<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended February 3, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition period from _____ to _____
Commission File Number 1-6049
DAYTON HUDSON CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-0215170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Nicollet Mall, Minneapolis, Minnesota 55402-2055
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612/370-6948
------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, par value $1 per share New York Stock Exchange
Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant on March 29, 1996 was $6,515,440,677, based on the closing price of
$84.875 per share of Common Stock as reported on the New York Stock Exchange--
Composite Index and $1,040.00 per share of Series B ESOP Convertible Preferred
Stock as determined by Duff & Phelps. (Excluded from this figure is the voting
stock held by Registrant's Directors and Executive Officers.)
Indicate the number of shares outstanding of each of Registrant's classes of
common stock, as of the latest practicable date. March 29, 1996: 72,019,463
shares of common stock, par value $1.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Registrant's 1995 Annual Report to Shareholders are
incorporated into Parts I and II.
2. Portions of Registrant's Proxy Statement dated April 18, 1996 are
incorporated into Part III.
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<PAGE>
PART I
ITEM 1. BUSINESS.
The first paragraph of Fourth Quarter Results, Page 19; Analysis of Financial
Condition, Page 20; Performance Objectives, Page 21; Internal Credit, Page 22;
Business Segment Comparisons, excluding years 1990-1992, Page 23; first textual
paragraph of Summary of Accounting Policies -- Organization, page 25; Quarterly
Results, Page 33 and the non-textual information relating to stores on Pages 14
and 15 of Registrant's 1995 Annual Report to Shareholders are incorporated
herein by reference. Registrant was incorporated in Minnesota in 1902.
ITEM 2. PROPERTIES.
Leases, Page 27 and the list of store locations on Pages 14 and 15 of
Registrant's 1995 Annual Report to Shareholders are incorporated herein by
reference.
ITEM 3. LEGAL PROCEEDINGS.
Commitments and Contingencies, Page 27 of Registrant's 1995 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
Not Applicable.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers of the Registrant as of April 1, 1996 and their
positions and ages, are as follows:
<TABLE>
<CAPTION>
NAME TITLE AGE
<S> <C> <C>
Robert J. Ulrich Chairman, Chief Executive Officer, Chairman of the 52
Executive Committee and Director of Registrant;
Chairman and Chief Executive Officer of Target (a
division of Registrant)
Kenneth B. Woodrow President of Target 51
Larry V. Gilpin Executive Vice President, Team, Guest and Community 52
Relations of Target
Robert G. McMahon Senior Vice President, Property Development of Target 47
John E. Pellegrene Executive Vice President, Marketing of Target 59
Gregg W. Steinhafel Executive Vice President, Merchandising of Target 41
Paul W. Sauser President and Chief Operating Officer of Mervyn's 48
(a subsidiary of Registrant)
Raj Joneja Executive Vice President, Merchandising of Mervyn's 48
Linda L. Ahlers President of the Department Store Division (a 45
division of Registrant)
Vivian M. Stephenson Senior Vice President and Chief Information Officer 58
of Registrant
James T. Hale Senior Vice President, General Counsel and 55
Secretary of Registrant
Douglas A. Scovanner Senior Vice President and Chief Financial Officer 40
of Registrant
Gerald L. Storch Senior Vice President, Strategic Planning 39
of Registrant
Edwin H. Wingate Senior Vice President, Personnel of Registrant 63
JoAnn Bogdan Controller and Chief Accounting Officer 43
of Registrant
</TABLE>
1
<PAGE>
Each officer is elected by and serves at the pleasure of the Board of Directors.
There is no family relationship between any of the officers named nor is there
any arrangement or understanding pursuant to which any person was selected as an
officer. The period of service of each officer in the positions listed and other
business experience as of April 1, 1996 is set forth below.
ROBERT J. ULRICH Chief Executive Officer, Chairman of the Board and Chairman
of the Executive Committee of Registrant since 1994. Chairman and Chief
Executive Officer of Target since 1987.
KENNETH B. WOODROW President of Target since 1994, Vice Chairman of Target from
1993 to 1994 and Executive Vice President of Target from 1989 to 1993.
LARRY V. GILPIN Executive Vice President of Target since 1995 and Senior Vice
President of Target from 1981 to 1995.
ROBERT G. MCMAHON Senior Vice President of Target since 1991 and Vice
President of Target from 1990 to 1991.
JOHN E. PELLEGRENE Executive Vice President of Target since 1995 and Senior
Vice President of Target from 1988 to 1995.
GREGG W. STEINHAFEL Executive Vice President of Target since 1994 and Senior
Vice President and General Merchandise Manager of Target from 1987 to 1994.
PAUL W. SAUSER President and Chief Operating Officer of Mervyn's since 1993
and Senior Vice President and General Merchandise Manager of Target from 1989
to 1993.
RAJ JONEJA Executive Vice President of Mervyn's since 1994. Vice President of
Amcena Corporation (a retail company) from 1989 to 1994.
LINDA L. AHLERS President of the Department Store Division since February
1996 and Executive Vice President, Merchandising of the Department Store
Division from August 1995 to February 1996. Senior Vice President of Target
from 1989 to 1995.
VIVIAN STEPHENSON Senior Vice President of Registrant since 1995. Senior Vice
President, MIS of Mervyn's from 1994 to 1995 and Vice President, MIS of Mervyn's
from 1990 to 1994.
JAMES T. HALE Senior Vice President, Secretary and General Counsel of
Registrant since 1981.
DOUGLAS A. SCOVANNER Senior Vice President and Chief Financial Officer of
Registrant since 1994. Treasurer of Registrant in 1994. Senior Vice
President, Finance of Fleming Companies, Inc. (a food wholesaler) from 1992
to 1994. Vice President and Treasurer of Coca-Cola Enterprises, Inc. (a soft
drink bottler) from 1986 to 1992.
GERALD L. STORCH Senior Vice President of Registrant since 1993. Principal
with McKinsey & Company (a consulting firm) from 1982 to 1993.
EDWIN H. WINGATE Senior Vice President of Registrant since 1980.
JOANN BOGDAN Controller and Chief Accounting Officer of Registrant since 1993.
Assistant Controller of Registrant from 1988 to 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Dividends Declared Per Share and Common Stock Price, Page 33 of Registrant's
1995 Annual Report to Shareholders are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The data on years 1991-1995 in the Summary Financial and Operating Data
(excluding Other Data), Page 35; Notes to Consolidated Financial Statements,
Pages 23, 25, 27, 29 and 31-33 (excluding years 1990-1992 on page 23) and the
Report of Independent Auditors, Page 34 of Registrant's 1995 Annual Report to
Shareholders are incorporated herein by reference.
2
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's Discussion and Analysis, Pages 16-22 and the second
textual paragraph of Postretirement Health Care Benefits, Page 32 of
Registrant's 1995 Annual Report to Shareholders are incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pages 23-33 and 35 (excluding years 1990-1992 on Page 23 and years
1985-1990 and Other Data in the Summary Financial and Operating Data on Page 35)
and the Report of Independent Auditors, Page 34 of Registrant's 1995 Annual
Report to Shareholders are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Election of Directors, Pages 1-7 of Registrant's Proxy Statement dated
April 18, 1996, is incorporated herein by reference. See also Item X of Part I
hereof.
ITEM 11. EXECUTIVE COMPENSATION.
Executive Compensation, Pages 7-13 and Director Compensation, Pages 19-20 of
Registrant's Proxy Statement dated April 18, 1996, are incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Outstanding Shares and Voting Rights, Pages 22-23 of Registrant's Proxy
Statement dated April 18, 1996, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not Applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
a) FINANCIAL STATEMENTS:
Consolidated Results of Operations for the Years Ended February 3, 1996,
January 28, 1995 and January 29, 1994.
Consolidated Statements of Financial Position at February 3, 1996 and
January 28, 1995.
Consolidated Statements of Cash Flows for the Years Ended February 3, 1996,
January 28, 1995 and January 29, 1994.
Consolidated Statements of Shareholders' Investment for the Years Ended
February 3, 1996, January 28, 1995 and January 29, 1994.
Information which is an integral part of the financial statements: Notes to
Consolidated Financial Statements on Pages 23, 25, 27, 29 and 31-33
(excluding years 1990-1992 on Page 23) and the Report of Independent
Auditors on Page 34 in Registrant's 1995 Annual Report to Shareholders.
FINANCIAL STATEMENT SCHEDULE:
For the Years Ended February 3, 1996, January 28, 1995 and January 29, 1994
II--Valuation and Qualifying Accounts
b) REPORTS ON FORM 8-K
Form 8-K dated February 8, 1996.
3
<PAGE>
c) EXHIBITS
(2) Not Applicable
(3)A. Articles of Incorporation Incorporated by reference to Exhibit
(3)A. to Registrant's Form 10-K Report for the year ended January 30,
1993 ("1992 10-K").
B. By-Laws, as amended through September 13, 1995.
(4) Instruments defining the rights of security holders, including
indentures. Registrant agrees to furnish the Commission on request
copies of instruments with respect to long-term debt.
(9) Not Applicable
(10)A. Executive Incentive Plan (PTOC&EVA(R)) (a)
B. Director Stock Option Plan of 1995 (b)
C. Executive Incentive Plan (Personal Score) (c)
D. Excess Benefit Plan (d)
E. Supplemental Pension Plan I (e)
F. Executive Long-Term Incentive Plan of 1981, as amended and restated.
(f)
G. Supplemental Pension Plan II (g)
H. Supplemental Pension Plan III (h)
I. Deferred Compensation Plan (i)
J. Deferred Compensation Plan for Directors (j)
K. Income Continuance Policy (k)
L. SMG Income Continuance Policy (l)
M. SMG Executive Deferred Compension Plan (m)
N. Director Deferred Compensation Plan (n)
(11) Statements re Computations of Per Share Earnings
(12) Statements re Computations of Ratios
(13) 1995 Annual Report to Shareholders (only those portions specifically
incorporated by reference herein shall be deemed filed with the
Commission)
(16) Not Applicable
(18) Not Applicable
(19) Not Applicable
(21) List of Subsidiaries
(22) Not Applicable
(23) Consent of Independent Auditors
(24) Powers of Attorney
(27) Financial Data Schedule
(28) Not Applicable
(99)(I) Registrant's Form 11-K Report
(II) Registrant's Proxy Statement dated April 18, 1996 (only those portions
specifically incorporated by reference shall be deemed filed with the
Commission) (o)
Copies of Exhibits (10)A.-(10)N., (21) and (99)(I) will be furnished upon
written request and payment of Registrant's reasonable expenses in furnishing
the exhibits.
4
<PAGE>
(a) Incorporated by reference to Exhibit A to Registrant's Proxy Statement
dated April 19, 1995.
(b) Incorporated by reference to Exhibit B to Registrant's Proxy Statement
dated April 19, 1995.
(c) Incorporated by reference to Exhibit C to Registrant's Form 10-K Report for
the year ended January 29, 1994.
(d) Incorporated by reference to Exhibit (10)D. to Registrant's 1992 10-K.
(e) Incorporated by reference to Exhibit (10)E. to Registrant's Form 10-K
Report for the year ended January 28, 1995 ("1994 10-K").
(f) Incorporated by reference to Exhibit (10)B. to Registrant's Form 10-Q
Report for the quarter ended October 29, 1994.
(g) Incorporated by reference to Exhibit (10)G. to Registrant's 1994 10-K.
(h) Incorporated by reference to Exhibit (10)H. to Registrant's 1994 10-K.
(i) Incorporated by reference to Exhibit (10)I. to Registrant's 1992 10-K.
(j) Incorporated by reference to Exhibit (10)J. to Registrant's 1992 10-K.
(k) Incorporated by reference to Exhibit (10)A. to Registrant's 1992 10-K.
(l) Incorporated by reference to Exhibit (10)B. to Registrant's 1992 10-K.
(m) Incorporated by reference to Exhibit (10)M. to Registrant's 1994 10-K.
(n) Incorporated by reference to Exhibit (10)N. to Registrant's 1994 10-K.
(o) Incorporated by reference to Registrant's Proxy Statement dated April 18,
1996 (only those portions specifically incorporated by reference shall be
deemed filed with the Commission).
______________________
/(R)/ EVA is a registered trademark.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DAYTON HUDSON CORPORATION
By /S/ DOUGLAS A. SCOVANNER
-----------------------------
Douglas A. Scovanner
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Dated: April 10, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, the
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/S/ BOB ULRICH
-----------------------------
Robert J. Ulrich
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Dated: April 10, 1996
/S/ DOUGLAS A. SCOVANNER
-----------------------------
Douglas A. Scovanner
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Dated: April 10, 1996
/S/ J.A. BOGDAN
-----------------------------
JoAnn Bogdan
CONTROLLER AND
CHIEF ACCOUNTING OFFICER
Dated: April 10, 1996
RAND V. ARASKOG MICHELE J. HOOPER
LIVIO D. DESIMONE JAMES A. JOHNSON
ROGER A. ENRICO MARY PATTERSON MCPHERSON
WILLIAM W. GEORGE SOLOMON J. TRUJILLO
ROGER L. HALE ROBERT J. ULRICH
BETTY RUTH HOLLANDER JOHN R. WALTER Directors
Douglas A. Scovanner, by signing his name hereto, does hereby sign this
document pursuant to powers of attorney duly executed by the Directors named,
filed with the Securities and Exchange Commission on behalf of such Directors,
all in the capacities and on the date stated, such persons being a majority of
the Directors of the Registrant.
By /S/ DOUGLAS A. SCOVANNER
-----------------------------
Douglas A. Scovanner
ATTORNEY-IN-FACT
Dated: April 10, 1996
6
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS 1995, 1994 AND 1993
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- ---------- ---------- ---------- ----------
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND (1) END OF
DESCRIPTIONS OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts
1995............................ $46 $93 $70 $69
1994............................ 35 66 55 46
1993............................ 37 53 55 35
</TABLE>
____________________
(1) Accounts determined to be uncollectible are charged against reserve, net of
collections on accounts previously charged against reserve.
