<PAGE>
Rule 424(b)(5)
Registration Nos.
333-389 and 33-59008
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED FEBRUARY 8, 1996)
$200,000,000
DAYTON HUDSON CORPORATION
7.50% NOTES DUE 2006
----------------
Interest on the Notes is payable semi-annually on January 15 and July 15 of
each year, commencing January 15, 1997. The Notes are not redeemable prior to
maturity and will not be entitled to any sinking fund. The Notes will be
represented by one or more global Notes registered in the name of the nominee
of The Depository Trust Company, which will act as Depositary. Interests in
the Notes will be shown on, and transfers thereof will be effected only
through, records maintained by the Depositary and its participants. Except as
described under "Description of Notes", owners of beneficial interests in the
global Notes will not be considered the Holders thereof and will not be
entitled to receive any delivery of Notes in definitive form. Settlement for
the Notes will be made in immediately available funds. The Notes will trade in
the Depositary's Same-Day Funds Settlement System until maturity and secondary
market trading activity in the Notes will therefore settle in immediately
available funds. See "Description of Notes".
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.......................... 99.768% .65% 99.118%
- --------------------------------------------------------------------------------
Total............................. $199,536,000 $1,300,000 $198,236,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued interest from July 15, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $100,000 payable by the Company.
----------------
The Notes are offered severally by the Underwriters, as specified herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of the Notes will
be made through the facilities of The Depository Trust Company on or about
July 24, 1996 against payment therefor in immediately available funds.
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
----------------
The date of this Prospectus Supplement is July 19, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS IN THE NOTES WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------
RATIOS OF EARNINGS TO FIXED CHARGES AND TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following are the consolidated ratios of earnings to fixed charges and
to fixed charges and preferred stock dividends for each of the years in the
five-year period ended February 3, 1996, and the three-month periods ended
April 29, 1995 and May 4, 1996:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED ENDED
----------------------------------------------------------- ----------------
FEBRUARY 1, JANUARY 30, JANUARY 29, JANUARY 28, FEBRUARY 3, APRIL 29, MAY 4,
1992 1993 1994 1995 1996 1995 1996
----------- ----------- ----------- ----------- ----------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges.......... 2.00x 2.22 2.19 2.43 1.94 1.12 1.48
Ratio of Earnings to
Fixed Charges and Pre-
ferred Stock Dividends. 1.85x 2.06 2.04 2.25 1.81 1.04 1.39
</TABLE>
For purposes of computing the ratios of earnings to fixed charges, income
before income taxes plus fixed charges less capitalized interest has been
divided by fixed charges. For purposes of computing the ratios of earnings to
fixed charges and preferred stock dividends, income before income taxes plus
fixed charges less capitalized interest has been divided by fixed charges and
pretax earnings required to cover preferred stock dividends. Fixed charges
consist of interest on short-term borrowings and long-term debt, amortization
of debt expense, capitalized interest and the interest portion of rental
expense. Pretax earnings required to cover preferred stock dividends have been
computed by dividing preferred stock dividends, adjusted for the tax benefits
related to the unallocated shares, by one minus the Corporation's income tax
rate.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Debt Securities")
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set
forth in the Prospectus, to which description reference is hereby made.
The Notes will be issued under an Indenture, dated as of February 1, 1986,
as amended or supplemented from time to time (the "Indenture"), between the
Company and First Trust National Association, as Trustee, which is more fully
described in the Prospectus.
The Notes are unsecured and unsubordinated obligations of the Company and
will be limited to $200,000,000 aggregate principal amount. The Notes will
mature on July 15, 2006, and will bear interest at the rate per annum shown on
the front cover of this Prospectus Supplement from July 15, 1996 or from the
most recent Interest Payment Date to which interest has been paid or provided
for, payable semi-annually on January 15 and July 15 of each year, commencing
January 15, 1997, to the Person in whose name the Note (or any predecessor
Note) is registered at the close of business on the preceding January 1 or
July 1, as the case may be.
The Notes are not redeemable by the Company prior to their Stated Maturity
and will not be entitled to a sinking fund.
S-2
<PAGE>
The Notes will be issued in the form of one or more fully registered global
Notes which will be deposited with, or on behalf of, The Depository Trust
Company, as Depositary (the "Depositary"), located in the Borough of Manhattan,
The City of New York, and will be registered in the name of the Depositary or a
nominee of the Depositary.
Ownership of beneficial interests in a global Note will be limited to
participants and to persons that may hold interests through institutions that
have accounts with the Depositary ("participants"). Ownership of beneficial
interests by participants in a global Note will be shown on, and the transfer
of that ownership interest will be effected only through, records maintained by
the Depositary for such global Note. Ownership of beneficial interests in such
global Note by persons that hold through participants will be shown on, and the
transfer of that ownership interest within each participant will be effected
only through, records maintained by such participants.
Payment of principal of and interest on the Notes represented by any such
global Note will be made to the Depositary or its nominee, as the case may be,
as the sole registered owner and the sole Holder of the Notes represented
thereby for all purposes under the Indenture. None of the Company, the Trustee
or any agent of the Company or the Trustee will have any responsibility or
liability for any aspect of the Depositary's records relating to or payments
made on account of beneficial ownership interests in a global Note representing
any Notes or any other aspect of the relationship between the Depositary and
its participants or the relationship between such participants and the owners
of beneficial interests in a global Note owning through such participants or
for maintaining, supervising or reviewing any of the Depositary's records
relating to such beneficial ownership interests.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or interest on any such global Note, the Depositary
will immediately credit, on its book-entry registration and transfer system,
the accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such global Note as
shown on the records of the Depositary. The accounts to be credited shall be
designated by the Underwriters. Payments by participants to owners of
beneficial interests in a global Note held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for customer accounts registered in "street name", and
will be the sole responsibility of such participants.
No global Note may be transferred except as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor of the Depositary or a nominee of such successor.
A global Note representing Notes is exchangeable for definitive Notes in
registered form, only if (x) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such global Note or if at any
time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934 (the "Exchange Act"), (y) the Company in its
sole discretion determines that such global Note shall be exchangeable for
definitive Notes in registered form and notifies the Trustee thereof or (z) an
Event of Default with respect to the Notes represented by such global Note has
occurred and is continuing. Any global Note that is exchangeable pursuant to
the preceding sentence shall be exchangeable for definitive Notes issuable in
authorized denominations in registered form, aggregating a like amount. Such
definitive Notes shall be registered in the names of the owners of the
beneficial interests in such global Note as the Depositary shall direct.
Except as provided above, owners of beneficial interests in such a global
Note will not be entitled to receive physical delivery of Notes in definitive
form and will not be considered the Holders thereof for any purpose under the
Indenture, and no global Note representing Notes shall be exchangeable.
Accordingly, each person owning a beneficial interest in such a global Note
must rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person
owns its interest, to exercise any rights of a Holder under the Indenture or
such global Note. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a global Note.
The Indenture provides that the Depositary may grant proxies and otherwise
authorize participants to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a Holder is entitled
to give
S-3
<PAGE>
or take under the Indenture or a global Note. The Company understands that
under existing industry practices, in the event that the Company requests any
action of Holders or that an owner of a beneficial interest in such a global
Note desires to give or take any action which a Holder is entitled to give or
take under the Indenture, the Depositary would authorize the participants
holding the relevant beneficial interests to give or take such action, and
such participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Depositary has advised the Company that the Depositary is a limited-
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold the
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including
the Underwriters), banks, trust companies, clearing corporations, and certain
other organizations some of whom (and/or their representatives) own the
Depositary. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and therefore the Depositary will require secondary trading activity
in the Notes to be settled in immediately available funds.
The Notes are subject to defeasance as described under "Description of Debt
Securities--Defeasance" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the Underwriters named below, and
each of the Underwriters has severally agreed to purchase, the principal
amount of Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................. $ 66,700,000
Goldman, Sachs & Co. .......................................... 66,650,000
Salomon Brothers Inc .......................................... 66,650,000
------------
Total........................................................ $200,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of .4% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to
exceed .25% of the principal amount of the Notes to certain brokers and
dealers. After the Notes are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend
to make a market in the Notes but they are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Notes.
S-4
<PAGE>
Settlement for the Notes will be made in immediately available funds and all
secondary trading in the Notes will settle in immediately available funds. See
"Description of Notes".
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
VALIDITY OF NOTES
The validity of the Notes offered hereby is being passed upon for the Company
by Faegre & Benson LLP ("Faegre & Benson"), 2200 Norwest Center, 90 South
Seventh Street, Minneapolis, Minnesota 55402, and for the Underwriters by
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004. Faegre &
Benson may rely on Sullivan & Cromwell as to matters of New York law, and
Sullivan & Cromwell may rely on Faegre & Benson as to matters of Minnesota law.
Members of the Faegre & Benson firm and members of their families own an
aggregate of less than 0.1% of the outstanding shares of the Company's Common
Stock.
S-5
<PAGE>
PROSPECTUS
DAYTON HUDSON CORPORATION
DEBT SECURITIES AND DEBT WARRANTS
PREFERRED SHARES AND PREFERRED SHARE WARRANTS
COMMON STOCK AND COMMON STOCK WARRANTS
UNITS
----------------
Dayton Hudson Corporation (the "Corporation") intends to offer from time to
time in one or more series its unsecured debt securities (the "Debt
Securities"), warrants to purchase the Debt Securities ("Debt Warrants"),
shares of preferred stock (the "Preferred Shares"), interests in which may be
represented by depositary shares ("Depositary Shares"), shares of common
stock, $1.00 par value per share (the "Common Stock"), warrants to purchase
the Preferred Shares or Depositary Shares ("Preferred Share Warrants") or
warrants to purchase Common Stock ("Common Stock Warrants," and together with
the Debt Warrants and Preferred Share Warrants, the "Securities Warrants"),
with an aggregate initial public offering price (including the exercise price
of any Securities Warrants) of up to $1,271,200,000 or the equivalent thereof
in one or more foreign currencies or composite currencies, including European
Currency Units ("ECU"), on terms to be determined at the time of sale. The
Debt Securities, Preferred Shares, Depositary Shares, Common Stock and
Securities Warrants may be offered separately or as a part of units consisting
of one or more such securities ("Units," and together with the Debt
Securities, Preferred Shares, Depositary Shares, Common Stock and Securities
Warrants, the "Offered Securities"), in separate series, in amounts, at prices
and on terms to be set forth in one or more supplements to this Prospectus (a
"Prospectus Supplement").
Specific terms of the Offered Securities, including such terms as, where
applicable, (i) in the case of Debt Securities, the specific designation,
aggregate principal amount, currency, denominations, maturity, premium, rate
and time of payment of interest, terms for redemption at the option of the
Corporation or repayment at the option of the holder, terms for sinking fund
payments and the initial public offering price; (ii) in the case of Preferred
Shares, the specific title, any dividend, liquidation, redemption, conversion,
voting and other rights, and the initial public offering price and whether
interests in the Preferred Shares will be represented by Depositary Shares;
(iii) in the case of Common Stock, the number of shares or fractional
interests therein, the initial public offering price and other rights in
connection with the offer and sale of the Common Stock; and (iv) in the case
of Securities Warrants, where applicable, the duration, offering price,
exercise price and detachability, are set forth in the accompanying Prospectus
Supplement. Units may be issued in amounts, at prices, on terms and containing
such conditions, covenants and other provisions, and consisting of such
Offered Securities, as will be set forth in a Prospectus Supplement. The
Prospectus Supplement will also contain information, where applicable, about
certain United States federal income tax considerations relating to and any
listing on a securities exchange of the Offered Securities covered by the
Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time or to or through underwriters or dealers. If any agents or
underwriters are involved in the sale of any of the Offered Securities, their
names, and any applicable fee, commission, purchase price or discount
arrangements with them, will be set forth, or will be calculable from the
information set forth, in the Prospectus Supplement.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF OFFERED SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is February 8, 1996.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Securities and
Exchange Commission (the "Commission") are incorporated in and made a part of
this Prospectus by reference: (i) Annual Report on Form 10-K for the year
ended January 28, 1995 (which incorporates by reference certain portions of
the Corporation's 1994 Annual Report to Shareholders, including financial
statements and accompanying information, and certain portions of the
Corporation's definitive Notice and Proxy Statement for the Corporation's 1995
Annual Meeting of Shareholders); (ii) Quarterly Reports on Form 10-Q for the
quarters ended April 29, 1995, July 29, 1995 and October 28, 1995; (iii)
Registration Statement on Form 8-A dated September 18, 1986, as amended by
Amendment No. 1 on Form 8 dated May 28, 1992; and (iv) Registration Statement
on Form 8-A filed with respect to the Common Stock.
