<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended November 2, 1996
-----------------
Commission file number 1-6049
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Dayton Hudson Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0215170
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(State of incorporation or organization) (I.R.S. Employer
Identification No.)
777 Nicollet Mall Minneapolis, Minnesota 55402-2055
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 370-6948
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None
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
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 and
(2) has been subject to such filing requirements for the past 90 days.
The number of shares outstanding of common stock as of November 2, 1996 was
216,920,781.
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I FINANCIAL INFORMATION:
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Results of 1
Operations for the Three Months, Nine
Months and Twelve Months ended November 2,
1996 and October 28, 1995
Condensed Consolidated Statements of 2
Financial Position at November 2, 1996,
February 3, 1996 and October 28, 1995
Condensed Consolidated Statements of 3
Cash Flows for the Nine Months ended
November 2, 1996 and October 28, 1995
Notes to Condensed Consolidated 4-5
Financial Statements
ITEM 2 - MANAGEMENT'S DISCUSSION AND 6-10
ANALYSIS OF OPERATIONS AND FINANCIAL
CONDITION
PART II OTHER INFORMATION:
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 11
Signatures 12
Exhibit Index 13
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED Dayton Hudson Corporation
RESULTS OF OPERATIONS and Subsidiaries
(Millions of Dollars, Except Per Share Data) Three Months Ended Nine Months Ended Twelve Months Ended
- -----------------------------------------------------------------------------------------------------------------------------------
NOVEMBER 2, October 28, NOVEMBER 2, October 28, NOVEMBER 2, October 28,
(Unaudited) 1996 1995 1996 1995 1996 * 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES $ 6,073 $ 5,573 $17,204 $15,566 $25,154 $22,564
COSTS AND EXPENSES
Cost of retail sales, buying
and occupancy 4,452 4,113 12,598 11 ,513 18,612 16,682
Selling, publicity and administrative 1,041 1,023 3,033 2,849 4,227 3,872
Depreciation and amortization 166 152 482 443 633 582
Interest expense, net 114 111 334 326 450 433
Taxes other than income taxes 109 103 329 299 439 399
- -----------------------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 5,882 5,502 16,776 15,430 24,361 21,968
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes and
Extraordinary Charge 191 71 428 136 793 596
Provision for Income Taxes 75 27 169 53 306 234
- -----------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS BEFORE EXTRAORDINARY
CHARGE $ 116 $ 44 $ 259 $ 83 $ 487 $ 362
Extraordinary Charge from Purchase
and Redemption of Debt,
Net of Tax 9 - 10 - 10 -
- -----------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 107 $ 44 $ 249 $ 83 $ 477 $ 362
===================================================================================================================================
PRIMARY EARNINGS PER SHARE:
Earnings Before Extraordinary Charge $ 0.51 $ 0.18 $ 1.11 $ 0.32 $ 2.14 $ 1.58
Extraordinary Charge (0.04) - (0.04) - (0.04) -
- -----------------------------------------------------------------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE $ 0.47 $ 0.18 $ 1.07 $ 0.32 $ 2.10 $ 1.58
- -----------------------------------------------------------------------------------------------------------------------------------
FULLY DILUTED EARNINGS PER SHARE:
Earnings Before Extraordinary Charge $ 0.49 $ 0.18 $ 1.08 $ 0.32 $ 2.05 1.52
Extraordinary Charge (0.04) - (0.04) - (0.04) -
- -----------------------------------------------------------------------------------------------------------------------------------
FULLY DILUTED EARNINGS PER SHARE $ 0.45 $ 0.18 $ 1.04 $ 0.32 $ 2.01 1.52
===================================================================================================================================
DIVIDENDS DECLARED PER COMMON SHARE $ 0.16 $ 0.15 $ 0.47 $ 0.44 $ 0.61 0.58
AVERAGE COMMON SHARES
OUTSTANDING (Millions):
Primary 218.8 217.0 218.4 216.8 217.8 216.2
Fully Diluted 230.7 229.2 230.5 229.2 230.0 228.9
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Consisted of 53 weeks.
See accompanying Notes to Condensed Consolidated Financial Statements.