7
<PAGE>
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EXHIBITS
FILED WITH
DAYTON HUDSON CORPORATION
FORM 10-K
FOR YEAR ENDED FEBRUARY 3, 1996
(3)B. By-Laws, as amended through September 13, 1995
(11) Statements re Computations of Per Share Earnings
(12) Statements re Computations of Ratios
(13) 1995 Annual Report to Shareholders (only those portions specifically
incorporated by reference herein shall be deemed filed with the
Commission)
(21) List of Subsidiaries
(23) Consent of Independent Auditors
(24) Powers of Attorney
(27) Financial Data Schedule
(99)(I) Registrant's Form 11-K Report
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<PAGE>
Exhibit 3B
BY-LAWS
OF
DAYTON HUDSON CORPORATION
As Amended Through September 13, 1995
SHAREHOLDERS
------------
Section 1.01. Place of Meetings and Annual Meeting
- ---------------------------------------------------
Meetings of the shareholders shall be held at the principal executive
office of the corporation or at such other place or places as the Board may from
time to time designate. The regular annual meeting of the shareholders shall be
held on such day in May in each year as shall be designated by the Board, and at
such time as the Board may from time to time designate, for the election of
Directors and for the transaction of such other business as may lawfully come
before such meeting.
Section 1.02. Shareholders' Special Meetings
- ---------------------------------------------
Special meetings of the shareholders may be called for any purpose or
purposes, at any time, by the Chief Executive Officer; by the President; by the
Chief Financial Officer; by the Board or any two or more members thereof; or by
one or more shareholders holding not less than ten percent (10%) of the voting
power of all shares of the corporation entitled to vote (except that a special
meeting for the purpose of considering any action to directly or indirectly
facilitate or effect a business combination, including any action to change or
otherwise affect the composition of the Board for that purpose, must be called
by 25% or more of the voting power of all shares of the corporation entitled to
vote), who shall demand such special meeting by written notice given to the
Chief Executive Officer or the Chief Financial Officer specifying the purpose or
purposes of such meeting.
Section 1.03. Meetings Held Upon Shareholder Demand
- ----------------------------------------------------
Within 30 days of receipt of a demand by the Chief Executive Officer
or the Chief Financial Officer from any shareholder or shareholders entitled to
call a meeting of the shareholders, it shall be the duty of the Board to cause a
special or regular meeting of shareholders, as the case may be, to be duly
called and held on notice no later than ninety days after receipt of such
shareholder or shareholder's demand. If the Board fails to cause such a meeting
to be called and held as required by this Section, the shareholder or
shareholders making the demand may call the meeting by giving notice as provided
in Section 1.04 at the expense of the corporation.
<PAGE>
Section 1.04. Notices of Meetings
- ----------------------------------
Except as otherwise specified in Section 1.03 or required by law,
written notice of the time and place of every meeting of shareholders and in the
case of a special meeting, the purpose or purposes of the meeting shall be given
at least ten (10) days previous thereto, to each shareholder of record entitled
to vote at the meeting. The business transacted at a special meeting of
shareholders is limited to the purpose or purposes stated in the notice of the
meeting.
Section 1.05. Quorum
- ---------------------
A quorum at any meeting of shareholders shall consist of shareholders
representing, either in person or by proxy, a majority of the outstanding shares
of the corporation entitled to vote at such meeting, except as otherwise
specially provided by law. If a quorum is not present at any such meeting, it
may be adjourned from time to time until a quorum is present.
Section 1.06. Adjournments
- ---------------------------
Any meeting of the shareholders may be adjourned from time to time to
another date, time and place. If any meeting of the shareholders is so
adjourned, no notice as to such adjourned meeting need be given if the date,
time and place at which the meeting will be reconvened are announced at the time
of adjournment.
Section 1.07. Proposals Regarding Business Other Than Director Nominations
- ---------------------------------------------------------------------------
The proposal of business (other than business relating to the
nomination and election of directors) to be considered by the shareholders may
be made at an annual or special meeting of shareholders (a) pursuant to the
corporation's Notice of Meeting, (b) by or at the direction of the Board, or (c)
by any shareholder of the corporation who (i) was a shareholder of record at the
time of giving of notice provided for in these By-laws, (ii) is entitled to vote
at the meeting, and (iii) gives notice of the matter, which must otherwise be a
proper matter for shareholder action, in a writing which is received by the
Secretary of the corporation not less than 60 days prior to the date fixed for
the meeting. In no event shall a proposal be made at a special meeting if it
was not included in the notice of the meeting. Such shareholder's notice shall
set forth (a) a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such shareholder and the beneficial owner,
if any, on whose behalf the proposal is made, and (b) the name and address of
such shareholder, as they appear on the corporation's books, and of the
beneficial owner, if any, on whose behalf the proposal is made; and the class
and number of shares of the corporation which are owned beneficially and of
record by such shareholder and such beneficial owner.
<PAGE>
BOARD OF DIRECTORS
------------------
Section 2.01. Regular Meetings
- -------------------------------
Regular meetings of the Board may be established by the Board. They
may be held without notice at the principal executive office of the corporation,
or at such other place or places as the Board may from time to time designate.
Section 2.02. Special Meetings
- -------------------------------
Special meetings of the Board may be called at any time by the
Chairman of the Board, or the President, or in their absence by the Chairman of
the Executive Committee or any Executive Vice President, or by a majority of the
members of the Board then elected and serving, to be held at the principal
executive office of the corporation or at such other place or places as the
Directors may from time to time designate. Notices of all special meetings of
the Board shall be given to each Director by twenty-four hours' service of the
same by telegram, by letter, by telephone or personally, provided that when
notice is mailed, at least three days notice shall be given.
Section 2.03. Quorum
- ---------------------
A majority of the Board shall be necessary at all meetings to
constitute a quorum for the transaction of business, except as otherwise
provided herein, but less than a quorum may adjourn any meeting, which may be
held on a subsequent date without further notice, provided that a quorum be
present at such deferred meeting.
Section 2.04. Waiver of Notice; Previously Scheduled Meetings
- --------------------------------------------------------------
A Director may waive notice of the date, time and place of a meeting
of the Board. A waiver of notice by a Director entitled to notice is effective
whether given before, at or after the meeting, and whether given in writing,
orally or by attendance. Attendance by a Director at a meeting is a waiver of
notice of that meeting, unless the Director objects at the beginning of the
meeting to the transaction of business because the meeting is not lawfully
called or convened and thereafter does not participate in the meeting.
If the day or date, time and place of a Board meeting have been
provided herein or announced at a previous meeting of the Board, no notice is
required. Notice of an adjourned meeting need not be given other than by
announcement at the meeting at which adjournment is taken of the date, time and
place at which the meeting will be reconvened.
Section 2.05. Action in Writing
- --------------------------------
Any action which may be taken at a meeting of the Board or of the
Executive Committee or any other committee may be taken without a meeting if
authorized by a writing or writings signed by all of the Directors or all of the
members of the Executive Committee or any other committee, as
<PAGE>
the case may be, and such action shall be effective on the date on which the
last signature is placed on such writing or writings or such earlier date as is
set forth therein.
Section 2.06. Electronic Communications
- ----------------------------------------
Any action which may be taken at a meeting of the Board or of the
Executive Committee or any other committee may be taken by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, with the same effect as though
all such persons were present in person at such meeting.
Section 2.07. Executive Committee
- ----------------------------------
(a) Designation, Number and Qualifications. The Board may designate
not less than five (5) of their number to constitute an Executive Committee.
The Chairman of the Board shall be a member of the Executive Committee. The
Board may also designate a Chairman and a Vice Chairman of the Executive
Committee. The Executive Committee shall be subject at all times to the control
and direction of the Board.
(b) Powers. Except as may be otherwise prospectively and specifically
provided in a resolution duly adopted by a majority of the members of the entire
Board at any meeting of the Board reducing or limiting the authority of the
Executive Committee, said Committee shall have and may exercise, during the
intervals between meetings of the Board, all of the powers of the Board except
that the Executive Committee shall not have power to act upon or submit to the
shareholders any proposal for amendment to the Articles of Incorporation, any
plan of merger or consolidation, any sale or other disposition of all or
substantially all of the property and assets of the corporation, or any proposal
for the dissolution of the corporation; to amend or repeal these By-Laws or
adopt new By-Laws; to fill vacancies in the Board, or to dissolve, remove
members or change the number of, or fill vacancies in, the Executive Committee;
to fix the compensation for any Director for serving on the Board or any
committee of the Board; or to amend or repeal any resolution of the Board which
by its terms shall not be so amendable or repealable.
(c) Rules of Procedure.
-------------------
(1) A majority of the members of the Executive Committee shall
constitute a quorum for the purpose of taking action upon any matter that may
come before it, and the affirmative vote of a majority of a quorum present at
the meeting shall be necessary to pass any resolution presented thereat. All
action by said Executive Committee shall be reported to the Board at its meeting
next succeeding the taking of such action.
(2) The Executive Committee may adopt such rules and regulations
for the conduct of its meetings as it may deem proper and as are not
inconsistent with law, the Articles of Incorporation, these By-Laws or any
resolution duly adopted by the Board.
(3) The Executive Committee shall keep written minutes of its
proceedings.
(d) Removal; Dissolution. Any member or members of the Executive
Committee may be removed at any time, with or without cause, by the affirmative
vote of a majority of the members
<PAGE>
of the entire Board. The Board may, by a resolution duly adopted by a majority
of the entire Board at any meeting of the Board, dissolve the Executive
Committee.
(e) Vacancies. If any vacancy shall occur in the Executive Committee
by reason of death, resignation, removal or otherwise, such vacancy may be
filled at any meeting of the Board.
(f) Regular Meetings. Regular meetings of the Executive Committee may
be held without notice at such times and at such places, within or without the
State of Minnesota, as may from time to time be determined by the Executive
Committee or the Board.
(g) Special Meetings. Special meetings of the Executive Committee may
be called by the Chairman of the Board, the President or the Chairman of the
Executive Committee and shall be called by the Chairman of the Board, the
Chairman of the Executive Committee or the Secretary on the written request of a
majority of the members of the Committee then elected and serving.
Special meetings shall be held at such times and such places as shall be
determined by the Chairman of the Board, the President or the Chairman of the
Executive Committee, subject to any requirement of notice as in these By-Laws
provided.
(h) Notice of Meetings. When required by these By-Laws to be given,
notice of the time and place of a meeting of the Executive Committee shall be
given to each member of the Executive Committee in the same manner as required
to be given for a Directors' meeting.
(i) Adjournment. At any meeting a majority of the members present,
without notice other than by announcement at the meeting, may adjourn such
meeting to another time and place, whether or not a quorum is present.
Section 2.08. Notice of Committee Meetings
- -------------------------------------------
Notices of meetings of Committees of the Board shall be given in the
same manner required for a Directors' meeting, unless other provisions are set
by the Directors.
Section 2.09. Absent Directors
- -------------------------------
A Director may give advance written consent or opposition to a
proposal to be acted on at a Board meeting. If the Director is not present at
the meeting, consent or opposition to a proposal does not constitute presence
for purposes of determining the existence of a quorum, but consent or opposition
shall be counted as a vote in favor of or against the proposal and shall be
entered in the minutes or other record of action at the meeting, if the proposal
acted on at the meeting is substantially the same or has substantially the same
effect as the proposal to which the Director has consented or objected.
<PAGE>
OFFICERS
--------
Section 3.01. Number and Designation
- -------------------------------------
The corporation shall have one or more natural persons exercising the
functions of the offices of Chief Executive Officer and Chief Financial Officer.
The Board may elect or appoint such other officers or agents as it deems
necessary for the operation and management of the corporation, with such powers,
rights, duties and responsibilities as may be determined by the Board,
including, without limitation, a Chairman, one or more Vice Chairmen, a
President, one or more Vice Presidents, a Secretary and a Treasurer, each of
whom shall have the powers, rights, duties and responsibilities set forth in
these By-Laws unless otherwise determined by the Board. Any of the offices or
functions of those offices may be held by the same person.
Section 3.02. Chairman of the Board
- ------------------------------------
The Chairman of the Board shall be a member of the Board and shall
preside at all meetings of shareholders and of the Board, shall make reports to
the Board and shareholders, and shall have such other authority and perform such
other duties as the Board may from time to time determine. During the absence
or disability of the President, the Chairman of the Board shall exercise the
powers and perform the duties of the President.
Section 3.03. President
- ------------------------
The President shall, in the absence of the Chairman of the Board,
preside at meetings of the Board and of the shareholders, and shall have such
other authority and perform such other duties as the Board may from time to time
determine.
Section 3.04. Vice Chairman
- ----------------------------
A Vice Chairman may, but need not be a member of the Board. If the
Vice Chairman is a member of the Board, he/she shall in the absence of the
Chairman of the Board and the President preside at meetings of the Board and of
the shareholders, and shall have such authority and perform such duties as the
Board may from time to time determine. If at any time there shall be elected
and serving more than one person in the office of Vice Chairman, then for all
purposes of succession as provided in these By-Laws, seniority of continuous
service in that office shall control.
Section 3.05. Chairman of the Executive Committee
- --------------------------------------------------
The Chairman of the Executive Committee shall be a member of the
Board, shall in the absence of the Chairman of the Board, the President and any
Vice Chairman who is a member of the Board preside at meetings of the
shareholders and shall have such authority and perform such other duties as the
Board may from time to time determine.
<PAGE>
Section 3.06. Vice Presidents
- ------------------------------
Any one or more of the Vice Presidents may be designated by the Board
as an Executive or Senior Vice President, and each Vice President shall have
such authority and perform such duties as the Board may from time to time
determine.