All documents filed by the Corporation with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") subsequent to the date of this Prospectus and
prior to the termination of the offering of the Offered Securities offered
hereby shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in the accompanying Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Corporation will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or
oral request of such person, a copy of any or all of the information
incorporated herein by reference (other than exhibits, unless such exhibits
are specifically incorporated by reference in such documents). Written
requests for such copies should be directed to the Secretary, Dayton Hudson
Corporation, 777 Nicollet Mall, Minneapolis, Minnesota 55402. Telephone
requests may be directed to 612/370-6948.
No person is authorized to give any information or to make any
representations other than those contained in this Prospectus or a Prospectus
Supplement in connection with the offering described herein and therein, and
any information or representations not contained herein or therein must not be
relied upon as having been authorized. This Prospectus may not be used to
consummate sales of Offered Securities unless accompanied by a Prospectus
Supplement. The delivery of this Prospectus and a Prospectus Supplement
relating to particular Offered Securities shall not constitute an offer of any
of the other Offered Securities covered by this Prospectus. The delivery of
this Prospectus or any Prospectus Supplement does not constitute an offer to
sell or a solicitation of an offer to buy the Offered Securities in any
circumstances in which such offer or solicitation of an offer to buy the
Offered Securities is unlawful.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports and other information with the
Commission. Such reports, proxy and information statements and other
information filed by the Corporation can be inspected and copied at the public
reference facilities of the Commission, Room 1024, 450 Fifth Street N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven World Trade Center, Suite 1300, New York, New York 10048, and at 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of such
materials can be obtained from the Public Reference Section of the Commission
at 450 Fifth Street N.W., Washington, D.C. 20549, at prescribed rates.
Reports, proxy and information statements and other information concerning the
Corporation can also be inspected at the offices of the New York Stock
Exchange at 20 Broad Street, New York, New York 10005, and at the offices of
the Pacific Stock Exchange at 301 Pine Street, San Francisco, California
94104.
2
<PAGE>
Additional information regarding the Corporation and the Offered Securities
offered hereby is contained in the Registration Statement and the exhibits
relating thereto in respect of the Offered Securities offered hereby, filed
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). For further information pertaining to the Corporation and
the Offered Securities offered hereby, reference is made to the Registration
Statement and the exhibits thereto, which may be inspected without charge at
the office of the Commission at 450 Fifth Street N.W., Washington, D.C. 20549,
and copies thereof may be obtained from the Commission at prescribed rates.
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$," "dollars,"
"U.S. dollars," or "U.S. $").
THE CORPORATION
The Corporation is a national diversified retail company operating through
three separate operating divisions: Target upscale discount stores, Mervyn's
moderate-priced middle-market promotional department stores and the Department
Store Division. At October 28, 1995, these operating divisions operated 1,032
stores in 34 states.
The Corporation was incorporated in Minnesota in 1902. All references to the
"Corporation" herein relate to Dayton Hudson Corporation and its subsidiaries
and their predecessors unless otherwise indicated by the context. The
Corporation's principal executive offices are located at 777 Nicollet Mall,
Minneapolis, Minnesota 55402 (telephone 612/370-6948).
Additional information concerning the Corporation is included in the
documents incorporated by reference herein. See "Incorporation of Certain
Documents by Reference."
USE OF PROCEEDS
Unless otherwise specified in an applicable Prospectus Supplement, the net
proceeds from the sale of the Offered Securities offered hereby will be added
to the general funds of the Corporation and may be used to meet working
capital requirements, for capital expenditures relating to the construction
and fixturing of certain of the Corporation's new stores and remodeling of
certain of the Corporation's existing stores, to refinance certain debt, or to
finance acquisitions of real estate, other assets or companies. Pending such
applications, the funds may be used to reduce short-term borrowings or may be
invested in short-term marketable securities.
3
<PAGE>
BUSINESS
GENERAL
The data reported below detail the operations of the Corporation's business
segments.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------------------------------
FEBRUARY 2, FEBRUARY 1, JANUARY 30, JANUARY 29, JANUARY 28,
1991 1992 1993 1994 1995
----------- ----------- ----------- ----------- -----------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Revenues
Target................ $ 8,175 $ 9,041 $10,393 $11,743 $13,600
Mervyn's.............. 4,055 4,143 4,510 4,436 4,561
Department Store
Division............. 2,509 2,931 3,024 3,054 3,150
------- ------- ------- ------- -------
Total............... $14,739 $16,115 $17,927 $19,233 $21,311
======= ======= ======= ======= =======
Operating Profit
Target................ $ 466 $ 458 $ 574 $ 662 $ 732
Mervyn's.............. 366 284 284 179 206
Department Store
Division............. 183 168 228 268 270
------- ------- ------- ------- -------
Total............... 1,015 910 1,086 1,109 1,208
Interest Expense, Net. 325 398 437 446 426
Corporate and Other... 31 40 38 56 68
------- ------- ------- ------- -------
Earnings Before Income
Taxes.................. $ 659 $ 472 $ 611 $ 607 $ 714
======= ======= ======= ======= =======
Operating Profit as a
Percent of Revenues
Target................ 5.7% 5.1% 5.5% 5.6% 5.4%
Mervyn's.............. 9.0 6.9 6.3 4.0 4.5
Department Store
Division............. 7.3 5.7 7.5 8.8 8.6
------- ------- ------- ------- -------
Assets
Target................ $ 3,722 $ 4,393 $ 4,913 $ 5,495 $ 6,247
Mervyn's.............. 2,439 2,686 3,042 2,750 2,917
Department Store
Division............. 2,261 2,317 2,292 2,240 2,392
Corporate and Other... 102 89 90 293 141
------- ------- ------- ------- -------
Total............... $ 8,524 $ 9,485 $10,337 $10,778 $11,697
======= ======= ======= ======= =======
Depreciation
Target................ $ 190 $ 208 $ 236 $ 263 $ 293
Mervyn's.............. 107 117 135 146 145
Department Store
Division............. 69 84 87 88 92
Corporate and Other... 3 1 1 1 1
------- ------- ------- ------- -------
Total............... $ 369 $ 410 $ 459 $ 498 $ 531
======= ======= ======= ======= =======
Capital Expenditures
Target................ $ 374 $ 605 $ 571 $ 716 $ 842
Mervyn's.............. 210 303 294 180 146
Department Store
Division............. 1,155 106 72 80 96
Corporate and Other... 1 2 1 2 11
------- ------- ------- ------- -------
Total............... $ 1,740 $ 1,016 $ 938 $ 978 $ 1,095
======= ======= ======= ======= =======
</TABLE>
- --------
The Department Store Division includes the acquisition of Marshall Field's
and its results of operations from June 24, 1990, the effective date of
acquisition.
Operating profit is LIFO earnings from operations before corporate expense,
interest and income taxes.
4
<PAGE>
TARGET
Target is an upscale discount chain which provides quality merchandise at
low prices in guest-friendly stores. Target operated 673 stores in 33 states
at October 28, 1995.
MERVYN'S
Mervyn's is a middle-market promotional department store chain emphasizing
name-brand and private-label casual apparel and home soft goods. Mervyn's
operated 295 stores in 16 states at October 28, 1995.
DEPARTMENT STORE DIVISION
The Department Store Division offers trend leadership, quality merchandise
and superior service. At October 28, 1995, the Department Store Division
operated 64 Dayton's, Hudson's and Marshall Field's stores in nine states.
RATIOS OF EARNINGS TO FIXED CHARGES AND TO FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS
The following are the consolidated ratios of earnings to fixed charges and
to fixed charges and preferred stock dividends for each of the years in the
five-year period ended January 28, 1995, and the nine-month periods ended
October 29, 1994 and October 28, 1995:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
----------------------------------------------------------- -----------------------
FEBRUARY 2, FEBRUARY 1, JANUARY 30, JANUARY 29, JANUARY 28, OCTOBER 29, OCTOBER 28,
1991 1992 1993 1994 1995 1994 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges.......... 2.72x 2.00 2.22 2.19 2.43 1.68 1.32
Ratio of Earnings to
Fixed Charges and
Preferred Stock
Dividends.............. 2.47x 1.85 2.06 2.04 2.25 1.56 1.23
</TABLE>
For purposes of computing the ratios of earnings to fixed charges, income
before income taxes plus fixed charges less capitalized interest has been
divided by fixed charges. For purposes of computing the ratios of earnings to
fixed charges and preferred stock dividends, income before income taxes plus
fixed charges less capitalized interest has been divided by fixed charges and
pretax earnings required to cover preferred stock dividends. Fixed charges
consist of interest on short-term borrowings and long-term debt, amortization
of debt expense, capitalized interest and the interest portion of rental
expense. Pretax earnings required to cover preferred stock dividends have been
computed by dividing preferred stock dividends, adjusted for the tax benefits
related to the unallocated shares, by one minus the Corporation's income tax
rate.
DESCRIPTION OF DEBT SECURITIES
The following descriptions of the terms of the Debt Securities set forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be
described in the Prospectus Supplement relating to such Debt Securities.
The Debt Securities are to be issued under an Indenture dated as of February
1, 1986, as amended and supplemented from time to time (collectively, the
"Indenture"), between the Corporation and First Trust National Association, as
Trustee (the "Trustee"). A copy of the Indenture is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Debt Securities and the Indenture
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do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Indenture, including the
definition therein of certain terms. Section numbers below refer to provisions
of the Indenture.
GENERAL
The Debt Securities will be unsecured obligations of the Corporation.
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder and provides that Debt Securities may be issued thereunder
from time to time in one or more series. (Section 301)
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms of the Debt
Securities: (i) the title of the Debt Securities; (ii) any limit on the
aggregate principal amount of the Debt Securities; (iii) the price (expressed
as a percentage of the aggregate principal amount thereof) at which the Debt
Securities will be issued; (iv) the date or dates on which the Debt Securities
will mature; (v) the rate or rates (which may be fixed or variable) per annum
at which the Debt Securities will bear interest, if any; (vi) the date from
which such interest, if any, on the Debt Securities will accrue, the Interest
Payment Dates on which such interest, if any, will be payable, the date on
which payment of such interest, if any, will commence and the Regular Record
Dates for such Interest Payment Dates, if any; (vii) the dates, if any, on
which and the price or prices at which the Debt Securities will, pursuant to
any mandatory sinking fund provisions, or may, pursuant to any optional
sinking fund provisions, be redeemed by the Corporation, and the other
detailed terms and provisions of such sinking fund; (viii) the date, if any,
after which and the price or prices at which the Debt Securities may, pursuant
to any optional redemption provisions, be redeemed at the option of the
Corporation or of the Holder thereof and the other detailed terms and
provisions of such optional redemption; (ix) the currency or currencies of
denomination and payment; (x) if the currency or currencies of payment are at
the Corporation's or Holder's election, the manner in which such election may
be made; (xi) the application of defeasance provisions to the Debt Securities;
(xii) any additional restrictive covenants included for the benefit of Holders
of the Debt Securities; (xiii) any additional Events of Default provided with
respect to the Debt Securities; and (xiv) whether the Debt Securities will be
issued in whole or in part in the form of one or more Global Securities and,
if so, the Depositary for such Global Securities. (Section 301)
Principal, premium, if any, and interest, if any, will be payable, and the
Debt Securities will be transferable, at the Place of Payment designated for
such Debt Securities, provided that payment of interest may, at the option of
the Corporation, be made by check mailed to the address of the Person entitled
thereto as it appears in the Security Register. (Sections 305, 1002)
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Debt Securities will be issued only in fully registered form, without
coupons, in denominations of $1,000 or any integral multiple thereof. (Section
302) No service charge will be made for any registration of transfer or
exchange of the Debt Securities, but the Corporation may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. (Section 305)
Debt Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities will
be described in the Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for an amount less than
the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof, upon the occurrence of an Event of
Default and the continuation thereof. (Section 101)
Unless otherwise indicated in the Prospectus Supplement relating to the Debt
Securities, the covenants contained in the Indenture and the Debt Securities
would not necessarily afford Holders of the Debt Securities protection in the
event of a highly leveraged or other transaction involving the Corporation
that may adversely affect Holders.
