mervyn's 4.5 4.0 6.3
Department Store Division 8.6 8.8 7.5
- ------------------------------------------------------------------------

ASSETS
Target $ 6,247 $ 5,495 $ 4,913
Mervyn's 2,917 2,750 3,042
Department Store Division 2,392 2,240 2,292
Corporate and other 141 293 90
- ------------------------------------------------------------------------
Total $11,697 $10,778 $10,337
- ------------------------------------------------------------------------

DEPRECIATION
Target $ 293 $ 263 $ 236
Mervyn's 145 146 135
Department Store Division 92 88 87
Corporate and other 1 1 1
- ------------------------------------------------------------------------
Total $ 531 $ 498 $ 459
- ------------------------------------------------------------------------

CAPITAL EXPENDITURES
Target $ 842 $ 716 $ 571
Mervyn's 146 180 294
Department Store Division 96 80 72
Corporate and other 11 2 1
- ------------------------------------------------------------------------
Total $ 1,095 $ 978 $ 938
- ------------------------------------------------------------------------

Dayton Hudson Corporation and Subsidiaries
<PAGE>

CONSOLIDATED RESULTS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)

1994 1993 1992
- --------------------------------------------------------------------------
REVENUES $21,311 $19,233 $17,927
COSTS AND EXPENSES
Cost of retail sales, buying and occupancy 15,636 14,164 13,129
Selling, publicity and administrative 3,631 3,175 2,978
Depreciation 531 498 459
Interest expense, net 426 446 437
Taxes other than income taxes 373 343 313
- --------------------------------------------------------------------------
Total Costs and Expenses 20,597 18,626 17,316
- --------------------------------------------------------------------------
Earnings Before Income Taxes 714 607 611
Provision for Income Taxes 280 232 228
- --------------------------------------------------------------------------
NET EARNINGS $ 434 $ 375 $ 383
- --------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE $ 5.77 $ 4.99 $ 5.02
FULLY DILUTED EARNINGS PER SHARE $ 5.52 $ 4.77 $ 4.82
- --------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING (Millions):
Primary 72.0 71.8 71.6
Fully Diluted 76.3 76.1 75.9
- --------------------------------------------------------------------------

See Notes to Consolidated Financial Statements contained throughout pages 21-32.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)

REVENUES

Finance charge revenues and late fees on internal credit sales were $248
million on sales of $3.6 billion in 1994, $200 million on sales of $3.5 billion
in 1993 and $191 million on sales of $3.5 billion in 1992. Lease department
sales were $156 million, $165 million and $163 million in 1994, 1993, and 1992,
respectively.

INCOME TAXES

Reconciliation of tax rates is as follows:
- ---------------------------------------------------------------------
PERCENT OF EARNINGS BEFORE INCOME TAXES 1994 1993 1992
- ---------------------------------------------------------------------
Federal statutory rate 35.0% 35.0% 34.0%
State income taxes, net of federal tax benefit 4.7 4.6 4.7
Cumulative effect of adopting SFAS No. 109 - (1.4) -
Targeted Jobs Tax Credits (.7) (.4) (.5)
Dividends on preferred stock (.6) (.5) (1.5)
Other .8 .9 .6
- ---------------------------------------------------------------------
Effective tax rate 39.2% 38.2% 37.3%
- ---------------------------------------------------------------------

The components of the provision for income taxes were:

- ---------------------------------------------
INCOME TAX PROVISION:
EXPENSE/(BENEFIT) 1994 1993 1992
- ---------------------------------------------
Current:
Federal $ 262 $ 166 $ 176
State 59 37 41
- ---------------------------------------------
321 203 217
- ---------------------------------------------
Deferred:
Federal (34) 23 8
State (7) 6 3
- ---------------------------------------------
(41) 29 11
- ---------------------------------------------
Total $ 280 $ 232 $ 228
- ---------------------------------------------

The components of the net deferred tax liability were:

- -------------------------------------------------------------------
JANUARY 28, January 29,
NET DEFERRED TAX LIABILITY 1995 1994
- -------------------------------------------------------------------
Gross deferred tax liabilities:
Property and equipment $ 311 $ 304
Inventory 34 37
Other 45 34
- -------------------------------------------------------------------
390 375
- -------------------------------------------------------------------
Gross deferred tax assets:
Self-insured benefits 93 69
Deferred compensation 66 55
Postretirement health care obligation 44 41
Purchase accounting 41 (33)
Other 90 59
- -------------------------------------------------------------------
334 191
- -------------------------------------------------------------------
Total $ 56 $ 184
- -------------------------------------------------------------------

INCOME TAXES (CONTINUED)

In 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 to this, income
taxes were calculated according to SFAS No. 96, "Accounting for Income Taxes,"
which was superseded by SFAS No. 109. The cumulative and 1993 effects of the
adoption were not significant. Prior-year financial statements have not been
restated. Also with this adoption the financial reporting deductibility of the
Employee Stock Ownership Plan (ESOP) preferred stock dividends earned was
reduced to shares allocated to participant accounts versus all outstanding ESOP
shares.