Section 3.07. Secretary
- ------------------------
The Secretary shall issue notices for all meetings, except as
otherwise provided for herein, and the Secretary shall keep minutes of all
meetings, have charge of the seal and the corporate books, and make such reports
and perform the other duties incident to that office, and shall have such other
authority and perform such other duties as the Board may from time to time
determine.
Section 3.08. Treasurer
- ------------------------
The Treasurer shall have the custody of all monies and securities of
the corporation, keep regular books of account, disburse the funds of the
corporation in payment of the just demands against the corporation or as may be
ordered by the Board, taking proper vouchers for such disbursements, shall
render to the Board from time to time as may be required of the Treasurer, an
account of all the transactions of the Treasurer and of the financial condition
of the corporation, and shall perform the other duties incident to that office,
and shall have such other authority and perform such other duties as the Board
may from time to time determine.
Section 3.09. Chief Executive Officer
- --------------------------------------
The Board shall at least annually designate an officer of the
corporation also to serve as its Chief Executive Officer who shall by such
designation have and exercise the highest level of executive authority and
responsibility for the management and affairs of the corporation. Except as
otherwise expressly provided in these By-Laws or by the Board, the Chief
Executive Officer may for occasions of temporary absence or disability from time
to time delegate the authority and duties of that office to one or more other
officers of the corporation by written designation delivered to the Chairman of
the Board or if the Chairman of the Board is also the Chief Executive Officer,
then to the Vice Chairman of the Executive Committee and the Secretary. During
any period when such temporary delegation is in effect the Secretary shall be
authorized to attest or certify to any act performed or document executed
pursuant to such delegation as executed by the person then designated Chief
Executive Officer. In the event of the death, or apparent incapacity or
disability of the Chief Executive Officer then currently designated by the
Board, the Vice Chairman of the Executive Committee or in his absence or
unavailability the Chairman of the Finance Committee, shall determine whether
said Chief Executive Officer is or will for more than a temporary period be
unable to perform the duties of that office, then upon notice to that effect
given or promptly confirmed in writing to each member of the Executive Committee
then elected and serving, the Vice Chairman of the Executive Committee or, as
provided, the Chairman of the Finance Committee shall designate an acting Chief
Executive Officer who shall have and exercise all of the authority and
responsibility of the Chief Executive Officer as though designated by, and until
further action of, the Board.
<PAGE>
Section 3.10. Other Officers and Designations
- ----------------------------------------------
The Board may elect or appoint such other officers and agents as it
shall deem necessary or expedient, who shall hold their offices for such terms,
and shall exercise such powers and perform such duties, as shall be determined
from time to time by the Board. The Board may also from time to time designate,
in addition and by way of further definition to the title and duties of any duly
elected officer of the corporation, a Chief Operating Officer, Chief
Administrative Officer, Chief Accounting Officer, and a General Counsel, or any
of them, and may so adopt any similar or comparable definition for any officer
which is not inconsistent with any express provision of these By-Laws.
Section 3.11. Term of Office
- -----------------------------
The officers of the corporation shall hold office until their
respective successors are elected or appointed or until their earlier
resignation, death or removal. Any officer elected or appointed by the Board
may be removed at any time, with or without cause, by the Board.
Section 3.12. Vacancies
- ------------------------
Vacancies in any office or designation arising from any cause may be
filled by the Directors at any regular or special meeting.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
Section 4.01. Indemnification Committee
- ----------------------------------------
There is hereby established an Indemnification Committee consisting of
the Chief Executive Officer; the Senior personnel Officer; the Chief Financial
Officer and the General Counsel. In the event of vacancy in the office of Chief
Executive Officer or in the event that officer is not a member of the Board, the
Chairman of the Board shall be an ex officio member of the committee. In the
event of vacancy in any other position, the Chief Executive Officer shall
appoint an interim member of the committee. By reason of their annual election
and designation to these offices, said officers shall be deemed to have been
annually appointed to the committee.
Section 4.02. Duties of the Committee
- --------------------------------------
The committee shall have the fullest authority and responsibility
available under Minnesota Statutes 302A. 521, including the authority to make a
determination, subject to the power of the Board, whether the person for whom
indemnification is sought is not a director or officer of the corporation nor a
person possessing directly or indirectly the power to direct or cause the
direction of the management or policies of the corporation.
The committee shall report its actions to the Board at least once in
each fiscal year. At that time, the Board shall have the opportunity to ratify
the existence and constitution of the committee.
<PAGE>
At all meetings of the committee, the presence of a least two members
shall constitute a quorum for the transaction of business.
CERTIFICATES OF SHARES
----------------------
Section 5.01. Execution of Share Certificates
- ----------------------------------------------
The certificates of shares of the corporation shall bear the corporate
seal and shall be signed by the Chairman of the Board or the president and by
the Secretary or an Assistant Secretary; but when a certificate is signed by a
transfer agent or a registrar the signature of any such corporate officer and
the corporate seal upon such certificate may be facsimiles engraved or printed.
Section 5.02. Lost, Stolen or Destroyed Share Certificates
- -----------------------------------------------------------
In the event of a certificate of shares being lost, stolen, or
destroyed, a new certificate of the same tenor and for the same number of shares
as the one lost, stolen or destroyed may be issued pursuant to the standards
prescribed from time to time by the Board.
MISCELLANEOUS
-------------
Section 6.01. Execution of Instruments
- ---------------------------------------
All contracts, deeds, mortgages, notes, checks, conveyances, releases
of mortgages and other instruments shall be signed on behalf of the corporation:
by the Chief Executive Officer, the Chairman of the Board, the President, any
Vice Chairman, the Chairman of the Executive Committee or any Vice President, or
by such other person or persons as may be designated or authorized from time to
time by the Board or by the Chief Executive Officer.
Section 6.02. Fiscal Year
- --------------------------
The fiscal year of the corporation shall commence on whatever date the
Sunday shall fall which Sunday immediately follows the Saturday which is nearest
to the last day of January in any one year, and such fiscal year shall end on
whatever date the Saturday which is nearest to the last day of January in the
following year shall fall.
Section 6.03. Amendments
- -------------------------
These By-Laws may be altered, amended, added to, or repealed by the
affirmative vote of a majority of the members of the Board at any regular
meeting of the Board, or at any special meeting of the Board called for that
purpose, subject to the power of the shareholders to change or repeal such By-
Laws and subject to any other limitations on such authority of the Board
provided by the Minnesota Business Corporation Act.
<PAGE>
EXHIBIT 11
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF PER SHARE EARNINGS
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------------
FEBRUARY 3, 1996 JANUARY 28, 1995 JANUARY 29, 1994
------------------- -------- ------ -------- ------
EARNINGS SHARES EARNINGS SHARES EARNINGS SHARES
-------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
Primary Computation
- -------------------
Net earnings....................... $ 311 $ 434 $ 375
Less: Dividend requirements on
ESOP preferred shares, net of tax
benefit on unallocated shares..... (20) (19) (17)
----- ----- -----
Adjusted net earnings.............. $ 291 $ 415 $ 358
===== ===== =====
Average common shares outstanding.. 71.8 71.6 71.5
Average number of common share
equivalents:
Stock options..................... 0.2 0.2 0.1
Performance shares................ 0.3 0.2 0.2
---- ---- ----
Adjusted common equivalent shares
outstanding--primary.............. 72.3 72.0 71.8
==== ==== ====
PRIMARY EARNINGS PER SHARE......... $4.03 $5.77 $4.99
===== ===== =====
Fully Diluted Computation
- -------------------------
Net earnings....................... $ 311 $ 434 $ 375
Less: Earnings impact of assumed
ESOP preferred share conversion,
net of tax benefit on unallocated
shares............................ (14) (13) (12)
----- ----- -----
Adjusted net earnings.............. $ 297 $ 421 $ 363
===== ===== =====
Average common and common
equivalent shares--primary........ 72.3 72.0 71.8
Additional common stock
equivalents attributable to
application of the treasury stock
method............................ -- 0.1 --
Assumed conversion of ESOP
preferred shares.................. 4.1 4.2 4.3
---- ---- ----
Adjusted common equivalent shares
outstanding--fully diluted........ 76.4 76.3 76.1
==== ==== ====
FULLY DILUTED EARNINGS PER SHARE... $3.89 $5.52 $4.77
===== ===== =====
AVERAGE ALLOCATED ESOP PREFERRED
SHARES OUTSTANDING (IN MILLIONS).. 2.5 2.0 1.5
==== ==== ====
</TABLE>
<PAGE>
EXHIBIT 12
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF RATIOS OF EARNINGS TO FIXED CHARGES AND
RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------------------
FEBRUARY 3, JANUARY 28, JANUARY 29, JANUARY 30, FEBRUARY 1,
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES:
Earnings:
Consolidated net earnings $ 311 $ 434 $ 375 $ 383 $ 301
Income taxes 190 280 232 228 171
------ ------ ------ ------ -----
Total earnings 501 714 607 611 472
------ ------ ------ ------ -----
Fixed charges:
Interest expense 461 439 459 454 421
Interest portion of rental expense 59 56 45 43 39
------ ------ ------ ------ -----
Total fixed charges 520 495 504 497 460
Less:
Capitalized interest (14) (7) (5) (6) (11)
------ ------ ------ ------ -----
Fixed charges in earnings 506 488 499 491 449
------ ------ ------ ------ -----
Earnings available for fixed charges $1,007 $1,202 $1,106 $1,102 $ 921
====== ====== ====== ====== =====
Ratio of earnings to fixed charges 1.94 2.43 2.19 2.22 2.00
====== ====== ====== ====== =====
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS:
Total fixed charges, as above $ 520 $ 495 $ 504 $ 497 $ 460
Dividends on preferred stock
(pre-tax basis) 37 39 39 39 39
------ ------ ------ ------ -----
Total fixed charges and preferred
stock dividends 557 534 543 536 499
------ ------ ------ ------ -----
Earnings available for fixed charges
and preferred stock dividends $1,007 $1,202 $1,106 $1,102 $ 921
====== ====== ====== ====== =====
Ratio of earnings to fixed charges
and preferred stock dividends 1.81 2.25 2.04 2.06 1.85
====== ====== ====== ====== =====
</TABLE>
<PAGE>
Exhibit 13
TARGET
<TABLE>
<CAPTION>
(Millions of Dollars) 1995 1994 1993
<S> <C> <C> <C>
Revenues $15,807 $13,600 $11,743
Operating Profit $ 719 $ 732 $ 662
Stores 670 611 554
Retail Square Feet* 71,108 64,446 58,087
</TABLE>
*In thousands, reflects total square feet, less office, warehouse and vacant
space.
<TABLE>
<CAPTION>
Retail Sq. Ft. No. of
in Thousands Stores
<S> <C> <C>
AZ 2,357 22
AR 186 2
CA 13,863 128
CO 2,342 22
FL 5,682 52
GA 2,381 23
ID 309 3
IL 4,915 43
IN 2,728 30
IA 1,620 17
KS 769 7
KY 660 7
LA 203 2
MI 4,403 42
MN 4,868 42
MS 116 1
MO 1,124 11
MT 299 3
NE 885 8
NV 841 8
NM 491 5
NC 1,341 13
ND 415 4
OH 1,539 14
OK 784 8
OR 944 9
SC 393 4
SD 392 4
TN 1,598 16
TX 8,200 77
WA 2,190 21
WI 2,089 20
WY 182 2
TOTAL 71,108 670
</TABLE>
<TABLE>
<CAPTION>
MAJOR MARKETS
<S> <C>
Greater Los Angeles 66
Minneapolis/St. Paul 30
Chicago 29
Dallas/Ft. Worth 21
Detroit 21
Houston 21
Atlanta 20
San Francisco Bay Area 19
Denver 15
Miami/Ft. Lauderdale 15
Phoenix 15
San Diego 12
Seattle/Tacoma 12
Indianapolis 10
EMPLOYEES
(AT YEAR-END): 141,000
</TABLE>
14 Dayton Hudson Corporation
<PAGE>
MERVYN'S
<TABLE>
<CAPTION>
(Millions of Dollars) 1995 1994 1993
<S> <C> <C> <C>
Revenues $4,516 $4,561 $4,436
Operating Profit $ 100 $ 206 $ 179
Stores 295 286 276
Retail Square Feet* 24,113 23,130 22,273
</TABLE>
*In thousands, reflects total square feet, less office, warehouse and vacant
space.
<TABLE>
<CAPTION>
Retail Sq. Ft. No. of
in Thousands Stores
<S> <C> <C>
AZ 1,226 15
CA 9,948 128
CO 925 12
FL 1,616 18
GA 562 7
ID 83 1
LA 538 7
MI 1,174 15
MN 852 6
NV 412 6
NM 180 2
OK 270 3
OR 551 7
TX 3,569 44
UT 761 8
WA 1,446 16
TOTAL 24,113 295
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
MAJOR MARKETS
Greater Los Angeles 51
San Francisco Bay Area 22
Dallas/Ft. Worth 13
Miami/Ft. Lauderdale 13
San Diego 12
Phoenix 11
Houston 10
Detroit 9
Seattle/Tacoma 9
Atlanta 7
Denver 7
Minneapolis/St. Paul 6
EMPLOYEES
(AT YEAR-END): 34,000
</TABLE>
DEPARTMENT STORES
<TABLE>
<CAPTION>
(Millions of Dollars) 1995 1994 1993
<S> <C> <C> <C>
Revenues $ 3,193 $ 3,150 $ 3,054
Operating Profit $ 184 $ 270 $ 268
Stores 64 63 63
Retail Square Feet* 13,870 13,587 13,587
</TABLE>
*In thousands, reflects total square feet, less office, warehouse and vacant
space.