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RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The various restrictive provisions of the Indenture applicable to the
Corporation and its Restricted Subsidiaries do not apply to Unrestricted
Subsidiaries. The assets and indebtedness of Unrestricted Subsidiaries are not
consolidated with those of the Corporation and its Restricted Subsidiaries in
calculating Consolidated Net Tangible Assets under the Indenture and
investments by the Corporation or by its Restricted Subsidiaries in
Unrestricted Subsidiaries are excluded in computing Consolidated Net Tangible
Assets. "Unrestricted Subsidiaries" are those Subsidiaries defined as such by
the Indenture, i.e., Dayton Credit Company and certain other finance
Subsidiaries acquired or formed subsequent to the date of the Indenture,
Eighth Street Development Company, those Subsidiaries which are designated as
Unrestricted Subsidiaries by the Board of Directors from time to time pursuant
to the Indenture (in each case, unless and until designated as Restricted
Subsidiaries by the Board of Directors pursuant to the Indenture) and any
Subsidiary, a majority of the voting stock of which is owned by Unrestricted
Subsidiaries. "Restricted Subsidiaries" are all Subsidiaries other than
Unrestricted Subsidiaries. A "Wholly-owned Restricted Subsidiary" is a
Restricted Subsidiary of which all of the outstanding Funded Debt and capital
stock (except directors' qualifying shares) is owned by the Corporation and
its other Wholly-owned Restricted Subsidiaries. (Section 101)
An Unrestricted Subsidiary may not be designated a Restricted Subsidiary
unless the Corporation would be permitted immediately thereafter to incur
additional Secured Funded Debt and Attributable Debt under the terms of the
Indenture. (Section 1009(a))
RESTRICTIONS ON SECURED FUNDED DEBT
The Corporation may not, and may not permit any Restricted Subsidiary to,
issue, assume, guarantee, incur or create any Secured Funded Debt without
first making effective provision whereby the Debt Securities shall be secured
equally and ratably with (or prior to) such Secured Funded Debt, unless
immediately thereafter the sum of the aggregate amount of all outstanding
Secured Funded Debt of the Corporation and its Restricted Subsidiaries
together with all Attributable Debt of the Corporation and its Restricted
Subsidiaries in respect of sale and leaseback transactions does not exceed 5%
of Consolidated Net Tangible Assets. The foregoing restriction does not
prevent (i) Secured Funded Debt of a Restricted Subsidiary owing to the
Corporation or a Wholly-owned Restricted Subsidiary, (ii) Secured Funded Debt
resulting from the Mortgage of property of the Corporation or any Restricted
Subsidiary in favor of the United States or any State or any instrumentality
thereof to secure partial, progress, advance or other payments, (iii) Secured
Funded Debt secured by a Mortgage on property of, or on any shares of stock or
Indebtedness of, any corporation existing at the time such corporation becomes
a Subsidiary, (iv) Secured Funded Debt secured by a Mortgage on property,
shares of stock or Indebtedness existing at or incurred within 120 days of the
time of acquisition thereof (including acquisition through merger or
consolidation), purchase money Mortgages and construction Mortgages, (v)
Secured Funded Debt secured by a Mortgage incurred or assumed in connection
with an issuance of revenue bonds the interest on which is exempt from federal
income tax pursuant to Section 103(a) and related Sections of the Internal
Revenue Code of 1986, as amended, or (vi) any extension, renewal or refunding,
in whole or in part, of any Secured Funded Debt permitted under the
restrictions described in the first sentence of this paragraph or of any
Secured Funded Debt of any Restricted Subsidiary outstanding at February 2,
1985 or of any corporation outstanding at the time such corporation became a
Restricted Subsidiary. (Section 1007)
"Secured Funded Debt" means Funded Debt which is secured by a Mortgage upon
any assets of the Corporation or a Restricted Subsidiary. (Section 101)
"Funded Debt" means Indebtedness maturing more than 12 months after the time
of computation thereof, guarantees of Funded Debt or of dividends of others
(except guarantees in connection with the sale or discount of accounts
receivable, trade acceptances and other paper arising in the ordinary course
of business) and Funded Debt secured by a Mortgage on property of the
Corporation or any Restricted Subsidiary, whether or not assumed, and in the
case of any Subsidiary all Preferred Stock of such Subsidiary. Funded Debt
does not include
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any amount in respect of obligations under leases (or guarantees thereof),
whether or not such obligations would be included as liabilities on a
consolidated balance sheet of the Corporation and its Restricted Subsidiaries.
(Section 101)
"Attributable Debt" means (i) the balance sheet liability amount of capital
leases (capital lease obligations and current portion thereof) determined
under generally accepted accounting principles, plus (ii) the amount of future
minimum lease payments under operating leases required to be disclosed by
generally accepted accounting principles, less any amounts required to be paid
on account of maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges, discounted at the average interest rate per annum
used to calculate the present value of operating lease payments for the most
recent year in the Corporation's most recent Annual Report to Shareholders.
(Section 101)
"Consolidated Net Tangible Assets" means the total amount of assets on a
consolidated balance sheet of the Corporation and its Restricted Subsidiaries
(less applicable reserves and other properly deductible items and after
excluding any investments made in Unrestricted Subsidiaries or in corporations
while they were Unrestricted Subsidiaries but which are not Subsidiaries at
the time of computation) after deducting (i) all liabilities and liability
items, including amounts in respect of obligations under leases (or guarantees
thereof) which under generally accepted accounting principles would be
included on such balance sheet, except Funded Debt, capital stock and surplus,
surplus reserves and provisions for deferred income taxes and (ii) goodwill,
trade names, trademarks, patents, unamortized debt discount and expense and
other like intangibles. (Section 101)
RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS
Neither the Corporation nor any Restricted Subsidiary may enter into any
sale and leaseback transaction involving any Operating Property which has been
or is to be sold or transferred more than 120 days after the acquisition
thereof or the completion of construction and commencement of full operations
thereof, unless (a) the Corporation or such Restricted Subsidiary could create
Secured Funded Debt on such property pursuant to Section 1007 (see
"Restrictions on Secured Funded Debt" above) in an amount equal to the
Attributable Debt with respect to the sale and leaseback transaction without
equally and ratably securing the Debt Securities or (b) the Corporation,
within 120 days, applies to the retirement of its Secured Funded Debt an
amount equal to the greater of (i) the net proceeds of the sale of an
Operating Property leased pursuant to such arrangement or (ii) the fair value
of the Operating Property so leased (subject to credits for certain voluntary
retirements of Funded Debt). This restriction will not apply to any sale and
leaseback transaction (a) between the Corporation and a Restricted Subsidiary
or between Restricted Subsidiaries, or (b) involving the taking back of a
lease for a period of three years or less. (Section 1008) "Operating Property"
is defined as any retail store, warehouse or other property related to the
general retail business of the Corporation or any Subsidiary, parking
facilities, and any equipment located at or comprising a part of any such
property having a net book value in excess of .35% of Consolidated Net
Tangible Assets (which has been owned and operated by the Corporation or any
Restricted Subsidiary for more than 90 days). (Section 101)
RESTRICTIONS ON MERGER AND SALE OF ASSETS
The Corporation may consolidate with or merge into any other corporation, or
transfer substantially all its properties and assets to any Person, and any
other Person may consolidate with or merge into the Corporation, or transfer
substantially all its properties and assets to the Corporation, provided that
(i) the Person (if other than the Corporation) formed by or resulting from any
such consolidation or merger or which shall have received the transfer of such
property and assets shall assume payment of the principal of, premium, if any,
and interest on the Debt Securities and the performance and observance of the
covenants of the Indenture, and (ii) except in the case of a merger or
consolidation of the Corporation and a Restricted Subsidiary, either (a) the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of each series shall have consented thereto or (b) immediately
thereafter under the terms of the Indenture the successor corporation would be
permitted to become liable for an additional amount of Secured Funded Debt.
(Section 801) Notwithstanding the provisions summarized in this paragraph, the
Corporation may, without complying with such provisions, sell all
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of its property and assets to another corporation if, immediately after giving
effect to such sale, such corporation is a Wholly-owned Restricted Subsidiary
of the Corporation and the Corporation would be permitted to become liable for
an additional amount of Secured Funded Debt. (Section 803)
MODIFICATION AND WAIVER
Certain modifications and amendments of the Indenture may be made by the
Corporation and the Trustee only with the consent of the Holders of a majority
in aggregate principal amount of the Outstanding Debt Securities of each
series affected by the modification or amendment, provided that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby: (i) change the stated maturity
date of the principal of, or any installment of principal of or interest on,
any such Debt Security; (ii) reduce the principal amount of, or the interest
(or premium, if any) on, any such Debt Security (including in the case of an
Original Issue Discount Security the amount payable upon acceleration of the
Maturity thereof); (iii) change the Place of Payment where, or the coin or
currency in which, any principal or interest (or premium, if any) on any such
Debt Security is payable; (iv) impair the right to institute suit for the
enforcement of any payment on or with respect to any such Debt Security; (v)
reduce the above-stated percentage of Outstanding Debt Securities of any
series the consent of the Holders of which is necessary to modify or amend the
Indenture; or (vi) modify the foregoing requirements or reduce the percentage
of aggregate principal amount of Outstanding Debt Securities of any series
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults. (Section 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of any series may on behalf of the Holders of all Debt
Securities of that series waive, insofar as that series is concerned,
compliance by the Corporation with certain restrictive provisions of the
Indenture. (Section 1012) The Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of any series may on behalf of the
Holders of all Debt Securities of that series waive any past default under the
Indenture with respect to that series, except a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of that
series or in respect of a provision which under the Indenture cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security of that series affected. (Section 513)
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to any series of Debt
Securities as being any one of the following events: (i) default for 30 days
in any payment of interest on such series; (ii) default in any payment of
principal of (or premium, if any, on) such series when due; (iii) default in
the payment of any sinking fund installment with respect to such series when
due; (iv) default for 60 days after appropriate notice in performance of any
other covenant or warranty in the Indenture (other than a covenant or warranty
included in the Indenture solely for the benefit of series of Debt Securities
other than that series); (v) default under any evidence of Indebtedness for
money borrowed (including a default with respect to Debt Securities other than
that series) or under any Mortgage, indenture or instrument under which any
such Indebtedness is issued or secured (including the Indenture), which
results in acceleration of the maturity of such Indebtedness, if such
acceleration is not annulled (or if such Indebtedness is not discharged)
within 10 days after written notice as provided in the Indenture; (vi) certain
events in bankruptcy, insolvency or reorganization; or (vii) any other Event
of Default provided with respect to Debt Securities of that series. In case an
Event of Default shall occur and be continuing with respect to any series of
Debt Securities, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Debt Securities of that series may declare
the principal of such series (or, if the Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms of that series) to be due and payable. Any Event of
Default with respect to a particular series of Debt Securities may be waived
by the Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of such series, except in each case a failure to pay principal
of (or premium, if any) or interest on such Debt Security or in respect of a
provision which under the Indenture cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of that series
affected. (Sections 501, 502, 513)
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Reference is made to the Prospectus Supplement relating to each series of
Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to acceleration of the Maturity of a portion of
the principal amount of such Original Issue Discount Securities upon the
occurrence of an Event of Default and the continuation thereof.
