=============================================================================== 
                                UNITED STATES 
                      SECURITIES AND EXCHANGE COMMISSION 
                            Washington, D.C. 20549 

                                  FORM 10-K 

                         ----------------------------

(Mark One) 
  [X]        ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE 
                SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] 
                  For the fiscal year ended January 29, 1994 
                                      OR 
   
  [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
              SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 
           For the Transition period from __________ to __________ 
                        Commission File Number 1-6049 

                          DAYTON HUDSON CORPORATION 
            (Exact name of registrant as specified in its charter) 

                  Minnesota                                 41-0215170 
       (State or other jurisdiction of                   (I.R.S. Employer 
        incorporation or organization)                  Identification No.) 
   777 Nicollet Mall, Minneapolis, Minnesota                   55402 
    (Address of principal executive offices)                 (Zip Code)
                                   
       Registrant's telephone number, including area code: 612/370-6948 

                         ----------------------------

         SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: 

                                                     Name of Each Exchange 
            Title of Each Class                       on Which Registered 
            -------------------                      ---------------------
     Common Stock, par value $1 per share           New York Stock Exchange 
                                                    Pacific Stock Exchange 

     Preferred Stock Purchase Rights                New York Stock Exchange 

  Securities registered pursuant to Section 12(g) of the Act: NONE 

  Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.                Yes  [X]  No 
                                                                  -----    -----

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. [_] 

  Aggregate market value of the voting stock held by non-affiliates of the 
Registrant on March 31, 1994 was $5,604,931,234, based on the closing price 
of $73.00 per share of Common Stock as reported on the New York Stock 
Exchange -- Composite Index and $935.00 per share of Series B ESOP 
Convertible Preferred Stock as determined by Duff & Phelps. (Excluded from 
this figure is the voting stock held by Registrant's Directors and Executive 
Officers.) 

  Indicate the number of shares outstanding of each of Registrant's classes of 
common stock, as of the latest practicable date. April 1, 1994: 71,548,293 
shares of common stock, par value $1. 

                     DOCUMENTS INCORPORATED BY REFERENCE 

1. Portions of Registrant's 1993 Annual Report to Shareholders are 
   incorporated into Parts I and II. 
2. Portions of Registrant's Proxy Statement dated April 20, 1994 are 
   incorporated into Part III. 
================================================================================

 
                                    PART I 

ITEM 1. BUSINESS. 
        --------
  Financial Policies and Debt Ratio, Pages 17-18; Capital Expenditures, Page 
18; Business Segments, excluding years 1988-1990, Page 21; Quarterly Results, 
Page 31; Page 34 and the list of store locations on Page 35 of Registrant's 
1993 Annual Report to Shareholders are incorporated herein by reference. 
Registrant was incorporated in Minnesota in 1902. 

ITEM 2. PROPERTIES. 
        ----------
  Leases, Page 25; Long-Term Debt, Page 27 and the list of store locations on 
Page 35 of Registrant's 1993 Annual Report to Shareholders are incorporated 
herein by reference. 

ITEM 3. LEGAL PROCEEDINGS. 
        -----------------
  Paragraph 2 of Commitments and Contingencies, Page 25 of Registrant's 1993 
Annual Report to Shareholders is incorporated herein by reference. 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. 
        ---------------------------------------------------
  Not Applicable. 

ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT. 
        ------------------------------------
  The executive officers of the Registrant as of April 1, 1994 and their 
positions and ages, are as follows: 

