<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 May 2, 1998
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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
- --------
(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 May 2, 1998 was
439,069,095.
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NO.
<S> <C>
PART I FINANCIAL INFORMATION:
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Results of Operations for the Three Months
and Twelve Months ended May 2, 1998 and May 3, 1997 1
Condensed Consolidated Statements of Financial Position at May 2,
1998, January 31, 1998 and May 3, 1997 2
Condensed Consolidated Statements of Cash Flows for the Three
Months ended May 2, 1998 and May 3, 1997 3
Notes to Condensed Consolidated Financial Statements 4-6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND
FINANCIAL CONDITION 7-11
PART II OTHER INFORMATION:
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 13
Signatures 14
Exhibit Index 15
</TABLE>
<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 Twelve Months Ended
- ------------------------------------------------------------------------------------------------------------------------
MAY 2, May 3, MAY 2, May 3,
(Unaudited) 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $6,468 $5,889 $28,336 $25,879
COSTS AND EXPENSES:
Cost of retail sales, buying and occupancy 4,727 4,253 20,794 18,932
Selling, publicity and administrative 1,074 1,034 4,571 4,340
Depreciation and amortization 184 170 705 663
Interest expense, net 96 107 408 440
Taxes other than income taxes 122 117 475 450
Real estate repositioning charge - - - 134
- ------------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 6,203 5,681 26,953 24,959
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EARNINGS BEFORE INCOME TAXES AND EXTRAORDINARY CHARGES 265 208 1,383 920
Provision for Income Taxes 105 82 546 363
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NET EARNINGS BEFORE EXTRAORDINARY CHARGES 160 126 837 557
Extraordinary Charges from Purchase and Redemption of
Debt, Net of Tax 2 21 32 31
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NET EARNINGS $ 158 $ 105 $ 805 $ 526
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BASIC EARNINGS PER SHARE:
Earnings Before Extraordinary Charges $ .36 $ .28 $ 1.87 $ 1.24
Extraordinary Charges .01 .05 .08 .07
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BASIC EARNINGS PER SHARE $ .35 $ .23 $ 1.79 $ 1.17
- ------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE:
Earnings Before Extraordinary Charges $ .34 $ .27 $ 1.77 $ 1.18
Extraordinary Charges .01 .05 .07 .07
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DILUTED EARNINGS PER SHARE $ .33 $ .22 $ 1.70 $ 1.11
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS DECLARED PER COMMON SHARE $ .09 $ .08 $ .34 $ .32
AVERAGE COMMON SHARES OUTSTANDING (Millions):
Basic 438.6 434.8 437.1 433.9
Diluted 466.6 462.4 464.7 461.6
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
1
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS Dayton Hudson Corporation
OF FINANCIAL POSITION and Subsidiaries
<TABLE>
<CAPTION>
MAY 2, January 31, May 3,
(Millions of Dollars) 1998 1998* 1997
- -----------------------------------------------------------------------------------------------
ASSETS (UNAUDITED) (Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 249 $ 211 $ 257
Retained securitized receivables 1,351 1,555 1,547
Merchandise inventories 3,569 3,251 3,330
Other 623 544 391
- -----------------------------------------------------------------------------------------------
Total Current Assets 5,792 5,561 5,525
PROPERTY AND EQUIPMENT 11,847 11,513 10,593
Accumulated depreciation (3,527) (3,388) (3,042)
------ ------ ------
Property and Equipment, net 8,320 8,125 7,551
OTHER 608 505 491
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TOTAL ASSETS $14,720 $14,191 $13,567
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- -----------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 2,723 $ 2,727 $ 2,356
Current portion of long-term debt and notes payable 538 273 338
Other 1,347 1,556 1,329
- -----------------------------------------------------------------------------------------------
Total Current Liabilities 4,608 4,556 4,023
LONG-TERM DEBT 4,760 4,425 5,000
DEFERRED INCOME TAXES AND OTHER 731 720 623
CONVERTIBLE PREFERRED STOCK, NET 24 30 44
SHAREHOLDERS' INVESTMENT 4,597 4,460 3,877
- -----------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $14,720 $14,191 $13,567
- -----------------------------------------------------------------------------------------------
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COMMON SHARES OUTSTANDING (Millions) 439.1 437.8 435.3
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</TABLE>
* The January 31, 1998 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) Three Months Ended
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MAY 2, May 3,
(Unaudited) 1998 1997
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<S> <C> <C>
OPERATING ACTIVITIES
Net earnings before extraordinary charges $160 $126
Reconciliation to cash flow:
Depreciation and amortization 184 169
Deferred tax provision 44 (28)
Other non-cash items affecting earnings 11 (3)
Changes in operating accounts providing/(requiring) cash:
Retained securitized receivables 250 173
Merchandise inventories (291) (300)
Accounts payable (91) (188)
Accrued liabilities (120) 1
Income taxes payable (102) (9)
Other (118) 31
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Cash Flow Required by Operations (73) (28)
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INVESTING ACTIVITIES
Expenditures for property and equipment (378) (254)
Proceeds from disposals of property and equipment 22 102
Acquisition of subsidiaries, net (100) -
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Cash Flow Required for Investing Activities (456) (152)
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Net Financing Requirements (529) (180)
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FINANCING ACTIVITIES
Increase in notes payable, net 682 319
Reductions of long-term debt (85) (209)
Sale of subsidiary preferred stock - 160
Dividends paid (45) (40)
Other 15 6
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Cash Flow Provided by Financing Activities 567 236
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Net Increase in Cash and Cash Equivalents 38 56
Cash and Cash Equivalents at Beginning of Period 211 201
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $249 $257
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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
$163 million and $133 million during the first three months of 1998 and 1997,
respectively. Cash paid for interest (including interest capitalized) in the
first three months of 1998 and 1997 was $76 million and $89 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 1997
Annual Shareholders' Report throughout pages 25-36. As explained on page 35 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, quarterly earnings are not
necessarily indicative of the results that may be expected for the full fiscal
year.
