<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended August 2, 1997
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Commission file number 1-6049
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Dayton Hudson Corporation
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(Exact name of registrant as specified in its charter)
Minnesota 41-0215170
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
777 Nicollet Mall Minneapolis, Minnesota 55402-2055
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 370-6948
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None
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(Former name, former address and former fiscal year, if changed since last
report.)
The registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90 days.
The number of shares outstanding of common stock as of August 2, 1997 was
218,062,670.
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
NO.
PART I FINANCIAL INFORMATION:
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Results of Operations for the 1
Three Months, Six Months and Twelve Months ended August
2, 1997 and August 3, 1996
Condensed Consolidated Statements of Financial Position 2
at August 2, 1997, February 1, 1997 and August 3, 1996
Condensed Consolidated Statements of Cash Flows for the 3
Six Months ended August 2, 1997 and August 3, 1996
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF 7-11
OPERATIONS AND FINANCIAL CONDITION
PART II OTHER INFORMATION:
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 12-13
Signatures 14
Exhibit Index 15
<PAGE>
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED Dayton Hudson Corporation
RESULTS OF OPERATIONS and Subsidiaries
<TABLE>
<CAPTION>
(Millions of Dollars, Except Per Share Data) Three Months Ended Six Months Ended Twelve Months Ended
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AUGUST 2, August 3, AUGUST 2, August 3, AUGUST 2, August 3,
(Unaudited) 1997 1996 1997 1996 1997 1996*
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<S> <C> <C> <C> <C> <C> <C>
REVENUES $6,293 $5,751 $12,182 $11,131 $26,422 $24,654
COSTS AND EXPENSES:
Cost of retail sales, buying and occupancy 4,586 4,197 8,839 8,146 19,321 18,273
Selling, publicity and administrative 1,080 1,009 2,114 1,992 4,411 4,209
Depreciation and amortization 174 159 344 316 678 619
Interest expense, net 107 111 214 220 436 447
Taxes other than income taxes 113 108 230 220 455 433
Real estate repositioning charge - - - - 134 -
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Total Costs and Expenses 6,060 5,584 11,741 10,894 25,435 23,981
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EARNINGS BEFORE INCOME TAXES AND EXTRAORDINARY
CHARGE 233 167 441 237 987 673
Provision for Income Taxes 92 66 174 94 389 258
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NET EARNINGS BEFORE EXTRAORDINARY CHARGE $ 141 $ 101 $ 267 $ 143 $ 598 $ 415
Extraordinary Charge from Purchase and
Redemption of Debt, Net of Tax 11 - 32 1 42 1
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NET EARNINGS $ 130 $ 101 $ 235 $ 142 $556 $ 414
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PRIMARY EARNINGS PER SHARE:
Earnings Before Extraordinary Charge $ .61 $ .44 $ 1.17 $ .60 $ 2.63 $ 1.81
Extraordinary Charge (.05) - (.15) - (.20) -
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PRIMARY EARNINGS PER SHARE $ .56 $ .44 $ 1.02 $ .60 $ 2.43 $ 1.81
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FULLY DILUTED EARNINGS PER SHARE:
Earnings Before Extraordinary Charge $ .59 $ .42 $ 1.12 $ .59 $ 2.53 $ 1.74
Extraordinary Charge (.05) - (.14) - (.19) -
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FULLY DILUTED EARNINGS PER SHARE $ .54 $ .42 $ .98 $ .59 $ 2.34 $ 1.74
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- --------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS DECLARED PER COMMON SHARE $ .16 $ .16 $ .32 $ .31 $ .64 $.60
AVERAGE COMMON SHARES OUTSTANDING (Millions):
Primary 220.7 218.7 220.2 218.2 219.7 217.6
Fully Diluted 232.6 230.5 232.3 230.4 231.4 229.7
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</TABLE>
*Consisted of 53 weeks.
See accompanying Notes to Condensed Consolidated Financial Statements.
1
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS Dayton Hudson Corporation
OF FINANCIAL POSITION and Subsidiaries
<TABLE>
<CAPTION>
AUGUST 2, February 1, August 3,
(Millions of Dollars) 1997 1997* 1996
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ASSETS (UNAUDITED) (Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 216 $ 201 $ 221
Accounts receivable 1,551 1,720 1,412
Merchandise inventories 3,363 3,031 3,228
Other 409 488 191
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Total Current Assets 5,539 5,440 5,052
PROPERTY AND EQUIPMENT 10,920 10,469 10,401
Accumulated depreciation (3,171) (3,002) (2,944)
-------- -------- --------
Property and Equipment, net 7,749 7,467 7,457
OTHER 487 482 503
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TOTAL ASSETS $13,775 $13,389 $13,012
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt and notes payable $ 384 $ 233 $ 228
Accounts payable 2,399 2,528 2,176
Other 1,264 1,350 1,116
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Total Current Liabilities 4,047 4,111 3,520
LONG-TERM DEBT 5,072 4,808 5,297
DEFERRED INCOME TAXES AND OTHER 636 630 628
CONVERTIBLE PREFERRED STOCK, NET 34 50 54
SHAREHOLDERS' INVESTMENT 3,986 3,790 3,513
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TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $13,775 $13,389 $13,012
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COMMON SHARES OUTSTANDING (Millions) 218.1 217.2 216.7
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</TABLE>
* The February 1, 1997 Consolidated Statement of Financial Position is
condensed from the audited financial statement.
See accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
CONDENSED CONSOLIDATED Dayton Hudson Corporation
STATEMENTS OF CASH FLOWS and Subsidiaries
<TABLE>
<CAPTION>
(Millions of Dollars) Six Months Ended
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AUGUST 2, August 3,
(Unaudited) 1997 1996
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<S> <C> <C>
OPERATING ACTIVITIES
Net earnings before extraordinary charge $ 267 $ 142
Reconciliation to cash flow:
Depreciation and amortization 344 316
Deferred tax provision (60) (29)
Other non-cash items affecting earnings 7 46
Changes in operating accounts providing/(requiring) cash:
Accounts receivable 169 98
Merchandise inventories (332) (210)
Accounts payable (136) (71)
Other (2) 112
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Cash Flow Provided by Operations 257 404
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INVESTING ACTIVITIES
Expenditures for property and equipment (637) (693)
Proceeds from disposals of property and equipment 110 11
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Cash Flow Required for Investing Activities (527) (682)
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Net Financing Requirements (270) (278)
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FINANCING ACTIVITIES
Increase/(decrease) in notes payable, net 537 (24)
Additions to long-term debt 100 500
Reductions of long-term debt (438) (92)
Sale of subsidiary preferred stock 160 -
Dividends paid (80) (74)
Other 6 14
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Cash Flow Provided by Financing Activities 285 324
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Net Increase in Cash and Cash Equivalents 15 46
Cash and Cash Equivalents at Beginning of Period 201 175
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 216 $ 221
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</TABLE>
Amounts in this statement are presented on a cash basis and therefore may differ
from those shown elsewhere in this 10-Q report. Cash paid for income taxes was
$342 million and $205 million during the first six months of 1997 and 1996,
respectively. Cash paid for interest (including interest capitalized) in the
first six months of 1997 and 1996 was $284 million and $214 million,
respectively.
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
NOTES TO CONDENSED CONSOLIDATED Dayton Hudson Corporation
FINANCIAL STATEMENTS and Subsidiaries
ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements should be read in
conjunction with the financial statement disclosures contained in our 1996
Annual Shareholders' Report throughout pages 23-34. As explained on page 33 of
the Annual Report, the same accounting policies are followed in preparing
quarterly financial data as are followed in preparing annual data. In the
opinion of management, all adjustments necessary for a fair presentation of
quarterly operating results are reflected herein and are of a normal, recurring
nature.
Due to the seasonal nature of the retail industry, earnings for periods which
exclude the holiday season are not necessarily indicative of the results that
may be expected for the full fiscal year.
PER SHARE DATA
References to earnings per share relate to fully diluted earnings per share.
LONG-TERM DEBT
During second quarter 1997, we issued $100 million of debt, due 2037, and
subsequent to the quarter, we issued $75 million of debt, due 2027, both at a
fixed rate of 5.9% per annum. Investors have the option to cause the redemption
of these bonds at par in two years and each year thereafter. The proceeds from
these bonds were used for general corporate purposes.
During the second quarter, we repurchased an additional $47 million of long-term
debt for $59 million and committed to repurchase $30 million of long-term debt
for $36 million, which settled in the third quarter. The debt repurchased had
an average interest rate of approximately 9.4% and an average remaining maturity
of 18 years. An extraordinary charge, net of tax, of $11 million ($ .05 per
share) for early extinguishment of debt was recorded in the second quarter.
Year-to-date, repurchased debt amounted to $329 million with an extraordinary
charge, net of tax, of $32 million ($.14 per share). The replacement of this
debt with lower interest rate financing is expected to result in future interest
expense savings.
As noted in our first quarter 10-Q filing, Retail Properties, Inc. (RPI), a
subsidiary of the Corporation, was formed as a real estate investment trust
(REIT) and issued preferred stock which could be redeemed if, as a result of a
change in tax laws, rules or regulations, certain tax attributes of the REIT
transaction were recharacterized. Subsequent to our issuance, an Internal
Revenue Service (IRS) notice was issued challenging the tax attributes of this
type of REIT transaction. The notice purports retroactive application for our
transaction and similar transactions entered into by others. As a result, RPI's
preferred stock will be redeemed in the third quarter. The impact to our
financial statements will not be material.
4
<PAGE>
REAL ESTATE REPOSITIONING
In the second quarter, Mervyn's closed two additional under performing stores
for a total of 27 stores closed in 1997, in accordance with our previously
announced plan. Exit costs incurred year-to-date by Mervyn's and DSD during
1997 approximated $12 million and were charged against the reserve established
in fourth quarter 1996. Subsequent to second quarter end, DSD closed its
second store in 1997.
INCOME TAXES
We have historically deducted for income tax purposes the inventory shortage
expense accrued for book purposes, in a manner consistent with industry
practice. With respect to our 1983 tax return, the IRS challenged the practice
of deducting accrued shortage not verified with a year-end physical inventory.
As disclosed in our first quarter 10-Q filing, the United States Tax Court
returned a judgment on this issue in favor of the IRS. We continue to believe
strongly that our accrual practice is correct and have appealed this decision to
the United States Court of Appeals for the Eighth Circuit. To stop further
interest accrual, we paid the tax and interest assessed by the IRS, without
impact to our results of operations.
SEGMENT DISCLOSURES
In June 1997, the Financial Accounting Standards Board issued Statement
(SFAS) No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION. This statement is required to be adopted by fiscal 1998, with
earlier application encouraged. We adopted SFAS No. 131 in the second
quarter. In addition, the segment disclosures on pages 22 and 23 of our 1996
Annual Report complied with the provisions of SFAS No. 131 and, therefore,
have not been reiterated herein.
Revenues by business segment were as follows :
(Millions of Dollars) Three Months Ended Six Months Ended
---------------------- ----------------------
AUGUST 2, August 3, AUGUST 2, August 3,
1997 1996 1997 1996
---------- --------- --------- ---------
Target $ 4,663 $ 4,078 $ 8,917 $ 7,801
Mervyn's 945 999 1,891 1,966
DSD 685 674 1,374 1,364
--------- --------- --------- ---------
Total Revenues $ 6,293 $ 5,751 $12,182 $11,131
--------- --------- --------- ---------
--------- --------- --------- ---------
5
<PAGE>
SEGMENT DISCLOSURES, CONTINUED
Pre-tax Segment Profit was as follows:
(Millions of Dollars) Three Months Ended Six Months Ended
---------------------- ----------------------
AUGUST 2, August 3, AUGUST 2, August 3,
1997 1996 1997 1996
---------- --------- --------- ---------
Target $274 $242 $526 $376
Mervyn's 58 56 108 98
DSD 33 12 68 42
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Total Pre-tax Segment
Profit 365 310 702 516
Net impact from
securitization - (6) - (12)
Interest expense, net (107) (111) (214) (220)
Corporate and other (25) (26) (47) (47)
---------- --------- --------- ---------
Earnings before income
taxes and extraordinary
charge $233 $167 $441 $237
---------- --------- --------- ---------
---------- --------- --------- ---------
Pre-tax segment profit is first-in, first-out (FIFO) earnings before
securitization effects, interest, corporate and other, and unusual items.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current-year
presentation.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
SECOND QUARTER 1997
ANALYSIS OF OPERATIONS
Second quarter 1997 net earnings were $130 million, compared with $101 million
for second quarter 1996. For the first half of 1997, net earnings increased to
$235 million from $142 million for the same period a year ago. Second quarter
and first half 1997 net earnings include an extraordinary charge, net of tax,
related to the early extinguishment of debt of $11 million ($.05 per share) and
$32 million ($.14 per share), respectively.