The Indenture requires the Corporation to file annually with the Trustee an
Officers' Certificate as to the absence of certain defaults under the terms of
the Indenture. (Section 1011) The Indenture provides that the Trustee may
withhold notice to the Holders of the Debt Securities of any default (except
in payment of principal (or premium, if any) or interest or any sinking fund
installment) if it considers it in the interest of the Holders of the Debt
Securities to do so. (Section 602)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the
Indenture provides that the Trustee shall be under no obligation to exercise
any of its rights or powers under the Indenture at the request, order or
direction of the Holders of the Debt Securities unless such Holders shall have
offered to the Trustee reasonable indemnity. (Sections 601, 603) Subject to
such provisions for indemnification and certain other rights of the Trustee,
the Indenture provides that the Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of any series affected shall have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to the Debt Securities of such series.
(Sections 512, 603)
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to Debt
Securities of that series and unless also the Holders of at least 25% in
aggregate principal amount of the Outstanding Debt Securities of that series
shall have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding as trustee, and the Trustee shall not
have received from the Holders of a majority in aggregate principal amount of
the Outstanding Debt Securities of that series a direction inconsistent with
such request and shall have failed to institute such proceeding within 60
days. (Section 507) However, the Holder of any Debt Security will have an
absolute right to receive payment of the principal of (and premium, if any)
and interest on such Debt Security on or after the due dates expressed in such
Debt Security and to institute suit for the enforcement of any such payment.
(Section 508)
DEFEASANCE
Defeasance and Discharge. If the terms of a series of Debt Securities so
provide and the Corporation deposits or causes to be deposited with the
Trustee as trust funds in trust for the purpose money and/or Government
Obligations, as hereinafter defined, which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay and discharge (i) the principal of (and
premium, if any) and each installment of principal (and premium, if any) and
interest on the Outstanding Debt Securities of such series on the Stated
Maturity of such principal or installment of principal or interest (or on the
Redemption Date of the Outstanding Debt Securities of such series if the
Corporation has elected to redeem such Outstanding Debt Securities in
accordance with Section 1102 of the Indenture), and (ii) any mandatory (or, if
applicable, optional) sinking fund payments applicable to the Outstanding Debt
Securities of such series on the day on which such payments are due and
payable, then the Indenture will cease to be of further effect with respect to
such series (except for certain obligations to compensate, reimburse and
indemnify the Trustee, to register the transfer or exchange of Debt
Securities, to replace stolen, lost or mutilated Debt Securities, to maintain
paying agencies and to hold monies for payment in trust), and the Corporation
will be deemed to have satisfied and discharged the Indenture with respect to
such series. (Section 403) In the event of any such defeasance, holders of
Debt Securities of such series would be able to look only to such trust fund
for payment of principal (and premium, if any) and interest, if any, on their
Debt Securities. The term "Government Obligations" as used herein shall mean
securities of the government which issued the currency in which the
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Debt Securities of such series are denominated and/or in which interest is
payable or of government agencies backed by the full faith and credit of such
government. (Section 101)
Under current federal income tax law, such defeasance will be treated as a
taxable exchange of the related Debt Securities for an interest in the trust.
As a consequence, each holder of such Debt Securities will recognize gain or
loss equal to the difference between the holder's cost or other tax basis for
the Debt Securities and the value of the holder's interest in the trust, and
thereafter will be required to include in income a share of the income, gain
or loss of the trust, including gain or loss recognized in connection with any
substitution of collateral, as described below. Prospective investors are
urged to consult their own tax advisors as to the specific consequences of
such a defeasance.
Defeasance of Certain Covenants and Certain Events of Default. If the terms
of the Debt Securities of any series so provide, the Corporation may omit to
comply with certain restrictive covenants in Sections 801, 803 and 804
(Consolidation, Merger, Conveyance, Transfer or Lease), and Sections 1005
(Maintenance of Properties), 1006 (Payment of Taxes and Other Claims), 1007
(Restriction on the Creation of Secured Funded Debt), 1008 (Restriction on
Sale and Lease-Back Transactions) and 1009 (Restriction on Permitting
Unrestricted Subsidiaries to become Restricted Subsidiaries), and Sections
501(4), 501(5), 501(6), 501(7) and 501(8) (if Section 501(8) is specified in
the Prospectus Supplement or Prospectus Supplements relating to such Debt
Securities), as described in clauses (iv) through (vii) under "Events of
Default" above, shall not be deemed to be Events of Default under the
Indenture with respect to such series, upon the deposit with the Trustee, in
trust, of money and/or Government Obligations which through the payment of
interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay and discharge (i) the principal
of (and premium, if any) and each installment of principal (and premium, if
any) and interest on the Outstanding Debt Securities of such series on the
Stated Maturity of such principal or installment of principal or interest (or
on the Redemption Date of the Outstanding Debt Securities of such series if
the Corporation has elected to redeem such Outstanding Debt Securities in
accordance with Section 1102 of the Indenture) and (ii) any mandatory (or, if
applicable, optional) sinking fund payments applicable to the Outstanding Debt
Securities of such series on the day on which such payments are due and
payable. The obligations of the Corporation under the Indenture and the Debt
Securities other than with respect to the covenants referred to above and the
Events of Default other than the Events of Default referred to above shall
remain in full force and effect. (Section 1010)
In the event the Corporation exercises its option to omit compliance with
certain covenants of the Indenture with respect to the Debt Securities of any
series as described above and the Debt Securities of such series are declared
due and payable because of the occurrence of any Event of Default other than
Events of Default described in clauses (iv) through (vii) under "Events of
Default" above, the amount of money and/or Government Obligations on deposit
with the Trustee will be sufficient to pay amounts due on the Debt Securities
of such series on their Stated Maturity or Redemption Date, but may not be
sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting from such Event of Default. However, the Corporation
shall remain liable for such payments. (Section 1010)
Substitution of Collateral. If the terms of a series of Debt Securities so
provide, the Corporation will be permitted at any time to withdraw any money
or Government Obligations deposited pursuant to the foregoing defeasance
provisions, provided that the Corporation in substitution therefor
simultaneously deposits money and/or Government Obligations which would then
be sufficient to satisfy the Corporation's payment obligations in respect of
the Debt Securities in the manner contemplated by such defeasance provisions.
REGARDING THE TRUSTEE
The Trustee acts as trustee under the Indenture relating to the
Corporation's 9 1/4% Debentures due 2006, 9 1/2% Sinking Fund Debentures due
2016, 9 1/4% Sinking Fund Debentures due 2016, 9 7/8% Sinking Fund Debentures
due 2017, 9 5/8% Debentures due 2008, Medium-Term Notes, Series B, 9 3/4%
Notes due 1998, Medium-Term Notes, Series C, Medium-Term Notes, Series D,
Medium-Term Notes, Series E, 9 3/4% Notes due 2002, 9 7/8% Debentures due
2020, Medium-Term Notes, Series F, 10% Notes due 2000, 10% Notes due 2011,
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9.40% Notes due 2001, Medium-Term Notes, Series G, 9.70% Debentures due 2021,
9.25% Debentures due 2011, 9% Debentures due 2021, 8.60% Debentures due 2012,
Medium-Term Notes, Series H, 8 7/8% Debentures due 2022, 8.80% Debentures due
2022, 7.25% Notes due 2004, 8.50% Debentures due 2022, 6 5/8% Notes due 2003,
7 7/8% Debentures due 2023, 7.65% Debentures due 2023 and 7.5% Notes due 1999.
Roger L. Hale, a director of the Corporation, is a director of First Bank
System, Inc., which owns substantially all of the capital stock of the
Trustee.
DESCRIPTION OF PREFERRED SHARES
The following description of the terms of the Preferred Shares sets forth
certain general terms and provisions of the Preferred Shares to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Shares offered by any Prospectus Supplement will be described in the
Prospectus Supplement relating to such series of the Preferred Shares. If so
indicated in the Prospectus Supplement, the terms of any such series may
differ from the terms set forth below. The description of certain provisions
of the Preferred Shares set forth below and in any Prospectus Supplement does
not purport to be complete and is subject to and qualified in its entirety by
reference to the Corporation's Restated Articles of Incorporation and the
Certificate of Designation, Preferences and Rights ("Certificate of
Designation") relating to each series of the Preferred Shares.
GENERAL
Pursuant to the Corporation's Restated Articles of Incorporation, the Board
of Directors of the Corporation has the authority, without further shareholder
action, to issue from time to time a maximum of 5,000,000 shares of preferred
stock, par value $.01 per share ("Preferred Stock"), including shares issued
or reserved for issuance, in one or more series and with such terms and at
such times and for such consideration as the Board of Directors of the
Corporation may determine. The authority of the Board of Directors of the
Corporation includes the determination or fixing of the following with respect
to shares of any series thereof: (i) the number of shares and designation or
title thereof; (ii) rights as to dividends; (iii) whether and upon what terms
the shares are to be redeemable; (iv) the rights of the holders upon the
dissolution, or upon the distribution of assets, of the Corporation; (v)
whether and upon what terms the shares shall have a purchase, retirement or
sinking fund; (vi) whether and upon what terms the shares are to be
convertible; (vii) the voting rights, if any, which shall apply; and (viii)
any other preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions of such series. At
October 28, 1995, 406,246 shares of Preferred Stock were outstanding. Shares
of Preferred Stock purchased, redeemed or converted by the Corporation shall
be retired and canceled and restored to the status of authorized but unissued
shares of Preferred Stock, without designation as to series, and may
thereafter be issued.
As described under "Description of Depositary Shares," the Corporation may,
at its option, elect to offer Depositary Shares evidenced by depositary
receipts ("Depositary Receipts"), each representing a fractional interest (to
be specified in the Prospectus Supplement relating to the particular series of
the Preferred Shares) in a share of the particular series of the Preferred
Shares issued and deposited with a Depositary (as defined below).
The Preferred Shares shall have the dividend, liquidation, redemption,
voting and conversion rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of the Preferred Shares.
Reference is made to the Prospectus Supplement relating to the particular
series of the Preferred Shares offered thereby for specific terms, including
(i) the title and liquidation preference of such Preferred Shares and the
number of shares offered; (ii) the initial public offering price at which such
Preferred Shares will be issued; (iii) the dividend rate or rates (or method
of calculation), the dividend periods, the dates on which dividends shall be
payable and whether such dividends shall be cumulative or noncumulative and,
if cumulative, the dates from which dividends shall commence to cumulate; (iv)
any redemption or sinking fund provisions; (v) any conversion provisions; (vi)
whether the Corporation has elected to offer Depositary Shares as described
under "Description of Depositary Shares"; and (vii) any additional dividend,
liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations and restrictions.
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The Preferred Shares will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a
particular series of the Preferred Shares, each series of the Preferred Shares
will rank on a parity in all respects with the outstanding shares of each
other series of the Preferred Shares and will rank senior to the Corporation's
Series B ESOP Convertible Preferred Stock and Corporation's Series A Junior
Participating Preferred Stock described below. The Preferred Shares will have
no preemptive rights to subscribe for any additional securities which may be
issued by the Corporation. Unless otherwise specified in the applicable
Prospectus Supplement, First Chicago Trust Company of New York will be the
transfer agent and registrar for the Preferred Shares and any Depositary
Shares.