INTERNAL USE SOFTWARE
We adopted Statement of Position (SOP) 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" in first quarter 1998.
The adoption resulted in expense savings which increased first quarter pre-tax
earnings by approximately $15 million ($.02 per share), which partially offset
our other systems expenses.
PER SHARE DATA
References to earnings per share relate to diluted earnings per share.
<TABLE>
<CAPTION>
Basic EPS Diluted EPS
- ----------------------------------------------------------------------------------------------------------------------------------
Three Months Twelve Months Three Months Twelve Months
Ended Ended Ended Ended
- ----------------------------------------------------------------------------------------------------------------------------------
MAY 2, May 3, MAY 2, May 3, MAY 2, May 3 MAY 2 May 3,
1998 1997 1998 1997 1998 1997, 1998, 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net earnings* $ 160 $ 126 $ 837 $ 557 $ 160 $ 126 $ 837 $ 557
Less: ESOP net earnings adjustment (5) (5) (20) (20) (3) (3) (13) (13)
- ----------------------------------------------------------------------------------------------------------------------------------
Adjusted net earnings* $ 155 $ 121 $ 817 $ 537 $ 157 $ 123 $ 824 $ 544
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares
outstanding 438.6 434.8 437.1 433.9 438.6 434.8 437.1 433.9
Performance shares - - - - 1.0 1.5 1.2 1.6
Stock options - - - - 5.5 3.3 4.4 2.8
Assumed conversion of ESOP
preferred shares - - - - 21.5 22.8 22.0 23.3
- ----------------------------------------------------------------------------------------------------------------------------------
Total common equivalent shares
outstanding 438.6 434.8 437.1 433.9 466.6 462.4 464.7 461.6
- ----------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share* $ .36 $ .28 $ 1.87 $ 1.24 $ .34 $ .27 $ 1.77 $ 1.18
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Before extraordinary charges
4
<PAGE>
LONG-TERM DEBT
During the first quarter, we repurchased approximately $12 million of
high-coupon debt for $15 million, resulting in an after-tax extraordinary charge
of $2 million ($.01 per share). The replacement of this debt with lower interest
rate financing is expected to result in future interest expense savings. The
debt repurchased had an average interest rate of 10 percent and an average
remaining life of approximately 12 years.
ACQUISITIONS
Effective February 1, 1998, we acquired The Associated Merchandising
Corporation, an international sourcing company for our three operating divisions
and other retailers. Effective April 15, 1998, we acquired a direct marketing
firm, Rivertown Trading Company. Both subsidiaries are included in the
consolidated financial statements. Their revenues and operating results are
included in "Corporate and other" and were immaterial in the quarter.
SEGMENT DISCLOSURES (millions of dollars)
Revenues by segment were as follows:
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
---------------------- ----------------------
MAY 2, May 3, MAY 2, May 3,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Target $4,807 $4,254 $20,921 $18,384
Mervyn's 890 946 4,171 4,348
DSD 726 689 3,199 3,147
Corporate and other 45 - 45 -
------- ------- ------- -------
Total revenues $6,468 $5,889 $28,336 $25,879
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
Pre-tax segment profit and reconciliation to pre-tax earnings were as follows:
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
---------------------- ----------------------
MAY 2, May 3, MAY 2, May 3,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Target $ 302 $ 252 $1,337 $1,166
Mervyn's 43 50 273 280
DSD 41 35 246 156
------- ------- ------- -------
Total Pre-tax Segment Profit 386 337 1,856 1,602
LIFO provision - - (6) (9)
Securitization adjustments:
Interest equivalent (12) (6) (39) (25)
SFAS 125 gain - 6 39 6
Interest expense (96) (107) (408) (440)
Real estate repositioning charge - - - (134)
Corporate and other (13) (22) (59) (80)
------- ------- ------- -------
Earnings before income taxes
and extraordinary charge $ 265 $ 208 $1,383 $ 920
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
5
<PAGE>
SUBSEQUENT EVENT
On May 28, 1998 we issued $200 million of long term debt maturing in 2010, and
puttable in June 2000. In addition, we sold to a third party the right, in June
2000, to call and remarket these securities to their final maturity.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 1998
ANALYSIS OF OPERATIONS
First quarter 1998 net earnings were $158 million, or $.33 per share, compared
with $105 million, or $.22 per share, for the same period last year. First
quarter 1998 net earnings included an extraordinary charge, net of tax, related
to the early extinguishment of debt of $2 million ($.01 per share). First
quarter 1997 net earnings included an extraordinary charge, net of tax, related
to the early extinguishment of debt of $21 million ($.05 per share) and a
pre-tax securitization gain of $6 million ($.01 per share). Excluding all
unusual items, first quarter earnings per share were $.34 in 1998 and $.26 in
1997. The improvement in first quarter net earnings was due to strong sales and
profit performance at Target and DSD.
REVENUES AND COMPARABLE-STORE SALES
Total revenues increased 9.8 percent to $6,468 million compared with $5,889
million for the same period a year ago. Total comparable-store sales (sales from
stores open longer than one year) increased 5.2 percent. Year-over-year change
in revenues and comparable-store sales by business segment was as follows :
<TABLE>
<CAPTION>
Three Months Percentage Change
-------------------------------------
Comparable-Store
Revenues Sales
------------ ------------------
<S> <C> <C>
Target 13.0% 5.9%
Mervyn's (5.9) 0.4
DSD 5.4 6.9
------------ ------------------
Total 9.8% 5.2%
------------ ------------------
------------ ------------------
</TABLE>
Target's revenue results reflect strong new and comparable-store sales growth,
while Mervyn's total revenue decrease reflects stores closed in 1997. DSD's
revenue and comparable-store sales results reflect continued improvement in
merchandise content and store productivity.