The improvement in second quarter earnings is due primarily to continued strong
sales at Target, expense reduction initiatives at DSD and significant increases
in credit revenues at all three divisions. The following table reflects the
components of the year-over-year change in our earnings per share:
Three Six
Months Months
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1996 Earnings Per Share $.42 $.59
Changes in earnings per share due to:
Revenues .16 .30
Gross margin rate (.05) .06
Operating expense rate .07 .19
Start-up expenses (.02) (.03)
Interest expense, net .01 .01
Extraordinary charge from redemption of debt (.05) (.14)
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1997 Earnings Per Share $.54 $.98
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Strong growth at Target, our lowest 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 sales mix between divisions had
remained constant with the comparable periods in 1996, the gross margin rate
variance would have been $.03 and $.07 more favorable, and the operating expense
rate would have been $.06 and $.11 less favorable, for the second quarter and
six months, respectively.
7
<PAGE>
Revenues
- --------
Total revenues increased 9% for both the three- and six-month periods, while
comparable-store revenues (revenues from stores open longer than one year)
increased 5% and 4%, respectively.
Year-over-year revenue growth by business segment was as follows :
Three Months Six Months
Percentage Change Percentage Change
------------------- --------------------
All Comparable All Comparable
Stores Stores Stores Stores
------- ---------- ------ ----------
Target 14% 6% 14% 6%
Mervyn's (5) 2 (4) 1
DSD 1 (1) 1 (2)
------- ---------- ------ ----------
Total Revenues 9% 5% 9% 4%
------- ---------- ------ ----------
------- ---------- ------ ----------
Target's strong revenue results reflect new-store and comparable-store sales
growth and increased credit revenues related to the substantial growth of the
Target Guest Card. Mervyn's comparable-store growth reflects increases in
credit revenue and continued focus on sales growth through enhancing
merchandising and marketing initiatives. Mervyn's total revenue decrease
reflects previously announced store closings as part of its real estate
repositioning efforts. DSD results reflect continued implementation of its
enhanced merchandise strategy and increases in credit revenues.
Pre-Tax Segment Profit
- ----------------------
Our pre-tax segment profit increased 18% to $365 million compared with $310
million for the same period a year ago. For the second consecutive quarter, all
three divisions contributed to the year-over-year improvement. Pre-tax segment
profit in the first half increased 36% to $702 million, compared with $516
million in 1996.
8
<PAGE>
Pre-tax Segment Profit was as follows:
(Millions of Dollars) Three Months Ended
-------------------------------------
AUGUST 2, August 3, Percentage
1997 1996 Change
--------- ---------- ----------
Target $274 $242 14%
Mervyn's 58 56 4
DSD 33 12 100+
---- ---- ---
Total Pre-tax Segment Profit $365 $310 18%
---- ---- ---
---- ---- ---
Six Months Ended
-------------------------------------
AUGUST 2, August 3, Percentage
1997 1996 Change
--------- ---------- ----------
Target $526 $376 40%
Mervyn's 108 98 11
DSD 68 42 59
---- ---- ---
Total Pre-tax Segment Profit $702 $516 36%
---- ---- ---
---- ---- ---
TARGET'S second quarter and six-month profit increases of 14% and 40% over the
same periods last year reflect strong total and comparable-store sales growth
and increases in credit revenue due to the substantial expansion of the Target
Guest Card. During the second quarter, the gross margin rate declined slightly
due to higher markdowns, while the operating expense rate was even with last
year as improved store productivity was offset by higher credit expenses
associated with the significant growth of the Target Guest Card. Importantly,
credit revenue increased in excess of the growth in credit expenses. During the
six-month period, the gross margin rate increased due primarily to higher markup
and the operating expense rate was favorable to last year, reflecting continued
progress on Target's expense reduction program and favorable sales leveraging.
For the balance of the year, we continue to anticipate similar comparable-store
sales growth with the gross margin rate flat to slightly down as Target
continues to annualize the exceptionally strong improvement in gross margin rate
achieved last year. In addition, we expect further expense reduction
initiatives to be somewhat offset by increased credit-related expenses. While
solid profit improvement is expected in the second half of the year, the rate of
growth should be more modest than in the first six months.
MERVYN'S profit for the second quarter and first half increased 4% and 11%,
respectively, from comparable periods last year. The gross margin rate
decreased during the second quarter due to higher markdowns. Mervyn's
operating expense rate for the second quarter was favorable to last year
primarily due to improvements in store productivity and reduced headquarters
costs. Mervyn's year-to-date gross margin rate increased slightly, while the
operating expense rate was unfavorable to last year due to poor sales
leveraging and higher credit expenses associated with higher credit revenue.
For the balance of 1997, despite lost revenue and profit from the previously
announced store closings, Mervyn's is expected to continue to achieve
year-over-year profit growth through a modest comparable-store revenue
increase and moderate gross margin rate favorability versus last year.
9
<PAGE>
DSD'S second quarter profit was nearly triple last year's comparable period
results and the six-month profit increased 59% over last year. The gross margin
rate for the quarter and the first half of the year were favorable primarily due
to improved markup. The operating expense rate for both the second quarter and
first half improved substantially due to increased store productivity and lower
advertising expenses. For the balance of the year, DSD's profit improvement is
expected to continue with modest gross margin favorability and continued
operating expense reductions.
Other Performance Factors
- -------------------------
The last-in first-out (LIFO) provision, included in cost of retail sales, was
zero for the three- and six-month periods for both 1997 and 1996. The
cumulative LIFO provision was $86 million at August 2, 1997 and February 1,
1997, and $77 million at August 3, 1996.
For the second quarter and first six months of 1997 and 1996, total earnings
before income taxes and extraordinary charge include a reduction of credit
revenues and a reduction of bad debt expense related to the sale of securitized
accounts receivable of $6 and $12 million, respectively. For 1997, these
reductions have been offset by the net effect of SFAS No. 125.
Net interest expense decreased $4 million in the second quarter and $6 million
in the first half of 1997 compared with the same periods last year due primarily
to lower average debt balances. In addition, we expect lower average interest
rates as we move forward, due in part to refinancing of higher coupon debt.
Therefore, interest expense for 1997 is expected to be somewhat below last
year's levels.
The estimated annual effective income tax rate is 39.5 % for 1997, unchanged
from 1996's first half estimated annual rate.
ANALYSIS OF FINANCIAL CONDITION
Our financial condition remains strong. The ratio of debt to total
capitalization attributable to our retail operations was 52% at the end of
second quarter 1997, compared with 55% a year ago and 50% at year end. Due to
the seasonality of our business, quarterly comparisons will fluctuate, but we
expect our debt ratio to remain lower than last year for the balance of 1997.
At August 2, 1997, working capital was $1,492 million, 3% lower than a year ago.
Accounts receivable increased $139 million from second quarter last year,
primarily due to growth of the Target Guest Card. Accounts receivable declined
10% from year end, reflecting the typical reduction from seasonally high levels.
Inventory increased only 4%, or $135 million, over the same period last year as
a result of new Target stores and good controls at all three divisions. The
growth in inventory has been more than fully funded by the $223 million increase
in accounts payable over the comparable period. In addition, the current
portion of long-term debt and notes payable increased $156 million over second
quarter last year.
10
<PAGE>
Capital expenditures for the first half of 1997 were $637 million, compared with
$693 million for the same period a year ago. Approximately 83% of the current
year expenditures were made by Target, 6% by Mervyn's and 11% by DSD. Proceeds
of $110 million were received during the period from the disposal of property
and equipment, primarily from the sale of Mervyn's Florida and Georgia stores.
We continue to fund the growth in our business through a combination of debt,
the securitization of accounts receivable and retained earnings. Our debt has
decreased $69 million compared with a year ago while our shareholders'
investment has grown by $473 million.
STORE DATA
At August 2, 1997, Target operated 769 stores in 39 states, Mervyn's operated
274 stores in 14 states and DSD operated 65 stores in nine states. During the
quarter, we opened 17 net Target stores, one DSD store and closed two Mervyn's
store.
Retail square footage was as follows:
<TABLE>
<CAPTION>
AUGUST 2, February 1, August 3,
(In thousands, reflects total square feet, less office, warehouse and vacant space) 1997 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Target 83,393 79,360 76,519
Mervyn's 22,345 24,518 24,449
DSD 14,222 14,111 14,082
- --------------------------------------------------------------------------------------------------------------------------------
Total Retail Square Footage 119,960 117,989 115,050
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
(2). Not applicable
(4). Instruments defining the rights of security holders, including
indentures. Registrant agrees to furnish the Commission on
request copies of instruments with respect to long-term debt.
(10)A. Executive Incentive Plan (PTOC & EVA-Registered Trademark-)
(as amended and restated May 21, 1997).
B. Executive Long-Term Incentive Plan of 1981 (as amended and
restated May 21, 1997).
C. Executive Deferred Compensation Plan (as amended and restated
June 30, 1997). Incorporated by reference to Exhibit 10.1 to
Registrant's Registration Statement on Form S-8 (File No.
333-30311).
D. Highly Compensated Capital Accumulation Plan (as amended and
restated June 30, 1997). Incorporated by reference to Exhibit
10.2 to Registrant's Registration Statement on Form S-8 (File
No. 333-30311).
E. SMG Executive Deferred Compensation Plan (as amended and
restated June 30, 1997). Incorporated by referenced to
Exhibit 10.3 to Registrant's Registration Statement on Form
S-8 (File No. 333-30311).
F. Director Deferred Compensation Plan (as amended and restated
June 30, 1997). Incorporated by reference to Exhibit 10.4 to
Registrant's Registration Statement on Form S-8 (File No.
333-30311).
(11). Statements re Computations of Per Share Earnings
(12). Statements re Computations of Ratios
(15). Not applicable
(18). Not applicable
(19). Not applicable
(22). Not applicable
12
<PAGE>
(23). Not applicable
(24). Not applicable
(27). Financial Data Schedule
(99). Not applicable
b) Reports on Form 8-K. Registrant did not file any reports on Form 8-K
during the quarter ended August 2, 1997.
- ----------------------
- -Registered Trademark-EVA is a registered trademark
13
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DAYTON HUDSON CORPORATION
Registrant
Date: September 12, 1997 By /s/ Douglas A. Scovanner
---------------------------
Douglas A. Scovanner
Senior Vice President and
Chief Financial Officer
Date: September 12, 1997 By /s/ J.A. Bogdan
---------------------------
JoAnn Bogdan
Controller and
Chief Accounting Officer
14
<PAGE>
Exhibit Index
- -------------
(10)A. Executive Incentive Plan (PTOC & EVA-Registered Trademark-)
(as amended and restated May 21, 1997)
B. Executive Long-Term Incentive Plan of 1981 (as amended and restated
May 21, 1997)
(11). Statements re Computations of Per Share Earnings
(12). Statements re Computations of Ratios
(27). Financial Data Schedule
- --------------------
- -Registered Trademark-EVA is a registered trademark
15
<PAGE>
DAYTON HUDSON CORPORATION
EXECUTIVE INCENTIVE PLAN
(PTOC & EVA)
(AS AMENDED AND RESTATED MAY 21, 1997)
Article I
Sec. 1.1 NAME. The name of the short term incentive plan set forth herein is
"Dayton Hudson Corporation Executive Incentive Plan (PTOC & EVA)".