Name Title Age - ---- ----- --- Kenneth A. Macke* Chairman of the Board, Chief Executive Officer, 55 Chairman of the Executive Committee and Director of Registrant Stephen E. Watson President and Director of Registrant; Chairman and 49 Chief Executive Officer of the Department Store Division (a division of Registrant) Henry T. DeNero Vice Chairman 48 James T. Hale Senior Vice President and Secretary 53 Douglas A. Scovanner Senior Vice President and Treasurer 38 Robert J. Ulrich* Chairman and Chief Executive Officer of Target 50 (a division of Registrant) and Director of Registrant Joseph C. Vesce Chairman and Chief Executive Officer of Mervyn's 45 (a subsidiary of Registrant) Edwin H. Wingate Senior Vice President 61 JoAnn Bogdan Controller and Chief Accounting Officer 41
- -------------------- *Mr. Macke was Chief Executive Officer of Registrant until April 13, 1994. Mr. Ulrich was elected Chief Executive Officer of Registrant on April 13, 1994. 1 Each officer is elected by and serves at the pleasure of the Board of Directors. There is no family relationship between any of the officers named nor is there any arrangement or understanding pursuant to which any person was selected as an officer. The period of service of each officer in the positions listed and other business experience as of April 1, 1994 is set forth below. Kenneth A. Macke Chairman of the Executive Committee of Registrant since 1985, Chairman of the Board of Registrant since 1984 and Chief Executive Officer of Registrant since 1983. Stephen E. Watson President of Registrant since 1990. Chairman and Chief Executive Officer of the Department Store Division from 1985 to 1989 and since 1991. Executive Vice President of Registrant in 1989. Henry T. DeNero Vice Chairman of Registrant since 1992. Director of McKinsey & Company, Inc. (a management consulting firm) from 1985-1992. James T. Hale Senior Vice President, Secretary and General Counsel of Registrant since 1981. Douglas A. Scovanner Senior Vice President and Treasurer of Registrant since 1994. Senior Vice President, Finance of Fleming Companies, Inc. (a food wholesaler) from 1992 to 1994. Vice President and Treasurer of Coca-Cola Enterprises, Inc. (a soft drink bottler) from 1986 to 1992. Robert J. Ulrich Chairman and Chief Executive Officer of Target since 1987. Joseph C. Vesce Chairman of Mervyn's since 1993. Chief Executive Officer of Mervyn's since 1992. President of Mervyn's from 1988 to 1993. Edwin H. Wingate Senior Vice President of Registrant since 1980. JoAnn Bogdan Controller and Chief Accounting Officer of Registrant since 1993. Assistant Controller of Registrant from 1988 to 1993. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER ----------------------------------------------------------------- MATTERS. ------- Shareholder Return, Page 18 and Dividends Declared Per Share and Common Stock Price, Page 31 of Registrant's 1993 Annual Report to Shareholders are incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA. ----------------------- The data on years 1989-1993 in the Summary Financial and Operating Data (excluding Other Data), Page 33; Notes and Analysis, Pages 21, 23, 25, 27 and 29-31 (excluding years 1988-1990 on page 21) and the Report of Independent Auditors, Page 32 of Registrant's 1993 Annual Report to Shareholders are incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS. --------------------- Financial Policies and Debt Ratio, Pages 17-18; Capital Expenditures, Page 18; Analysis of Operations, Pages 19-20, paragraph 2 of Income Taxes, Page 23; Commitments and Contingencies, Page 25; Analysis of Cash Flow and Lines of Credit, Page 27; the fourth texual paragraph of Pension Plans, Page 29; the second and third texual paragraphs of Postretirement Health Care Benefits, Page 30 and LIFO Provision, Page 31 of Registrant's 1993 Annual Report to Shareholders are incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ------------------------------------------- Pages 21-31 and 33 (excluding years 1988-1990 on Page 21 and years 1983-1988 and Other Data in the Summary Financial and Operating Data on Page 33) and the Report of Independent Auditors, Page 32 of Registrant's 1993 Annual Report to Shareholders are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND --------------------------------------------------------------- FINANCIAL DISCLOSURE. -------------------- Not Applicable. 2 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. -------------------------------------------------- Election of Directors, Pages 1-6 and Compliance with Section 16(a) of the Securities Exchange Act of 1934, Page 28 of Registrant's Proxy Statement dated April 20, 1994, is incorporated herein by reference. See also Item X of Part I hereof. ITEM 11. EXECUTIVE COMPENSATION. ---------------------- Executive Compensation, Pages 7-13 and Director Compensation, Pages 17-18 of Registrant's Proxy Statement dated April 20, 1994, are incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. -------------------------------------------------------------- Outstanding Shares and Voting Rights, Pages 26-28 of Registrant's Proxy Statement dated April 20, 1994, is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. ---------------------------------------------- Not Applicable. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. ---------------------------------------------------------------- a) FINANCIAL STATEMENTS: Consolidated Results of Operations for the Years Ended January 29, 1994, January 30, 1993 and February 1, 1992. Consolidated Statements of Financial Position at January 29, 1994 and January 30, 1993. Consolidated Statements of Cash Flows for the Years Ended January 29, 1994, January 30, 1993 and February 1, 1992. Consolidated Statements of Common Shareholders' Investment for the Years Ended January 29, 1994, January 30, 1993 and February 1, 1992. Information which is an integral part of the financial statements: Notes and Analysis on Pages 21, 23, 25, 27 and 29-31, excluding years 1988-1990 on Page 21, and the Report of Independent Auditors on Page 32 in Registrant's 1993 Annual Report to Shareholders. FINANCIAL STATEMENT SCHEDULES: For the Years Ended January 29, 1994, January 30, 1993 and February 1, 1992 V - Property and Equipment VI - Accumulated Depreciation of Property and Equipment VIII - Valuation and Qualifying Accounts IX - Short-Term Borrowings X - Supplementary Income Statement Information b) REPORTS ON FORM 8-K Not Applicable. 3 c) EXHIBITS
(2) Not Applicable (3)A. Articles of Incorporation Incorporated by reference to Exhibit (3)A. to Registrant's Form 10-K Report for the year ended January 30, 1993 ("1993 10-K"). B. By-Laws Incorporated by reference to Exhibit (3)B. to Registrant's 1993 10-K. (4) Instruments defining the rights of security holders, including indentures. Registrant agrees to furnish the Commission on request copies of instruments with respect to long-term debt. (9) Not Applicable (10)A. Executive Incentive Plan (PTOC) (a) B. Executive Incentive Plan (ROI) (b) C. Executive Incentive Plan (Personal Score) D. Excess Benefit Plan (c) E. Excess Benefit Plan II (d) F. Executive Long-Term Incentive Plan of 1981, as amended and restated. Amendment dated April 14, 1993 (e) G. Supplemental Pension Plan I (f) H. Supplemental Pension Plan II (g) I. Deferred Compensation Plan (h) J. Deferred Compensation Plan for Directors (i) K. Income Continuance Policy (j) L. SMG Income Continuance Policy (k) (11) Statements re Computation of Per Share Earnings (12) Computations of Ratios (13) 1993 Annual Report to Shareholders (only those portions specifically incorporated by reference herein shall be deemed filed with the Commission) (18) Letter re Change in Accounting Principles (19) Not Applicable (21) List of Subsidiaries (22) Not Applicable (23) Consent of Independent Auditors (24) Powers of Attorney (28) Not Applicable (29) Not Applicable (99)(I) Registrant's 11-K Report (filed under Form SE) (II) Registrant's Proxy Statement dated April 20, 1994 (only those portions specifically incorporated by reference shall be deemed filed with the Commission) (l) (III) Schedule of Operating Profit and LIFO Provision
Copies of Exhibits (10)A.-(10)L., (21), (99)(I) and (99)(III) will be furnished upon written request and payment of Registrant's reasonable expenses in furnishing the exhibits. 4
(a) Incorporated by reference to Exhibit A to Registrant's Proxy Statement dated April 20, 1994. (b) Incorporated by reference to Exhibit B to Registrant's Proxy Statement dated April 20, 1994. (c) Incorporated by reference to Exhibit (10)D. to Registrant's 1993 10-K. (d) Incorporated by reference to Exhibit (10)E. to Registrant's 1993 10-K. (e) Incorporated by reference to Exhibit (10)F. to Registrant's 1993 10-K. (f) Incorporated by reference to Exhibit (10)G. to Registrant's 1993 10-K. (g) Incorporated by reference to Exhibit (10)H. to Registrant's 1993 10-K. (h) Incorporated by reference to Exhibit (10)I. to Registrant's 1993 10-K. (i) Incorporated by reference to Exhibit (10)J. to Registrant's 1993 10-K. (j) Incorporated by reference to Exhibit (10)A. to Registrant's 1993 10-K. (k) Incorporated by reference to Exhibit (10)B. to Registrant's 1993 10-K. (l) Incorporated by reference to Registrant's Proxy Statement dated April 20, 1994 (only those portions specifically incorporated by reference shall be deemed filed with the Commission).
5 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DAYTON HUDSON CORPORATION By /s/ Henry T. DeNero -------------------------- Henry T. DeNero Vice Chairman and Chief Financial Officer Dated: April 19, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Bob Ulrich ------------------------- Robert J. Ulrich Dated: April 19, 1994 Chief Executive Officer /s/ Henry T. DeNero ------------------------- Henry T. DeNero Vice Chairman and Dated: April 19, 1994 Chief Financial Officer /s/ J.A. Bogdan ------------------------- JoAnn Bogdan Controller and Dated: April 19, 1994 Chief Accounting Officer RAND V. ARASKOG MICHELE J. HOOPER ROBERT A. BURNETT KENNETH A. MACKE LIVIO D. DESIMONE MARY PATTERSON MCPHERSON ROGER A. ENRICO ROBERT J. ULRICH WILLIAM W. GEORGE JOHN R. WALTER ROGER L. HALE STEPHEN E. WATSON Directors BETTY RUTH HOLLANDER Henry T. DeNero, by signing his name hereto, does hereby sign this document pursuant to powers of attorney duly executed by the Directors named, filed with the Securities and Exchange Commission on behalf of such Directors, all in the capacities and on the date stated, such persons being a majority of the Directors of the Registrant. By /s/ Henry T. DeNero ---------------------------- Henry T. DeNero Dated: April 19, 1994 Attorney-in-Fact 6 DAYTON HUDSON CORPORATION AND SUBSIDIARIES SCHEDULE V - PROPERTY AND EQUIPMENT FISCAL YEARS 1993, 1992 AND 1991 (MILLIONS OF DOLLARS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------- ---------- --------- ----------- -------- ---------- BALANCE AT BALANCE AT BEGINNING (1) OTHER END OF CLASSIFICATION OF PERIOD ADDITIONS RETIREMENTS CHANGES PERIOD - -------------- ---------- --------- ----------- -------- ---------- 1993: Land......................... $ 998 $ 130 $ 8 $- $1,120 Buildings and Improvements... 4,342 460 49 - 4,753 Fixtures and Equipment....... 2,197 363 398 - 2,162 Construction-in-Progress..... 223 25 - - 248 ------ ------ ---- --- ------ $7,760 $ 978 $455 $- $8,283 ====== ====== ==== === ====== 1992: Land......................... $ 897 $ 105 $ 4 $- $ 998 Buildings and Improvements... 3,883 473 14 - 4,342 Fixtures and Equipment....... 1,983 335 121 - 2,197 Construction-in-Progress..... 198 25 - - 223 ------ ------ ---- --- ------- $6,961 $ 938 $139 $- $7,760 ====== ====== ==== === ======= 1991: Land......................... $ 723 $ 175 $ 1 $- $ 897 Buildings and Improvements... 3,455 466 38 - 3,883 Fixtures and Equipment....... 1,745 387 149 - 1,983 Construction-in-Progress..... 210 (12) - - 198 ------ ------ ---- --- ------ $6,133 $1,016 $188 $- $6,961 ====== ====== ==== === ======
- ------------------------- (1) Represents acquisitions of fixed assets and additions to and transfers from construction-in-progress. 7 DAYTON HUDSON CORPORATION AND SUBSIDIARIES SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT FISCAL YEARS 1993, 1992 AND 1991 (MILLIONS OF DOLLARS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------- ---------- ---------- ----------- --------- ---------- ADDITIONS BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS CHANGES PERIOD - -------------- ---------- ---------- ----------- --------- ---------- 1993: Buildings and Improvements..... $1,125 $200 $ 37 $- $1,288 Fixtures and Equipment......... 1,072 298 322 - 1,048 ------ ---- ---- --- ------ $2,197 $498 $359 $- $2,336 ====== ==== ==== === ====== 1992: Buildings and Improvements..... $ 950 $183 $ 8 $- $1,125 Fixtures and Equipment......... 909 276 113 - 1,072 ------ ---- ---- --- ------ $1,859 $459 $121 $- $2,197 ====== ==== ==== === ====== 1991: Buildings and Improvements..... $ 800 $161 $ 11 $- $ 950 Fixtures and Equipment......... 808 249 148 - 909 ------ ---- ---- --- ------ $1,608 $410 $159 $- $1,859 ====== ==== ==== === ======
- ------------------------ Depreciation is computed using the straight-line method and the following lives:
Land improvements....................... 20 years Buildings and building improvements..... 8 to 55 years Leasehold improvements.................. Lease term or useful life of asset, whichever is less Fixtures and equipment.................. 3 to 8 years
8 DAYTON HUDSON CORPORATION AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS FISCAL YEARS 1993, 1992 AND 1991 (MILLIONS OF DOLLARS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - -------- ---------- --------- ---------- ---------- ADDITIONS BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS AND (1) END OF DESCRIPTIONS OF PERIOD EXPENSES DEDUCTIONS PERIOD - ------------ ---------- --------- ---------- ---------- Allowance for Doubtful Accounts 1993............................ $37 $53 $55 $35 1992............................ 46 56 65 37 1991............................ 44 65 63 46
- -------------------------- (1) Accounts determined to be uncollectible are charged against reserve, net of collections on accounts previously charged against reserve. 9 DAYTON HUDSON CORPORATION AND SUBSIDIARIES SCHEDULE IX - SHORT-TERM BORROWINGS FISCAL YEARS 1993, 1992 AND 1991 (MILLIONS OF DOLLARS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------- ---------- ------------- ----------- ----------- ------------- MAXIMUM AVERAGE WEIGHTED AMOUNT AMOUNT AVERAGE BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE CATEGORY OF AGGREGATE END OF AVERAGE DURING DURING DURING SHORT-TERM BORROWINGS PERIOD INTEREST RATE THE PERIOD THE PERIOD THE PERIOD - --------------------- ---------- ------------- ----------- ---------- ----------- 1993: Commercial paper $200 3.0% $ 896 $298 3.2% Short-term bank borrowings - - - - - 1992: Commercial paper (1) $223 3.1% $1,211 $460 3.7% Short-term bank borrowings - - 41 5 4.2% 1991: Commercial paper (1) $465 4.2% $ 941 $365 5.7% Short-term bank borrowings - - 220 37 5.5%
- ------------------------------- (1) $200 million of the commercial paper outstanding at the end of 1992 and 1991 was classified as long-term debt in the Consolidated Statements of Financial Position, as explained in the Commercial Paper note in Registrant's 1993 Annual Report to Shareholders. 10 DAYTON HUDSON CORPORATION AND SUBSIDIARIES SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION FISCAL YEARS 1993, 1992 AND 1991 (MILLIONS OF DOLLARS)
COLUMN A COLUMN B - -------- --------------------- 1993 1992 1991 ---- ---- ---- CHARGED TO COSTS AND EXPENSES --------------------- Taxes other than income taxes (1) Real and personal property taxes. $141 $125 $110 Payroll taxes.................... 190 178 164 Other............................ 12 10 9 --- --- --- $343 $313 $283 Advertising costs................. $494 $437 $423 Included in Revenues ---------------------- Sales by leased departments....... $165 $163 $153 Finance charge revenue............ 192 186 182
- ---------------------- (1) Taxes paid as Lessee in accordance with certain lease agreements have been included in cost of retail sales, buying and occupancy and are not included herein. Amounts for maintenance and repairs, depreciation and amortization of intangible assets, pre-operating costs and similar deferrals, and royalties are not presented as such amounts are less than 1% of total revenues. 11

 
                                 EXHIBIT (10)C.

                           DAYTON HUDSON CORPORATION
                            EXECUTIVE INCENTIVE PLAN
                                (PERSONAL SCORE)

                                   Article I

Sec. 1.1  Name.  The name of the short term incentive plan set forth herein is
          "Dayton Hudson Corporation Executive Incentive Plan (Personal Score)".
          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 the executive's
          personal achievements.

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 or 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:
 
          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
               Administrative 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.
 
                                       2

 
          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.   Compensation Policy and Intent of Plan
               --------------------------------------

               Incentive bonuses under the Plan are based on the participant's
               individual accomplishments in his/her assigned job during the
               Plan Year.

          b.   Defined Incentive Bonus Terms
               -----------------------------

               "Bonus Matrix"

                    The "Bonus Matrix" is a table setting forth figures which
                    indicate, at varying participant scoring levels and
                    interrelated with varying job grade level classifications,
                    the percentage of incentive bonus attributable to each 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.

               "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.

          c.   Determination of Bonus
               ----------------------

               (1)  Non-Pooled
                    ----------

                    Incentive bonuses for each participant will be calculated by
                    taking the participant's bonus percentage from the Bonus
                    Matrix, using his/her personal score above the specified
                    minimum and job grade and multiplying it by his/her Midpoint
                    of Salary Range.
 
                                       3

 
               (2)  Pooled
                    ------

                    A bonus pool is calculated by multiplying the percentage
                    from the Bonus Matrix using the personal score for each
                    participant above the specified minimum by the participant's
                    Midpoint of Salary Range.

                    The bonus for each participant will be based on a ratio of
                    his/her bonus to do all bonuses paid under the Executive
                    Incentive Plan (Personal Score).  The percentage determined
                    by that ratio will be multiplied by the bonus pool.

          d.   Maximum Bonus
               -------------

               The maximum bonus payable under the Plan is equal to 250% of the
               salary of the Chief Executive Officer (the "CEO") or named
               executive officer, as the case may be, set forth in the previous
               year's Proxy Statement.  If the CEO or named executive 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 250% of the highest salary rate reported in such year.
               Provided, however, in either case the aggregate of all bonuses
               paid to the CEO or named executive officer under any combination
               of the Plan, ROI Plan and PTOC Plan may not exceed 250% of the
               relevant salary.  The aggregate of all bonuses paid to any other
               executive not listed above under any combination of the Plan, ROI
               Plan and PTOC Plan may not exceed 250% of his/her base salary.