ADVERTISING COSTS

Advertising costs, included in selling, publicity and administrative expenses,
are expensed as incurred and were $604 million, $494 million and $437 million
for 1994, 1993 and 1992, respectively.

EARNINGS PER SHARE

Primary earnings per share equal net earnings, less dividend requirements on
ESOP preferred stock (net of tax benefits in both 1994 and 1993 related to
unallocated shares associated with the adoption of SFAS No. 109), divided by the
average number of common shares and common share equivalents outstanding during
the period.

Fully diluted earnings per share are computed based on the average number of
common shares and common share 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 both 1994 and 1993 related to
unallocated shares associated with the adoption of SFAS No. 109), which results
from the assumed replacement of the ESOP preferred stock dividends with common
stock dividends.

References to earnings per share relate to fully diluted earnings per share.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)

<TABLE>
<CAPTION>
JANUARY 28, January 29,
1995 1994
- -----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 147 $ 321
Accounts receivable 1,810 1,536
Merchandise inventories 2,777 2,497
Other 225 157
- -----------------------------------------------------------------------------------
Total Current Assets 4,959 4,511

PROPERTY AND EQUIPMENT
Land 1,251 1,120
Buildings and improvements 5,208 4,753
Fixtures and equipment 2,257 2,162
Construction-in-progress 293 248
Accumulated depreciation (2,624) (2,336)
- -----------------------------------------------------------------------------------
Net Property and Equipment 6,385 5,947
OTHER 353 320
- -----------------------------------------------------------------------------------
TOTAL ASSETS $11,697 $10,778
- -----------------------------------------------------------------------------------

LIABILITIES AND COMMON SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 1,961 $ 1,654
Accrued liabilities 1,045 903
Income taxes payable 175 145
Current portion of long-term debt and notes payable 209 373
- -----------------------------------------------------------------------------------
Total Current Liabilities 3,390 3,075

LONG-TERM DEBT 4,488 4,279

DEFERRED INCOME TAXES AND OTHER 582 536

CONVERTIBLE PREFERRED STOCK 360 368
LOAN TO ESOP (166) (217)

COMMON SHAREHOLDERS' INVESTMENT
Common stock 72 72
Additional paid-in capital 89 73
Retained earnings 2,882 2,592
- -----------------------------------------------------------------------------------
Total Common Shareholders' Investment 3,043 2,737
- -----------------------------------------------------------------------------------
TOTAL LIABILITIES & COMMON SHAREHOLDERS' INVESTMENT $11,697 $10,778
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements contained throughout pages 21-32.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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.

ACCOUNTS RECEIVABLE

Accounts receivable are written off when the required payments have not been
received for six consecutive months. The allowance for doubtful accounts was
$46 million and $35 million at year-end 1994 and 1993, respectively.

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 and are
stated at the lower of LIFO cost or market. 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 cumulative
LIFO provision was $61 million and $80 million at year-end 1994 and 1993,
respectively.

In 1993, Mervyn's and DSD adopted internally-generated price indices utilized
in the LIFO calculation to determine retail price changes. Target had
previously adopted an internally-generated price index. These internal indices
capture the inventory valuation impact of lower retail prices resulting from
value-pricing strategies. Previously, Mervyn's and DSD used the Bureau of Labor
Statistics' Department Store Inventory Price Index to estimate retail price
changes. This change generated a pre-tax LIFO credit of $77 million, or $.63
per share in 1993, which represented a major portion of the total year credit.
The cumulative effect of this change and the impact for any year prior to 1993
was not determinable.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over estimated useful
lives. Buildings and improvements are depreciated over eight to 55 years.
Furniture and fixtures are depreciated over three to eight years. Accelerated
depreciation methods generally are used for income tax purposes.

ACCOUNTS PAYABLE

Outstanding drafts included in accounts payable were $352 million and $239
million at year-end 1994 and 1993, 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, classified in buying and occupancy, includes percentage rents which
are based on a percentage of retail sales over stated levels. Total rent
expense was $123 million, $100 million and $94 million in 1994, 1993 and 1992,
respectively.

