-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HpAQxiFtEBrmADy+TL0JIlWnMR5DRENVVoQKVaTWgduBfW9nhGXbW2VPlOg6H9EL T4f+hDU4nkAxLyFjx3SMww== 0000912057-97-013232.txt : 19970417 0000912057-97-013232.hdr.sgml : 19970417 ACCESSION NUMBER: 0000912057-97-013232 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19970201 FILED AS OF DATE: 19970416 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAYTON HUDSON CORP CENTRAL INDEX KEY: 0000027419 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 410215170 STATE OF INCORPORATION: MN FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-06049 FILM NUMBER: 97581903 BUSINESS ADDRESS: STREET 1: 777 NICOLLET MALL CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 6123706948 MAIL ADDRESS: STREET 1: 777 NICOLLET MALL CITY: MINNEAPOLIS STATE: MN ZIP: 55402 FORMER COMPANY: FORMER CONFORMED NAME: DAYTON CORP DATE OF NAME CHANGE: 19690728 10-K405 1 FORM 10-K405 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K --------------- (MARK ONE) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED FEBRUARY 1, 1997 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, 55402-2055 MINNESOTA (Address of principal executive (Zip Code) offices)
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 $.3333 per New York Stock Exchange share Pacific Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ Aggregate market value of the voting stock held by non-affiliates of the Registrant on March 21, 1997 was $9,811,287,151.97, based on the closing price of $42.625 per share of Common Stock as reported on the New York Stock Exchange--Composite Index and $1,428.75 per share of Series B ESOP Convertible Preferred Stock as determined by Duff & Phelps. (Excluded from this figure is the voting stock held by Registrant's Directors and Executive Officers.) Indicate the number of shares outstanding of each of Registrant's classes of common stock, as of the latest practicable date. March 21, 1997: 217,555,475 shares of common stock, par value $.3333. DOCUMENTS INCORPORATED BY REFERENCE 1. Portions of Registrant's 1996 Annual Report to Shareholders are incorporated into Parts I and II. 2. Portions of Registrant's Proxy Statement dated April 14, 1997 are incorporated into Part III. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS. The first paragraph of Fourth Quarter Results, Page 18; Analysis of Financial Condition, Page 19; Performance Objectives, Page 20; Internal Credit, Page 21; Business Segment Comparisons, excluding years 1991-1993, Page 23; first textual paragraph of Summary of Accounting Policies--Organization, Page 24; Quarterly Results, Page 33 and the information relating to store locations on Page 14 of Registrant's 1996 Annual Report to Shareholders are incorporated herein by reference. Registrant was incorporated in Minnesota in 1902. ITEM 2. PROPERTIES. Leases, Page 27 and the list of store locations on Page 14 of Registrant's 1996 Annual Report to Shareholders are incorporated herein by reference. ITEM 3. LEGAL PROCEEDINGS. Commitments and Contingencies, Page 27 of Registrant's 1996 Annual Report to Shareholders is incorporated herein by reference. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. Not Applicable. 1 ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT. The executive officers of the Registrant as of April 1, 1997 and their positions and ages, are as follows:
NAME TITLE AGE - ---------------------------------------------- ---------------------------------------------- --- Robert J. Ulrich.............................. Chairman, Chief Executive Officer, Chairman of 53 the Executive Committee and Director of Registrant; Chairman and Chief Executive Officer of Target (a division of Registrant) Kenneth B. Woodrow............................ President of Target 52 Larry V. Gilpin............................... Executive Vice President Team, Guest and 53 Community Relations of Target Robert G. McMahon............................. Senior Vice President, Property Development of 48 Target John E. Pellegrene............................ Executive Vice President, Marketing of Target 60 Gregg W. Steinhafel........................... Executive Vice President, Merchandising of 42 Target Bart Butzer................................... President of Mervyn's (a subsidiary of 41 Registrant) Shannon M. Buscho............................. Executive Vice President, Stores of Mervyn's 45 Linda L. Ahlers............................... President of the Department Store Division (a 46 division of Registrant) James T. Hale................................. Senior Vice President, General Counsel and 56 Secretary of Registrant Douglas A. Scovanner.......................... Senior Vice President and Chief Financial 41 Officer of Registrant Vivian M. Stephenson.......................... Senior Vice President and Chief Information 59 Officer of Registrant Gerald L. Storch.............................. Senior Vice President, Credit and Strategic 40 Planning of Registrant Edwin H. Wingate.............................. Senior Vice President, Personnel of Registrant 64 JoAnn Bogdan.................................. Controller and Chief Accounting Officer of 44 Registrant
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, 1997 is set forth below. ROBERT J. ULRICH Chairman of the Board, Chief Executive Officer, Chairman of the Executive Committee and Director of Registrant since 1994. Chairman and Chief Executive Officer of Target since 1987. KENNETH B. WOODROW President of Target since 1994, Vice Chairman of Target from 1993 to 1994 and Executive Vice President of Target from 1989 to 1993. 2 LARRY V. GILPIN Executive Vice President of Target since 1995 and Senior Vice President of Target from 1981 to 1995. ROBERT G. MCMAHON Senior Vice President of Target since 1991 and Vice President of Target from 1990 to 1991. JOHN E. PELLEGRENE Executive Vice President of Target since 1995 and Senior Vice President of Target from 1988 to 1995. GREGG W. STEINHAFEL Executive Vice President of Target since 1994 and Senior Vice President and General Merchandise Manager of Target from 1987 to 1994. BART BUTZER President of Mervyn's since March 1997 and Regional Senior Vice President of Target from 1991 to 1997. SHANNON M. BUSCHO Executive Vice President, Stores of Mervyn's since December 1996 and Senior Vice President, Stores of Mervyn's from January 1996 to December 1996. She has held various management positions at Mervyn's for over five years and was first elected a Vice President in 1994. LINDA L. AHLERS President of the Department Store Division since February 1996 and Executive Vice President, Merchandising of the Department Store Division from August 1995 to February 1996. Senior Vice President of Target from 1989 to 1995. JAMES T. HALE Senior Vice President, Secretary and General Counsel of Registrant since 1981. DOUGLAS A. SCOVANNER Senior Vice President and Chief Financial Officer of Registrant since 1994. Treasurer of Registrant in 1994. Senior Vice President, Finance of Fleming Companies, Inc. (a food wholesaler) from 1992 to 1994. Vice President and Treasurer of Coca-Cola Enterprises, Inc. (a soft drink bottler) from 1986 to 1992. VIVIAN M. STEPHENSON Senior Vice President of Registrant since 1995. Senior Vice President, MIS of Mervyn's from 1994 to 1995 and Vice President, MIS of Mervyn's from 1990 to 1994. GERALD L. STORCH Senior Vice President of Registrant since 1993. Principal with McKinsey & Company (a consulting firm) from 1982 to 1993. EDWIN H. WINGATE Senior Vice President of Registrant since 1980. JOANN BOGDAN Controller and Chief Accounting Officer of Registrant since 1993. Assistant Controller of Registrant from 1988 to 1993. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Dividends Declared Per Share and Common Stock price, Page 33 of Registrant's 1996 Annual Report to Shareholders are incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA. The Data on years 1992-1996 in the Summary Financial and Operating Data (excluding 1991 and Other Data), Page 35; Notes to Consolidated Financial Statements, Pages 23, 24, 25, 27, 29 and 31-33 (excluding years 1991-1993 on page 23) and the Report of Independent Auditors, Page 34 of Registrant's 1996 Annual Report to Shareholders are incorporated herein by reference. 3 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Management's Discussion and Analysis, Pages 15-21 and the second textual paragraph of Post-retirement Health Care Benefits, Page 32 of Registrant's 1996 Annual Report to Shareholders are incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Pages 23-33 and 35 (excluding years 1991-1993 on Page 23 and 1991 and Other Data in the Summary Financial and Operating Data on Page 35) and the Report of Independent Auditors, Page 34 of Registrant's 1996 Annual Report to Shareholders are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not Applicable PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Election of Directors, Pages 1-6 of Registrant's Proxy Statement dated April 14, 1997, is incorporated herein by reference. See also Item X of Part I hereof. ITEM 11. EXECUTIVE COMPENSATION. Executive Compensation, Pages 7-12, Report of the Compensation Committee on Executive Compensation, pages 13-17 and Director Compensation, Pages 18-19 of Registrant's Proxy Statement dated April 14, 1997, are incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Outstanding Shares and Voting Rights, Pages 27-28 of Registrant's Proxy Statement dated April 14, 1997, is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Not Applicable. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. a) FINANCIAL STATEMENTS: Consolidated Results of Operations for the Years Ended February 1, 1997, February 3, 1996 and January 28, 1995. Consolidated Statements of Financial Position at February 1, 1997 and February 3, 1996. Consolidated Statements of Cash Flows for the Years Ended February 1, 1997, February 3, 1996 and January 28, 1995. Consolidated Statements of Shareholders' Investment for the Years Ended February 1, 1997, February 3, 1996 and January 28, 1995. Information which is an integral part of the financial statements: Notes to Consolidated Financial Statements on Pages 23, 24, 25, 27, 29 and 31-33 (excluding years 1991-1993 on Page 23) and the Report of Independent Auditors on Page 34 in Registrant's 1996 Annual Report to Shareholders. 4 The Registrant, through its special purpose subsidiary, Dayton Hudson Receivables Corporation ("DHRC") entered into a securitization transaction under which it transfers, on an ongoing basis, substantially all of its credit card receivables to a trust. Separate financial statements are filed for DHRC in its separate Annual Reports on Form 10-K. FINANCIAL STATEMENT SCHEDULE: For the Years Ended February 1, 1997, February 3, 1996 and January 28, 1995. II--Valuation and Qualifying Accounts. b) REPORTS ON FORM 8-K None c) EXHIBITS (2) Not applicable (3)A. Restated Articles of Incorporation (as amended July 17, 1996). Incorporated by reference to Exhibit (3)A. to Registrant's Form 10-Q Report for the quarter ended August 3, 1996. B. By-Laws (as amended through September 13, 1995). Incorporated by reference to Exhibit (3)B. to Registrant's Form 10-K Report for the year ended February 3, 1996. (4)A. Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock, as amended. Incorporated by reference to Exhibit A to Exhibit 1 to Registrant's Form 8-K Report dated September 12, 1996. B. Certificate of Designation, Preference and Rights of Series B ESOP Convertible Preferred Stock. Incorporated by reference to Exhibit (3)A. to Registrant's Form 10-K Report for the year ended January 30, 1993. C. Instruments defining the rights of security holders, including indentures. Registrant agrees to furnish the Commission on request copies of instruments with respect to long-term debt. (9) Not applicable (10)A. Executive Incentive Plan (PTOC&EVA-Registered Trademark-) (a) B. Director Stock Option Plan of 1995 (b) C. Executive Incentive Plan (Personal Score) (c) D. Excess Benefit Plan (d) E. Supplemental Pension Plan I F. Executive Long-Term Incentive Plan of 1981, as amended and restated (e) G. Supplemental Pension Plan II H. Supplemental Pension Plan III I. Deferred Compensation Plan Senior Management Group J. Deferred Compensation Plan Directors K. Income Continuance Policy (f)
- ------------------------ - -Registered Trademark-EVA is a registered trademark. 5 L. SMG Income Continuance Policy (g) M. SMG Executive Deferred Compensation Plan N. Director Deferred Compensation Plan (11) Statements re Computations of Per Share Earnings (12) Statements re Computations of Ratios (13) 1996 Annual Report to Shareholders (only those portions specifically incorporated by reference herein shall be deemed filed with the Commission) (16) Not applicable (18) Not applicable (19) Not applicable (21) List of Subsidiaries (22) Not applicable (23) Consent of Independent Auditors (24) Powers of Attorney (27) Financial Data Schedule (28) Not applicable (99)(I) Registrant's Form 11-K Report (II) Registrant's Proxy Statement dated April 14, 1997 (only those portions specifically incorporated by reference shall be deemed filed with the Commission)(h)
Copies of Exhibits (10)A.-(10)D., (10)F., (10)K., (10)L., (21) and (99)(I) will be furnished upon written request and payment of Registrant's reasonable expenses in furnishing the exhibits. - ------------------------ (a) Incorporated by reference to Exhibit A to Registrant's Proxy Statement dated April 19, 1995. (b) Incorporated by reference to Exhibit B to Registrant's Proxy Statement dated April 19, 1995. (c) Incorporated by reference to Exhibit (10)C. to Registrant's Form 10-K Report for the year ended January 29, 1994. (d) Incorporated by reference to Exhibit (10)D. to Registrant's Form 10-K Report for the year ended January 30, 1993 (the "1992 10-K"). (e) Incorporated by reference to Exhibit(10)B. to Registrant's Form 10-Q Report for the quarter ended October 29, 1994. (f) Incorporated by reference to Exhibit(10)A. to Registrant's 1992 10-K. (g) Incorporated by reference to Exhibit(10)B. to Registrant's 1992 10-K. (h) Incorporated by reference to Registrant's Proxy Statement dated April 14, 1997 (only those portions specifically incorporated by reference shall be deemed filed with the Commission). 6 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DAYTON HUDSON CORPORATION By: /s/ DOUGLAS A. SCOVANNER ----------------------------------------- Douglas A. Scovanner SENIOR VICE PRESIDENT AND CHIEF FINANCIAL Dated: April 16, 1997 OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ BOB ULRICH -------------------------------------- Robert J. Ulrich CHAIRMAN OF THE BOARD AND CHIEF Dated: April 16, 1997 EXECUTIVE OFFICER /s/ DOUGLAS A. SCOVANNER -------------------------------------- Douglas A. Scovanner SENIOR VICE PRESIDENT AND CHIEF Dated: April 16, 1997 FINANCIAL OFFICER /s/ J.A. BOGDAN -------------------------------------- JoAnn Bogdan CONTROLLER AND CHIEF ACCOUNTING Dated: April 16, 1997 OFFICER
LIVIO D. DESIMONE JAMES A. JOHNSON ROGER A. ENRICO RICHARD M. KOVACEVICH WILLIAM W. GEORGE STEPHEN W. SANGER ROGER L. HALE SOLOMON D. TRUJILLO Directors BETTY RUTH HOLLANDER ROBERT J. ULRICH MICHELE J. HOOPER JOHN R. WALTER
Douglas A. Scovanner, by signing his name hereto, does hereby sign this document pursuant to powers of attorney duly executed by the Directors named, filed with the Securities and Exchange Commission on behalf of such Directors, all in the capacities and on the date stated, such persons being all of the Directors of the Registrant. By: /s/ DOUGLAS A. SCOVANNER ----------------------------------------- Douglas A. Scovanner Dated: April 16, 1997 ATTORNEY-IN-FACT
7 DAYTON HUDSON CORPORATION AND SUBSIDIARIES SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS FISCAL YEARS 1996, 1995 AND 1994 (MILLIONS OF DOLLARS)
COLUMN C COLUMN B ------------- COLUMN E ------------- ADDITIONS COLUMN D ------------- COLUMN A BALANCE AT CHARGED TO ------------- BALANCE AT - ---------------------------------------------------------------- BEGINNING COSTS AND (1) END OF DESCRIPTIONS OF PERIOD EXPENSES DEDUCTIONS PERIOD - ---------------------------------------------------------------- ------------- ------------- ------------- ------------- Allowance for Doubtful Accounts 1996.......................................................... $ 69 $ 124 $ 74 $ 119 1995.......................................................... 46 93 70 69 1994.......................................................... 35 66 55 46
- ------------------------ (1) Accounts determined to be uncollectible are charged against reserve, net of collections on accounts previously charged against reserve. EX-10.E 2 SUPPLEMENTAL PENSION PLAN 11-29-94 Date Adopted: 12-14-94 Effective: 1-1-95 Amended and Restated 1-8-97 DAYTON HUDSON CORPORATION SUPPLEMENTAL PENSION PLAN I ARTICLE I GENERAL Sec. 1.1 NAME OF PLAN. The name of the pension plan set forth herein is "Dayton Hudson Corporation Supplemental Pension Plan I" (the "Plan"). Sec. 1.2 PURPOSE. The Plan has been established by Dayton Hudson Corporation (the "Company") to provide retirement income that the Dayton Hudson Corporation Employees' Retirement Plan (the "DHC Plan") as in effect from time to time, The Retirement Plan of The J. L. Hudson Company (the "Hudson Plan") as in effect from time to time, the Mervyn's Pension Plan (the "Mervyn's Plan") as in effect from time to time, and the Dayton Hudson Corporation Excess Benefit Plan (the "Excess Plan") as in effect from time to time cannot provide to certain Participants in such plans because of the limitations imposed by the Internal Revenue Code of 1986, as amended from time to time, relative to compensation above a certain maximum in connection with computing pension benefits under qualified plans. The Plan is intended to be a "top hat plan" as defined in Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended from time to time, ("ERISA") and shall be interpreted and administered accordingly. Sec. 1.3 QUALIFIED PLAN. Each of the DHC Plan, the Hudson Plan and the Mervyn's Plan is sometimes referred to herein as a "Qualified Plan". Sec. 1.4 PARTICIPATION. An employee of the Company or a subsidiary of the Company becomes and remains a Participant in this Plan only if he is a Participant in the DHC Plan and/or the Hudson Plan and/or the Mervyn's Plan, and only if he is a member of a select group of management of the Company or a subsidiary of the Company and is a highly compensated employee of the Company or a subsidiary of the Company. In order to meet the criteria of being a member of a select group of management of the Company or a subsidiary of the Company and being a highly compensated employee of the Company or a subsidiary of the Company, the employee must be designated a member of the Senior Management Group ("SMG") by the Chief Executive Officer of the Company or of an equivalent rank on any revised classification system. Sec. 1.5 MISCELLANEOUS. The terms in this Plan shall have the same meaning as those used in the Qualified Plans unless the context clearly indicates the contrary. ARTICLE II PENSION BENEFITS Sec. 2.1 AMOUNT OF PENSION. Each Participant in this Plan shall be entitled to a pension under this Plan that is the actuarial equivalent of the excess, if any, of (a) the pension the Participant would be entitled under the benefit formula of the Qualified Plans applied (i) without respect to the maximum benefit limitations in said Plans required by Section 415 of the Internal Revenue Code of 1986, as amended from time to time, (ii) as if Section 4.7(b) of the Qualified Plans read as follows: "Any bonus earned by a Participant pursuant to a plan or policy of the Company, that is paid in a calendar year other than the calendar year in which such bonus would normally be 2 paid under such plan or policy, shall be included in Certified Earnings in the year it normally would be paid, be valued at the amount of bonus that would have been paid in that year and shall not be included in Certified Earnings in the year it is paid", for each year the Participant was a Participant in this Plan, and (iii) without respect to the maximum compensation limitation in said Qualified Plans required by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended from time to time, over (b) the pension the Participant is entitled to receive from the Qualified Plans and the Excess Plan. Sec. 2.2 METHOD OF PAYMENT. The pension payable under this Plan shall be paid in a single sum at such time during the calendar year next following the calendar year in which the Participant's Termination of Employment occurs as may be determined by the administrative committee under the DHC Plan. Actuarial equivalents under this Plan shall be determined by the Actuary for the Qualified Plans using such factors and assumptions as the Actuary considers appropriate for the purpose. ARTICLE III MISCELLANEOUS Sec. 3.1 UNFUNDED. Pensions under this Plan shall be unfunded. No person entitled to a benefit under this Plan shall, by virtue of this Plan, have any interest in any specific asset or assets of the Company. Such persons have only an unsecured contract right to receive payments in accordance with this Plan. Sec. 3.2 BENEFITS MAY NOT BE ASSIGNED OR ALIENATED. Except as required by law, the interests of persons entitled to benefits under this Plan may not in any manner whatsoever be assigned or alienated, whether voluntarily or involuntarily, or directly or indirectly. Sec. 3.3 NOT EMPLOYMENT AGREEMENT. This Plan is not an employment agreement and does not assure the continued employment of any employee or Participant for any time or period. Sec. 3.4 ADMINISTRATION. The administrative committee under the DHC Plan shall control and manage the operations and administration of this Plan and make all decisions and determinations incident thereto. Sec. 3.5 CLAIMS PROCEDURE. The administrative committee under the DHC Plan shall establish a claims procedure consistent with ERISA requirements. ARTICLE IV AMENDMENT, TERMINATION AND APPLICABLE LAW Sec. 4.1 AMENDMENT AND TERMINATION. This Plan may be amended or terminated by the Board of Directors of the Company at any time. No amendment or termination shall adversely affect a benefit to which a Participant is entitled under Article II prior to the effective date of such amendment or termination, unless the Participant becomes entitled to an amount equal to or greater than such benefit under another plan or practice adopted by the Company, as a substitute to this Plan. Sec. 4.2 APPLICABLE LAW. The provisions of this Plan shall be construed and enforced according to the laws of the State of Minnesota to the extent that such laws are not preempted by the laws of the United States of America. All controversies, disputes, and claims arising hereunder shall be submitted to the United States District Court for the District of Minnesota. ARTICLE V DEATH BENEFITS Sec. 5.1 DEATH WHILE EMPLOYED. If a Participant dies prior to incurring any other type of Termination of Employment, and if the Participant would have been entitled to a payment under Article II of this Plan if the Participant's Termination of Employment had occurred on the date of his or her death for a reason other than death, death benefits shall be payable as follows: (a) If the Participant is survived by a qualified spouse, the spouse shall be entitled to the benefit that would have been paid under Article II if the Participant had a Termination of Employment on the date of death and survived until the date the benefit would have been paid to the Participant. (b) If the Participant is survived by a qualified spouse but the spouse dies before the payment is made under subsection (a), the payment shall instead be made to the Participant's estate. (c) If the Participant is not survived by a qualified spouse, the payment under section (a) shall instead be made to the Participant's estate. (d) For purposes of this Section, a person is a "qualified spouse" of a Participant if, and only if, such person is the opposite sex of the Participant and such person and the Participant are legally married to each other at the time of the Participant's death. Sec. 5.2 DEATH FOLLOWING TERMINATION OF EMPLOYMENT. If a Participant's Termination of Employment occurs for a reason other than death, and if the Participant is entitled to a benefit under Article II of this Plan due to the Termination of Employment but dies prior to receiving that benefit, a death benefit shall be payable as follows: (a) If the Participant is survived by a qualified spouse, the spouse shall receive the payment that would have been made to the Participant if the Participant had lived. However, if the spouse dies prior to receiving that payment, the payment shall instead be made to the Participant's estate. (b) If the Participant is not survived by a qualified spouse, the Participant's estate shall receive the payment that would have been made if the Participant had lived. 6 EX-10.G 3 SUPPLEMENTAL PENSION PLAN II 11-28-94 Date Amended: 12-14-94 Effective: 1-1-95 Amended and Restated 1-8-97 DAYTON HUDSON CORPORATION SUPPLEMENTAL PENSION PLAN II ARTICLE I GENERAL Sec. 1.1 NAME OF PLAN. The name of the pension plan set forth herein is "Dayton Hudson Corporation Supplemental Pension Plan II" (the "Plan"). Sec. 1.2 PURPOSE. The Plan has been established by Dayton Hudson Corporation (the "Company") to provide retirement income that the Dayton Hudson Corporation Employees' Retirement Plan (the "DHC Plan") as in effect from time to time, The Retirement Plan of The J. L. Hudson Company (the "Hudson Plan") as in effect from time to time, the Mervyn's Pension Plan (the "Mervyn's Plan") as in effect from time to time, the Dayton Hudson Corporation Excess Benefit Plan (the "Excess Plan") as in effect from time to time, and the Dayton Hudson Corporation Supplemental Pension Plan I ("Supplemental Pension Plan I") as in effect from time to time cannot provide to certain Participants in such plans because of the limitations imposed by the Internal Revenue Code of 1986, as amended from time to time, relative to using deferred compensation in connection with computing pension benefits under qualified plans. The Plan is intended to be a "top hat plan" as defined in Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended from time to time, ("ERISA") and shall be interpreted and administered accordingly. Sec. 1.3 QUALIFIED PLAN. Each of the DHC Plan, the Hudson Plan and the Mervyn's Plan is sometimes referred to herein as a "Qualified Plan". Sec. 1.4 PARTICIPATION. An employee of the Company or a subsidiary of the Company becomes and remains a Participant in this Plan only if he is a Participant in the DHC Plan and/or the Hudson Plan and/or the Mervyn's Plan, and only if he is a member of a select group of management of the Company or a subsidiary of the Company and is a highly compensated employee of the Company or a subsidiary of the Company. In order to meet the criteria of being a member of a select group of management of the Company or a subsidiary of the Company and being a highly compensated employee of the Company or a subsidiary of the Company, the employee must be designated a member of the Senior Management Group ("SMG") by the Chief Executive Officer of the Company or of an equivalent rank on any revised classification system. Sec. 1.5 MISCELLANEOUS. The terms in this Plan shall have the same meaning as those used in the Qualified Plans unless the context clearly indicates the contrary. ARTICLE II PENSION BENEFITS Sec. 2.1 AMOUNT OF PENSION. Each Participant in this Plan shall be entitled to a pension under this Plan that is the actuarial equivalent of the excess, if any, of (a) the pension the Participant would be entitled under the benefit formula of the Qualified Plans applied (i) without respect to the maximum benefit limitations in said Plans required by Section 415 of the Internal Revenue Code of 1986, as amended from time to time, (ii) as if Section 4.7(b) of the Qualified Plans read as follows: "Any bonus earned by a Participant pursuant to a plan or policy of the Company, that is paid in a calendar year other than the calendar year in which such bonus would normally be 2 paid under such plan or policy, shall be included in Certified Earnings in the year it normally would be paid, be valued at the amount of bonus that would have been paid in that year and shall not be included in Certified Earnings in the year it is paid", for each year the Participant was a Participant in this Plan, (iii) as if there were no maximum compensation limits in said Qualified Plans required by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended from time to time, and (iv) as if Section 4.7 of the Qualified Plans included in Certified Earnings for a Plan Year compensation that would have been paid in that year in the absence of an election to defer payment of the compensation to a later date pursuant to the provisions of a deferred compensation plan, over (b) the pension the Participant is entitled to receive from the Qualified Plans, the Excess Plan and Supplemental Pension Plan I. Sec. 2.2 METHOD OF PAYMENT. The pension payable under this Plan shall be paid in a single sum at such time during the calendar year next following the calendar year in which the Participant's Termination of Employment occurs as may be determined by the administrative committee under the DHC Plan. Actuarial equivalents under this Plan shall be determined by the Actuary for the Qualified Plans using such factors and assumptions as the Actuary considers appropriate for the purpose. Sec. 2.3 VESTING. A Participant is entitled to benefits under this Plan for deferrals of compensation made after January 1, 1993 only if: a) The Participant has a termination of employment after age 55 and is entitled to a pension under the DHC Plan, the Hudson's Plan or the Mervyn's Plan; or b) The Participant's termination of employment occurred because of a reduction in force; or 3 c) The Participant's termination of employment is a result of a written mutual agreement that contains a release in the form determined by the Company. ARTICLE III MISCELLANEOUS Sec. 3.1 UNFUNDED. Pensions under this Plan shall be unfunded. No person entitled to a benefit under this Plan shall, by virtue of this Plan, have any interest in any specific asset or assets of the Company. Such persons have only an unsecured contract right to receive payments in accordance with this Plan. Sec. 3.2 BENEFITS MAY NOT BE ASSIGNED OR ALIENATED. Except as required by law, the interests of persons entitled to benefits under this Plan may not in any manner whatsoever be assigned or alienated, whether voluntarily or involuntarily, or directly or indirectly. Sec. 3.3 NOT EMPLOYMENT AGREEMENT. This Plan is not an employment agreement and does not assure the continued employment of any employee or Participant for any time or period. Sec. 3.4 ADMINISTRATION. The administrative committee under the DHC Plan shall control and manage the operations and administration of this Plan and make all decisions and determinations incident thereto. Sec. 3.5 CLAIMS PROCEDURE. The administrative committee under the DHC Plan shall establish a claims procedure consistent with ERISA requirements. ARTICLE IV AMENDMENT, TERMINATION AND APPLICABLE LAW Sec. 4.1 AMENDMENT AND TERMINATION. This Plan may be amended or terminated by the Board of Directors of the Company at any time. No amendment or termination shall adversely 4 affect a benefit to which a Participant is entitled under Article II prior to the effective date of such amendment or termination, unless the Participant becomes entitled to an amount equal to or greater than such benefit under another plan or practice adopted by the Company, as a substitute to this Plan. Sec. 4.2 APPLICABLE LAW. The provisions of this Plan shall be construed and enforced according to the laws of the State of Minnesota to the extent that such laws are not preempted by the laws of the United States of America. All controversies, disputes, and claims arising hereunder shall be submitted to the United States District Court for the District of Minnesota. ARTICLE V DEATH BENEFITS Sec. 5.1 DEATH WHILE EMPLOYED. If a Participant dies prior to incurring any other type of Termination of Employment, and if the Participant would have been entitled to a payment under Article II of this Plan if the Participant's Termination of Employment had occurred on the date of his or her death for a reason other than death, death benefits shall be payable as follows: (a) If the Participant is survived by a qualified spouse, the spouse shall be entitled to the benefit that would have been paid under Article II if the Participant had a Termination of Employment on the date of death and survived until the date the benefit would have been paid to the Participant. (b) If the Participant is survived by a qualified spouse but the spouse dies before the payment is made under subsection (a), the payment shall instead be made to the Participant's estate. 