<TABLE>
<CAPTION>
Retail Sq. Ft. No. of
in Thousands Stores
<S> <C> <C>
Dayton's
MN 2,846 12
ND 297 3
SD 102 1
WI 373 3
Hudson's
IN 246 2
MI 4,216 18
OH 187 1
Marshall Field's
IL 4,079 16
OH 204 1
TX 713 4
WI 607 3
TOTAL 13,870 64
</TABLE>
<TABLE>
<S> <C>
MAJOR MARKETS
Chicago 15
Minneapolis/St.Paul 10
Detroit 9
EMPLOYEES
(AT YEAR-END): 39,000
</TABLE>
15 Dayton Hudson Corporation
<PAGE>
ANALYSIS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)
Dayton Hudson Corporation's fiscal year net earnings were
$311 million in 1995, compared with $434 million in 1994 and $375 million in
1993. Fully diluted earnings per share were $3.89 in 1995, $5.52 in 1994 and
$4.77 in 1993. (References to earnings per share relate to fully diluted
earnings per share.)
Operating profit in 1995 declined 17 percent from the prior year. Operating
profit was $1,003 million in 1995, compared with $1,208 million in 1994 and
$1,109 million in 1993. Operating profit is last-in, first-out (LIFO) earnings
from operations before corporate expense, interest and income taxes. Target's
operating profit declined 2 percent, compared with the prior year, while
Mervyn's and the Department Store Division (DSD) reported declines of 52
percent and 32 percent, respectively. Operating profit results reflected a $17
million pre-tax LIFO charge in 1995, compared with a $19 million pre-tax LIFO
credit in 1994. In addition, as a result of the sale of securitized accounts
receivable, 1995 operating profit reflected a reduction of finance charge
revenue, as well as a reduction of bad debt expense. The net impact, of
approximately $10 million, was reflected proportionately (based on respective
accounts receivable balances) as a reduction to each division's operating profit
results. The overall net decrease was offset by a comparable savings in interest
expense as a result of the replacement of debt with the sale proceeds.
The Corporation has undertaken several strategic initiatives to improve
overall profitability in 1996:
. TARGET expects to recapture historical levels of profit margin through
continued sales momentum, stabilization of its gross margin formula and up to
$50 million in operating expense savings related to a broad-based cost-
reduction program. In 1995, Target's operating profit as a percentage of
revenues declined to 4.6 percent of total revenues from historical levels of 5
percent or more. We are optimistic that as a result of its initiatives, Target
will return to the 5 percent operating profit level.
. MERVYN'S is positioned to produce significantly higher operating profit in
1996, particularly in the first and second quarters due to the combination of
promotional and merchandising changes implemented in the second half of 1995
and a $100 million annualized expense-reduction program initiated in fiscal
1996. Mervyn's goal is to make substantial progress in 1996 toward our long-
term objective of realizing an operating profit level of 7 percent of total
revenues.
. DSD expects to realize favorable operating profit results from the strategic
changes that were initiated in the latter part of 1995. The critical elements
of DSD's strategy include fewer storewide promotional events, a greater
emphasis on better and more unique merchandise assortments and improved guest
service. In 1996, we expect that DSD's new strategy will result in essentially
flat annual comparable-store sales growth, with increased sales of regular-
priced merchandise offset by a decline in promotional sales. The strategy,
together with a $20 million expense-reduction program, is expected to result
in improved profitability beginning in the fall of 1996.
The earnings per share variance analysis and its associated discussion
presented below represents management's view of the business. It differs from
the classifications in the Consolidated Results of Operations. Revenues include
sales, as well as finance charges and other revenues. The gross margin rate
includes cost of retail sales and excludes buying and occupancy costs. The
operating expense rate includes buying and occupancy costs; selling, publicity
and administrative expenses (excluding start-up and corporate and other
expenses); depreciation and amortization; and taxes other than income taxes.
Start-up expenses are costs associated with opening new stores and remodeling
existing stores.
Strong growth at Target, our lowest gross margin and expense rate division,
continues to impact our business mix. As a result, the Corporation's overall
revenue growth and total operating expense rate were favorably affected, while
the gross margin rate was unfavorably affected. If the revenue mix had remained
constant with 1994, the gross margin rate variance would have been 49 cents more
favorable and the operating expense rate variance would have been 60 cents less
favorable. Looking forward, growth at Target is expected to continue to have an
increasing impact on the Corporation's overall gross margin and expense rate
structure.
The table below identifies the major factors in the change in earnings per
share:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
EARNINGS VARIANCE ANALYSIS 1995 VS. 1994 1994 vs. 1993
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prior year's earnings per share $ 5.52 $4.77
Change due to:
Revenues 1.63 1.17
Gross margin rate:
FIFO (1.96) .53
LIFO provision (.29) (2.25) (.58) (.05)
---- ---
Operating expense rate (.81) (.19)
Start-up expenses (.18) (.14)
Interest expense, net (.13) .13
Corporate and other
expense, net .03 (.07)
Income tax rate .08 (.10)
- ----------------------------------------------------------------------------
EARNINGS PER SHARE $ 3.89 $5.52
============================================================================
</TABLE>
16 Dayton Hudson Corporation and Subsidiaries
<PAGE>
ANALYSIS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)
REVENUES
The Corporation in 1995 reported a 10 percent increase in total revenues and a 3
percent increase in comparable-store revenues over 1994. Comparable-store
revenues are revenues from stores open longer than a year. Target's 16 percent
revenue increase reflected solid base-business growth and new-store expansion,
as well as increased sales, finance-charge revenues and late-fee revenues due to
the expansion of its proprietary credit card. Mervyn's total and comparable-
store revenue declines were primarily due to low sales volume throughout the
first half of the year combined with the transition to put its new strategy in
place. DSD reported essentially flat revenues for the year, while comparable-
store revenues declined primarily due to reduced guest response to frequent
promotional events.
The impact of inflation on the Corporation's consolidated operations was
minimal, and as a result, the overall comparable-store revenue increase closely
approximated real growth.
Revenue growth in 1994 reflected a combination of new and comparable-store
growth at Target, new store expansion at Mervyn's and growth in DSD's home and
moderate-price merchandise areas. Increased finance-charge revenues at all three
operating divisions also contributed to the overall revenue growth.
<TABLE>
<CAPTION>
- ---------------------------------------------------------
REVENUE GROWTH 1995 1994
- ---------------------------------------------------------
53 WEEKS 52 WEEKS 52 weeks
- ---------------------------------------------------------
ALL ALL COMP. All Comp.
STORES STORES STORES Stores Stores
- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Target 16% 15% 6% 16% 7%
Mervyn's (1) (2) (4) 3 --
DSD 1 -- (1) 3 3
- ---------------------------------------------------------
Total 10% 9% 3% 11% 5%
=========================================================
</TABLE>
One measure used to evaluate store productivity is revenues per square foot.
Increased revenues per square foot at Target reflected solid base-business
growth, partially offset by the inherent lower productivity of new stores.
Mervyn's reduction from the prior year was primarily due to a comparable-store
revenue decline combined with reduced productivity of its new stores. DSD's
slight decrease in revenues per square foot was primarily due to the decrease in
comparable-store revenues.
<TABLE>
<CAPTION>
- ---------------------------------------------------------
REVENUES PER SQUARE FOOT *
(Dollars) 1995** 1994 1993
- ---------------------------------------------------------
<S> <C> <C> <C>
Target $230 $222 $213
Mervyn's 190 200 204
DSD 230 232 225
=========================================================
</TABLE>
* Thirteen-month average retail square feet.
** The 1995 revenues per square foot calculations exclude the 53rd week.
GROSS MARGIN RATE
All three operating divisions contributed to the 1995 gross margin rate decline.
In addition, the decline reflects Target's growing influence on the
Corporation's overall margin structure, as well as the year-over-year impact of
a $17 million LIFO charge in 1995, compared with a $19 million LIFO credit for
the prior year.
. TARGET'S gross margin rate declined slightly relative to 1994, primarily due
to the strength of low-margin commodity businesses in the fourth quarter. In
addition, a highly competitive environment made it difficult for Target to
pass along increased merchandise costs. In 1996, Target expects to remain
price-competitive, yet realize an improvement in the gross margin rate as a
result of improved sales mix and reduced clearance markdowns.
. MERVYN'S gross margin rate declined for the year, reflecting a sharp
deterioration during the first half of the year due to significantly
increased promotional markdowns without offsetting markup improvement.
Beginning in the third quarter, there was a strong improvement in the gross
margin rate over the first six months of 1995 as a result of increased markup
offsetting markdown rates associated with the new strategy. The 1995 gross
margin rate was also impacted by the year-over-year change in the LIFO
provision. Looking forward, with all of the critical elements of the profit
formula solidly in place, Mervyn's expects to generate significant gross
margin rate improvement in 1996, particularly during the first half of the
year.
. DSD'S gross margin rate declined significantly in 1995 due to a substantial
increase in clearance markdowns and the year-over-year change in the LIFO
provision, partially offset by an improvement in markup. In 1996, as a result
of substantially fewer promotional events, DSD's promotional markdown rate is
expected to decline, resulting in an improvement in the gross margin rate.
17 Dayton Hudson Corporation and Subsidiaries
<PAGE>
ANALYSIS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)
The 1994 gross margin rate was essentially unchanged from 1993, reflecting
markdown improvement at all three operating divisions, offset by a significantly
lower LIFO credit. Target's gross margin rate declined in 1994, reflecting an
improved promotional markdown rate more than offset by a lower markup and a
lower LIFO credit. Mervyn's 1994 gross margin rate compared favorably to 1993,
the result of lower promotional and clearance markdowns partially offset by
lower markup. DSD's gross margin rate was essentially unchanged in 1994, as an
improved clearance markdown rate was offset by a lower LIFO credit and higher
promotional markdowns.
The LIFO provision was as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
LIFO PROVISION: (EXPENSE)/CREDIT 1995 1994 1993
- -----------------------------------------------------------
<S> <C> <C> <C>
Target $ -- $ -- $ 62
Mervyn's (12) 8 7
DSD (5) 11 22
- -----------------------------------------------------------
Total $ (17) $ 19 $ 91
- -----------------------------------------------------------
Per Share $(.14) $ .15 $ .75
===========================================================
</TABLE>
The LIFO provision is calculated based on inventory levels, markup rates
and internally generated retail price indices. The 1995 LIFO charge reflected
retail price inflation, particularly increased retail prices related to Mervyn's
new strategy, partially offset by associated increases in markup rates. The 1994
LIFO credit reflected higher inventory levels associated with new store growth,
as well as deflation in retail prices. The 1993 LIFO credit reflected deflation
in retail prices at all three operating divisions, partially offset by a
substantial decline in inventory levels at Mervyn's.
OPERATING EXPENSE RATE
All three operating divisions contributed to the overall operating expense rate
increase in 1995, which was partially offset by the favorable effect of Target's
increasing impact on the overall expense rate structure. Looking forward to
1996, we will aggressively pursue the identification and realization of
operating expense savings throughout the Corporation.
. TARGET'S operating expense rate increased in 1995, principally due to higher
store expenses associated with starting-wage rate increases. As one of its
primary objectives for 1996, Target has begun a major initiative to reduce its
operating expense rate over time and has developed a broad-based cost-
reduction program that includes 1996 savings of $50 million related to store
productivity improvements, as well as other cost reductions in headquarters
and marketing.
. MERVYN'S operating expense rate deteriorated in 1995, primarily reflecting
lower sales leveraging, as well as increased marketing expenses. Favorable
expense management in the fourth quarter partially offset the higher expenses
that were reported during the first nine months. Mervyn's has formulated an
expense-reduction program that is intended to significantly reduce costs,
principally in the areas of stores, marketing and employee benefits. The
majority of Mervyn's $100 million annualized expense savings are expected to
be realized during fiscal 1996.
. DSD'S operating expense rate rose in 1995 as a result of increased store and
marketing costs, higher buying and occupancy costs, and lower sales leverage.
DSD initiated a new strategy in the second half of 1995 that includes as one
of its key elements an increased emphasis on improved guest service. In 1996,
the incremental store costs related to the new strategy are expected to be
offset by marketing expense savings resulting from substantially fewer
promotional events and savings from centralizing certain store operational
functions.
The 1994 operating expense rate increased over 1993 and included charges of
$32 million, or 26 cents per share, for strategic store closings and relocations
at Target, and $20 million, or 16 cents per share, for Mervyn's 11-store
Colorado remodeling project. Target's operating expense rate was unchanged in
1994, reflecting favorable sales leveraging and expense efficiencies offset by
charges related to its strategic efforts. In addition to the charge related to
the Colorado stores, Mervyn's operating expense rate increased in 1994 due to
additional advertising expense and lower sales leveraging. DSD's operating
expense rate was higher in 1994 due to increased advertising expenses partially
offset by other expense savings.
START-UP EXPENSES
Start-up expenses rose in 1995 due primarily to growth in the number of new
Target stores. A total of 76 new stores were opened in 1995, compared with 69
stores in 1994 and 62 stores in 1993. Start-up expenses are generally recognized
evenly throughout the year in which the expenses are incurred.
18 Dayton Hudson Corporation and Subsidiaries
<PAGE>
ANALYSIS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)
INTEREST EXPENSE
Interest expense increased $16 million in 1995, as higher average debt balances,
utilized to fund new store growth, remodeling programs and other capital
expenditures, were partially offset by a lower average portfolio rate and
interest savings related to the replacement of debt with the proceeds from the
sale of securitized accounts receivable. The decrease in interest expense in
1994 of $20 million was the result of lower average financing requirements and a
lower average portfolio rate.
Interest expense in 1996 is expected to increase to between $450 million
and $475 million, reflecting the continued borrowing requirements for store
expansion, remodeling programs and internal credit growth, partially offset by a
decline in the average portfolio rate.