1
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS Dayton Hudson Corporation
OF FINANCIAL POSITION and Subsidiaries
NOVEMBER 2, February 3, October 28,
(Millions of Dollars) 1996 1996* 1995
- -------------------------------------------------------------------------------------------------
ASSETS (UNAUDITED) (Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 204 $ 175 $ 177
Accounts receivable 1,581 1,510 1,338
Merchandise inventories 3,949 3,018 4,007
Other 257 252 198
- -------------------------------------------------------------------------------------------------
Total Current Assets 5,991 4,955 5,720
PROPERTY AND EQUIPMENT 10,572 10,224 9,968
Accumulated depreciation (3,038) (2,930) (2,904)
------- ------- -------
Property and Equipment, net 7,534 7,294 7,064
OTHER 484 321 356
- -------------------------------------------------------------------------------------------------
TOTAL ASSETS $14,009 $12,570 $13,140
=================================================================================================
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt and
notes payable $ 658 $ 182 $ 625
Accounts payable 2,662 2,247 2,613
Other 1,174 1,094 1,091
- -------------------------------------------------------------------------------------------------
Total Current Liabilities 4,494 3,523 4,329
LONG-TERM DEBT 5,235 4,959 4,968
DEFERRED INCOME TAXES AND OTHER 633 623 588
CONVERTIBLE PREFERRED STOCK, NET 51 62 54
SHAREHOLDERS' INVESTMENT 3,596 3,403 3,201
- -------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $14,009 $ 12,570 $13,140
=================================================================================================
COMMON SHARES OUTSTANDING (Millions) 216.9 215.9 215.7
=================================================================================================
</TABLE>
*The February 3, 1996 Consolidated Statement of Financial Position is condensed
from the audited financial statements.
See accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
CONDENSED CONSOLIDATED Dayton Hudson Corporation
STATEMENTS OF CASH FLOWS and Subsidiaries
<TABLE>
<CAPTION>
(Millions of Dollars) Nine Months Ended
- --------------------------------------------------------------------------------
NOVEMBER 2, October 28,
(Unaudited) 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings before extraordinary charge $ 259 $ 83
Reconciliation to cash flow:
Depreciation and amortization 482 443
Deferred tax provision (39) (24)
Other non-cash items affecting earnings 72 53
Changes in operating accounts
providing/(requiring) cash:
Accounts receivable (71) 72
Sale of securitized accounts - 400
receivable
Merchandise inventories (931) (1,230)
Accounts payable 409 652
Other 170 (91)
- -------------------------------------------------------------------------------
Cash Flow Provided by Operations 351 358
===============================================================================
INVESTING ACTIVITIES
Expenditures for property and equipment, net (972) (1,121)
Other - 3
- -------------------------------------------------------------------------------
Cash Flow Required for Investing Activities (972) (1,118)
- -------------------------------------------------------------------------------
Net Financing Requirements (621) (760)
===============================================================================
FINANCING ACTIVITIES
Increase in notes payable, net 261 888
Additions to long-term debt 700 150
Reductions of long-term debt (209) (146)
Dividends paid (114) (111)
Other 12 9
- -------------------------------------------------------------------------------
Cash Flow Provided by Financing Activities 650 790
===============================================================================
Net Increase in Cash and Cash Equivalents 29 30
Cash and Cash Equivalents at Beginning of Period 175 147
- -------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 204 $ 177
===============================================================================
</TABLE>
Amounts in this statement are presented on a cash basis and therefore may differ
from those shown elsewhere in this 10-Q report. Cash paid for income taxes was
$266 million and $197 million during the first nine months of 1996 and 1995,
respectively. Cash paid for interest (including interest capitalized) in the
first nine months of 1996 and 1995 was $292 million and $290 million,
respectively.
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
NOTES TO CONDENSED CONSOLIDATED Dayton Hudson Corporation
FINANCIAL STATEMENTS and Subsidiaries
ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements should be read in
conjunction with the financial statement disclosures contained in the
Corporation's 1995 Annual Shareholders' Report throughout pages 23-34. As
explained on page 33 of the Annual Report, the same accounting policies are
followed in preparing quarterly financial data as are followed in preparing
annual data. In the opinion of management, all adjustments necessary for a
fair presentation of quarterly operating results are reflected herein and are
of a normal, recurring nature.