5 (c) If the Participant is not survived by a qualified spouse, the payment under section (a) shall instead be made to the Participant's estate. (d) For purposes of this Section, a person is a "qualified spouse" of a Participant if, and only if, such person is the opposite sex of the Participant and such person and the Participant are legally married to each other at the time of the Participant's death. Sec. 5.2 DEATH FOLLOWING TERMINATION OF EMPLOYMENT. If a Participant's Termination of Employment occurs for a reason other than death, and if the Participant is entitled to a benefit under Article II of this Plan due to the Termination of Employment but dies prior to receiving that benefit, a death benefit shall be payable as follows: (a) If the Participant is survived by a qualified spouse, the spouse shall receive the payment that would have been made to the Participant if the Participant had lived. However, if the spouse dies prior to receiving that payment, the payment shall instead be made to the Participant's estate. (b) If the Participant is not survived by a qualified spouse, the Participant's estate shall receive the payment that would have been made if the Participant had lived. 6 EX-10.H 4 SUPPLEMENTAL PENSION PLAN III 11-29-94 Date Amended: 12-14-94 Effective: 1-1-95 Amended and Restated 1-8-97 DAYTON HUDSON CORPORATION SUPPLEMENTAL PENSION PLAN III ARTICLE I GENERAL Sec. 1.1 NAME OF PLAN. The name of the pension plan set forth herein is "Dayton Hudson Corporation Supplemental Pension Plan III" (the "Plan"). Sec. 1.2 PURPOSE. The Plan has been established by Dayton Hudson Corporation (the "Company") to provide retirement income in addition to the retirement income provided by the Dayton Hudson Corporation Employees' Retirement Plan (the "DHC Plan") as in effect from time to time, The Retirement Plan of The J. L. Hudson Company (the "Hudson Plan") as in effect from time to time, the Mervyn's Pension Plan (the "Mervyn's Plan") as in effect from time to time, the Dayton Hudson Corporation Excess Benefit Plan (the "Excess Plan") as in effect from time to time, the Dayton Hudson Corporation Supplemental Pension Plan I ("Supplemental Pension Plan I") as in effect from time to time, and the Dayton Hudson Corporation Supplemental Pension Plan II ("Supplemental Pension Plan II") as in effect from time to time to certain Participants in such plans. The Plan is intended to be a "top hat plan" as defined in Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended from time to time, ("ERISA") and shall be interpreted and administered accordingly. Sec. 1.3 QUALIFIED PLAN. Each of the DHC Plan, the Hudson Plan and the Mervyn's Plan is sometimes referred to herein as a "Qualified Plan". Sec. 1.4 PARTICIPATION. An employee of the Company or a subsidiary of the Company becomes and remains a Participant in this Plan only if he is a Participant in the DHC Plan and/or the Hudson Plan and/or the Mervyn's Plan, only if he is at least age 55 and only if he is a member of a select group of management of the Company or a subsidiary of the Company and is a highly compensated employee of the Company or a subsidiary of the Company. In order to meet the criteria of being a member of a select group of management of the Company or a subsidiary of the Company and being a highly compensated employee of the Company or a subsidiary of the Company, the employee must be designated a member of the Senior Management Group ("SMG") by the Chief Executive Officer of the Company or of an equivalent rank on any revised classification system and have a grade 32 or higher under the Company's compensation grading system or an equivalent grade on any revised grading system. Sec. 1.5 MISCELLANEOUS. The terms in this Plan shall have the same meaning as those used in the Qualified Plans unless the context clearly indicates the contrary. ARTICLE II PENSION BENEFITS Sec. 2.1 AMOUNT OF PENSION. Each Participant in this Plan who has a Termination of Employment under a Qualified Plan after age 55, who is not entitled to payments under an Income Continuance Plan or Policy of the Company and/or a subsidiary of the Company and who is approved for benefits under this Plan by the Board of Directors of Dayton Hudson Corporation, shall be entitled to a pension under this Plan that is the actuarial equivalent of the excess, if any, of 2 (a) the pension the Participant would be entitled under the benefit formula of the Qualified Plans applied (i) without respect to the maximum benefit limitations in said Plans required by Section 415 of the Internal Revenue Code of 1986, as amended from time to time, (ii) as if Section 4.7(b) of the Qualified Plans read as follows: "Any bonus earned by a Participant pursuant to a plan or policy of the Company, that is paid in a calendar year other than the calendar year in which such bonus would normally be paid under such plan or policy, shall be included in Certified Earnings in the year it normally would be paid, be valued at the amount of bonus that would have been paid in that year and shall not be included in Certified Earnings in the year it is paid", for each year the Participant was a Participant in the Supplemental Pension Plan I, (iii) as if Section 4.7 of the Qualified Plans included in Certified Earnings for a Plan Year compensation that would have been paid in that year in the absence of an election to defer payment of the compensation to a later date pursuant to the provisions of a deferred compensation plan, (iv) without respect to the maximum compensation limitation in said Qualified Plans required by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended from time to time, and (v) as if the Participant at Termination of Employment was, for purposes of applying Appendix B of the Qualified Plans, five years older than his actual age (except that no Participant shall be deemed at Termination of Employment to be older than his age on the 65th anniversary of the date of his birth) over (b) the pension the Participant is entitled to receive from the Qualified Plans, the Excess Plan, Supplemental Pension Plan I and Supplemental Pension Plan II. Sec. 2.2 METHOD OF PAYMENT. The pension payable under this Plan shall be paid in a single sum at such time during the calendar year next following the calendar year in which the 3 Participant's Termination of Employment occurs as may be determined by the administrative committee under the DHC Plan. Actuarial equivalents under this Plan shall be determined by the Actuary for the Qualified Plans using such factors and assumptions as the Actuary considers appropriate for the purpose. ARTICLE III MISCELLANEOUS Sec. 3.1 UNFUNDED. Pensions under this Plan shall be unfunded. No person entitled to a benefit under this Plan shall, by virtue of this Plan, have any interest in any specific asset or assets of the Company. Such persons have only an unsecured contract right to receive payments in accordance with this Plan. Sec. 3.2 BENEFITS MAY NOT BE ASSIGNED OR ALIENATED. Except as required by law, the interests of persons entitled to benefits under this Plan may not in any manner whatsoever be assigned or alienated, whether voluntarily or involuntarily, or directly or indirectly. Sec. 3.3 NOT EMPLOYMENT AGREEMENT. This Plan is not an employment agreement and does not assure the continued employment of any employee or Participant for any time or period. Sec. 3.4 ADMINISTRATION. The administrative committee under the DHC Plan shall control and manage the operations and administration of this Plan and make all decisions and determinations incident thereto. Sec. 3.5 CLAIMS PROCEDURE. The administrative committee under the DHC Plan shall establish a claims procedure consistent with ERISA requirements. 4 ARTICLE IV AMENDMENT, TERMINATION AND APPLICABLE LAW Sec. 4.1 AMENDMENT AND TERMINATION. This Plan may be amended or terminated by the Board of Directors of the Company at any time. No amendment or termination shall adversely affect a benefit to which a Participant is entitled under Article II prior to the effective date of such amendment or termination, unless the Participant becomes entitled to an amount equal to or greater than such benefit under another plan or practice adopted by the Company, as a substitute to this Plan. Sec. 4.2 APPLICABLE LAW. The provisions of this Plan shall be construed and enforced according to the laws of the State of Minnesota to the extent that such laws are not preempted by the laws of the United States of America. All controversies, disputes, and claims arising hereunder shall be submitted to the United States District Court for the District of Minnesota. ARTICLE V DEATH BENEFITS Sec. 5.1 DEATH WHILE EMPLOYED. If a Participant dies prior to incurring any other type of Termination of Employment, and if the Participant would have been entitled to a payment under Article II of this Plan if the Participant's Termination of Employment had occurred on the date of his or her death for a reason other than death, death benefits shall be payable as follows: (a) If the Participant is survived by a qualified spouse, the spouse shall be entitled to the benefit that would have been paid under Article II if the Participant had a Termination of Employment on the date of death and survived until the date the benefit would have been paid to the Participant. 5 (b) If the Participant is survived by a qualified spouse but the spouse dies before the payment is made under subsection (a), the payment shall instead be made to the Participant's estate. (c) If the Participant is not survived by a qualified spouse, the payment under section (a) shall instead be made to the Participant's estate. (d) For purposes of this Section, a person is a "qualified spouse" of a Participant if, and only if, such person is the opposite sex of the Participant and such person and the Participant are legally married to each other at the time of the Participant's death. Sec. 5.2 DEATH FOLLOWING TERMINATION OF EMPLOYMENT. If a Participant's Termination of Employment occurs for a reason other than death, and if the Participant is entitled to a benefit under Article II of this Plan due to the Termination of Employment but dies prior to receiving that benefit, a death benefit shall be payable as follows: (a) If the Participant is survived by a qualified spouse, the spouse shall receive the payment that would have been made to the Participant if the Participant had lived. However, if the spouse dies prior to receiving that payment, the payment shall instead be made to the Participant's estate. (b) If the Participant is not survived by a qualified spouse, the Participant's estate shall receive the payment that would have been made if the Participant had lived. 6 EX-10.I 5 DEFERRED COMP. PLAN, SR. MGMT. GROUP 5-24-94 Adopted: 6-8-94 Effective: 8-1-94 Amended 4-10-96 Amended 9-11-96 DAYTON HUDSON CORPORATION DEFERRED COMPENSATION PLAN SENIOR MANAGEMENT GROUP ARTICLE 1 PURPOSE The purpose of this Deferred Compensation Plan (the "Plan") is to provide a means whereby Dayton Hudson Corporation (the "Company") may afford financial security to a select group of employees who are in the Senior Management Group of the Company and its subsidiaries and who have rendered and continue to render valuable services to the Company or its subsidiaries and who make an important contribution towards the Company's continued growth and success, by providing for additional future compensation so that such employees may be retained and their productive efforts encouraged. ARTICLE 2 DEFINITIONS AND CERTAIN PROVISIONS BENEFICIARY. "Beneficiary" means the person or persons designated as such in accordance with Article 6. BENEFIT DEFERRAL PERIOD. "Benefit Deferral Period" means that period of one (1) or four (4) Plan Years as determined pursuant to Article 4 over which a Participant defers a portion of such Participant's Earnings. COMMITTEE. "Committee" means the plan administration committee appointed to administer the Plan pursuant to Article 3. CUMULATIVE DEFERRAL AMOUNT. "Cumulative Deferral Amount" means the total cumulative amount by which a Participant's Earnings must be reduced over the period prescribed in Section 4.1. If for a Plan Year a Matching Allocation for an Employee who is a member of the Senior Management Group of the Company pursuant to the Dayton Hudson Corporation Supplemental Retirement, Savings and Employee Stock Ownership Plan ("SRSP") cannot be made because the Before Tax Deposits or After Tax Deposits elected by the Employee are reduced to comply with the provisions of the SRSP, "Cumulative Deferral Amount" also includes the amount of the Matching Allocation that cannot be made. DECLARED RATE. "Declared Rate" means with respect to any Plan Year the applicable rate announced in advance by the Committee for such Plan Year. Under no circumstances shall the minimum rate be less than twelve percent (12%) per annum and the maximum rate shall not exceed twenty percent (20%) per annum. The rate to be announced, subject to the minimum and maximum percentages referenced above, shall be a calculated rate using the following formula: Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc. or its successor (or if said index is no longer available, its successor index, or if no successor index exists, such other index as selected by the Committee as most closely replicates the measure produced by said Moody index) for the month of June for the year preceding the subject Plan Year to which the Declared Rate shall apply, said rate of return to be rounded to the nearest .10% of said reported rate, to which percentage rate shall be added six (6) percentage points (e.g. an index of 7.16% rounded to 7.20% plus 6% equals a 13.2% "Declared Rate"). PROVIDED HOWEVER, if any tax or insurance change shall occur which in the reasoned judgment of the Committee shall have an ongoing adverse economic effect on the underlying COLI financing assumptions related to the Plan, then the Committee may adjust said Declared Rate to reflect such adverse economic impact but in no event below the twelve percent (12%) minimum referenced in the first paragraph hereof. DEFERRAL ACCOUNT. "Deferral Account" means the account maintained on the books of account of the Company pursuant to Section 4.4. EARLY RETIREMENT. "Early Retirement" means the termination of a Participant's employment with the Employer for a reason other than death on or after the date the Participant attains age 55. EARNINGS. "Earnings" means the base pay and incentive pay paid to a Participant by the Company or a subsidiary, excluding car and other allowances and other cash and non-cash compensation. ELIGIBLE EMPLOYEE. "Eligible Employee" means each Employee in the Senior Management Group of the Company who executes an Enrollment Agreement to participate in the Plan. EMPLOYEE. "Employee" means any person employed by the Employer on a regular full-time salaried basis, including officers of the Employer. EMPLOYER. "Employer" means the Company and any of its wholly owned subsidiaries. ENROLLMENT AGREEMENT. "Enrollment Agreement" means the written agreement entered into by the Employer and an Eligible Employee pursuant to which the Eligible Employee becomes a Participant in the Plan. In the sole discretion of the Company, authorization forms filed by any Participant by which the Participant makes the elections provided for by this Plan may be treated as a completed and fully executed Enrollment Agreement for all purposes under the Plan. 2 NORMAL RETIREMENT. "Normal Retirement" means the termination of a Participant's employment with the Employer for reasons other than death on or after the date the Participant attains age 65. PARTICIPANT. "Participant" means an Eligible Employee who has filed a completed and executed Enrollment Agreement or authorization form with the Committee and is participating in the Plan in accordance with the provisions of Article 4. "Participant" also means an Employee who is a member of the Senior Management Group of the Company who has a Cumulative Deferral Amount based on Matching Allocation that could not be made to the SRSP. PLAN YEAR. "Plan Year" means the calendar year beginning January 1 and ending December 31. ARTICLE 3 ADMINISTRATION OF THE PLAN A Committee shall be appointed by the Chief Executive Officer of the Company to administer the Plan and to establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. The Committee shall have discretionary authority to determine eligibility for benefits and to construe the terms of the Plan. Interpretations of the Plan by the Committee shall be conclusive. Members of the Committee shall be eligible to participate in the Plan while serving as members of the Committee, but a member of the Committee shall not vote or act upon any matter which relates solely to such member's interest in the Plan as a Participant. ARTICLE 4 PARTICIPATION 4.1 ELECTION TO PARTICIPATE. Any Employee who is a member of the Senior Management Group of the Company may enroll in the Plan by filing a completed and fully executed Enrollment Agreement or authorization form with the Committee. Pursuant to said Enrollment Agreement or authorization form, the Employee shall irrevocably designate a dollar amount by which the aggregate Earnings of such Participant would be reduced over one (1) or four (4) Plan Years next following the execution of the Enrollment Agreement (the "Benefit Deferral Period"), provided, however, that: (a) MINIMUM DEFERRAL. The reduction for any Plan Year shall not be less than Five Thousand Dollars ($5,000.00) (b) REDUCTION IN EARNINGS. 3 (i) IN GENERAL. Except as otherwise provided in this Section 4.1, the Earnings of the Participant for each of the Plan Years in the Benefit Deferral Period shall be reduced by the amount specified in the Enrollment Agreement (including any authorization form) applicable to such Plan Year. (ii) ACCELERATED REDUCTION. A Participant may elect in a written notice with the consent of the Committee to increase the amount of the reduction of Earnings otherwise provided for by Section 4.1(b)(i) for any of the Plan Years remaining in the Benefit Deferral Period, provided, however, that any such increase in the reduction of Earnings for any remaining Plan Years in the Benefit Deferral Period shall not increase the Cumulative Deferral Amount, but shall act to shorten the length of the Benefit Deferral Period. (c) MAXIMUM REDUCTION IN EARNINGS. A Participant may not elect a Cumulative Deferral Amount or an increase in reduction of Earnings pursuant to Section 4.1(b)(ii), or any combination of the two, that would cause the aggregate total reduction in Earnings in any Plan Year to exceed twenty-five percent (25%) of the base pay and one hundred percent (100%) of the incentive pay payable during such Plan Year up to a total of $250,000 per year plus the amount of any payout made pursuant to Section 5.4, or such greater percent of base pay and/or incentive pay or greater total amount as the Committee may permit in its sole discretion. In the event that a Participant elects a Cumulative Deferral Amount or increase in reduction of Earnings that would violate the limitation described in this paragraph (c), the election shall be valid except that the Cumulative Deferral Amount or increase in reduction of Earnings so elected shall automatically be reduced to comply with such limitation, whichever is most appropriate in the sole discretion of the Committee. 4.2 DEFERRAL ACCOUNTS. The Committee shall establish and maintain a separate Deferral Account for each Participant. The amount by which a Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by the Employer to the Participant's Deferral Account on the fifteenth (15th) day of the month in which such Earnings would otherwise have been paid. The Participant's Deferral Account shall be credited with the annual SRSP lost Matching Allocation on January 15 following the year of the lost Matching Allocation. Such Deferral Account shall be debited by the amount of any payments made by the Employer to the Participant or the Participant's Beneficiary pursuant to this Plan. (a) NORMAL AND EARLY RETIREMENT INTEREST. Each Deferral Account of a Participant who attains Normal or Early Retirement shall be deemed to bear interest from the date such Deferral Account was established through the date of commencement of payment of the Normal or Early Retirement Benefit at a rate equal to the Declared Rate which is announced by the Committee for each Plan Year, compounded annually, on the balance from month-to-month in such Deferral Account. Following the date of commencement of payment of the Normal or Early Retirement Benefit, a Participant's Deferral Account shall be deemed to bear interest on the balance of such Deferral Account from month to month at a rate equal to the Declared Rate, compounded annually. 4 (b) OTHER INTEREST. In the case of any termination of a Participant's employment with the Employer other than by Normal or Early Retirement or upon the Participant's termination of enrollment in this Plan pursuant to Section 5.2(b), the Participant's Deferral Account shall be deemed to bear interest from the date such Deferral Account was established through the date of the earlier of termination of employment or termination of enrollment in this Plan on the balance from month-to-month in such Deferral Account at a rate equal to ten percent (10%) per annum, compounded annually, provided, however, that if more than five (5) years have elapsed since the first day of the Benefit Deferral Period, the Participant's Deferral Account shall be deemed to bear interest from the date such Deferral Account was established through the date of the earlier of termination of employment or termination of enrollment in this Plan on the balance from month-to-month in such Deferral Account at a rate equal to the Declared Rate which is announced by the Committee for each Plan Year, compounded annually. Following the earlier of the date of commencement of payment of the Termination Benefit or the date of termination of enrollment in this Plan, a Participant's Deferral Account shall be deemed to bear interest on the balance in such Deferral Account from month-to-month at a rate equal to twelve percent (12%) per annum, compounded annually. 4.3 ROLLOVER DEFERRED COMPENSATION ACCOUNT. In its sole discretion, the Committee may permit a Participant to make a special rollover election to transfer any amounts which were previously deferred under the Company's existing deferred compensation plans to this Plan. In such event, the Committee shall establish and maintain a separate Rollover Deferral Account for each Participant who makes a rollover transfer to this Plan. Such Rollover Deferral Account shall be deemed to bear interest at the same rate and subject to the same conditions as other Deferral Accounts pursuant to Section 4.2. Each Participant who makes a rollover transfer to a Rollover Deferral Account shall be treated for purposes of determining benefits under the Plan as having a separate Cumulative Deferral Amount and Deferral Account which shall initially be in the amount of the rollover transfer. A Participant who makes a rollover transfer shall be deemed to waive all rights under the Company's existing deferred compensation plans from which rollover transfers are made with respect to the amounts transferred to this Plan, including the right to make elections regarding the time or manner of payment as permitted thereunder. Rollover transfers shall be subject to the minimum deferral amount set forth in Section 4.1(a), but shall not be subject to any maximum deferral limitation. 4.4 VALUATION OF ACCOUNTS. The value of a Deferral Account as of any date shall equal the amounts theretofore credited to such account less any payments debited to such account plus the interest deemed to be earned on such account in accordance with Section 4.2. Interest shall be credited monthly on the fifteenth (15th) day of each month. 4.5 STATEMENT OF ACCOUNTS. The Committee shall submit to each Participant, within one hundred twenty (120) days after the close of each Plan Year, a statement in such form as the Committee deems desirable setting forth the balance standing to the credit of each Participant in his Deferral Account. 5 ARTICLE 5 BENEFITS 5.1 NORMAL OR EARLY RETIREMENT. Upon Normal or Early Retirement, the payment of benefits shall commence on the first day of the month following retirement, or following such later date which the Participant elected in his Enrollment Agreement (including any authorization form). A Participant may elect in his Enrollment Agreement (including any authorization form) to have payments commence from one (1) to ten (10) years following retirement, but not later than age 65 (or five (5) years after the first day of the Benefit Deferral Period, if later). (a) SINGLE PARTICIPANT. In the case of a Participant who is single when payments commence, the Employer shall pay to the Participant an amount each month for the life of the Participant, but not less than one hundred eighty (180) months. The payments shall be the actuarial equivalent of the aggregate of the Participant's Deferral Account at the time payments commence and the interest that will accrue on the unpaid balance in such Deferral Account during the payment period pursuant to Section 4.2(a). The monthly amount of payments will be redetermined annually to reflect the changes in the Declared Rate. (b) MARRIED PARTICIPANT. In the case of a Participant who is married when payments commence, the Employer shall make actuarially reduced monthly payments to the Participant for his life and thereafter, if the Participant is survived by a spouse who was married to the Participant when Normal or Early Retirement Benefit payments commenced, shall continue to make monthly payments to the Participant's spouse for her life, with payments to be made for an aggregate period of not less than one hundred eighty (180) months. The payments shall be the actuarial equivalent of the payments which would be made to the Participant pursuant to Section 5.1(a) if he were single. The monthly amount of payments will be redetermined annually to reflect changes in the Declared Rate. 5.2 TERMINATION BENEFIT. (a) TERMINATIONS OF EMPLOYMENT. If a Participant shall cease to be an Employee for any reason other than death or Normal or Early Retirement or Certain Terminations of Employment under Section 5.2(b), the Employer shall pay to the Participant in one lump sum an amount (the "Termination Benefit") equal to the value of the Deferral Account as of the date of payment and such Participant shall be entitled to no further benefits under this Plan, provided, however, at the sole discretion of the Committee, no lump sum shall be payable and, instead, the Employer shall pay to the Participant an equal amount each month for a period not to exceed forty-eight (48) months beginning on the first day of the month next following the date of termination of employment, the sum of which payments shall equal (a) the value as of the date of termination of employment of the Deferral Account, plus (b) the interest that will accrue on the unpaid balance in such Deferral Account during such period at the rate of twelve percent (12%) per annum, compounded annually. Upon termination of employment the Participant shall immediately cease to be eligible for any benefits under the 6 Plan other than the Termination Benefit. No other benefit shall be payable to either the Participant or any Beneficiary of such Participant. (b) CERTAIN TERMINATIONS OF EMPLOYMENT. If a Participant shall cease to be an Employee for any reason other than death or Normal or Early Retirement and shall be at least age 50, have worked for the Company for at least 10 years and has received an ICP Contract under the Company's Income Continuance Policy that is signed by Participant and Company and not rescinded, the payment of benefits shall commence on the first day of the month following termination, or following such later date which the Participant elected in his Enrollment Agreement (including any authorization form). A Participant may elect in his Enrollment Agreement (including any authorization form) to have payments commence from one (1) to ten (10) years following retirement, but not later than age 65 (or five (5) years after the first day of the Benefit Deferral Period, if later). (i) SINGLE PARTICIPANT. In the case of a Participant who is single when payments commence, the Employer shall pay to the Participant an amount each month for the life of the Participant, but not less than one hundred eighty (180) months. The payments shall be the actuarial equivalent of the aggregate of the Participant's Deferral Account at the time payments commence and the interest that will accrue on the unpaid balance in such Deferral Account during the payment period pursuant to Section 4.2(a). The monthly amount of payments will be redetermined annually to reflect changes in the Declared Rate. (ii) MARRIED PARTICIPANT. In the case of a Participant who is married when payments commence, the Employer shall make actuarially reduced monthly payments to the Participant for his life and thereafter, if the Participant is survived by a spouse who was married to the Participant when Normal or Early Retirement Benefit payments commenced, shall continue to make monthly payments to the Participant's spouse for her life, with payments to be made for an aggregate period of not less than one hundred eighty (180) months. The payments shall be the actuarial equivalent of the payments which would be made to the Participant pursuant to Section 5.1(a) if he were single. The monthly amount of payments will be redetermined annually to reflect changes in the Declared Rate. (c) TERMINATION OF ENROLLMENT IN PLAN. With the written consent of the Committee, a Participant may terminate his enrollment in the Plan by filing with the Committee a written request to terminate enrollment. The Committee will consent to the termination of a Participant's enrollment in the Plan in the event of an unforeseeable financial emergency of the Participant. An unforeseeable financial emergency shall mean an unexpected need for cash arising from an illness, casualty loss, sudden financial reversal or other such unforeseeable occurrence. Cash needs arising from foreseeable events such as the purchase of a house or education expenses for children shall not be considered to be the result of an unforeseeable financial emergency. Upon termination of enrollment, no further reductions shall be made in the Participant's Earnings pursuant to his Enrollment Agreement, and the 7 Participant shall immediately cease to be eligible for any benefits under the Plan other than the Termination Benefit. No other benefit shall be payable to either the Participant or any Beneficiary of such Participant. In its sole discretion, the Committee may pay the Termination Benefit on a date earlier than the Participant's termination of employment with the Employer, in which event the Termination Benefit shall be calculated as if the Participant had terminated employment with the Employer on the date of such payment. Following termination of enrollment in the Plan, a Participant's Deferral Account shall be deemed to bear interest on the balance in such Deferral Account from month-to-month at a rate equal to twelve percent (12%) per annum, compounded annually. 