DIVIDENDS
The holders of the Preferred Shares of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
or a duly authorized committee thereof, out of funds legally available
therefor, cash dividends at such rates and on such dates as will be set forth
in the Prospectus Supplement relating to such series. Such rates may be fixed
or variable or both. If variable, the formula used for determining the
dividend rate for each dividend period will be set forth in the Prospectus
Supplement. Dividends will be payable to the holders of record as they appear
on the stock books of the Corporation on such record dates as will be fixed by
the Board of Directors of the Corporation or a duly authorized committee
thereof.
Dividends on any series of the Preferred Shares may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement. If the
Board of Directors of the Corporation fails to declare a dividend payable on a
dividend payment date on any series of the Preferred Shares for which
dividends are noncumulative ("Noncumulative Preferred Shares"), then the
holders of such series of the Preferred Shares will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment
date, and the Corporation will have no obligation to pay the dividend accrued
for such period, whether or not dividends on such series are declared payable
on any future dividend payment dates.
No full dividends will be declared or paid or set apart for payment on any
stock of the Corporation ranking, as to dividends, on a parity with or junior
to the Preferred Shares for any period unless full dividends on the Preferred
Shares of each series (including any accumulated dividends) have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment. When dividends are not paid in
full upon any series of Preferred Shares and any Preferred Stock ranking on a
parity as to dividends with the Preferred Shares, all dividends declared or
made upon Preferred Shares of each series and any Preferred Stock ranking on a
parity as to dividends with the Preferred Shares shall be declared pro rata so
that the amount of dividends declared per share on Preferred Shares of each
series and such Preferred Stock shall in all cases bear to each other the same
ratio that accrued dividends per share (which, in the case of Noncumulative
Preferred Shares, shall not include any accumulation in respect of unpaid
dividends for prior dividend periods) on shares of each series of the
Preferred Shares and such Preferred Stock bear to each other. Except as
provided in the preceding sentence, no dividend (other than dividends or
distributions paid in shares of, or options, warrants or rights to subscribe
for or purchase shares of, Common Stock or any other stock of the Corporation
ranking junior to the Preferred Shares as to dividends and upon liquidation)
shall be declared or paid or set aside for payment or other distribution
declared or made upon the Common Stock or any other stock of the Corporation
ranking junior to or on a parity with the Preferred Shares as to dividends or
upon liquidation, nor shall any Common Stock nor any other stock of the
Corporation ranking junior to or on a parity with the Preferred Shares as to
dividends or upon liquidation be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking
junior to the Preferred Shares as to dividends and upon liquidation) unless,
in each case, the full dividends on each series of the Preferred Shares shall
have been paid or declared and set aside for payment. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on any series of the Preferred Shares which may be in arrears.
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REDEMPTION
A series of the Preferred Shares may be redeemable, in whole or in part, at
the option of the Corporation, and may be subject to mandatory redemption
pursuant to a sinking fund or otherwise, in each case upon terms, at the times
and at the redemption prices set forth in the Prospectus Supplement relating
to such series. Preferred Shares redeemed by the Corporation will be restored
to the status of authorized but unissued shares of Preferred Stock.
The Prospectus Supplement relating to a series of the Preferred Shares which
is subject to mandatory redemption will specify the number of shares of such
series of the Preferred Shares which shall be redeemed by the Corporation in
each year commencing after a date to be specified, at a redemption price per
share to be specified, together with an amount equal to all accrued and unpaid
dividends thereon to the date of redemption. The redemption price may be
payable in cash or other property, as specified in the Prospectus Supplement
relating to such series of the Preferred Shares. If the redemption price is
payable only from the net proceeds of the issuance of capital stock of the
Corporation, the terms of such series may provide that, if no such capital
stock shall have been issued or to the extent the net proceeds from any
issuance are insufficient to pay in full the aggregate redemption price then
due, the applicable shares of such series of the Preferred Shares shall
automatically and mandatorily be converted into shares of the applicable
capital stock of the Corporation pursuant to conversion provisions specified
in the Prospectus Supplement relating to such series of the Preferred Shares.
If fewer than all of the outstanding shares of any series of the Preferred
Shares are to be redeemed, the number of shares to be redeemed will be
determined by the Board of Directors of the Corporation and such shares shall
be redeemed pro rata from the holders of record of such shares in proportion
to the number of such shares held by such holders (with adjustments to avoid
redemption of fractional shares).
Notwithstanding the foregoing, if any dividends, including any accumulation,
on Preferred Shares of any series are in arrears, no Preferred Shares of such
series shall be redeemed unless all outstanding Preferred Shares of such
series are simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any Preferred Shares of such series; provided, however, that
the foregoing shall not prevent the purchase or acquisition of Preferred
Shares of such series pursuant to a purchase or exchange offer provided such
offer is made on the same terms to all holders of such series of the Preferred
Shares.
Unless otherwise specified in the applicable Prospectus Supplement, notice
of redemption shall be given by mailing the same to each record holder of the
shares to be redeemed, not less than 40 nor more than 70 days prior to the
date fixed for redemption thereof, to the respective addresses of such holders
as the same shall appear on the stock books of the Corporation. Each such
notice shall state (i) the redemption date; (ii) the number of shares and
series of the Preferred Shares to be redeemed; (iii) the redemption price;
(iv) the place or places where certificates for such Preferred Shares are to
be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi)
the date upon which the holder's conversion rights as to such shares, if any,
shall terminate. If fewer than all shares of any series of the Preferred
Shares held by any holder are to be redeemed, the notice mailed to such holder
shall also specify the number of shares to be redeemed from such holder.
If notice of redemption has been given, from and after the redemption date
for the shares of the series of the Preferred Shares called for redemption
(unless default shall be made by the Corporation in providing money for the
payment of the redemption price of the shares so called for redemption),
dividends on the Preferred Shares so called for redemption shall cease to
accrue and such shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as shareholders of the Corporation (except the
right to receive the redemption price) shall cease. Upon surrender in
accordance with such notice of the certificates representing any shares so
redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation shall so require and the notice shall so state),
the redemption price set forth above shall be paid out of funds provided by
the Corporation. If fewer than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
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In the event that a redemption described above is deemed to be a "tender
offer" within the meaning of Rule 14e-1 under the Exchange Act, the
Corporation will comply with all applicable provisions of the Exchange Act.
CONVERSION
The Prospectus Supplement relating to a series of the Preferred Shares which
is convertible will state the terms on which shares of that series are
convertible into shares of Common Stock or a series of Preferred Stock.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of shares of each series of the
Preferred Shares and any Preferred Stock ranking on a parity with such series
of Preferred Shares upon liquidation will be entitled to receive out of the
assets of the Corporation available for distribution to shareholders, before
any distribution of assets is made to holders of the Common Stock or any other
class or series of stock of the Corporation ranking junior to such series of
the Preferred Shares upon liquidation, liquidation distributions in the amount
set forth in the Prospectus Supplement relating to such series of the
Preferred Shares plus an amount equal to the sum of all accrued and unpaid
dividends (whether or not earned or declared) for the then current dividend
period and, if such series of the Preferred Shares is cumulative, for all
dividend periods prior thereto. Neither the sale of all or substantially all
of the property and assets of the Corporation, nor the merger or consolidation
of the Corporation into or with any other corporation nor the merger or
consolidation of any other corporation into or with the Corporation, shall be
deemed to be a dissolution, liquidation or winding up. If, upon any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation available for distribution to the holders of the
Preferred Shares of any series and any other shares of stock of the
Corporation ranking as to any such distribution on a parity with such series
of the Preferred Shares shall be insufficient to pay in full all amounts to
which such holders are entitled, no such distribution shall be made on account
of any shares of any other series of the Preferred Shares or other securities
of the Corporation ranking as to any such distribution on a parity with the
Preferred Shares of such series upon such dissolution, liquidation or winding
up unless proportionate distributive amounts shall be paid on account of the
Preferred Shares of such series, ratably, in proportion to the full
distributive amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up. After
payment of the full amount of the liquidation distribution to which they are
entitled, the holders of such series of the Preferred Shares will have no
right or claim to any of the remaining assets of the Corporation.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of the Preferred Shares, or except as expressly required by
applicable law, the holders of the Preferred Shares will not be entitled to
vote. In the event the Corporation issues shares of a series of the Preferred
Shares, unless otherwise indicated in the Prospectus Supplement relating to
such series, each share will be entitled to one vote on matters on which
holders of such series are entitled to vote. However, as more fully described
under "Description of Depositary Shares," if the Corporation elects to provide
for the issuance of Depositary Shares representing fractional interests in a
share of such series of the Preferred Shares, the holders of each such
Depositary Share will, in effect, be entitled through the Depositary to such
fraction of a vote, rather than a full vote. In the case of any series of
Preferred Shares having one vote per share on matters on which holders of such
series are entitled to vote, the voting power of such series, on matters on
which holders of such series and holders of any other series of Preferred
Shares or a series of Preferred Stock are entitled to vote as a single class,
will depend on the number of shares in such series, not the aggregate
liquidation preference or initial offering price of the shares of such series
of the Preferred Shares.
So long as any Preferred Shares of any series remain outstanding, the
Corporation will not, without the consent of the holders of the outstanding
Preferred Shares of such series and outstanding shares of all series of
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Preferred Stock ranking on a parity with the Preferred Shares of such series
either as to dividends or the distribution of assets upon liquidation,
dissolution or winding up and upon which like voting rights have been
conferred and are then exercisable, by a vote of at least two-thirds of all
such outstanding Preferred Shares and shares of Preferred Stock voting
together as a class, given in person or by proxy, either in writing or at a
meeting, (i) authorize, create or issue, or increase the authorized or issued
amount of, any class or series of stock ranking prior to the Preferred Shares
with respect to payment of dividends or the distribution of assets on
liquidation, dissolution or winding up, or (ii) amend, alter or repeal,
whether by merger, consolidation or otherwise, the provisions of the
Corporation's Restated Articles of Incorporation or of the resolutions
contained in a Certificate of Designation for any series of the Preferred
Shares designating such series of the Preferred Shares and the preferences and
relative, participating, optional or other special rights and qualifications,
limitations and restrictions thereof, so as to materially and adversely affect
any right, preference, privilege or voting power of the Preferred Shares or
the holders thereof; provided, however, that any increase in the amount of the
authorized Preferred Stock or the creation and issuance of other series of
Preferred Stock, or any increase in the amount of authorized shares of any
series of Preferred Stock, in each case ranking on a parity with or junior to
the Preferred Shares with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up will not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting powers.
OUTSTANDING PREFERRED STOCK
The Corporation has established the terms of two series of Preferred Stock:
the Series A Junior Participating Preferred Stock (the "Series A Preferred
Stock") which is described more fully below in "Description of Common Stock--
Rights Agreement;" and the Series B ESOP Convertible Preferred Stock (the
"Series B Preferred Stock"). Shares of Series B Preferred Stock are the only
shares of Preferred Stock that have been issued to date. Unless otherwise
specified in the applicable Prospectus Supplement, the Preferred Shares will
rank in all respects senior to the outstanding Series B Preferred Stock. The
Common Stock of the Corporation, including the Common Stock that may be issued
as Offered Securities or upon conversion or exercise of Offered Securities,
will be subject to any prior rights of the Preferred Stock then outstanding or
thereafter issued. Therefore, the rights of the outstanding Preferred Stock,
described below, and any Preferred Stock that may be subsequently issued, may
limit the rights of the holders of the Common Stock of the Corporation. At
October 28, 1995, the Corporation had outstanding 406,246 shares of Series B
Preferred Stock.