The Corporation has the option, but not the obligation, to call and refund
approximately $325 million of sinking fund debentures at a premium in the second
half of 1996. The Corporation has not committed to these transactions, which
would result in a one-time charge of up to 14 cents per share, but would save
the Corporation future annual interest expense of approximately 7 cents per
share over the period of time the debentures would have otherwise remained
outstanding. The actual amount of ongoing interest savings will depend on the
Corporation's borrowing rates at the time of the refunding.
CORPORATE AND OTHER EXPENSE, NET
Corporate and other expense includes corporate headquarters expense, corporate
charitable contributions that support our annual giving program of 5 percent of
federally taxable income, and a variety of other items.
One of the Corporation's primary objectives is to increase overall
operating effectiveness through the sharing of information and resources among
its divisions. In 1995, the Corporation completed the consolidation of its
credit operations, for which a pre-tax charge of $10 million, or 8 cents per
share, was included in 1994 corporate and other expense. The Corporation has
begun to realize, and expects to continue to achieve, divisional cost savings as
a result of the consolidation of its credit operations. Consistent with its
objective, in 1995 the Corporation committed to a three-year common information
systems initiative aimed at producing additional profitability through
improvements to gross margin, as well as cross-divisional efficiencies and cost
savings.
INCOME TAX RATE
The effective tax rates were 38.0 percent, 39.2 percent and 38.2 percent in
1995, 1994 and 1993, respectively. The 1995 effective tax rate decreased from
the prior year, primarily as a result of a greater impact of permanent
differences on a lower earnings base. The increase in the 1994 effective tax
rate over 1993 reflected the one-time benefit in 1993 from the adoption of SFAS
No. 109, "Accounting for Income Taxes." In 1996, our tax rate is expected to
return to a level approximating our 1994 rate.
FOURTH QUARTER RESULTS
Due to the seasonal nature of the retail industry, fourth quarter operating
results represent a substantially larger share of the total year operating
results due to the inclusion of the holiday shopping season.
The Corporation's fourth quarter earnings per share were $2.94, reflecting
a decline from $3.62 for the same quarter last year. The fourth quarter earnings
per share comparison was unfavorably affected by a 1995 pre-tax LIFO charge of
$17 million, or 14 cents per share, versus a credit of $9 million, or 7 cents
per share, in 1994. Net earnings were $228 million for the quarter, compared
with $279 million in 1994.
. TARGET'S operating profit declined moderately, reflecting a 20 percent revenue
increase offset by a lower gross margin rate and a higher operating expense
rate. Comparable-store revenues increased 6 percent. Target's gross margin
rate decline was the result of continued cost pressures in a competitive
pricing environment and an adverse change in the business mix. The operating
expense rate increased slightly due to higher store payroll and marketing
expenses.
. MERVYN'S operating profit declined in the quarter but was essentially
unchanged from a year ago before the year-over-year impact of LIFO. Total
revenues for the quarter rose 1 percent, while comparable-store revenues
decreased 5 percent. The gross margin rate was unfavorable compared with the
prior year as an improved markup was more than offset by a significant
increase in promotional markdowns and the year-over-year change in the LIFO
provision. The operating expense rate improved slightly.
. DSD'S fourth quarter operating profit declined, while total revenues increased
2 percent and comparable-store revenues decreased 3 percent. The gross margin
rate declined reflecting increased clearance markdowns, partially offset by
markup and promotional markdown improvements, and the unfavorable year-over-
year change in the LIFO provision. DSD's operating expense rate was higher
than the prior year due to increased store and marketing costs in addition to
lower sales leveraging.
19 Dayton Hudson Corporation and Subsidiaries
<PAGE>
ANALYSIS OF FINANCIAL CONDITION
(Millions of Dollars)
Our financial condition remains strong, as our cash flow from operations was
$1,161 million, driven by earnings before interest, income taxes, depreciation
and amortization of $1,537 million. Internally generated funds will continue to
be the most important component of our capital resources and, along with our
ability to access a variety of financial markets, are expected to enable us to
fund our expansion plans.
Average accounts receivable, net of the reduction for $400 million of
securitized accounts receivable sold, grew 4 percent during 1995. The
Corporation continued to realize a favorable impact on finance charge revenues
and late fees as a result of the continued expansion of our proprietary credit
cards. In 1995, we successfully completed the first phase of the roll-out of the
Target Guest Card/SM/, Target's proprietary credit card, which is expected to
have a significant impact on accounts receivable growth and credit profitability
in the future.
Inventory levels increased $241 million, in line with revenue and square
footage growth. Importantly, this inventory growth was more than fully funded by
an increase in accounts payable of $286 million.
Capital expenditures for 1995 were $1,522 million, compared with $1,095
million for fiscal year 1994. This increase reflected the additional capital
invested in new stores and store remodels, and included the acquisition and
remodel of several real estate sites related to Mervyn's 1995 entry into the
Minneapolis-St. Paul market. Target comprised 70 percent of 1995 expenditures,
while 18 percent, 11 percent and 1 percent were made by Mervyn's, DSD and
Corporate, respectively. Net fixed assets increased $909 million, principally as
a result of new store growth at Target. During 1995, Target added 65 new stores,
Mervyn's opened 10 new stores and DSD opened one new store. Approximately 69
percent of total capital expenditures was for the building of new stores, 9
percent was for store remodeling and 22 percent was for distribution,
information systems and other capital items. Over the past five years, Target's
square footage has grown at a compound annual rate of approximately 10 percent,
and this growth rate is expected to continue into the foreseeable future.
Capital expenditures in 1996 are expected to be approximately $1,400
million for the construction of new stores, remodeling of existing stores and
other capital support. As we continue to invest in each of our operating
companies, the majority of new store capital continues to be invested in Target.
In the upcoming year, Target plans to open 65 to 75 new stores in new and
existing markets and construct two new distribution centers. Expansion plans for
Target in 1996 include market entries into upstate New York, Maryland, Virginia
and Washington D.C., as well as further testing of its super-center concept,
including openings in Salt Lake City. Mervyn's plans to open four to six new
stores, and DSD plans to open two new department stores and two new home stores,
all in existing markets.
The Corporation's financing strategy is to ensure liquidity and access to
capital markets, to control the amount of floating-rate debt and to maintain a
balanced portfolio of maturities. Within these parameters, we continually seek
to minimize our cost of borrowing. The average rate on our financings, including
the sale of securitized accounts receivable, decreased from 8.8 percent in 1994
to 8.5 percent in 1995. We expect this rate to decline further in 1996.
A key to the Corporation's liquidity and capital market access is the
maintenance of strong investment grade debt ratings. During 1995, Duff & Phelps
and Standard & Poor's downgraded our long-term debt ratings to A- and BBB+,
respectively, principally due to our 1995 financial performance. Moody's has
placed the Corporation's A3 rating under review for a possible downgrade, and we
expect that any potential action taken by Moody's would not materially affect
our ability to access the capital markets. Our commercial paper debt ratings
were D-1-, P-2 and A-2 by Duff & Phelps, Standard & Poor's, and Moody's,
respectively. These ratings are sufficient to support commercial paper levels
well in excess of the $948 million outstanding at year-end. In 1996 and beyond,
we expect that a strong recovery in profitability would allow us to continue our
capital expenditure plans while maintaining or improving our ratings.
In addition to the unsecured debt markets, the Corporation accessed the
secured debt market in 1995 through our securitization of accounts receivable.
The ability to access this market in the future provides the Corporation with an
attractive alternative source of funds. Further liquidity is provided by $1.4
billion of committed credit lines obtained through a group of 27 domestic and
international banks.
20 Dayton Hudson Corporation and Subsidiaries
<PAGE>
PERFORMANCE OBJECTIVES
(Millions of Dollars)
SHAREHOLDER RETURN
Management's primary objective is to maximize shareholder value over time. This
is accomplished through a combination of dividend income and share price
appreciation, while a prudent and flexible capital structure is maintained.
Our total return to shareholders was approximately 11 percent for 1995.
Though below broad market measures, this return was consistent with retail
industry averages.
MEASURING VALUE CREATION
We measure shareholder value creation using a form of Economic Value Added/R/
(EVA/R/), which we define generally as after-tax operating profit less a capital
charge for all investment employed. The capital charge is an estimate of the
Corporation's after-tax cost of capital, which has been adjusted for the age of
our stores, recognizing that mature stores inherently have higher returns than
newly opened stores. We estimate that the after-tax cost of capital for our
retail business is 10 percent, while our credit operations' after-tax cost of
capital is estimated to be 6 percent as a result of its ability to support
higher debt levels. We expect to generate returns in excess of these costs of
capital, thereby producing positive EVA.
We believe there is a high correlation between generating EVA and creating
shareholder value. Maximizing EVA is our internal key to achieving our primary
objective, which is to maximize shareholder value over time. EVA is used to
evaluate our performance and to guide capital investment decisions. A
significant portion of executive incentive compensation is tied to the
achievement of targeted levels of annual EVA.
FINANCIAL OBJECTIVES
We believe that managing our business with a focus on EVA will assist us in
achieving our objective of earnings per share growth of 15 percent per year over
time. We intend to deliver these results, while maintaining a year-end debt
ratio for our retail operations of 45 percent to 55 percent, which will ensure
sufficient capital market access to fund our growth. We operated within our
target range in 1995, 1994 and 1993, and plan to move our leverage to the middle
of this range over time.
In evaluating our debt level, we separate our retail operations from our
credit operations due to their inherently different performance characteristics.
We view the appropriate capitalization of our credit business to be 88 percent
debt and 12 percent equity, similar to ratios of comparable credit-card
businesses.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
DEBT RATIO/1/:
RETAIL 53% 50% 53%
CREDIT 88 88 88
- -------------------------------------------------------------------------------
TOTAL 60% 57% 59%
- -------------------------------------------------------------------------------
BALANCE SHEET DEBT RATIO 56% 55% 58%
===============================================================================
</TABLE>
/1/ Includes the impact of off-balance sheet operating leases and $400 million
of securitized accounts receivable sold, as if they were debt.
/R/ Economic Value Added and EVA are registered trademarks.
21 Dayton Hudson Corporation and Subsidiaries
<PAGE>
INTERNAL CREDIT
(Millions of Dollars)
Internal credit strategically supports our core retail operations and continues
to demonstrate its profitability on a stand-alone basis. In 1995, we
consolidated our credit operations in a single facility, devoted significant
resources to expanding our credit-card business and completed a cost-effective
sale of securitized accounts receivable. In addition, in 1995 we aggressively
grew the business by successfully completing the initial phase of the roll-out
of the Target Guest Card.
The operating margin of our credit operations increased by 12 percent to
$194 million in 1995, the result of a substantial increase in credit revenues
partially offset by an increase in expenses related to receivables growth. The
increase in the bad debt provision over the prior year was associated with the
new accounts created with the Target Guest Card in addition to an increase in
delinquency rates. Operating profit was $169 million, including the one-time
marketing costs associated with the expansion of the Target Guest Card and the
net impact from the securitization of accounts receivable.
In 1996, we plan to significantly grow the credit business as we continue
to expand the Target Guest Card, lower minimum payment terms on Mervyn's
accounts and begin offering a loyalty incentive program for credit-card
customers at DSD. In addition, we expect to achieve increased efficiencies and
reduced expenses through further leveraging the combined credit operations and
investing in credit information systems. As a result, we expect increased
operating profit and EVA.
The following table illustrates the results of our credit operations:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CREDIT OPERATING PROFIT 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Finance-charge revenues and late fees $ 313 $ 248 $ 200
Merchant and deferred billing fees 75 65 63
- -------------------------------------------------------------------------------
Total revenues 388 313 263
- -------------------------------------------------------------------------------
EXPENSES:
Bad debt provision 104 66 53
Operating expenses 90 74 70
- -------------------------------------------------------------------------------
Total expenses 194 140 123
- -------------------------------------------------------------------------------
OPERATING MARGIN 194 173 140
Target Guest Card introduction costs (15) (3) --
Net impact from securitization (10) -- --
- -------------------------------------------------------------------------------
OPERATING PROFIT, NET $ 169 $ 170 $ 140
- -------------------------------------------------------------------------------
Average accounts receivable serviced $1,719 $1,504 $1,329
Average accounts receivable owned $1,558 $1,504 $1,329
===============================================================================
</TABLE>
In the preceding table, revenues, expenses and operating margin, as
reflected, are associated with accounts receivable serviced. Merchant fees
represent the fees charged to our retail operations on a basis similar to
charges incurred for third-party credit cards. Deferred billing fees represent
charges for carrying non-revenue-earning revolving balances. Both the merchant
and deferred billing fees are intercompany transfer prices that are eliminated
in consolidation. Operating expenses, measured on an all-inclusive basis,
represent expenses for granting and operating credit. The net impact from
securitization represents a reduction of revenues, as well as a reduction in the
bad debt provision, resulting from the sale of $400 million of securitized
accounts receivable. Average accounts receivable serviced represents an average
of all accounts receivable, including the securitized accounts receivable sold,
while the calculation of average accounts receivable owned reflects a reduction
for the sale of securitized accounts receivable.
Recognizing credit's strategic support of our core retail operations,
credit revenue, operating profit and EVA continue to be recorded in each of the
operating divisions' results.