5.3 LUMP SUM ELECTION. Other provisions of Section 5.1 and Section 5.2 notwithstanding, if a Participant in his Enrollment Agreement (including any authorization form) has elected a lump sum payment to be made after his retirement, the amount of his Deferral Account (including interest) for the Benefit Deferral Period covered by that Agreement shall be paid to the Participant in a lump sum at the time specified in that Agreement. 5.4 EARLY PAYMENT OPTION. The Employer shall pay to the Participant, if he is an Employee of the Company, the amount by which the Participant's Earnings were reduced in any Plan Year pursuant to Section 4.1 during the eighth (8th) year following the Plan Year ("Early Payment"), provided that such amount has not previously been paid out under other provisions of the Plan. Such Early Payment shall not include any interest credited to the Participant's Deferral Account pursuant to Section 4.2. Notwithstanding any other provisions of this Plan, the Participant may elect prior to the beginning of any year in which such an Early Payment will be made to him to reduce his Earnings during the year in which such Early Payment is made by an amount equal to the Early Payment. An Early Payment shall not result in any change in the Survivor Benefits payable pursuant to Section 5.5, other than as a result of the reduction in the Participant's Cumulative Deferral Account and Deferral Account balance by the amount of the Early Payment. 5.5 SURVIVOR BENEFITS. (a) If a Participant dies while employed with an Employer prior to Early or Normal Retirement, the Employer will pay to the Participant's Beneficiary an annual benefit for the greater of: (i) ten (10) years, or (ii) until the Participant would otherwise have attained age 65, equal to fifty percent (50%) of the Cumulative Deferral Amount. However, if the Committee determines that a distribution of the Participant's Deferral Account would produce a greater benefit, such Deferral Account balance shall be paid to the Participant's Beneficiary in equal annual installments over the same period as specified above based on crediting the balance from month-to-month in such Deferral Account at a rate equal to twelve percent (12%) per annum, compounded annually. 8 (b) If a Participant dies after Early or Normal Retirement, but prior to commencement of payment of any Early or Normal Retirement Benefit under the Plan, the Employer will pay to the Participant's Beneficiary the benefit that such Participant would have received had the Participant retired on the day prior to such Participant's death, provided, however, that if the present value of the benefit described in this Section 5.5(b) is less than the present value of the benefit described in Section 5.5(a), using in each case twelve percent (12%) as the discount factor, then the Beneficiary described in this Section 5.5(b) shall receive the benefit described in Section 5.5(a) and not the benefit described in this Section 5.5(b). (c) If a Participant (who was unmarried at the commencement of the payment of any Early or Normal Retirement Benefit, or whose spouse who was married to the Participant at the time of commencement of payment of any Early or Normal Retirement Benefit predeceases the Participant) dies after the commencement of the payment of any Early or Normal Retirement Benefit, the Employer will pay to the Participant's Beneficiary the remaining installments of any such benefit for the balance of the one hundred eighty (180) months minimum payment period. If a spouse who was married to the Participant at the time of commencement of payment of the Early or Normal Retirement Benefit survives beyond such one hundred eighty (180) months minimum payment period, payments shall continue to be made to the spouse until the spouse's death. If the spouse who was married to the Participant at the time of commencement of payment of the Early or Normal Retirement Benefit survives the Participant, but does not survive past the one hundred eighty (180) months minimum payment period, the Employer will pay to the Participant's Beneficiary the remaining installments of any such benefit for the balance of the one hundred eighty (180) months minimum payment period. In computing any benefits to be paid following the Participant's death pursuant to this paragraph (c), the Participant's Deferral Account shall be deemed to bear interest following the Participant's death on the balance in such Deferral Account from month-to- month at a rate equal to the Declared Rate, compounded annually. (d) If a Participant, who does not receive a lump sum Termination Benefit, dies prior to the time he has received the forty-eight (48) months payments referred to in Section 5.2(a), the remaining payments for such 48 month period shall be paid to the Participant's Beneficiary. (e) Notwithstanding other provisions of the Plan, if the Beneficiary is not a spouse, the present value of the installments shall be paid as soon as administratively feasible after the death of the Participant. The interest rate used to compute the present value shall be the average of the Declared Rate for the Plan Year in which the Participant dies and twelve percent (12%). (f) Solely for purposes of this Section 5.5, a Participant who has a Certain Termination of Employment as defined in Section 5.2(b) shall be deemed to have had an Early Retirement and the benefit payable under Section 5.2(b) shall be deemed to be an Early Retirement Benefit. 9 5.6 SMALL BENEFIT. In the event that the Committee determines in its sole discretion that the amount of any benefit is too small to make it administratively convenient to pay such benefit over time, the Committee may pay the benefit in the form of a lump sum, notwithstanding any provision of this Article 5 to the contrary. Such lump sum shall be computed as the net present value of the benefit otherwise payable using a twelve percent (12%) per annum discount factor. 5.7 WITHHOLDING. To the extent required by the law in effect at the time payments are made, the Employer shall withhold from payments made hereunder the minimum taxes required to be withheld by the federal or any state or local government. 5.8 LUMP SUM PAYOUT OPTION. Notwithstanding any other provisions of the Plan, at any time after retirement, but not later than ten (10) years after retirement of the Participant, a Participant or a Beneficiary of a deceased Participant may elect to receive an immediate lump sum payment of 50% or 100% of the balance of his Deferral Account, reduced by a penalty, which shall be forfeited to the Company, equal to eight percent (8%) of the amount of his Deferral Account he elected to receive, in lieu of payments in accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. Such election, if not 100%, may be made only twice. If less than 100% of his Deferral Account is paid out, the remainder of his Deferral Account will be paid in accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. However, the penalty shall not apply if the Committee determines, based on advice of counsel or a final determination by the Internal Revenue Service or any court of competent jurisdiction, that by reason of the foregoing provision any Participant or Beneficiary has recognized or will recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. The Company shall notify all Participants (and Beneficiaries of deceased Participants) of any such determination. Whenever any such determination is made, the Company shall refund all penalties which were imposed hereunder on account of making lump sum payments at any time during or after the first year to which such determination applies (i.e., the first year when gross income is recognized for federal income tax purposes). Interest shall be paid on any such refunds at ten percent (10%) for each Plan Year, compounded annually. The Committee may also reduce or eliminate the penalty if it determines that this action will not cause any Participant or Beneficiary to recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. ARTICLE 6 BENEFICIARY DESIGNATION Each Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries to whom payment under this Plan shall be made in the event of the Participant's death prior to complete distribution to the Participant of the benefits due under the Plan. Each Beneficiary designation shall become effective only when filed in writing with the Committee during the Participant's lifetime on a form prescribed by the Committee. The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation form shall revoke such 10 designation unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in the case of marriage the Participant's new spouse had previously been designated as Beneficiary. The spouse of a married Participant domiciled in a community property jurisdiction shall join in any designation of Beneficiary or Beneficiaries other than the spouse. If a Participant fails to designate a Beneficiary as provided above, or if his Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Committee shall direct the distribution of such benefits to the Participant's estate. ARTICLE 7 AMENDMENT AND TERMINATION OF PLAN 7.1 AMENDMENT. The Board of Directors of the Company may at any time amend the Plan , in whole or in part for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals (excluding from such power to terminate future deferrals those future deferrals provided for in Section 5.4 EARLY PAYOUT OPTION); provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan. 7.2 AUTOMATIC TERMINATION OF PLAN. The Plan shall terminate only under the following circumstances. The Plan shall automatically terminate upon (a) a determination by the Company that a final decision of a court of competent jurisdiction or the U. S. Department of Labor holding that the Plan is not maintained "primarily for the purpose of providing deferred compensation for a select group of management or highly-compensated employees," and therefore is subject to Parts 2, 3 and 4 of Title I of ERISA, would require that the Plan be funded and would result in immediate taxation to Participants of their vested Plan benefits, or (b) a determination by the Company that a final decision of a court of competent jurisdiction has declared that the Participants under the Plan are in constructive receipt under the Internal Revenue Code of their vested Plan benefits. 7.3 PAYMENTS UPON AUTOMATIC TERMINATION. Upon any Plan termination under Section 7.2, the Participants will be deemed to have terminated their enrollment under the Plan as of the date of such termination. The Employer will pay all Participants the value of each Participant's Deferral Accounts in a lump sum, determined as if each Participant had a Termination of Employment on the date of such termination of the Plan as provided under Section 5.2(a) hereof. ARTICLE 8 MISCELLANEOUS 11 8.1 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of Employer, nor shall they be beneficiaries of, or have any rights, claims, or interests in any life insurance policies, annuity contracts, or the proceeds therefrom owned or which may be acquired by Employer ("Policies"). Such Policies or other assets of Employer shall not be held under any trust for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of Employer under this Plan. Any and all of Employer's assets and Policies shall be, and remain, the general, unpledged, unrestricted assets of Employer. Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise of Employer to pay money in the future. 8.2 NONASSIGNABILITY. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency. 8.3 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Employee any right to be retained in the employ of the Employer. 8.4 PROTECTIVE PROVISIONS. Each Participant shall cooperate with the Employer by furnishing any and all information requested by the Employer in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Employer may deem necessary and taking such other relevant action as may be requested by the Employer. If a Participant refuses so to cooperate, the Employer shall have no further obligation to the Participant under the Plan, other than payment to such Participant of the cumulative reductions in Earnings theretofore made pursuant to this Plan. If a Participant commits suicide during the two (2) year period beginning on the later of (a) the date of adoption of this Plan or (b) the first day of the first Plan Year of such Participant's participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history, then no benefits will be payable hereunder to such Participant or his Beneficiary, other than payment to such Participant of the cumulative reductions in Earnings theretofore made pursuant to this Plan, provided, that in the Employer's sole discretion, benefits may be payable in an amount reduced to compensate the Employer for any loss, cost, damage or expense suffered or incurred by the Employer as a result in any way of such misstatement or nondisclosure. 8.5 GENDER, SINGULAR AND PLURAL. All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular. 12 8.6 CAPTIONS. The captions of the articles, sections, and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 8.7 VALIDITY. In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan. 8.8 NOTICE. Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Employer, directed to the attention of the President of the Employer. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. 8.9 APPLICABLE LAW. This Plan shall be governed and construed in accordance with the laws of the State of Minnesota as applied to contracts executed and to be wholly performed in such state. 13 EX-10.J 6 DEFERRED COMP. PLAN, DIRECTORS Restated 4-8-92 Amended 4-10-96 Amended 9-11-96 DAYTON HUDSON CORPORATION DEFERRED COMPENSATION PLAN DIRECTORS ARTICLE 1 PURPOSE The purpose of this Deferred Compensation Plan (the "Plan") is to provide a means whereby Dayton Hudson Corporation (the "Company") may afford additional financial security to directors of the Company and its subsidiaries who have rendered and continue to render valuable services to the Company or its subsidiaries and who make an important contribution towards the Company's continued growth and success by providing for additional future compensation so that such directors may be retained and their productive efforts encouraged. ARTICLE 2 DEFINITIONS AND CERTAIN PROVISIONS BENEFICIARY. "Beneficiary" means the person or persons designated as such in accordance with Article 6. BENEFIT DEFERRAL PERIOD. "Benefit Deferral Period" means that period of one (1) or four (4) Plan Years as determined pursuant to Article 4 over which a Participant defers a portion of such Participant's Earnings. COMMITTEE. "Committee" means the plan administration committee appointed to administer the Plan pursuant to Article 3. CUMULATIVE DEFERRAL AMOUNT. "Cumulative Deferral Amount" means the total cumulative amount by which a Participant's Earnings must be reduced over the period prescribed in Section 4.1. DECLARED RATE. "Declared Rate" means with respect to any Plan Year the applicable rate announced in advance by the Committee for such Plan Year. Under no circumstances shall the minimum rate be less than twelve percent (12%) per annum and the maximum rate shall not exceed twenty percent (20%) per annum. The rate to be announced, subject to the minimum and maximum percentages referenced above, shall be a calculated rate using the following formula: Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc. or its successor (or if said index is no longer available, its successor index, or if no successor index exists, such other index as selected by the Committee as most closely replicates the measure produced by said Moody index) for the month of June for the year preceding the subject Plan Year to which the Declared Rate shall apply, said rate of return to be rounded to the nearest .10% of said reported rate, to which percentage rate shall be added six (6) percentage points (e.g. an index of 7.16% rounded to 7.20% plus 6% equals a 13.2% "Declared Rate"). PROVIDED HOWEVER, if any tax or insurance change shall occur which in the reasoned judgment of the Committee shall have an ongoing adverse economic effect on the underlying COLI financing assumptions related to the Plan, then the Committee may adjust said Declared Rate to reflect such adverse economic impact but in no event below the twelve percent (12%) minimum referenced in the first paragraph hereof. RESOLVED FURTHER that "Article 7 Amendment and Termination of Plan" be amended in its entirety to read as follows: DEFERRAL ACCOUNT. "Deferral Account" means the account maintained on the books of account of the Company pursuant to Section 4.4. DIRECTOR. "Director" means any director of the Company or a subsidiary. EARNINGS. "Earnings" means the total fees paid to a Participant for service on the Board of Directors (or any committee thereof) of the Company or a subsidiary. EMPLOYER. "Employer" means the Company and any of its wholly owned subsidiaries. ENROLLMENT AGREEMENT. "Enrollment Agreement" means the written agreement entered into by the Employer and a Director pursuant to which the Director becomes a Participant in the Plan. In the sole discretion of the Company, authorization forms filed by any Participant by which the Participant makes the elections provided for by this Plan may be treated as a completed and fully executed Enrollment Agreement for all purposes under the Plan. PARTICIPANT. "Participant" means a Director who has filed a completed and executed Enrollment Agreement or authorization form with the Committee and is participating in the Plan in accordance with the provisions of Article 4. PLAN YEAR. "Plan Year" means the fiscal year beginning February 1 and ending January 31. RETIREMENT. "Retirement" means termination of service as a Director for any reason whatsoever, whether voluntarily or involuntarily, except death. 2 ARTICLE 3 ADMINISTRATION OF THE PLAN A Committee shall be appointed by the Chief Executive Officer of the Company to administer the Plan and to establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. The Committee shall have discretionary authority to determine eligibility for benefits and to construe the terms of the Plan. Interpretations of the Plan by the Committee shall be conclusive. Members of the Committee shall be eligible to participate in the Plan while serving as members of the Committee, but a member of the Committee shall not vote or act upon any matter which relates solely to such member's interest in the Plan as a Participant. ARTICLE 4 PARTICIPATION 4.1 ELECTION TO PARTICIPATE. Any Director may enroll in the Plan by filing a completed and fully executed Enrollment Agreement or authorization form with the Committee. Pursuant to said Enrollment Agreement or authorization form, the Director shall irrevocably designate a dollar amount (the "Cumulative Deferral Amount") by which the aggregate Earnings of such Participant would be reduced over one (1) or four (4) Plan Years next following the execution of the Enrollment Agreement (the "Benefit Deferral Period"), provided, however, that: (a) MINIMUM DEFERRAL. The reduction for any Plan Year shall not be less than Five Thousand Dollars ($5,000.00). (b) REDUCTION IN EARNINGS. (i) IN GENERAL. Except as otherwise provided in this Section 4.1, the Earnings of the Participant for each of the Plan Years in the Benefit Deferral Period shall be reduced by the amount specified in the Enrollment Agreement (including any authorization form) applicable to such Plan Year. (ii) ACCELERATED REDUCTION. A Participant may elect in a written notice with the consent of the Committee to increase the amount of the reduction of Earnings otherwise provided for by Section 4.1(b) (i) for any of the Plan Years remaining in the Benefit Deferral Period, provided, however, that any such increase in the reduction of Earnings for any remaining Plan Years in the Benefit Deferral Period shall not increase the Cumulative Deferral Amount, but shall act to shorten the length of the Benefit Deferral Period. 3 (c) MAXIMUM REDUCTION IN EARNINGS. A Participant may not elect a Cumulative Deferral Amount or an increase in reduction of Earnings pursuant to Section 4.1(b) (ii), or any combination of the two, that would cause the aggregate total reduction in Earnings in any Plan Year to exceed one hundred percent (100%) of the Earnings payable during such Plan Year. In the event that a Participant elects a Cumulative Deferral Amount or increase in reduction of Earnings that would violate the limitation described in this paragraph (c), the election shall be valid except that the Cumulative Deferral Amount or increase in reduction of Earnings so elected shall automatically be reduced to comply with such limitation, whichever is most appropriate in the sole discretion of the Committee. 4.2 DEFERRAL ACCOUNTS. The Committee shall establish and maintain a separate Deferral Account for each Participant. The amount by which a Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by the Employer to the Participant's Deferral Account on the fifteenth (15th) day of the month in which such Earnings would otherwise have been paid. Such Deferral Account shall be debited by the amount of any payments made by the Employer to the Participant or the Participant's Beneficiary pursuant to this Plan. (a) INTEREST. Each Deferral Account of a Participant shall be deemed to bear interest from the date such Deferral Account was established through the date of commencement of payment of the Retirement Benefit at a rate equal to the Declared Rate which is announced by the Committee for each Plan Year, compounded annually, on the balance from month-to-month in such Deferral Account. Following the date of commencement of payment of the Retirement Benefit, a Participant's Deferral Account shall be deemed to bear interest on the balance in such Deferral Account from month to month at a rate equal to Declared Rate, compounded annually. 4.3 ROLLOVER DEFERRED COMPENSATION ACCOUNT. In its sole discretion, the Committee may permit any Participant to make a special rollover election to transfer any amounts which were previously deferred under any existing deferred compensation plans of the Company to this Plan. In such event, the Committee shall establish and maintain a separate Rollover Deferral Account for each Participant who makes a rollover transfer to this Plan. Such Rollover Deferral Account shall be deemed to bear interest at the same rate and subject to the same conditions as other Deferral Accounts pursuant to Section 4.2. Each Participant who makes a rollover transfer to a Rollover Deferral Account shall be treated for purposes of determining benefits under the Plan as having a separate Cumulative Deferral Amount which shall initially be in the amount of the rollover transfer. A Participant who makes a rollover transfer shall be deemed to waive all rights under the Company's existing deferred compensation plans from which rollover transfers are made with respect to the amounts transferred to this Plan, including the right to make elections regarding the time or manner of payment as permitted thereunder. Rollover transfers shall be subject to the minimum deferral amount set forth in Section 4.1(a), but shall not be subject to any maximum deferral limitation. 4 4.4 VALUATION OF ACCOUNTS. The value of a Deferral Account as of any date shall equal the amounts theretofore credited to such account less any payments debited to such account plus the interest deemed to be earned on such account in accordance with Section 4.2. Interest shall be credited monthly on the fifteenth (15th) day of each month. 4.5 STATEMENT OF ACCOUNTS. The Committee shall submit to each Participant, within one hundred twenty (120) days after the close of each Plan Year, a statement in such form as the Committee deems desirable setting forth the balance standing to the credit of each Participant in his Deferral Account. ARTICLE 5 BENEFITS 5.1 RETIREMENT. Upon Retirement, the payment of benefits shall commence on the first day of the month following retirement, or following such later date which the Participant elected in his Enrollment Agreement (including any authorization form). A Participant may elect in his Enrollment Agreement (including any authorization form) to have payments commence from one (1) to ten (10) years following retirement, but not later than age 65 (or five (5) years after the first day of the Benefit Deferral Period, if later). (a) SINGLE PARTICIPANT. In the case of a Participant who is single when payments commence, the Employer shall pay to the Participant an amount each month for the life of the Participant, but not less than one hundred eighty (180) months. The payments shall be the actuarial equivalent of the aggregate of the Participant's Deferral Account at the time payments commence and the interest that will accrue on the unpaid balance in such Deferral Account during the payment period pursuant to Section 4.2(a). The monthly amount of payment will be redetermined annually to reflect changes in the Declared Rate. (b) MARRIED PARTICIPANT. In the case of a Participant who is married when payments commence, the Employer shall make actuarially reduced monthly payments to the Participant for his life and thereafter, if the Participant is survived by a spouse who was married to the Participant when Retirement Benefit payments commenced, shall continue to make monthly payments to the Participant's spouse for her life, with payments to be made for an aggregate period of not less than one hundred eighty (180) months. The payments shall be the actuarial equivalent of the payment which would be made to the Participant pursuant to Section 5.1(a) if he were single. The monthly amount of payments will be redetermined annually to reflect the change in the Declared Rate. 5 5.2 SURVIVOR BENEFITS. (a) If a Participant dies prior to Retirement, the Employer will pay to the Participant's Beneficiary an annual benefit for the greater of: (i) ten (10) years, or (ii) until the Participant would otherwise have attained age 65, equal to fifty percent (50%) of the Cumulative Deferral Amount. However, if the Committee determines that a distribution of the Participant's Deferral Account would produce a greater benefit, such Deferral Account balance shall be paid to the Participant's Beneficiary in equal annual installments over the same period as specified above based on crediting the balance from month-to-month in such Deferral Account at a rate equal to twelve percent (12%) per annum, compounded annually. (b) If a Participant dies after Retirement, but prior to commencement of payment of any Retirement Benefit under the Plan, the Employer will pay to the Participant's Beneficiary the benefit that such Participant would have received had the Participant retired on the day prior to such Participant's death, provided, however, that if the present value of the benefit described in this Section 5.2(b) is less than the present value of the benefit described in Section 5.2(a), using in each case twelve percent (12%) as the discount factor, then the Beneficiary described in this Section 5.2(b) shall receive the benefit described in Section 5.2(a) and not the benefit described in this Section 5.2(b). (c) If a Participant (who was unmarried at the commencement of the payment of any Retirement Benefit, or whose spouse who was married to the Participant at the time of commencement of payment of any Retirement Benefit predeceases the Participant) dies after the commencement of the payment of any Retirement Benefit, the Employer will pay to the Participant's Beneficiary the remaining installments of any such benefit for the balance of the one hundred eighty (180) months minimum payment period. If a spouse who was married to the Participant at the time of commencement of payment of the Retirement Benefit survives beyond such one hundred eighty (180) months minimum payment period, payments shall continue to be made to the spouse until the spouse's death. If the spouse who was married to the Participant at the time of commencement of payment of the Retirement Benefit survives the Participant, but does not survive past the one hundred eighty (180) months minimum payment period, the Employer will pay to the Participant's Beneficiary the remaining installments of any such benefit for the balance of the one hundred eighty (180) months minimum payment period. In computing any benefits to be paid following the Participant's death pursuant to this paragraph (c), the Participant's Deferral Account shall be deemed to bear interest following the Participant's death on the balance in such 6 Deferral Account from month-to-month at a rate equal to the Declared Rate, compounded annually. (d) Notwithstanding other provisions of the Plan, if the Beneficiary is not a spouse, the present value of the installments shall be paid as soon as administratively feasible after the death of the Participant. The interest rate used to compute the present value shall be the average of the declared rate for the Plan Year in which the Participant dies and twelve percent (12%). 5.3 SMALL BENEFIT. In the event that the Committee determines in its sole discretion that the amount of any benefit is too small to make it administratively convenient to pay such benefit over time, the Committee may pay the benefit in the form of a lump sum, notwithstanding any provision of this Article 5 to the contrary. Such lump sum shall be computed as the net present value of the benefit otherwise payable using a twelve percent (12%) per annum discount factor. 5.4 WITHHOLDING. To the extent required by the law in effect at the time payments are made, the Employer shall withhold from payments made hereunder the minimum taxes required to be withheld by the federal or any state or local government. 5.5 LUMP SUM ELECTION. Other provisions of Section 5.1 notwithstanding, if a Participant in his Enrollment Agreement (including any authorization form) has elected a lump sum payment to be made after his Retirement, the amount of his Deferral Account (including interest) for the Benefit Deferral Period covered by that Agreement shall be paid to the Participant in a lump sum at the time specified in that Agreement. 5.6 LUMP SUM PAYOUT OPTION. Notwithstanding any other provisions of the Plan, at any time after Retirement, but not later than ten (10) years after Retirement of the Participant, a Participant or a Beneficiary of a deceased Participant may elect to receive an immediate lump sum payment of 50% or 100% of the balance of his Deferral Account, reduced by a penalty, which shall be forfeited to the Company, equal to eight percent (8%) of the amount of his Deferral Account he elected to receive, in lieu of payments in accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. Such election, if not 100%, may be made only twice. If less than 100% of his Deferral Account is paid out, the remainder of his Deferral Account will be paid in accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. However, the penalty shall not apply if the Committee determines, based on advice of counsel or a final determination by the Internal Revenue Service or any court of competent jurisdiction, that by reason of the foregoing provision any Participant or Beneficiary has recognized or will recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. The Company shall notify all Participants (and Beneficiaries of deceased Participants) of any such determination. Whenever any such determination is made, the Company shall refund all penalties which were imposed hereunder on account of making lump sum payments at any time during or after the first year to which such determination applies (i.e., the first year when gross income is recognized for federal income tax 7 purposes). Interest shall be paid on any such refunds at ten percent (10%) for each Plan Year, compounded annually. The Committee may also reduce or eliminate the penalty if it determines that this action will not cause any Participant or Beneficiary to recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. ARTICLE 6 BENEFICIARY DESIGNATION Each Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries to whom payment under this Plan shall be made in the event of the Participant's death prior to complete distribution to the Participant of the benefits due under the Plan. Each Beneficiary designation shall become effective only when filed in writing with the Committee during the Participant's lifetime on a form prescribed by the Committee. The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation form shall revoke such designation unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in the case of marriage the Participant's new spouse had previously been designated as Beneficiary. The spouse of a married Participant domiciled in a community property jurisdiction shall join in any designation of Beneficiary or Beneficiaries other than the spouse. If a Participant fails to designate a Beneficiary as provided above, or if his Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Committee shall direct the distribution of such benefits to the Participant's estate. ARTICLE 7 AMENDMENT AND TERMINATION OF PLAN 7.1 AMENDMENT. The Board of Directors of the Company may at any time amend the Plan , in whole or in part for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals; provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan. 8 7.2 AUTOMATIC TERMINATION OF PLAN. The Plan shall terminate only under the following circumstances. The Plan shall automatically terminate upon a determination by the Company that a final decision of a court of competent jurisdiction has declared that the Participants under the Plan are in constructive receipt under the Internal Revenue Code of their vested Plan benefits. 