It is sometimes hereinafter referred to as the "Plan". "Company"
refers to Dayton Hudson Corporation and its subsidiaries. "Division"
refers to an operating company, test strategy, staff group or other
subdivision of the Company.
Sec. 1.2 COMPENSATION POLICY AND PLAN INTENT. The Plan has been designed to
provide financial incentives ("incentive bonuses") to designated
upper level executive employees, who through their efforts directly
and significantly impact the achievement of Company goals and
objectives. Such incentive bonuses are intended to reflect both the
executive's personal achievements therein, as well as the Division's
or Company's achievement of such goals and objectives.
Sec. 1.3 ELIGIBILITY. Participation in this Plan is restricted to those
upper level executive employees who, through their position and
performance, have a decided impact upon the performance of the
Company and/or a Division, and therefore upon the operating results
of the Company. The Compensation Committee shall determine which
individuals or groups of individuals by title or position or rank
shall participate in the Plan.
Divisions which participate in the Plan shall at times hereinafter
be referred to as "Participating Divisions". Executives
participating in the Plan are referred to as "participants" at times
herein.
Those Divisions which do not participate in this Plan shall at times
hereinafter be referred to as "Non-Participating Divisions".
Sec. 1.4 TRANSFER AND TERMINATION. A participant who transfers to another
Division of the Company, or who terminates employment for the
purpose of early or normal retirement from the Company, or who dies
or becomes disabled shall be eligible for incentive compensation at
Plan Year end if they were an actual participant in the Plan at the
commencement of such Plan Year. The incentive bonus, when
determined, pursuant to the provisions hereof shall be prorated to
reflect that portion of the Plan Year (including ALL if such is the
case) during which the participant was enrolled and participating in
the Plan as a participant. Participants in this category will be
treated in accordance with the following guidelines:
<PAGE>
a. TRANSFERS BETWEEN PARTICIPATING DIVISIONS. In the event of a
transfer between then Participating Divisions, a pro rata share
of the incentive bonus shall be contributed by each
Participating Division if the participant has been designated
as such in each Participating Division from the commencement of
the Plan Year, or in the case of the successor Participating
Division, from his/her commencement of employment to Plan Year
end.
b. TRANSFERS BETWEEN PARTICIPATING DIVISION AND NON-PARTICIPATING
DIVISION AND RETIREMENT, DEATH OR DISABILITY OF PARTICIPATING
EXECUTIVE. In the event a participant transfers from a
Participating Division to a Non-Participating Division, a pro
rata incentive bonus calculated on the basis of the number of
months (a major portion of a month to be considered a whole
month) during the Plan Year the executive was a Participant in
the Plan, over 12, will be awarded in the due course of the
Plan's administration. The same formula shall be utilized for
executives who transfer from a Non-Participating Division to a
Participating Division. The same method of calculating an
incentive bonus shall also be utilized in calculating incentive
bonuses for participants who die, become disabled or who retire
from the Company during the year. Any such incentive bonuses
would be paid only in the normal course of administration of
the Plan.
c. NEW EXECUTIVE EMPLOYEES. Upon recommendation of the Chief
Personnel Officer or the Chief Executive Officer of a Division,
whichever is applicable, and following approval thereof by the
Chairman of the Company, a new executive employee who will have
been employed by a Participating Division prior to the end of a
Plan Year may be designated as a participant in the Plan,
subject to the conditions of the Plan.
d. TERMINATION OTHER THAN RETIREMENT, DEATH OR DISABILITY. A
participant who terminates his/her employment during the Plan
Year for any reason other than retirement, death or disability,
shall not be eligible for and shall not receive an incentive
bonus for the subject Plan Year. A participant who terminates
following the completion of the subject Plan Year, but prior to
the payout of such incentive bonus shall receive the incentive
bonus under procedures which would, only for such purpose,
treat them as still employed at the time of the Plan payout.
e. PROMOTION OR JOB CHANGE. A participant who has a promotion
and/or a job change during a Plan Year will have his/her
incentive bonus calculated using each grade level separately.
The score and grade level shall determine the bonus percentage
and that percentage shall be applied to the Midpoint of Salary
Range while in the grade level. The total incentive bonus will
be the sum of the bonuses for each grade level.
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f. MARKET PRICING ADJUSTMENT. A participant whose grade level is
adjusted during the Plan Year due to a "market pricing
adjustment" will have his/her bonuses calculated for the entire
period using the adjusted grade. If a, b and/or e are
applicable, those sections shall also apply and this section f
shall be applicable only for the period that the "market
pricing adjustment" relates to.
Sec. 1.5 PROCESS FOR DETERMINATION OF INCENTIVE BONUSES
a. DEFINED INCENTIVE BONUS TERMS
"Bonus Matrix"
The "Bonus Matrix" refers to either of two separate tables
setting forth figures which indicate with varying job grade
level classifications, the percentage of incentive bonus
attributable to each PTOC Score or EVA Score in relationship
to the participant's Midpoint of Salary Range. The "Bonus
Matrix" may be changed from time to time at the election of
the Compensation Committee but any change in the Bonus
Matrix shall have prospective application only.
"Capital Charge"
"Capital Charge" is the cost of capital invested in the
business operation, adjusted for the maturity of the assets
employed by such business operation.
"Covered Officer"
"Covered Officer" includes all participants whose
compensation, in the year for which the bonus is calculated,
is subject to the compensation expense deduction limitations
set forth in Section 162(m) of the Internal Revenue Code of
1986, as amended.
"EVA"
"EVA" (economic value added) is PTOC after taxes less a
Capital Charge.
"EVA Score"
The "EVA Score" is determined from a schedule that is
approved by the Compensation Committee that gives a score
for the level of EVA achieved by the Division and/or
Company. The schedule may be modified annually.
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"Midpoint of Salary Range"
The "Midpoint of Salary Range" of a participant during the
related incentive bonus Fiscal Year is the midpoint for
his/her job grade as set forth in the salary range by job
grade that is applicable.
"PTOC"
"PTOC" (pre-tax operating contribution) is operating income
on a first-in, first-out inventory accounting basis, with
certain adjustments for treating all leases as operating
leases and ignoring the effects of securitizing accounts
receivable and large non-recurring items.
"PTOC Score"
The "PTOC Score" is determined from a schedule that is
approved by the Compensation Committee that gives a score
for the level of PTOC achieved by the Division and/or
Company. The schedule may be modified annually.
b. DETERMINATION OF BONUS BASED UPON PTOC
(1) COMPENSATION POLICY AND INTENT OF PTOC BONUSES
Incentive bonuses under the PTOC portion of the Plan
are based on the Division and/or Company PTOC for the
Fiscal Year.
(2) NON-POOLED
Incentive bonuses for each participant will be
calculated by taking the participant's bonus percentage
from the PTOC Bonus Matrix, using his/her salary grade,
and multiplying it by his/her Midpoint of Salary Range.
(3) POOLED
A bonus pool is calculated by multiplying the
percentage from the Bonus Matrix using the PTOC Score
for each participant by the participant's Midpoint of
Salary Range.
The incentive bonus for each participant will be based
on a ratio of his/her bonus to all bonuses paid under
the Executive Incentive Plan (Personal Score). The
percentage determined by that ratio will be multiplied
by the bonus pool.
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(4) MINIMUM SCORE
No bonus will be payable to a participant under this
Plan unless his/her personal score under the Executive
Incentive Plan (Personal Score) is equal to or higher
than a minimum set by the Division or the Compensation
Committee.
(5) SELECTION OF POOLED OR NON-POOLED
The Compensation Committee will determine whether a
Division and/or Company is to be pooled or non-pooled.
c. DETERMINATION OF BONUS BASED UPON EVA
(1) COMPENSATION POLICY AND INTENT OF EVA BONUSES
Incentive bonuses under the EVA portion of the Plan are
based on the Division and/or Company EVA for the Fiscal
Year.
(2) NON-POOLED
A bonus pool is calculated by multiplying the
percentage from the Bonus Matrix using the EVA Score
for each participant by the participant's Midpoint of
Salary Range.
(3) POOLED
A bonus pool is calculated by multiplying the
percentage from the Bonus Matrix using the EVA Score
for each participant by the participant's Midpoint of
Salary Range.
The incentive bonus for each participant will be based
on a ratio of his/her bonus to all bonuses paid under
the Executive Incentive Plan (Personal Score). The
percentage determined by that ratio will be multiplied
by the bonus pool.
(4) MINIMUM SCORE
No bonus will be payable to a participant under this
Plan unless his/her personal score under the Executive
Incentive Plan (Personal Score) is equal to or higher
than a minimum set by the Division or the Compensation
Committee.
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(5) SELECTION OF POOLED OR NON-POOLED
The Compensation Committee will determine whether a
Division and/or Company is to be pooled or non-pooled.
d. MAXIMUM BONUS
The maximum bonus payable under the Plan is equal to 400% of
the salary of the Chief Executive Officer (the "CEO") or other
Covered Officer set forth in the Proxy Statement covering the
year during which the bonus was earned. If the CEO or other
Covered Officer held a different office or was not employed in
his/her position for the full year covered by that Proxy
Statement, the maximum bonus is 400% of the highest salary
reported in such year. Provided, however, in either case the
aggregate of all bonuses paid to the CEO or other Covered
Officer under any combination of this Plan and the Personal
Score Plan may not exceed 400% of the relevant salary. In
addition, for purposes of calculating the maximum bonus payable
to the CEO or any other Covered Officer, the salary of the
participant may not exceed 200% of the salary earned by the
Company's CEO for Fiscal 1996 as reported in its Proxy
Statement covering that year. The aggregate of all bonuses paid
to any other executive not listed above under any combination
of this Plan and the Personal Score Plan may not exceed 400% of
his/her base salary. If it is necessary to reduce a bonus in
order to comply with the limitation on the maximum aggregate
bonus payable to a participant, then the reduction shall be
applied first to the bonus payable under the Personal Score
Plan and then, if necessary, to the bonus payable under this
Plan.
Article II
Sec. 2.1 PAYMENT OF BONUS. Normally the total incentive bonus for a Fiscal
Year will be paid in cash as soon as administratively feasible after
the amount of the incentive bonus has been computed.
However, any participant who is a participant in a deferred
compensation plan or arrangement of the Company, may have his/her
incentive bonus deferred pursuant to that plan or arrangement.
Article III
Sec. 3.1 BENEFICIARY. Any incentive bonus payments which become
distributable after the death of a participant shall be distributed
as they become due to such person or persons, or other legal entity
as the participant may have designated in writing delivered to
his/her Participating Division's personnel office on an approved
form. The participant may, from time to time, revoke or change any
such designation by writing delivered to such Participating
Division's personnel office on an approved form. If there is no
unrevoked
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designation on file with such corporate personnel office at the
participant's death, or if the person or persons designated therein
shall have all predeceased the participant, such distributions shall
be made to the participant's spouse, or in the absence of a spouse,
children and if the participant has no spouse or children, to the
participant's estate. If a participant has deferred his/her
incentive bonus pursuant to a plan or arrangement, the plan or
arrangement shall govern the beneficiary designation.
Article IV
Sec. 4.1 ADMINISTRATION AND INTERPRETATION OF PLAN. This Plan shall be
interpreted by the Compensation Committee of the Company and its
interpretations shall be final and binding on participants,
Participating Divisions, and all other parties in interest.
The Plan shall be administered by the Compensation Committee
selected by the Board of Directors. The Plan Committee reserves the
right, from time to time, to prescribe rules and regulations, not
inconsistent with the provisions of the Plan, and to modify or
revoke such rules and regulations at such time and in such manner as
it may deem proper. A copy of this Plan and all such rules and
regulations will be supplied to each person participating in the
Plan and a copy of the then current Plan shall be maintained in the
Company's personnel office and at the personnel office of each
Participating Division and shall be available, upon request, for
review by any participant or his duly authorized agent. All persons
in the Plan shall be bound by the terms of the Plan and of all rules
and regulations pursuant thereto, all as now in effect or hereafter
amended, promulgated or passed which shall likewise be maintained at
the Company and each Participating Division personnel office.