7
<PAGE>
PRE-TAX SEGMENT PROFIT
Pre-tax segment profit is first-in, first-out (FIFO) earnings from operations
before securitization effects, interest, corporate and other, and unusual items.
Our first quarter pre-tax segment profit increased 15 percent to $386 million
compared with $337 million for the same period a year ago. Year-over-year
pre-tax segment profit growth was as follows:
<TABLE>
<CAPTION>
Three Months Twelve Months
Percentage Change Percentage Change
----------------- -----------------
<S> <C> <C>
Target 20% 15%
Mervyn's (13) (4)
DSD 14 56
----- -----
Total Pre-tax Segment Profit 15% 15%
----- -----
----- -----
</TABLE>
TARGET'S first quarter pre-tax profit increased 20 percent to $302 million
compared with $252 million for the same period a year ago, reflecting
comparable-store sales growth of 5.9 percent, and operating expense rate
improvement. The operating expense rate favorability reflects strong sales
leveraging and benefits from Target's multi-year expense reduction effort. In
1998, Target's gross margin rate is expected to be essentially even with 1997.
Expense reduction will remain a priority; however, ongoing wage rate pressures
within our competitive markets may challenge our ability to fully realize our
planned savings of $60 to $70 million.
MERVYN'S first quarter pre-tax profit decreased 13 percent to $43 million
compared with $50 million for the same period a year ago, with comparable
store-sales growth of 0.4 percent. The gross margin rate declined primarily due
to higher markdowns while the operating expense rate improved modestly. Despite
lost revenue and profits from the stores closed in 1997, Mervyn's is expected to
achieve modest improvement in its 1998 profit margin rate through low
single-digit comparable-store sales increases. The operating expense rate is
expected to be essentially even with 1997.
DSD'S first quarter pre-tax profit increased 14 percent to $41 million compared
with $35 million for the same period a year ago, reflecting comparable-store
sales growth of 6.9 percent and operating expense rate improvement, primarily
due to increased store productivity. The gross margin rate was essentially even
with the prior year. In 1998, we expect continued growth in DSD's pre-tax profit
for the year, reflecting low-to-mid single digit comparable-store sales, and a
modest increase in the gross margin rate. We also expect DSD's operating expense
rate to be essentially unchanged from 1997.
8
<PAGE>
OTHER PERFORMANCE FACTORS
Our proprietary guest credit programs strategically support our core retail
operations and are an integral component of each business segment. As such,
credit contribution is reflected in each business segment's pre-tax profit. Net
of all expenses, including bad debt expense, pre-tax contribution from guest
credit increased over the prior year principally due to continued growth of the
Target guest card. We expect to grow guest credit's contribution in 1998 by
acquiring new accounts, refining guest loyalty programs and controlling bad debt
expense.
The last-in first-out (LIFO) provision, included in cost of retail sales, was
zero for both first quarter 1998 and 1997. The cumulative LIFO provision was $92
million at May 2, 1998 and January 31, 1998, and $86 million at May 3, 1997.
Our Consolidated Results of Operations include reductions of finance charge
revenues and bad debt expense, the net effect of which reduced earnings by $12
and $6 million during the first quarter of 1998 and 1997, respectively. These
amounts represent payments to holders of our sold securitized receivables and
are included in our pre-tax earnings reconciliation on page 5 as "interest
equivalent". Our current $800 million of sold securitized receivables will
result in approximately $12 million of interest equivalent in each quarter they
remain outstanding. For analytical purposes, management includes the interest
equivalent discussed above in interest expense.
In first quarter 1998, combined interest expense and interest equivalent was $5
million lower than 1997 due to a lower average portfolio rate. In first quarter
1997, combined interest expense and interest equivalent was $2 million lower
than 1996 due to lower average funded balances. For the balance of the year,
combined interest expense and interest equivalent is expected to be similar to,
or slightly above, 1997 as continued portfolio rate favorability is expected to
substantially offset the effect of somewhat higher average funded balances.
The effective income tax rate was 39.5 percent in both 1998 and 1997.
9
<PAGE>
ANALYSIS OF FINANCIAL CONDITION
Our financial condition remains strong. We continue to fund the growth in our
business through a combination of retained earnings, debt, and sold securitized
receivables. The ratio of debt to total capitalization attributable to our
retail operations was 49 percent at the end of first quarter 1998, compared with
52 percent a year ago and 45 percent at year end. Due to the seasonality of
our business, quarterly comparisons will fluctuate, but we expect our debt ratio
to continue to be below last year for the balance of 1998.
At May 2, 1998, working capital was $1,184 million, down 21 percent compared
with a year ago. Retained securitized receivables declined 13 percent from year
end, reflecting a typical reduction from seasonally high levels. Retained
securitized receivables also decreased 13 percent from first quarter last year,
reflecting $400 million of securitized receivables sold in third quarter 1997.
Compared with last year, merchandise inventories increased approximately $239
million, or 7 percent, as a result of new store growth at Target, partially
offset by good inventory control at all divisions. The inventory growth was
more than fully funded by a $367 million, or 16 percent, increase in accounts
payable.
Capital expenditures for the first three months of 1998 were $378 million,
compared with $254 million for the same period a year ago. Approximately 86
percent of the current year expenditures were made by Target, 8 percent by
Mervyn's and 6 percent by DSD.