7.3 PAYMENTS UPON AUTOMATIC TERMINATION. Upon any Plan termination under Section 7.2, the Participants will be deemed to have terminated their enrollment under the Plan as of the date of such termination. The Company will pay all Participants the value of each Participant's Deferral Accounts in a lump sum. The interest rate used to compute the present value shall be the average of the declared rate for the Plan Year in which the lump sum is to be paid and twelve percent (12%). ARTICLE 8 MISCELLANEOUS 8.1 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of Employer, nor shall they be beneficiaries of, or have any rights, claims, or interests in any life insurance policies, annuity contracts, or the proceeds therefrom owned or which may be acquired by Employer ("Policies"). Such Policies or other assets of Employer shall not be held under any trust for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of Employer under this Plan. Any and all of Employer's assets and Policies shall be, and remain, the general, unpledged, unrestricted assets of Employer. Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise of Employer to pay money in the future. 8.2 NONASSIGNABILITY. Neither a Participant nor any other person shall, have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency. 8.3 SERVICE NOT GUARANTEED. Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Director any right to be retained as a Director of the Employer. 8.4 PROTECTIVE PROVISIONS. Each Participant shall cooperate with the Employer by furnishing any and all information requested by the Employer in order to facilitate the payment of 9 benefits hereunder, taking such physical examinations as the Employer may deem necessary and taking such other relevant action as may be requested by the Employer. If a Participant refuses so to cooperate, the Employer shall have no further obligation to the Participant under the Plan, other than payment to such Participant of the cumulative reductions in Earnings theretofore made pursuant to this Plan. If a Participant commits suicide during the two (2) year period beginning on the later of (a) the date of adoption of this Plan or (b) the first day of the first Plan Year of such Participant's participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history, then no benefits will be payable hereunder to such Participant or his Beneficiary, other than payment to such Participant of the cumulative reductions in Earnings theretofore made pursuant to this Plan, provided, that in the Employer's sole discretion, benefits may be payable in an amount reduced to compensate the Employer for any loss, cost, damage or expense suffered or incurred by the Employer as a result in any way of such misstatement or nondisclosure. 8.5 GENDER, SINGULAR AND PLURAL. All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular. 8.6 CAPTIONS. The captions of the articles, sections, and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 8.7 VALIDITY. In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan. 8.8 NOTICE. Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Employer, directed to the attention of the President of the Employer. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. 8.9 APPLICABLE LAW. This Plan shall be governed and construed in accordance with the laws of the State of Minnesota as applied to contracts executed and to be wholly performed in such state. 10 EX-10.M 7 SMG EXEC. DEFERRED COMP. PLAN 11-29-94 Adopted: 12-14-94 Effective: 1/1/97 Amended 4-10-96 Amended and Restated Effective: 1-1-97 DAYTON HUDSON CORPORATION SMG EXECUTIVE DEFERRED COMPENSATION PLAN ARTICLE I GENERAL Sec. 1.1 NAME OF PLAN. The name of the Plan set forth herein is the Dayton Hudson Corporation SMG Executive Deferred Compensation Plan. It is referred to herein as the "Plan". Sec. 1.2 PURPOSE. The purpose of the Plan is to provide a means whereby Dayton Hudson Corporation (the "Company") may afford financial security to a select group of employees of the Company and its subsidiaries who have rendered and continue to render valuable services to the Company or its subsidiaries and who make an important contribution towards the Company's continued growth and success, by providing for additional future compensation so that such employees may be retained and their productive efforts encouraged. Sec. 1.3 EFFECTIVE DATE. The Effective Date of the Plan is January 1, 1997. Sec. 1.4 COMPANY. "Company" means all of the following: (a) Dayton Hudson Corporation, a Minnesota corporation. (b) Any successor of Dayton Hudson Corporation (whether direct or indirect, by purchase of a majority of the outstanding voting stock of Dayton Hudson Corporation or all or substantially all of the assets of Dayton Hudson Corporation, or by merger, consolidation or otherwise). (c) Any person that becomes liable for the obligations hereunder of the entities specified in (a) and (b) above by operation of law. Sec. 1.5 PARTICIPATING EMPLOYERS. The Company is a Participating Employer in the Plan. With the consent of the Company, by action of the Board or any duly authorized officer, any wholly-owned subsidiary of the Company may, by action of its board of directors or any duly authorized officer, also become a Participating Employer in the Plan effective as of the date specified by it in its adoption of the Plan; but the subsidiary shall cease to be a Participating Employer on the date it ceases to be a wholly-owned subsidiary of the Company. The other Participating Employers on the Effective Date are: Dayton's Commercial Interiors, Inc. (Minnesota) Dayton's Travel Service, Inc. (Minnesota) Mervyn's (California) DHC Milwaukee, Inc. (Wisconsin) DHC Wisconsin, Inc. (Wisconsin) Marshall Field & Company (Delaware) Marshall Field Stores, Inc. (Delaware) Retailers National Bank Sec. 1.6 CONSTRUCTION AND APPLICABLE LAW. The Plan is intended to be an unfunded benefit plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees, subject to the applicable requirements of ERISA. The Plan shall be administered and construed consistently with said intent. It shall also be construed and administered according to the laws of the State of Minnesota to the extent such laws are not preempted by laws of the United States of America. All controversies, disputes, and claims arising hereunder shall be submitted to the United States District Court for the District of Minnesota. Sec. 1.7 RULES OF CONSTRUCTION. The Plan shall be construed in accordance with the following: (a) Headings at the beginning of articles and sections hereof are for convenience of reference, shall not be considered as part of the text of the Plan, and shall not influence its construction. (b) Capitalized terms used in the Plan shall have their meaning as defined in the Plan unless the context clearly indicates to the contrary. (c) All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular. (d) 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) 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. 2 ARTICLE II DEFINITIONS Sec. 2.1 BASE SALARY. "Base Salary" is the salary an Employee is expected to earn in a Benefit Deferral Period, assuming the Employee is employed for the full Benefit Deferral Period. Sec. 2.2 BENEFICIARY. "Beneficiary" means the person or persons designated as such in accordance with Article VI. Sec. 2.3 BENEFIT DEFERRAL PERIOD. "Benefit Deferral Period" means that period of one Plan Year as determined pursuant to Article IV over which a Participant defers a portion of such Participant's Base Salary and/or Bonus. Sec. 2.4 BONUS. "Bonus" is the bonus, under any bonus plan of a Participating Employer. Any part of a "Bonus" earned in a Benefit Deferral Period, but otherwise payable in the year following the Benefit Deferral Period is governed by the deferral election made for the Benefit Deferral Period. Sec. 2.5 BOARD. "Board" means the board of directors of the Company, and includes any committee thereof authorized to act for said board of directors. Sec. 2.6 CONTINUING PARTICIPATING SALARY. "Continuing Participating Salary" shall be the amount of compensation during the previous Plan Year necessary to make a Participant a Highly Compensated Employee for the current Plan Year. Sec. 2.7 CREDITED SERVICE. "Credited Service" of a Participant means the number of years of service for vesting purposes a Participant would have under the applicable defined benefit pension plan of the Company and/or a Participating Employer. Sec. 2.8 CREDITING RATE ALTERNATIVE. "Crediting Rate Alternative" means the S&P Crediting Rate or the Variable Interest Crediting Rate. Sec. 2.9 CUMULATIVE DEFERRAL AMOUNT. "Cumulative Deferral Amount" means the total cumulative amount by which a Participant's Base Salary and/or Bonus must be reduced over the period prescribed in Section 4.1. If for a Plan Year a Matching Allocation for a Participant pursuant to the SRSP cannot be made because the Before Tax Deposits or After Tax Deposits elected by the Employee are reduced to comply with the provisions of the SRSP, "Cumulative Deferral Amount" also includes the amount of the Matching Allocation that cannot be made. "Cumulative Deferral Amount" also includes amounts transferred from the HCCAP. 3 Sec. 2.10 DEFERRAL ACCOUNT. "Deferral Account" means the accounts maintained on the books of account of the Company pursuant to Section 4.2. Sec. 2.11 EMPLOYEE. "Employee" means any person employed by a Participating Employer on a salaried basis. Sec. 2.12 ENHANCEMENT. "Enhancement" means an additional .1667% per month added to the S&P Crediting Rate and the Variable Interest Crediting Rate. Sec. 2.13 ENROLLMENT AGREEMENT. "Enrollment Agreement" means the written agreement entered into by the Company and an Employee pursuant to which the Employee becomes a Participant in the Plan. In the sole discretion of the Company, authorization forms filed by any Participant by which the Participant makes the elections provided for by this Plan may be treated as a completed and fully executed Enrollment Agreement for all purposes under the Plan. Sec. 2.14 ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974 as from time to time amended. Sec. 2.15 HCCAP. "HCCAP" is the Company's Highly Compensated Capital Accumulation Plan. Sec. 2.16 HIGHLY COMPENSATED EMPLOYEE. "Highly Compensated Employee" means a "Highly Compensated Employee" as that term is defined in the SRSP. Sec. 2.17 NAMED FIDUCIARY. The Company and the Vice President of Personnel are a "Named Fiduciary" for purposes of ERISA with authority to control and manage the operation and administration of the Plan. Other persons are also Named Fiduciaries under ERISA if so provided thereunder or if so identified by the Company, by action of the Board or the Chief Executive Officer. Such other person or persons shall have such authority to control or manage the operation and administration of the Plan as may be provided by ERISA or as may be allocated by the Company, by action of the Board or the Chief Executive Officer or the Vice President of Personnel. Sec. 2.18 PARTICIPANT. "Participant" means an eligible Employee who has filed a completed and executed Enrollment Agreement or authorization form with the Company and is participating in the Plan in accordance with the provisions of Article IV. "Participant" also means an Employee of the Company who has a Cumulative Deferral Amount based on Matching Allocation that could not be made to the SRSP. Sec. 2.19 PERSON. "Person" means an individual, partnership, corporation, estate, trust, or other entity. 4 Sec. 2.20 PLAN YEAR. "Plan Year" means the period commencing with the Effective Date and ending December 31, 1997 and each subsequent calendar year. Sec. 2.21 S&P CREDITING RATE. "S&P Crediting Rate" means the earnings or losses for a month on the S&P Index Fund of the SRSP, or if such Index Fund ceases to exist, such other index as selected by the Board as most closely replicates the measure produced by the S&P Index Fund of the SRSP. Sec. 2.22 SMG. A "SMG" is a member of the Senior Management Group of the Company or a Participating Employer, as that term is defined by the Vice President of Personnel. Sec. 2.23 SRSP. "SRSP" is the Dayton Hudson Corporation Supplemental Retirement, Savings, and Employee Stock Ownership Plan. Sec. 2.24 TERMINATION OF EMPLOYMENT. The "Termination of Employment" of an employee from his Participating Employer for purposes of the Plan shall be deemed to occur upon his or her resignation, discharge, retirement, death, failure to return to active work at the end of an authorized leave of absence or the authorized extension or extensions thereof, failure to return to work when duly called following a temporary layoff, or upon the happening of any other event or circumstance which, under the policy of his Participating Employer as in effect from time to time, results in the termination of the employer-employee relationship; provided, however, that "Termination of Employment" shall not be deemed to occur upon a transfer between any combination of Participating Employers, affiliates, and predecessor employers. Sec. 2.25 VARIABLE INTEREST CREDITING RATE. "Variable Interest Crediting Rate" means the earnings or losses for a month on the Variable Interest Fund of the SRSP, or if such fund ceases to exist, such other index as selected by the Board as most closely replicates the measure produced by the Variable Interest Fund of the SRSP. Sec. 2.26 VICE PRESIDENT OF PERSONNEL. "Vice President of Personnel" means the most senior officer of the Company who is assigned responsibility for compensation and benefits matters or such other officer as may be designated from time to time by the Board of Directors. Sec. 2.27 YEAR OF VESTING. A "Year of Vesting" is a full year of participation under HCCAP or a full year of participation in a deferred compensation plan of the Company. ARTICLE III ELIGIBILITY Sec. 3.1 ELIGIBILITY. An Employee shall be a Participant while, and only while, he or she is a regular employee of a Participating Employer, subject to the following: 5 (a) An Employee will become a Participant on the first day of the first Plan Year in which he or she is a Highly Compensated Employee. (b) An Employee must be an SMG on the first day of the Plan Year, or he or she cannot become a Participant. (c) If an employee's Base Salary is below the Continuing Participating Salary, he or she will continue to be a Participant, but no further deferrals will be allowed and no SRSP match will be added to the Cumulative Deferral Amount. (d) The employee must sign an enrollment and insurance consent form, in the form that the Company determines in order to defer Base Salary and/or Bonus. The insurance consent form will allow Company to purchase life insurance on the employee with the Company as beneficiary. Sec. 3.2 NO GUARANTEE OF EMPLOYMENT. Participation in the Plan does not constitute a guarantee or contract of employment with any Participating Employer. Such participation shall in no way interfere with any rights a Participating Employer would have in the absence of such participation to determine the duration of the employee's employment. ARTICLE IV PARTICIPATION AND BENEFITS Sec. 4.1 ELECTION TO PARTICIPATE. Any Employee of a Participating Employer who is eligible to participate may enroll in the Plan by filing a completed and fully executed Enrollment Agreement or authorization form with the Company. Pursuant to said Enrollment Agreement or authorization form, the Employee shall irrevocably designate a dollar amount by which the Base Salary and/or the percentage of the Bonus of such Participant would be reduced over the Benefit Deferral Period next following the execution of the Enrollment Agreement, provided, however, that: (a) REDUCTION IN EARNINGS. Except as otherwise provided in this Section 4.1, the Base Salary and/or Bonus of the Participant for the Benefit Deferral Period shall be reduced by the amount specified in the Enrollment Agreement (including any authorization form) applicable to such Plan Year. (b) MAXIMUM REDUCTION IN EARNINGS. A Participant may not elect a Cumulative Deferral Amount that would cause the reduction in Base Salary in any Plan Year to exceed eighty percent (80%) of the Base Salary and eighty percent (80%) of the Bonus payable during such Plan Year or such greater amount or percent of base pay and/or incentive pay or greater total amount as the Company may permit in its sole 6 discretion. In no event can Base Salary be reduced below one hundred and ten percent (110%) of the Continuing Participating Salary in the previous Plan Year. In the event that a Participant elects a Cumulative Deferral Amount that would violate the limitation described in this paragraph (b), the election shall be valid except that the Cumulative Deferral Amount so elected shall automatically be reduced to comply with such limitation, whichever is most appropriate in the sole discretion of the Company. Sec. 4.2 DEFERRAL ACCOUNTS. The Company shall establish and maintain separate Deferral Accounts for each Participant. The amount by which a Participant's Base Salary or Bonus are reduced pursuant to Section 4.1 shall be credited by the Company to the Participant's Deferral Accounts at the end of the month in which such Base Salary or Bonus would otherwise have been paid. The Participant's Deferral Account shall be credited with the annual SRSP lost Matching Allocation on the last day of February following the year of the lost Matching Allocation. Such Deferral Accounts shall be debited by the amount of any payments made by the Company to the Participant or the Participant's Beneficiary pursuant to this Plan. A separate Deferral Account shall be maintained for each type of deferral election made and for each Crediting Rate Alternative. Sec. 4.3 HCCAP. All persons who become Participants in this Plan on January 1, 1997 will have the balance of their HCCAP Account transferred to this Plan effective January 1, 1997. All persons who become Participants in this Plan after January 1, 1997 will have the balance in their HCCAP account transferred on the January 1 they become Participants. The Deferral Accounts transferred from HCCAP will be paid in immediate lump sum payouts after Termination of Employment. Sec. 4.4 CREDITING RATE ALTERNATIVES. The Participant shall select the Crediting Rate Alternatives, using full percentages, that are to be applied to his or her Deferral Accounts. Participants may change their Crediting Rate Alternatives quarterly (January, April, July or October) by completing a Rate of Return Alternative Change Form. The Change Form must be received by the Compensation Department of the Company at least fifteen days and not more than forty days before the beginning of the applicable quarter. If a Participant does not make an election, the Crediting Rate Alternative will be the S&P Crediting Rate. Sec. 4.5 BENEFIT PAYMENT ELECTIONS. At the time a Participant executes an Enrollment Agreement, he or she must also elect the method of benefit payment and the time to start the benefit. The elections are to be made for each Plan Year. (a) METHOD OF BENEFIT PAYMENT. Benefits for each Plan Year can be paid in a lump sum, five annual installments or ten annual installments. 7 (b) COMMENCEMENT OF BENEFIT. The benefit for each Plan Year may be started as soon as possible following Termination of Employment or one year following Termination of Employment. Sec. 4.6 CREDITING. Each Deferral Account will be credited at the end of a month at the following rates on the balance in the Deferral Account on the first day of the month. (a) EMPLOYEE. Each Deferral Account of an Employee will be credited using the Crediting Rate Alternative plus the Enhancement. (b) TERMINATED EMPLOYEE. Each Deferral Account of an Employee who has had a Termination of Employment will be credited using the Crediting Rate Alternative. (c) VESTING. Each Employee who has a Termination of Employment and does not have five Years of Vesting will have his or her Deferral Accounts revalued using only the Crediting Rate Alternative and not receiving the Enhancement. Provided, however, if an Employee's Termination of Employment is because of death or permanent and total disability, the Employee will be treated as if he or she have five years of vesting. Sec. 4.7 TIME OF PAYMENT. If a Participant has a Termination of Employment after age fifty-five or an involuntary termination after age fifty with ten years of Credited Service, the participant's Deferral Accounts will be paid pursuant to his or her elections. If a Participant has a Termination of Employment that does not qualify under the first sentence of this section, the Participant's Deferral Accounts will be paid in a lump sum as soon as possible following Termination of Employment. Sec. 4.8 STATEMENT OF ACCOUNTS. The Company shall submit to each Participant, within one hundred twenty days after the close of each Plan Year, a statement in such form as the Company deems desirable, setting forth the balance standing to the credit of each Participant in his Deferral Accounts. ARTICLE V CERTAIN BENEFIT PAYMENTS Sec. 5.1 TERMINATION OF ENROLLMENT IN PLAN. With the written consent of the Company, a Participant may terminate his or her enrollment in the Plan by filing with the Company a written request to terminate enrollment. The Company will consent to the termination of a Participant's enrollment in the Plan in the event of an unforeseeable financial emergency of the Participant. An unforeseeable financial emergency shall mean an unexpected need for cash arising from an illness, casualty loss, sudden financial reversal or other such unforeseeable occurrence. Cash needs arising from foreseeable events such as the purchase of a house or education expenses for children shall not 8 be considered to be the result of an unforeseeable financial emergency. Upon termination of enrollment, no further reductions shall be made in the Participant's Base Salary or Bonus pursuant to his or her Enrollment Agreement, and the Participant shall immediately cease to be eligible for any benefits under the Plan other than payments from his or her Deferral Accounts. In its sole discretion, the Committee may pay the Deferral Accounts on a date earlier than the Participant's Termination of Employment with the Participating Employer, in which event the amounts shall be calculated as if the Participant had a Termination of Employment with the Participating Employer on the date of such payment. Following termination of enrollment in the Plan, a Participant's Deferral Account shall be credited at the Crediting Rate Alternative with no Enhancement. Sec. 5.2 SURVIVOR BENEFITS (a) DEATH WHILE EMPLOYED. If a Participant dies while employed by a Participating Employer, the Company will pay the amount in his or her Deferral Accounts to the Participant's Beneficiary as soon as possible after death in a lump sum. (b) DEATH AFTER TERMINATION OF EMPLOYMENT. If a Participant dies after Termination of Employment, and has not received all of his or her payments, and the Participant's Beneficiary is his or her spouse, payments shall be made to the spouse pursuant to the Participant's payout elections. If the Participant's spouse dies before receiving all payments, the remaining amount in the Deferral Accounts will be paid in a lump sum as soon as possible after the spouse's death to the spouse's estate. If a Participant dies after Termination of Employment, has not received all of his or her payments, and the Participant's Beneficiary is a Person other than his or her spouse, then payment shall be made in a lump sum as soon as possible after the Participant's death. Sec. 5.3 SMALL BENEFIT. In the event that the Company determines in its sole discretion that the amount of any benefit is too small to make it administratively convenient to pay such benefit over time, the Company may pay the benefit in the form of a lump sum, notwithstanding any provision of this Article or Article IV to the contrary. Sec. 5.4 WITHHOLDING. To the extent required by the law in effect at the time payments are made, the Company shall withhold from payments made hereunder or any other payment owing by the Company to the Participant the taxes required to be withheld by the federal or any state or local government. Sec. 5.5 LUMP SUM PAYOUT OPTION. Notwithstanding any other provisions of the Plan, at any time after Termination of Employment, but not later than ten years after Termination of Employment of the Participant, a Participant or a Beneficiary of a deceased Participant may elect to receive an immediate lump sum payment of 100% of the balance of his or her Deferral Accounts, if any, reduced by a penalty, which shall be forfeited to the Company, equal to eight percent of the 9 amount of his or her Deferral Accounts he or she elected to receive, in lieu of payments in accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. However, the penalty shall not apply if the Company determines, based on advice of counsel or a final determination by the Internal Revenue Service or any court of competent jurisdiction, that by reason of the foregoing provision any Participant or Beneficiary has recognized or will recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. The Company shall notify all Participants (and Beneficiaries of deceased Participants) of any such determination. Whenever any such determination is made, the Company shall refund all penalties which were imposed hereunder on account of making lump sum payments at any time during or after the first year to which such determination applies (i.e., the first year when gross income is recognized for federal income tax purposes). Interest shall be paid on any such refunds at Variable Interest Crediting Rate for each Plan Year, compounded annually. The Committee may also reduce or eliminate the penalty if it determines that this action will not cause any Participant or Beneficiary to recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. ARTICLE VI BENEFICIARY DESIGNATION Each Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries to whom payment under this Plan shall be made in the event of the Participant's death prior to complete distribution to the Participant of the benefits due under the Plan. Each Beneficiary designation shall be come effective only when filed in writing with the Company during the Participant's lifetime on a form prescribed by the Company. The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation form shall revoke such designation unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in the case of marriage the Participant's new spouse had previously been designated as Beneficiary. If a Participant fails to designate a Beneficiary as provided above, or if his or her Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Company shall direct the distribution of such benefits to the Participant's spouse, if any, and if there is no spouse to the Participant's estate. ARTICLE VII ADMINISTRATION OF PLAN Sec. 7.1 ADMINISTRATION BY COMPANY. The Company is the "administrator" of the Plan for 10 purposes of ERISA. Except as expressly otherwise provided herein, the Company shall control and manage the operation and administration of the Plan, make all decisions and determinations incident thereto, and construe the provisions thereof. In carrying out its Plan responsibilities, the Company shall have discretionary authority to construe the terms of the Plan. Except in cases where the Plan expressly requires action on behalf of the Company to be taken by the Board, action on behalf of the Company may be taken by any of the following: (a) The Board. (b) The Chief Executive Officer of the Company. (c) The Vice President of Personnel of the Company. (d) Any person or persons, natural or otherwise, or committee, to whom responsibilities for the operation and administration of the Plan are allocated by the Company, by resolution of the Board or by written instrument executed by the Chief Executive Officer or the Vice President of Personnel of the Company and filed with its permanent records, but action of such person or persons or committee shall be within the scope of said allocation. Sec. 7.2 CERTAIN FIDUCIARY PROVISIONS. For purposes of the Plan: (a) Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan. (b) A Named Fiduciary, or a fiduciary designated by a Named Fiduciary pursuant to the provisions of the Plan, may employ one or more persons to render advice with regard to any responsibility such fiduciary has under the Plan. (c) Any time the Plan has more than one Named Fiduciary, if pursuant to the Plan provisions fiduciary responsibilities are not already allocated among such Named Fiduciaries, the Company, by action of the Board or its chief executive officer, may provide for such allocation. (d) Unless expressly prohibited in the appointment of a Named Fiduciary which is not the Company acting as provided in Sec. 7.1, such Named Fiduciary by written instrument may designate a person or persons other than such Named Fiduciary to carry out any or all of the fiduciary responsibilities under the Plan of such Named Fiduciary. 