Article V
Sec. 5.1 RIGHTS OF PARTICIPANTS AND BENEFICIARIES. The Plan is not an
employment agreement and does not assure or evidence to any degree
the continued employment or the claim to continued employment of any
participant for any time or period or job.
No participant or beneficiary shall, by virtue of this Plan, have
any interest in any specific asset or assets of the Company or any
Participating Division. A participant or beneficiary has only an
unsecured contract right to receive cash payments in accordance with
and at the times specified by the Plan.
No participant shall have the right or ability to assign, pledge, or
otherwise dispose of any part of an incentive bonus hereunder
(except as provided in Section 3.1 hereof).
Article VI
Sec. 6.1 OVERVIEW. It is specifically understood that the Chairman of the
Board and Chief Executive Officer of the Company shall at all times
retain the authority to veto or rescind any appointment or
designation of an individual as a participant (except an
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Executive Officer) under this Plan but it is the intent of the Plan
that such authority shall be exercised with restraint and only for
circumstances deemed by said officer to be of importance for
preserving the integrity of the Plan's policy and/or its
performance.
Article VII
Sec. 7.1 TERMINATION OF PLAN. This Plan may be amended or terminated at any
time by the Board of Directors of the Company. Such amendment or
termination, will not, without the participant's written consent,
affect his/her incentive bonus or bonuses previously earned.
Article VIII
Sec. 8.1 MISCELLANEOUS DEFINITIONS.
a. "COMPENSATION COMMITTEE": shall mean that committee of the
Board of Directors of the Company designated as such on January
12, 1994 or as it is thereafter designated during the term
hereof and if during the term hereof no such named committee
shall be designated by the Board of Directors it shall mean the
Committee of the Board most nearly performing the duties of the
Compensation Committee as defined at the time of its
elimination as a Board Committee.
b. "PLAN YEAR": Plan Year shall be the applicable financial
"Fiscal Year" of the Company.
c. "RETIRE OR RETIREMENT": Retire or Retirement means a
termination of employment pursuant to an arrangement contained
in any formal private retirement plan or written agreement then
in effect by the Company or any participating Division relative
to the subject participant.
d. "CHAIRMAN": Chairman shall at all times refer to the incumbent
Chairman of the Board of Directors of the Dayton Hudson
Corporation.
Article IX
Sec. 9.1 MISCELLANEOUS PROVISIONS
a. HEADINGS. Headings at the beginning of sections hereof are for
convenience of reference, shall not be considered a part of the
text of the Plan, and shall not influence its construction.
b. CAPITALIZED DEFINITIONS. Capitalized terms used in the Plan
shall have their meaning as defined in the Plan unless the
context clearly indicates to the contrary.
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c. GENDER. Any references to gender also include the opposite
gender.
d. USE OF COMPOUNDS OF WORD "HERE". Use of the words "hereof",
"herein", "hereunder", or similar compounds of the word "here"
shall mean and refer to the entire Plan unless the context
clearly indicates to the contrary.
e. CONSTRUED AS A WHOLE. The provisions of the Plan shall be
construed as a whole in such manner as to carry out the
provisions thereof and shall not be construed separately
without relation to the context.
f. SHAREHOLDER APPROVAL. No bonuses, awards or other compensation
will be granted or paid pursuant to this Plan unless and until
this Plan is approved by the affirmative vote of a majority of
the voting power of the shares present and entitled to vote at
a meeting of the Company's shareholders.
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DAYTON HUDSON CORPORATION
EXECUTIVE LONG TERM INCENTIVE PLAN
OF 1981
(AS AMENDED AND RESTATED MAY 21, 1997)
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.1 The name of this plan shall be "The Dayton Hudson Corporation
Executive Long Term Incentive Plan of 1981" (hereinafter called the "Plan").
1.2 The purpose of the Plan is to advance the interim performance and
long-term growth of the Company by offering long-term incentives, in addition to
current compensation and other benefits, to those key employees of the Company
and its Subsidiaries who the Plan Committee determines will contribute to such
performance and growth inuring to the benefit of the shareholders of the
Company. Such long-term incentives may take the form of Stock Options, or
Performance Shares, or Restricted Stock Awards or any combination.
ARTICLE II
DEFINITIONS
2.1 AWARD. An "Award" is used at times in the Plan to refer to the act of
granting a Stock Option, Performance Share or Restricted Stock Award under the
Plan.
2.2 BOARD. "Board" is the Board of Directors of Dayton Hudson
Corporation.
2.3 CODE. "Code" is the Internal Revenue Code of 1986, as amended, as now
in force or as hereafter amended.
2.4 COMPANY. "Company" is Dayton Hudson Corporation, a Minnesota
corporation, and any successor thereof.
2.5 COVERED OFFICER. "Covered Officer" includes all Participants whose
compensation, in the year in which the Award is made, is subject to the
compensation expense deduction limitations set forth in Section 162(m) of the
Code.
2.6 DATE OF GRANT. "Date of Grant" shall be the date designated in the
resolution by the Plan Committee as the date of such Stock Option(s) or
Performance Share(s) or Restricted Stock Award(s), but such date shall not be
earlier than the date of the resolution and action thereon by the Plan
Committee, or earlier than the effective date of the Plan, and in the absence of
a date of grant or a fixed method of computing such date being specifically set
forth in the Plan Committee's resolution, then the Date of Grant shall be the
date of such Plan Committee's resolution and action.
<PAGE>
2.7 FAIR MARKET VALUE. "Fair Market Value" of a share of Company common
stock on any date is 100% of the mean between the high and low prices for such
stock as reported for such stock on the New York Stock Exchange Composite
Transactions Listing ("Composite Listing") on such date, or in the absence of
such report 100% of the mean between the high and low prices of such stock on
the New York Stock Exchange on such date or, if no sale has been recorded on the
Composite Listing or made on such Exchange on such date, then on the last
preceding date on which any such sale shall have been made in the order of
primacy above indicated.
2.8 HOLDER. A "Holder" is a person who has been granted a Restricted
Stock Award.
2.9 INCENTIVE STOCK OPTIONS. "Incentive Stock Options" are Stock Options
that are intended to qualify under Section 422 of the Code.
2.10 NON-QUALIFIED OPTIONS. "Non-Qualified Options" are Stock Options
that are not intended to qualify under Section 422 of the Code.
2.11 PARTICIPANT. A "Participant" is a person designated as such by the
Plan Committee, pursuant to Article III hereof, for participation in the Plan.
2.12 PERFORMANCE GOALS. "Performance Goals" are defined in Section 4.1
hereof.
2.13 PERFORMANCE PERIOD. "Performance Period", with respect to a
Performance Share, is a period of four consecutive fiscal years of the Company,
beginning with the fiscal year in which such Performance Share is granted and
may be referred to herein and by the Plan Committee by use of the calendar year
in which a particular Performance Period commences.
2.14 PERFORMANCE SHARE. A "Performance Share" is a potential award
consisting of a right to one share of the Company's $.3333 par value common
stock (subject to increase as provided in Section 4.2 hereof) or a lesser number
of shares and the cash payment set forth in Section 5.2 hereof. A Performance
Share shall be of no value to a Participant unless and until earned in
accordance with Article V hereof.
2.15 PLAN COMMITTEE. The "Plan Committee" is the Committee referenced in
Article IX hereof.
2.16 PLAN YEAR. The "Plan Year" shall be a fiscal year of the Company
falling within the term of this Plan.
2.17 RELEVANT CHANGE ADJUSTMENTS. Appropriate adjustments in the number
of shares and in the option price per share as authorized herein, may be made by
the Plan Committee, in its discretion (except as provided in Section 11.8
hereof), to give effect to adjustments made in the number of shares of Company
common stock through a merger, consolidation, recapitalization,
reclassification, combination, spin-off, common stock dividend, stock split or
other relevant change.
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2.18 RESTRICTED STOCK AWARD. A "Restricted Stock Award" is an Award
granted under Article VII of this Plan.
2.19 STOCK OPTION. A "Stock Option" is a right accruing in a Participant
to purchase from the Company one share of the Company's $.3333 par value common
stock at the Fair Market Value of such share of common stock on the Date of
Grant of the Stock Option, such exercise of option to be made any time within
ten years and one day (ten years with respect to Incentive Stock Options)
following the Date of Grant, and containing the terms and conditions set forth
or allowed under Article VI hereof. Stock Options may be either Non-Qualified
Options or Incentive Stock Options.
2.20 SUBSIDIARY CORPORATION. For purposes of this Plan, the term
"Subsidiary" or "Subsidiary Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, in
which each of the corporations other than the last corporation in the unbroken
chain owns stock possessing fifty percent or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain as
determined at the point in time when reference is made to such "Subsidiary" or
"Subsidiary Corporation" in this Plan.
2.21 CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred if:
(a) a majority of the directors of the Company shall be persons other than
persons
(i) for whose election proxies shall have been solicited by the
Board or
(ii) who are then serving as directors appointed by the Board to
fill vacancies on the Board caused by death or resignation
(but not by removal) or to fill newly-created directorships,
(b) 30% or more of the outstanding Voting Stock (as defined in Article IV
of the Restated Articles of Incorporation, as amended, of the Company)
of the Company is acquired or beneficially owned (as defined in
Article IV of the Restated Articles of Incorporation, as amended, of
the Company) by any person (as defined in Article IV of the Restated
Articles of Incorporation, as amended, of the Company), or
(c) the shareholders of the Company approve a definitive agreement or plan
to
(i) merge or consolidate the Company with or into another
corporation (other than (1) a merger or consolidation with a
Subsidiary of the Company or (2) a merger in which the
Company is the surviving corporation and either (A) no
outstanding Voting Stock of the Company (other than
fractional shares) held by shareholders immediately prior to
the merger is converted into cash (except cash upon the
exercise by holders of Voting Stock of the Company of
statutory dissenters' rights), securities, or other property
or (B) all holders of outstanding Voting Stock of the Company
(other than fractional shares) immediately prior to the
merger (except those that exercise statutory
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dissenters' rights) have substantially the same proportionate
ownership of the Voting Stock of the Company or its parent
corporation immediately after the merger),
(ii) exchange, pursuant to a statutory exchange of shares of
Voting Stock of the Company held by shareholders of the
Company immediately prior to the exchange, shares of one or
more classes or series of Voting Stock of the Company for
shares of another corporation or other securities, cash or
other property,
(iii) sell or otherwise dispose of all or substantially all of the
assets of the Company (in one transaction or a series of
transactions) or
(iv) liquidate or dissolve the Company.
ARTICLE III
GRANTING OF STOCK OPTIONS, PERFORMANCE SHARES
AND RESTRICTED STOCK AWARDS TO PARTICIPANTS
3.1 ELIGIBLE EMPLOYEES. Stock Options, Restricted Stock Awards or
Performance Shares may be granted by the Plan Committee to any key employee of
the Company or a Subsidiary Corporation. A Stock Option(s) or Performance
Share(s) or Restricted Stock Award(s) may be granted to a director of the
Company provided that he/she is also at the time of grant a key employee of the
Company or a Subsidiary Corporation. No Stock Option(s) or Performance Share(s)
or Restricted Stock Award(s) shall be granted to a person who is at the time of
award a member of the Plan Committee. A person who has been engaged by the
Company for employment shall be eligible for grants under the Plan, provided
such person actually reports for and commences such employment within ninety
days after the Date of Grant.
3.2 DESIGNATION OF PARTICIPANTS. At any time and from time to time during
the Plan Year, the Plan Committee may designate the key employees of the Company
and its Subsidiaries eligible for Awards.