                                   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

                                       4

 
          writing delivered to such Participating Division's personnel office on
          an approved form.  If there is no unrevoked 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).

                                       5

 
                                  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 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.

                                       6

 
                                 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.

          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.

                                       7

 
                                  EXHIBIT (11)

                           DAYTON HUDSON CORPORATION
                       COMPUTATION OF PER SHARE EARNINGS

                      (IN MILLIONS, EXCEPT PER-SHARE DATA)

Year Ended ------------------------------------------------------------ January 29, 1994 January 30, 1993 February 1, 1992 ---------------- ---------------- ---------------- Primary Computation Earnings Shares Earnings Shares Earnings Shares - ------------------- -------- ------ -------- ------ -------- ------ Net Earnings $ 375 $ 383 $ 301 Less: Dividend requirements on ESOP preferred shares a/ (17) (24) (25) ----- ----- ----- Adjusted net earnings $ 358 $ 359 $ 276 ===== ===== ===== Average common shares outstanding 71.5 71.3 71.2 Average number of common share equivalents: Stock options 0.1 0.2 0.2 Performance shares 0.2 0.1 0.1 ----- ----- ----- Adjusted common equivalent shares outstanding-primary 71.8 71.6 71.5 ===== ===== ===== PRIMARY EARNINGS PER SHARE $4.99 $5.02 $3.86 ===== ===== ===== Fully Diluted Computation - ------------------------- Net Earnings $ 375 $ 383 $ 301 Less: Earnings impact of ESOP preferred share conversion a/ (12) (17) (19) ----- ----- ----- Adjusted net earnings $ 363 $ 366 $ 282 ===== ===== ===== Average common and common equivalent shares-primary 71.8 71.6 71.5 Assumed conversion of ESOP preferred shares 4.3 4.3 4.4 ----- ----- ----- Adjusted common equivalent shares outstanding-fully diluted 76.1 75.9 75.9 ===== ===== ===== FULLY DILUTED EARNINGS PER SHARE $4.77 $4.82 $3.72 ===== ===== =====
a/ At the beginning of 1993, with the adoption of Statement of Financial Accounting Standard No.109, "Accounting for Income Taxes", the tax benefit to the Corporation for dividends paid on ESOP preferred stock was limited to allocated shares of ESOP preferred stock. Average allocated ESOP preferred shares outstanding were 1.6 million for the year ended January 29, 1994.

 
                                  EXHIBIT (12)

                           DAYTON HUDSON CORPORATION
               COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                   FOR THE FIVE YEARS ENDED JANUARY 29, 1994

                             (MILLIONS OF DOLLARS)


January 29, January 30, February 1, February 2, February 3, 1994 1993 1992 1991 1990 ------------ ------------ ------------ ------------ ------------ Earnings: Consolidated net earnings............ $ 375 $ 383 $ 301 $ 412 $ 410 Income taxes......................... 232 228 171 249 268 ------ ------ ----- ------ ----- Total earnings.................... 607 611 472 661 678 ------ ------ ----- ------ ----- Fixed charges: Interest expense..................... 459 454 421 333 283 Dividends on preferred stock (pre-tax basis)............................ 39 39 39 39 2 Interest portion of rental expense... 45 43 39 46 45 ------ ------ ----- ------ ----- Total fixed charges............... 543 536 499 418 330 Less: Dividends on preferred stock (pre-tax basis)............................ (39) (39) (39) (39) (2) Capitalized interest................. (5) (6) (11) (8) (10) ------ ------ ----- ------ ----- Fixed charges in earnings......... 499 491 449 371 318 ------ ------ ----- ------ ----- Earnings available for fixed charges... $1,106 $1,102 $ 921 $1,032 $ 996 ====== ====== ===== ====== ===== Ratio of earnings to fixed charges..... 2.04 2.06 1.85 2.47 3.02 ====== ====== ===== ====== =====

 
                                  EXHIBIT (13)

                               Financial Review
- --------------------------------------------------------------------------------
                 (Millions of Dollars, Except Per-Share Data)

FINANCIAL POLICIES

  Our principal financial policies are as follows:
  MAINTAIN STRONG INVESTMENT GRADE DEBT RATINGS. Our long-term debt ratings are
A+, A3 and A from Duff & Phelps, Moody's and Standard & Poor's, respectively.
Our commercial paper debt ratings are D-1+, P-2 and A-1 from Duff & Phelps,
Moody's and Standard & Poor's, respectively.
  MAINTAIN A YEAR-END DEBT RATIO WITHIN A RANGE OF 45% TO 65%. This debt ratio
range enables management to take advantage of changes in the economy and the
retail environment.
  Our debt ratio declined to 59% at the end of 1993 and we expect it to move
toward the middle of the range over time while continuing to support our
expansion.