11 (e) A person who is a fiduciary with respect to the Plan, including a Named Fiduciary, shall be recognized and treated as a fiduciary only with respect to the particular fiduciary functions as to which such person has responsibility. Sec. 7.3 EVIDENCE. Evidence required of anyone under this Plan may be by certificate, affidavit, document, or other instrument which the person acting in reliance thereon considers to be pertinent and reliable and to be signed, made, or presented by the proper party. Sec. 7.4 RECORDS. Each Participating Employer, each fiduciary with respect to the Plan, and each other person performing any functions in the operation or administration of the Plan shall keep such records as may be necessary or appropriate in the discharge of their respective functions hereunder, including records required by ERISA or any other applicable law. Records shall be retained as long as necessary for the proper administration of the Plan and at least for any period required by ERISA or other applicable law. Sec. 7.5 GENERAL FIDUCIARY STANDARD. Each fiduciary shall discharge his duties with respect to the Plan solely in the interests of Participants and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Sec. 7.6 WAIVER OF NOTICE. Any notice required hereunder may be waived by the person entitled thereto. Sec. 7.7 AGENT FOR LEGAL PROCESS. The Company shall be the agent for service of legal process with respect to any matter concerning the Plan, unless and until the Company designates some other person as such agent. Sec. 7.8 INDEMNIFICATION. In addition to any other applicable provisions for indemnification, the Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer, and employee of the Participating Employers against any and all liabilities, losses, costs, or expenses (including legal fees) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against such person at any time by reason of such person's services as a fiduciary in connection with the Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost, or expense arises. ARTICLE VIII AMENDMENT AND TERMINATION OF PLAN Sec. 8.1 AMENDMENT. The Board may at any time amend the Plan , in whole or in part for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals; provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) 12 prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan. Sec. 8.2 AUTOMATIC TERMINATION OF PLAN. The Plan shall terminate only under the following circumstances. The Plan shall automatically terminate upon (a) a determination by the Company that a final decision of a court of competent jurisdiction or the U. S. Department of Labor holding that the Plan is not maintained "primarily for the purpose of providing deferred compensation for a select group of management or highly-compensated employees," and therefore is subject to Parts 2, 3 and 4 of Title I of ERISA, would require that the Plan be funded and would result in immediate taxation to Participants of their vested Plan benefits, or (b) a determination by the Company that a final decision of a court of competent jurisdiction has declared that the Participants under the Plan are in constructive receipt under the Internal Revenue Code of their vested Plan benefits. Sec. 8.3 PAYMENTS UPON AUTOMATIC TERMINATION. Upon any Plan termination under Sec. 8.2, the Participants will be deemed to have terminated their enrollment under the Plan as of the date of such termination. The Company will pay all Participants the value of each Participant's Deferral Accounts in a lump sum, determined as if each Participant had a Termination of Employment on the date of such termination of the Plan and elected to be paid as soon as possible following Termination of Employment." ARTICLE IX MISCELLANEOUS Sec. 9.1 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company or a Participating Employer, nor shall they be beneficiaries of, or have any rights, claims, or interests in any life insurance policies, annuity contracts, or the proceeds therefrom owned or which may be acquired by Company ("Policies"). Such Policies or other assets of Participating Employers shall not be held under any trust (except they may be placed in a Rabbi Trust) for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of Participating Employers under this Plan. Any and all of a Participating Employer's assets and Policies shall be, and remain, the general, unpledged, unrestricted assets of the Participating Employer. Participating Employers obligations under the Plan shall be merely that of an unfunded and unsecured promise of a Participating Employer to pay money in the future. Sec. 9.2 NONASSIGNABILITY. Neither a Participant nor any other person shall have any right to sell, assign, transfer, pledge, anticipate, mortgage, commute or otherwise encumber, hypothecate 13 or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, not be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency. Sec. 9.3 PROTECTIVE PROVISIONS. Each Participant shall cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Company may deem necessary and taking such other relevant action as may be requested by the Company. If a Participant refuses so to cooperate, the Company shall have no further obligation to the Participant under the Plan, other than payment to such participant of the cumulative reductions in base salary and or bonus theretofore made pursuant to this Plan. If a Participant commits suicide during the two (2) year period beginning on the later of (a) the date of adoption of this Plan or (b) the first day of the first Plan Year of such Participant's participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history, then no benefits will be payable hereunder to such Participant or his Beneficiary, other than payment to such Participant of the cumulative reductions in Base Salary and or Bonus theretofore made pursuant to this Plan, provided, that in the Company's sole discretion, benefits may be payable in an amount reduced to compensate the Company for any loss, cost, damage or expense suffered or incurred by the Company as a result in any way of such misstatement or nondisclosure. Sec. 9.4 VALIDITY. In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan. Sec. 9.5 NOTICE. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company, directed to the attention of the President of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Sec. 9.6 APPLICABLE LAW. This Plan shall be governed and construed in accordance with the laws of the State of Minnesota as applied to contracts executed and to be wholly performed in such state. 14 EX-10.N 8 DIRECTOR DEFERRED COMP PLAN 12-10-94 Adopted: 12-14-94 Effective: 1-1-97 Amended: 4-10-96 DAYTON HUDSON CORPORATION DIRECTOR DEFERRED COMPENSATION PLAN ARTICLE I GENERAL Sec. 1.1 NAME OF PLAN. The name of the Plan set forth herein is the Dayton Hudson Corporation Director Deferred Compensation Plan. It is referred to herein as the "Plan". Sec. 1.2 PURPOSE. The purpose of the Plan is to provide a means whereby Dayton Hudson Corporation (the "Company") may allow certain directors a way to defer compensation. Sec. 1.3 EFFECTIVE DATE. The Effective Date of the Plan is January 1, 1997. Sec. 1.4 COMPANY. "Company" means all of the following: (a) Dayton Hudson Corporation, a Minnesota corporation. (b) Any successor of Dayton Hudson Corporation (whether direct or indirect, by purchase of a majority of the outstanding voting stock of Dayton Hudson Corporation or all or substantially all of the assets of Dayton Hudson Corporation, or by merger, consolidation or otherwise). (c) Any person that becomes liable for the obligations hereunder of the entities specified in (a) and (b) above by operation of law. Sec. 1.5 PARTICIPATING EMPLOYERS. The Company is a Participating Employer in the Plan. With the consent of the Company, by action of the Board or any duly authorized officer, any wholly-owned subsidiary of the Company may, by action of its board of directors or any duly authorized officer, also become a Participating Employer in the Plan effective as of the date specified by it in its adoption of the Plan; but the subsidiary shall cease to be a Participating Employer on the date it ceases to be a wholly-owned subsidiary of the Company. Sec. 1.6 CONSTRUCTION AND APPLICABLE LAW. The Plan is intended to be an unfunded benefit plan maintained for the purpose of providing deferred compensation for certain directors. The Plan shall be construed and administered according to the laws of the State of Minnesota. All controversies, disputes, and claims arising hereunder shall be submitted to the United States District Court for the District of Minnesota. Sec. 1.7 RULES OF CONSTRUCTION. The Plan shall be construed in accordance with the following: (a) Headings at the beginning of articles and sections hereof are for convenience of reference, shall not be considered as part of the text of the Plan, and shall not influence its construction. (b) Capitalized terms used in the Plan shall have their meaning as defined in the Plan unless the context clearly indicates to the contrary. (c) All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular. (d) 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) 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. ARTICLE II DEFINITIONS Sec. 2.1 BENEFICIARY. "Beneficiary" means the person or persons designated as such in accordance with Article VI. Sec. 2.2 BENEFIT DEFERRAL PERIOD. "Benefit Deferral Period" means that period of one Plan Year as determined pursuant to Article IV over which a Participant defers a portion of such Participant's Earnings. Sec. 2.3 BOARD. "Board" means the board of directors of the Company, and includes any committee thereof authorized to act for said board of directors. Sec. 2.4 CREDITING RATE ALTERNATIVE. "Crediting Rate Alternative" means the S&P Crediting Rate or the Variable Interest Crediting Rate. 2 Sec. 2.5 CUMULATIVE DEFERRAL AMOUNT. "Cumulative Deferral Amount" means the total cumulative amount by which a Participant's Earnings must be reduced over the period prescribed in Section 4.1. Sec. 2.6 DEFERRAL ACCOUNT. "Deferral Account" means the accounts maintained on the books of account of the Company pursuant to Section 4.2. Sec. 2.7 DIRECTOR. "Director" means any person who is a director of the Company or another Participating Employer but is not an Employee of a Participating Employer. Sec. 2.8 EARNINGS. "Earnings" means the total fees paid to a Participant for service on the Board (or any committee thereof) or a board of a Participating Employer. Sec. 2.9 EMPLOYEE. "Employee" means any person employed by a Participating Employer. Sec. 2.10 ENHANCEMENT. "Enhancement" means an additional .1667% per month added to the S&P Crediting Rate and the Variable Interest Crediting Rate. Sec. 2.11 ENROLLMENT AGREEMENT. "Enrollment Agreement" means the written agreement entered into by the Company and a Director pursuant to which the Director becomes a Participant in the Plan. In the sole discretion of the Company, authorization forms filed by any Participant by which the Participant makes the elections provided for by this Plan may be treated as a completed and fully executed Enrollment Agreement for all purposes under the Plan. Sec. 2.12 PARTICIPANT. "Participant" means an eligible Director who has filed a completed and executed Enrollment Agreement or authorization form with the Company and is participating in the Plan in accordance with the provisions of Article IV. Sec. 2.13 PERSON. "Person" means an individual, partnership, corporation, estate, trust, or other entity. Sec. 2.14 PLAN YEAR. "Plan Year" means the period commencing with the Effective Date and ending December 31, 1997 and each subsequent calendar year. Sec. 2.15 RETIREMENT. "Retirement" shall mean when the Director ceases to be a director of all Participating Employers. Sec. 2.16 S&P CREDITING RATE. "S&P Crediting Rate" means the earnings or losses for a month on the S&P Index Fund of the SRSP, or if such Index Fund ceases to exist, such other index as selected by the Board as most closely replicates the measure produced by the S&P Index Fund of the SRSP. 3 Sec. 2.17 SRSP. SRSP is the Dayton Hudson Corporation Supplemental Retirement, Savings, and Employee Stock Ownership Plan. Sec. 2.18 VARIABLE INTEREST CREDITING RATE. "Variable Interest Crediting Rate" means the earnings or losses for a month on the Variable Interest Fund of the SRSP, or if such fund ceases to exist, such other index as selected by the Board as most closely replicates the measure produced by the Variable Interest Fund of the SRSP. ARTICLE III ELIGIBILITY Sec. 3.1 ELIGIBILITY. A Director shall be a Participant while, and only while, he or she is a director of a Participating Employer, subject to the following: (a) The Director must sign an enrollment and insurance consent form, in the form that the Company determines in order to defer Earnings. The insurance consent form will allow Company to purchase life insurance on the Director with the Company as beneficiary. Sec. 3.2 NO GUARANTEE OF CONTINUED DIRECTORSHIP. Participation in the Plan does not constitute a guarantee or contract with any Participating Employer guaranteeing that the Director will continue to be a director. Such participation shall in no way interfere with any rights the shareholders of a Participating Employer would have in the absence of such participation to determine the duration of the director's service. ARTICLE IV PARTICIPATION AND BENEFITS Sec. 4.1 ELECTION TO PARTICIPATE. Any Director of a Participating Employer who is eligible to participate may enroll in the Plan by filing a completed and fully executed Enrollment Agreement or authorization form with the Company. Pursuant to said Enrollment Agreement or authorization form, the Director shall irrevocably designate a dollar amount by which the Earnings of such Participant would be reduced over the Benefit Deferral Period next following the execution of the Enrollment Agreement, provided, however, that: (a) MINIMUM DEFERRAL. The reduction of Earnings for any Plan Year shall not be less than Five Thousand Dollars ($5,000.00). 4 (b) REDUCTION IN EARNINGS. Except as otherwise provided in this Section 4.1, the Earnings of the Participant for the Benefit Deferral Period shall be reduced by the amount specified in the Enrollment Agreement (including any authorization form) applicable to such Plan Year. (c) MAXIMUM REDUCTION IN EARNINGS. A Participant may not elect a Cumulative Deferral Amount that would cause the reduction in Earnings to exceed one hundred percent (100%) of Earnings payable during such Plan Year. In the event that a Participant elects a Cumulative Deferral Amount that would violate the limitation described in this paragraph (c), the election shall be valid except that the Cumulative Deferral Amount so elected shall automatically be reduced to comply with such limitation. Sec. 4.2 DEFERRAL ACCOUNTS. The Company shall establish and maintain separate Deferral Accounts for each Participant. The amount by which a Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by the Company to the Participant's Deferral Accounts at the end of the month in which such Earnings would otherwise have been paid. Such Deferral Accounts shall be debited by the amount of any payments made by the Company to the Participant or the Participant's Beneficiary pursuant to this Plan. A separate Deferral Account shall be maintained for each type of deferral election made and for each Crediting Rate Alternative. Sec. 4.3 CREDITING RATE ALTERNATIVES. The Participant shall select the Crediting Rate Alternatives, using full percentages, that are to be applied to his or her Deferral Accounts. Participants may change their Crediting Rate Alternatives quarterly (January, April, July or October) by completing a Rate of Return Alternative Change Form. The Change Form must be received by the Compensation Department of the Company at least fifteen days and not more than forty days before the beginning of the applicable quarter. If a Participant does not make an election, the Crediting Rate Alternative will be the S&P Crediting Rate. Sec. 4.4 BENEFIT PAYMENT ELECTIONS. At the time a Participant executes an Enrollment Agreement, he or she must also elect the method of benefit payment and the time to start the benefit. The elections are to be made for each Plan Year. (a) METHOD OF BENEFIT PAYMENT. Benefits for each Plan Year can be paid in a lump sum, five annual installments or ten annual installments. (b) COMMENCEMENT OF BENEFIT. The benefit for each Plan Year may be started as soon as possible following Retirement or one year following Retirement. Sec. 4.5 CREDITING. Each Deferral Account will be credited at the end of a month at the following rates on the balance in the Deferral Account on the first day of the month. 5 (a) DIRECTOR. Each Deferral Account of Director will be credited using the Crediting Rate Alternative plus the Enhancement. (b) FORMER DIRECTOR. Each Deferral Account of a Director who has had a Retirement will be credited using the Crediting Rate Alternative. Sec. 4.6 STATEMENT OF ACCOUNTS. The Company shall submit to each Participant, within one hundred twenty days after the close of each Plan Year, a statement in such form as the Company deems desirable, setting forth the balance standing to the credit of each Participant in his Deferral Accounts. ARTICLE V CERTAIN BENEFIT PAYMENTS Sec. 5.1 TERMINATION OF ENROLLMENT IN PLAN. With the written consent of the Company, a Participant may terminate his or her enrollment in the Plan by filing with the Company a written request to terminate enrollment. The Company will consent to the termination of a Participant's enrollment in the Plan in the event of an unforeseeable financial emergency of the Participant. An unforeseeable financial emergency shall mean an unexpected need for cash arising from an illness, casualty loss, sudden financial reversal or other such unforeseeable occurrence. Cash needs arising from foreseeable events such as the purchase of a house or education expenses for children shall not be considered to be the result of an unforeseeable financial emergency. Upon termination of enrollment, no further reductions shall be made in the Participant's Earnings pursuant to his or her Enrollment Agreement, and the Participant shall immediately cease to be eligible for any benefits under the Plan other than payments from his or her Deferral Accounts. In its sole discretion, the Committee may pay the Deferral Accounts on a date earlier than the Participant's Retirement with the Participating Employer, in which event the amounts shall be calculated as if the Participant had a Retirement with the Participating Employer on the date of such payment. Following termination of enrollment in the Plan, a Participant's Deferral Account shall be credited at the Crediting Rate Alternative with no Enhancement. Sec. 5.2 SURVIVOR BENEFITS (a) DEATH WHILE EMPLOYED. If a Participant dies while a Director of a Participating Employer, the Company will pay the amount in his or her Deferral Accounts to the Participant's Beneficiary as soon as possible after death in a lump sum. (b) DEATH AFTER RETIREMENT. If a Participant dies after Retirement, and has not received all of his or her payments, and the Participant's Beneficiary is his or her spouse, payments shall be made to the spouse pursuant to the Participant's payout elections. If the Participant's spouse dies before receiving all payments, the remaining amount 6 in the Deferral Accounts will be paid in a lump sum as soon as possible after the spouse's death to the spouse's estate. If a Participant dies after Retirement, has not received all of his or her payments, and the Participant's Beneficiary is a Person other than his or her spouse, then payment shall be made in a lump sum as soon as possible after the Participant's death. Sec. 5.3 SMALL BENEFIT. In the event that the Company determines in its sole discretion that the amount of any benefit is too small to make it administratively convenient to pay such benefit over time, the Company may pay the benefit in the form of a lump sum, notwithstanding any provision of this Article or Article IV to the contrary. Sec. 5.4 WITHHOLDING. To the extent required by the law in effect at the time payments are made, the Company shall withhold from payments made hereunder or any other payment owing by the Company to the Participant the taxes required to be withheld by the federal or any state or local government. Sec. 5.5 LUMP SUM PAYOUT OPTION. Notwithstanding any other provisions of the Plan, at any time after Retirement, but not later than ten years after Retirement of the Participant, a Participant or a Beneficiary of a deceased Participant may elect to receive an immediate lump sum payment of 100% of the balance of his or her Deferral Accounts, if any, reduced by a penalty, which shall be forfeited to the Company, equal to eight percent of the amount of his or her Deferral Accounts he or she elected to receive, in lieu of payments in accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. However, the penalty shall not apply if the Company determines, based on advice of counsel or a final determination by the Internal Revenue Service or any court of competent jurisdiction, that by reason of the foregoing provision any Participant or Beneficiary has recognized or will recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. The Company shall notify all Participants (and Beneficiaries of deceased Participants) of any such determination. Whenever any such determination is made, the Company shall refund all penalties which were imposed hereunder on account of making lump sum payments at any time during or after the first year to which such determination applies (i.e., the first year when gross income is recognized for federal income tax purposes). Interest shall be paid on any such refunds at the Variable Interest Crediting Rate for each Plan Year, compounded annually. The Committee may also reduce or eliminate the penalty if it determines that this action will not cause any Participant or Beneficiary to recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. ARTICLE VI BENEFICIARY DESIGNATION Each Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries to whom payment under this Plan shall be made in the event of the 7 Participant's death prior to complete distribution to the Participant of the benefits due under the Plan. Each Beneficiary designation shall be come effective only when filed in writing with the Company during the Participant's lifetime on a form prescribed by the Company. The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation form shall revoke such designation unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in the case of marriage the Participant's new spouse had previously been designated as Beneficiary. If a Participant fails to designate a Beneficiary as provided above, or if his or her Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Company shall direct the distribution of such benefits to the Participant's spouse, if any, and if there is no spouse to the Participant's estate. ARTICLE VII ADMINISTRATION OF PLAN Sec. 7.1 ADMINISTRATION BY COMPANY. The Company is the "administrator" of the Plan. Except as expressly otherwise provided herein, the Company shall control and manage the operation and administration of the Plan, make all decisions and determinations incident thereto, and construe the provisions thereof. In carrying out its Plan responsibilities, the Company shall have discretionary authority to construe the terms of the Plan. Except in cases where the Plan expressly requires action on behalf of the Company to be taken by the Board, action on behalf of the Company may be taken by any of the following: (a) The Board. (b) The Chief Executive Officer of the Company. (c) The Vice President of Personnel of the Company. (d) Any person or persons, natural or otherwise, or committee, to whom responsibilities for the operation and administration of the Plan are allocated by the Company, by resolution of the Board or by written instrument executed by the Chief Executive Officer or the Vice President of Personnel of the Company and filed with its permanent records, but action of such person or persons or committee shall be within the scope of said allocation. 8 Sec. 7.2 CERTAIN FIDUCIARY PROVISIONS. For purposes of the Plan: (a) Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan. (b) A Named Fiduciary, or a fiduciary designated by a Named Fiduciary pursuant to the provisions of the Plan, may employ one or more persons to render advice with regard to any responsibility such fiduciary has under the Plan. (c) Any time the Plan has more than one Named Fiduciary, if pursuant to the Plan provisions fiduciary responsibilities are not already allocated among such Named Fiduciaries, the Company, by action of the Board or its chief executive officer, may provide for such allocation. (d) Unless expressly prohibited in the appointment of a Named Fiduciary which is not the Company acting as provided in Sec. 7.1, such Named Fiduciary by written instrument may designate a person or persons other than such Named Fiduciary to carry out any or all of the fiduciary responsibilities under the Plan of such Named Fiduciary. (e) A person who is a fiduciary with respect to the Plan, including a Named Fiduciary, shall be recognized and treated as a fiduciary only with respect to the particular fiduciary functions as to which such person has responsibility. Sec. 7.3 EVIDENCE. Evidence required of anyone under this Plan may be by certificate, affidavit, document, or other instrument which the person acting in reliance thereon considers to be pertinent and reliable and to be signed, made, or presented by the proper party. Sec. 7.4 RECORDS. Each Participating Employer, each fiduciary with respect to the Plan, and each other person performing any functions in the operation or administration of the Plan shall keep such records as may be necessary or appropriate in the discharge of their respective functions hereunder, including records required by applicable law. Records shall be retained as long as necessary for the proper administration of the Plan and at least for any period required by applicable law. Sec. 7.5 GENERAL FIDUCIARY STANDARD. Each fiduciary shall discharge his duties with respect to the Plan solely in the interests of Participants and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Sec. 7.6 WAIVER OF NOTICE. Any notice required hereunder may be waived by the person entitled thereto. 9 Sec. 7.7 AGENT FOR LEGAL PROCESS. The Company shall be the agent for service of legal process with respect to any matter concerning the Plan, unless and until the Company designates some other person as such agent. Sec. 7.8 INDEMNIFICATION. In addition to any other applicable provisions for indemnification, the Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer, and employee of the Participating Employers against any and all liabilities, losses, costs, or expenses (including legal fees) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against such person at any time by reason of such person's services as a fiduciary in connection with the Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost, or expense arises. ARTICLE VIII AMENDMENT AND TERMINATION OF PLAN Sec. 8.1 AMENDMENT. The Board may at any time amend the Plan , in whole or in part for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals; provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan. Sec. 8.2 AUTOMATIC TERMINATION OF PLAN. The Plan shall terminate only under the following circumstances. The Plan shall automatically terminate upon a determination by the Company that a final decision of a court of competent jurisdiction has declared that the Participants under the Plan are in constructive receipt under the Internal Revenue Code of their vested Plan benefits. Sec. 8.3 PAYMENTS UPON AUTOMATIC TERMINATION. Upon any Plan termination under Sec. 8.2, the Participants will be deemed to have terminated their enrollment under the Plan as of the date of such termination. The Company will pay all Participants the value of each Participant's Deferral Accounts in a lump sum, determined as if each Participant had a Termination of Employment on the date of such termination of the Plan and elected to be paid as soon as possible following Termination of Employment. 10 ARTICLE IX MISCELLANEOUS Sec. 9.1 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company or a Participating Employer, nor shall they be beneficiaries of, or have any rights, claims, or interests in any life insurance policies, annuity contracts, or the proceeds therefrom owned or which may be acquired by Company ("Policies"). Such Policies or other assets of Participating Employers shall not be held under any trust (except they may be placed in a Rabbi Trust) for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of Participating Employers under this Plan. Any and all of a Participating Employer's assets and Policies shall be, and remain, the general, unpledged, unrestricted assets of the Participating Employer. Participating Employers obligations under the Plan shall be merely that of an unfunded and unsecured promise of a Participating Employer to pay money in the future. Sec. 9.2 NONASSIGNABILITY. Neither a Participant nor any other person shall have any right to sell, assign, transfer, pledge, anticipate, mortgage, commute or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgements, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency Sec. 9.3 PROTECTIVE PROVISIONS. Each Participant shall cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Company may deem necessary and taking such other relevant action as may be requested by the Company. If a Participant refuses so to cooperate, the Company shall have no further obligation to the Participant under the Plan, other than payment to such participant of the cumulative reductions in Earnings theretofore made pursuant to this Plan. If a Participant commits suicide during the two (2) year period beginning on the later of (a) the date of adoption of this Plan or (b) the first day of the first Plan Year of such Participant's participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history, then no benefits will be payable hereunder to such Participant or his Beneficiary, other than payment to such Participant of the cumulative reductions in Earnings theretofore made pursuant to this Plan, provided, that in the Company's sole discretion, benefits may be payable in an amount reduced to compensate the Company for any loss, cost, damage or expense suffered or incurred by the Company as a result in any way of such misstatement or nondisclosure. 11 Sec. 9.4 VALIDITY. In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan. Sec. 9.5 NOTICE. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company, directed to the attention of the President of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Sec. 9.6 APPLICABLE LAW. This Plan shall be governed and construed in accordance with the laws of the State of Minnesota as applied to contracts executed and to be wholly performed in such state. 12 EX-11 9 EXHIBIT 11 EXHIBIT (11) DAYTON HUDSON CORPORATION AND SUBSIDIARIES COMPUTATIONS OF PER SHARE EARNINGS (In Millions, Except Per Share Data)
Fiscal Year Ended --------------------------------------------------------------- FEBRUARY 1, 1997 February 3, 1996 January 28, 1995 ------------------- ------------------- ------------------- EARNINGS SHARES Earnings Shares Earnings Shares -------- ------ -------- ------ -------- ------ Primary Computations - --------------------- Earnings before extraordinary charge . . . . . . . . . . . $ 474 $ 311 $ 434 Extraordinary charge, net of tax . . . . . . . . . . . . . (11) 0 0 ------- ------- ------- Net earnings . . . . . . . . . . . . . . . . . . . . . . . 463 311 434 Less: Dividend requirements on ESOP preferred shares, net of tax benefit on unallocated shares . . . . . . . . . . . . . . . . . . . (20) (20) (19) ------- ------- ------- Adjusted net earnings. . . . . . . . . . . . . . . . . . . $ 443 $ 291 $ 415 ------- ------- ------- ------- ------- ------- Average common shares outstanding. . . . . . . . . . . . . 216.7 215.5 214.8 Average number of common share equivalents: Stock options. . . . . . . . . . . . . . . . . . . . . . 1.2 0.4 0.6 Performance shares . . . . . . . . . . . . . . . . . . . 0.8 0.9 0.6 ------- ------- ------- Adjusted common equivalent shares outstanding-primary. . . . . . . . . . . . . . . . . . . 218.7 216.8 216.0 ------- ------- ------- ------- ------- ------- Primary earnings per share before extraordinary charge . . . . . . . . . . . . . . . . . . $ 2.07 $ 1.34 $ 1.92 Extraordinary Charge . . . . . . . . . . . . . . . . . . . (0.05) 0.00 0.00 ------- ------- ------- PRIMARY EARNINGS PER SHARE . . . . . . . . . . . . . . . . $ 2.02 $ 1.34 $ 1.92 ------- ------- ------- ------- ------- ------- Fully Diluted Computations - -------------------------- Earnings before extraordinary charge . . . . . . . . . . . $ 474 $ 311 $ 434 Extraordinary charge, net of tax . . . . . . . . . . . . . (11) 0 0 ------- ------- ------- Net earnings . . . . . . . . . . . . . . . . . . . . . . . 463 311 434 Less: Earnings impact of assumed ESOP preferred share conversion, net of tax benefit on unallocated shares. . . . . . . . . . . . . . . . . . (14) (14) (13) ------- ------- ------- Adjusted net earnings. . . . . . . . . . . . . . . . . . . $ 449 $ 297 $ 421 ------- ------- ------- ------- ------- ------- Average common and common equivalent shares-primary . . . . . . . . . . . . . . . . . . . . . 218.7 216.8 216.0 Additional common share equivalents attributable to application of the treasury stock method . . . . . . . . 0.2 0.1 0.3 Assumed conversion of ESOP preferred shares. . . . . . . . 11.7 12.3 12.6 ------- ------- ------- Adjusted common equivalent shares outstanding-fully diluted. . . . . . . . . . . . . . . . 230.6 229.2 228.9 ------- ------- ------- ------- ------- ------- Fully diluted earnings per share before extraordinary charge . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.00 $ 1.30 $ 1.84 Extraordinary Charge . . . . . . . . . . . . . . . . . . . (0.05) 0.00 0.00 ------- ------- ------- FULLY DILUTED EARNINGS PER SHARE . . . . . . . . . . . . . $ 1.95 $ 1.30 $ 1.84 ------- ------- ------- ------- ------- -------