3.3 ALLOCATION OF STOCK OPTION(S), PERFORMANCE SHARE(S) OR RESTRICTED
STOCK AWARD(S). Contemporaneously with the designation of a Participant
pursuant to Section 3.2 hereof, the Plan Committee shall determine the number of
Stock Option(s) and/or Restricted Stock Award(s) and/or Performance Share(s) to
be granted to such Participant and the Date of Grant for such related Stock
Option or Performance Share or Restricted Stock Award, taking into consideration
such factors as it deems relevant, which may include the following:
(a) the total number of Stock Option(s) and/or Restricted Stock Award(s)
and/or Performance Share(s) available for allocation to all
Participants; and
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(b) the work assignment or the position of the Participant and its
sensitivity and/or impact in relationship to the profitability and
growth of the Company and its Subsidiaries; and
(c) the Participant's current and potential performance in reference to
such factors.
Allocation of Awards may, in the discretion of the Plan Committee, be in the
form of Stock Option(s) solely or Performance Share(s) solely, or Restricted
Stock Award(s) solely, or any combination in whatever relationship one to the
other, if any, as the Plan Committee in its discretion so determines.
Allocation of Stock Options may, in the discretion of the Plan Committee, be in
the form of Incentive Stock Option(s) solely or Non-Qualified Option(s) solely
or a combination in whatever relationship to the other, if any, as the Plan
Committee in its discretion so determines.
3.4 NOTIFICATION TO PARTICIPANTS AND DELIVERY OF DOCUMENTS. As soon as
practicable after such determinations have been made, each Participant, shall be
notified of (i) his/her designation as a Participant, (ii) the Date of Grant,
and (iii) the number of Stock Option(s), and/or Restricted Stock Award(s) and/or
the number of Performance Share(s) granted to the Participant, and in the case
of Performance Share(s), the Performance Period and in the case of Restricted
Stock Award(s), the Restriction Period. The Participant shall thereafter be
supplied with written evidence of any such granted Performance Share(s) and/or
Restricted Stock Award(s), and shall receive a Stock Option exercisable for
purchase of one share of the Company's $.3333 par value common stock for each
Stock Option granted to the Participant pursuant to this Plan or indicating the
aggregate of such grant, which option agreement(s) shall be in conformity with
the provisions of Article VI hereof.
ARTICLE IV
PERFORMANCE GOALS AND MAXIMUM AWARD
4.1 ESTABLISHMENT OF GOALS. Within a reasonable period of time after the
beginning of each Performance Period, Performance Goals relative to such
Performance Period shall be established by the Plan Committee in its absolute
discretion. Such Performance Goals may include, but, except as provided below,
are not limited to, criteria such as PTOC, EVA, amount or rate of growth in
consolidated profits of the Company expressed as a percent, earnings per share,
return on capital, return on investment, return on shareholders' equity.
Performance Goals for Covered Officers must be based upon one or more of the
foregoing specifically described performance goals. Performance Goals may be
absolute in their terms or be measured against or in relationship to other
companies comparably, similarly or otherwise situated. The Plan Committee, in
its sole discretion, may modify the Performance Goals if it determines that
circumstances have changed and modification is required to reflect the original
intent of the Performance Goals. The Plan Committee may in its discretion
classify Participants into as many groups as it determines, and as to any
Participant(s) relate his/her Performance Goals partially, or entirely, to the
measured performance, either absolutely or relatively, of an identified
Subsidiary, operating company or test strategy or new venture of the Company.
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4.2 LEVELS OF PERFORMANCE REQUIRED TO EARN PERFORMANCE SHARES. At or
about the same time that Performance Goals are established for a specific
period, the Plan Committee shall in its absolute discretion establish the
percentage (not to exceed 150% thereof) of the Performance Share(s) granted for
such Performance Period which shall be earned by the Participant for various
levels of performance measured in relation to achievement of Performance Goals
for such Performance Period.
4.3 OTHER RESTRICTIONS. The Plan Committee may provide restrictions on
the delivery of common stock of the Company upon the earning of Performance
Shares, including the future forfeiture of all or part of the common stock
earned. The Plan Committee may provide that the shares of the Company's .3333
par value common stock issued on Performance Shares Earned be held in escrow
and/or legended.
4.4 NOTIFICATION TO PARTICIPANTS. Promptly after the Plan Committee has
established Performance Goals for a specific Performance Period or modified such
goals, each Participant who has received a grant of any Performance Share(s) for
that period shall be provided with written evidence of the Performance Goals so
established or modified.
4.5 During any Plan Year, no Covered Officer may receive Awards that, in
the aggregate, could result in that Participant receiving, earning or acquiring
more than 1,000,000 shares of the Company's $.3333 par value common stock,
subject to the adjustments described in Section 2.17.
ARTICLE V
EARNING OF PERFORMANCE SHARES
5.1 MEASUREMENT OF PERFORMANCE AGAINST PERFORMANCE GOALS. The Plan
Committee shall as soon as practicable after the close of each Performance
Period, make a determination of:
(a) the extent to which the Performance Goals for such Performance Period
have been achieved;
(b) the percentage of the Performance Shares granted for such Performance
Period which are earned for such Performance Period by Participants
who have been from his/her date of hire in the continuous employ of
the Company or Subsidiary or a combination thereof, during the subject
Performance Period; and
(c) the percentage of Performance Shares to be paid in cash, if any. The
percentage paid in cash shall be uniform for all Participants in a
particular Performance Period.
These determinations shall be absolute and final as to the facts and conclusions
therein made and be binding on all parties. Promptly after the Plan Committee
has made the foregoing determination each Participant who has earned Performance
Share(s) based thereon shall be notified, in writing, of the number of
Performance Shares so earned. For all purposes of this Plan notice shall be
deemed to have been given the date action is taken by the Plan Committee making
the determination.
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5.2 TREATMENT OF PERFORMANCE SHARES EARNED. Upon the determination that a
percentage of the Performance Share(s) has been earned for a Performance Period,
a Participant to whom such earned Performance Share(s) has been granted and who
has been (or was) in the employ of the Company or a Subsidiary thereof
continuously from the date of his/her hire during the subject Performance Period
to which the grant relates, subject to the exceptions set forth at Section 5.5
and Section 5.6 hereof, shall be entitled, subject to the other conditions of
this Plan, to receive the shares of the Company's $.3333 par value common stock
for each Performance Share earned (less the shares paid in cash), plus a cash
payment in the amount of the Fair Market Value of the shares of common stock to
be paid in cash as determined in Section 5.1(c) hereof, calculated as of the
close of business on the date of the notice referred to in Section 5.1 hereof.
The provisions of Section 5.5 to the contrary notwithstanding, the Plan
Committee may provide that the issued shares of common stock be held in escrow
and/or be legended and that the common stock be subject to restrictions,
including the future forfeiture of all or a part of the shares. Performance
Shares shall under no circumstances become earned or have any value whatsoever
for any Participant who is not in the employ of the Company or its Subsidiaries
continuously during the entire Performance Period for which such Performance
Shares are granted, except as provided at Section 5.5 or Section 5.6 hereof.
5.3 STOCK-CASH DISTRIBUTION. Each distribution determined in accordance
with Section 5.2 above shall be made as soon as practicable after Performance
Shares have been determined to have been earned unless the provisions of Section
5.4(a) hereof are applicable to a Participant.
5.4(a) DEFERRAL OF RECEIPT OF PERFORMANCE SHARE EARNOUT. A Participant
who has received a grant of Performance Shares may by compliance with the then
applicable procedures under the Plan irrevocably elect in writing to defer
receipt of all or any part of the stock-cash distribution associated with the
earnout, if any, of the Performance Shares (the combination thereof hereafter
referred to as the "deferred account"). The deferral shall be effective until
the Participant terminates his/her employment with the Company and its
Subsidiaries except as otherwise provided herein.
The terms and conditions of such deferral, including but not limited to,
the period of time for, and form of, election; the manner and method of payout;
the form in which the deferred account shall be held; the interest equivalent or
other payment that shall accrue upon the deferred account pending its payout;
and the use and form of dividend equivalents in respect of stock units included
within any deferred account, shall be as determined from time to time by the
Plan Committee, which Plan Committee may change any and all of the terms and
conditions at any time applicable to deferrals thereafter made.
5.4(b) AMENDMENT OF DEFERRAL ARRANGEMENTS. The Plan Committee may, at any
time and from time to time, but prospectively only except as hereinafter
provided, amend, modify, change, suspend or cancel any and all of the rights,
procedures, mechanics and timing parameters relating to the deferral of receipt
of Performance Share earnout under the Plan as set forth at Section 5.4(a)
hereof. In addition, the Plan Committee may, in its sole discretion, accelerate
the payout of the deferred account, or any portion thereof, either in a lump sum
or in a series of payments, but under the following conditions only:
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(a) the Federal tax statutes, regulations or interpretations are amended,
modified, or otherwise changed or affected in such a manner as to
adversely alter or modify the tax effect of the "deferred account" as
it is comprehended under the tax law and interpretations in effect for
deferred accounts as of the effective date of this Plan, or
(b) the deferred account holder suffers or incurs an event that would
qualify for a "withdrawal" of contributions that have not been
accumulated for two years without adverse consequences on the tax
status of a qualified profit-sharing or stock bonus plan under the
Federal tax laws applicable from time to time to such types of plans.
5.5 NON-DISQUALIFYING TERMINATION OF EMPLOYMENT. Except for Section 5.6
hereof, the only exceptions to the requirement of continuous employment during a
Performance Period for Performance Share earnout eligibility are termination of
a Participant's employment by reason of death (in which event the Performance
Shares may be transferable by will or the laws of descent and distribution only
to such Participant's beneficiary designated to receive the Performance Shares
or to the Participant's applicable legal representatives, heirs or legatees),
total and permanent disability, normal or late retirement or early retirement,
with the consent of the Plan Committee, or transfer of an executive in a
spin-off, with the consent of the Plan Committee, occurring during the
Performance Period applicable to the subject Performance share grant. In such
instance an earnout of the Performance Shares shall be made, as of the end of
the Performance Period, and 100% of the total Performance Shares that would have
been earned during the Performance Period shall be earned and paid out;
provided, however, in a spin-off situation the Plan Committee may set additional
conditions, such as, without limiting the generality of the foregoing,
continuous employment with the spin-off entity. If a Participant's termination
of employment does not meet the criteria set forth above, but the Participant
had at least 15 years of continuous employment with the Corporation or a
Subsidiary or any combination thereof, provided that if the person is not an
Executive Officer (as defined under the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder) of the Corporation at time
of termination such 15 years need not be continuous, the Plan Committee may
allow earn-outs of up to 100% of the total Performance Shares for the
Performance Period(s) in which the termination of employment occurred, subject
to any conditions that the Plan Committee shall determine.
5.6 CHANGE IN CONTROL. In the event of a Change in Control, all
outstanding Performance Shares granted under the Plan shall be proratably
payable ten days after the Change in Control; provided that no Performance Share
shall be payable to a Participant within six months after the Date of Grant.
The amount of Performance Shares payable shall be determined by multiplying 100%
of each Performance Share grant by a fraction, the numerator of which shall be
the number of months that have elapsed in the applicable Performance Period and
the denominator of which shall be forty-eight.
ARTICLE VI
STOCK OPTIONS
6.1 NON-QUALIFIED OPTION. Non-Qualified Options granted under the Plan
are not intended to be Incentive Stock Options under the provisions of Section
422 of the Code. The Non-Qualified
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Options shall be evidenced by Non-Qualified Option agreements in such form and
not inconsistent with the Plan as the Plan Committee shall in its sole
discretion approve from time to time, which agreements shall specify the number
of shares to which they pertain and the purchase price of such shares and shall,
but without limitation, contain in substance the following terms and conditions:
(a) OPTION PERIOD. Each option granted shall expire and all rights to
purchase shares thereunder shall cease ten years and one day after the
Date of Grant of the Stock Option or on such date prior thereto as may
be fixed by the Plan Committee, or on such date prior thereto as is
provided by this Plan in the event of termination of employment or
death or reorganization pursuant to Section 11.8(b) hereof. No option
shall permit the purchase of any shares thereunder during the first
year after the Date of Grant of such option, except as provided in
Section 6.3 hereof.