22 Dayton Hudson Corporation and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars)
<TABLE>
<CAPTION>
BUSINESS SEGMENT COMPARISONS 1995* 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Target $15,807 $13,600 $11,743
Mervyn's 4,516 4,561 4,436
Department Store Division 3,193 3,150 3,054
- -------------------------------------------------------------------------------
Total revenues $23,516 $21,311 $19,233
- -------------------------------------------------------------------------------
OPERATING PROFIT
Target $ 719 $ 732 $ 662
Mervyn's 100 206 179
Department Store Division 184 270 268
- -------------------------------------------------------------------------------
Total operating profit 1,003 1,208 1,109
Interest expense, net 442 426 446
Corporate and other 60 68 56
- -------------------------------------------------------------------------------
Earnings before income taxes $ 501 $ 714 $ 607
- -------------------------------------------------------------------------------
OPERATING PROFIT AS A PERCENT OF REVENUES
Target 4.6% 5.4% 5.6%
Mervyn's 2.2 4.5 4.0
Department Store Division 5.8 8.6 8.8
- -------------------------------------------------------------------------------
EBITDA (EARNINGS BEFORE INTEREST, INCOME TAXES,
DEPRECIATION AND AMORTIZATION)
Target $ 1,047 $ 1,026 $ 926
Mervyn's 250 351 325
Department Store Division 297 378 372
Corporate and other (57) (67) (55)
- -------------------------------------------------------------------------------
Total EBITDA $ 1,537 $ 1,688 $ 1,568
- -------------------------------------------------------------------------------
EBITDA AS A PERCENT OF REVENUES
Target 6.6% 7.5% 7.9%
Mervyn's 5.5 7.7 7.3
Department Store Division 9.3 12.0 12.2
- -------------------------------------------------------------------------------
ASSETS
Target $ 7,330 $ 6,247 $ 5,495
Mervyn's 2,776 2,917 2,750
Department Store Division 2,309 2,392 2,240
Corporate and other 155 141 293
- -------------------------------------------------------------------------------
Total assets $12,570 $11,697 $10,778
- -------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Target $ 328 $ 294 $ 264
Mervyn's 150 145 146
Department Store Division 113 108 104
Corporate and other 3 1 1
- -------------------------------------------------------------------------------
Total depreciation and amortization $ 594 $ 548 $ 515
- -------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Target $ 1,067 $ 842 $ 716
Mervyn's 273 146 180
Department Store Division 161 96 80
Corporate and other 21 11 2
- -------------------------------------------------------------------------------
Total capital expenditures $ 1,522 $ 1,095 $ 978
===============================================================================
</TABLE>
* Consisted of 53 weeks.
In 1995, operating profit and EBITDA reflect a net reduction of $2 million,
$5 million and $3 million for Target, Mervyn's and DSD, respectively, related
to the sale of securitized accounts receivable.
23 Dayton Hudson Corporation and Subsidiaries
<PAGE>
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of Dollars, Except Per Share Data)
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES $23,516 $21,311 $19,233
COSTS AND EXPENSES
Cost of retail sales, buying and occupancy 17,527 15,636 14,164
Selling, publicity and administrative 4,043 3,614 3,158
Depreciation and amortization 594 548 515
Interest expense, net 442 426 446
Taxes other than income taxes 409 373 343
- -------------------------------------------------------------------------------
Total Costs and Expenses 23,015 20,597 18,626
- -------------------------------------------------------------------------------
Earnings Before Income Taxes 501 714 607
Provision for Income Taxes 190 280 232
- -------------------------------------------------------------------------------
NET EARNINGS $ 311 $ 434 $ 375
- -------------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE $ 4.03 $ 5.77 $ 4.99
FULLY DILUTED EARNINGS PER SHARE $ 3.89 $ 5.52 $ 4.77
- -------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING (Millions):
Primary 72.3 72.0 71.8
Fully Diluted 76.4 76.3 76.1
===============================================================================
</TABLE>
See Notes to Consolidated Financial Statements contained throughout pages
23-34.
24 Dayton Hudson Corporation and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)
SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION Dayton Hudson Corporation (the Corporation) is a general
merchandise retailer. The Corporation's operating divisions consist of Target,
Mervyn's and the Department Store Division (DSD). Target, an upscale discount
chain located in 33 states coast-to-coast, generated 67 percent of the
Corporation's 1995 revenues. Mervyn's, a middle-market promotional department
store located in 16 states in the West, South and Midwest, generated 19 percent
of revenues. DSD offers trend leadership, quality merchandise and superior
service throughout its department stores, located in nine states, primarily in
the Midwest, and generated 14 percent of revenues.
CONSOLIDATION The financial statements include the accounts of the Corporation
after elimination of material intercompany balances and transactions. All
subsidiaries are wholly owned.
USE OF ESTIMATES Preparing financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
FISCAL YEAR The Corporation's fiscal year ends on the Saturday nearest
January 31. Unless otherwise stated, references to years in this report relate
to fiscal years rather than to calendar years.
<TABLE>
<CAPTION>
- -----------------------------------------
Fiscal Year Ended Weeks
- -----------------------------------------
<S> <C> <C>
1995 February 3, 1996 53
1994 January 28, 1995 52
1993 January 29, 1994 52
=========================================
</TABLE>
RECLASSIFICATIONS Certain prior-year amounts have been reclassified to
conform to the current-year presentation.
REVENUES
Finance-charge revenues and late fees on internal credit sales were $292
million on sales of $3.8 billion in 1995, $248 million on sales of $3.6 billion
in 1994 and $200 million on sales of $3.5 billion in 1993. Leased department
sales were $153 million, $156 million and $165 million in 1995, 1994 and 1993,
respectively.
EARNINGS PER SHARE
Primary earnings per share equals net earnings, less dividend requirements on
Employee Stock Ownership Plan (ESOP) preferred stock, divided by the average
number of common shares and common share equivalents outstanding during the
period. Fully diluted earnings per share assumes conversion of the ESOP
preferred stock into common stock, unless the conversion is antidilutive. Net
earnings are adjusted for the additional expense required to fund the ESOP debt
service, which results from the assumed replacement of the ESOP preferred
dividends with common stock dividends, unless the assumed conversion is
antidilutive. References to earnings per share relate to fully diluted earnings
per share.
ADVERTISING COSTS
Advertising costs, included in selling, publicity and administrative expenses,
are expensed as incurred and were $670 million, $604 million and $494 million
for 1995, 1994 and 1993, respectively.
INCOME TAXES
Reconciliation of tax rates is as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
PERCENT OF EARNINGS BEFORE
INCOME TAXES 1995 1994 1993
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit 4.9 4.7 4.6
Targeted Jobs Tax Credits (.5) (.7) (.4)
Dividends on preferred stock (1.1) (.6) (.5)
Other (.3) .8 (.5)
- ---------------------------------------------------------------------
Effective tax rate 38.0% 39.2% 38.2%
=====================================================================
</TABLE>
The components of the provision for income taxes were:
<TABLE>
<CAPTION>
- ------------------------------------------------------
INCOME TAX PROVISION:
EXPENSE/(BENEFIT) 1995 1994 1993
- ------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $158 $262 $166
State 38 59 37
- ------------------------------------------------------
196 321 203
- ------------------------------------------------------
Deferred:
Federal (5) (34) 23
State (1) (7) 6
- ------------------------------------------------------
(6) (41) 29
- ------------------------------------------------------
Total $190 $280 $232
======================================================
</TABLE>
The components of the net deferred tax liability were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
FEBRUARY 3, January 28,
NET DEFERRED TAX LIABILITY 1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C>
Gross deferred tax liabilities:
Property and equipment $319 $311
Inventory 27 34
Other 47 45
- ---------------------------------------------------------------------------
393 390
- ---------------------------------------------------------------------------
Gross deferred tax assets:
Self-insured benefits 99 93
Deferred compensation 74 66
Postretirement health care obligation 44 44
Purchase accounting 28 41
Allowance for doubtful accounts 28 19
Other 70 71
- ---------------------------------------------------------------------------
343 334
- ---------------------------------------------------------------------------
Total $ 50 $ 56
===========================================================================
</TABLE>
25 Dayton Hudson Corporation and Subsidiaries
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Millions of Dollars)
<TABLE>
<CAPTION>
FEBRUARY 3, January 28,
1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 175 $ 147
Accounts receivable 1,510 1,810
Merchandise inventories 3,018 2,777
Other 252 225
- ------------------------------------------------------------------------------------
Total Current Assets 4,955 4,959
PROPERTY AND EQUIPMENT
Land 1,496 1,251
Buildings and improvements 5,812 5,208
Fixtures and equipment 2,482 2,257
Construction-in-progress 434 293
Accumulated depreciation (2,930) (2,624)
- ------------------------------------------------------------------------------------
Property and Equipment, net 7,294 6,385
OTHER 321 353
- ------------------------------------------------------------------------------------
TOTAL ASSETS $12,570 $11,697
- ------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 2,247 $ 1,961
Accrued liabilities 957 1,045
Income taxes payable 137 175
Current portion of long-term debt and notes payable 182 209
- ------------------------------------------------------------------------------------
Total Current Liabilities 3,523 3,390
LONG-TERM DEBT 4,959 4,488
DEFERRED INCOME TAXES AND OTHER 623 582
CONVERTIBLE PREFERRED STOCK, NET 62 44
SHAREHOLDERS' INVESTMENT
Convertible preferred stock 257 277
Common stock 72 72
Additional paid-in capital 110 89
Retained earnings 3,044 2,882
Loan to ESOP (80) (127)
- ------------------------------------------------------------------------------------
Total Shareholders' Investment 3,403 3,193
- ------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $12,570 $11,697
====================================================================================
</TABLE>
See Notes to Consolidated Financial Statements contained throughout pages 23-34.
26 Dayton Hudson Corporation and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)
CASH EQUIVALENTS
Cash equivalents represent short-term investments with a
maturity of three months or less from the time of purchase.
ACCOUNTS RECEIVABLE
Accounts receivable are written off when the required payments have not been
received for six consecutive months. Prior to an account being written off, an
allowance is established for potential losses. The allowance for doubtful
accounts was $69 million and $46 million at year-end 1995 and 1994,
respectively.
In September 1995, the Corporation entered into a securitization
transaction and transferred substantially all of its credit-card receivables to
a trust in return for certificates representing undivided interests in the
trust's assets. Concurrently, the Corporation sold to the public $400 million of
three-year certificates, with a fixed rate of 6.1 percent, backed by the credit-
card receivables. The issuance of Class A certificates was recorded as a sale,
and no gain or loss was recorded on the transaction. The Corporation retained a
$123 million issue of subordinated Class B asset-backed certificates, which is
classified in accounts receivable at February 3,1996. The Corporation owns the
remaining undivided interest in the trust's assets and, through its credit-card
subsidiary, continues to service all receivables for the trust.
INVENTORIES
Inventories and the related cost of sales are accounted for by the retail
inventory accounting method using the last-in, first-out (LIFO) basis and are
stated at the lower of LIFO cost or market. Under this method, the cost of
retail sales as reported in the Consolidated Results of Operations, represents
current cost, thereby reflecting the effect of changing prices. The cumulative
LIFO provision was $77 million and $60 million at February 3, 1996, and January
28, 1995, respectively.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over estimated useful
lives. Buildings and improvements are depreciated over eight to 55 years.
Furniture and fixtures are depreciated over three to eight years. Accelerated
depreciation methods are generally used for income tax purposes.
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 121
prescribes the accounting treatment for long-lived assets, identifiable
intangibles and goodwill related to those assets when there are indications that
the carrying values of those assets may not be recoverable. Management believes
that the adoption of SFAS No. 121 in 1996 will not have a material adverse
effect on the Corporation's results of operations or its financial condition
taken as a whole.
ACCOUNTS PAYABLE
Outstanding drafts included in accounts payable were $344 million and $352
million at year-end 1995 and 1994, respectively.
LEASES
Assets held under capital leases are included in property and equipment and are
charged to depreciation and interest over the life of the lease. Operating
leases are not capitalized, and lease rentals are expensed. Rent expense on
buildings, classified in buying and occupancy, includes percentage rents that
are based on a percentage of retail sales over stated levels. Total rent expense
was $144 million, $123 million and $100 million in 1995, 1994 and 1993,
respectively.
Most of the long-term leases include options to renew, with terms varying
from five to 30 years. Certain leases also include options to purchase the
property.
Future minimum lease payments required under noncancelable lease agreements
existing at February 3, 1996, were:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Operating Capital
FUTURE MINIMUM LEASES PAYMENTS Leases Leases
- --------------------------------------------------------------------------------
<S> <C> <C>
1996 $ 124 $ 19
1997 108 19
1998 103 18
1999 94 18
2000 76 17
After 2000 661 153
- ------------------------------------------------------------------------------
Total future minimum lease payments 1,166 244
Less: Interest * (524) (127)
- ------------------------------------------------------------------------------
Present value of minimum lease payments $ 642 $ 117**
==============================================================================
</TABLE>
* Calculated using the interest rate at inception for each lease
(the weighted average interest rate was 9.5 percent).
** Includes current portion of $6 million.
COMMITMENTS AND CONTINGENCIES
Commitments for the future purchase of real estate, construction of new
facilities, remodeling of existing facilities and other equipment purchases were
approximately $382 million at February 3, 1996. The Corporation is exposed to
claims and litigation arising out of the ordinary course of business.
Management, after consulting with legal counsel, believes that the currently
identified claims and litigation will not have a material adverse effect on the
Corporation's results of operations or its financial condition taken as a whole.