Most of the long-term leases include options to renew, with 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 1994 were:

- --------------------------------------------------------------
Operating Capital
FUTURE MINIMUM LEASE PAYMENTS Leases Leases
- --------------------------------------------------------------
1995 $ 120 $ 19
1996 114 19
1997 95 18
1998 87 18
1999 78 17
After 1999 503 169
- --------------------------------------------------------------
Total future minimum lease payments 997 260
Less: Interest* (396) (137)
Executory costs (4)
- --------------------------------------------------------------
Present value of minimum lease payments $ 601 $119**
- --------------------------------------------------------------

* Calculated using the average interest rate in the year of inception for
each lease (weighted average interest rate - 9.7%).
** 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 were approximately $367 million at January 28, 1995.

The Corporation is exposed to claims and litigation arising out of the
ordinary course of business. 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 taken as a whole.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)

<TABLE>
<CAPTION>
1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 434 $ 375 $ 383
Reconciliation to cash flow:
Depreciation 531 498 459
Deferred tax provision: (benefit)/expense (41) 29 11
Other noncash items affecting earnings 19 60 48
Changes in operating accounts providing/
(requiring) cash:
Accounts receivable (274) (22) (84)
Merchandise inventories (280) 121 (237)
Accounts payable 307 58 272
Accrued liabilities 147 63 142
Income taxes payable 30 20 27
Other 19 17 (37)
- ------------------------------------------------------------------------------
Cash Flow Provided by Operations 892 1,219 984
- ------------------------------------------------------------------------------

INVESTING ACTIVITIES
Expenditures for property and equipment (1,095) (969) (918)
Proceeds from disposals of property and
equipment 89 79 10
- ------------------------------------------------------------------------------
Cash Flow Required for Investing Activities (1,006) (890) (908)
- ------------------------------------------------------------------------------
Net Financing (Requirements)/Sources (114) 329 76
- ------------------------------------------------------------------------------

FINANCING ACTIVITIES
Decrease in notes payable (200) (23) (242)
Additions to long-term debt 447 528 550
Reductions of long-term debt (199) (581) (290)
Principal payments received on loan to ESOP 58 61 58
Dividends paid (144) (138) (133)
Other (22) 28 2
- ------------------------------------------------------------------------------
Cash Flow Used by Financing Activities (60) (125) (55)
- ------------------------------------------------------------------------------
Net (Decrease)/Increase in Cash and Cash
Equivalents (174) 204 21
Cash and Cash Equivalents at Beginning of Year 321 117 96
- ------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 147 $ 321 $ 117
- ------------------------------------------------------------------------------
</TABLE>

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
income taxes was $292 million, $183 million and $189 million for 1994, 1993 and
1992, respectively. Cash paid for interest (including interest capitalized) was
$431 million, $441 million and $438 million for 1994, 1993 and 1992,
respectively.

See Notes to Consolidated Financial Statements contained throughout pages 21-32.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)

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 28, 1995 or 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 $1 million in 1994 and $2 million
each in 1993 and 1992.

LONG-TERM DEBT

At January 28, 1995, $447 million of notes payable were outstanding, all of
which was classified as long-term debt as it was supported by the Corporation's
revolving credit agreement, which expires in 1999. Beginning in 1994, notes
payable are classified as long-term, provided the term of the related credit
agreement exceeds one year and to the extent any unused commitments thereunder
equal or exceed the amount of notes payable outstanding. The average amount of
notes payable outstanding during 1994 was $418 million at a weighted average
interest rate 4.9%.

The average interest rate on our total debt portfolio, excluding capital
leases, was 8.8% in 1994.

At year end the debt portfolio was as follows:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
JANUARY 28, January 29,
LONG-TERM DEBT 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Notes payable $ 447 $ 200
4.65% to 9.95%, Notes and other, due 1994-1999 544 711
6.625% to 10% Notes and other, due 2000-2004 1,037 1,037
9.25% to 9.625% Debentures and other, due 2005-2009 201 201
8.6% to 10.03% Debentures and other, due 2010-2014 549 549
9.25% to 9.875% Debentures and other, due 2015-2019 514 541
7.65% to 9.99% Debentures, due 2020-2023 1,286 1,286
- -------------------------------------------------------------------------------
Total unsecured notes and debentures, and other 4,578 4,525
Capital lease obligations 119 127
Less: current portion (209) (373)
- -------------------------------------------------------------------------------
Long-term debt $4,488 $4,279
- -------------------------------------------------------------------------------
</TABLE>

Required principal payments on long-term debt and notes payable over the next
five years, excluding capital lease obligations, are $204 million in 1995, $68
million in 1996, $100 million in 1997, $170 million in 1998 and $449 million in
1999.