All outstanding shares of Series B Preferred Stock are held of record by a
trustee acting on behalf of the Dayton Hudson Corporation Supplemental
Retirement, Savings, and Employee Stock Ownership Plan, or any successor to
such plan (the "Plan"). The Series B Preferred Stock provides for cumulative
quarterly dividends equal to $56.20 per annum, subject to adjustment. The
Series B Preferred Stock is subject to redemption, in whole or in part, at the
option of the Corporation at any time after January 19, 2000 at a price equal
to $864.60 per share plus accrued and unpaid dividends thereon to the date
fixed for redemption (the "Redemption Price"). In addition, the Corporation
may redeem, in whole or in part, the Series B Preferred Stock at any time
after a change in any statute, rule or regulation which has the effect of
limiting or making unavailable to the Corporation all or any of the tax
deductions for certain amounts paid on the Series B Preferred Stock at a price
equal to the higher of the Redemption Price and the per share fair market
value of the Series B Preferred Stock (determined as set forth in the
Certificate of Designation for the Series B Preferred Stock). The Corporation
shall redeem the Series B Preferred Stock in the event the Plan is terminated
or the employee stock ownership feature of the Plan is terminated or
eliminated from the Plan at a price equal to the higher of the Redemption
Price and the per share fair market value of the Series B Preferred Stock. The
Series B Preferred Stock may be redeemed in whole or in part at the option of
the holder thereof in certain circumstances related to (i) the payment by the
holder of indebtedness incurred by or for the benefit of the Plan or (ii)
distributions required to be made by the holder under the Plan.
The Series B Preferred Stock is mandatorily convertible, without any further
action on the part of the Corporation or the holder thereof, into Common Stock
at the then applicable conversion price (as defined in the
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Certificate of Designation for the Series B Preferred Stock) when record
ownership of the shares of Series B Preferred Stock is transferred to any
person other than a successor trustee under the Plan. In addition, a holder of
Series B Preferred Stock is entitled, at any time prior to the date fixed for
redemption, to convert shares of Series B Preferred Stock held by such holder
into shares of Common Stock at the then applicable conversion price. The
Series B Preferred Stock does not have preemptive rights.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the holders of the Series B Preferred Stock are
entitled to receive out of the assets of the Corporation available for
distribution to shareholders, before any distribution is made to holders of
Common Stock, $864.60 per share, plus accrued and unpaid dividends. The
holders of Series B Preferred Stock shall be entitled to vote on all matters
submitted to a vote of the shareholders of the Corporation, voting together
with the holders of voting capital stock of the Corporation as one class. In
addition, the vote of at least two-thirds of the outstanding shares of Series
B Preferred Stock is necessary to adopt any alteration, amendment or repeal of
any provision of the Restated Articles of Incorporation or the Certificate of
Designation for the Series B Preferred Stock if such amendment, alteration or
repeal would alter or change the powers, preferences or special rights of the
shares of the Series B Preferred Stock as to affect them adversely. The vote
of a majority of the outstanding shares of Series B Preferred Stock is also
necessary for increases in the capital of the Corporation allocable to the
Common Stock if, as a result thereof, the surplus of the Corporation for
purposes of the Minnesota Business Corporation Act would be less than the
amount of dividends that would accrue on the then outstanding Series B
Preferred Stock during the following three years. Except as otherwise required
by law or set forth above, holders of Series B Preferred Stock have no special
voting rights.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject
to and qualified in its entirety by reference to the Deposit Agreement and
Depositary Receipts relating to each series of the Preferred Shares which will
be filed with the Commission at or prior to the time of the offering of such
series of the Preferred Shares.
GENERAL
The Corporation may, at its option, elect to offer fractional interests in
Preferred Shares, rather than full Preferred Shares. In the event such option
is exercised, the Corporation will provide for the issuance by a Depositary to
the public of Depositary Receipts evidencing Depositary Shares, each of which
will represent a fractional interest (to be set forth in the Prospectus
Supplement relating to a particular series of the Preferred Shares) in a share
of a particular series of the Preferred Shares as described below.
The shares of any series of the Preferred Shares underlying the Depositary
Shares will be deposited under a separate deposit agreement (the "Deposit
Agreement") between the Corporation and a bank or trust company selected by
the Corporation having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000 (the "Depositary"). The
Prospectus Supplement relating to a series of Depositary Shares will set forth
the name and address of the Depositary. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fractional interest in a Preferred Share underlying such
Depositary Share, to all the rights and preferences of the Preferred Shares
underlying such Depositary Share (including dividend, voting, redemption,
conversion and liquidation rights).
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Corporation, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts
but not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will
be exchangeable for definitive Depositary Receipts at the Corporation's
expense.
Upon surrender of the Depositary Receipts at the principal office of the
Depositary (unless the related Depositary Shares have previously been called
for redemption), the owner of the Depositary Shares evidenced
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thereby is entitled to delivery at such office, to or upon his order, of the
number of Preferred Shares and any money or other property represented by such
Depositary Shares. Partial Preferred Shares will not be issued. If the
Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole Preferred Shares to be withdrawn, the Depositary will deliver to such
holder at the same time a new Depositary Receipt evidencing such excess number
of Depositary Shares. Holders of Preferred Shares thus withdrawn will not
thereafter be entitled to deposit such shares under the Deposit Agreement or
to receive Depositary Shares therefor. The Corporation does not expect that
there will be any public trading market for the Preferred Shares except as
represented by the Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Shares to the record
holders of Depositary Shares relating to such Preferred Shares in proportion
to the numbers of such Depositary Shares owned by such holders on the relevant
record date. The Depositary shall distribute only such amount, however, as can
be distributed without attributing to any holder of Depositary Shares a
fraction of one cent, and any balance not so distributed shall be added to and
treated as part of the next sum received by the Depositary for distribution to
record holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Corporation, sell such property and distribute the net proceeds from such
sale to such holders.
The Deposit Agreement will also contain provisions relating to the manner in
which any subscription or similar rights offered by the Corporation to holders
of the Preferred Shares shall be made available to holders of Depositary
Shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Shares underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the
proceeds received by the Depositary resulting from the redemption, in whole or
in part, of such series of the Preferred Shares held by the Depositary. The
Depositary shall mail notice of redemption not less than 30 and not more than
60 days prior to the date fixed for redemption to the record holders of the
Depositary Shares to be so redeemed at their respective addresses appearing in
the Depositary's books. The redemption price per Depositary Share will be
equal to the applicable fraction of the redemption price per share payable
with respect to such series of the Preferred Shares. Whenever the Corporation
redeems Preferred Shares held by the Depositary, the Depositary will redeem as
of the same redemption date the number of Depositary Shares relating to the
Preferred Shares so redeemed. If less than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot or pro
rata as may be determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which
the holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
VOTING THE PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the Preferred
Shares are entitled to vote, the Depositary will mail the information
contained in such notice of meeting to the record holders of the Depositary
Shares relating to such Preferred Shares. Each record holder of such
Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Shares) will be entitled to instruct the
Depositary as to
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the exercise of the voting rights pertaining to the number of shares of
Preferred Shares underlying such holder's Depositary Shares. The Depositary
will endeavor, insofar as practicable, to vote the number of Preferred Shares
underlying such Depositary Shares in accordance with such instructions, and
the Corporation will agree to take all action which may be deemed necessary by
the Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting Preferred Shares to the extent it does not receive
specific instructions from the holders of Depositary Shares relating to such
Preferred Shares.
TAXATION
Owners of Depositary Shares will be treated for federal income tax purposes
as if they were owners of the Preferred Shares represented by such Depositary
Shares and, accordingly, will be entitled to take into account for federal
income tax purposes income and deductions to which they would be entitled if
they were holders of such Preferred Shares. In addition, (i) no gain or loss
will be recognized for federal income tax purposes upon the withdrawal of
Preferred Shares in exchange for Depositary Shares as provided in the Deposit
Agreement, (ii) the tax basis of each Preferred Share to an exchanging owner
of Depositary Shares will, upon such exchange, be the same as the aggregate
tax basis of the Depositary Shares exchanged therefor, and (iii) the holding
period for the Preferred Shares in the hands of an exchanging owner of
Depositary Shares who held such Depositary Shares as a capital asset at the
time of the exchange thereof for Preferred Shares will include the period
during which such person owned such Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Corporation and the Depositary. However, any amendment which
materially and adversely alters the rights of the existing holders of
Depositary Shares will not be effective unless such amendment has been
approved by the record holders of at least a majority of the Depositary Shares
then outstanding. A Deposit Agreement may be terminated by the Corporation or
the Depositary only if (i) all outstanding Depositary Shares relating thereto
have been redeemed or (ii) there has been a final distribution in respect of
the Preferred Shares of the relevant series in connection with any
liquidation, dissolution or winding up of the Corporation and such
distribution has been distributed to the holders of the related Depositary
Shares.
CHARGES OF DEPOSITARY
The Corporation will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary arrangements. The
Corporation will pay charges of the Depositary in connection with the initial
deposit of the Preferred Shares and any redemption of the Preferred Shares.
Holders of Depositary Shares will pay other transfer and other taxes and
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all reports
and communications from the Corporation which are delivered to the Depositary
and which the Corporation is required to furnish to the holders of the
Preferred Shares.
Neither the Depositary nor the Corporation will be liable if it is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Corporation
and the Depositary under the Deposit Agreement will be limited to performance
in good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares
or Preferred Shares unless satisfactory indemnity is furnished. They may rely
upon written advice of counsel or accountants, or information provided by
persons presenting Preferred Shares for deposit, holders of Depositary Shares
or other persons believed to be competent and on documents believed to be
genuine.
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RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Corporation
notice of its election to do so, and the Corporation may at any time remove
the Depositary, any such resignation or removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment.
Such successor Depositary must be appointed within 60 days after delivery of
the notice of resignation or removal and must be a bank or trust company
having its principal office in the United States and having a combined capital
and surplus of at least $50,000,000.
DESCRIPTION OF COMMON STOCK
The following description of the terms of the Common Stock sets forth
certain general terms and provisions of the Common Stock to which any
Prospectus Supplement may pertain. The description of certain provisions of
the Common Stock set forth below and in any Prospectus Supplement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Corporation's Restated Articles of Incorporation and bylaws
and the Certificate of Designation relating to the Series A Preferred Stock.
GENERAL
The Board of Directors of the Corporation is authorized to issue a maximum
of 500,000,000 shares of Common Stock. As of October 28, 1995, 71,901,403
shares of Common Stock were issued and outstanding. Subject to any prior
rights of any Preferred Stock then outstanding, holders of the Common Stock
are entitled to receive such dividends as are declared by the Board of
Directors of the Corporation out of funds legally available therefor. Subject
to the rights, if any, of any Preferred Stock then outstanding, all voting
rights are vested in the holders of Common Stock, each share being entitled to
one vote. Subject to any prior rights of any such Preferred Stock, in the
event of liquidation, dissolution or winding up of the Corporation, holders of
shares of Common Stock are entitled to receive pro rata any assets
distributable to shareholders in respect of shares held by them. Holders of
shares of Common Stock do not have any preemptive right to subscribe for any
additional securities which may be issued by the Corporation. The outstanding
shares of Common Stock are fully paid and nonassessable, and any shares of
Common Stock issued as Offered Securities and any shares of Common Stock
issuable upon exercise of Common Stock Warrants or the conversion of Debt
Securities or Preferred Shares that are convertible into Common Stock will be
fully paid and nonassessable. The transfer agent and registrar for the Common
Stock is First Chicago Trust Company of New York. Each share of Common Stock
also includes a right to purchase certain Preferred Stock. See "Rights
Agreement" below.
ANTI-TAKEOVER PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
The Corporation's Restated Articles of Incorporation contain certain
provisions that may reduce the likelihood of a change in management or voting
control of the Corporation without the consent of the Board of Directors.
These provisions could have the effect of delaying, deterring or preventing
tender offers or takeover attempts that some or a majority of the
Corporation's shareholders might consider to be in the shareholders' best
interests, including tender offers or attempts that might result in a premium
over the market price for the Common Stock.