Due to the seasonal nature of the retail industry, earnings for periods which
exclude the Holiday season are not necessarily indicative of the operating
results that may be expected for the full year.
PER SHARE DATA
Primary earnings per share equals net earnings, less dividend requirements on
ESOP preferred shares, divided by the average number of common shares and
common share equivalents outstanding during the period. Fully diluted
earnings per share assumes conversion of the ESOP preferred shares into common
shares, unless the conversion is antidilutive. Net earnings are also adjusted
for the additional expense required to fund the ESOP debt service, caused by
the assumed replacement of the ESOP preferred dividends with common stock
dividends, unless the conversion is antidilutive. References to earnings per
share relate to fully diluted earnings per share.
In second quarter 1996, the Corporation's common stock was split three-for-
one. All earnings per share, dividends per share and common shares outstanding
presented in this report reflect the stock split.
LONG-TERM DEBT AND NOTES PAYABLE
During the quarter, the Corporation called and redeemed $112 million of 9.5%
sinking fund debentures, due in 2016, for $117 million. The Corporation also
called, for redemption in November 1996, an additional $145 million of 9.25%
sinking fund debentures, due in 2016, for $151 million. An extraordinary
charge of $9 million, net of tax, ($.04 per share) for early extinguishment of
debt was recorded in the quarter related to these transactions.
During the third quarter, the Corporation issued $200 million of long-term debt
at 6.8% per annum, maturing in 2001. Also in the quarter, the Dayton Hudson
Credit Card Master Trust issued, for cash, a $300 million Series 1996-1 Class
A Variable Funding Certificate backed by credit card receivables. The
outstanding Certificate amount may fluctuate based on financing needs. The
Class A Certificate is debt of Dayton Hudson Receivables Corporation (DHRC), a
subsidiary of the Corporation, and is included in the Corporation's
Consolidated Statement of Financial Position. These proceeds were used for
general corporate purposes. The issuance of this Certificate is a
continuation of the use of securitized accounts receivable as a funding
source. The $400 million of three-year certificates backed by credit card
receivables issued in September 1995 were recorded as a sale.
4
<PAGE>
SALE OF MARSHALL FIELD'S TEXAS STORES
In the third quarter DSD finalized agreements to sell three of the four Marshall
Field's stores in Texas. The three stores will continue to operate as Marshall
Field's through the Holiday season and the sale transactions are expected to
close by the end of 1996. The remaining Texas store continues to be marketed and
will operate until its expected sale, pending developer approval, in 1997. The
exit of Marshall Field's from the Texas market is expected to result in an
immaterial gain in the fourth quarter.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current-
year presentation.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
THIRD QUARTER 1996
ANALYSIS OF OPERATIONS
Third quarter 1996 net earnings before extraordinary charge were $116 million,
compared with $44 million for third quarter 1995. For the nine-month period
ending November 2, 1996, net earnings before extraordinary charge increased to
$259 million from $83 million for the same period a year ago. Earnings per
share before extraordinary charge for the third quarter and the nine-month
period were $.49 and $1.08, respectively, compared with $.18 and $.32 for the
same periods last year. Net earnings for third quarter and the nine-month
period were reduced by an extraordinary charge, net of tax, related to the early
extinguishment of debt of $9 million ($.04 per share) and $10 million ($.04 per
share), respectively.
The improvement in earnings for the third quarter and first nine months of the
year was due to strong sales and operating performance at Target, a significant
increase in profitability at Mervyn's and expense savings associated with our
corporation-wide cost reduction initiatives.
The following table illustrates the impact of the major factors contributing to
the changes in earnings per share:
<TABLE>
<CAPTION>
Three Nine
Months Months
- -----------------------------------------------------------------------
<S> <C> <C>
1995 Earnings Per Share $ .18 $ .32
Changes in earnings per share due to:
Revenues .06 .12
Gross margin rate:
FIFO .01 .22
LIFO Provision (.01) (.01)
Operating expense rate .29 .57
Start-up expenses (.02) (.05)
Interest expense, net (.01) (.02)
Corporate and other expense, net (.01) (.07)
- -----------------------------------------------------------------------
1996 Earnings Per Share before
Extraordinary Charge $ .49 $1.08
=======================================================================
</TABLE>
Strong sales growth at Target, our lowest margin and expense rate division,
continues to impact our business mix. As a result, for third quarter and for
the nine-month period the Corporation's overall revenue growth and total
operating expense rate were favorably affected, while the gross margin rate was
unfavorably affected. If the sales mix between divisions had remained constant
with the comparable periods in 1995, the gross margin rate variance would have
been $.04 and $.11 more favorable and the operating expense rate would have been
$.05 and $.16 less favorable for the third quarter and nine months,
respectively. This is expected to continue into the future as a result of the
Corporation's strategy to grow Target more rapidly than its other divisions.