DEBT RATIO 1993 1992 1991 - -------------------------------------------------------------------- DEBT AND EQUIVALENTS Notes payable and current portion of long-term debt* $ 373 $ 394 $ 453 Long-term debt* 4,279 4,330 4,227 Present value of operating leases 504 419 411 - -------------------------------------------------------------------- Total debt and equivalents $5,156 $5,143 $5,091 ==================================================================== CAPITALIZATION Debt and equivalents $5,156 $5,143 $5,091 Deferred income taxes and other 536 450 381 Convertible preferred stock 368 374 377 Common shareholders' investment 2,737 2,486 2,231 - -------------------------------------------------------------------- Total capitalization $8,797 $8,453 $8,080 ==================================================================== YEAR-END DEBT RATIO 59% 61% 63% ====================================================================
* Includes capital leases. Dayton Hudson Corporation and Subsidiaries Page 17 Financial Review - -------------------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data) FINANCIAL POLICIES continued FUNDING OF CAPITAL EXPENDITURES. Capital expenditure commitments are limited to what can be financed by projected internally-generated funds and committed financing. CAPITAL EXPENDITURES Capital expenditures totaled $978 million in 1993 and are expected to be approximately $1.3 billion in 1994. Capital expenditure priorities are as follows: KEEP existing facilities fresh and exciting to maintain and grow current market share. IMPROVE distribution and systems to cost-effectively support sales growth. BUILD new stores in existing markets to increase market share and leverage our existing expense structure. BUILD stores in new markets to enhance growth and increase market share. Due to sufficient capital resources, we were able to maintain our capital expenditure priorities while allocating the majority of our spending towards new store growth. Most new store capital continues to be allocated to Target due to its proven record of successful expansion and profitable growth. In order to retain flexibility, the majority of our planned capital spending for the next several years remains uncommitted. SHAREHOLDER RETURN DIVIDENDS. To support our objective of providing shareholders with an attractive total return on their investment, it is our policy to make regular annual increases in dividends declared on common stock. Dividends declared in 1993 increased 5% to $1.62 per share, compared with $1.54 per share declared in 1992. The quarterly dividend paid in the first quarter of 1994 was increased to $.42 per share, indicating an annualized dividend of $1.68 per share. MARKET VALUE PER SHARE. The common stock price reflects the market's view of our performance and future prospects, as well as industry and general economic conditions. At March 24, 1994 there were 11,787 shareholders of record and the common stock price was $74.75 per share. Dayton Hudson Corporation and Subsidiaries Page 18 Analysis of Operations - -------------------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data) Our 1993 financial performance did not meet our expectations. Net earnings were $375 million compared with $383 million in 1992 and $301 million in 1991. The shortfall from our expectations was primarily due to poor performance at Mervyn's. Despite not meeting our net earnings expectations, total operating profit reached a record $1,109 million compared with $1,086 million in 1992 and $910 million in 1991. Target posted a 15% increase in operating profit and the Department Store Division (DSD) reported an 18% increase. Mervyn's declined 37%. Operating profit in 1993 was aided by a substantial LIFO credit, mainly due to Mervyn's and DSD's adoption of internally-generated price indices (see discussion on page 31). TARGET'S record operating profit improved strongly from 1992, reflecting solid revenue growth and improved expense control somewhat offset by a lower gross margin rate. MERVYN'S operating profit declined significantly as a result of lower revenues, a lower gross margin rate and a higher operating expense rate. DSD achieved record operating profit due to higher revenues and improved gross margin and operating expense rates. Fully diluted earnings per share were $4.77 in 1993 versus $4.82 in 1992 and $3.72 in 1991. Target, our primary growth vehicle, has contributed the largest share to overall earnings in the past three years. Due to the significant growth at Target, our lowest margin division, overall revenue growth and the operating expense rate were favorably affected, while the gross margin rate was unfavorably affected. The table below identifies the major factors in the change in earnings per share:
- ----------------------------------------------------------------------- VARIANCE ANALYSIS 1993 1992 1991 - ----------------------------------------------------------------------- Prior year's earnings per share $4.82 $3.72 $ 5.20 Change due to: Revenues (a) .59 .81 .75 Gross margin rate (b) (.52) (.77) (1.27) Operating expense rate (c) .16 1.32 (.09) Start-up expenses (d) .06 (.03) (.14) Interest expense, net (.08) (.31) (.54) Corporate expense and other, net (e) (.03) .08 (.19) Unusual items (primarily earthquake) (.23) - - - ----------------------------------------------------------------------- EARNINGS PER SHARE $4.77 $4.82 $ 3.72 =======================================================================
(a) Includes sales, finance charge revenue and other. (b) Excludes buying and occupancy costs. (c) Includes buying and occupancy costs, portions of selling, publicity and administrative expense, depreciation and taxes other than income taxes. (d) Includes costs associated with opening new stores and remodeling existing stores; included in selling, publicity and administrative expense. (e) Includes corporate headquarters expense, corporate charitable contributions and other miscellaneous items. REVENUES The Corporation reported a 7% increase in total revenues and a 1% increase in comparable-store revenues in 1993 despite deflation of retail prices at all operating divisions. Target's solid revenue increase was primarily due to its new store expansion and continued success of its value-pricing strategy. Mervyn's revenue decline reflects the slow process of re-orienting the consumer from a heavy promotional shopping environment to a more balanced value-pricing and promotional strategy. Additionally, both Target and Mervyn's have a substantial presence in the California market, which remained depressed throughout 1993. DSD's revenues were up slightly due primarily to added promotional events. Revenue growth in 1992 was the result of expanding the value-pricing strategy at Target, along with new store growth, increased promotions and increases in base business at all operating divisions. Revenue growth in 1991 was driven by new store expansion and the full-year contribution of Marshall Field's operations. Overall price changes in 1992 and 1991 were minimal and, as a result, reported comparable-store revenue increases closely approximate real growth.
- ------------------------------------------------------------------------------------- REVENUE GROWTH 1993 1992 1991 - ------------------------------------------------------------------------------------- ALL COMP. All Comp. All Comp. STORES STORES* Stores Stores* Stores Stores* - ------------------------------------------------------------------------------------- Target 13% 5% 15% 5% 11% 4% Mervyn's (2) (6) 9 3 2 (1) DSD 1 1 3 2 17 1 - ------------------------------------------------------------------------------------- Total 7% 1% 11% 4% 9% 2% =====================================================================================
*Comparable-store revenues are revenues from stores open longer than a year. One measure used to evaluate store productivity is revenues per square foot. Higher revenues per square foot at Target reflect increased base business, partially offset by the inherent lower productivity of new stores. DSD's growth was due to enhanced productivity, especially at the Marshall Field's stores. Mervyn's decline reflects lower revenues.
- --------------------------------------------------------------------- REVENUES PER SQUARE FOOT* (dollars) 1993 1992 1991 - --------------------------------------------------------------------- Target $213 $209 $205 Mervyn's 204 223 224 DSD 221 219 215 =====================================================================
*Thirteen-month average retail square footage. Dayton Hudson Corporation and Subsidiaries Page 19 Analysis of Operations - -------------------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data) GROSS MARGIN RATE Our gross margin rate declined in 1993, reflecting our lowering of opening retail prices to meet the needs of the value-conscious consumer, partially offset by a LIFO credit. Also, the 1993 holiday season was one of the most promotional. Looking forward, with accelerated growth from Target and strategies focusing on value at all the operating divisions, the gross margin rate may continue to decline. TARGET'S gross margin rate declined slightly in 1993, reflecting the ongoing impact of its value-pricing strategy. This impact was partially offset by a corresponding improvement in the promotional markdown rate along with a LIFO credit. MERVYN'S 1993 gross margin rate declined reflecting higher clearance markdowns associated with reducing inventories. Also, implementation of a value strategy pressured the gross margin rate despite an improvement in the promotional markdown rate. DSD'S gross margin rate increased in 1993 reflecting a lower cost of merchandise, in addition to a LIFO credit. Implementation of a value-pricing strategy and higher promotional markdowns partially offset the improvement. The gross margin rate in 1992 declined slightly reflecting increased consumer value-consciousness in a competitive retail environment. The 1991 gross margin rate declined reflecting a weak economy and strong customer response to advertised merchandise. OPERATING EXPENSE RATE Our overall operating expense rate continued to improve in 1993 with expense management at each of the operating divisions and the benefit of cross- divisional synergies in technology, logistics and advertising. Operating expense rate reductions will continue to be a major focus in 1994. TARGET'S operating expense rate improved in 1993, reflecting sales leverage and expense efficiencies within the stores. MERVYN'S operating expense rate deteriorated substantially in 1993 despite its continued focus on expense disciplines. The rate increase reflects slightly higher operating expenses on lower revenues. DSD'S operating expense rate improved in 1993 due to distribution expense efficiencies, partially offset by increased advertising expenses associated with incremental promotional events. In 1992, the operating expense rate improved significantly through disciplined expense management at each operating division. The 1991 operating expense rate increased slightly, reflecting weak comparable-store revenue growth at Mervyn's and DSD. START-UP EXPENSES Start-up expenses declined in 1993 due to a reduction in the number of new stores opened. Start-up expenses increased in 1992 and 1991 due to Target's accelerated store growth and ongoing remodeling programs at all the operating divisions. A total of 62 new stores were opened in 1993 compared with 68 in 1992 and 63 in 1991. Start-up expenses are recognized evenly throughout the year in which the expenses are incurred. INTEREST EXPENSE Total interest expense increased in 1993, 1992 and 1991 due to an increase in average debt required to finance the business. Lower interest rates somewhat offset the impact of increased average debt levels.
- --------------------------------------------------------------------- COMPONENTS OF INTEREST EXPENSE, NET 1993 1992 1991 - --------------------------------------------------------------------- Interest on debt $438 $431 $397 Interest on capital leases 15 15 14 Interest cost capitalized (5) (6) (11) Interest income (2) (3) (2) - --------------------------------------------------------------------- Interest expense, net $446 $437 $398 =====================================================================
UNUSUAL ITEMS In January 1994, 11 Target stores and 13 Mervyn's stores sustained various levels of damage associated with the Los Angeles earthquake. The portion of uninsured losses included in operating profit and recorded in selling, publicity and administrative expense, were $7 million and $15 million for Target and Mervyn's, respectively. The Tax Reform Act of 1993 required a one-time after-tax charge to earnings of $4 million, or $.05 per share, as a result of applying the higher tax rate to deferred tax balances (see page 23). Dayton Hudson Corporation and Subsidiaries Page 20 Notes and Analysis - ----------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data)
BUSINESS SEGMENTS 1993 1992 1991 - ----------------------------------------------------------------------- REVENUES Target $11,743 $10,393 $ 9,041 Mervyn's 4,436 4,510 4,143 Department Store Division 3,054 3,024 2,931 Other - - - - ----------------------------------------------------------------------- Total $19,233 $17,927 $16,115 ======================================================================= OPERATING PROFIT Target $ 662 $ 574 $ 458 Mervyn's 179 284 284 Department Store Division 268 228 168 - ----------------------------------------------------------------------- Total 1,109 1,086 910 Interest expense, net 446 437 398 Corporate and other 56 38 40 - ----------------------------------------------------------------------- EARNINGS BEFORE INCOME TAXES $ 607 $ 611 $ 472 ======================================================================= OPERATING PROFIT AS A PERCENT OF REVENUES Target 5.6% 5.5% 5.1% Mervyn's 4.0 6.3 6.9 Department Store Division 8.8 7.5 5.7 ======================================================================= ASSETS Target $ 5,495 $ 4,913 $ 4,393 Mervyn's 2,750 3,042 2,686 Department Store Division 2,240 2,292 2,317 Corporate and other 293 90 89 - ----------------------------------------------------------------------- Total $10,778 $10,337 $ 9,485 ======================================================================= DEPRECIATION Target $ 263 $ 236 $ 208 Mervyn's 146 135 117 Department Store Division 88 87 84 Corporate and other 1 1 1 - ----------------------------------------------------------------------- Total $ 498 $ 459 $ 410 ======================================================================= CAPITAL EXPENDITURES Target $ 716 $ 571 $ 605 Mervyn's 180 294 303 Department Store Division 80 72 106 Corporate and other 2 1 2 - ----------------------------------------------------------------------- Total $ 978 $ 938 $ 1,016 =======================================================================
Operating profit is LIFO earnings from operations before corporate expense, interest and income taxes. Dayton Hudson Corporation and Subsidiaries Page 21 Consolidated Results of Operations - --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data) 1993 1992 1991 ================================================================================ REVENUES $19,233 $17,927 $16,115 COSTS AND EXPENSES Cost of retail sales, buying and occupancy 14,164 13,129 11,751 Selling, publicity and administrative 3,175 2,978 2,801 Depreciation 498 459 410 Interest expense, net 446 437 398 Taxes other than income taxes 343 313 283 - -------------------------------------------------------------------------------- Total Costs and Expenses 18,626 17,316 15,643 - -------------------------------------------------------------------------------- Earnings Before Income Taxes 607 611 472 Provision for Income Taxes 232 228 171 - -------------------------------------------------------------------------------- NET EARNINGS $ 375 $ 383 $ 301 ================================================================================ PRIMARY EARNINGS PER SHARE $ 4.99 $ 5.02 $ 3.86 FULLY DILUTED EARNINGS PER SHARE $ 4.77 $ 4.82 $ 3.72 ================================================================================ AVERAGE COMMON SHARES OUTSTANDING (MILLIONS): Primary 71.8 71.6 71.5 Fully Diluted 76.1 75.9 75.9 ================================================================================