EX-12 10 EXHIBIT 12 EXHIBIT (12) DAYTON HUDSON CORPORATION AND SUBSIDIARIES COMPUTATIONS OF RATIOS OF EARNINGS TO FIXED CHARGES AND RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (Millions of Dollars)
Fiscal Year Ended -------------------------------------------------------------- Feb.1, Feb.3, Jan. 28, Jan. 29, Jan. 30, 1997 1996 1995 1994 1993 ---------- ---------- ---------- ---------- ---------- Ratio of Earnings to Fixed Charges: Earnings: Consolidated net earnings before extraordinary charge. . . . . . . . . . $ 474 $ 311 $ 434 $ 375 $ 383 Income taxes. . . . . . . . . . . . . . . . 309 190 280 232 228 ---------- ---------- ---------- ---------- ---------- Total earnings before extraordinary charge . . . . . . . . . . . . . . . 783 501 714 607 611 ---------- ---------- ---------- ---------- ---------- Fixed charges: Interest expense. . . . . . . . . . . . . . 464 461 439 459 454 Interest portion of rental expense. . . . . 59 59 56 45 43 ---------- ---------- ---------- ---------- ---------- Total fixed charges. . . . . . . . . . . 523 520 495 504 497 ---------- ---------- ---------- ---------- ---------- Less: Capitalized interest. . . . . . . . . . . . (16) (14) (7) (5) (6) ---------- ---------- ---------- ---------- ---------- Fixed charges in earnings. . . . . . . . 507 506 488 499 491 ---------- ---------- ---------- ---------- ---------- Earnings available for fixed charges . . . . $ 1,290 $ 1,007 $ 1,202 $ 1,106 $ 1,102 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Ratio of earnings before extraordinary charge to fixed charges. . . . . . . . . 2.46 1.94 2.43 2.19 2.22 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Ratio of Earnings to Fixed Charges and Preferred Stock Dividends: Total fixed charges, as above. . . . . . . . $ 523 $ 520 $ 495 $ 504 $ 497 Dividends on preferred stock (pre-tax basis). . . . . . . . . . . . . 37 37 39 39 39 ---------- ---------- ---------- ---------- ---------- Total fixed charges and preferred stock dividends. . . . . . . . . . . . . 560 557 534 543 536 ---------- ---------- ---------- ---------- ---------- Earnings available for fixed charges and preferred stock dividends. . . . . . $ 1,290 $ 1,007 $ 1,202 $ 1,106 $ 1,102 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Ratio of earnings before extraordinary charge to fixed charges and preferred stock dividends. . . . . . . . . . . . . 2.30 1.81 2.25 2.04 2.06 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
EX-13 11 EXHIBIT 13 Exhibit 13 MEASURING OUR PERFORMANCE 1996 RESULTS TARGET (in millions) 1996 1995 1994 - -------------------------------------------------------------------------------- Revenues $ 17,853 $ 15,807 $ 13,600 - -------------------------------------------------------------------------------- Operating $ 1,042 $ 719 $ 732 Profit - -------------------------------------------------------------------------------- Stores 736 670 611 - -------------------------------------------------------------------------------- Retail Square 79,360 71,108 64,446 Feet* * In thousands, reflects total square feet, less office, warehouse and vacant space. TARGET LOCATIONS (at year end) Retail Sq Ft. No. of in Thousands Stores AL 117 1 AZ 2,453 23 AR 186 2 CA 14,530 133 CO 2,334 22 FL 6,605 60 GA 2,439 23 ID 309 3 IA 1,760 17 IL 5,245 46 IN 2,858 31 KS 738 7 KY 800 8 LA 203 2 MD 1,421 12 MI 4,780 45 MN 4,879 42 MS 116 1 MO 1,368 13 MT 299 3 NE 1,074 9 NV 841 8 NM 490 5 NY 473 4 NC 1,530 15 ND 424 4 OH 2,004 18 OK 791 8 OR 1,157 11 SC 393 4 SD 391 4 TN 1,830 18 TX 8,356 78 UT 534 3 VA 1,053 9 WA 2,307 22 WI 2,090 20 WY 182 2 TOTAL 79,360 736 MAJOR MARKETS Greater Los Angeles 68 Chicago 31 Minneapolis/St. Paul 30 San Francisco Bay Area 25 Detroit 23 Dallas/Ft. Worth 21 Houston 21 Atlanta 20 Greater Miami 18 Denver/Boulder 15 Phoenix 15 San Diego 12 Seattle/Tacoma 12 Indianapolis 11 St. Louis 11 Tampa/St. Petersburg 11 Greater Cleveland 9 Milwaukee 8 Washington, D.C. 8 Baltimore 7 EMPLOYEES: 149,000 MERVYN'S (in millions) 1996 1995 1994 - -------------------------------------------------------------------------------- Revenues $ 4,369 $ 4,516 $ 4,561 - -------------------------------------------------------------------------------- Operating $ 153 ** $ 100 $ 206 Profit - -------------------------------------------------------------------------------- Stores 300 295 286 - -------------------------------------------------------------------------------- Retail Square 24,518 24,113 23,130 Feet* ** Net of a real estate repositioning charge of $114 million at Mervyn's and $20 million at DSD MERVYN'S LOCATIONS (at year end) Retail Sq. Ft. No. of in Thousands Stores AZ 1,208 15 CA 9,949 128 CO 936 12 FL 1,611 18 GA 555 7 ID 83 1 LA 538 7 MI 1,176 15 MN 1,050 8 NV 499 7 NM 266 3 OK 270 3 OR 551 7 TX 3,637 45 UT 760 8 WA 1,429 16 TOTAL 24,518 300 MAJOR MARKETS Greater Los Angeles 51 San Francisco Bay Area 29 Dallas/Ft. Worth 13 San Diego 12 Houston 11 Phoenix 11 Detroit 9 Seattle/Tacoma 9 Minneapolis/St. Paul 8 Greater Salt Lake City 8 Denver 7 EMPLOYEES: 32,000 DEPARTMENT STORES (in millions) 1996 1995 1994 - -------------------------------------------------------------------------------- Revenues $ 3,149 $ 3,193 $ 3,150 - -------------------------------------------------------------------------------- Operating $ 108 ** $ 184 $ 270 Profit - -------------------------------------------------------------------------------- Stores 65 64 63 - -------------------------------------------------------------------------------- Retail Square 14,111 13,870 13,587 Feet* Retail Sq. Ft. No. of in Thousands Stores Dayton's MN 3,072 13 ND 297 3 SD 102 1 WI 373 3 Hudson's IN 246 2 MI 4,516 19 OH 187 1 Marshall Field's IL 4,289 18 OH 204 1 TX 155 1 WI 670 3 TOTAL DSD 14,111 65 MAJOR MARKETS Chicago 17 Minneapolis/St. Paul 11 Detroit 10 EMPLOYEES: 37,000 TOTAL STORES: 1,101 TOTAL RETAIL SQUARE FEET: 117,989,000 14 DAYTON HUDSON CORPORATION ANALYSIS OF OPERATIONS Our net earnings were $463 million in 1996, compared with $311 million in 1995 and $434 million in 1994. Earnings per share were $1.95 in 1996, $1.30 in 1995 and $1.84 in 1994. (References to earnings per share relate to fully diluted earnings per share.) In 1996, earnings were reduced by two unusual items, a real estate repositioning charge of $.35 per share and an extraordinary charge for the purchase and redemption of debt of $.05 per share. Operating profit in 1996 improved 30 percent to $1,303 million in 1996, compared with $1,003 million in 1995 and $1,208 million in 1994. Operating profit is last-in, first-out (LIFO) earnings from operations before corporate expense, interest and income taxes. Target and Mervyn's operating profit improved 45 percent and 53 percent, respectively, compared with the prior year, while the Department Store Division (DSD) reported a decline of 41 percent. Mervyn's and DSD's 1996 operating profit results include real estate repositioning charges of $114 million and $20 million, respectively. We undertook several strategic initiatives that improved overall profitability in 1996. Continued growth in profitability is expected in 1997, particularly early in the year: - - TARGET attained record levels of operating margin (operating profit as a percentage of revenues) through strong sales momentum, improvement in its gross margin rate and significant operating expense savings related to a broad-based productivity improvement program. Target expects continued mid-single digit comparable-sales increases combined with further expense savings initiatives to generate continued operating profit growth in 1997. - - MERVYN'S operating profit improved by $167 million in 1996 before the real estate repositioning charge of $114 million, through a combination of substantial expense reduction efforts and gross margin improvement. Mervyn's focus in 1997 will be on producing positive comparable-store sales growth for the year and continuing to improve its overall financial performance. We expect operating profit at Mervyn's to be up only modestly from 1996 results before the real estate charge, through continued gross margin expansion partially offset by the lost profit from 25 to 35 fewer stores. - - DSD's sales and operating profit were lower in 1996 than 1995 due to sales declines and an unfavorable expense rate. DSD's 1996 results reflect the transition to its new strategy which includes substantially fewer storewide promotional events, a greater emphasis on better and more unique merchandise assortments and improved guest service. As a result of this strategy, DSD expects positive comparable-store sales growth combined with a significant expense reduction program to produce substantial growth in 1997 operating profit. REAL ESTATE REPOSITIONING CHARGE As a result of actions and decisions made in fourth quarter 1996, we recorded a pre-tax charge of $134 million, $81 million after-tax, for the real estate repositioning at Mervyn's and DSD to strengthen competitive positions and achieve improved long-term results. The charge includes $114 million for Mervyn's to sell or close its 25 stores in Florida and Georgia and approximately 10 other underperforming stores throughout the chain. Also included is a net charge of $20 million for DSD's disposition of its four Texas stores and the sale or closure of two other stores. In fourth quarter 1996, DSD sold three of its four Texas stores. In first quarter 1997, Mervyn's exited the Florida and Georgia markets and DSD closed one store. All remaining properties are expected to be sold or closed within approximately 12 to 18 months. Real estate repositioning actions at Mervyn's will reduce annualized revenue and operating profit by approximately $375 million and $15 million, respectively. At DSD, annualized revenues and operating profit will be reduced by approximately $130 million and $15 million, respectively. 15 DAYTON HUDSON CORPORATION AND SUBSIDIARIES ANALYSIS OF OPERATIONS EARNINGS PER SHARE The following earnings per share variance analysis and associated discussion represent management's view of the business and, in certain respects, differ from the classifications used in the Consolidated Results of Operations. In both cases, revenues include sales, as well as finance charges, late fees and other revenues. The gross margin rate, as shown in the table below and as further discussed, includes cost of retail sales and excludes buying and occupancy costs. The operating expense rate, in the table and as further discussed, includes selling, publicity and administrative expenses (excluding start-up and corporate and other expenses), depreciation and amortization, taxes other than income taxes and buying and occupancy costs. Start-up expenses, disclosed and further discussed separately, are costs associated primarily with opening new stores and distribution centers, and remodeling existing stores. Corporate and other expense includes corporate headquarters expense, corporate charitable contributions that support our annual giving program of five percent of federal taxable income and a variety of other items. Strong sales growth at Target, our lowest gross margin and expense rate division, continues to impact our business mix. As a result, our overall revenue growth and operating expense rate were favorably affected, while the total gross margin rate was unfavorably affected. If the revenue mix had remained constant with 1995, the gross margin rate variance would have been $.14 more favorable and the operating expense rate variance would have been $.21 less favorable. Looking forward, Target is expected to continue to have an increasing impact on our overall gross margin and expense rate structure reflecting our strategy to grow Target more rapidly than our other divisions. The following table illustrates the impact of the major factors causing the change in earnings per share: - -------------------------------------------------------------------------------- EARNINGS PER SHARE VARIANCE ANALYSIS 1996 VS. 1995 1995 vs. 1994 - -------------------------------------------------------------------------------- Prior year's earnings per share $1.30 $1.84 Change due to: Revenues .27 .54 Gross margin rate: FIFO .55 (.65) LIFO provision .02 .57 (.10) (.75) ---- ---- Operating expense rate .33 (.27) Real estate repositioning charge (.35) - Start-up expenses - (.06) Interest expense, net - (.04) Corporate and other expense, net (.07) .01 Income tax rate (.05) .03 Extraordinary charge from purchase and redemption of debt (.05) - - -------------------------------------------------------------------------------- EARNINGS PER SHARE $1.95 $1.30 - -------------------------------------------------------------------------------- REVENUES In 1996, our total and comparable-store revenues increased 8 percent and 3 percent, respectively. Comparable-store revenues are revenues from stores open longer than a year. Target's 13 percent total revenue increase reflects a 6 percent comparable-store revenue increase and new store expansion. Mervyn's total revenue decline of 3 percent resulted primarily from a 4 percent comparable-store revenue decline, slightly offset by revenues from new stores. DSD's total revenue declined 1 percent due to a 4 percent comparable-store revenue decline, primarily reflecting the reduction in promotional days. Increased finance charge and late fee revenues at all three operating divisions also contributed to revenue growth. We expect positive comparable-store revenue growth at all divisions in 1997. This growth is expected to result from a continuation of existing trends at Target, an improvement of in-stock performance and other marketing refinements at Mervyn's and the annualization of promotional calendar changes and merchandise enhancements at DSD. Revenue growth in 1995 reflected a combination of new and comparable-store growth at Target as well as higher sales, finance charge and late fee revenues due to expansion of the Target Guest Card. Mervyn's total and comparable-store revenues declined reflecting low sales volume in the first half of the year and the transition to the new, more-promotional strategy. DSD's comparable-store revenues declined primarily due to reduced guest response to promotional events. The impact of inflation on our consolidated operations was minimal and, as a result, the overall comparable-store revenue increase closely approximates real growth. - -------------------------------------------------------------------------------- REVENUE GROWTH (52-week basis) 1996 1995 - -------------------------------------------------------------------------------- ALL COMP. All Comp. STORES STORES Stores Stores - -------------------------------------------------------------------------------- Target 13% 6% 15% 6% Mervyn's (3) (4) (2) (4) DSD (1) (4) - (1) - -------------------------------------------------------------------------------- Total 8% 3% 9% 3% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REVENUES PER SQUARE FOOT* (52-week basis) (Dollars) 1996 1995 1994 - -------------------------------------------------------------------------------- Target $235 $230 $222 Mervyn's 179 190 200 DSD 223 230 232 - -------------------------------------------------------------------------------- * Thirteen-month average retail square feet. 16 DAYTON HUDSON CORPORATION AND SUBSIDIARIES ANALYSIS OF OPERATIONS GROSS MARGIN RATE In 1996, strong gross margin rate improvement at Target and Mervyn's, offset somewhat by a slight deterioration at DSD, resulted in an overall gross margin rate improvement. This improvement was partially offset by the effect of Target's larger growth and lower gross margin rate structure. - - TARGET'S strong gross margin improvement resulted from favorable markup and very favorable promotional markdowns. Target's 1997 gross margin rate may be adversely affected by cycling against the unusually favorable markdown experience in 1996. - - MERVYN'S gross margin rate improved substantially for the year, reflecting improved markup and significantly lower markdowns. In 1997, we expect modest improvement in Mervyn's gross margin rate. - - DSD'S gross margin rate declined slightly in 1996. Higher clearance markdowns were partially offset by improved markup and lower promotional markdowns. In 1997, we anticipate a somewhat improved gross margin rate, principally due to lower clearance markdowns. The 1995 gross margin rate declined at all three operating divisions from 1994. Target's gross margin rate decrease reflected the strength of the low-margin commodity businesses in the fourth quarter and a highly competitive pricing environment. Mervyn's gross margin rate decline reflected significantly higher promotional markdowns without offsetting markup improvement during the first half of 1995. DSD's significant gross margin rate decrease was caused by substantially higher clearance markdowns and the year-over-year increase in the LIFO provision, partially offset by improved markup. The LIFO provision was as follows: - -------------------------------------------------------------------------------- LIFO PROVISION: (EXPENSE)/CREDIT (Millions of Dollars, except Per Share Data) 1996 1995 1994 - -------------------------------------------------------------------------------- Target $ - $ - $ - Mervyn's 5 (12) 8 DSD (14) (5) 11 - -------------------------------------------------------------------------------- Total $ (9) $ (17) $ 19 - -------------------------------------------------------------------------------- Per Share $(.02) $(.05) $.05 - -------------------------------------------------------------------------------- The LIFO provision is calculated based on inventory levels, markup rates and internally generated retail price indices. In 1996, the LIFO credit at Mervyn's resulted principally from higher markup and lower inventory levels while the LIFO charge at DSD resulted primarily from exiting the electronics business and the disposition of the Texas stores. The 1995 LIFO charge reflected retail price inflation, particularly associated with Mervyn's change to a more promotional strategy, partially offset by higher markup rates. OPERATING EXPENSE RATE The overall operating expense rate improved in 1996, due to significant cost reductions at Mervyn's and Target and the favorable effect of Target's increasing impact on the overall expense rate structure. In 1997, we expect additional operating expense rate improvement, particularly at Target and DSD. - - TARGET'S operating expense rate improved in 1996, reflecting savings of approximately $60 million in the first year of a three-year program to eliminate at least $200 million from operating expenses by improving store productivity and reducing headquarters and marketing costs. In 1997, we expect to eliminate a similar amount. - - MERVYN'S operating expense rate improved significantly in 1996, as a result of more than $100 million in savings realized through an extensive expense reduction program, particularly in the areas of stores and marketing. Although expense control remains a priority in 1997, no new major expense reduction initiatives are planned. - - DSD'S operating expense rate rose in 1996 principally as a result of unfavorable sales leverage. In 1997, DSD will implement a significant expense reduction program to eliminate $50 million or more in costs. The 1995 operating expense rate increased over 1994 at all three operating divisions. Mervyn's and DSD experienced lower sales leveraging and higher marketing and other costs. Target's operating expense rate increase resulted principally from higher store expenses associated with starting wage-rate increases. 17 DAYTON HUDSON CORPORATION AND SUBSIDIARIES ANALYSIS OF OPERATIONS START-UP EXPENSES Start-up expenses were essentially flat in 1996. Increased spending at Target due to its entrance into more expensive markets in the mid-Atlantic and Northeast was offset by savings from fewer Mervyn's store openings in 1996. We opened 75 new stores in 1996 compared with 76 stores in 1995 and 69 stores in 1994. Start-up expenses are generally recognized evenly throughout the year in which the expenses are incurred. INTEREST EXPENSE In 1996, interest expense was equal to 1995 as higher average debt balances were offset by a lower average portfolio rate. Interest expense in 1995 increased $16 million over 1994 as higher average debt balances were only partially offset by a lower portfolio interest rate. Interest expense in 1997 is expected to be similar to 1996. During 1996, we repurchased $325 million of sinking fund debentures for $340 million, resulting in an extraordinary charge of $.05 per share. As a result of these transactions, future annual interest expense is expected to be reduced by approximately $.03 per share over the period of time the debentures would have otherwise remained outstanding. INCOME TAX RATE The effective tax rates were 39.5 percent, 38.0 percent and 39.2 percent in 1996, 1995 and 1994, respectively. The 1996 effective tax rate reflects a more normalized rate, while lower earnings in 1995 caused permanent differences to have a greater impact. Our 1997 tax rate is expected to approximate the 1996 rate. FOURTH QUARTER RESULTS Due to the seasonal nature of the retail industry, fourth quarter operating results represent a substantially larger share of the total year earnings due to the inclusion of the holiday shopping season. Fourth quarter 1996 net earnings were $214 million, compared with $228 million in 1995. The fourth quarter earnings comparison was unfavorably affected by the real estate repositioning charge previously discussed. Earnings per share were $.91 for the quarter, compared with $.98 last year. - - TARGET'S operating profit increased 26 percent over fourth quarter 1995, reflecting a 7 percent total revenue increase and an improved gross margin rate, offset by a slightly higher operating expense rate. Comparable-store revenues increased 3 percent. The gross margin rate improvement was driven by improved markup. The operating expense rate increased slightly due in part to lower sales leveraging in a shortened holiday selling season and higher advertising expenditures. - - MERVYN'S operating profit increased $46 million before the $114 million real estate charge. Total revenues for the quarter declined 9 percent and comparable-store revenues decreased 7 percent. The gross margin rate was substantially better than last year primarily due to significantly lower markdowns and slightly higher markup. The operating expense rate deteriorated slightly as expense reductions were offset by lower sales leverage and higher bad debt expense. - - DSD's fourth quarter operating profit declined $47 million, partially due to the real estate repositioning charge of $20 million. Total revenues decreased 4 percent and comparable-store revenues were down 5 percent. The gross margin rate improved reflecting lower promotional markdowns and higher markup, principally offset by costs associated with exiting the Texas market. DSD's operating expense rate was substantially higher due to lower sales leverage and higher bad debt expense. 18 DAYTON HUDSON CORPORATION AND SUBSIDIARIES ANALYSIS OF FINANCIAL CONDITION Our financial condition remains strong. Cash flow from operations was $1,458 million, driven by earnings growth, excellent inventory control and improved accounts payable leveraging. Internally generated funds continue to be the most important component of our capital resources and, along with our ability to access a variety of financial markets, provide funding for our expansion plans. Our strong cash flow from operations in 1996 allowed us to reduce total debt by $100 million. In 1997, we expect cash flow to remain strong. During 1996, accounts receivable increased 14 percent, or $210 million, principally due to the expansion of the Guest Card, Target's proprietary credit card. In 1997, we expect to continue the growth of the Target Guest Card, which will benefit sales, accounts receivable and credit profitability. A strong inventory/accounts payable equation generated $268 million in cash flow for the Corporation in 1996. Inventory levels increased only $13 million, reflecting tight inventory control at all three divisions, offset by new store growth at Target, while accounts payable grew by $281 million over last year. Capital expenditures in 1996 were $1,301 million, compared with $1,522 million in 1995.Target's growth in store count and square footage was essentially the same in both years, while the reduction in capital expenditures was principally due to Mervyn's 1995 entry into the Minneapolis market. Investment in Target comprised 81 percent of 1996 capital expenditures, while 6 percent and 13 percent were made by Mervyn's and DSD, respectively. Net property and equipment increased $173 million, reflecting capital invested offset by depreciation and the effect of real estate repositioning. During 1996, Target added 66 net new stores, Mervyn's opened five new stores and DSD opened four new stores. Approximately 71 percent of total capital expenditures was for new stores. Other investments were for distribution, information systems and other infrastructure to support our growth. Over the past five years, Target's square footage has grown at a compound annual rate of approximately 10 percent, and this growth rate is expected to continue into the foreseeable future. Capital expenditures in 1997 are expected to approximate $1,500 million for the construction of new stores, remodeling of existing stores and other capital support. The majority of new store capital continues to be invested in Target. In the upcoming year, Target plans to open approximately 65 stores in new and existing markets and to construct two new distribution centers. Expansion plans for Target in 1997 include new stores in California, New York, New Jersey, North Carolina and Virginia. Mervyn's will open one new store and DSD plans to open two new stores, all in existing markets. The Corporation's financing strategy is to ensure liquidity and access to capital markets, to manage the amount of floating rate debt and to maintain a balanced spectrum of debt maturities. Within these parameters, we seek to minimize our cost of borrowing. The average rate on our financings, including the sale of securitized accounts receivable, decreased to 8.3 percent in 1996 from 8.5 percent in 1995. The average portfolio rate is expected to decline further in 1997. A key to the Corporation's liquidity and capital markets access is maintaining strong investment-grade debt ratings. Our long-term debt ratings are A-, Baa1 and BBB+ as rated by Duff & Phelps, Moody's and Standard & Poor's, respectively. Those agencies rate our commercial paper as D-1-, P-2 and A-2, respectively. These ratings were sufficient to support commercial paper levels well in excess of our $532 million outstanding at year end. Going forward, we expect that continued profit increases and cash flow from operations will allow us to fund our planned capital expenditures while maintaining or improving our debt ratings. In addition to the unsecured debt markets, we accessed the secured debt market in 1995 through a securitization of our accounts receivable. Accounts receivable securitization represents an attractive alternative for financing accounts receivable growth and other liquidity needs. In 1996, we expanded our securitization program by issuing a $300 million, Variable Funding Certificate, backed by credit card receivables. The outstanding certificate amount fluctuates based on financing needs and was $100 million at year end 1996. Further liquidity is provided by $1,600 million of committed lines of credit obtained through a group of 28 domestic and international banks. 19 DAYTON HUDSON CORPORATION AND SUBSIDIARIES PERFORMANCE OBJECTIVES SHAREHOLDER RETURN Our primary objective is to maximize shareholder value over time through a combination of dividend income and share price appreciation while maintaining a prudent and flexible capital structure. Our total return to shareholders approximated 55 percent in 1996 and has averaged 14 percent and 13 percent per year over the last five and ten years, respectively. MEASURING VALUE CREATION We internally measure value creation using a form of Economic Value Added - Registered Trademark- (EVA - Registered Trademark-), which we define generally as after-tax operating profit less a capital charge for all investment employed. We calculate EVA before LIFO and non-recurring charges. The capital charge is an estimate of our after-tax cost of capital adjusted for the age of our stores, recognizing that mature stores should inherently have higher returns than newly opened stores. We estimate that the after-tax cost of capital for our retail business is 10 percent, while our credit operations' after-tax cost of capital is estimated to be 6 percent as a result of its ability to support higher debt levels. We expect to generate returns in excess of these costs of capital, thereby producing EVA. There is generally a high correlation between generation of EVA and the creation of shareholder value. Maximizing EVA is the key to maximizing shareholder value over time. EVA is used to evaluate our performance and to guide capital investment decisions. A significant portion of executive incentive compensation is tied to the achievement of targeted levels of annual EVA. FINANCIAL OBJECTIVES We believe that managing our business with a focus on EVA helps achieve our objective of annual earnings per share growth of 15 percent or more over time. We intend to produce these results, while maintaining a year-end debt ratio for our retail operations within a range of 45 percent to 55 percent, which will allow efficient capital market access to fund our growth. Our cash flows during 1996 allowed us to reduce our retail debt ratio to 50 percent, the mid-point of our target range. We expect to further reduce our leverage in 1997. In evaluating our debt level, we separate retail operations from credit operations due to their inherently different financial characteristics. We view the appropriate capitalization of our credit business to be 88 percent debt and 12 percent equity, similar to ratios of comparable credit card businesses. - -------------------------------------------------------------------------------- 1996 1995 1994 - -------------------------------------------------------------------------------- DEBT RATIO*: Retail 50% 53% 50% - -------------------------------------------------------------------------------- Credit 88 88 88 - -------------------------------------------------------------------------------- Total 57% 60% 57% - -------------------------------------------------------------------------------- BALANCE SHEET DEBT RATIO 53% 56% 55% - -------------------------------------------------------------------------------- * Includes the impact of off-balance sheet operating leases and $400 million of securitized accounts receivable sold, as if they were debt. - - Registered Trademark- Economic Value Added and EVA are registered trademarks. 