Target contributed 69% of the Corporation's total revenues on a 12-month
trailing basis.
6
<PAGE>
Revenues
- --------
Total revenues increased 9% and 11% for the third quarter and nine months,
respectively, while comparable-store revenues (revenues from stores open longer
than one year) increased 2% and 4%, respectively.
Revenues by business segment were as follows:
<TABLE>
<CAPTION>
(Millions of Dollars) Three Months Ended Percentage Change
----------------------- ---------------------
NOVEMBER 2, October 28, All Comparable
1996 1995 Stores Stores
---------- ---------- ------ ----------
<S> <C> <C> <C> <C>
Target $ 4,191 $ 3,666 14% 5%
Mervyn's 1,078 1,110 (3) (4)
DSD 804 797 1 (5)
------- ------- --- --
Total Revenues $ 6,073 $ 5,573 9% 2%
======= ======= === ==
Nine Months Ended Percentage Change
----------------------- ----------------------
NOVEMBER 2, October 28, All Comparable
1996 1995 Stores Stores
---------- ---------- ------ ----------
Target $11,992 $10,337 16% 7%
Mervyn's 3,044 3,054 - (2)
DSD 2,168 2,175 - (3)
------- ------- --- --
Total Revenues $17,204 $15,566 11% 4%
======= ======= === ==
</TABLE>
Target's strong revenue results reflect new-store growth, strong base-business
sales and higher finance-charge revenues and late-fee revenues associated with
the continued growth of the Target Guest Card. While Mervyn's experienced
positive comparable-store revenues in the first quarter, the second quarter
trend of declining comparable-store revenues continued into the third quarter,
as anticipated. DSD's total revenues were essentially flat and comparable-store
revenues declined for the third quarter and for the first nine months
principally due to substantially fewer promotional days, partially offset by
increased regular-price sales, particularly in better merchandise categories.
7
<PAGE>
Operating Profit
- ----------------
Total operating profit increased 62% and 63% for the third quarter and nine-
month period, respectively. Operating profit is LIFO earnings from operations
before corporate expense, interest and income taxes.
Operating profit by business segment was as follows:
<TABLE>
<CAPTION>
(Millions of Dollars) Three Months Ended
------------------------------------------
NOVEMBER 2, October 28, Percentage
1996 1995 Change
----------- ----------- ----------
<S> <C> <C> <C>
Target $ 213 $ 117 82%
Mervyn's 64 33 98
DSD 45 50 (10)
----------- ----------- ----------
Total Operating Profit $ 322 $ 200 62%
=========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
(Millions of Dollars) Nine Months Ended
------------------------------------------
NOVEMBER 2, October 28, Percentage
1996 1995 Change
----------- ----------- ----------
<S> <C> <C> <C>
Target $ 586 $ 358 64%
Mervyn's 157 37 100+
DSD 83 112 (26)
----------- ----------- ----------
Total Operating Profit $ 826 $ 507 63%
=========== =========== ==========
</TABLE>
Operating profit included a net reduction related to the September 1995 sale of
securitized accounts receivable as follows:
<TABLE>
<CAPTION>
(Millions of Dollars) Three Months Ended Nine Months Ended
------------------------- -------------------------
NOVEMBER 2, October 28, NOVEMBER 2, October 28,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Target $ 1 $ 1 $ 4 $ 1
Mervyn's 2 2 7 2
DSD 3 1 7 1
----------- ----------- ----------- -----------
Total Reduction to
Operating Profit $ 6 $ 4 $ 18 $ 4
=========== =========== =========== ===========
</TABLE>
The reductions to operating profit were offset by comparable interest expense
savings due to the replacement of debt with securitization proceeds.