The financial statements should be read in conjunction with the Notes and Analysis contained throughout pages 21-32. Dayton Hudson Corporation and Subsidiaries Page 22 Notes and Analysis - ------------------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data) FINANCE CHARGE REVENUES Finance charge revenues on internal credit sales were $192 million on sales of $3.5 billion in 1993, $186 million on sales of $3.5 billion in 1992 and $182 million on sales of $3.3 billion in 1991. INCOME TAXES At the beginning of 1993, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which requires the use of the liability method of accounting for deferred income taxes. Prior-year financial statements have not been restated for the provisions of SFAS No. 109. The cumulative and the current-year effects of the adoption were not significant. Income taxes for 1992 and 1991 were calculated according to SFAS No. 96, "Accounting for Income Taxes," which was superseded by SFAS No. 109. The Corporation's effective tax rate was 38.2% for 1993 compared with 37.3% for 1992 and 36.3% for 1991. The increase in the 1993 tax rate over 1992 reflects the one percentage point increase in the federal statutory tax rate and the associated one-time adjustment to increase deferred tax balances, partially offset by tax savings from the reenactment of the Targeted Jobs Tax Credit. Also, with the adoption of SFAS No. 109, the financial reporting deductibility of ESOP preferred stock dividends earned was reduced to shares allocated to participant accounts versus all outstanding ESOP shares. The higher effective tax rate in 1992 over 1991 was primarily due to increased state tax rates. Effective tax rates vary from the federal statutory rate as follows:
- --------------------------------------------------------------- PERCENT OF EARNINGS BEFORE INCOME TAXES 1993 1992 1991 - --------------------------------------------------------------- Statutory rate 35.0% 34.0% 34.0% State income taxes, net of federal tax benefit 4.6 4.7 4.0 Cumulative effect of adopting SFAS No. 109 (1.4) - - Dividends on preferred stock (.5) (1.5) (2.0) Other .5 .1 .3 - --------------------------------------------------------------- Effective tax rate 38.2% 37.3% 36.3% ===============================================================
INCOME TAXES continued The components of the provision for income taxes were:
- --------------------------------------------------------------- INCOME TAX PROVISION 1993 1992 1991 - --------------------------------------------------------------- Current: Federal $166 $176 $112 State 37 41 25 - --------------------------------------------------------------- 203 217 137 - --------------------------------------------------------------- Deferred: Federal 23 8 31 State 6 3 3 - --------------------------------------------------------------- 29 11 34 - --------------------------------------------------------------- Total $232 $228 $171 ===============================================================
The components of the net deferred tax liability were:
- --------------------------------------------------------------- JANUARY 29, January 30, NET DEFERRED TAX LIABILITY 1994 1993 - --------------------------------------------------------------- Gross deferred tax assets: Deferred compensation $ 55 $ 47 Self-insured benefits 69 44 Postretirement health care obligation 41 38 Other 59 74 - --------------------------------------------------------------- 224 203 - --------------------------------------------------------------- Gross deferred tax liabilities: Inventory 37 - Property and equipment 304 290 Purchase accounting differences 33 33 Other 34 35 - --------------------------------------------------------------- 408 358 - --------------------------------------------------------------- Net deferred tax liability $184 $155 ===============================================================
EARNINGS PER SHARE Primary earnings per share equal net earnings, less dividend requirements on ESOP preferred stock (net of tax benefits in 1993 related to unallocated shares associated with the adoption of SFAS No. 109), divided by the average number of common shares and common stock equivalents outstanding during the period. Fully diluted earnings per share are computed based on the average number of common shares and common stock equivalents outstanding during the period. The computation assumes conversion of the ESOP preferred stock into common stock. Net earnings also are adjusted for the additional expense required to fund the ESOP debt service (net of tax benefits in 1993 related to unallocated shares associated with the adoption of SFAS No. 109), which results from the assumed replacement of the ESOP preferred dividends with common stock dividends. References to earnings per share relate to fully diluted earnings per share. Dayton Hudson Corporation and Subsidiaries Page 23 Consolidated Statements of Financial Position - -------------------------------------------------------------------------------
JANUARY 29, JANUARY 30, (Millions of Dollars) 1994 1993 - ------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 321 $ 117 Accounts receivable 1,536 1,514 Merchandise inventories 2,497 2,618 Other 157 165 - ------------------------------------------------------------------------------- Total Current Assets 4,511 4,414 PROPERTY AND EQUIPMENT Land 1,120 998 Buildings and improvements 4,753 4,342 Fixtures and equipment 2,162 2,197 Construction-in-progress 248 223 Accumulated depreciation (2,336) (2,197) - ------------------------------------------------------------------------------- Net Property and Equipment 5,947 5,563 OTHER 320 360 - ------------------------------------------------------------------------------- TOTAL ASSETS $10,778 $10,337 =============================================================================== LIABILITIES AND COMMON SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES Notes payable $ 200 $ 23 Accounts payable 1,654 1,596 Accrued liabilities 903 849 Income taxes payable 145 125 Current portion of long-term debt 173 371 - ------------------------------------------------------------------------------- Total Current Liabilities 3,075 2,964 LONG-TERM DEBT 4,279 4,330 DEFERRED INCOME TAXES AND OTHER 536 450 CONVERTIBLE PREFERRED STOCK 368 374 LOAN TO ESOP (217) (267) COMMON SHAREHOLDERS' INVESTMENT Common stock 72 71 Additional paid-in capital 73 58 Retained earnings 2,592 2,357 - ------------------------------------------------------------------------------- Total Common Shareholders' Investment 2,737 2,486 - ------------------------------------------------------------------------------- TOTAL LIABILITIES & COMMON SHAREHOLDERS' INVESTMENT $10,778 $10,337 ===============================================================================
The financial statements should be read in conjunction with the Notes and Analysis contained throughout pages 21-32. Dayton Hudson Corporation and Subsidiaries Page 24 Notes and Analysis - -------------------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data) CASH EQUIVALENTS Cash equivalents represent short-term investments with a maturity of three months or less at the time of purchase. Short-term investments are recorded at cost, which approximates fair value. ACCOUNTS RECEIVABLE Customer accounts receivable are classified as current assets and include some which are due after one year, consistent with industry practice. Accounts receivable generally are written off when any portion of the balance is 12 months past due, or when the required payments have not been received for six consecutive months. The allowance for doubtful accounts was $35 million and $37 million at year-end 1993 and 1992, respectively. CREDIT CARD SUBSIDIARY Retailers National Bank (the Bank), a national credit card bank and a wholly owned subsidiary, was chartered on January 7, 1994. The Bank, at inception, acquired the outstanding accounts receivable of DSD and Target. It issues DSD-named credit cards, which are accepted at DSD and Target stores. Net earnings for the Bank were insignificant for 1993. The following is the condensed statement of financial position for the Bank.
- -------------------------------------------------------------------------------- JANUARY 29, 1994 - -------------------------------------------------------------------------------- Accounts receivable, net $668 Other assets 16 - -------------------------------------------------------------------------------- Total Assets $684 ================================================================================ Liabilities, principally deposit due to the Corporation $634 Investment of the Corporation 50 - -------------------------------------------------------------------------------- Total Liabilities and Investment $684 ================================================================================
INVENTORIES Inventories and the related cost of sales are accounted for by the retail inventory accounting method using the last-in, first-out (LIFO) basis. Under this method, the cost of retail sales, as reported in the Consolidated Results of Operations, represents current cost, thereby reflecting the effect of changing prices. The accumulated LIFO provision was $80 million and $171 million at year-end 1993 and 1992, respectively (see page 31 for further discussion of the LIFO provision). PROPERTY AND EQUIPMENT Property and equipment are recorded at cost less accumulated depreciation. For financial reporting purposes, depreciation on property is computed using the straight-line method over estimated useful lives. Accelerated depreciation methods generally are used for income tax purposes. ACCOUNTS PAYABLE Outstanding drafts included in accounts payable were $239 million and $372 million at year-end 1993 and 1992, respectively. LEASES Assets held under capital leases are included in property and equipment and are charged to depreciation and interest over the life of the lease. Operating leases are not capitalized and lease rentals are expensed. Rent expense on buildings, included in buying and occupancy, includes percentage rents which are based on a percentage of retail sales over stated levels. Total rent expense was $100 million, $94 million and $92 million in 1993, 1992 and 1991, respectively. Many of the long-term leases include options to renew, with renewal terms varying from five to 30 years. Certain leases also include options to purchase the property. Future minimum lease payments required under noncancelable lease agreements existing at the end of 1993 were:
- ------------------------------------------------------------------------------ Operating Capital FUTURE MINIMUM LEASE PAYMENTS Leases Leases - ------------------------------------------------------------------------------ 1994 $ 99 $ 20 1995 98 20 1996 91 19 1997 71 19 1998 64 18 After 1998 501 189 - ------------------------------------------------------------------------------ Total future minimum lease payments 924 285 Less: Interest* (411) (153) Executory costs (9) (5) - ------------------------------------------------------------------------------ Present value of minimum lease payments $504 $127** ==============================================================================
* Calculated using the average interest rate in the year of inception for each lease (weighted average interest rate - 9.6%). ** Includes current portion of $5 million. COMMITMENTS AND CONTINGENCIES Commitments for the purchase of real estate, construction of new facilities, remodeling of existing facilities and other equipment purchases over the next year amounted to approximately $186 million at January 29, 1994. The Corporation is exposed to claims and litigation arising out of the ordinary course of business. Considering the insurance coverage in place for a major portion of the claims and litigation, and noting that the ultimate resolutions cannot be accurately predicted, management, after consulting with legal counsel, believes that the presently identified claims and litigation will not have a material adverse effect on the Corporation's results of operations or its financial condition. Dayton Hudson Corporation and Subsidiaries Page 25 Consolidated Statements of Cash Flows - --------------------------------------------------------------------------------
(Millions of Dollars) 1993 1992 1991 - ------------------------------------------------------------------------------------------------------ OPERATING ACTIVITIES Net earnings $ 375 $383 $ 301 Reconciliation to cash flow: Depreciation 498 459 410 Deferred tax provision 29 11 34 Other noncash items affecting earnings 60 48 26 Changes in operating accounts providing/(requiring) cash: Accounts receivable (22) (84) (23) Merchandise inventories 121 (237) (365) Accounts payable 58 272 57 Accrued liabilities 63 142 59 Income taxes payable 20 27 (62) Other 17 (37) - - ------------------------------------------------------------------------------------------------------ Cash Flow Provided by Operations 1,219 984 437 - ------------------------------------------------------------------------------------------------------ INVESTING ACTIVITIES Expenditures for property and equipment (969) (918) (1,009) Disposals of property and equipment 79 10 19 - ------------------------------------------------------------------------------------------------------ Cash Flow Required for Investing Activities (890) (908) (990) - ------------------------------------------------------------------------------------------------------ Net Financing Sources/(Requirements) 329 76 (553) - ------------------------------------------------------------------------------------------------------ FINANCING ACTIVITIES (Decrease)/increase in notes payable (23) (242) 161 Additions to long-term debt 528 550 756 Reductions of long-term debt (581) (290) (280) Principal payments received on loan to ESOP 61 58 49 Dividends paid (138) (133) (128) Other 28 2 (1) - ------------------------------------------------------------------------------------------------------ Cash Flow (Used)/Provided by Financing Activities (125) (55) 557 - ------------------------------------------------------------------------------------------------------ Net Increase in Cash and Cash Equivalents 204 21 4 Cash and Cash Equivalents at Beginning of Year 117 96 92 - ------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 321 $117 $ 96 ======================================================================================================