27 Dayton Hudson Corporation and Subsidiaries
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 311 $ 434 $ 375
Reconciliation to cash flow:
Depreciation and amortization 594 548 515
Deferred tax provision: (benefit)/expense (6) (41) 29
Other noncash items affecting earnings 52 38 55
Changes in operating accounts providing/(requiring) cash:
Accounts receivable (100) (274) (22)
Sale of securitized accounts receivable 400 -- --
Merchandise inventories (241) (280) 121
Accounts payable 286 307 58
Accrued liabilities (88) 147 63
Income taxes payable (38) 30 20
Other (9) (17) 5
- -------------------------------------------------------------------------------------------
Cash Flow Provided by Operations 1,161 892 1,219
- -------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for property and equipment (1,522) (1,095) (969)
Proceeds from disposals of property and equipment 17 89 79
- -------------------------------------------------------------------------------------------
Cash Flow Required for Investing Activities (1,505) (1,006) (890)
- -------------------------------------------------------------------------------------------
Net Financing (Requirements)/Sources (344) (114) 329
- -------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase/(decrease) in notes payable, net 501 247 (23)
Additions to long-term debt 150 -- 528
Reductions of long-term debt (210) (199) (581)
Principal payments received on loan to ESOP 57 58 61
Dividends paid (148) (144) (138)
Other 22 (22) 28
- -------------------------------------------------------------------------------------------
Cash Flow Provided by/(Used for) Financing Activities 372 (60) (125)
- -------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Cash and Cash Equivalents 28 (174) 204
Cash and Cash Equivalents at Beginning of Year 147 321 117
- -------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 175 $ 147 $ 321
===========================================================================================
</TABLE>
Amounts in these statements are presented on a cash basis and therefore may
differ from those shown in other sections of this Annual Report. Cash paid for
income taxes was $229 million, $292 million and $183 million for 1995, 1994 and
1993, respectively. Cash paid for interest (including interest capitalized) was
$451 million, $431 million and $441 million for 1995, 1994 and 1993,
respectively.
See Notes to Consolidated Financial Statements contained throughout pages 23-34.
28 Dayton Hudson Corporation and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)
LINES OF CREDIT
At February 3, 1996, two committed credit agreements totaling $1.4 billion were
available from various lending institutions. There were no balances outstanding
at any time during the year related to these agreements. A fee is paid for the
availability under these agreements, and the Corporation may borrow at various
specified rates. Fees paid under these agreements were $1 million in 1995 and
1994, and $2 million in 1993.
LONG-TERM DEBT AND NOTES PAYABLE
At February 3, 1996, $948 million of notes payable were outstanding, $840
million of which was classified as long-term as it was supported by the
Corporation's committed credit agreement that expires in 2000. The remaining
$108 million of notes payable were classified as current portion of long-term
debt and notes payable as it was supported by a short-term committed credit
agreement. The average amount of notes payable outstanding during 1995 was $884
million at a weighted-average interest rate of 6.0 percent.
In 1995, the Corporation issued $150 million of long-term debt at 7.5
percent, maturing in 1999. The proceeds from the issuance were used for general
corporate purposes.
At year-end, the debt portfolio was as follows:
<TABLE>
- -------------------------------------------------------------------------------
FEBRUARY 3, January 28,
LONG-TERM DEBT AND NOTES PAYABLE 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Notes payable $ 948 $ 447
Notes and debentures:
Due 1995-1999; weighted-average rate of 8.2%* 490 545
Due 2000-2004; weighted-average rate of 9.0% 1,037 1,037
Due 2005-2009; weighted-average rate of 9.4% 201 201
Due 2010-2014; weighted-average rate of 9.3% 549 549
Due 2015-2019; weighted-average rate of 9.5% 514 514
Due 2020-2023; weighted-average rate of 8.8% 1,285 1,285
- -------------------------------------------------------------------------------
Total long-term debt and notes payable 5,024 4,578
Capital lease obligations 117 119
Less: current portion (182) (209)
- -------------------------------------------------------------------------------
Long-term debt and notes payable $4,959 $4,488
===============================================================================
</TABLE>
* Reflects the weighted average rate as of February 3, 1996. The weighted-
average rate as of January 28, 1995, was 8.8%.
Required principal payments on long-term debt and notes payable over the
next five years, excluding capital lease obligations, are $176 million in 1996,
$100 million in 1997, $170 million in 1998, $152 million in 1999 and $1,228
million in 2000.
The Corporation has two interest rate swap agreements that effectively
exchange fixed interest rates for variable interest rates on $175 million of
long-term debt without the exchange of underlying principal. The interest rate
swaps are used to manage the portfolio mix of fixed- and floating-rate debt,
within established parameters. The difference to be paid or received varies as
short-term interest rates change and is accrued and recognized as an adjustment
to interest expense. The agreements expire in the first quarter 1997. Market
risks may arise from the movements in interest rates. The Corporation's credit
risk is limited to the fair market value of the interest rate swaps.
Subsequent to year-end, the Corporation issued $300 million of long-term
debt at 6.4 percent, maturing in 2003. The proceeds from the issuance were used
for general corporate purposes.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values of financial instruments
were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FEBRUARY 3, January 28,
1996 1995
- -------------------------------------------------------------------------------
CARRYING FAIR Carrying Fair
VALUE VALUE Value Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial instruments
recorded as liabilities:
Long-term debt and
notes payable $5,024 $5,460 $4,578 $4,701
Off-balance sheet financial
instruments in a (receivable)/
payable position:
Interest rate swaps -- (3) -- 7
===============================================================================
</TABLE>
The fair value of long-term debt and interest rate swaps was estimated
using discounted cash flow analysis, based on the Corporation's incremental
interest rates for similar types of financial instruments.
29 Dayton Hudson Corporation and Subsidiaries
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
(Millions of Dollars, Except Share Data)
<TABLE>
<CAPTION>
Convertible Additional
Preferred Common Paid-in Retained Loan to
Stock Stock Capital Earnings ESOP Total
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JANUARY 30, 1993 $280 $71 $ 58 $2,357 $(200) $2,566
Consolidated net earnings -- -- -- 375 -- 375
Dividends declared -- -- -- (140) -- (140)
Tax benefit on unallocated
preferred stock dividends -- -- 6 -- -- 6
Conversion of preferred stock
and other (7) -- 6 -- -- (1)
Net reduction in loan to ESOP -- -- -- -- 39 39
Stock option activity -- 1 3 -- -- 4
- --------------------------------------------------------------------------------------------------------
JANUARY 29, 1994 273 72 73 2,592 (161) 2,849
Consolidated net earnings -- -- -- 434 -- 434
Dividends declared -- -- -- (144) -- (144)
Tax benefit on unallocated
preferred stock dividends -- -- 6 -- -- 6
Conversion of preferred stock
and other 4 -- 7 -- -- 11
Net reduction in loan to ESOP -- -- -- -- 34 34
Stock option activity -- -- 3 -- -- 3
- --------------------------------------------------------------------------------------------------------
JANUARY 28, 1995 277 72 89 2,882 (127) 3,193
Consolidated net earnings -- -- -- 311 -- 311
Dividends declared -- -- -- (149) -- (149)
Tax benefit on unallocated
preferred stock dividends -- -- 5 -- -- 5
Conversion of preferred stock
and other (20) -- 11 -- -- (9)
Net reduction in loan to ESOP -- -- -- -- 47 47
Stock option activity -- -- 5 -- -- 5
- --------------------------------------------------------------------------------------------------------
FEBRUARY 3, 1996 $257 $72 $110 $3,044 $(80) $3,403
========================================================================================================
</TABLE>
COMMON STOCK
Authorized 500,000,000 shares, $1.00 par value; 71,964,840 shares issued and
outstanding at February 3, 1996; 71,690,360 shares issued and outstanding at
January 28, 1995.
PREFERRED STOCK
Authorized 5,000,000 shares; Series B ESOP Convertible Preferred Stock $.01
par value, 401,494 shares issued and outstanding at February 3, 1996; 416,675
shares issued and outstanding at January 28, 1995. Each share converts into 10
shares of the Corporation's common stock, has voting rights equal to the
equivalent number of common shares and is entitled to cumulative annual
dividends of $56.20. Under certain circumstances, the shares may be redeemed at
the election of the Corporation or the ESOP.
JUNIOR PREFERRED STOCK RIGHTS
The Corporation declared a distribution of shares of preferred share
purchase rights in 1986. Terms of the plan provide for a distribution of one
preferred share purchase right for each outstanding share of the Corporation's
common stock. Each right will entitle shareholders to buy one-hundredth of a
share of a new series of junior participating preferred stock at an exercise
price of $150, subject to adjustment. The rights will be exercisable only if a
person or group acquires ownership of 20 percent or more of the Corporation's
common stock or announces a tender offer to acquire 30 percent or more of the
common stock.
See Notes to Consolidated Financial Statements contained throughout pages
23-34.
30 Dayton Hudson Corporation and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)
STOCK OPTION PLAN
The Corporation has a stock option plan for key employees. Options have
included Incentive Stock Options, Non-Qualified Stock Options or a combination
of the two. A majority of the options contain a vesting schedule so that 12
months after the grant date 25 percent of the options become exercisable, with
another 25 percent vesting after each succeeding 12 months. These options are
cumulatively exercisable and expire no later than 10 years after the date of
the grant. In 1995, the Corporation adopted a non-qualified stock option plan
for nonemployee members of its Board of Directors. Such stock option grants
become exercisable after one year and expire no later than 10 years from the
date of the grant. Stock options are awarded at fair market value on the grant
date. When exercised, proceeds are credited to shareholders' investment and no
expense is incurred.
The Corporation has a performance share and restricted stock award plan for
key employees. Performance shares are earned to the extent that certain
financial goals are met over a four-year period. Performance shares and
restricted stock awards are placed in escrow until retirement, subject to
certain further restrictions.
The Corporation follows the guidance in Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" and related Interpretations
to account for its stock-based plans.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
OPTIONS, PERFORMANCE SHARES AND RESTRICTED
STOCK AWARDS OUTSTANDING
- -----------------------------------------------------------------------------
Options
---------------------------------
Number Price Shares Perform- Restricted
of Per Exer- ance Stock
Shares Share cisable Shares Awards
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jan. 30, 1993 1,154,418 $30.25-$75.50 590,807 207,758 --
Granted 205,268 65.25- 83.25
Canceled (16,856) 53.00- 78.00
Exercised (70,009) 30.25- 75.50
- -----------------------------------------------------------------------------
Jan. 29, 1994 1,272,821 30.25- 83.25 654,624 247,689 30,494
Granted 200,886 75.31- 79.63
Canceled (69,538) 59.81- 78.00
Exercised (78,169) 30.25- 78.00
- -----------------------------------------------------------------------------
Jan. 28, 1995 1,326,000 30.25- 83.25 837,723 247,956 43,562
Granted 497,459 66.38- 74.50
Canceled (34,730) 59.81- 78.00
Exercised (127,586) 30.25- 65.75
- -----------------------------------------------------------------------------
FEB. 3, 1996 1,661,143 $30.25-$83.25 895,315 267,901 59,873
=============================================================================
</TABLE>
The number of shares of unissued common stock reserved for future grants under
the stock option plans were 2,543,805 at February 3, 1996, and 2,961,931 at
January 28, 1995.
PENSION PLANS
The Corporation has three defined benefit pension plans that cover all employees
who meet certain requirements of age, length of service and hours worked per
year. The benefits provided are based upon years of service and the employee's
compensation. Contributions to the pension plans, which are made solely by the
Corporation, are determined by an outside actuarial firm. To compute net pension
cost, the actuarial firm estimates the total benefits that will ultimately be
paid to eligible employees and then allocates these costs to service periods.
The period over which unrecognized pension costs and credits are amortized,
including prior service costs and actuarial gains and losses, is based on the
remaining service period for those employees expected to receive pension
benefits.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
NET PENSION EXPENSE 1995 1994 1993
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 21 $ 25 $ 22
Interest cost on projected benefit obligation 35 33 32
Return on assets -- current (87) (10) (50)
-- deferred 47 (26) 14
- -----------------------------------------------------------------------
Total $ 16 $ 22 $ 18
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
ACTUARIAL ASSUMPTIONS 1995 1994 1993
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7 1/2% 8 1/2% 7 1/4%
Expected long-term rate of
return on plans' assets 9 9 9 1/2
Average assumed rate of
compensation increase 4 1/2 5 1/2 5 1/4
========================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31,
FUNDED STATUS 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
Vested benefit obligation $412 $342
Accumulated benefit obligation 438 364
- ---------------------------------------------------------------------
Projected benefit obligation 503 425
Fair market value of plans' assets* 518 455
- ---------------------------------------------------------------------
Plans' assets in excess of projected
benefit obligation 15 30
Unrecognized prior service cost 2 3
Unrecognized net actuarial loss 21 8
- ---------------------------------------------------------------------
Prepaid pension asset $ 38 $ 41
=====================================================================
</TABLE>
* Plans' assets consist primarily of equity and fixed income securities.
31 Dayton Hudson Corporation and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)
EMPLOYEE STOCK OWNERSHIP PLAN
The Corporation sponsors a defined contribution employee benefit plan.
Employees who meet certain eligibility requirements of age, length of service
and hours worked per year can participate in the plan by investing up to 15
percent of their compensation. The Corporation's match equals 100 percent of
each employee's contribution up to 5 percent of each participant's total
compensation, within ERISA limits. The Corporation's contribution to the plan
is invested in the ESOP.
In 1989, the Corporation lent $379 million to the ESOP at a 9 percent
interest rate. Proceeds from the loan were used by the ESOP to purchase 438,353
shares of Series B ESOP Convertible Preferred Stock of the Corporation. The
original issue value of the ESOP preferred stock of $864.60 per share is
guaranteed by the Corporation.
The Corporation's contributions to the ESOP, plus dividends paid on all
preferred stock held by the ESOP, are used to repay the loan principal and
interest. Cash contributed by the Corporation to the ESOP was $45 million in
1995, $50 million in 1994 and $61 million in 1993. Dividends earned on shares
held by the ESOP were $23 million in 1995 and $24 million each in 1994 and 1993.
The dividends on allocated preferred stock are paid to participants' accounts in
additional shares of preferred stock. Benefits expense, calculated based on the
shares allocated method, was $39 million in 1995 and $33 million in 1994 and
1993.
Upon a participant's termination, the Corporation is required to exchange at
fair value each share of preferred stock for 10 shares of common stock and
cash, if any. At February 3, 1996, 280,512 shares of the ESOP preferred stock
were allocated to participants and had a fair value of $273 million.