8
<PAGE>
TARGET'S third quarter and nine-month operating profit increases of 82% and 64%,
respectively, reflect strong total and comparable-store revenue growth, as well
as gross margin rate and operating expense rate improvements. Target's gross
margin rate for the third quarter and nine months improved primarily due to
promotional markdown favorability and higher markup. Target's improved operating
expense rate for the third quarter and nine-month period reflects strong sales
leveraging, improved productivity and expense control. Through the first nine
months, Target is ahead of schedule in realizing the $50 million cost savings
identified as the 1996 portion of its multi-year cost reduction program. Total
1996 cost savings are now expected to be $60-$65 million. In the fourth quarter,
modest sales growth is expected reflecting five fewer shopping days this year
between Thanksgiving and Christmas. Continued margin improvement, combined with
conservative inventory levels, should produce an additional year-over-year
operating profit increase, although not to the degree experienced in the first
nine months.
MERVYN'S operating profit for the third quarter and nine-months increased to $64
million and $157 million, respectively, from $33 million and $37 million for the
comparable periods last year. The gross margin rate declined in the third
quarter while the nine-month gross margin rate increased significantly
reflecting higher markup and lower markdowns. Mervyn's operating expense rate
for the third quarter and first nine months of 1996 also showed substantial
improvement due to expense reductions in stores, marketing and headquarters.
Through the third quarter, Mervyn's is slightly ahead of plan in achieving its
1996 cost reduction plan of $80 million, $100 million annualized, and may
achieve the full $100 million in 1996. In the fourth quarter, Mervyn's is
expected to continue to achieve operating profit improvement over last year,
although not to the degree experienced in the first nine months. Our fourth
quarter plan assumes improvement in the gross margin rate and further
realization of operating expense savings, partially offset by an expected
comparable-store sales decline.
DSD'S third quarter and nine-month operating profit declined compared with the
same periods last year. The third quarter and nine-month gross margin rates
declined due to exiting the electronics business and increased clearance
markdowns, partially offset by lower promotional markdowns and higher markup.
The operating expense rate for the third quarter was favorable due to expense
reduction initiatives, particularly lower marketing costs. The nine-month
operating expense rate was unfavorable to last year due to lower sales leverage
and higher store expense related to increased staffing to improve guest service,
partially offset by lower marketing costs. In the fourth quarter, DSD will
continue its repositioning and fourth quarter comparable-store sales are
expected to decline reflecting the continued impact of reduced store-wide
promotions.
Other Performance Factors
- -------------------------
The last-in first-out (LIFO) provision was a $5 million charge, $.01 per share,
for the three- and nine-month periods ended November 2, 1996, and zero for the
three- and nine-month periods ended October 28, 1995. The third quarter LIFO
charge is attributable to DSD. The cumulative LIFO provision was $82 million at
November 2, 1996, $77 million at February 3, 1996 and $60 million at October 28,
1995. Management expects a modest LIFO charge for total year 1996.
Net interest expense increased $3 million in the third quarter and $8 million in
the first nine months compared with the same periods last year. Higher average
debt balances were substantially offset by lower average portfolio interest
rates and interest savings resulting from the replacement of debt with the
proceeds from the sale of securitized accounts receivable. The trend of higher
average debt balances offset by lower average portfolio interest rates is
expected to continue in the fourth quarter. The purchase and redemption of debt
will reduce annual interest expense by approximately $.02 per share over the
period the debentures would otherwise have remained outstanding.
9
<PAGE>
The 1996 estimated annual effective income tax rate is 39.5%, compared with
39.2% in third quarter 1995.
ANALYSIS OF FINANCIAL CONDITION
Our financial condition remains strong. The ratio of debt to total
capitalization attributable to our retail operations was 56% at the end of third
quarter, compared with 59% at the end of third quarter last year. The increase
from 53% at year-end 1995 reflects typical seasonality. Looking forward to year-
end, this ratio is expected to continue to be lower than last year.
At November 2, 1996, working capital was $1,497 million, up 8% from a year ago,
principally due to $243 million in accounts receivable growth. The 5% increase
in accounts receivable from year-end reflects growth in the Target Guest Card
offset by the typical reduction from seasonally high levels. Compared with third
quarter 1995, merchandise inventories decreased $58 million as a result of tight
inventory control at all three divisions, partially offset by Target's new store
growth. Accounts payable increased $49 million over third quarter 1995. The
combination of reduced inventory and higher accounts payable contributed over
$100 million of cash flow over the last twelve months.