The reclassification of $200 million of long-term debt to notes payable, associated with the subsequent event discussed on page 27, is not reflected in financing activities in the Statements of Cash Flows because it did not involve cash. Amounts in these statements are presented on a cash basis and therefore may differ from those shown in other sections of this annual report. Cash paid for interest (including interest capitalized) was $441 million, $438 million and $389 million in 1993, 1992 and 1991, respectively. Income taxes paid were $183 million, $189 million and $200 million in 1993, 1992 and 1991, respectively. The financial statements should be read in conjunction with the Notes and Analysis contained throughout pages 21-32. Dayton Hudson Corporation and Subsidiaries Page 26 Notes and Analysis - -------------------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data) ANALYSIS OF CASH FLOW (Unaudited) OPERATING ACTIVITIES. The improvement in 1993 cash flow from operations reflects a decline in working capital, primarily Mervyn's inventories. Internally-generated funds represent an important component of our capital resources. INVESTING ACTIVITIES. The Corporation's investing activities reflect strategic capital spending in all three operating divisions, primarily Target. Approximately 73% of 1993 capital expenditures were made by Target, 19% by Mervyn's and 8% by DSD. Nearly 63% of total expenditures were for building new stores, with the balance spent on store remodeling, systems and distribution. Capital expenditures for 1994 are expected to be approximately $1.3 billion. The 1994 store opening plans are for approximately 60 new Target stores and 10 new Mervyn's stores, while the remodel program includes approximately 45 stores. FINANCING ACTIVITIES. Cash flow from operations and proceeds from the issuance of debt are generally used to fund the Corporation's capital expenditures, working capital needs, dividend payments and debt maturities and redemptions. Internally-generated funds were sufficient to finance the Corporation's investment activities in 1993 and 1992, while a portion of the Corporation's needs were met by financing activities in 1991. (Refer to the Lines of Credit note on this page for information regarding the Corporation's available credit.) LINES OF CREDIT At year-end, two revolving credit agreements totaling $1 billion were available from various lending institutions. There were no balances outstanding at January 29, 1994. A fee is paid for the availability under these agreements and the Corporation may borrow at various specified rates. Fees paid under these agreements were $2 million each in 1993, 1992 and 1991. NOTES PAYABLE At January 29, 1994, $200 million in commercial paper was outstanding. The average amount of commercial paper outstanding during the year was $298 million, at a weighted average interest rate of 3.2%. Interest rate swaps were used to reduce interest rate exposure by effectively fixing the rate on $200 million of variable-rate commercial paper at approximately 8.6% until 1999. Subsequent to year end, the interest rate swaps were terminated at a premium of $22 million. The premium will be amortized into interest expense through 1999. It is anticipated that future interest rate savings will offset the premium amortization. At January 30, 1993, NOTES PAYABLE CONTINUED $200 million of commercial paper, which supported the underlying obligation of the swaps, was classified as long-term debt. Long-term revolving credit agreements backed the commercial paper. LONG-TERM DEBT During 1993, $528 million of long-term debt was issued with maturities of 1996 to 2023 at rates ranging from 4.65% to 7.875%, with an average interest rate of 7.1%. At year-end, the weighted average interest rate on total long-term debt was 9.0% with an average maturity of 15 years. In 1993, the Corporation called $300 million of notes and debentures at 7.875% to 10.75% due 1996 to 2013. The replacement of this debt at lower interest rates results in current and future expense savings. Long-term debt due beyond one year was:
- ------------------------------------------------------------------------------- JANUARY 29, JANUARY 30, LONG-TERM DEBT 1994 1993 - ------------------------------------------------------------------------------- Swapped commercial paper backed by revolving credit $ - $ 200 4.65% to 10.0% unsecured notes and sinking fund notes and debentures due 1995 to 2023, and other debt 4,157 4,004 Capital lease obligations 122 126 - ------------------------------------------------------------------------------- Total $4,279 $4,330 ===============================================================================
At January 29, 1994, the fair value of the $4,157 million 4.65% to 10.0% unsecured notes, sinking fund notes and debentures, and other debt was approximately $4,799 million. The fair value of the $200 million swapped commercial paper was approximately $231 million at year-end. The fair value of the long-term debt and swaps was estimated using discounted cash flow analysis, based on the Corporation's current incremental borrowing rates for similar types of financial instruments. The carrying amounts of the Corporation's other borrowings, including the current portion of long-term debt, approximate their fair values. As a condition of certain borrowings, related land, buildings and equipment have been pledged as collateral. At year end, approximately $67 million of property and equipment served as collateral for these loans. Required principal payments on long-term debt over the next five years, excluding capital lease obligations, will be $168 million in 1994, $204 million in 1995, $68 million in 1996, $123 million in 1997 and $200 million in 1998. Dayton Hudson Corporation and Subsidiaries Page 27 Consolidated Statements of Common Shareholders' Investment - -------------------------------------------------------------------------------
Additional Common Paid-in Retained (Millions of Dollars) Stock Capital Earnings Total - ----------------------------------------------------------------------------------------------------- FEBRUARY 2, 1991 $71 $41 $1,936 $2,048 Consolidated net earnings - - 301 301 Dividends declared - - (128) (128) Conversion of preferred stock - 2 - 2 Stock option activity - 8 - 8 - ----------------------------------------------------------------------------------------------------- FEBRUARY 1, 1992 71 51 2,109 2,231 Consolidated net earnings - - 383 383 Dividends declared - - (135) (135) Conversion of preferred stock - 3 - 3 Stock option activity - 4 - 4 - ----------------------------------------------------------------------------------------------------- JANUARY 30, 1993 71 58 2,357 2,486 Consolidated net earnings - - 375 375 Dividends declared - - (140) (140) Tax benefit on unallocated preferred share dividends - 6 - 6 Conversion of preferred stock - 6 - 6 Stock option activity 1 3 - 4 - ----------------------------------------------------------------------------------------------------- JANUARY 29, 1994 $72 $73 $2,592 $2,737 =====================================================================================================
COMMON STOCK Authorized 500,000,000 shares, $1.00 par value; 71,525,082 shares issued and outstanding at January 29, 1994; 71,383,880 shares issued and outstanding at January 30, 1993. PREFERRED STOCK Authorized 5,000,000 shares; Series B ESOP Convertible Preferred Stock $.01 par value, 425,979 shares issued and outstanding at January 29, 1994; 432,014 shares issued and outstanding at January 30, 1993. Each share converts into ten shares of the Corporation's common stock, has voting rights equal to the equivalent number of common shares, and is entitled to cumulative annual dividends of $56.20. Under certain circumstances, the shares may be redeemed at the election of the Corporation or the ESOP. JUNIOR PREFERRED STOCK RIGHTS The Corporation declared a distribution of shares of preferred share purchase rights in 1986. Terms of the plan provide for a distribution of one preferred share purchase right for each outstanding share of Dayton Hudson common stock. Each right will entitle shareholders to buy one-hundredth of a share of a new series of junior participating preferred stock at an exercise price of $150, subject to adjustment. The rights will be exercisable only if a person or group acquires ownership of 20% or more of Dayton Hudson common stock or announces a tender offer to acquire 30% or more of the common stock. The financial statements should be read in conjunction with the Notes and Analysis contained throughout pages 21-32. Dayton Hudson Corporation and Subsidiaries Page 28 Notes and Analysis - -------------------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data) STOCK OPTION PLAN The Corporation has a stock option plan for key employees. Grants have included stock options, performance shares and, beginning in 1993, restricted stock awards. Options have included Incentive Stock Options, Non-Qualified Stock Options or a combination of the two. Twelve months after the grant date 25% of the majority of options granted become exercisable with another 25% after each succeeding 12 months. These options are cumulatively exercisable and expire no later than 10 years after the date of the grant. Stock options are awarded at fair market value on the grant date. When exercised, proceeds are credited to common shareholders' investment and no expense is incurred. Beginning in 1993, the performance shares earned and restricted stock awarded generally vest at the end of a four-year period, at which time common stock is issued and placed in escrow, subject to further restrictions. Prior to 1993, performance shares earned were paid in cash and common stock. Compensation expense on performance shares and restricted stock awards is recorded based on the current market price of the Corporation's common stock and the extent to which certain goals are being met. Performance share and restricted stock award expense was less than $1 million in 1993, compared with $3 million and $1 million of performance share expense in 1992 and 1991, respectively. The number of shares of unissued common stock reserved for future grants under the plan was 3,106,901 at the end of 1993 and 3,396,070 at the end of 1992.
- ------------------------------------------------------------------------------------- OPTIONS, PERFORMANCE SHARES AND RESTRICTED STOCK AWARDS OUTSTANDING - ------------------------------------------------------------------------------------- OPTIONS ----------------------------------------- NUMBER PRICE SHARES PERFOR- RESTRICTED OF PER EXER- MANCE STOCK SHARES SHARE CISABLE SHARES AWARDS - ------------------------------------------------------------------------------- Feb. 2, 1991 1,072,349 $14.30-$75.50 571,948 219,091 - Granted 190,513 73.81- 75.19 Canceled (49,706) 30.25- 75.50 Exercised (141,990) 14.30- 69.56 - ------------------------------------------------------------------------------- Feb. 1, 1992 1,071,166 17.44- 75.50 561,774 190,215 - Granted 198,027 59.81- 67.63 Canceled (14,666) 17.44- 75.50 Exercised (100,109) 17.44- 53.19 - ------------------------------------------------------------------------------- Jan. 30, 1993 1,154,418 30.25- 75.50 590,807 207,758 - Granted 205,268 65.25- 83.25 Canceled (16,856) 53.00- 78.00 Exercised (70,009) 30.25- 75.50 - ------------------------------------------------------------------------------- JAN. 29, 1994 1,272,821 $30.25-$83.25 654,624 247,689 30,494 ===============================================================================
PENSION PLANS The Corporation has three defined benefit pension plans which cover all employees who meet certain requirements of age, length of service and hours worked per year. The benefits provided are based upon years of service and the employee's compensation. Contributions to the pension plans are made solely by the Corporation. To compute net pension cost, the Corporation's actuarial consulting firm estimates the total benefits which will ultimately be paid to eligible employees and then allocates these costs to service periods. The period over which unrecognized pension costs and credits are amortized, including prior service costs and actuarial gains and losses, is based on the remaining service period for those employees expected to receive pension benefits.
- ------------------------------------------------------------------------------------- COMPONENTS OF NET PENSION EXPENSE 1993 1992 1991 - ------------------------------------------------------------------------------------- Service cost-benefits earned during the period $22 $19 $18 Interest cost on projected benefit obligation 32 30 26 Return on assets-current (50) (30) (79) -deferred 14 (1) 50 Amortization of transitional asset - - (7) - ------------------------------------------------------------------------------------- Net pension expense $18 $18 $ 8 =====================================================================================
- ------------------------------------------------------------------------------------- ACTUARIAL ASSUMPTIONS 1993 1992 1991 - ------------------------------------------------------------------------------------- Discount rate 7-1/4% 8-1/2% 8-1/2% Expected long-term rate of return on plan assets 9-1/2 9-1/2 9-1/2 Average assumed rate of compensation increase 5-1/4 7 7 =====================================================================================
During 1993, the Corporation changed certain actuarial assumptions used in the calculation of its projected benefit obligation for the defined benefit plans. The net effect of these changes on future years' pension expense is not expected to be significant.
- --------------------------------------------------------------------------- December 31, FUNDED STATUS 1993 1992 - --------------------------------------------------------------------------- Actuarial present value of: Vested benefit obligation $385 $297 Accumulated benefit obligation 411 316 =========================================================================== Projected benefit obligation 466 380 Fair market value of plans' assets* 454 403 - --------------------------------------------------------------------------- Plans' assets (less than)/in excess of projected benefit obligation (12) 23 Unrecognized prior service cost 4 5 Unrecognized net actuarial loss/(gain) 42 (4) - --------------------------------------------------------------------------- Prepaid pension asset $ 34 $ 24 ===========================================================================
*Plans' assets consist primarily of equity and fixed income securities. Dayton Hudson Corporation and Subsidiaries Page 29 Notes and Analysis - -------------------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data) SUPPLEMENTAL RETIREMENT PLAN The Corporation sponsors a defined contribution employee benefit plan. Employees who meet certain eligibility requirements of age, length of service and hours worked per year can participate in the plan by investing up to 15% of their compensation. The Corporation's match equals 100% of each employee's contribution up to 5% of each participant's total compensation, within ERISA limits. The Corporation's contribution to the plan is invested in the ESOP. In 1989, the Corporation lent $379 million to the ESOP at a 9% interest rate with an estimated maturity of 15 years. Proceeds from the loan were used by the ESOP to purchase 438,353 shares of Series B ESOP Convertible Preferred Stock of the Corporation. The original issue value of the ESOP preferred stock of $864.60 per share is guaranteed by the Corporation. The Corporation's contributions to the ESOP, plus dividends paid on preferred stock held by the ESOP, are used to repay the loan principal and interest. Cash contributed to the ESOP was $61 million each in 1993 and 1992, and $53 million in 1991. Dividends earned on shares held by the ESOP were $24 million each in 1993 and 1992, and $25 million in 1991. Benefits expense, calculated based on the shares allocated method, was $33 million, $28 million and $25 million in 1993, 1992 and 1991, respectively. In November 1993, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 93-6 "Employers' Accounting for Employee Stock Ownership Plans." The statement is effective for fiscal years beginning after December 15, 1993. Within the SOP, the Corporation may continue its current accounting. POSTRETIREMENT HEALTH CARE BENEFITS Certain health care benefits are provided for retired employees. Employees eligible for retirement become eligible for these benefits if they meet minimum age and service requirements and agree to contribute a portion of the cost. The Corporation has the right to modify or terminate these benefits. POSTRETIREMENT HEALTH CARE BENEFITS CONTINUED
- ----------------------------------------------------------------------- December 31, ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION 1993 1992 - ----------------------------------------------------------------------- Retirees $51 $52 Fully eligible active plan participants 26 30 Other active plan participants 14 14 Prior service cost (7) (6) Unrecognized gain 14 4 - ----------------------------------------------------------------------- Total accumulated postretirement benefit obligation $98 $94 =======================================================================
- -------------------------------------------------------------------------------- NET PERIODIC COST 1993 1992 1991 - -------------------------------------------------------------------------------- Service cost - benefits earned during the period $1 $1 $1 Interest cost on accumulated benefit 8 8 7 - -------------------------------------------------------------------------------- Net cost $9 $9 $8 ================================================================================