STORE DATA
During the quarter, we opened 11 net new Target stores. At May 2, 1998, Target
operated 807 stores in 39 states, Mervyn's operated 269 stores in 14 states and
DSD operated 65 stores in nine states.
Retail square footage was as follows:
<TABLE>
<CAPTION>
(In thousands, reflects total square feet, MAY 2, January 31, May 3,
less office, warehouse and vacant space) 1998 1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Target 88,795 87,158 81,353
Mervyn's 21,810 21,810 22,424
DSD 14,090 14,090 13,995
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Total Retail Square Footage 124,695 123,058 117,772
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
FORWARD-LOOKING STATEMENTS
The preceding Management's Discussion and Analysis contains forward-looking
statements regarding the Company's performance, liquidity and the adequacy of
its capital resources. Those statements are based on management's current
assumptions and expectations and are subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected. As a
result, the Company cautions that the forward-looking statements are qualified
by the risks of increased competition, shifting consumer demand, changing
consumer credit markets and general economic conditions, hiring and retaining
effective team members, sourcing merchandise from domestic and international
vendors, preparing for the impact of year 2000, and other risks and
uncertainties. As a result, while management believes that there is a
reasonable basis for the forward-looking statements, undue reliance should not
be placed on those statements. Readers are encouraged to review Exhibit (99)C.
attached to the Company's Form 10-K Report for the year ended January 31, 1998
which contains additional important factors that may cause actual results to
differ materially from those predicted in the forward-looking statements.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) The Company held its Annual Shareholders' Meeting on May 20, 1998.
c) (1). The shareholders voted for four director nominees for
three-year terms. The vote was as follows:
<TABLE>
<CAPTION>
Name of Candidate For Withheld
----------------- ----------- ---------
<S> <C> <C>
Michele J. Hooper 199,950,008 2,166,767
Susan A. McLaughlin 199,972,652 2,144,123
Anne M. Mulcahy 199,953,234 2,163,541
Stephen W. Sanger 199,971,730 2,145,045
</TABLE>
There were no abstentions and no broker non-votes.
(2). The shareholders voted to approve the appointment of Ernst &
Young LLP as independent auditors of the Corporation for
fiscal year 1998. The vote was 201,491,513 for, 236,586
against and 388,676 abstentions. There were no broker
non-votes.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
(2). Not applicable
(3)A. Restated Articles of Incorporation (as amended April 30,
1998).
(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.
(11). Not applicable
(12). Statements re Computations of Ratios
(15). Not applicable
(18). Not applicable
(19). Not applicable
(22). Not applicable
(23). Not applicable
(24). Not applicable
(27). Financial Data Schedule
b) Reports on Form 8-K. Registrant did not file any reports on Form 8-K
during the quarter ended May 2, 1998.
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: June 11, 1998 By /s/ Douglas A. Scovanner
--------------------------
Douglas A. Scovanner
Senior Vice President and
Chief Financial Officer
Date: June 11, 1998 By /s/ J.A. Bogdan
--------------------------
JoAnn Bogdan
Controller and
Chief Accounting Officer
14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>
(3)A. Restated Articles of Incorporation (as amended April 30, 1998)
(12). Statements re Computations of Ratios
(27). Financial Data Schedule
</TABLE>
15
<PAGE>
Exhibit (3)A
RESTATED
ARTICLES OF INCORPORATION
OF
DAYTON HUDSON CORPORATION
(AS AMENDED THROUGH APRIL 30, 1998)
ARTICLE I
The name of the corporation is Dayton Hudson Corporation.
ARTICLE II
The location and post-office address of the registered office of the corporation
in the State of Minnesota is number 777 Nicollet Mall in the City of
Minneapolis, County of Hennepin.
ARTICLE III
The total authorized number of shares of the corporation is 3,005,000,000. The
shares are classified in two classes, consisting of 5,000,000 shares of
Preferred Stock of the par value of $0.01 per share and 3,000,000,000 shares of
Common Stock of the par value of $0.1667 per share.
The Board of Directors is authorized to establish one or more series of
Preferred Stock, setting forth the designation of each such series, and fixing
the relative rights and preferences of each such series.
Each holder of record of Common Stock shall be entitled to one vote for each
share of Common Stock held by such shareholder on every matter voted on at every
meeting of shareholders of the corporation. No holder of shares of stock of any
class or series shall be entitled to cumulate his/her votes in any election of
directors.
No holder of shares of stock of any class or series shall be entitled as such,
as a matter of right, to subscribe for or purchase any part of any new or
additional issue of shares of stock of any class or series whatsoever or of any
securities convertible into or exchangeable for any shares of stock of any class
or series whatsoever, whether now or hereafter authorized or issued for cash or
other consideration.
<PAGE>
ARTICLE IV
A. In addition to any affirmative vote required by law or these Articles of
Incorporation, and except as otherwise expressly provided in Section B of
this Article IV, a Business Combination (as hereinafter defined) shall
require the affirmative vote of not less than seventy-five percent (75%) of
the votes entitled to be cast by the holders of all then outstanding shares
of Voting Stock (as hereinafter defined), voting together as a single
class. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage or separate class
vote may be specified, by law or by any other provision of these Articles
of Incorporation or in any agreement with any national securities exchange
or otherwise.