Net capital expenditures for the first three quarters of 1996 were $972 million,
compared with $1,121 million for the same period a year ago. Approximately 83%
of the current year-to-date expenditures were made by Target, 5% by Mervyn's and
12% by DSD.
We continue to fund the growth in our business through a combination of debt,
the securitization of accounts receivable and retained earnings. Our debt has
increased $300 million compared with a year ago and our shareholders' investment
has grown by $395 million.
A key to the Corporation's liquidity is its ability to access a variety of
capital markets. In third quarter the Corporation, through its subsidiary DHRC,
accessed the receivables-backed commercial paper market through the sale of a
Series 1996-1 Class A Variable Funding Certificate in the amount of $300
million. This market represents a cost-efficient, alternative source of
variable-rate funding.
STORE DATA
At November 2, 1996, Target operated 736 stores in 38 states, Mervyn's operated
300 stores in 16 states and DSD operated 68 stores in nine states. During the
quarter, the Corporation opened 22 Target stores, one Mervyn's store and two DSD
stores.
Retail square footage was as follows:
<TABLE>
<CAPTION>
(In thousands, reflects total
square feet, less office, NOVEMBER 2, February 3, October 28,
warehouse and vacant space) 1996 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Target 79,090 71,108 71,108
Mervyn's 24,533 24,113 24,113
DSD 14,686 13,870 13,870
- ------------------------------------------------------------------------------
Total Retail Square Footage 118,309 109,091 109,091
==============================================================================
</TABLE>
10
<PAGE>
PART II. OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(2). Not applicable
(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.
(10). Not applicable
(11). Statements re Computations of Per Share Earnings
(12). Statements re Computations of Ratios
(15). Not applicable
(18). Not applicable
(19). Not applicable
(22). Not applicable
(23). Not applicable
(24). Not applicable
(27). Financial Data Schedule
(99). Not applicable
b) Reports on Form 8-K:
Form 8-K dated September 11, 1996 reporting declaration of a dividend
of one preferred share purchase right for each outstanding share of
common stock.
Form 8-K dated October 8, 1996 furnishing as exhibits a new form of
indenture and a second supplemental indenture to an existing form of
indenture.
11
<PAGE>
Signatures
----------
Pursuant to the requirements 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
Registrant
Date: December 13, 1996 By /s/ Douglas A. Scovanner
-------------------------------
Douglas A. Scovanner
Senior Vice President and
Chief Financial Officer
Date: December 13, 1996 By /s/ J.A. Bogdan
-------------------------------
JoAnn Bogdan
Controller and Chief
Accounting Officer
12
<PAGE>
Exhibit Index
- -------------
(11). Statements re Computations of Per Share Earnings
(12). Statements re Computations of Ratios
(27). Financial Data Schedule
13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT (11)
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF PER SHARE EARNINGS
(In Millions, Except Per Share Data)
Three Months Ended Nine Months Ended
------------------------------------------- ------------------------------------
NOVEMBER 2, 1996 October 28, 1995 NOVEMBER 2, 1996 October 28, 1995
------------------- --------------------- ----------------- -----------------
EARNINGS SHARES Earnings Shares EARNINGS SHARES Earnings Shares
-------- ------- -------- ------- -------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Primary Computations
- --------------------
Earnings before extraordinary charge............. $116 $ 44 $ 259 $ 83
Extraordinary charge, net of tax................. (9) - (10) -
-------- -------- -------- --------
Net earnings..................................... 107 $ 44 $ 249 $ 83
======== ======== ======== ========
Less: Dividend requirements on ESOP
preferred shares, net of tax benefit on
unallocated shares............................. (5) (5) (15) (15)
-------- -------- -------- --------
Adjusted net earnings............................ $102 $ 39 $ 234 $ 68
======== ======== ======== ========