An increase in the cost of covered health care benefits of 9.5% is assumed for fiscal 1994. The rate is assumed to decrease incrementally to 6% in the year 2000 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, a 1% increase in the health care trend rate would increase the accumulated postretirement benefit obligation by $7 million at year-end 1993 and the net periodic cost by $1 million for the year. The discount rate used in determining the accumulated postretirement benefit obligation was 7.25% for 1993 and 8.5% for 1992. During 1993, the Corporation changed certain actuarial assumptions used in the calculation of its projected benefit obligation for the postretirement health care benefits. The net effect of these changes on future years' results for the postretirement health care benefits is not expected to be significant. SUMMARY OF OTHER ACCOUNTING POLICIES CONSOLIDATION. The financial statements include the accounts of the Corporation after elimination of material intercompany balances and transactions. All subsidiaries are wholly owned. FISCAL YEAR. Our fiscal year ends on the Saturday nearest January 31.
- ------------------------------------------------------------------------------------ FISCAL YEAR Ended Weeks - ------------------------------------------------------------------------------------ 1993 January 29, 1994 52 1992 January 30, 1993 52 1991 February 1, 1992 52 ====================================================================================
Unless otherwise stated, references to years in this report relate to fiscal years rather than to calendar years. Dayton Hudson Corporation and Subsidiaries Page 30 Notes and Analysis - -------------------------------------------------------------------------------- (Millions of Dollars, Except Per-Share Data) QUARTERLY RESULTS (Unaudited) The same accounting policies are followed in preparing quarterly financial data as are followed in preparing annual data. Costs directly associated with revenues, such as cost of goods sold and percentage rent on leased stores, are allocated based on revenues. Certain other costs not directly associated with revenues, such as benefit plan expenses, bonuses and real estate taxes, are allocated evenly throughout the year. The table below summarizes results by quarter for 1993 and 1992:
- ---------------------------------------------------------------------------------------------------------------------------- First Quarter Second Quarter Third Quarter Fourth Quarter Total Year 1993 1992 1993 1992 1993 1992 1993 1992 1993 1992 - ---------------------------------------------------------------------------------------------------------------------------- Revenues $4,040 $3,719 $4,287 $3,967 $4,625 $4,340 $6,281 $5,901 $19,233 $17,927 Gross Profit(a) $1,067 $1,009 $1,107 $1,068 $1,208 $1,151 $1,687 $1,570 $ 5,069 $ 4,798 Net Earnings $ 30 $ 35 $ 24 $ 42 $ 43 $ 57 $ 278 $ 249 $ 375 $ 383 Earnings Per Share(b) $ .35 $ .40 $ .28 $ .50 $ .53 $ .70 $ 3.62 $ 3.22 $ 4.77 $ 4.82 ============================================================================================================================ Fully Diluted Average Common Shares Outstanding (Millions) 76.1 75.9 76.0 75.9 76.1 76.0 76.1 76.0 76.1 75.9 Dividends Declared Per Share $ .40 $ .38 $ .40 $ .38 $ .40 $ .38 $ .42 $ .40 $ 1.62 $ 1.54 Common Stock Price(c) High $ 83-3/4 $ 70 $ 75 $ 69 $ 71-7/8 $ 78-3/8 $ 74-3/4 $ 79-1/8 $ 83-3/4 $ 79-1/8 Low 69-1/8 60 63-1/4 59 65 61-7/8 65-7/8 72-1/2 63-1/4 59 ============================================================================================================================
(a) Gross profit is revenues less cost of retail sales, buying and occupancy. (b) Earnings per share are computed independently for each of the quarters presented. The sum of the quarterly earnings per share may not equal the total-year amount due to the impact of changes in average quarterly shares outstanding. (c) Dayton Hudson Corporation's common stock is listed on the New York Stock Exchange and the Pacific Stock Exchange. LIFO PROVISION The following table shows the quarterly pre-tax LIFO provision and its impact on earnings per share:
- ------------------------------------------------------------------------------- LIFO Expense/(Credit)* 1993 1992 1991 - ------------------------------------------------------------------------------- Per Per Per Quarter (Unaudited) Total Share Total Share Total Share - ------------------------------------------------------------------------------- First $ 6 $ .05 $13 $.11 $ 16 $ .13 Second 6 .05 15 .12 13 .11 Third 3 .02 3 .02 3 .02 Fourth (106) (.87) (22) (.18) (70) (.59) - ------------------------------------------------------------------------------- Total year $(91) $(.75) $ 9 $.07 $(38) $(.32) ===============================================================================
*LIFO expense/(credit) per share is computed based on fully diluted average shares outstanding during each period. The sum of quarterly LIFO expense per share may not equal the total-year amount due to the impact of changes in average shares outstanding. The fourth quarter 1993 LIFO credit was primarily the result of the adoption of internally-generated price indices at Mervyn's and DSD. Previously, Mervyn's and DSD used the Bureau of Labor Statistics' Department Stores Inventory Price Index to estimate retail price changes. These internal price indices capture the inventory valuation impact of lower retail prices resulting from our value-pricing strategies. This change generated a LIFO credit of $77 million, or $.63 per share. The cumulative and prior years' effects of this change are not determinable. In addition to this change, the 1993 LIFO credit was affected by a lower-than-expected internally-generated price index at Target, partially offset by a substantial decline in inventory levels at Mervyn's. The 1992 LIFO expense, as compared with the 1991 credit, was primarily due to a higher internal price index at Target, partially offset by lower inflation at Mervyn's and DSD. The 1991 LIFO credit primarily reflects Target's adoption of an internally-generated price index. The LIFO provision is adjusted each quarter for estimated changes in year-end retail inflation rates, inventory levels and markup levels. A final adjustment is recorded in the fourth quarter for the difference between the prior quarters' estimates and actual total year LIFO expense. Dayton Hudson Corporation and Subsidiaries Page 31 Report of Independent Auditors - -------------------------------------------------------------------------------- Board of Directors and Shareholders Dayton Hudson Corporation We have audited the accompanying consolidated statements of financial position of Dayton Hudson Corporation and subsidiaries as of January 29, 1994 and January 30, 1993 and the related consolidated results of operations, cash flows and common shareholders' investment for each of the three years in the period ended January 29, 1994. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Dayton Hudson Corporation and subsidiaries at January 29, 1994 and January 30, 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended January 29, 1994, in conformity with generally accepted accounting principles. As discussed in the notes to the financial statements, the Corporation changed its method of estimating retail price indices used in its LIFO inventory valuation for Mervyn's and the Department Store Division in 1993. /s/ Ernst & Young Minneapolis, Minnesota March 18, 1994 Dayton Hudson Corporation and Subsidiaries Page 32 Summary Financial and Operating Data - --------------------------------------------------------------------------------
(Millions of Dollars, Except Per-Share Data) 1993 1992 1991 1990 1989(a) - -------------------------------------------------------------------------------------------------------- INCOME STATEMENT DATA - -------------------------------------------------------------------------------------------------------- Revenues $19,233 17,927 16,115 14,739 13,644 - -------------------------------------------------------------------------------------------------------- Cost of retail sales, buying and occupancy $14,164 13,129 11,751 10,652 9,890 - -------------------------------------------------------------------------------------------------------- Selling, publicity and administrative $ 3,175 2,978 2,801 2,478 2,264 - -------------------------------------------------------------------------------------------------------- Depreciation $ 498 459 410 369 315 - -------------------------------------------------------------------------------------------------------- Interest expense, net $ 446 437 398 325 267 - -------------------------------------------------------------------------------------------------------- Earnings from continuing operations before income taxes $ 607 611 472 659 678 - -------------------------------------------------------------------------------------------------------- Income taxes $ 232 228 171 249 268 - -------------------------------------------------------------------------------------------------------- Net earnings: Continuing (b) $ 375 383 301 412 410 - -------------------------------------------------------------------------------------------------------- Consolidated $ 375 383 301 412 410 - -------------------------------------------------------------------------------------------------------- FINANCIAL POSITION DATA - -------------------------------------------------------------------------------------------------------- Working capital $ 1,436 1,450 1,452 1,236 912 - -------------------------------------------------------------------------------------------------------- Property and equipment $ 5,947 5,563 5,102 4,525 3,523 - -------------------------------------------------------------------------------------------------------- Total assets $10,778 10,337 9,485 8,524 6,684 - -------------------------------------------------------------------------------------------------------- Long-term debt $ 4,279 4,330 4,227 3,682 2,510 - -------------------------------------------------------------------------------------------------------- Convertible preferred stock $ 368 374 377 379 379 - -------------------------------------------------------------------------------------------------------- Common shareholders' investment $ 2,737 2,486 2,231 2,048 1,753 - -------------------------------------------------------------------------------------------------------- PER COMMON SHARE DATA - -------------------------------------------------------------------------------------------------------- Fully diluted net earnings per share: Continuing (b) $ 4.77 4.82 3.72 5.20 5.35 - -------------------------------------------------------------------------------------------------------- Consolidated $ 4.77 4.82 3.72 5.20 5.35 - -------------------------------------------------------------------------------------------------------- Cash dividend declared $ 1.62 1.54 1.46 1.35 1.17 - -------------------------------------------------------------------------------------------------------- Market price - high $ 83-3/4 79-1/8 80 78-1/8 66-3/8 - -------------------------------------------------------------------------------------------------------- Market price - low $ 63-1/4 59 56-3/8 47 43 - -------------------------------------------------------------------------------------------------------- Market price - close $ 65-7/8 77-3/4 65-1/8 65-3/4 61-3/4 - -------------------------------------------------------------------------------------------------------- Common shareholders' investment $ 38.27 34.83 31.31 28.82 24.73 - --------------------------------------------------------------------------------------------------------
The Summary Financial and Operating Data should be read in conjunction with the Financial Statements, Notes and Analysis on pages 21-32. (a) Consisted of 53 weeks. (b) Includes cumulative income effect of two accounting changes, net, of $2 million ($.03 per share) in 1990. Dayton Hudson Corporation and Subsidiaries Page 33 DAYTON HUDSON CORPORATION 1993 FACTS . One of America's largest general merchandise retailers with revenues of $19.2 billion. . More than 80% of revenues derived from discount and moderate-price retailing. . Serves a wide range of consumers through 893 stores housing 94 million square feet of retail space in 33 states. . Among America's 20 largest private employers, with a workforce totaling 174,000. . Largest commitment to community giving of any major general merchandise retailer with 1993 giving of $24.0 million. Only major retailer to invest five percent of its federally taxable income in social action and arts programs in store communities. TARGET Target is an upscale discounter which provides quality merchandise at attractive prices in clean, spacious and customer-friendly stores. It has 554 stores coast-to-coast.
(Millions of Dollars) 1993 1992 1991 - ----------------------- ------- ------- ------- Revenues $11,743 $10,393 $9,041 - -------------------------------------------------- Operating Profit $ 662 $ 574 $ 458 - -------------------------------------------------- Stores 554 506 463 - -------------------------------------------------- Retail Square Feet* 58,087 52,211 47,086
MERVYN'S Mervyn's is a moderate-priced family department store chain specializing in soft goods. The division operates 276 stores in 15 states in the Northwest, West, Southwest, Southeast, and Michigan.
(Millions of Dollars) 1993 1992 1991 - ----------------------- ------- ------- ------- Revenues $4,436 $4,510 $4,143 - -------------------------------------------------- Operating Profit $ 179 $ 284 $ 284 - -------------------------------------------------- Stores 276 265 245 - -------------------------------------------------- Retail Square Feet* 22,273 21,305 19,479
DEPARTMENT STORES The Department Store Division emphasizes fashion leadership, quality merchandise and superior customer service. The Division operates 63 full-service, full-line department stores through three store groups predominantly in nine Midwestern states: 19 Dayton's stores, 21 Hudson's stores and 23 Marshall Field's stores.
(Millions of Dollars) 1993 1992 1991 - ----------------------- ------- ------- ------- Revenues $3,054 $3,024 $2,931 - -------------------------------------------------- Operating Profit $ 268 $ 228 $ 168 - -------------------------------------------------- Stores 63 63 62 - -------------------------------------------------- Retail Square Feet* 13,824 13,846 13,744
*In thousands, reflects total square feet less office, warehouse and vacant space. Dayton Hudson Corporation and Subsidiaries Page 34 TARGET LOCATIONS
Retail Sq. Ft. No. in thousands of stores Arizona 1,921 18 Arkansas 186 2 California 12,127 115 Colorado 1,887 18 Florida 4,822 44 Georgia 1,469 15 Idaho 309 3 Illinois 3,211 28 Indiana 2,692 30 Iowa 1,554 17 Kansas 305 3 Kentucky 556 6 Louisiana 202 2 Michigan 3,563 34 Minnesota 4,467 38 Missouri 840 8 Montana 182 2 Nebraska 597 6 Nevada 842 8 New Mexico 403 4 North Carolina 479 5 North Dakota 416 4 Ohio 809 7 Oklahoma 779 8 Oregon 828 8 South Carolina 297 3 South Dakota 391 4 Tennessee 1,298 13 Texas 6,713 63 Washington 1,835 18 Wisconsin 1,925 18 Wyoming 182 2 - --------------------------------------------------- Total 58,087 554 MAJOR MARKETS Greater Los Angeles 60 Minneapolis/St. Paul 28 Chicago 18 Dallas/Ft. Worth 17 Detroit 17 Houston 17 San Francisco Bay Area 17 Atlanta 14 Miami/Ft. Lauderdale 13 Phoenix 13 Denver 12 San Diego 12 Seattle/Tacoma 10
MERVYN'S LOCATIONS
Retail Sq. Ft. No. in thousands of stores Arizona 1,154 14 California 9,558 123 Colorado 927 12 Florida 1,634 18 Georgia 487 6 Idaho 83 1 Louisiana 538 7 Michigan 1,175 15 Nevada 412 6 New Mexico 180 2 Oklahoma 270 3 Oregon 479 6 Texas 3,331 41 Utah 678 7 Washington 1,367 15 - -------------------------------------------------------- Total 22,273 276 MAJOR MARKETS Greater Los Angeles 47 San Francisco Bay Area 22 Dallas/Ft. Worth 13 Miami/Ft. Lauderdale 13 San Diego 11 Phoenix 10 Detroit 9 Houston 9 Seattle/Tacoma 8 Atlanta 6 Denver 7 Salt Lake City 6 Sacramento 7
DEPARTMENT STORE LOCATIONS
Retail Sq. Ft. No. in thousands of stores DAYTON'S Minnesota 2,748 12 North Dakota 299 3 South Dakota 102 1 Wisconsin 349 3 HUDSON'S Indiana 246 2 Michigan 4,315 18 Ohio 187 1 MARSHALL FIELD'S Illinois 3,944 15 Ohio 201 1 Texas 721 4 Wisconsin 712 3 - ------------------------------------------------------ Total 13,824 63 MAJOR MARKETS Chicago 14 Minneapolis/St. Paul 10 Detroit 9
Dayton Hudson Corporation and Subsidiaries Page 35