20 DAYTON HUDSON CORPORATION AND SUBSIDIARIES INTERNAL CREDIT Internal credit strategically supports our core retail operations and has contributed significantly to our earnings growth. The operating margin of our credit operations increased by 18 percent in 1996 to $210 million compared with growth in average accounts receivable serviced of 11 percent. Improved credit performance was driven by continued expansion of the Target Guest Card, changes in payment terms at all three divisions and development of guest loyalty programs. The increase in the bad debt provision over the prior year was principally associated with additional reserves to cover potential increases in delinquency rates, given national industry trends. In 1997, we plan to continue growing the credit business by generating new accounts and further implementing guest relationship programs. In addition, we intend to reduce expenses by improving productivity through further development of common credit information systems. As a result, we expect continued growth in operating profit and EVA. - -------------------------------------------------------------------------------- CREDIT OPERATING PROFIT (Millions of Dollars) 1996 1995 1994 - -------------------------------------------------------------------------------- REVENUES: Finance charge revenues and late fees $ 403 $ 313 $ 248 Merchant and deferred billing fees 72 75 65 - -------------------------------------------------------------------------------- Total revenues 475 388 313 - -------------------------------------------------------------------------------- EXPENSES: Bad debt provision 149 104 66 Operating expenses 116 105 77 - -------------------------------------------------------------------------------- Total expenses 265 209 143 - -------------------------------------------------------------------------------- OPERATING MARGIN 210 179 170 Net impact from securitization (25) (10) - - -------------------------------------------------------------------------------- OPERATING PROFIT, NET $ 185 $ 169 $ 170 - -------------------------------------------------------------------------------- Average accounts receivable serviced: Target $ 453 $ 313 $ 190 Mervyn's 799 791 765 DSD 663 615 549 -------------------------- Total average accounts receivable serviced $1,915 $1,719 $1,504 Average accounts receivable owned $1,515 $1,558 $1,504 - -------------------------------------------------------------------------------- In the Credit Operating Profit table, revenues, expenses and operating margin are associated with accounts receivable serviced. Merchant fees are the fees charged to our retail operations on a basis similar to fees charged by third-party credit cards. Deferred billing fees are charges for carrying non-revenue-earning revolving balances. Both the merchant and deferred billing fees are intercompany transfer prices that are eliminated in consolidation. Operating expenses are those associated with granting and servicing credit. The net impact from the 1995 sale of $400 million of securitized accounts receivable is a reduction of revenues, as well as a reduction in the bad debt provision. Average accounts receivable serviced represents an average of all accounts receivable, including the securitized accounts receivable sold, while the calculation of average accounts receivable owned reflects a reduction for the sale of securitized accounts receivable. Credit revenue, operating profit and EVA continue to be recorded in each of the operating divisions' results to recognize credit's strategic support of our core retail operations. 21 DAYTON HUDSON CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BUSINESS SEGMENT COMPARISONS (Millions of Dollars) 1996 1995* 1994 - ------------------------------------------------------------------------------------------- REVENUES Target $17,853 $15,807 $13,600 Mervyn's 4,369 4,516 4,561 Department Store Division 3,149 3,193 3,150 - ------------------------------------------------------------------------------------------- Total revenues $25,371 $23,516 $21,311 - ------------------------------------------------------------------------------------------- OPERATING PROFIT Target $ 1,042 $ 719 $ 732 Mervyn's 153 100 206 Department Store Division 108 184 270 - ------------------------------------------------------------------------------------------- Total operating profit 1,303 1,003 1,208 Interest expense, net 442 442 426 Corporate and other 78 60 68 - ------------------------------------------------------------------------------------------- Earnings before income taxes and extraordinary charge $ 783 $ 501 $ 714 - ------------------------------------------------------------------------------------------- ASSETS Target $ 8,257 $ 7,330 $ 6,247 Mervyn's 2,658 2,776 2,917 Department Store Division 2,296 2,309 2,392 Corporate and other 178 155 141 - ------------------------------------------------------------------------------------------- Total assets $13,389 $12,570 $11,697 - ------------------------------------------------------------------------------------------- DEPRECIATION AND AMORTIZATION Target $ 377 $ 328 $ 294 Mervyn's 151 150 145 Department Store Division 119 113 108 Corporate and other 3 3 1 - ------------------------------------------------------------------------------------------- Total depreciation and amortization $ 650 $ 594 $ 548 - ------------------------------------------------------------------------------------------- CAPITAL EXPENDITURES Target $ 1,048 $ 1,067 $ 842 Mervyn's 79 273 146 Department Store Division 173 161 96 Corporate and other 1 21 11 - ------------------------------------------------------------------------------------------- Total capital expenditures $ 1,301 $ 1,522 $ 1,095 - -------------------------------------------------------------------------------------------
* Consisted of 53 weeks. In 1996, operating profit includes real estate repositioning charges of $114 million and $20 million at Mervyn's and DSD, respectively. In 1996, operating profit is net of reductions of $6 million, $10 million and $9 million for Target, Mervyn's and DSD, respectively, related to the sale of securitized accounts receivable. In 1995, the net reductions were $2 million, $5 million and $3 million for Target, Mervyn's and DSD, respectively. Each operating division's assets and operating results include the undivided interest in the accounts receivable held by Dayton Hudson Receivables Corporation (in 1995 and 1996) and Retailers National Bank (1993 to 1996), as well as related income and expenses. 23 DAYTON HUDSON CORPORATION AND SUBSIDIARIES CONSOLIDATED RESULTS OF OPERATIONS
(Millions of Dollars, Except Per Share Data) 1996 1995 1994 - ----------------------------------------------------------------------------------------------------- REVENUES $25,371 $23,516 $21,311 COSTS AND EXPENSES Cost of retail sales, buying and occupancy 18,628 17,527 15,636 Selling, publicity and administrative 4,289 4,043 3,614 Depreciation and amortization 650 594 548 Interest expense, net 442 442 426 Taxes other than income taxes 445 409 373 Real estate repositioning charge 134 - - - ----------------------------------------------------------------------------------------------------- Total Costs and Expenses 24,588 23,015 20,597 - ----------------------------------------------------------------------------------------------------- Earnings Before Income Taxes and Extraordinary Charge 783 501 714 Provision for Income Taxes 309 190 280 - ----------------------------------------------------------------------------------------------------- NET EARNINGS BEFORE EXTRAORDINARY CHARGE $ 474 $ 311 $ 434 Extraordinary Charge from Purchase and Redemption of Debt, Net of Tax 11 - - - ----------------------------------------------------------------------------------------------------- NET EARNINGS $ 463 $ 311 $ 434 - ----------------------------------------------------------------------------------------------------- PRIMARY EARNINGS PER SHARE: Earnings Before Extraordinary Charge $ 2.07 $ 1.34 $ 1.92 Extraordinary Charge .05 - - - ----------------------------------------------------------------------------------------------------- PRIMARY EARNINGS PER SHARE $ 2.02 $ 1.34 $ 1.92 - ----------------------------------------------------------------------------------------------------- FULLY DILUTED EARNINGS PER SHARE: Earnings Before Extraordinary Charge $ 2.00 $ 1.30 $ 1.84 Extraordinary Charge .05 - - - ----------------------------------------------------------------------------------------------------- FULLY DILUTED EARNINGS PER SHARE $ 1.95 $ 1.30 $ 1.84 - ----------------------------------------------------------------------------------------------------- AVERAGE COMMON SHARES OUTSTANDING (Millions): Primary 218.7 216.8 216.0 Fully Diluted 230.6 229.2 228.9 - -----------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements on pages 23-34. SUMMARY OF ACCOUNTING POLICIES ORGANIZATION Dayton Hudson Corporation is a general merchandise retailer. Our operating divisions consist of Target, Mervyn's and the Department Store Division (DSD). Target, an upscale discount chain located in 38 states, generated 70 percent of our 1996 revenues. Mervyn's, a middle-market promotional department store located in 16 states in the West, South and Midwest, contributed 17 percent of revenues. DSD offers trend leadership, quality merchandise and superior service throughout its department stores located in nine states in the Midwest, and produced 13 percent of revenues. CONSOLIDATION The financial statements include the accounts of the Corporation after elimination of material intercompany balances and transactions. All subsidiaries are wholly owned. USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. FISCAL YEAR Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to years in this report relate to fiscal years rather than to calendar years. - -------------------------------------------------------------------------------- Fiscal Year Ended Weeks - -------------------------------------------------------------------------------- 1996 February 1, 1997 52 1995 February 3, 1996 53 1994 January 28, 1995 52 - -------------------------------------------------------------------------------- 24 DAYTON HUDSON CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS REVENUES Finance charge revenues and late fees on internal credit sales were $346 million on sales of $3.8 billion in 1996, $292 million on sales of $3.8 billion in 1995 and $248 million on sales of $3.6 billion in 1994. Leased department sales were $162 million, $153 million and $156 million in 1996, 1995 and 1994, respectively. EARNINGS PER SHARE Primary earnings per share equals net earnings, less dividend requirements on the Employee Stock Ownership Plan (ESOP) preferred stock, divided by the average number of common shares and common share equivalents outstanding during the period. Fully diluted earnings per share assumes conversion of the ESOP preferred stock into common stock. Net earnings are adjusted for the additional expense required to fund the ESOP debt service, which results from the assumed replacement of the ESOP preferred dividends with common stock dividends. References to earnings per share relate to fully diluted earnings per share. During 1996, the Corporation distributed to shareholders two additional shares of common stock for each share owned, resulting in a three-for-one common stock split. All earnings per share, dividends per share and common shares outstanding reflect the stock split. ADVERTISING COSTS Advertising costs, included in selling, publicity and administrative expenses, are expensed as incurred and were $634 million, $670 million and $604 million for 1996, 1995 and 1994, respectively. REAL ESTATE REPOSITIONING CHARGE As a result of actions and decisions made in fourth quarter 1996 to sell or close stores, we recorded a pre-tax real estate repositioning charge of $134 million ($.35 per share). The charge includes $114 million for Mervyn's to sell or close its 25 stores in Florida and Georgia, and approximately 10 other underperforming stores throughout the chain. Also included is a net charge of $20 million for DSD's exit from the Texas market and the sale or closure of two other stores. The real estate repositioning charge reflects a $87 million charge for the write-down of property and equipment to its net realizable value, which includes the net gain realized on the December 1996 sale of the DSD Texas stores. In the first quarter 1997, Mervyn's exited the Florida and Georgia markets and DSD closed one store. All remaining properties are expected to be sold or closed within approximately 12 to 18 months. At year end 1996, properties held for sale are classified in other current assets at their net realizable value. The charge also includes $47 million for exit costs associated with the real estate repositioning effort, including expected cash outlays for lease liabilities and other real estate costs, occupancy costs during the shut-down period and incremental bad debt expense related to the exit of specific markets. There were no material charges against the reserve for exit costs in 1996, which is included in accrued liabilities at February 1, 1997. INCOME TAXES Reconciliation of tax rates is as follows: - -------------------------------------------------------------------------------- PERCENT OF EARNINGS BEFORE INCOME TAXES 1996 1995 1994 - -------------------------------------------------------------------------------- Federal statutory rate 35.0% 35.0% 35.0% State income taxes, net of federal tax benefit 4.6 4.9 4.7 Dividends on preferred stock (.8) (1.1) (.6) Targeted Jobs Tax Credits - (.5) (.7) Other .7 (.3) .8 - -------------------------------------------------------------------------------- Effective tax rate 39.5% 38.0% 39.2% - -------------------------------------------------------------------------------- The components of the provision for income taxes were: - -------------------------------------------------------------------------------- INCOME TAX PROVISION EXPENSE/(BENEFIT) (Millions of Dollars) 1996 1995 1994 - -------------------------------------------------------------------------------- Current: Federal $ 344 $158 $262 State 72 38 59 - -------------------------------------------------------------------------------- 416 196 321 - -------------------------------------------------------------------------------- Deferred: Federal (89) (5) (34) State (18) (1) (7) - -------------------------------------------------------------------------------- (107) (6) (41) - -------------------------------------------------------------------------------- Total $ 309 $190 $280 - -------------------------------------------------------------------------------- The components of the net deferred tax asset/(liability) were: - -------------------------------------------------------------------------------- NET DEFERRED TAX ASSET/(LIABILITY) FEBRUARY 1, February 3, (Millions of Dollars) 1997 1996 - -------------------------------------------------------------------------------- Gross deferred tax assets: Self-insured benefits $109 $ 99 Deferred compensation 85 74 Postretirement health care obligation 44 44 Allowance for doubtful accounts 49 28 Other 108 98 - -------------------------------------------------------------------------------- 395 343 - -------------------------------------------------------------------------------- Gross deferred tax liabilities: Property and equipment (288) (319) Inventory (15) (27) Other (35) (47) - -------------------------------------------------------------------------------- (338) (393) - -------------------------------------------------------------------------------- Net $ 57 $ (50) - -------------------------------------------------------------------------------- 25 DAYTON HUDSON CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION FEBRUARY 1, February 3, (Millions of Dollars) 1997 1996 - -------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 201 $ 175 Accounts receivable 1,720 1,510 Merchandise inventories 3,031 3,018 Other 488 252 - -------------------------------------------------------------------------------- Total Current Assets 5,440 4,955 PROPERTY AND EQUIPMENT Land 1,557 1,496 Buildings and improvements 5,943 5,812 Fixtures and equipment 2,652 2,482 Construction-in-progress 317 434 Accumulated depreciation (3,002) (2,930) - -------------------------------------------------------------------------------- Property and Equipment, net 7,467 7,294 OTHER 482 321 - -------------------------------------------------------------------------------- TOTAL ASSETS $13,389 $12,570 - -------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES Accounts payable $ 2,528 $ 2,247 Accrued liabilities 1,168 957 Income taxes payable 182 137 Current portion of long-term debt and notes payable 233 182 - -------------------------------------------------------------------------------- Total Current Liabilities 4,111 3,523 LONG-TERM DEBT 4,808 4,959 DEFERRED INCOME TAXES AND OTHER 630 623 CONVERTIBLE PREFERRED STOCK, NET 50 62 SHAREHOLDERS' INVESTMENT Convertible preferred stock 271 257 Common stock 72 72 Additional paid-in capital 146 110 Retained earnings 3,348 3,044 Loan to ESOP (47) (80) - -------------------------------------------------------------------------------- Total Shareholders' Investment 3,790 3,403 - -------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $13,389 $12,570 - -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements on pages 23-34. 26 DAYTON HUDSON CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CASH EQUIVALENTS Cash equivalents represent short-term investments with a maturity of three months or less from the time of purchase. ACCOUNTS RECEIVABLE Accounts receivable are written off when the required payments have not been received for six consecutive months. Prior to an account being written-off, an allowance is established for potential losses. The allowance for doubtful accounts was $119 million and $69 million at year-end 1996 and 1995, respectively. In September 1995, the Corporation, through its special-purpose subsidiary, Dayton Hudson Receivables Corporation (DHRC), entered into a securitization transaction under which it transfers, on an ongoing basis, substantially all of its credit card receivables to a trust in return for certificates representing undivided interests in the trust's assets. At that time DHRC sold to the public $400 million of three-year Class A certificates, with a fixed rate of 6.1 percent, backed by the credit card receivables. The issuance of such certificates was recorded as a sale and no gain or loss was recorded. DHRC retained a $123 million issue of subordinated Class B asset-backed certificates, which is classified in accounts receivable. Retailers National Bank (the Bank), a national credit card bank and wholly owned subsidiary of the Corporation, holds a 5 percent undivided interest in the accounts receivable of the trust. DHRC owns the remaining undivided interest in the trust's assets. The Bank continues to generate and service all receivables for the trust. The undivided interests in the accounts receivable held by DHRC and the Bank, as well as related income and expenses, are reflected in each operating division's assets and operating results. During 1996, we adopted Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," which provides standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings and prescribes the measurement of assets obtained and liabilities incurred in a sale. SFAS No. 125, effective for transfers of accounts receivable after December 31, 1996, was not material to the financial statements in 1996 and is not expected to be material going forward. INVENTORIES Inventories and the related cost of sales are accounted for by the retail accounting method using the last-in, first-out (LIFO) basis and are stated at the lower of LIFO cost or market. The LIFO reserve was $86 million and $77 million at February 1, 1997 and February 3, 1996, respectively. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over estimated useful lives. Buildings and improvements are depreciated over eight to 55 years. Furniture and fixtures are depreciated over three to eight years. Accelerated depreciation methods are generally used for income tax purposes. In first quarter 1996, we adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The impairment loss recorded upon adoption was not material to the financial statements. ACCOUNTS PAYABLE Outstanding drafts included in accounts payable were $414 million and $344 million at year-end 1996 and 1995, respectively. LEASES Assets held under capital leases are included in property and equipment, and are charged to depreciation and interest over the life of the lease. Operating leases are not capitalized and lease rentals are expensed. Rent expense on buildings, classified in buying and occupancy, includes percentage rents that are based on a percentage of retail sales over stated levels. Total rent expense was $146 million, $144 million and $123 million in 1996, 1995 and 1994, respectively. Most of the long-term leases include options to renew, with terms varying from five to 30 years. Certain leases also include options to purchase the property. Future minimum lease payments required under noncancelable lease agreements existing at February 1, 1997 were: - -------------------------------------------------------------------------------- FUTURE MINIMUM LEASES PAYMENTS Operating Capital (Millions of Dollars) Leases Leases - -------------------------------------------------------------------------------- 1997 $ 117 $ 20 1998 111 19 1999 103 19 2000 80 18 2001 77 18 After 2001 658 146 - -------------------------------------------------------------------------------- Total future minimum lease payments 1,146 240 Less: Interest* (500) (114) - -------------------------------------------------------------------------------- Present value of minimum lease payments $ 646 $ 126** - -------------------------------------------------------------------------------- * Calculated using the interest rate at inception for each lease (the weighted average interest rate was 9.4 percent.) ** Includes current portion of $7 million. COMMITMENTS AND CONTINGENCIES Commitments for the purchase, construction, lease or remodeling of real estate, facilities and equipment were approximately $261 million at February 1, 1997. The Corporation is exposed to claims and litigation arising out of the ordinary course of business. Management, after consulting with legal counsel, believes that the currently identified claims and litigation will not have a material adverse effect on our results of operations or its financial condition taken as a whole. 27 DAYTON HUDSON CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars) 1996 1995 1994 - ---------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net earnings before extraordinary charge $ 474 $ 311 $ 434 Reconciliation to cash flow: Depreciation and amortization 650 594 548 Deferred tax provision (107) (6) (41) Other noncash items affecting earnings 11 52 38 Changes in operating accounts providing/(requiring) cash: Accounts receivable (210) (100) (274) Sale of securitized accounts receivable - 400 Merchandise inventories (13) (241) (280) Accounts payable 281 286 307 Accrued liabilities 275 (88) 147 Income taxes payable 55 (38) 30 Other 42 (9) (17) - ---------------------------------------------------------------------------------------------------- Cash Flow Provided by Operations 1,458 1,161 892 - ---------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for property and equipment (1,301) (1,522) (1,095) Proceeds from disposals of property and equipment 103 17 89 - ---------------------------------------------------------------------------------------------------- Cash Flow Required for Investing Activities (1,198) (1,505) (1,006) - ---------------------------------------------------------------------------------------------------- Net Financing Sources/(Requirements) 260 (344) (114) - ---------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES (Decrease)/increase in notes payable, net (416) 501 247 Additions to long-term debt 700 150 - Reductions of long-term debt (414) (210) (199) Principal payments received on loan to ESOP 40 57 58 Dividends paid (155) (148) (144) Other 11 22 (22) - ---------------------------------------------------------------------------------------------------- Cash Flow (Used for)/Provided by Financing Activities (234) 372 (60) - ---------------------------------------------------------------------------------------------------- Net Increase/(Decrease) in Cash and Cash Equivalents 26 28 (174) Cash and Cash Equivalents at Beginning of Year 175 147 321 - ---------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 201 $ 175 $ 147 - ----------------------------------------------------------------------------------------------------
Amounts in these statements are presented on a cash basis and therefore may differ from those shown in other sections of this Annual Report. Cash paid for income taxes was $352 million, $229 million and $292 million for 1996, 1995 and 1994, respectively. Cash paid for interest (including interest capitalized) was $434 million, $451 million and $431 million for 1996, 1995 and 1994, respectively. See Notes to Consolidated Financial Statements on pages 23-34. 28 DAYTON HUDSON CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS LINES OF CREDIT At February 1, 1997, two committed credit agreements totaling $1.6 billion were available from various lending institutions at specified rates. There were no balances outstanding at any time during the year related to these agreements. LONG-TERM DEBT AND NOTES PAYABLE At February 1, 1997, $532 million of notes payable were outstanding, $432 million of which were classified as long-term debt as they were supported by the Corporation's $800 million committed credit agreement that expires in the year 2001. The average amount of notes payable outstanding during 1996 was $877 million at a weighted-average interest rate of 5.6 percent. During 1996, the Dayton Hudson Credit Card Master Trust issued, for cash, a $300 million Series 1996-1 Class A Variable Funding Certificate backed by credit card receivables. The outstanding Certificate amount fluctuates based on financing needs and was $100 million at February 1, 1997. The Class A Certificate is debt of DHRC and is classified in the current portion of long-term debt and notes payable in the Corporation's Consolidated Statement of Financial Position. In 1996, we issued the following long-term debt: $200 million at 6.8 percent maturing in 2001; $300 million at 6.4 percent, maturing in 2003; and $200 million at 7.5 percent, maturing in 2006. The proceeds from these issuances were used for general corporate purposes. Also during 1996, we repurchased for $340 million the following sinking fund debentures: $112 million of 9.5 percent, due in 2016; $148 million of 9.25 percent, due in 2016; and $65 million of 9.875 percent, due in 2017. An extraordinary charge, net of tax, of $11 million ($.05 per share) for early extinguishment of debt was recorded related to these transactions. At year-end the debt portfolio was as follows: - -------------------------------------------------------------------------------- LONG-TERM DEBT FEBRUARY 1, 1997 February 3, 1996 AND NOTES PAYABLE ---------------- ---------------- (Millions of Dollars) RATE* BALANCE Rate* Balance - -------------------------------------------------------------------------------- Notes payable 5.6% $ 532 5.6% $ 948 Notes and debentures: Due 1996-2000 9.3 836 8.9 878 Due 2001-2005 7.6 1,149 8.4 649 Due 2006-2010 9.0 648 9.7 448 Due 2011-2015 8.9 379 8.9 379 Due 2016-2020 9.6 436 9.6 787 Due 2021-2023 8.5 935 8.5 935 - -------------------------------------------------------------------------------- Total notes payable, notes and debentures** 4,915 5,024 Capital lease obligations 126 117 Less: current portion (233) (182) - -------------------------------------------------------------------------------- Long-term debt and notes payable $4,808 $4,959 - -------------------------------------------------------------------------------- * Reflects the weighted-average stated interest rate as of year end. ** The estimated fair value of total notes payable, notes and debentures, using discounted cash flow analysis based on the Corporation's incremental interest rates for similar types of financial instruments, was $5,246 million at February 1, 1997 and $5,460 at February 3, 1996. Required principal payments on long-term debt and notes payable over the next five years, excluding capital lease obligations, are $226 million in 1997, $170 million in 1998, $152 million in 1999, $388 million in 2000 and $795 million in 2001. 29 DAYTON HUDSON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT Convertible Additional Preferred Common Paid-in Retained Loan to (Millions of Dollars, Except Per Share Data) Stock Stock Capital Earnings ESOP Total - ----------------------------------------------------------------------------------------------------------------------------------- JANUARY 29, 1994 $273 $72 $ 73 $2,592 $(161) $2,849 Consolidated net earnings - - - 434 - 434 Dividends declared - - - (144) - (144) Tax benefit on unallocated preferred stock dividends - - 6 - - 6 Conversion of preferred stock and other 4 - 7 - - 11 Net reduction in loan to ESOP - - - - 34 34 Stock option activity - - 3 - - 3 - ----------------------------------------------------------------------------------------------------------------------------------- JANUARY 28, 1995 277 72 89 2,882 (127) 3,193 Consolidated net earnings - - - 311 - 311 Dividends declared - - - (149) - (149) Tax benefit on unallocated preferred stock dividends - - 5 - - 5 Conversion of preferred stock and other (20) - 11 - - (9) Net reduction in loan to ESOP - - - - 47 47 Stock option activity - - 5 - - 5 - ----------------------------------------------------------------------------------------------------------------------------------- FEBRUARY 3, 1996 257 72 110 3,044 (80) 3,403 Consolidated net earnings - - - 463 - 463 Dividends declared - - - (159) - (159) Tax benefit on unallocated preferred stock dividends - - 7 - - 7 Conversion of preferred stock and other 14 - 16 - - 30 Net reduction in loan to ESOP - - - - 33 33 Stock option activity - - 13 - - 13 - ----------------------------------------------------------------------------------------------------------------------------------- FEBRUARY 1, 1997 $271 $72 $146 $3,348 $ (47) $3,790 - -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK Authorized 1,500,000,000 shares, $.3333 par value; 217,205,226 shares issued and outstanding at February 1, 1997; 215,894,520 shares issued and outstanding at February 3, 1996. PREFERRED STOCK Authorized 5,000,000 shares; Series B ESOP Convertible Preferred Stock $.01 par value, 382,921 shares issued and outstanding at February 1, 1997; 401,494 shares issued and outstanding at February 3, 1996. Each share converts into 30 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 In September 1996, the Corporation declared a distribution of preferred share purchase rights. Terms of the plan provide for a distribution of one preferred share purchase right for each outstanding share of the Corporation's common stock. Each right will entitle shareholders to buy one three-hundredth of a share of a new series of junior participating preferred stock at an exercise price of $100, subject to adjustment. The rights will be exercisable only if a person or group acquires ownership of 20 percent or more of the Corporation's common stock or announces a tender offer to acquire 30 percent or more of the common stock. See Notes to Consolidated Financial Statements on pages 23-34. 30 DAYTON HUDSON CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS STOCK OPTION PLAN The Corporation has a stock option plan for key employees. Options have included Incentive Stock Options, Non-Qualified Stock Options or a combination of the two. A majority of the options contain a vesting schedule so that 12 months after the grant date, 25 percent of the options granted become exercisable, with another 25 percent vesting after each succeeding 12 months. These options are cumulatively exercisable and expire no later than ten years after the date of the grant. In 1995, we adopted a non-qualified stock option plan for nonemployee members of the Board of Directors. Such options become exercisable after one year and have a ten year term. The 1997 grant was moved up to January 1997 and fell within 1996, resulting in two grants in the same fiscal year. The typical frequency of stock option grants is once each year. The Corporation has had a performance share and restricted stock award plan for key employees. Performance shares are earned to the extent certain financial goals are met over a four-year period. Performance shares and restricted stock awards are placed in escrow until retirement, subject to certain further restrictions, and result in compensation expense.