Fair Price Provision. Article IV of the Restated Articles of Incorporation
of the Corporation provides that certain transactions ("business
combinations") with certain beneficial owners of 10% or more of the voting
capital stock of the Corporation ("interested shareholders") require, in
addition to any affirmative vote required by law, the affirmative vote of not
less than 75% of the votes entitled to be cast by the holders of all then
outstanding shares of voting capital stock of the Corporation, voting as a
single class. Business combinations include, without limitation, any merger,
consolidation, or statutory exchange of shares of the Corporation with an
interested shareholder; any sale, lease, pledge, or other disposition to or
from an interested shareholder or the Corporation of any assets of the
Corporation or the interested shareholder, respectively, with a value equal to
or greater than 10% of the book value of the consolidated assets of the
Corporation; the adoption of any plan for the liquidation or dissolution of
the Corporation proposed by or on behalf of an interested shareholder; and any
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<PAGE>
transaction that has the effect of increasing the proportionate share of
capital stock of the Corporation beneficially owned by an interested
shareholder. An affirmative vote by the shareholders is not required to
approve a business combination under Article IV if the business combination
has been approved by a majority of those directors who were members of the
Board of Directors prior to the time that the interested shareholder involved
in the business combination became an interested shareholder or whose election
or nomination was approved by a majority of such directors ("continuing
directors"). An affirmative vote is also not required if the business
combination meets certain conditions specified in Article IV, including,
without limitation, that certain minimum consideration be received in the
business combination by holders of capital stock of the Corporation, that the
interested shareholder not acquire any additional shares of capital stock of
the Corporation after becoming an interested shareholder (except as approved
by the continuing directors), and that a proxy or information statement
describing the proposed business combination be mailed to all holders of
capital stock of the Corporation as least 30 days prior to the consummation of
the business combination. The affirmative vote of the holders of not less than
75% of the votes entitled to be cast by the holders of then outstanding shares
of voting stock of the Corporation, voting together as a single class, is
required to amend or repeal, or adopt any provisions inconsistent with,
Article IV of the Restated Articles of Incorporation.
Preferred Stock. In addition to the Series B Preferred Stock discussed above
and the Series A Preferred Stock discussed below, the Corporation's Restated
Articles of Incorporation permit the Board of Directors to issue Preferred
Stock at any time without shareholder approval. Preferred stock is sometimes
used to discourage or make more difficult attempts to take control of a
company by means of a merger, tender offer, proxy contest or otherwise through
the issuance without shareholder approval of shares with supervoting rights or
other features that could thwart a takeover by reducing the ability of the
suitor to acquire the necessary voting shares to obtain control.
Classified Board. Pursuant to Article VI of the Restated Articles of
Incorporation, directors of the Corporation are divided into three classes and
elected for staggered terms. At each annual meeting of shareholders
approximately one third of the directors is elected to serve a three-year
term. Directors serving staggered terms can be removed from office only upon
the affirmative vote of not less than 75% of the votes entitled to be cast by
the holders of all then outstanding shares of voting stock of the Corporation,
voting together as a single class. The affirmative vote of not less than 75%
of the votes entitled to be cast by the holders of all of the outstanding
shares of voting stock of the Corporation, voting together as a single class,
is required to amend or repeal, or adopt any provisions inconsistent with,
this provision of the Restated Articles of Incorporation.
Nomination Procedures. Article VI of the Corporation's Restated Articles of
Incorporation also establishes procedures with regard to the nomination, other
than by or at the direction of the Board of Directors, of candidates for
election as directors. In general, notice must be received by the Secretary of
the Corporation not less than 60 days prior to meetings of the shareholders of
the Corporation.
Amendment of Bylaws. The Corporation's bylaws give the Board of Directors
the power to adopt, amend and repeal the bylaws, subject to limitations on
such power contained in the Minnesota Business Corporation Act and subject to
the power of the shareholders to change or repeal the bylaws.
RIGHTS AGREEMENT
Each share of the Corporation's Common Stock, including those that may be
issued as Offered Securities or upon conversion or exercise of Offered
Securities, is accompanied by one preferred share purchase right (a "Right").
Once exercisable, each Right entitles the registered holder to purchase one
one-hundredth of a share of the Series A Preferred Stock. Until a Right is
exercised, the holder of a Right, as such, will have no rights as a
shareholder of the Corporation including, without limitation, the right to
vote or receive dividends. The description and terms of the Rights are set
forth in the Amended and Restated Rights Agreement, dated as of May 27, 1992,
between the Corporation and First Chicago Trust Company of New York, as Rights
Agent.
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The Rights trade automatically with shares of Common Stock and become
exercisable only under the circumstances described below. The Rights are
designed to protect the interests of the Corporation and its shareholders
against coercive takeover tactics. The purpose of the Rights is to encourage
potential acquirors to negotiate with the Corporation's Board of Directors
prior to attempting a takeover and to give the Board leverage in negotiating
on behalf of all shareholders the terms of any proposed takeover. The Rights
may, but are not intended to, deter takeover proposals.
Shares of Series A Preferred Stock purchasable upon exercise of the Rights
will rank junior to all other series of the Corporation's Preferred Stock,
including the Preferred Shares, and will not be redeemable. Each share of
Series A Preferred Stock will, subject to the rights of senior securities of
the Corporation, including outstanding Preferred Shares, if any, be entitled
to a preferential cumulative quarterly dividend payment equal to the greater
of $5.00 per share or 100 times the quarterly dividend declared per share of
Common Stock. Upon the liquidation of the Corporation, the holders of the
Series A Preferred Stock will, subject to the rights of such senior
securities, be entitled to a preferential liquidation payment equal to the
greater of $100 per share plus all accrued and unpaid dividends or 100 times
the payment made per share of Common Stock. Finally, in the event of any
merger, consolidation, statutory share exchange or other similar transaction,
each share of Series A Preferred Stock will, subject to the rights of such
senior securities, be entitled to receive 100 times the amount received per
share of Common Stock. These rights of the Series A Preferred Stock are
protected by customary antidilution provisions. Each share of Series A
Preferred Stock will have 100 votes per share and, except as otherwise
required by law, will vote together with the Common Stock.
The purchase price for each one one-hundredth of a share of Series A
Preferred Stock is $150.00. The purchase price is subject to adjustment upon
the occurrence of certain events, including stock dividends on the Series A
Preferred Stock or issuance of warrants for, or securities convertible on
certain terms into, shares of Series A Preferred Stock. The number of Rights
outstanding and the number of shares of Series A Preferred Stock issuable upon
the exercise of the Rights are subject to adjustment in the event of a stock
split of, or a stock dividend on, Common Stock.
The Rights will become exercisable following a "distribution date." A
distribution date will occur 15 days after a person or group acquires 20% or
more of the outstanding shares of Common Stock or a person or group announces
an offer, which, if successful, would result in the acquisition of 30% or more
of the outstanding shares of Common Stock (the Board may delay the
distribution date following such an offer until the person or group actually
acquires at least 20% of the outstanding shares of Common Stock). The Rights
have certain additional features that will be triggered upon the occurrence of
specified events:
1. If a person or group acquires at least 20% of the outstanding shares
of Common Stock, the Rights permit holders of the Rights, other than such
person or group, to acquire Common Stock at 50% of market value.
2. In the event of certain business combinations involving the
Corporation or the sale of 50% or more of the assets or earning power of
the Corporation, the Rights permit holders of the Rights to purchase the
stock of the acquiror at 50% of market value.
At any time prior to the acquisition by a person or group of 20% or more of
the outstanding shares of Common Stock and in certain circumstances within 20
days after such acquisition, the Board of Directors may redeem the Rights in
whole, but not in part, at a price of $.05 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to
exercise such Rights will terminate and the only remaining right of the
holders of Rights will be to receive the Redemption Price. In addition, the
shareholders of the Corporation can, under certain circumstances, compel the
Board of Directors to redeem the Rights even if the Board of Directors
believes that a tender offer of the nature described in the next sentence is
not in the shareholders' best interests. A person making a cash tender offer
for all of the Corporation's outstanding capital stock and satisfying certain
other conditions could require a shareholders meeting to vote upon a
resolution requesting that the Board of Directors redeem the Rights to allow
the
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completion of that tender offer or another cash tender offer for all of the
Corporation's capital stock at a price not less than that contained in the
original tender offer without being affected by the Rights. If the
Corporation's shareholders, by a two-thirds vote of the outstanding voting
power of the shares of the Corporation, approve such a resolution, and certain
other conditions are satisfied, the Rights must be redeemed by the Board and
would not affect the completion of the tender offer.
The Rights will expire on September 26, 1996, unless earlier redeemed by the
Corporation. The terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights if such amendment cures
ambiguities or corrects or supplements defective provisions or does not
adversely affect the interests of the holders of the Rights. Otherwise, the
terms of the Rights may be amended only with the consent of the holders of a
majority of the shares of Common Stock voting for or against such amendment at
a meeting of the Corporation's shareholders.
DESCRIPTION OF SECURITIES WARRANTS
The Corporation may issue Securities Warrants for the purchase of Debt
Securities, Preferred Shares, Depositary Shares or Common Stock. Securities
Warrants may be issued independently or together with Debt Securities,
Preferred Shares, Depositary Shares or Common Stock offered by any Prospectus
Supplement and may be attached to or separate from such Debt Securities,
Preferred Shares, Depositary Shares or Common Stock. Each series of Securities
Warrants will be issued under a separate warrant agreement (a "Securities
Warrant Agreement") to be entered into between the Corporation and a bank or
trust company, as Securities Warrant Agent, all as set forth in the Prospectus
Supplement relating to the particular issue of offered Securities Warrants.
The Securities Warrant Agent will act solely as an agent of the Corporation in
connection with the Securities Warrant Certificates and will not assume any
obligation or relationship of agency or trust for or with any holders of
Securities Warrant Certificates or beneficial owners of Securities Warrants.
Copies of the forms of Securities Warrant Agreements, including the forms of
Securities Warrant Certificates representing the Securities Warrants, are
filed as exhibits to the Registration Statement to which this Prospectus
pertains. The following summaries of certain provisions of the forms of
Securities Warrant Agreements and Securities Warrant Certificates do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Securities Warrant Agreements and
the Securities Warrant Certificates.
GENERAL
If Securities Warrants are offered, the applicable Prospectus Supplement
will describe the terms of such Securities Warrants, including, in the case of
Securities Warrants for the purchase of Debt Securities, the following where
applicable: (i) the offering price; (ii) the currencies in which such
Securities Warrants are being offered; (iii) the designation, aggregate
principal amount, currencies, denominations and terms of the series of Debt
Securities purchasable upon exercise of such Securities Warrants; (iv) the
designation and terms of any series of Debt Securities, Preferred Shares or
Depositary Shares with which such Securities Warrants are being offered and
the number of such Securities Warrants being offered with each such Debt
Security, Preferred Share, Depositary Share or share of Common Stock; (v) the
date on and after which such Securities Warrants and the related Common Stock
or series of Debt Securities, Preferred Shares or Depositary Shares will be
transferable separately; (vi) the principal amount of the series of Debt
Securities purchasable upon exercise of each such Securities Warrant and the
price at which and currencies in which such principal amount of Debt
Securities of such series may be purchased upon such exercise; (vii) the date
on which the right to exercise such Securities Warrants shall commence and the
date (the "Expiration Date") on which such right shall expire; (viii) United
States federal income tax consequences; and (ix) any other terms of such
Securities Warrants. Securities Warrants for the purchase of Debt Securities
will be in registered form only.