LONG-TERM DEBT (CONTINUED)

In 1994, the Corporation entered into interest rate swap agreements which
effectively exchange fixed interest rates for variable interest rates on $175
million of long-term debt without the exchange of underlying principal. The
interest rate swaps were entered into to manage the portfolio mix of fixed and
floating rate debt, within established parameters. The difference to be paid or
received varies as short-term interest rates change and is accrued and
recognized as an adjustment to interest expense. The initial terms of the
agreements range from one to three years. Market risks arise from the movements
in interest rates. The Corporation's credit risk is limited to the fair market
value of the interest rate swaps. During 1994, the Corporation terminated fixed
interest rate swaps at a premium of $22 million. The premium is being amortized
into interest expense through 1999. At January 28, 1995, the unamortized premium
was $19 million.

Subsequent to year-end, the Corporation issued $150 million of long-term debt
at 7.5%, maturing in 1999. The proceeds from the issuance were used for general
corporate purposes.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of financial instruments were
as follows:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
JANUARY 28, January 29,
1995 1994
- -----------------------------------------------------------------------------
CARRYING FAIR Carrying Fair
VALUE VALUE Value Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial instruments recorded
as long-term liabilities:
Unsecured notes, and
debentures, and other debt $4,578 $4,701 $4,525 $5,167

Off-balance sheet financial
instruments:
Interest rate swaps - (7) - (31)
- -----------------------------------------------------------------------------
</TABLE>

The fair value of long-term debt and interest rate swaps was estimated using
discounted cash flow analysis, based on the Corporation's current incremental
interest rates for similar types of financial instruments. The carrying value
of cash equivalents approximates fair value due to its short maturity.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' INVESTMENT
(Millions of Dollars)

<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Earnings Total
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 stock dividends - 6 - 6
Conversion of preferred stock - 6 - 6
Stock option activity 1 3 - 4
- -----------------------------------------------------------------------
JANUARY 29, 1994 72 73 2,592 2,737
Consolidated net earnings - - 434 434
Dividends declared - - (144) (144)
Tax benefit on unallocated
preferred stock dividends - 6 - 6
Conversion of preferred stock - 7 - 7
Stock option activity - 3 - 3
- -----------------------------------------------------------------------
JANUARY 28, 1995 $72 $89 $2,882 $3,043
=======================================================================
</TABLE>

COMMON STOCK

Authorized 500,000,000 shares, $1.00 par value; 71,690,360 shares issued and
outstanding at January 28, 1995; 71,525,082 shares issued and outstanding at
January 29, 1994.

PREFERRED STOCK

Authorized 5,000,000 shares; Series B ESOP Convertible Preferred Stock $.01
par value, 416,675 shares issued and outstanding at January 28, 1995; 425,979
shares issued and outstanding at January 29, 1994. 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.

See Notes to Consolidated Financial Statements contained throughout pages 21-32.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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 a 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, 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 was recorded based on the current market price of
the Corporation's common stock and the extent to which certain earnings and
return on investment goals were met relative to an established group of retail
competitors. Compensation expense on restricted stock was recorded based on the
current market price of the Corporation's common stock. Performance share and
restricted stock award expense was $2 million in 1994, less than $1 million in
1993 and $3 million in 1992.

The number of shares of unissued common stock reserved for future grants under
the plan was 2,961,931 at the end of 1994 and 3,106,901 at the end of 1993.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
OPTIONS, PERFORMANCE SHARES AND
RESTRICTED STOCK AWARDS OUTSTANDING
- ------------------------------------------------------------------------------------------
Options
---------------------------
Number Price Shares Perform- Restricted
of Per Exer- ance Stock
Shares Share cisable Shares Awards
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
Granted 200,886 75.31 - 79.63
Canceled (69,538) 59.81 - 78.00
Exercised (78,169) 30.25 - 78.00
- ------------------------------------------------------------------------------------------
JAN. 28, 1995 1,326,000 $30.25 - $83.25 837,723 247,956 43,562
==========================================================================================
</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, which are made solely by the Corporation,
are determined by an outside actuarial firm. To compute net pension cost, the
actuarial 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>
- -------------------------------------------------------------------------------
NET PENSION EXPENSE 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 25 $ 22 $ 19
Interest cost on projected benefit obligation 33 32 30
Return on assets-current (10) (50) (30)
-deferred (26) 14 (1)
- -------------------------------------------------------------------------------
Total $ 22 $ 18 $ 18
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
ACTUARIAL ASSUMPTIONS 1994 1993 1992
- -------------------------------------------------------------------------------
Discount rate 8 1/2% 7 1/4% 8 1/2%
Expected long-term rate of return on plans' assets 9 9 1/2 9 1/2
Average assumed rate of compensation increase 5 1/2 5 1/4 7
- -------------------------------------------------------------------------------
</TABLE>