- ------------------------------------------------------------------------------------------- OPTIONS, PERFORMANCE SHARES AND RESTRICTED STOCK AWARDS OUTSTANDING - ------------------------------------------------------------------------------------------- Options --------------------------------------------- Shares Outstanding Shares Exercisable --------------------- ---------------------- Weighted Weighted Number Average Number Average Perform- Restricted of Exercise of Exercise ance Stock Shares Price Shares Price Shares Awards - ------------------------------------------------------------------------------------------- January 29, 1994 3,818,463 $19.89 1,963,872 $17.35 743,067 91,482 Granted 602,658 25.39 Canceled (208,614) 22.54 Exercised (234,507) 13.98 - ------------------------------------------------------------------------------------------- January 28, 1995 3,978,000 20.93 2,513,169 18.87 743,868 130,686 Granted 1,492,377 23.50 Canceled (104,190) 23.93 Exercised (382,758) 13.96 - ------------------------------------------------------------------------------------------- February 3, 1996 4,983,429 22.17 2,685,945 20.59 803,703 179,619 Granted 3,269,923 32.17 Canceled (72,630) 24.37 Exercised (875,580) 19.35 - ------------------------------------------------------------------------------------------- FEBRUARY 1, 1997 7,305,142 $26.97 2,391,183 $21.77 632,028 155,308 - -------------------------------------------------------------------------------------------
As of February 1, 1997, there were 935,639 options outstanding with exercise prices between $10.08 and $19.94, 1,890,109 options with exercise prices between $20.85 and $24.83, 2,594,160 options with exercise prices between $25.04 and $28.35 and 1,885,234 options with an exercise price of $37.38. As of February 1, 1997, outstanding options had a weighted-average remaining contractual life of 7.5 years. The number of shares of unissued common stock reserved for future grants under the stock option plans were 4,564,547 at February 1, 1997 and 7,631,415 at February 3, 1996. The Corporation applies Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees", and related Interpretations to account for its stock option plans. Under APB No. 25, no compensation expense is recognized if the exercise price of the Corporation's employee stock options equals the market price on the grant date. SFAS No. 123, "Accounting for Stock-Based Compensation" requires that the fair value of options granted during 1996 and 1995 and the pro forma impact on earnings to be disclosed when material. The pro forma impact was not material for 1996 and 1995. PENSION PLANS The Corporation has three defined benefit pension plans that cover all employees who meet certain requirements of age, length of service and hours worked per year. Benefits are provided based upon years of service and the employee's compensation. Contributions to the pension plans, which are made solely by the Corporation, are determined by an outside actuarial firm. To compute net pension cost, the actuarial firm estimates the total benefits that will ultimately be paid to eligible employees and then allocates these costs to service periods. The period over which unrecognized pension costs and credits are amortized, including prior service costs and actuarial gains and losses, is based on the remaining service period for those employees expected to receive pension benefits. 31 DAYTON HUDSON CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NET PENSION EXPENSE (Millions of Dollars) 1996 1995 1994 - -------------------------------------------------------------------------------- Service cost-benefits earned during the period $ 26 $ 21 $ 25 Interest cost on projected benefit obligation 37 35 33 Return on assets-current (78) (87) (10) -deferred 36 47 (26) - -------------------------------------------------------------------------------- Total $ 21 $ 16 $ 22 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ACTUARIAL ASSUMPTIONS 1996 1995 1994 - -------------------------------------------------------------------------------- Discount rate 7 3/4% 7 1/2% 8 1/2% Expected long-term rate of return on plans' assets 9 9 9 Average assumed rate of compensation increase 4 3/4 4 1/2 5 1/2 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- December 31, FUNDED STATUS 1996 1995 - -------------------------------------------------------------------------------- Actuarial present value of Vested benefit obligation $428 $412 Accumulated benefit obligation 455 438 Projected benefit obligation 523 503 Fair market value of plans' assets* 587 518 - -------------------------------------------------------------------------------- Plans' assets in excess of projected benefit obligation 64 15 Unrecognized prior service cost 2 2 Unrecognized net actuarial (gain)/loss (21) 21 - -------------------------------------------------------------------------------- Prepaid pension assets $ 45 $ 38 - -------------------------------------------------------------------------------- * Plans' assets consist primarily of equity and fixed-income securities. EMPLOYEE STOCK OWNERSHIP PLAN The Corporation sponsors a defined contribution employee benefit plan. Employees who meet certain eligibility requirements may participate by investing up to 15 percent of their compensation. We match 100 percent of each employee's contribution up to 5 percent of each participant's total compensation. Our contribution to the plan is invested in the ESOP. It is anticipated that all available ESOP shares will be allocated to participants by early 1998. At that time, management intends to provide new ESOP shares for funding the employer match. In 1989, we loaned $379 million to the ESOP at a 9 percent interest rate. Proceeds from the loan were used by the ESOP to purchase 438,353 shares of Series B ESOP Convertible Preferred Stock of the Corporation. The original issue value of the ESOP preferred stock of $864.60 per share is guaranteed by the Corporation. Our contributions to the ESOP, plus dividends paid on all preferred stock held by the ESOP, are used to repay the loan principal and interest. Cash contributed by us to the ESOP was $23 million in 1996, $45 million in 1995 and $50 million in 1994. Dividends earned on shares held by the ESOP were $22 million in 1996, $23 million in 1995 and $24 million in 1994. The dividends on allocated preferred stock are paid to participants' accounts in additional shares of preferred stock. Benefits expense, calculated based on the shares allocated method, was $31 million in 1996, $39 million in 1995 and $33 million in 1994. Upon a participant's termination, we are required to exchange at fair value each share of preferred stock for 30 shares of common stock and cash, if any. At February 1, 1997, 319,527 shares of the ESOP preferred stock were allocated to participants and had a fair value of $411 million. The convertible preferred stock and related loan to ESOP are classified as Shareholders' Investment to the extent the preferred stock is permanent equity. The remaining convertible preferred stock of $60 million, net of the related loan to ESOP of $10 million at February 1, 1997, represents our maximum cash obligation at year-end, measured by the market value difference between the preferred stock and common stock, and is excluded from Shareholders' Investment. POSTRETIREMENT HEALTH CARE BENEFITS Employees eligible for retirement become eligible for certain health care benefits if they meet minimum age and service requirements, and agree to contribute a portion of the cost. We have the right to modify or terminate these benefits. ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION December 31 (Millions of Dollars) 1996 1995 - -------------------------------------------------------------------------------- Retirees $ 48 $ 51 Fully eligible active plan participants 18 18 Other active plan participants 10 11 Prior service cost (4) (4) Unrecognized gain 31 27 - -------------------------------------------------------------------------------- Total $103 $103 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET PERIODIC COST 1996 1995 1994 - -------------------------------------------------------------------------------- Service cost -- benefits earned during the period $1 $1 $2 Interest cost on accumulated benefits 5 5 6 - -------------------------------------------------------------------------------- Total $6 $6 $8 - -------------------------------------------------------------------------------- An increase in the cost of covered health care benefits of 7 percent is assumed for fiscal 1997. The rate is assumed to decrease to 6 percent in the year 2000 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, a 1 percent increase in the health care trend rate would increase the accumulated postretirement benefit obligation by $5 million at February 1, 1997 and the net periodic cost by $.4 million for the year. The discount rate used in determining the accumulated postretirement benefit obligation was 7 3/4 percent for 1996, 7 1/2 percent for 1995 and 8 1/2 percent for 1994. 32 DAYTON HUDSON CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 and real estate taxes, are allocated evenly throughout the year. The table below summarizes results by quarter for 1996 and 1995:
(Millions of Dollars, except Per Share Data) First Quarter Second Quarter Third Quarter - ------------------------------------------------------------------------------------------------------------------------- 1996 1995 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------------- Revenues $5,380 $4,757 $5,751 $5,236 $6,073 $5,573 Gross Profit (a) $1,431 $1,253 $1,554 $1,340 $1,621 $1,460 Net Earnings Before Extraordinary Charge (b) $ 42 $ 11 $ 101 $ 28 $ 116 $ 44 Net Earnings (b) (c) $ 41 $ 11 $ 101 $ 28 $ 107 $ 44 Primary Earnings Per Share (b) (c) (d) $ .17 $ .03 $ .44 $ .11 $ .47 $ .18 Fully Diluted Earnings Per Share (b) (c) (d) $ .16 $ .03 $ .42 $ .11 $ .45 $ .17 - ------------------------------------------------------------------------------------------------------------------------- Dividends Declared Per Share (d) $ .15 $ .15 $ .16 $ .15 $ .16 $ .15 Common Stock Price (e) High $ 32 5/8 $ 24 7/8 $ 36 5/8 $ 26 1/4 $ 36 $ 26 1/2 Low 24 1/2 21 7/8 29 1/8 21 1/2 30 3/4 23 1/4 - ------------------------------------------------------------------------------------------------------------------------- (Millions of Dollars, except Per Share Data) Fourth Quarter Total Year - ----------------------------------------------------------------------------------------------- 1996 1995 1996 1995 - ----------------------------------------------------------------------------------------------- Revenues $8,167 $7,950 $25,371 $23,516 Gross Profit (a) $2,137 $1,936 $ 6,743 $ 5,989 Net Earnings Before Extraordinary Charge (b) $ 215 $ 228 $ 474 $ 311 Net Earnings (b) (c) $ 214 $ 228 $ 463 $ 311 Primary Earnings Per Share (b) (c) (d) $ .95 $ 1.03 $ 2.02 $ 1.34 Fully Diluted Earnings Per Share (b) (c) (d) $ .91 $ .98 $ 1.95 $ 1.30 - ----------------------------------------------------------------------------------------------- Dividends Declared Per Share (d) $ .16 $ .15 $ .63 $ .59 Common Stock Price (e) High $ 39 7/8 $ 25 7/8 $ 39 7/8 $ 26 1/2 Low 34 5/8 22 7/8 24 1/2 21 1/2 - -----------------------------------------------------------------------------------------------
(a) Gross profit is revenues less cost of retail sales, buying and occupancy. The LIFO provision, included in gross profit, is adjusted each quarter for estimated changes in year-end inventory levels, markup rates and internally generated retail price indices. A final adjustment is recorded in the fourth quarter for the difference between the prior quarters' estimates and the actual total year LIFO provision. (b) Fourth quarter and total year 1996 net earnings before extraordinary charges and earnings per share reflect a pre-tax real estate repositioning charge of $134 million ($81 million after tax), or $.35 per primary and fully diluted share. (c) In 1996, first, third and fourth quarter net earnings reflect extraordinary charges related to the purchase and redemption of debt, net of tax, of $1 million, $9 million and $1 million, respectively, or $.00, $.04 and $.01 per primary and fully diluted share. (d) Per share amounts are computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in average quarterly shares outstanding and/or rounding caused by the 1996 three-for-one common stock split. (e) The Corporation's common stock is listed on the New York Stock Exchange and Pacific Stock Exchange. At March 21, 1997 there were 10,958 shareholders of record and the common stock price closed at $42 5/8 per share. 33 DAYTON HUDSON CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT AUDITORS Board of Directors and Shareholders Dayton Hudson Corporation We have audited the accompanying consolidated statements of financial position of Dayton Hudson Corporation and subsidiaries as of February 1, 1997 and February 3, 1996 and the related consolidated results of operations, cash flows and shareholders' investment for each of the three years in the period ended February 1, 1997. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Dayton Hudson Corporation and subsidiaries at February 1, 1997 and February 3, 1996 and the consolidated results of their operations and their cash flows for each of the three years in the period ended February 1, 1997 in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Ernst & Young LLP Minneapolis, Minnesota March 3, 1997 34 DAYTON HUDSON CORPORATION AND SUBSIDIARIES SUMMARY FINANCIAL AND OPERATING DATA
(Millions of Dollars, Except Per Share Data) 1996 1995(a) 1994 1993 1992 - ---------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT DATA - ---------------------------------------------------------------------------------------------------------------------- Revenues $ 25,371 23,516 21,311 19,233 17,927 - ---------------------------------------------------------------------------------------------------------------------- Cost of retail sales, buying and occupancy $ 18,628 17,527 15,636 14,164 13,129 - ---------------------------------------------------------------------------------------------------------------------- Selling, publicity and administrative $ 4,289 4,043 3,614 3,158 2,961 - ---------------------------------------------------------------------------------------------------------------------- Depreciation and amortization $ 650 594 548 515 476 - ---------------------------------------------------------------------------------------------------------------------- Interest expense, net $ 442 442 426 446 437 - ---------------------------------------------------------------------------------------------------------------------- Earnings before income taxes and extraordinary charge (b) $ 783 501 714 607 611 - ---------------------------------------------------------------------------------------------------------------------- Income taxes $ 309 190 280 232 228 - ---------------------------------------------------------------------------------------------------------------------- Net earnings (b)(c) $ 463 311 434 375 383 - ---------------------------------------------------------------------------------------------------------------------- FINANCIAL POSITION DATA - ---------------------------------------------------------------------------------------------------------------------- Working capital $ 1,329 1,432 1,569 1,436 1,450 - ---------------------------------------------------------------------------------------------------------------------- Property and equipment, net $ 7,467 7,294 6,385 5,947 5,563 - ---------------------------------------------------------------------------------------------------------------------- Total assets $ 13,389 12,570 11,697 10,778 10,337 - ---------------------------------------------------------------------------------------------------------------------- Long-term debt $ 4,808 4,959 4,488 4,279 4,330 - ---------------------------------------------------------------------------------------------------------------------- Shareholders' investment $ 3,790 3,403 3,193 2,849 2,566 - ---------------------------------------------------------------------------------------------------------------------- PER COMMON SHARE DATA - ---------------------------------------------------------------------------------------------------------------------- Fully diluted earnings per share (b)(c) $ 1.95 1.30 1.84 1.59 1.61 - ---------------------------------------------------------------------------------------------------------------------- Cash dividend declared $ .63 .59 .56 .54 .51 - ---------------------------------------------------------------------------------------------------------------------- Market price -- high $ 39 7/8 26 1/2 28 5/8 27 7/8 26 3/8 Market price -- low $ 24 1/2 21 1/2 21 3/4 21 1/8 19 5/8 Market price -- year-end close $ 37 5/8 25 23 22 25 7/8 - ---------------------------------------------------------------------------------------------------------------------- Common shareholders' investment $ 16.42 14.94 14.15 12.76 11.61 - ----------------------------------------------------------------------------------------------------------------------
The Summary Financial and Operating Data should be read in conjunction with the Notes to Consolidated Financial Statements on pages 23-34. Per share amounts and shares outstanding for 1995 and earlier are restated to reflect a three-for-one Common Stock split effective July 17, 1996. (a) Consisted of 53 weeks. (b) 1996 includes a pre-tax real estate repositioning charge of $134 million ($81 million after-tax), or $.35 per share. (c) 1996 includes an extraordinary charge, net of tax, of $11 million, or $.05 per share, related to purchase and redemption of debt. 35 DAYTON HUDSON CORPORATION AND SUBSIDIARIES EX-21 12 EXHIBIT 21 EXHIBIT 21 SUBSIDIARIES OF REGISTRANT As of April 1, 1997, the following are wholly-owned subsidiaries of the Registrant and are Minnesota corporations, except as otherwise indicated: Bullseye Corporation (DE) Dayton Credit Company Dayton Development Company Dayton Hudson Capital Corporation Dayton Hudson Receivables Corporation Dayton's Commercial Interiors, Inc. Dayton's Iron Horse Liquors, Inc. Dayton's Sioux Falls, Inc. (SD) Dayton's Travel Service, Inc. Eighth Street Development Company Mervyn's (CA) Mervyn's, Inc. (DE) Retailer's National Bank, N.A. (a national association) Rooftop, Inc. Seatamatic, Inc. (NV) STL of Nebraska, Inc. Target Services, Inc. Target Stores, Inc. Capitol Lounge Corp. (WI) Clybourn Trading Corp. (WI) DHC Milwaukee, Inc. (WI) DHC Wine & Liquor Shop, Inc. (WI) Marshall Field & Company (DE) Marshall Field of Columbus, Inc. (OH) Marshall Field Stores, Inc. (DE) Marshall Field's Chicago, Inc. (DE) Marshall Field's Direct Response Company, Inc. (DE) Marshall Field's Mayfair, Inc. (WI) EX-23 13 EXHIBIT 23 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 3, 1997 included in the 1996 Annual Report to Shareholders of Dayton Hudson Corporation. Our audits also included the financial statement schedule of Dayton Hudson Corporation listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in Registration Statement Numbers 33-42364, 333-389 and 333-12915 on Form S-3 and Post-Effective Amendment No. 1 to Registration Statement Number 2-72549 and Registration Statement Numbers 33-6918, 33-66050 and 33-64013 on Form S-8 of our report dated March 3, 1997 with respect to the consolidated financial statements incorporated herein by reference and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Dayton Hudson Corporation. /s/ ERNST & YOUNG LLP --------------------------------------- Ernst & Young LLP Minneapolis, Minnesota April 16, 1997 EX-24 14 EXHIBIT 24 EXHIBIT 24 DAYTON HUDSON CORPORATION Power of Attorney of Director and/or Officer KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make, constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /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 ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /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 ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /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 ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /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 ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /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 ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /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 ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /s/ JAMES A. JOHNSON -------------------------------------- James A. Johnson DAYTON HUDSON CORPORATION Power of Attorney of Director and/or Officer KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make, constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /s/ RICHARD M. KOVACEVICH -------------------------------------- Richard M. Kovacevich DAYTON HUDSON CORPORATION Power of Attorney of Director and/or Officer KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make, constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /s/ STEPHEN W. SANGER -------------------------------------- Stephen W. Sanger DAYTON HUDSON CORPORATION Power of Attorney of Director and/or Officer KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make, constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /s/ SOLOMON D. TRUJILLO -------------------------------------- Solomon D. Trujillo DAYTON HUDSON CORPORATION Power of Attorney of Director and/or Officer KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of DAYTON HUDSON CORPORATION, a Minnesota corporation, does hereby make, constitute and appoint ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /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 ROBERT J. ULRICH, JAMES T. HALE, DOUGLAS A. SCOVANNER and EDWIN H. WINGATE, and each or any one of them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's name, place and stead, to sign and affix the undersigned's name as such director and/or officer of said Corporation to a Form 10-K, Annual Report, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended February 1, 1997, 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 12th day of March, 1997. /s/ JOHN R. WALTER -------------------------------------- John R. Walter EX-27 15 EX 27 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DAYTON HUDSON CORPORATION'S FORM 10K FOR THE YEAR ENDED FEBRUARY 1, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 YEAR FEB-01-1997 FEB-04-1996 FEB-01-1997 201 0 1839 119 3031 5440 10469 3002 13389 4111 4808 50 0 72 3718 13389 25371 25371 18628 18628 5394 124 442 783 309 474 0 11 0 463 2.02 1.95
-----END PRIVACY-ENHANCED MESSAGE-----