(b) TRANSFERABILITY AND TERMINATION OF OPTIONS. During the lifetime of an
individual to whom an option is granted, the option may be exercised
only by such individual and only while such individual is an employee
of the Company or a Subsidiary and only if the Participant has been
continuously so employed by any one or combination thereof since the
Date of Grant of the option, provided, however, that if the employment
of such Participant by the Company or a Subsidiary Corporation
terminates, the option may additionally be exercised but only as
follows and in no event later than ten years and one day after the
Date of Grant of the Stock Option, except as set forth in (ii) below:
(i) if a Participant's termination of employment occurs by
reason of normal or late retirement under any retirement
plan of the Company or its Subsidiaries or, with the consent
of the Plan Committee, by reason of early retirement under
any retirement plan of the Company or its Subsidiaries, or,
with the consent of the Plan Committee, the transfer of an
executive in a spin-off, or by reason of total and permanent
disability, as determined by the Plan Committee, without
retirement, then within five years after the date of such
termination of employment. During the five-year period the
right to exercise options, if any, accruing in installments,
shall continue; provided, however, in a spin-off situation
the Plan Committee may set additional conditions, such as,
without limiting the generality of the foregoing, continuous
employment with the spin-off entity.
(ii) if a Participant's termination of employment occurs by
reason of death, then within five years after the date of
death or the life of the option, whichever is less, but in
no event less than one year after the date of death, during
which time installments shall continue to accrue.
(iii) if a Participant's termination of employment occurs for any
reason other than as specified in Section 6.1(b)(i) or (ii)
hereof, the Participant has been continuously employed by
the Company or a Subsidiary or any combination for more than
15 years, provided that if the person is not an Executive
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Officer (as defined under the Securities Exchange Act of
1934, as amended, and the regulations promulgated
thereunder) of the Corporation at the time of termination
such 15 years need not be continuous, and if the Plan
Committee so approves, then within a period of up to five
years after the date of termination of employment. During
the period the right to exercise options, if any, accruing
in installments shall continue; provided, however, the Plan
Committee may set additional conditions.
(iv) if a Participant's termination of employment occurs for any
reason other than as specified in Section 6.1(b)(i) or (ii)
hereof, the Plan Committee has not approved an extension
pursuant to Section 6.1(b)(iii) and Participant's
termination of employment is not occasioned by the
commission of a dishonest or other illegal act, then, but
only with respect to installments that have as of the date
of termination already accrued, within ninety days after the
date of such termination of employment except in the case of
Participants who would at the time be subject to the
provisions of Section 16(b) of the Securities Exchange Act
of 1934, in which instance the period of exercise shall be
two hundred ten days after termination. Those Participants
terminated because of the commission of a dishonest or other
illegal act shall have no additional period after
termination of employment in which to exercise their
options. Absence on a leave of absence approved by the Plan
Committee shall not be deemed a termination or interruption
of continuous employment for the purposes of the Plan.
(v) Rights accruing to a Participant under the aforesaid
Subsections (b)(i), (b)(iii) and (b)(iv) may, upon the death
of a Participant subsequent to his/her termination of
employment, be exercised or perfected by his/her duly
designated beneficiary or otherwise by his/her applicable
legal representatives, heirs or legatees to the extent
vested in and unexercised or perfected by the Participant at
the date of his/her death.
No option shall be assignable or transferable by the
individual to whom it is granted, except that it may be
transferable by will or the laws of descent and distribution
in accordance with the provisions of the Plan. An option,
if so transferable, may be exercised after the death of the
individual to whom it is granted only by such individual's
beneficiary designated to exercise the option or otherwise
by his/her applicable legal representatives, heirs or
legatees, and only within the specific time period set forth
above.
In no event whether by the Participant directly or by
his/her beneficiary or other representative shall any option
be exercisable at any time after its expiration date as
stated in the option agreement. When an option is no longer
exercisable it shall be deemed for all purposes and without
further act to have lapsed and terminated. The Plan
Committee may in its sole discretion, but shall not be
required to, determine, solely for the purposes of
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the Plan, that a Participant is permanently and totally
disabled and the acts and decisions of the Plan Committee
made in good faith in relation to any such determination
shall be conclusive upon all persons and interests affected
thereby.
(c) EXERCISE OF OPTIONS. An individual entitled to exercise an option
may, subject to its terms and conditions and the terms and conditions
of the Plan, exercise it in whole at any time, or in part from time to
time, by delivery to the Company at its principal office of written
notice of exercise, specifying the number of whole shares with respect
to which the option is being exercised. Before shares may be issued
payment must be made in full, in legal United States tender, in the
amount of the purchase price of the shares to be purchased at the time
and any amounts for withholding as provided in Section 11.9 hereof;
provided, however, in lieu of paying for the exercise price in cash as
described above, the individual may pay (subject to such conditions
and procedures as the Plan Committee may establish) all or part of
such exercise price by delivering owned and unencumbered shares of the
Company common stock having a Fair Market Value on the date of
exercise of the option equal to or less than the exercise price of the
options exercised, with cash, as set forth above, for the remainder,
if any, of the purchase price. Subject to rules established by the
Plan Committee, the withholdings required by Section 11.9 hereof may
be satisfied by the Company withholding shares of Company common stock
issued on exercise that have a Fair Market Value on the date of
exercise of the option equal to or less than the withholding required
by Section 11.9 hereof.
6.2 INCENTIVE STOCK OPTION. Incentive Stock Options granted under the
Plan are intended to be incentive stock options under Section 422 of the Code
and the Plan shall be administered, except with respect to the right to exercise
options after termination of employment, to qualify Incentive Stock Options
issued hereunder as incentive stock options under Section 422 of the Code. An
Incentive Stock Option shall not be granted to an employee who owns, or is
deemed under Section 424(d) of the Code to own, stock of the Company (or of any
parent or Subsidiary of the Company) possessing more than 10% of the total
combined voting power of all classes of stock therein. The aggregate Fair
Market Value (determined as of the time the option is granted) of the stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Participant during any calendar year (under all incentive stock option plans
of the Company or any parent or Subsidiary of the Company) shall not exceed
$100,000. The Incentive Stock Options shall be evidenced by Incentive Stock
Option Agreements in such form and not inconsistent with the Plan as the Plan
Committee shall in its sole discretion approve from time to time, which
agreements shall specify the number of shares to which they pertain and the
purchase price of such shares.
The terms and conditions set forth in Subsections (a) through (c) of
Section 6.1 hereof shall apply to an Incentive Stock Option; provided that the
term of the Incentive Stock Option shall not exceed ten years; and provided,
further, that in the event Section 6.1(b)(i) hereof is applicable, all
installments shall become immediately exercisable.
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6.3 CHANGE IN CONTROL. In the event of a Change in Control, all
outstanding options granted under the Plan shall accelerate and will be
exercisable in full for a period of two hundred ten (210) days after the Change
in Control; provided that no option shall be exercisable by a Participant (i)
within six months after the Date of Grant of the option or (ii) after the
termination date of the option.
ARTICLE VII
RESTRICTED STOCK
7.1 RESTRICTION PERIOD TO BE ESTABLISHED BY THE PLAN COMMITTEE. At the
time a Restricted Stock Award is made, the Plan Committee shall establish a
period of time (the "Restriction Period") applicable to such Award, which shall
be not less than three years. Each Restricted Stock Award may have a different
Restriction Period, at the discretion of the Plan Committee. Except as
permitted or pursuant to Sections 7.4, 7.5 or 11.8 hereof, the Restriction
Period applicable to a particular Restricted Stock Award shall not be changed.
7.2 OTHER TERMS AND CONDITIONS. Company common stock awarded pursuant to
a Restricted Stock Award shall be represented by a stock certificate registered
in the name of the Holder of such Restricted Stock Award. The Holder shall have
the right to enjoy all shareholder rights during the Restriction Period with the
exception that:
(i) The Holder shall not be entitled to delivery of the stock
certificate until the Restriction Period shall have expired.
(ii) The Company may either issue shares subject to such restrictive
legends and/or stop-transfer instructions as it deems appropriate
or provide for retention of custody of the Company common stock
during the Restriction Period.
(iii) The Holder may not sell, transfer, pledge, exchange, hypothecate
or otherwise dispose of the Company common stock during the
Restriction Period.
(iv) A breach of the terms and conditions established by the Plan
Committee pursuant to the Restricted Stock Award shall cause a
forfeiture of the Restricted Stock Award, and any dividends
withheld thereon.
(v) Dividends payable in cash or in shares of stock or otherwise may
be either currently paid or withheld by the Company for the
Holder's account. At the discretion of the Plan Committee,
interest may be paid on the amount of cash dividends withheld,
including cash dividends on stock dividends, at a rate and
subject to such terms as determined by the Plan Committee.
Provided, however, and the provisions of Section 7.4 to the contrary
notwithstanding, in lieu of the foregoing, the Plan Committee may provide that
no shares of common stock be issued until the Restriction Period is over and
further provide that the shares of common stock issued after the
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Restriction Period has been completed, be issued in escrow and/or be legended
and that the common stock be subject to restrictions including the forfeiture of
all or a part of the shares.
7.3 PAYMENT FOR RESTRICTED STOCK. A Holder shall not be required to make
any payment for Company common stock received pursuant to a Restricted Stock
Award, unless the Plan Committee requires payment for such stock in the
Restricted Stock Award.
7.4 FORFEITURE PROVISIONS. Subject to Section 7.5, in the event a Holder
terminates employment during a Restriction Period, a Restricted Stock Award will
be forfeited; provided, however, when the Plan Committee issues the Restricted
Stock Award, it may provide in the Restricted Stock Award agreement for
proration or full payout in the event of a termination of employment because of
normal or late retirement, early retirement or spin-off with the consent of the
Plan Committee, or death or total and permanent disability, as determined by the
Plan Committee, or termination of employment after 15 years of continuous
employment with the Corporation or a Subsidiary or any combination thereof,
provided that if the person is not an Executive Officer (as defined under the
Securities Exchange Act of 1934, as amended, and the regulations promulgated
thereunder) of the Corporation at the time of termination such 15 years need not
be continuous, subject to any other conditions the Plan Committee may determine.
7.5 CHANGE IN CONTROL. In the event of a Change in Control, all
outstanding Restricted Stock Awards granted under the Plan will be proratably
payable ten days after the Change in Control; provided that no Restricted Stock
Award shall be payable to a Participant within six months after the Date of
Grant. The amount of Company common stock payable shall be determined by
multiplying each Restricted Stock Award granted by a fraction, the numerator of
which shall be the number of months that have elapsed in the applicable
Restriction Period and the denominator of which shall be the number of months in
the Restriction Period.
ARTICLE VIII
SHARES OF STOCK SUBJECT TO THE PLAN
8.1 The total number of shares that may be available for issuance under
all Performance Shares, Stock Options and Restricted Stock Awards granted
pursuant to the Plan shall not exceed in the aggregate 18,600,000 shares of the
Company's $.3333 par value common stock. Shares covered by granted Performance
Shares which are not earned pursuant to any of the provisions of Article V
hereof, or Stock Options or Performance Shares or Restricted Stock Awards which
are forfeited for any reason or are not distributed or are covered by options
that lapse or are cancelled before exercise, shall (unless the Plan shall have
been terminated) again be available in the same relative amounts for other
Performance Share, Restricted Stock Award and Stock Option grants under the Plan
(except for shares for which cash equivalent payments are received by
Participants pursuant to the Plan), except that 660,825 shares for Stock
Options, Performance Shares or Restricted Stock Awards that were outstanding on
April 10, 1991 that are not earned or are forfeited for any reason or are not
distributed or lapse or are cancelled before exercise shall be available for
future grants and any additional shares for Stock Options, Performance Shares or
Restricted Stock Awards that were outstanding on April 10, 1991 that are not
earned or are forfeited for any reason or are not distributed or lapse or are
cancelled before exercise shall not be available for future Performance
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Shares, Restricted Stock Awards or Stock Option Grants. Such shares may be
authorized and unissued shares, or may be treasury shares held by the Company or
may be shares purchased or held by the Company or a Subsidiary for purposes of
the Plan, or any combination thereof.