During 1994 and 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' expense is not
expected to be significant.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
December 31,
FUNDED STATUS 1994 1993
- -----------------------------------------------------------------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 342 $ 385
Accumulated benefit obligation 364 411
- -----------------------------------------------------------------
Projected benefit obligation 425 466
Fair market value of plans' assets* 455 454
- -----------------------------------------------------------------
Plans' assets in excess of/(less than) projected
benefit obligation 30 (12)
Unrecognized prior service cost 3 4
Unrecognized net actuarial loss 8 42
- -----------------------------------------------------------------
Prepaid pension asset $ 41 $ 34
- -----------------------------------------------------------------
</TABLE>

* Plans' assets consist primarily of equity and fixed income securities.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)

SUPPLEMENTAL RETIREMENT AND SAVINGS 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 all
preferred stock held by the ESOP, are used to repay the loan principal and
interest. Cash contributed to the ESOP was $50 million in 1994 and $61 million
each in 1993 and 1992. Dividends earned on shares held by the ESOP were $24
million each in 1994, 1993 and 1992. The dividends on allocated preferred stock
are paid in additional shares of preferred stock. Benefits expense, calculated
based on the shares allocated method, was $33 million each in 1994 and 1993 and
$28 million in 1992.

Upon a participant's termination, the Corporation is required to purchase the
preferred stock in exchange for common stock at the current market price. At
January 28, 1995, 226,890 shares of the ESOP preferred stock were allocated to
participants and had a fair value of $202 million.

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.

<TABLE>
<CAPTION>
- ---------------------------------------------------------
ACCUMULATED POSTRETIREMENT December 31,
BENEFIT OBLIGATION 1994 1993
- ---------------------------------------------------------
<S> <C> <C>
Retirees $ 47 $51
Fully eligible active plan participants 22 26
Other active plan participants 10 14
Prior service cost (5) (7)
Unrecognized gain 29 14
- ---------------------------------------------------------
Total $103 $98
- ---------------------------------------------------------
</TABLE>

POSTRETIREMENT HEALTH CARE BENEFITS (CONTINUED)

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
NET PERIODIC COST 1994 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $2 $1 $1
Interest cost on accumulated benefit 6 8 8
- -----------------------------------------------------------------------
Total $8 $9 $9
- -----------------------------------------------------------------------
</TABLE>

An increase in the cost of covered health care benefits of 8 1/2% is assumed
for fiscal 1995. 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 $5 million at year-end 1994 and the net
periodic cost by $1 million for the year. The discount rate used in determining
the accumulated postretirement benefit obligation was 8 1/2% for 1994, 7 1/4%
for 1993 and 8 1/2% for 1992.

During 1994 and 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' expense 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>
1994 January 28, 1995 52
1993 January 29, 1994 52
1992 January 30, 1993 52
- --------------------------------------
</TABLE>

Unless otherwise stated, references to years in this report relate to fiscal
years rather than to calendar years.

RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform
to the current-year presentation.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)

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. During 1994,
the Bank acquired the outstanding accounts receivable of Mervyn's. The Bank
issues and services the operating divisions' proprietary credit cards. In
September 1994, the Bank participated an 80% undivided interest of its accounts
receivable to another wholly owned subsidiary of the Corporation (the
Affiliate). The accounts receivable and all related income and expenses of the
Bank and the Affiliate are included in each operating division's results.

Net earnings for the Bank on a stand-alone basis, before intercompany
eliminations, were $69 million in 1994 and insignificant in 1993. The following
are condensed balance sheets for the Bank.
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------
JANUARY 28, January 29,
CONDENSED BALANCE SHEETS 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Accounts receivable, net $346 $699
Other assets 43 16
- ------------------------------------------------------------------------------
Total $389 $715
- ------------------------------------------------------------------------------
Liabilities and investment:
Liabilities, principally note payable
and deposit due to the Corporation, respectively $207 $634
Investment of the Corporation 182 81
- ------------------------------------------------------------------------------
Total $389 $715
- ------------------------------------------------------------------------------
</TABLE>

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 and real estate taxes, are allocated
evenly throughout the year.

The table below summarizes results by quarter for 1994 and 1993:
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
1994 1993 1994 1993 1994 1993 1994 1993 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------

Revenues $ 4,465 $ 4,040 $ 4,802 $ 4,287 $ 5,046 $ 4,625 $ 6,998 $ 6,281 $21,311 $19,233

Gross Profit (a) $ 1,212 $ 1,067 $ 1,283 $ 1,107 $ 1,351 $ 1,208 $ 1,829 $ 1,687 $ 5,675 $ 5,069

Net Earnings $ 39 $ 30 $ 49 $ 24 $ 67 $ 43 $ 279 $ 278 $ 434 $ 375

Earnings
Per Share (b) $ .47 $ .35 $ .61 $ .28 $ .83 $ .53 $ 3.62 $ 3.62 $ 5.52 $ 4.77

- -----------------------------------------------------------------------------------------------------------------------------------