B. The provisions of Section A of this Article IV shall not be applicable to
any particular Business Combination, and such Business Combination shall
require only such affirmative vote, if any, as is required by law or by any
other provision of these Articles of Incorporation or in any agreement with
any national securities exchange or otherwise, if the conditions specified
in either of the following Paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved by a majority of the
Continuing Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
a. The aggregate amount of cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of the
Business Combination of consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination shall be at least equal to the higher amount
determined under clauses (i) and (ii) below:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested
Shareholder (as hereinafter defined) for any share of
Common Stock in connection with the acquisition by the
Interested Shareholder of beneficial ownership of shares
of Common Stock (a) within the two-year period immediately
prior to the date of the first public announcement of the
proposed Business Combination (the "Announcement Date") or
(b) in the transaction in which it became an Interested
Shareholder, whichever is higher; and
2
<PAGE>
(ii) the fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (such latter
date being referred to herein as the "Determination
Date"), whichever is higher.
b. The aggregate amount of cash and the Fair Market Value as of the
date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders
of shares of any class or series of outstanding Capital Stock (as
hereinafter defined), other than Common Stock, shall be at least
equal to the highest amount determined under clauses (i), (ii)
and (iii) below:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested
Shareholder for any share of such class or series of
Capital Stock in connection with the acquisition by the
Interested Shareholder of beneficial ownership of shares
of such class or series of Capital Stock (a) within the
two-year period immediately prior to the Announcement Date
or (b) in the transaction in which it became an Interested
Shareholder, whichever is higher;
(ii) the Fair Market Value per share of such class or series of
Capital Stock on the Announcement Date or on the
Determination Date, whichever is higher; and
(iii) (if applicable) the highest preferential amount per share
to which the holders of shares of such class or series of
Capital Stock would be entitled in the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the corporation, regardless
of whether the Business Combination to be consummated
constitutes such an event.
The provisions of this Paragraph 2.b shall be required to be met
with respect to every class or series of outstanding Capital
Stock, whether or not the Interested Shareholder has previously
acquired beneficial ownership of any shares of a particular class
or series of Capital Stock.
c. The consideration to be received by holders of a particular class
or series of outstanding Capital Stock shall be in cash or in the
same
3
<PAGE>
form as previously has been paid by or on behalf of the
Interested Shareholder in connection with its direct or indirect
acquisition of beneficial ownership of shares of such class or
series of Capital Stock. If the consideration so paid for shares
of any class or series of Capital Stock varied as to form, the
form of consideration for such class or series of Capital Stock
shall be either cash or the form used to acquire beneficial
ownership of the largest number of shares of such class or series
of Capital Stock previously acquired by the Interested
Shareholder. The price determined in accordance with Paragraphs
2.a and 2.b of Section B of this Article IV shall be subject to
appropriate adjustment in the event of any stock dividend, stock
split, combination of shares or similar event.
d. After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business
Combination: (i) there shall have been no failure to declare and
pay at the regular date therefor any full quarterly dividends
(whether or not cumulative) payable in accordance with the terms
of any outstanding Capital Stock, except as approved by a
majority of the Continuing Directors; (ii) there shall have been
no reduction in the annual rate of dividends paid on the Common
Stock (except as necessary to reflect any stock dividend, stock
split, combination of shares or similar event), except as
approved by a majority of the Continuing Directors; (iii) there
shall have been an increase in the annual rate of dividends paid
on the Common Stock as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization or any similar transaction that has the effect of
reducing the number of outstanding shares of Common Stock, unless
the failure to increase such annual rate is approved by a
majority of the Continuing Directors; and (iv) except as approved
by a majority of the Continuing Directors, such Interested
Shareholder shall not have become the beneficial owner of any
additional shares of Capital Stock except as part of the
transaction that results in such Interested Shareholder becoming
an Interested Shareholder and except in a transaction that, after
giving effect thereto, would not result in any increase in the
Interested Shareholder's percentage beneficial ownership of any
class or series of Capital Stock.
e. After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received
the benefit, directly or indirectly (except proportionately as a
shareholder of the corporation), or any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax
4
<PAGE>
advantages provided by the corporation, whether in anticipation
of or in connection with such Business Combination or otherwise.
f. A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder
(the "Act") (or any subsequent provisions replacing such Act,
rules or regulations) shall be mailed to all shareholders of the
corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to the Act or
subsequent provisions). The proxy or information statement shall
contain on the first page thereof, in a prominent place, any
statement as to the advisability (or inadvisability) of the
Business Combination that a majority of the Continuing Directors
may choose to make and, if deemed advisable by a majority of the
Continuing Directors, the opinion of an investment banking firm
selected by a majority of the Continuing Directors as to the
fairness (or lack of fairness) of the terms of the Business
Combination from a financial point of view to the holders of the
outstanding shares of Capital Stock other than the Interested
Shareholder and its Affiliates (as hereinafter defined) or
Associates (as hereinafter defined).
g. Such Interested Shareholder shall not have made or caused to be
made any major change in the corporation's business or equity
capital structure without the approval of a majority of the
Continuing Directors.