ARTICLE IX
ADMINISTRATION OF THE PLAN
9.1 The Plan will be administered by a committee of the Board appointed
from time to time by the Board. Each member of the committee shall be a
"non-employee director" as that term is defined under Rule 16b-3, promulgated
under the Securities Exchange Act of 1934, as amended, or any successor statute
or regulation comprehending the same subject matter.
9.2 The Plan Committee shall have and exercise all of the powers and
responsibilities granted expressly or by implication to it by the provisions of
the Plan. Subject to and as limited by such provisions, the Plan Committee may
from time to time enact, amend and rescind such rules, regulations and
procedures with respect to the administration of the Plan as it deems
appropriate or convenient.
9.3 All questions arising under the Plan, any Incentive Stock Option,
Non-Qualified Stock Option, Performance Share or Restricted Stock Award
agreement, or any rule, regulation or procedure adopted by the Plan Committee
shall be determined by the Plan Committee, and its determination thereof shall
be conclusive and binding upon all parties.
9.4 Any action required or permitted to be taken by the Plan Committee
under the Plan shall require the affirmative vote of a majority of a quorum of
the members of the Plan Committee. A majority of all members of the Plan
Committee shall constitute a "quorum" for Plan Committee business. The Plan
Committee may act by written determination instead of by affirmative vote at a
meeting, provided that any written determination shall be signed by all members
of the Plan Committee, and any such written determination shall be as fully
effective as a majority vote of a quorum at a meeting.
ARTICLE X
REDUCTION IN AWARDS
10.1 Anything in this Plan to the contrary notwithstanding, the provisions
of this Article X shall apply to a Participant if Ernst & Young determines that
each of (a) and (b) below are applicable.
(a) Payments or distributions hereunder, determined without application of
this Article X, either alone or together with other payments in the
nature of compensation to the Participant which are contingent on a
change in the ownership or effective control of the Company, or in the
ownership of a substantial portion of the assets of the Company, or
otherwise (but after any elimination or reduction of such payments
under the terms of the Company's Income Continuance Policy Statement
or SMG Income Continuance Policy Statement), would result in any
portion of the payments
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hereunder being subject to an excise tax on excess parachute payments
imposed under Section 4999 of the Code.
(b) The excise tax imposed on the Participant under Section 4999 of the
Code on excess parachute payments, from whatever source, would result
in a lesser net aggregate present value of payments and distributions
to the Participant (after subtraction of the excise tax) than if
payments and distributions to the Participant were reduced to the
maximum amount that could be made without incurring the excise tax.
10.2 Under this Article X the payments and distributions under this Plan
shall be reduced (but not below zero) so that the present value of such payments
and distributions shall equal the Reduced Amount. The "Reduced Amount" (which
may be zero) shall be an amount expressed in present value which maximizes the
aggregate present value of payments and distributions under this Plan which can
be made without causing any such payment to be subject to the excise tax under
Section 4999 of the Code. The determinations and reductions under this
paragraph shall be made after eliminations or reductions, if any, have been made
under the Company's Income Continuance Policy Statement or SMG Income
Continuance Policy Statement.
10.3 If Ernst & Young determines that this Article X is applicable to a
Participant, it shall so advise the Plan Committee. The Plan Committee shall
then promptly give the Participant notice to that effect together with a copy of
the detailed calculation supporting such determination which shall include a
statement of the Reduced Amount. The Participant may then elect, in his/her
sole discretion, which and how much of the Stock Options, Restricted Stock
Awards and/or Performance Shares otherwise awarded under this Plan shall be
eliminated or reduced (as long as after such election the aggregate present
value of the remaining Stock Options, Restricted Stock Awards and/or Performance
Shares under this Plan equals the Reduced Amount), and shall advise the Plan
Committee in writing of his/her election within ten days of his/her receipt of
notice. If no such election is made by the Participant within such ten-day
period, the Plan Committee may elect which and how much of the Stock Options,
Restricted Stock Awards, and/or Performance Shares shall be eliminated or
reduced (as long as after such election their aggregate present value equals the
Reduced Amount) and shall notify the Participant promptly of such election. For
purposes of this Article X, present value shall be determined in accordance with
Section 280G of the Code. All the foregoing determinations made by Ernst &
Young under this Article X shall be made as promptly as practicable after it is
determined that parachute payments will be made to the Participant if an
elimination or reduction is not made. As promptly as practicable following the
election hereunder, the Company shall provide to or for the benefit of the
Participant such amounts and shares as are then due to the Participant under
this Plan and shall promptly provide to or for the benefit of the Participant in
the future such amounts and shares as become due to the Participant under this
Plan.
10.4 As a result of the uncertainty in the application of Section 280G of
the Code at the time of the initial determination by Ernst & Young hereunder, it
is possible that payments or distributions under this Plan will have been made
which should not have been made ("Overpayment") or that additional payments or
distributions which will have not been made could have been made
("Underpayment"), in each case, consistent with the calculation of the Reduced
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Amount hereunder. In the event that Ernst & Young, based upon the assertion of
a deficiency by the Internal Revenue Service against the Company or the
Participant which Ernst & Young believes has a high probability of success,
determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Participant which the Participant
shall repay together with interest at the applicable Federal rate provided for
in Section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant if and to the extent such payment would not reduce
the amount which is subject to the excise tax under Section 4999 of the Code.
In the event that Ernst & Young, based upon controlling precedent, determines
that an Underpayment has occurred, any such Underpayment shall be promptly paid
to or for the benefit of the Participant together with interest at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.
10.5 In making its determination under this Article X, the value of any
non-cash benefit shall be determined by Ernst & Young in accordance with the
principles of Section 280G(d)(3) of the Code.
10.6 All determinations made by Ernst & Young under this Article X shall
be binding upon the Company, the Plan Committee and the Participant.
ARTICLE XI
GENERAL PROVISIONS
11.1 AMENDMENT OR TERMINATION. The Board may at any time amend, suspend,
discontinue or terminate the Plan (including the making of any necessary
enabling, conforming and procedural amendments to the Plan to authorize and
implement the granting of qualified Stock Options or other income tax preferred
stock options which may be authorized by enactment of the United States Congress
and/or the Internal Revenue Service subsequent to the effective date of this
Plan); provided, however, that no amendment by the Board shall, without further
approval of the shareholders of the Company:
(a) except as provided at Section 2.17 hereof, increase the total number
of shares of Company common stock which may be made subject to the
Plan; or
(b) except as provided at Section 2.17 hereof, change the purchase price
of Company common stock under the Plan; or
(c) materially modify the class of employees that are eligible to receive
Stock Options and/or Performance Shares and/or Restricted Stock Awards
pursuant to the Plan.
No action taken pursuant to this Section 11.1 of the Plan shall, without the
consent of a Participant, alter or impair any Performance Share(s) or Stock
Option(s) or Restricted Stock Award(s) which have been previously granted to a
Participant.
11.2 NON-ALIENATION OF RIGHTS AND BENEFITS. Except as expressly provided
herein, no right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge,
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encumbrance or charge and any attempt to anticipate, alienate, sell, assign,
pledge, encumber or charge the same shall be void. No right or benefit
hereunder shall in any manner be liable for or subject to the debts, contracts,
liabilities or torts of the person entitled to such right or benefit. If any
Participant or beneficiary hereunder should become bankrupt or attempt to
anticipate, alienate, sell, assign, pledge, encumber or charge any right or
benefit hereunder, then such right or benefit shall, in the sole discretion of
the Plan Committee, cease and in such event the Company may hold or apply the
same or any or no part thereof for the benefit of the Participant or
beneficiary, his/her spouse, children or other dependents or any of them in any
such manner and in such proportion as the Plan Committee in its sole discretion
may deem proper.
11.3 NO RIGHTS AS SHAREHOLDER. The granting of Performance Share(s)
and/or Stock Option(s) and/or Restricted Stock Award(s) under the Plan shall not
entitle a Participant or any other person succeeding to his/her rights, to any
dividend, voting or other right as a shareholder of the Company unless and until
the issuance of a stock certificate to the Participant or such other person
pursuant to the provisions of the Plan and then only subsequent to the date of
issuance thereof.
11.4 LIMITATION OF LIABILITY OR OBLIGATION OF THE COMPANY. As
illustrative only of the limitations of liability or obligation of the Company
and not intended to be exhaustive thereof, nothing in the Plan shall be
construed:
(a) to give any employee of the Company any right to be granted any Stock
Option and/or Performance Share and/or Restricted Stock Award other
than at the sole discretion of the Plan Committee;
(b) to give any Participant any rights whatsoever with respect to shares
of the Company's $.3333 par value common stock except as specifically
provided in the Plan;
(c) to limit in any way the right of the Company or any Subsidiary to
terminate, change or modify, with or without cause, the employment of
any Participant at any time; or
(d) to be evidence of any agreement or understanding, express or implied,
that the Company or any Subsidiary will employ any Participant in any
particular position at any particular rate of compensation or for any
particular period of time.
11.5 GOVERNMENT REGULATIONS. Notwithstanding any other provisions of the
Plan seemingly to the contrary, the obligation of the Company with respect to
Performance Shares, Stock Options or Restricted Stock Awards granted under the
Plan shall at all times be subject to any and all applicable laws, rules, and
regulations and such approvals by any government agencies as may be required or
deemed by the Board or Plan Committee as reasonably necessary or appropriate for
the protection of the Company.
In connection with any sale, issuance or transfer hereunder, the
Participant acquiring the shares shall, if requested by the Company give
assurances satisfactory to counsel of the Company
17
<PAGE>
that the shares are being acquired for investment and not with a view to resale
or distribution thereof and assurances in respect of such other matters as the
Company may deem desirable to assure compliance with all applicable legal
requirements.
11.6 NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board nor the submission of the Plan to shareholders of the Company for approval
shall be construed as creating any limitations on the power or authority of the
Board to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board may deem necessary or desirable or
preclude or limit the continuation of any other plan, practice or arrangement
for the payment of compensation or fringe benefits to employees generally, or to
any class or group of employees, which the Company or any Subsidiary now has
lawfully put into effect, including, without limitation, any retirement,
pension, savings, profit sharing or stock purchase plan, insurance, death and
disability benefits, and executive short term incentive plans.
11.7 EFFECTIVE DATE. Subject to the approval of this restated Plan by the
holders of a majority of the voting power of the shares present and entitled to
vote at the Company's Annual Meeting of Shareholders to be held May 21, 1997 and
any necessary approval being obtained from any department, board or agency of
the United States or states having jurisdiction, the Plan shall be effective as
of May 21, 1997.
11.8 REORGANIZATION. In case the Company is merged or consolidated with
another corporation, or in case the property or stock of the Company is acquired
by another corporation, or in case of a separation, reorganization or
liquidation of the Company, the Plan Committee or a comparable committee of any
corporation assuming the obligations of the Company hereunder, shall either:
(a) make appropriate provision for the protection of any outstanding
Performance Shares, Stock Options and Restricted Stock Awards granted
thereunder by the substitution on an equitable basis of appropriate
stock of the Company, or of the merged, consolidated or otherwise
reorganized corporation which will be issuable in respect to the
shares of the Company's $.3333 par value common stock. Stock to be
issued pursuant to such Performance Shares shall be limited so that
the excess of the aggregate fair market value of the shares subject to
the Performance Shares immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate
fair market value of the shares subject to such Performance Shares
immediately before such substitution over the purchase price thereof;
or
(b) upon written notice to the Participant, provide that all Performance
Shares granted to the Participant are deemed earned, that the
Restriction Period of all Restricted Stock Awards has been eliminated
and that all outstanding Stock Options shall accelerate and become
exercisable in full but that all outstanding Stock Options, whether or
not exercisable prior to such acceleration, must be exercised within
not less than sixty days of the date of such notice or they will be
terminated. In any
18
<PAGE>
such case the Plan Committee may, in its discretion, extend the
sixty-day exercise period.