Fully Diluted Average
Common Shares Outstanding
(Millions) 76.3 76.1 76.3 76.0 76.3 76.1 76.2 76.1 76.3 76.1

Dividends
Declared Per Share $ .42 $ .40 $ .42 $ .40 $ .42 $ .40 $ .42 $ .42 $ 1.68 $ 1.62

Common Stock Price (c)
High $ 79 $83-3/4 $83-5/8 $ 75 $ 86 $71-7/8 $ 84 74-3/4 86 $83-3/4
Low 65-1/8 69-1/8 76-1/4 63-1/4 73-3/4 65 67-3/8 65-7/8 65-1/8 63-1/4

- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Gross profit is revenues less cost of retail sales, buying and occupancy.
The LIFO provision, included in gross profit, 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 the actual total year
LIFO provision.

(b) Earnings per share are computed independently for each of the quarters
presented. The sum of the quarters 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 Pacific Stock Exchange. At March 24, 1995 there were 11,287
shareholders of record and the common stock price was $71.25 per share.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Dayton Hudson Corporation

We have audited the accompanying consolidated balance sheets of Dayton Hudson
Corporation and subsidiaries as of January 28, 1995 and January 29, 1994, and
the related consolidated results of operations, cash flows and common
shareholders' investment for each of the three years in the period ended January
28, 1995. 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 28, 1995 and January 29, 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended January 28, 1995, in conformity with generally
accepted accounting principles.

As discussed in the notes to the consolidated financial statements, in 1993
the Corporation changed its method of estimating retail price indices used in
its LIFO inventory valuation for Mervyn's and the Department Store Division.

Ernst & Young LLP

Minneapolis, Minnesota
March 17, 1995

Dayton Hudson Corporation and Subsidiaries
<PAGE>

SUMMARY FINANCIAL AND OPERATING DATA
(Millions of Dollars, Except Per Share Data)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
- --------------------------------------------------------------------------------------------------------------------------
Revenues $ 21,311 19,233 17,927 16,115 14,739
- --------------------------------------------------------------------------------------------------------------------------
Cost of retail sales, buying and occupancy $ 15,636 14,164 13,129 11,751 10,652
- --------------------------------------------------------------------------------------------------------------------------
Selling, publicity and administrative $ 3,631 3,175 2,978 2,801 2,478
- --------------------------------------------------------------------------------------------------------------------------
Depreciation $ 531 498 459 410 369
- --------------------------------------------------------------------------------------------------------------------------
Interest expense, net $ 426 446 437 398 325
- --------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before
income taxes $ 714 607 611 472 659
- --------------------------------------------------------------------------------------------------------------------------
Income taxes $ 280 232 228 171 249
- --------------------------------------------------------------------------------------------------------------------------
Net earnings: Continuing (b) $ 434 375 383 301 412
Consolidated $ 434 375 383 301 412
- --------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION DATA
- --------------------------------------------------------------------------------------------------------------------------
Working capital $ 1,569 1,436 1,450 1,452 1,236
- --------------------------------------------------------------------------------------------------------------------------
Property and equipment $ 6,385 5,947 5,563 5,102 4,525
- --------------------------------------------------------------------------------------------------------------------------
Total assets $ 11,697 10,778 10,337 9,485 8,524
- --------------------------------------------------------------------------------------------------------------------------
Long-term debt $ 4,488 4,279 4,330 4,227 3,682
- --------------------------------------------------------------------------------------------------------------------------
Convertible preferred stock $ 360 368 374 377 379
- --------------------------------------------------------------------------------------------------------------------------
Common shareholders' investment $ 3,043 2,737 2,486 2,231 2,048
- --------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
- --------------------------------------------------------------------------------------------------------------------------
Fully diluted net earnings per share:
Continuing (b) $ 5.52 4.77 4.82 3.72 5.20
Consolidated $ 5.52 4.77 4.82 3.72 5.20
- --------------------------------------------------------------------------------------------------------------------------
Cash dividend declared $ 1.68 1.62 1.54 1.46 1.35
- --------------------------------------------------------------------------------------------------------------------------
Market price - high $ 86 83 3/4 79 1/8 80 78 1/8
- --------------------------------------------------------------------------------------------------------------------------
Market price - low $ 65 1/8 63 1/4 59 56 3/8 47
- --------------------------------------------------------------------------------------------------------------------------
Market price - close $ 69 65 7/8 77 3/4 65 1/8 65 3/4
- --------------------------------------------------------------------------------------------------------------------------
Common shareholders' investment $ 42.45 38.27 34.83 31.31 28.82
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Summary Financial and Operating Data should be read in conjunction with the
Notes to Consolidated Financial Statements contained throughout pages 21-32.