C. For the purposes of this Article IV:
1. The term "Business Combination" shall mean:
a. any merger, consolidation or statutory exchange of shares of the
corporation or any Subsidiary (as hereinafter defined) with (i)
any Interested Shareholder or (ii) any other corporation (whether
or not itself an Interested Shareholder) which is or after such
merger, consolidation or statutory share exchange would be an
Affiliate or Associate of an Interested Shareholder, provided,
however, that the foregoing shall not include the merger of a
wholly-owned Subsidiary of the corporation into the corporation
or the merger of two or more wholly-owned Subsidiaries of the
corporation; or
b. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to
or with
5
<PAGE>
an Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder of any assets of the corporation or any
Subsidiary equal to or greater than ten percent (10%) of the book
value of the consolidated assets of the corporation; or
c. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to
or with the corporation or any Subsidiary of any assets of any
Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder equal to or greater than ten percent (10%)
of the book value of the consolidated assets of the corporation;
or
d. the issuance or transfer by the corporation or any Subsidiary (in
one transaction or a series of transactions) to any Interested
Shareholder or any Affiliate or Associate of any Interested
Shareholder of any securities of the corporation (except pursuant
to stock dividends, stock splits, or similar transactions which
would not have the effect, directly or indirectly, of increasing
the proportionate share of any class or series of Capital Stock,
or any securities convertible into Capital Stock or into equity
securities of any Subsidiary, that is beneficially owned by any
Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder) or of any securities of a Subsidiary
(except pursuant to a pro rata distribution to all holders of
Common Stock of the Corporation); or
e. the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by or on behalf of an
Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder; or
f. any transaction (whether or not with or otherwise involving an
Interested Shareholder) that has the effect, directly or
indirectly, of increasing the proportionate share of any class or
series of Capital Stock, or any securities convertible into
Capital Stock or into equity securities of any Subsidiary, that
is beneficially owned by any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder, including,
without limitation any reclassification of securities (including
any reverse stock split), or recapitalization of the corporation,
or any merger, consolidation or statutory exchange of shares of
the corporation with any of its Subsidiaries; or
6
<PAGE>
g. any agreement, contract or other arrangement or understanding
providing for any one or more of the actions specified in the
foregoing clauses (a) to (f).
2. The term "Capital Stock" shall mean all capital stock of the
corporation authorized to be issued from time to time under Article
III of these Articles of Incorporation. The term "Voting Stock" shall
mean all Capital Stock of the corporation entitled to vote generally
in the election of directors of the corporation.
3. The term "person" shall mean any individual, firm, corporation or
other entity and shall include any group comprised of any person and
any other person with whom such person or any Affiliate or Associate
of such person has any agreement, arrangement or understanding,
directly or indirectly, for the purpose of acquiring, holding, voting
or disposing of Capital Stock.
4. The term "Interested Shareholder" shall mean any person (other than
the corporation or any Subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit plan of the
corporation or any Subsidiary or any trustee of or fiduciary with
respect to any such plan when acting in such capacity) who (a) is the
beneficial owner of Voting Stock representing ten percent (10%) or
more of the votes entitled to be cast by the holders of all then
outstanding shares of Voting Stock; or (b) is an Affiliate or
Associate of the corporation and at any time within the two-year
period immediately prior to the date in question was the beneficial
owner of Voting Stock representing ten percent (10%) or more of the
votes entitled to be cast by the holders of all then outstanding
shares of Voting Stock; or (c) is an assignee of or has otherwise
succeeded to any shares of Voting Stock which were at any time within
the two-year period immediately prior to the date in question
beneficially owned by any Interested Shareholder, if such assignment
or succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
5. A person shall be a "beneficial owner" of any Capital Stock (a) which
such person or any of its Affiliates or Associates beneficially owns,
directly or indirectly; (b) which such person or any of its Affiliates
or Associates has, directly or indirectly, (i) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or (iii) the
right to dispose or direct the disposition of,
7
<PAGE>
pursuant to any agreement, arrangement or understanding; or (c) which
are beneficially owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Capital stock. For the
purpose of determining whether a person is an interested Shareholder
pursuant to Paragraph 4 of this Section C, the number of shares of
Capital Stock deemed to be outstanding shall include shares deemed
beneficially owned by such person through application of this
Paragraph 5, but shall not include any other shares of Capital Stock
that may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, exchange rights,
warrants or options, or otherwise.
6. The term "Affiliate", used to indicate a relationship with a specified
person, shall mean a person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under
common control with, such specified person. The term "Associate",
used to indicate a relationship with a specified person, shall mean
(a) any person (other than the corporation or a Subsidiary) of which
such specified person is an officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any
class of equity securities, (b) any trust or other estate in which
such specified person has a substantial beneficial interest or as to
which such specified person serves as trustee or in a similar
fiduciary capacity, (c) any relative or spouse of such specified
person or any relative of such spouse, who has the same home as such
specified person or who is a director or officer of the corporation or
any Subsidiary, and (d) any person who is a director or officer of
such specified person or any of its parents or subsidiaries (other
than the corporation or a Subsidiary).
7. The term "Subsidiary" shall mean any corporation of which a majority
of any class of equity security is beneficially owned, directly or
indirectly, by the corporation; provided, however, that for the
purposes of Paragraph 4 of this Section C, the term "Subsidiary" shall
mean only a corporation of which a majority of each class of equity
security is beneficially owned, directly or indirectly, by the
corporation.
8. The term "Continuing Director" shall mean any member of the Board of
Directors of the corporation, while such person is a member of the
Board of Directors, who was a member of the Board of Directors prior
to the time that the Interested Shareholder involved in the Business
Combination in question became an Interested Shareholder, and any
member of the Board of Directors, while such person is a member of the
Board of Directors, whose election, or nomination for election by the
corporation's shareholders, was approved by a vote of a majority of
the Continuing
8
<PAGE>
Directors; provided, however, that in no event shall an Interested
Shareholder involved in the Business Combination in question or any
Affiliate, Associate or representative of such Interested Shareholder,
be deemed to be a Continuing Director.
9. The term "Fair Market Value" shall mean (a) in the case of cash, the
amount of such cash; (b) in the case of stock, the highest closing
sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the
Composite Tape on the New York Stock Exchange, or, if such stock is
not listed on such Exchange, on the principal United States securities
exchange registered under the Act on which such stock is listed, or,
if such stock is not listed on any such exchange, the highest closing
bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any similar
system then in use, or if no such quotations are available, the fair
market value on the date in question of a share of such stock as
determined by a majority of the Continuing Directors in good faith;
and (c) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined in
good faith by a majority of the Continuing Directors.