11.9 WITHHOLDING TAXES, ETC. All distributions under the Plan shall be
subject to any required withholding taxes and other withholdings and, in case of
distributions in Company common stock, the Participant or other recipient may,
as a condition precedent to the delivery of the common stock, be required to pay
to his/her participating employer the excess, if any, of the amount of required
withholding over the withholdings, if any, from any distributions in cash under
the Plan. No distribution under the Plan shall be made in fractional shares of
the Company's common stock, but the proportional market value thereof shall be
paid in cash.
11.10 GENERAL RESTRICTION. Each Performance Share, Stock Option and
Restricted Stock Award shall be subject to the requirement that, if at any time
the Board shall determine, in its discretion, that the listing, registration or
qualification of the shares subject to such option and/or right upon any
securities exchange or under any state or Federal Law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with the granting of such Performance Share or
Stock Option or Restricted Stock Award or the issue or purchase of shares
respectively thereunder, such Performance Share or Stock Option or Restricted
Stock Award may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board.
11.11 USE OF PROCEEDS. The proceeds derived from the sale of the stock
pursuant to Stock Options or Restricted Stock Awards granted under the Plan
shall constitute general funds of the Company.
11.12 HEADINGS. The headings of the Articles and their subparts in this
Plan are for convenience of reading only and are not meant to be of substantive
significance and shall not add to or detract from the meaning of such Article or
subpart to which it refers.
19
<PAGE>
EXHIBIT (11)
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF PER SHARE EARNINGS
(In Millions, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------
AUGUST 2, 1997 August 3, 1996
------------------- -------------------
EARNINGS SHARES Earnings Shares
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Primary Computations
- --------------------
Earnings before extraordinary charge . . . . $ 141 $ 101
Extraordinary charge, net of tax . . . . . . (11) -
-------- ---------
Net earnings.. . . . . . . . . . . . . . . . $ 130 $ 101
-------- ---------
-------- ---------
Less: Dividend requirements on ESOP
preferred shares, net of tax benefit on
unallocated shares . . . . . . . . . . . . (5) (5)
-------- ---------
Adjusted net earnings. . . . . . . . . . . . $ 125 $ 96
-------- ---------
-------- ---------
Average common shares outstanding. . . . . . 217.9 216.6
Average number of common share equivalents:
Stock options. . . . . . . . . . . . . . . 2.1 1.2
Performance shares.. . . . . . . . . . . . 0.7 0.9
----- -----
Adjusted common equivalent shares
outstanding-primary. . . . . . . . . . . . 220.7 218.7
----- -----
----- -----
Primary earnings per share before
extraordinary charge . . . . . . . . . . . $ 0.61 $ 0.44
Extraordinary charge.. . . . . . . . . . . . (0.05) -
-------- ---------
PRIMARY EARNINGS PER SHARE . . . . . . . . . $ 0.56 $ 0.44
-------- ---------
-------- ---------
Fully Diluted Computations
- --------------------------
Earnings before extraordinary charge . . . . $ 141 $ 101
Extraordinary charge, net of tax . . . . . . (11) -
-------- ---------
Net earnings.. . . . . . . . . . . . . . . . $ 130 $ 101
-------- ---------
-------- ---------
Less: Earnings impact of assumed ESOP
preferred share conversion, net of tax benefit
on unallocated shares. . . . . . . . . . . (4) (4)
-------- ---------
Adjusted net earnings. . . . . . . . . . . . $ 126 $ 97
-------- ---------
-------- ---------
Average common and common equivalent
shares-primary.. . . . . . . . . . . . . . 220.7 218.7
Additional common share equivalents attributable
to applications of the treasury stock method 0.7 -
Assumed conversion of ESOP preferred shares. 11.2 11.8
----- -----
Adjusted common equivalent shares
outstanding-fully diluted. . . . . . . . . 232.6 230.5
----- -----
----- -----
Fully diluted earnings per share before
extraordinary charge . . . . . . . . . . . $ 0.59 $ 0.42
Extraordinary charge.. . . . . . . . . . . . (0.05) -
-------- ---------
FULLY DILUTED EARNINGS PER SHARE . . . . . . $ 0.54 $ 0.42
-------- ---------
-------- ---------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Twelve Months Ended
------------------------------------ ------------------------------------
AUGUST 2, 1997 August 3, 1996 AUGUST 2, 1997 August 3, 1996
---------------- ---------------- ---------------- ----------------
EARNINGS SHARES Earnings Shares EARNINGS SHARES Earnings Shares
-------- ------ -------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Primary Computations
- --------------------
Earnings before extraordinary charge . . . . $ 267 $ 143 $ 598 $ 415
Extraordinary charge, net of tax . . . . . . (32) (1) (42) (1)
------- ------- ------- -------
Net earnings.. . . . . . . . . . . . . . . . $ 235 $ 142 $ 556 $ 414
------- ------- ------- -------
------- ------- ------- -------
Less: Dividend requirements on ESOP
preferred shares, net of tax benefit on
unallocated shares . . . . . . . . . . . . (10) (10) (21) (20)
------- ------- ------- -------
Adjusted net earnings. . . . . . . . . . . . $ 225 $ 132 $ 535 $ 394
------- ------- ------- -------
------- ------- ------- -------
Average common shares outstanding. . . . . . 217.6 216.3 217.3 216.0
Average number of common share equivalents:
Stock options. . . . . . . . . . . . . . . 1.9 1.0 1.6 0.7
Performance shares.. . . . . . . . . . . . 0.7 0.9 0.8 0.9
----- ----- ----- -----
Adjusted common equivalent shares
outstanding-primary. . . . . . . . . . . . 220.2 218.2 219.7 217.6
----- ----- ----- -----
----- ----- ----- -----
Primary earnings per share before
extraordinary charge . . . . . . . . . . . $ 1.17 $ 0.60 $ 2.63 $ 1.81
Extraordinary charge.. . . . . . . . . . . . (0.15) - (0.20) -
------- ------- ------- -------
PRIMARY EARNINGS PER SHARE . . . . . . . . . $ 1.02 $ 0.60 $ 2.43 $ 1.81
------- ------- ------- -------
------- ------- ------- -------
Fully Diluted Computations
- --------------------------
Earnings before extraordinary charge . . . . $ 267 $ 143 $ 598 $ 415
Extraordinary charge, net of tax . . . . . . (32) (1) (42) (1)
------- ------- ------- -------
Net earnings.. . . . . . . . . . . . . . . . $ 235 $ 142 $ 556 $ 414
------- ------- ------- -------
------- ------- ------- -------
Less: Earnings impact of assumed ESOP
preferred share conversion, net of
tax benefit on unallocated shares. . . . . (7) (7) (14) (14)
------- ------- ------- -------
Adjusted net earnings. . . . . . . . . . . . $ 228 $ 135 $ 542 $ 400
------- ------- ------- -------
------- ------- ------- -------
Average common and common equivalent
shares-primary.. . . . . . . . . . . . . . 220.2 218.2 219.7 217.6
Additional common share equivalents
attributable to applications of the
treasury stock method. . . . . . . . . . . 0.7 0.3 0.2 -
Assumed conversion of ESOP preferred shares. 11.4 11.9 11.5 12.1
----- ----- ----- -----
Adjusted common equivalent shares
outstanding-fully diluted. . . . . . . . . 232.3 230.4 231.4 229.7
----- ----- ----- -----
----- ----- ----- -----
Fully diluted earnings per share before
extraordinary charge . . . . . . . . . . . $ 1.12 $ 0.59 $ 2.53 $ 1.74
Extraordinary charge . . . . . . . . . . . . (0.14) - (0.19) -
------- ------- ------- -------
FULLY DILUTED EARNINGS PER SHARE . . . . . . $ 0.98 $ 0.59 $ 2.34 $ 1.74
------- ------- ------- -------
------- ------- ------- -------
</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 FOR THE
SIX MONTHS ENDED AUGUST 2, 1997 AND AUGUST 3, 1996
AND FOR THE FIVE YEARS ENDED FEBRUARY 1, 1997
(Millions of Dollars)
<TABLE>
<CAPTION>
Six Months Ended Fiscal Year Ended
---------------------- ------------------------------------------------
AUGUST 2, August 3, FEB. 1, Feb 3, Jan. 28, Jan. 29, Jan. 30,
1997 1996 1997 1996 1995 1994 1993
---------- --------- ------- ------ -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES:
Earnings:
Consolidated net earnings before
extraordinary charge. . . . . . . . . . . $ 267 $ 143 $ 474 $ 311 $ 434 $ 375 $ 383
Income taxes. . . . . . . . . . . . . . . . 174 94 309 190 280 232 228
------ ------ ------- ------- ------- ------- -------
Total earnings before
extraordinary charge. . . . . . . . . . 441 237 783 501 714 607 611
------ ------ ------- ------- ------- ------- -------
Fixed charges:
Interest expense. . . . . . . . . . . . . . 224 232 464 461 439 459 454
Interest portion of rental expense. . . . . 29 29 59 59 56 45 43
------ ------ ------- ------- ------- ------- -------
Total fixed charges.. . . . . . . . . . . 253 261 523 520 495 504 497
------ ------ ------- ------- ------- ------- -------
Less:
Capitalized interest. . . . . . . . . . . . (8) (10) (16) (14) (7) (5) (6)
------ ------ ------- ------- ------- ------- -------
Fixed charges in earnings.. . . . . . . . 245 251 507 506 488 499 491
------ ------ ------- ------- ------- ------- -------
Earnings available for fixed charges . . . . $ 686 $ 487 $ 1,290 $ 1,007 $ 1,202 $ 1,106 $ 1,102
------ ------ ------- ------- ------- ------- -------
------ ------ ------- ------- ------- ------- -------
Ratio of earnings before extraordinary charge
to fixed charges. . . . . . . . . . . . 2.71 1.86 2.46 1.94 2.43 2.19 2.22
------ ------ ------- ------- ------- ------- -------
------ ------ ------- ------- ------- ------- -------
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS:
Total fixed charges, as above. . . . . . . . $ 253 $ 261 $ 523 $ 520 $ 495 $ 504 $ 497
Dividends on preferred stock
(pre-tax basis) . . . . . . . . . . . . . . 17 18 37 37 39 39 39
------ ------ ------- ------- ------- ------- -------
Total fixed charges and preferred. . . .
stock dividends. . . . . . . . . . . . 270 279 560 557 534 543 536
------ ------ ------- ------- ------- ------- -------
Earnings available for fixed charges
and preferred stock dividends . . . . . . . $ 686 $ 487 $ 1,290 $ 1,007 $ 1,202 $ 1,106 $ 1,102
------ ------ ------- ------- ------- ------- -------
------ ------ ------- ------- ------- ------- -------
Ratio of earnings before extraordinary
charge to fixed charges and preferred
stock dividends . . . . . . . . . . . . . . 2.54 1.74 2.30 1.81 2.25 2.04 2.06
------ ------ ------- ------- ------- ------- -------
------ ------ ------- ------- ------- ------- -------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DAYTON
HUDSON CORPORATION'S FORM 10Q FOR THE SECOND QUARTER ENDED AUGUST 2, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> AUG-02-1997
<CASH> 216
<SECURITIES> 0
<RECEIVABLES> 1686
<ALLOWANCES> 135
<INVENTORY> 3363
<CURRENT-ASSETS> 5539
<PP&E> 10920
<DEPRECIATION> 3171
<TOTAL-ASSETS> 13775
<CURRENT-LIABILITIES> 4047
<BONDS> 5072
34
0
<COMMON> 73
<OTHER-SE> 3913
<TOTAL-LIABILITY-AND-EQUITY> 13775
<SALES> 12182
<TOTAL-REVENUES> 12182
<CGS> 8839
<TOTAL-COSTS> 8839
<OTHER-EXPENSES> 2623
<LOSS-PROVISION> 65
<INTEREST-EXPENSE> 214
<INCOME-PRETAX> 441
<INCOME-TAX> 174
<INCOME-CONTINUING> 267
<DISCONTINUED> 0
<EXTRAORDINARY> 32
<CHANGES> 0
<NET-INCOME> 235
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 0.98
</TABLE>