(b) Includes cumulative income effect of two accounting changes, net, of $2
million ($.03 per share) in 1990.

Dayton Hudson Corporation and Subsidiaries
<PAGE>

DAYTON HUDSON CORPORATION 1994 FACTS

. America's fourth largest general merchandise retailer with revenues of $21.3
billion.

. Serves guests through 960 stores in 33 states.

. Among America's 20 largest private employers, with a workforce totaling
194,000.

. Largest commitment to community giving of any general merchandise retailer
with 1994 giving of approximately $24 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, providing quality merchandise at low prices in
guest-friendly stores. It has 611 stores coast-to-coast.

<TABLE>
<CAPTION>
(Millions of Dollars) 1994 1993 1992
- --------------------------------------------------
<S> <C> <C> <C>
Revenues $13,600 $11,743 $10,393
- --------------------------------------------------
Operating Profit $ 732 $ 662 $ 574
- --------------------------------------------------
Stores 611 554 506
- --------------------------------------------------
Retail Square Feet* 64,446 58,087 52,211
</TABLE>

MERVYN'S

Mervyn's is a middle-market promotional department store focused on apparel and
soft goods. The division operates 286 stores in 15 states in the Northwest,
West, Southwest, Southeast and Michigan.

<TABLE>
<CAPTION>
(Millions of Dollars) 1994 1993 1992
- --------------------------------------------------
<S> <C> <C> <C>
Revenues $ 4,561 $ 4,436 $ 4,510
- --------------------------------------------------
Operating Profit $ 206 $ 179 $ 284
- --------------------------------------------------
Stores 286 276 265
- --------------------------------------------------
Retail Square Feet* 23,130 22,273 21,305
</TABLE>

DEPARTMENT STORES

The Department Store Division emphasizes fashion leadership, quality merchandise
and superior guest service. The Division operates 63 full-service, full-line
department stores through three store groups in nine states primarily in the
Midwest: 19 Dayton's stores, 21 Hudson's stores and 23 Marshall Field's stores.

<TABLE>
<CAPTION>
(Millions of Dollars) 1994 1993 1992
- --------------------------------------------------
<S> <C> <C> <C>
Revenues $ 3,150 $ 3,054 $ 3,024
- --------------------------------------------------
Operating Profit $ 270 $ 268 $ 228
- --------------------------------------------------
Stores 63 63 63
- --------------------------------------------------
Retail Square Feet* 13,824 13,824 13,846
</TABLE>

*In thousands, reflects total square feet less office, warehouse and vacant
space.

Dayton Hudson Corporation
<PAGE>

<TABLE>
<CAPTION>
TARGET LOCATIONS

RETAIL SQ. FT. NO.
IN THOUSANDS OF STORES
<S> <C> <C>
Arizona 2,340 22
Arkansas 186 2
California 13,180 123
Colorado 2,014 19
Florida 5,381 49
Georgia 1,500 15
Idaho 309 3
Illinois 4,327 38
Indiana 2,694 30
Iowa 1,592 17
Kansas 572 6
Kentucky 563 6
Louisiana 202 2
Michigan 4,307 41
Minnesota 4,764 41
Missouri 835 8
Montana 299 3
Nebraska 780 8
Nevada 842 8
New Mexico 403 4
North Carolina 595 6
North Dakota 416 4
Ohio 809 7
Oklahoma 782 8
Oregon 944 9
South Carolina 297 3
South Dakota 391 4
Tennessee 1,413 14
Texas 7,372 69
Washington 1,927 19
Wisconsin 2,228 21
Wyoming 182 2

TOTAL 64,446 611

MAJOR MARKETS
Greater Los Angeles 65
Minneapolis/St. Paul 29
Chicago 24
Detroit 21
Dallas/Ft. Worth 20
Houston 19
San Francisco Bay Area 17
Phoenix 15
Atlanta 14
Miami/Ft. Lauderdale 14
Denver 13
San Diego 12
Seattle/Tacoma 10
Indianapolis 10

EMPLOYEES
(AT YEAR-END): 123,000

MERVYN'S LOCATIONS

RETAIL SQ. FT. NO.
IN THOUSANDS OF STORES

Arizona 1,230 15
California 9,920 127
Colorado 927 12
Florida 1,732 19
Georgia 563 7
Idaho 83 1
Louisiana 538 7
Michigan 1,175 15
Nevada 412 6
New Mexico 180 2
Oklahoma 270 3
Oregon 555 7
Texas 3,416 42
Utah 762 8
Washington 1,367 15

TOTAL 23,130 286

MAJOR MARKETS
Greater Los Angeles 50
San Francisco Bay Area 22
Miami/Ft. Lauderdale 14
Dallas/Ft. Worth 13
San Diego 12
Phoenix 11
Houston 10
Detroit 9
Seattle/Tacoma 8
Atlanta 7
Denver 7