10. In the event of any Business Combination in which the corporation
survives, the phrase "consideration other than cash to be received" as
used in Paragraphs 2.a and 2.b of Section B of this Article IV shall
include the shares of Common Stock and/or the shares of any other
class or series of Capital Stock retained by the holders of such
shares.
D. The Continuing Directors by majority vote shall have the power to determine
for the purposes of this Article IV, on the basis of information known to
them after reasonable inquiry, (a) whether a person is an Interested
Shareholder, (b) the number of shares of Capital Stock (including Voting
Stock) or other securities beneficially owned by any person, (c) whether a
person is an Affiliate or Associate of another, (d) whether the assets that
are the subject of any Business Combination equal or exceed ten percent
(10%) of the book value of the consolidated assets of the corporation, (e)
whether a proposed plan of dissolution or liquidation is proposed by or on
behalf of an Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder, (f) whether any transaction has the effect,
directly or indirectly, of increasing the proportionate share of any class
or series of Capital Stock, or any securities convertible into Capital
Stock or into equity securities of any Subsidiary, that is beneficially
owned by an Interested Shareholder or any Affiliate or Associate of an
Interested Shareholder, (g) whether any Business Combination satisfies the
conditions set forth in Paragraph 2 of Section B of this Article IV, and
(h) such other matters with
9
<PAGE>
respect to which a determination is required under this Article IV. Any
such determination made in good faith shall be binding and conclusive on
all parties.
E. Nothing contained in this Article IV shall be construed to relieve any
Interested Shareholder from any fiduciary obligation imposed by law.
F. The fact that any Business Combination complies with the provisions of
Section B of this Article IV shall not be construed to impose any fiduciary
duty, obligation or responsibility on the Board of Directors, or any member
thereof, or the Continuing Directors, or any of them, to approve such
Business Combination or recommend its adoption or approval to the
shareholders of the corporation, nor shall such compliance limit, prohibit
or otherwise restrict in any manner the Board of Directors, or any member
thereof, or the continuing Directors, or any of them, with respect to
evaluations of or actions and responses taken with respect to such Business
Combination.
G. Notwithstanding any other provisions of these Articles of Incorporation
(and notwithstanding the fact that a lesser percentage or separate class
vote may be specified by law or these Articles of Incorporation), the
affirmative vote of the holders of not less than seventy-five percent (75%)
of the votes entitled to be cast by the holders of all then outstanding
shares of Voting Stock, voting together as a single class, shall be
required to amend or repeal, or adopt any provisions inconsistent with,
this Article IV.
ARTICLE V
No director of the corporation shall be personally liable to the corporation or
its shareholders for monetary damages for breach of fiduciary duty as a
director, provided, however, that this Article V shall not eliminate or limit
the liability of a director to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the corporation or its shareholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under section 302A.559 or 80A.23
of the Minnesota Statutes, (iv) for any transaction from which the director
derived an improper personal benefit, or (v) for any act or omission occurring
prior to the effective date of this Article V. No amendment to or repeal of
this Article V shall apply to or have any effect on the liability or alleged
liability of any director of the corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
ARTICLE VI
The business and affairs of the corporation shall be managed by or under the
direction of a Board of Directors consisting of not less than five nor more than
twenty-one persons,
10
<PAGE>
who need not be shareholders. The number of directors may be increased by the
shareholders or Board of Directors or decreased by the shareholders from the
number of directors on the Board of Directors immediately prior to the effective
date of this Article VI; provided, however, that any change in the number of
directors on the Board of Directors (including, without limitation, changes at
annual meetings of shareholders) shall be approved by the affirmative vote of
not less than seventy-five percent (75%) of the votes entitled to be cast by the
holders of all then outstanding shares of Voting Stock (as defined in Article
IV), voting together as a single class, unless such change shall have been
approved by a a majority of the entire Board of Directors. If such change shall
not have been so approved, the number of directors shall remain the same. The
directors shall be divided into three classes, designated Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the entire Board of Directors.
At the 1988 annual meeting of shareholders, Class I directors shall be elected
for a one-year term, Class II directors for a two-year term and Class III
directors for a three-year term. At each succeeding annual meeting of
shareholders beginning in 1989, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class. In no case will
a decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the year in
which the director's term expires and until a successor shall be elected and
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Removal of a director from office
(including a director named by the Board of Directors to fill a vacancy or newly
created directorship), with or without cause, shall require the affirmative vote
of not less than seventy-five percent (75%) of the votes entitled to be cast by
the holders of all then outstanding shares of Voting Stock, voting together as a
single class. Any vacancy on the Board of Directors that results from an
increase in the number of directors may be filled by a majority of the Board of
Directors then in office, and any other vacancy occurring in the Board of
Directors may be filled by a majority of the directors then in office, although
less than a quorum, or by a sole remaining director. Any director elected to
fill a vacancy not resulting from an increase in the number of directors shall
have the same remaining term as that of such director's predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more classes
of preferred or preference stock issued by the corporation shall have the right,
voting separately by class or series, to elect directors at an annual or special
meeting of shareholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by or pursuant to the
applicable terms of these Articles of Incorporation, and such directors so
elected shall not be divided into classes pursuant to this Article VI unless
expressly provided by such terms.
11
<PAGE>
No person (other than a person nominated by or on behalf of the Board of
Directors) shall be eligible for election as a director at any annual or special
meeting of shareholders unless a written request that his or her name be placed
in nomination is received from a shareholder of record by the Secretary of the
corporation not less than 60 days prior to the date fixed for the meeting,
together with the written consent of such person to serve as a director.