Average common shares outstanding 216.8 215.6 216.5 215.4
Average number of common share equivalents:
Stock options.................................... 1.2 0.4 1.1 0.4
Performance shares............................... 0.8 1.0 0.8 1.0
-------- -------- ------- ------
Adjusted common equivalent shares
outstanding-primary.............................. 218.8 217.0 218.4 216.8
======== ======== ======= ======
Primary earnings per share before extraordinary
charge........................................... $0.51 $0.18 $1.11 $ 0.32
Extraordinary Charge............................. (0.04) - (0.04) -
-------- -------- -------- --------
PRIMARY EARNINGS PER SHARE $0.47 $0.18 $1.07 $ 0.32
======== ======== ======== ========
Fully Diluted Computations
- --------------------------
Earnings before extraordinary charge............. $116 $ 44 $ 259 $ 83
Extraordinary charge, net of tax................. (9) - (10) -
-------- -------- -------- --------
Net earnings..................................... $107 $ 44 $ 249 $ 83
======== ======== ======== ========
Less: Earnings impact of assumed ESOP
preferred share conversion, net of tax benefit
on unallocated shares.......................... (3) (4) (10) (10)
-------- -------- -------- --------
Adjusted net earnings............................ $104 $ 40 $ 239 $ 73
======== ======== ======== ========
Average common and common equivalent
shares-primary.................................. 218.8 217.0 218.4 216.8
Additional common share equivalents attributable
to applications of the treasury stock method.... 0.2 - 0.3 0.1
Assumed conversion of ESOP preferred shares...... 11.7 12.2 11.8 12.3
-------- -------- -------- -------
Adjusted common equivalent shares
outstanding-fully diluted....................... 230.7 229.2 230.5 229.2
======== ======== ======== =======
Fully diluted earnings per share before
extraordinary charge............................ 0.49 $0.18 $1.08 $ 0.32
Extraordinary Charge............................. (0.04) - (0.04) -
-------- -------- -------- --------
FULLY DILUTED EARNINGS PER SHARE $0.45 $0.18 $1.04 $ 0.32
======== ======== ======== ========
AVERAGE ALLOCATED ESOP PREFERRED
SHARES OUTSTANDING (IN MILLIONS)................ 3.1 2.6 3.0 2.5
======== ======== ====== ======
Twelve Months Ended
------------------------------------------
NOVEMBER 2, 1996 October 28, 1995
------------------- --------------------
EARNINGS SHARES Earnings Shares
-------- ------- -------- ------
<S> <C> <C> <C> <C>
Primary Computations
- --------------------
Earnings before extraordinary charge............. $ 487 $ 362
Extraordinary charge, net of tax................. (10) -
-------- --------
Net earnings..................................... $ 477 $ 362
======== ========
Less: Dividend requirements on ESOP
preferred shares, net of tax benefit on
unallocated shares............................... (20) (19)
-------- --------
Adjusted net earnings............................ $ 457 $ 343
======== ========
Average common shares outstanding 216.1 215.0
Average number of common share equivalents:
Stock options.................................... 0.9 0.4
Performance shares............................... 0.8 0.8
------- -------
Adjusted common equivalent shares
outstanding-primary............................. 217.8 216.2
======= =======
Primary earnings per share before extraordinary
charge.......................................... $2.14 $1.58
Extraordinary Charge............................. (0.04) -
-------- --------
PRIMARY EARNINGS PER SHARE $2.10 $1.58
======== ========
Fully Diluted Computations
- --------------------------
Earnings before extraordinary charge............. $ 487 $ 362
Extraordinary charge, net of tax................. (10) -
-------- --------
Net earnings..................................... $ 477 $ 362
======== ========
Less: Earnings impact of assumed ESOP
preferred share conversion, net of tax benefit
on unallocated shares............................ (14) (13)
-------- --------
Adjusted net earnings............................ $ 463 $ 349
======== ========
Average common and common equivalent
shares-primary.................................. 217.8 216.2
Additional common share equivalents attributable