EMPLOYEES
(AT YEAR-END): 35,000

DEPARTMENT STORE LOCATIONS

RETAIL SQ. FT. NO.
IN THOUSANDS OF STORES

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

EMPLOYEES
(AT YEAR-END): 36,000
</TABLE>

Dayton Hudson Corporation

<PAGE>

EXHIBIT (21)

SUBSIDIARIES OF REGISTRANT
--------------------------

As of April 1, 1995, the following are wholly-owned subsidiaries of the
Registrant and are Minnesota corporations, except as otherwise indicated:

Bullseye Corporation (Delaware)
CPS Minnesota Corp. (Delaware)
Dayton Credit Company
Dayton Development Company
Dayton's Commercial Interiors, Inc.
Dayton Hudson Investment Corporation
Dayton's Iron Horse Liquors, Inc.
Dayton's Sioux Falls, Inc. (South Dakota)
Dayton's Travel Service, Inc.
Eighth Street Development Company
Mervyn's (California)
Mervyn's, Inc. (Delaware)
Retailers National Bank, N.A. (national association)
Rooftop, Inc.
Seatamatic, Inc. (Nevada)
STL of Nebraska, Inc.
Target Stores, Inc.

Capitol Lounge Corp. (Wisconsin)
Clybourn Trading Corp. (Wisconsin)
DHC Milwaukee, Inc. (Wisconsin)
DHC Wine & Liquor Shop, Inc. (Wisconsin)
Greener Fields, Inc. (Texas)
Marshall Field & Company (Delaware)
Marshall Field's Chicago, Inc. (Delaware)
Marshall Field's Direct Response Company, Inc. (Delaware)
Marshall Field of Columbus, Inc. (Ohio)
Marshall Field's Mayfair, Inc. (Wisconsin)
Marshall Field Stores, Inc. (Delaware)

<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 17, 1995, included in the
1994 Annual Report to Shareholders of Dayton Hudson Corporation.

Our audits also included the financial statement schedule of Dayton Hudson
Corporation listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule 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 17, 1995, 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 schedule included in this Annual Report (Form 10-K) of Dayton Hudson
Corporation.

/s/ Ernst & Young LLP

Minneapolis, Minnesota
April 18, 1995

<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 ROBERT J. ULRICH, STEPHEN E. WATSON, JAMES T. HALE,
DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, 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 28, 1995, 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 8th day of March, 1994.

/s/ Rand V. Araskog
________________________________
Rand V. Araskog
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Robert A. Burnett
________________________________
Robert A. Burnett
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Livio D. DeSimone
________________________________
Livio D. DeSimone
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Roger A. Enrico
________________________________
Roger A. Enrico
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ William W. George
________________________________
William W. George
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Roger L. Hale
________________________________
Roger L. Hale
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Betty Ruth Hollander
________________________________
Betty Ruth Hollander
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Michele J. Hooper
________________________________
Michele J. Hooper
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Mary Patterson McPherson
________________________________
Mary Patterson McPherson
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Solomon D. Trujillo
________________________________
Solomon D. Trujillo
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Robert J. Ulrich
________________________________
Robert J. Ulrich
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ John R. Walter
________________________________
John R. Walter
<PAGE>

DAYTON HUDSON CORPORATION

Power of Attorney
of Director and/or Officer

IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 8th day of March, 1994.

/s/ Stephen E. Watson
________________________________
Stephen E. Watson

<PAGE>

<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
DAYTON HUDSON CORPORATION'S FORM 10-K FOR THE YEAR ENDED JANUARY 28,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-29-1994
<PERIOD-END> JAN-28-1995
<CASH> 147
<SECURITIES> 0
<RECEIVABLES> 1,856
<ALLOWANCES> 46
<INVENTORY> 2,777
<CURRENT-ASSETS> 4,959
<PP&E> 9,009
<DEPRECIATION> 2,624
<TOTAL-ASSETS> 11,697
<CURRENT-LIABILITIES> 3,390
<BONDS> 4,488
<COMMON> 72
360
0
<OTHER-SE> 2,882
<TOTAL-LIABILITY-AND-EQUITY> 11,697
<SALES> 21,031
<TOTAL-REVENUES> 21,311
<CGS> 15,636
<TOTAL-COSTS> 15,636
<OTHER-EXPENSES> 4,469
<LOSS-PROVISION> 66
<INTEREST-EXPENSE> 426
<INCOME-PRETAX> 714
<INCOME-TAX> 280
<INCOME-CONTINUING> 434
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 434
<EPS-PRIMARY> 5.77
<EPS-DILUTED> 5.52

</TABLE>