Notwithstanding any other provisions of these Articles of Incorporation (and
notwithstanding the fact that a lesser percentage or separate class vote may be
specified by law or these Articles of Incorporation), the affirmative vote of
the holders of not less than seventy-five percent (75%) of the votes entitled to
be cast by the holders of all then outstanding shares of Voting Stock, voting
together as a single class, shall be required to amend or repeal, or adopt any
provisions inconsistent with, this Article VI.
12
<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
THREE MONTHS ENDED MAY 2, 1998 AND MAY 3, 1997
AND FOR THE FIVE YEARS ENDED JANUARY 31, 1998
(Millions of Dollars)
<TABLE>
<CAPTION>
Three Months Ended Fiscal Year Ended
------------------------ ---------------------------
MAY 2, May 3, Jan. 31, Feb. 1,
1998 1997 1998 1997
--------- --------- ------------ ----------
<S> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES:
Earnings:
Consolidated net earnings before extraordinary
charge .......................................................... $ 160 $ 126 $ 802 $ 474
Income taxes......................................................... 105 82 524 309
--------- --------- ------------ ----------
Total earnings before extraordinary charge ..................... 265 208 1,326 783
--------- --------- ------------ ----------
Fixed charges:
Interest expense..................................................... 101 112 437 464
Interest portion of rental expense................................... 15 14 59 59
--------- --------- ------------ ----------
Total fixed charges............................................... 116 126 496 523
--------- --------- ------------ ----------
Less:
Capitalized interest................................................. ( 5) ( 4) ( 16) ( 16)
--------- --------- ------------ ----------
Fixed charges in earnings.......................................... 111 122 480 507
--------- --------- ------------ ----------
Earnings available for fixed charges.................................. $ 376 $ 330 $ 1,806 $ 1,290
--------- --------- ------------ ----------
--------- --------- ------------ ----------
Ratio of earnings before extraordinary charge
to fixed charges................................................. 3.24 2.62 3.65 2.46
--------- --------- ------------ ----------
--------- --------- ------------ ----------
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS:
Total fixed charges, as above......................................... $ 116 $ 126 $ 496 $ 523
Dividends on preferred stock
(pre-tax basis)...................................................... 8 9 36 37
--------- --------- ------------ ----------
Total fixed charges and preferred
stock dividends................................................. 124 135 531 560
--------- --------- ------------ ----------
Earnings available for fixed charges
and preferred stock dividends........................................ $ 376 $ 330 $ 1,806 $ 1,290
--------- --------- ------------ ----------
--------- --------- ------------ ----------
Ratio of earnings before extraordinary charge to
fixed charges and preferred stock dividends........................ 3.03 2.45 3.40 2.30
--------- --------- ------------ ----------
--------- --------- ------------ ----------
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------
Feb 3, Jan. 28, Jan. 29,
1996 1995 1994
--------- --------- ----------
<S> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES:
Earnings:
Consolidated net earnings before extraordinary
charge .......................................................... $ 311 $ 434 $ 375
Income taxes......................................................... 190 280 232
--------- --------- ----------
Total earnings before extraordinary charge ..................... 501 714 607
--------- --------- ----------
Fixed charges:
Interest expense..................................................... 461 439 459
Interest portion of rental expense................................... 59 56 45
--------- --------- ----------
Total fixed charges............................................... 520 495 504
--------- --------- ----------
Less:
Capitalized interest................................................. ( 14) ( 7) ( 5)
--------- --------- ----------
Fixed charges in earnings.......................................... 506 488 499
--------- --------- ----------
Earnings available for fixed charges.................................. $ 1,007 $ 1,202 $ 1,106
--------- --------- ----------
--------- --------- ----------
Ratio of earnings before extraordinary charge
to fixed charges................................................. 1.94 2.43 2.19
--------- --------- ----------
--------- --------- ----------
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS:
Total fixed charges, as above......................................... $ 520 $ 495 $ 504
Dividends on preferred stock
(pre-tax basis)...................................................... 37 39 39
--------- --------- ----------
Total fixed charges and preferred
stock dividends................................................. 557 534 543
--------- --------- ----------
Earnings available for fixed charges
and preferred stock dividends........................................ $ 1,007 $ 1,202 $ 1,106
--------- --------- ----------
--------- --------- ----------
Ratio of earnings before extraordinary charge to
fixed charges and preferred stock dividends........................ 1.81 2.25 2.04
--------- --------- ----------
--------- --------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DAYTON
HUDSON CORPORATION'S FORM 10Q FOR THE FIRST QUARTER ENDED MAY 2, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> MAY-02-1998
<CASH> 249
<SECURITIES> 0
<RECEIVABLES> 1,351
<ALLOWANCES> 0
<INVENTORY> 3,569
<CURRENT-ASSETS> 5,792
<PP&E> 11,847
<DEPRECIATION> 3,527
<TOTAL-ASSETS> 14,720
<CURRENT-LIABILITIES> 4,608
<BONDS> 4,760
24
0
<COMMON> 73
<OTHER-SE> 4,524
<TOTAL-LIABILITY-AND-EQUITY> 14,720
<SALES> 6,468
<TOTAL-REVENUES> 6,468
<CGS> 4,727
<TOTAL-COSTS> 4,727
<OTHER-EXPENSES> 1,380
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96
<INCOME-PRETAX> 265
<INCOME-TAX> 105
<INCOME-CONTINUING> 160
<DISCONTINUED> 0
<EXTRAORDINARY> 2
<CHANGES> 0
<NET-INCOME> 158
<EPS-PRIMARY> .35
<EPS-DILUTED> .33
</TABLE>