The convertible preferred stock and related loan to ESOP are classified as
Shareholders' Investment to the extent the preferred stock is permanent equity.
The remaining convertible preferred stock of $90 million, net of the related
loan to ESOP of $28 million at February 3, 1996, represents the Corporation's
maximum cash obligation at year-end, measured by the market value difference
between the preferred stock and common stock, and is excluded from
Shareholders' Investment.
POSTRETIREMENT HEALTH CARE BENEFITS
Certain health care benefits are provided for retired employees. Employees
eligible for retirement become eligible for these benefits if they meet minimum
age and service requirements and agree to contribute a portion of the cost. The
Corporation has the right to modify or terminate these benefits.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ACCUMULATED POSTRETIREMENT December 31,
BENEFIT OBLIGATION 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Retirees $ 51 $ 47
Fully eligible active plan participants 18 22
Other active plan participants 11 10
Prior service cost (4) (5)
Unrecognized gain 27 29
- --------------------------------------------------------------------------------
Total $103 $103
================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET PERIODIC COST 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost -- benefits earned
during the period $1 $2 $1
Interest cost on accumulated benefits 5 6 8
- --------------------------------------------------------------------------------
Total $6 $8 $9
================================================================================
</TABLE>
An increase in the cost of covered health care benefits of 7 1/2 percent is
assumed for fiscal 1996. The rate is assumed to decrease incrementally to 6
percent in the year 2000 and remain at that level thereafter. The health care
cost trend rate assumption has a significant effect on the amounts reported.
For example, a 1 percent increase in the health care trend rate would increase
the accumulated postretirement benefit obligation by $5 million at February
3, 1996, and the net periodic cost by $.5 million for the year. The discount
rate used in determining the accumulated postretirement benefit obligation was
7 1/2 percent for 1995, 8 1/2 percent for 1994 and 7 1/4 percent for 1993.
32 Dayton Hudson Corporation and Subsidiaries
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars, Except Per Share Data)
CREDIT CARD SUBSIDIARY
Retailers National Bank (the Bank), a national credit-card bank and a wholly
owned subsidiary, was chartered on January 7, 1994. The Bank issues and services
the proprietary credit cards of the Corporation's operating divisions. At
inception, the Bank acquired the outstanding accounts receivable of Target and
DSD and acquired the outstanding accounts receivable of Mervyn's in 1994. In its
Statement of Financial Position at January 28, 1995, the Bank reflected the
accounts receivable retained after the sale of 80 percent of the accounts
receivable to a wholly owned subsidiary of the Corporation (the Affiliate).
In September 1995, the Bank transferred its remaining 20 percent undivided
interest to the Affiliate and concurrently purchased a 5 percent undivided
interest in the accounts receivable of a newly formed trust, created in
connection with the securitization transaction. The Bank continues to service
all of the accounts receivable on behalf of the trust. The accounts receivable
and all related income and expenses of the Bank and the Affiliate are included
in each operating division's results.
Net earnings for the Bank on a stand-alone basis, before intercompany
eliminations, were $34 million and $69 million in 1995 and 1994, respectively,
and were not material in 1993. The following are condensed statements of
financial position for the Bank.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FEBRUARY 3, January 28,
CONDENSED STATEMENTS OF FINANCIAL POSITION 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Accounts receivable, net $91 $346
Other assets 20 43
- -------------------------------------------------------------------------------
Total $111 $389
- -------------------------------------------------------------------------------
Liabilities and investment:
Liabilities, principally note payable
due to the Corporation $ 89 $207
Investment of the Corporation 22 182
- -------------------------------------------------------------------------------
Total $111 $389
===============================================================================
</TABLE>
QUARTERLY RESULTS (Unaudited)
The same accounting policies are followed in preparing quarterly financial
data as are followed in preparing annual data. Costs directly associated with
revenues, such as cost of retail sales and percentage rent on leased stores,
are allocated based on revenues. Certain other costs not directly associated
with revenues, such as benefit plan expenses and real estate taxes, are
allocated evenly throughout the year.
The table below summarizes results by quarter for 1995 and 1994:
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
- ---------------------------------------------------------------------------------------------------------------------------------
1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $4,757 $4,465 $5,236 $4,802 $5,573 $5,046 $7,950 $6,998 $23,516 $21,311
Gross Profit (a) $1,253 $1,212 $1,340 $1,283 $1,460 $1,351 $1,936 $1,829 $ 5,989 $ 5,675
Net Earnings $ 11 $ 39 $ 28 $ 49 $ 44 $ 67 $ 228 $ 279 $ 311 $ 434
Primary Earnings Per
Share (b) $ .10 $ .48 $ .32 $ .62 $ .54 $ .86 $ 3.08 $ 3.81 $ 4.03 $ 5.77
Fully Diluted Earnings
Per Share (b) $ .10 $ .47 $ .32 $ .61 $ .53 $ .83 $ 2.94 $ 3.62 $ 3.89 $ 5.52
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends Declared
Per Share $ .44 $ .42 $ .44 $ .42 $ .44 $ .42 $ .44 $ .42 $ 1.76 $ 1.68
Common Stock Price (c)
High $ 74 3/4 $ 79 $ 78 3/4 $ 83 5/8 $ 79 5/8 $ 86 77 1/2 $ 84 79 5/8 $ 86
Low 65 5/8 65 1/8 64 1/2 76 1/4 69 7/8 73 3/4 68 5/8 67 3/8 64 1/2 65 1/8
=================================================================================================================================
</TABLE>
(a) Gross profit is revenues less cost of retail sales, buying and occupancy.
The LIFO provision, included in gross profit, is adjusted each quarter for
estimated changes in year-end inventory levels, markup rates and internally
generated retail price indices. A final adjustment is recorded in the fourth
quarter for the difference between the prior quarters' estimates and the
actual total year LIFO provision.
(b) Earnings per share are computed independently for each of the quarters
presented. The sum of the quarters may not equal the total year amount due
to the impact of changes in average quarterly shares outstanding.
(c) The Corporation's common stock is listed on the New York Stock Exchange and
Pacific Stock Exchange. At March 21, 1996, there were 10,830 shareholders of
record and the common stock price was $85.88 per share.
33 Dayton Hudson Corporation and Subsidiaries
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Dayton Hudson Corporation
We have audited the accompanying consolidated statements of financial
position of Dayton Hudson Corporation and subsidiaries as of February 3, 1996,
and January 28, 1995, and the related consolidated results of operations, cash
flows and shareholders' investment for each of the three years in the period
ended February 3, 1996. These financial statements are the responsibility of
the Corporation's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Dayton Hudson
Corporation and subsidiaries at February 3, 1996, and January 28, 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended February 3, 1996, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
March 13, 1996
34 Dayton Hudson Corporation and Subsidiaries
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
(Millions of Dollars, Except Per Share Data)
<TABLE>
<CAPTION>
1995(a) 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
- ----------------------------------------------------------------------------------------------
Revenues $23,516 21,311 19,233 17,927 16,115
- ----------------------------------------------------------------------------------------------
Cost of retail sales,
buying and occupancy $17,527 15,636 14,164 13,129 11,751
- ----------------------------------------------------------------------------------------------
Selling, publicity and administrative $ 4,043 3,614 3,158 2,961 2,784
- ----------------------------------------------------------------------------------------------
Depreciation and amortization $ 594 548 515 476 427
- ----------------------------------------------------------------------------------------------
Interest expense, net $ 442 426 446 437 398
- ----------------------------------------------------------------------------------------------
Earnings from continuing operations
before income taxes $ 501 714 607 611 472
- ----------------------------------------------------------------------------------------------
Income taxes $ 190 280 232 228 171
- ----------------------------------------------------------------------------------------------
Net earnings: Continuing $ 311 434 375 383 301
Consolidated $ 311 434 375 383 301
- ----------------------------------------------------------------------------------------------
FINANCIAL POSITION DATA
- ----------------------------------------------------------------------------------------------
Working capital $ 1,432 1,569 1,436 1,450 1,452
- ----------------------------------------------------------------------------------------------
Property and equipment, net $ 7,294 6,385 5,947 5,563 5,102
- ----------------------------------------------------------------------------------------------
Total assets $12,570 11,697 10,778 10,337 9,485
- ----------------------------------------------------------------------------------------------
Long-term debt and notes payable $ 4,959 4,488 4,279 4,330 4,227
- ----------------------------------------------------------------------------------------------
Shareholders' investment $ 3,403 3,193 2,849 2,566 2,279
- ----------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
- ----------------------------------------------------------------------------------------------
Fully diluted net earnings per share:
Continuing $ 3.89 5.52 4.77 4.82 3.72
Consolidated $ 3.89 5.52 4.77 4.82 3.72
- ----------------------------------------------------------------------------------------------
Cash dividend declared $ 1.76 1.68 1.62 1.54 1.46
- ----------------------------------------------------------------------------------------------
Market price -- high $ 79 5/8 86 83 3/4 79 1/8 80
- ----------------------------------------------------------------------------------------------
Market price -- low $ 64 1/2 65 1/8 63 1/4 59 56 3/8
- ----------------------------------------------------------------------------------------------
Market price -- year-end close $ 74 7/8 69 65 7/8 77 3/4 65 1/8
- ----------------------------------------------------------------------------------------------
Common shareholders' investment $ 44.82 42.45 38.27 34.83 31.31
==============================================================================================
</TABLE>
The Summary Financial and Operating Data should be read in conjunction with
the Notes to Consolidated Financial Statements contained throughout pages 23-34.
(a) Consisted of 53 weeks.
35 Dayton Hudson Corporation and Subsidiaries
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
As of April 1, 1996, the following are wholly-owned subsidiaries of the
Registrant and are Minnesota corporations, except as otherwise indicated:
Bullseye Corporation (DE)
CPS Minnesota Corp. (DE)
Dayton Credit Company
Dayton Development Company
Dayton Hudson Capital Corporation
Dayton Hudson Receivables Corporation
Dayton's Commercial Interiors, Inc.
Dayton's Iron Horse Liquors, Inc.
Dayton's Sioux Falls, Inc. (SD)
Dayton's Travel Service, Inc.
Eighth Street Development Company
Mervyn's (CA)
Mervyn's, Inc. (DE)
Retailer's National Bank, N.A. (a national association)
Rooftop, Inc.
Seatamatic, Inc. (NV)
STL of Nebraska, Inc.
Target Services, Inc.
Target Stores, Inc.
Capitol Lounge Corp. (WI)
Clybourn Trading Corp. (WI)
DHC Milwaukee, Inc. (WI)
DHC Wine & Liquor Shop, Inc. (WI)
Greener Fields, Inc. (TX)
Marshall Field & Company (DE)
Marshall Field of Columbus, Inc. (OH)
Marshall Field Stores, Inc. (DE)
Marshall Field's Chicago, Inc. (DE)
Marshall Field's Direct Response Company, Inc. (DE)
Marshall Field's Mayfair, Inc. (WI)
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Annual Report (Form 10-K) of
Dayton Hudson Corporation of our report dated March 13, 1996 included in the
1995 Annual Report to Shareholders of Dayton Hudson Corporation.
Our audits also included the financial statement schedule of Dayton Hudson
Corporation listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in Registration Statement
Numbers 33-42364, 33-59008 and 333-389 on Form S-3 and Post-Effective Amendment
No. 1 to Registration Statement number 2-72549 and Registration Statement
Numbers 33-6918, 33-66050 and 33-64013 on Form S-8 of our report dated March 13,
1996 with respect to the consolidated financial statements incorporated herein
by reference and our report included in the preceding paragraph with respect to
the financial statement schedule included in this Annual Report (Form 10-K) of
Dayton Hudson Corporation.
Ernst & Young LLP
Minneapolis, Minnesota
April 18, 1996
<PAGE>
EXHIBIT 24
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ Rand V. Araskog
-------------------
Rand V. Araskog
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ Livio D. DeSimone
---------------------
Livio D. DeSimone
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ Roger A. Enrico
-------------------
Roger A. Enrico
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ William W. George
---------------------
William W. George
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ Roger L. Hale
-----------------
Roger L. Hale
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ Betty Ruth Hollander
------------------------
Betty Ruth Hollander
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ Michele J. Hooper
---------------------
Michele J. Hooper
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ James A. Johnson
--------------------
James A. Johnson
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ Mary Patterson McPherson
----------------------------
Mary Patterson McPherson
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ Solomon D. Trujillo
-----------------------
Solomon D. Trujillo
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ Bob Ulrich
--------------
Robert J. Ulrich
<PAGE>
DAYTON HUDSON CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and
EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director and/or officer of said Corporation to a Form 10-K, Annual Report,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the
fiscal year ended February 3, 1996, or other applicable form, including any and
all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's hand
as of this 13th day of March, 1996.
/s/ John R. Walter
------------------
John R. Walter
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Dayton Hudson Corporation's Form 10-K for the year ended February 3, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> FEB-03-1996
<CASH> 175
<SECURITIES> 0
<RECEIVABLES> 1579
<ALLOWANCES> 69
<INVENTORY> 3018
<CURRENT-ASSETS> 4955
<PP&E> 10224
<DEPRECIATION> 2930
<TOTAL-ASSETS> 12570
<CURRENT-LIABILITIES> 3523
<BONDS> 4959
<COMMON> 72
347
0
<OTHER-SE> 3154
<TOTAL-LIABILITY-AND-EQUITY> 12570
<SALES> 23133
<TOTAL-REVENUES> 23516
<CGS> 17527
<TOTAL-COSTS> 17527
<OTHER-EXPENSES> 4942
<LOSS-PROVISION> 104
<INTEREST-EXPENSE> 442
<INCOME-PRETAX> 501
<INCOME-TAX> 190
<INCOME-CONTINUING> 311
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 311
<EPS-PRIMARY> 4.03
<EPS-DILUTED> 3.89
</TABLE>