Ernst & Young                                       1400 Pillsbury Center
                                                    Minneapolis, Minnesota 55402
                                                    Phone: 612 343 1000



 
                                  EXHIBIT (18)



March 18, 1994



Mr. Douglas A. Scovanner
Senior Vice President & Treasurer
Dayton Hudson Corporation
777 Nicollet Mall
Minneapolis, Minnesota  55402

Dear Mr. Scovanner:

The notes to consolidated financial statements of Dayton Hudson Corporation 
included in its Annual Report on Form 10-K for the year ended January 29, 1994 
state that internally-generated indices were used in the valuation of the LIFO 
inventories of the Department Store Division and Mervyn's instead of the Bureau 
of Labor Statistics indices previously used. You have advised us that you 
believe the change is to a preferable method in your circumstances because it 
better represents the price changes being experienced at the Department Store 
Division and Mervyn's.

There are no authoritative criteria for determining a "preferable" LIFO 
inventory method based on the particular circumstances. However, we conclude 
that the change in the method of estimating retail price indices is to an 
acceptable alternative method which is preferable in your circumstances based on
your business judgment to make this change for the reason cited above.

                                         Very truly yours,
                                         /s/ Ernst & Young


 
                                  EXHIBIT (21)

                           SUBSIDIARIES OF REGISTRANT
                           --------------------------



     As of April 1, 1994, the following are wholly-owned subsidiaries of the
Registrant and are Minnesota corporations except as otherwise indicated:

                  Bullseye Corporation (Delaware)
                  Dayton Credit Company
                  Dayton Development Company
                  Dayton's Commercial Interiors, Inc.
                  Dayton's Iron Horse Liquors, Inc.
                  Dayton's Travel Service, Inc.
                  Eighth Street Development Company
                  Mervyn's (California)
                  Mervyn's, Inc. (Delaware)
                  Retailers National Bank (national association)
                  Rooftop, Inc.
                  Seatamatic, Inc. (Nevada)
                  Target Stores, Inc.

                  Capitol Lounge Corp. (Wisconsin)
                  Clybourn Trading Corp. (Wisconsin)
                  Commercial Interiors, Inc. (Delaware)
                  Creative Fields, Inc. (Nevada)
                  DHC Milwaukee, Inc. (Wisconsin)
                  DHC Wine & Liquor Shop, Inc. (Wisconsin)
                  DHC Wisconsin, Inc. (Wisconsin)
                  Fieldridge, Inc. (Wisconsin)
                  Greener Fields, Inc. (Texas)
                  MAFCO, Inc. (Delaware)
                  Marshall Field & Company (Delaware)
                  Marshall Field's Chicago, Inc. (Delaware)
                  Marshall Field's Direct Response Company, Inc. (Illinois)
                  Marshall Field Direct Response Supply Company, Inc. (Illinois)
                  Marshall Field of Columbus, Inc. (Ohio)
                  Marshall Field's Mayfair, Inc. (Wisconsin)
                  Marshall Field Stores, Inc. (Delaware)
                  Windows on Wisconsin, Inc. (Wisconsin)

 
                                  EXHIBIT (23)


                        CONSENT OF INDEPENDENT AUDITORS



     We consent to the incorporation by reference in the Annual Report (Form
10-K) of Dayton Hudson Corporation of our report dated March 18, 1994, included
in the 1993 Annual Report to Shareholders of Dayton Hudson Corporation.

     Our audits also included the financial statement schedules of Dayton Hudson
Corporation listed in Item 14(a).  These schedules are the responsibility of the
Company's management.  Our responsibility is to express an opinion based on our
audits.  In our opinion, the financial statement schedules referred to above,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

     We also consent to the incorporation by reference in Registration Statement
Numbers 33-42364 and 33-59008 on Form S-3 and Post-Effective Amendment No. 1 to
Registration Statement Number 2-72549 and Registration Statement Numbers 
33-6918 and 33-66050 on Form S-8 of our report dated March 18, 1994, with 
respect to the consolidated financial statements incorporated herein by
reference and our report included in the preceding paragraph with respect to the
financial statement schedules included in this Annual Report (Form 10-K) of
Dayton Hudson Corporation.



                                                   /s/ Ernst & Young


Minneapolis, Minnesota
April 19, 1994

 
                                  EXHIBIT (24)

                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.


                                            /s/  Rand V. Araskog
                                            ------------------------
                                            Rand V. Araskog


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Robert A. Burnett
                                            -------------------------
                                            Robert A. Burnett


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Livio D. DeSimone
                                            -------------------------
                                            Livio D. DeSimone


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Roger A. Enrico
                                            -----------------------
                                            Roger A. Enrico


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  William W. George
                                            -------------------------
                                            William W. George


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Roger L. Hale
                                            ---------------------
                                            Roger L. Hale


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Betty Ruth Hollander
                                            ----------------------------
                                            Betty Ruth Hollander


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Michele J. Hooper
                                            --------------------------
                                            Michele J. Hooper


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Kenneth A. Macke
                                            ------------------------
                                            Kenneth A. Macke


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Mary Patterson McPherson
                                            -----------------------------
                                            Mary Patterson McPherson

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Robert J. Ulrich
                                            ------------------------
                                            Robert J. Ulrich

 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  John R. Walter
                                            ----------------------
                                            John R. Walter


 

 
                           DAYTON HUDSON CORPORATION

                               Power of Attorney
                           of Director and/or Officer


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make,
constitute and appoint KENNETH A. MACKE, STEPHEN E. WATSON, HENRY T. DeNERO, and
DOUGLAS A. SCOVANNER, and each or any one of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Corporation to a Form 10-K, Annual
Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
for the fiscal year ended January 29, 1994, or other applicable form, including
any and all Exhibits, Schedules, Supplements and supporting documents thereto,
including, but not limited to, the Form 11-K Annual Reports of the Supplemental
Retirement, Savings, and Employee Stock Ownership Plan and similar plans
pursuant to Section 15(d) of the Securities Exchange Act of 1934, and all
amendments, supplementations and corrections thereto, to be filed by said
Corporation with the Securities and Exchange Commission, Washington, D.C. as
required in connection with its registration under the Securities Exchange Act
of 1934, as amended, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform any and all acts necessary or
incidental to the performance and execution of the powers herein expressly
granted.

          IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand as of this 9th day of March, 1994.



                                            /s/  Stephen E. Watson
                                            -------------------------
                                            Stephen E. Watson


 

 
                               EXHIBIT (99)(III)


                           DAYTON HUDSON CORPORATION
                SCHEDULE OF OPERATING PROFIT AND LIFO PROVISION

                             (MILLIONS OF DOLLARS)

1993 1992 1991 ------- ------- ------ Operating Profit Target $ 662 $ 574 $ 458 Mervyn's 179 284 284 Dept. Store Division 268 228 168 ------ ------ ----- Total $1,109 $1,086 $ 910 ====== ====== ===== LIFO (Expense)/Credit Target $ 62 $ (2) $ 44* Mervyn's 7* 4 (13) Dept. Store Division 22* (11) 7 ------ ------ ----- Total $ 91 $ (9) $ 38 ====== ====== =====
* Reflects adoption of an internally-generated price index to estimate the change in its retail prices.