to applications of the treasury stock method.... 0.2 0.1
Assumed conversion of ESOP preferred shares...... 12.0 12.6
------- -------
Adjusted common equivalent shares
outstanding-fully diluted....................... 230.0 228.9
======= =======
Fully diluted earnings per share before
extraordinary charge............................ $2.05 $1.52
Extraordinary Charge............................. (0.04) -
-------- -------
FULLY DILUTED EARNINGS PER SHARE $2.01 $1.52
======== =======
AVERAGE ALLOCATED ESOP PREFERRED
SHARES OUTSTANDING (IN MILLIONS)................ 2.8 2.1
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT (12)
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF RATIOS OF EARNINGS TO FIXED CHARGES AND
RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS FOR THE
NINE MONTHS ENDED NOVEMBER 2, 1996 AND OCTOBER 28, 1995
AND FOR THE FIVE YEARS ENDED FEBRUARY 3, 1996
(MILLIONS OF DOLLARS)
Nine Months Ended Fiscal Year Ended
--------------------- --------------------------------------------------
Nov. 2, Oct. 28, Feb. 3, Jan. 28, Jan. 29, Jan. 30, Feb. 1,
1996 1995 1996 1995 1994 1993 1992
-------- ---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES:
Earnings:
Consolidated net earnings before extraordinary
charge ................................................. $ 259 $ 83 $ 311 $ 434 $ 375 $ 383 $ 301
Income taxes.............................................. 169 53 190 280 232 228 171
----- ----- ------ ------ ------ ------ -----
Total earnings before extraordinary charge............... 428 136 501 714 607 611 472
----- ----- ------ ------ ------ ------ -----
Fixed charges:
Interest expense.......................................... 351 341 461 439 459 454 421
Interest portion of rental expense........................ 45 48 59 56 45 43 39
----- ----- ------ ------ ------ ------ -----
Total fixed charges...................................... 396 389 520 495 504 497 460
----- ----- ------ ------ ------ ------ -----
Less:
Capitalized interest...................................... ( 15) ( 11) ( 14) ( 7) ( 5) ( 6) ( 11)
----- ----- ------ ------ ------ ------ -----
Fixed charges in earnings................................ 381 378 506 488 499 491 449
----- ----- ------ ------ ------ ------ -----
Earnings available for fixed charges...................... $ 809 $ 514 $1,007 $1,202 $1,106 $1,102 $ 921
===== ===== ====== ====== ====== ====== =====
Ratio of earnings before extraordinary charge
to fixed charges........................................ 2.04 1.32 1.94 2.43 2.19 2.22 2.00
===== ===== ====== ====== ====== ====== =====
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS:
Total fixed charges, as above.............................. $ 396 $ 389 $ 520 $ 495 $ 504 $ 497 $ 460
Dividends on preferred stock
(pre-tax basis)........................................... 27 28 37 39 39 39 39
----- ----- ------ ------ ------ ------ -----
Total fixed charges and preferred
stock dividends....................................... 423 417 557 534 543 536 499
----- ----- ------ ------ ------ ------ -----
Earnings available for fixed charges
and preferred stock dividends............................. $ 809 $ 514 $1,007 $1,202 $1,106 $1,102 $ 921
===== ===== ====== ====== ====== ====== =====
Ratio of earnings before extraordinary charge to
fixed charges and preferred stock dividends.............. 1.91 1.23 1.81 2.25 2.04 2.06 1.85
===== ===== ====== ====== ====== ====== =====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Dayton Hudson Corporation's Form 10Q for the third quarter ended November 2,
1996 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-START> FEB-04-1996
<PERIOD-END> NOV-02-1996
<CASH> 204
<SECURITIES> 0
<RECEIVABLES> 1652
<ALLOWANCES> 70
<INVENTORY> 3949
<CURRENT-ASSETS> 5991
<PP&E> 10572
<DEPRECIATION> 3038
<TOTAL-ASSETS> 14009
<CURRENT-LIABILITIES> 4494
<BONDS> 5235
<COMMON> 72
51
0
<OTHER-SE> 3524
<TOTAL-LIABILITY-AND-EQUITY> 14009
<SALES> 17204
<TOTAL-REVENUES> 17204
<CGS> 12598
<TOTAL-COSTS> 12598
<OTHER-EXPENSES> 3790
<LOSS-PROVISION> 54
<INTEREST-EXPENSE> 334
<INCOME-PRETAX> 428
<INCOME-TAX> 169
<INCOME-CONTINUING> 259
<DISCONTINUED> 0
<EXTRAORDINARY> 10
<CHANGES> 0
<NET-INCOME> 249
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.04
</TABLE>