In the case of Securities Warrants for the purchase of Preferred Shares,
Depositary Shares or Common Stock, the applicable Prospectus Supplement will
describe the terms of such Securities Warrants, including the following where
applicable: (i) the offering price; (ii) the aggregate number of shares
purchasable upon exercise
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of such Securities Warrants and, in the case of Securities Warrants for
Preferred Shares or Depositary Shares, the designation, aggregate number and
terms of the series of Preferred Shares purchasable upon exercise of such
Securities Warrants or underlying the Depositary Shares purchasable upon
exercise of such Securities Warrants; (iii) the designation and terms of the
series of Debt Securities, Preferred Shares or Depositary Shares with which
such Securities Warrants are being offered and the number of such Securities
Warrants being offered with each such Debt Security, Preferred Share,
Depositary Share or share of Common Stock; (iv) the date on and after which
such Securities Warrants and the related Common Stock or series of Debt
Securities, Preferred Shares or Depositary Shares will be transferable
separately; (v) the number of Preferred Shares, Depositary Shares or shares of
Common Stock purchasable upon exercise of each such Securities Warrant and the
price at which such number of Preferred Shares or Depositary Shares of such
series or shares of Common Stock may be purchased upon each exercise; (vi) the
date on which the right to exercise such Securities Warrants shall commence
and the Expiration Date; (vii) United States federal income tax consequences;
and (viii) any other terms of such Securities Warrants. Securities Warrants
for the purchase of Preferred Shares, Depositary Shares or Common Stock will
be in registered form only.
Securities Warrant Certificates may be exchanged for new Securities Warrant
Certificates of different denominations, may be presented for registration of
transfer and may be exercised at the corporate trust office of the Securities
Warrant Agent or any other office indicated in the applicable Prospectus
Supplement. Prior to the exercise of any Securities Warrant to purchase Debt
Securities, holders of such Securities Warrants will not have any of the
rights of Holders of the Debt Securities purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest, if any, on the Debt Securities purchasable upon such exercise or to
enforce covenants in the Indenture. Prior to the exercise of any Securities
Warrants to purchase Preferred Shares, Depositary Shares or Common Stock,
holders of such Securities Warrants will not have any rights of holders of the
Preferred Shares, Depositary Shares or Common Stock purchasable upon such
exercise, including the right to receive payments of dividends, if any, on the
Preferred Shares, Depositary Shares or Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
EXERCISE OF SECURITIES WARRANTS
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or number of Preferred Shares, Depositary
Shares or shares of Common Stock, as the case may be, at such exercise price
as shall in each case be set forth in, or calculable from, the Prospectus
Supplement relating to the offered Securities Warrants. After the close of
business on the Expiration Date (or such later date to which such Expiration
Date may be extended by the Corporation), unexercised Securities Warrants will
become void.
Securities Warrants may be exercised by delivering to the Securities Warrant
Agent payment as provided in the applicable Prospectus Supplement of the
amount required to purchase the Debt Securities, Preferred Shares, Depositary
Shares or Common Stock, as the case may be, purchasable upon such exercise
together with certain information set forth on the reverse side of the
Securities Warrant Certificate. Securities Warrants will be deemed to have
been exercised upon receipt of payment of the exercise price, subject to the
receipt, within five business days, of the Securities Warrant Certificate
evidencing such Securities Warrants. Upon receipt of such payment and the
Securities Warrant Certificate properly completed and duly executed at the
corporate trust office of the Securities Warrant Agent or any other office
indicated in the applicable Prospectus Supplement, the Corporation will, as
soon as practicable, issue and deliver the Debt Securities, Preferred Shares,
Depositary Shares or Common Stock, as the case may be, purchasable upon such
exercise. If fewer than all of the Securities Warrants represented by such
Securities Warrant Certificate are exercised, a new Securities Warrant
Certificate will be issued for the remaining amount of Securities Warrants.
The holders of Securities Warrants will be required to pay any tax or
governmental charge that may be imposed in connection with any transfer
involved in the issuance of underlying securities issued upon such exercise.
AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENTS
The Securities Warrant Agreements may be amended or supplemented without the
consent of the holders of the Securities Warrants issued thereunder to effect
changes that are not inconsistent with the provisions of the
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Securities Warrants and that do not adversely affect the interests of the
holders of the Securities Warrants. The Corporation and the Securities Warrant
Agent under a Securities Warrant Agreement may also modify or amend a
Securities Warrant Agreement and the terms of the Securities Warrants with the
consent of the holders of not less than a majority in number of the then
outstanding unexercised Securities Warrants affected thereby; provided that no
such modification or amendment that accelerates the expiration date, increases
the exercise price, reduces the majority consent requirement for any such
modification or amendment, or otherwise materially adversely affects the
rights of the holders of the Securities Warrants, may be made without the
consent of each holder affected thereby.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock covered by, a
Common Stock Warrant are subject to adjustment in certain events, including
(i) the issuance of capital stock as a dividend or distribution on the Common
Stock; (ii) subdivisions and combinations of the Common Stock; (iii) the
issuance to all holders of Common Stock of certain rights or warrants
entitling them to subscribe for or purchase Common Stock within 45 days after
the date fixed for the determination of the shareholders entitled to receive
such rights or warrants, at less than the current market price (as defined in
the Warrant Agreement for such series of Common Stock Warrants); (iv) the
distribution to all holders of Common Stock of evidences of indebtedness or
assets of the Corporation (excluding certain cash dividends and distributions
described below) or rights or warrants (excluding those referred to above). In
the event that the Corporation shall distribute any rights or warrants to
acquire capital stock pursuant to clause (iii) above (the "Capital Stock
Rights"), pursuant to which separate certificates representing such Capital
Stock Rights will be distributed subsequent to the initial distribution of
such Capital Stock Rights (whether or not such distribution shall have
occurred prior to the date of the issuance of a series of Common Stock
Warrants), such subsequent distribution shall be deemed to be the distribution
of such Capital Stock Rights; provided that the Corporation may, in lieu of
making any adjustment in the exercise price of and the number of shares of
Common Stock covered by a Common Stock Warrant upon a distribution of separate
certificates representing such Capital Stock Rights, make proper provision so
that each holder of such a Common Stock Warrant who exercises such Common
Stock Warrant (or any portion thereof) (a) before the record date for such
distribution of separate certificates shall be entitled to receive upon such
exercise shares of Common Stock issued with Capital Stock Rights and (b) after
such record date and prior to the expiration, redemption or termination of
such Capital Stock Rights shall be entitled to receive upon such exercise, in
addition to the shares of Common Stock issuable upon such exercise, the same
number of such Capital Stock Rights as would a holder of the number of shares
of Common Stock that such Common Stock Warrant so exercised would have
entitled the holder thereof to acquire in accordance with the terms and
provisions applicable to the Capital Stock Rights if such Common Stock Warrant
was exercised immediately prior to the record date for such distribution.
Common Stock owned by or held for the account of the Corporation or any
majority owned subsidiary shall not be deemed outstanding for the purpose of
any adjustment.
No adjustment in the exercise price of and the number of shares of Common
Stock covered by a Common Stock Warrant will be made for regular quarterly or
other periodic or recurring cash dividends or distributions or for cash
dividends or distributions to the extent paid from retained earnings. No
adjustment will be required unless such adjustment would require a change of
at least 1% in the exercise price then in effect; provided that any such
adjustment not so made will be carried forward and taken into account in any
subsequent adjustment; and provided further that any such adjustment not so
made shall be made no later than three years after the occurrence of the event
requiring such adjustment to be made or carried forward. Except as stated
above, the exercise price of and the number of shares of Common Stock covered
by a Common Stock Warrant will not be adjusted for the issuance of Common
Stock or any securities convertible into or exchangeable for Common Stock, or
securities carrying the right to purchase any of the foregoing.
In the case of (i) a reclassification or change of the Common Stock, (ii) a
consolidation or merger involving the Corporation or (iii) a sale or
conveyance to another corporation of the property and assets of the
Corporation as an entirety or substantially as an entirety, in each case as a
result of which holders of the Corporation's Common Stock shall be entitled to
receive stock, securities, other property or assets (including cash) with
respect to or in exchange for such Common Stock, the holders of the Common
Stock Warrants then outstanding will be
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entitled thereafter to convert such Common Stock Warrants into the kind and
amount of shares of stock and other securities or property which they would
have received upon such reclassification, change, consolidation, merger, sale
or conveyance had such Common Stock Warrants been exercised immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance.
PLAN OF DISTRIBUTION
The Corporation may offer and sell the Offered Securities in any of three
ways: (i) through agents, (ii) through underwriters or dealers, or (iii)
directly to one or more purchasers. The Prospectus Supplement with respect to
any of the Offered Securities will set forth the terms of the offering of such
Offered Securities, including the name or names of any underwriters or agents,
the purchase price of such Offered Securities, the proceeds to the Corporation
from such sale, any underwriting discounts or agency fees and other items
constituting underwriters' or agents' compensation, the initial public
offering price, any discounts or concessions allowed or reallowed or paid to
dealers, and any securities exchanges on which such Offered Securities may be
listed.
The distribution of the Offered Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If so indicated in the applicable Prospectus Supplement relating to such
Offered Securities, the Corporation will authorize dealers or other persons
acting as the Corporation's agents to solicit offers by certain institutions
to purchase Offered Securities from the Corporation pursuant to contracts
providing for payment and delivery on a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved
by the Corporation. The obligations of any purchaser under any such contract
will not be subject to any conditions except that the purchase of the Offered
Securities shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The dealers and such
other persons will not have any responsibility in respect of the validity or
performance of such contracts.
Underwriters, dealers and agents may be entitled, under agreements entered
into with the Corporation, to indemnification by the Corporation against
certain civil liabilities, including liabilities under the Securities Act, or
to contributions with respect to payments which the underwriters or agents may
be required to make in respect thereof. Underwriters and agents, and
affiliates thereof, may be customers of, engage in transactions with, or
perform services for the Corporation and its affiliates in the ordinary course
of business.
All Offered Securities (except shares of Common Stock) will be new issues of
securities with no established trading market. Any underwriters to whom
Offered Securities are sold by the Corporation for public offering and sale
may make a market in such Offered Securities, but such underwriters will not
be obligated to do so and may discontinue any market making at any time
without notice. No assurance can be given concerning the liquidity of the
trading market for any Offered Securities.
VALIDITY OF SECURITIES
The validity of the Offered Securities will be passed upon for the
Corporation by Timothy R. Baer, Assistant General Counsel of the Corporation.
Mr. Baer owns or has the right to acquire a number of shares of Common Stock
which totals less than 1% of the outstanding Common Stock.
EXPERTS
The consolidated financial statements and related schedule of Dayton Hudson
Corporation and subsidiaries included or incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended January 28, 1995 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included or incorporated therein by reference and incorporated
herein by reference. Such financial statements are, and audited financial
statements to be included in subsequently filed documents will be,
incorporated herein in reliance upon the reports of Ernst & Young LLP
pertaining to such financial statements (to the extent covered by consents
filed with the Securities and Exchange Commission) given upon the authority of
such firm as experts in accounting and auditing.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTA-
TIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPEC-
TUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PRO-
SPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE NOTES DESCRIBED
IN THIS PROSPECTUS SUPPLEMENT, OR AN OFFER TO SELL OR A SOLICITATION OF AN OF-
FER TO BUY SUCH NOTES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIV-
ERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUN-
DER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF
OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Ratios of Earnings to Fixed Charges and to Fixed Charges and Preferred
Stock Dividends.......................................................... S-2
Description of Notes...................................................... S-2
Underwriting.............................................................. S-4
Validity of Notes......................................................... S-5
PROSPECTUS
Incorporation of Certain Documents by Reference........................... 2
Available Information..................................................... 2
The Corporation........................................................... 3
Use of Proceeds........................................................... 3
Business.................................................................. 4
Ratios of Earnings to Fixed Charges and to Fixed Charges and Preferred
Stock Dividends.......................................................... 5
Description of Debt Securities............................................ 5
Description of Preferred Shares........................................... 12
Description of Depositary Shares.......................................... 17
Description of Common Stock............................................... 20
Description of Securities Warrants........................................ 23
Plan of Distribution...................................................... 26
Validity of Securities.................................................... 26
Experts................................................................... 26
</TABLE>
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$200,000,000
DAYTON HUDSON
CORPORATION
7.50% NOTES DUE 2006
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[LOGO APPEARS HERE]
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MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
JULY 19, 1996
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