10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended October 30, 1999

Commission file number 1-6049

Dayton Hudson Corporation
(Exact name of registrant as specified in its charter)

Minnesota (State of incorporation or organization)	41-0215170 (IRS Employer Identification No.)
777 Nicollet Mall, Minneapolis, Minnesota (Address of principal executive offices)	55402-2055 (zip code)

(612) 370-6948
(Registrant's telephone number, including area code)

None
(Former name, former address and former fiscal year, if changed since last report)

The registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.

The number of shares outstanding of common stock as of October 30, 1999 was 438,175,896.

DAYTON HUDSON CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

		Page No.
PART I	FINANCIAL INFORMATION:
	Item 1—Financial Statements
	Condensed Consolidated Results of Operations for the Three Months, Nine Months and Twelve Months ended October 30, 1999 and October 31, 1998	1
	Condensed Consolidated Statements of Financial Position at October 30, 1999, January 30, 1999 and October 31, 1998	2
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended October 30, 1999 and October 31, 1998	3
	Notes to Condensed Consolidated Financial Statements	4-6
	Item 2—Management's Discussion and Analysis of Operations and Financial Condition	7-11
PART II	OTHER INFORMATION:
	Item 5—Other Information	12
	Item 6—Exhibits and Reports on Form 8-K	13
	Signatures	14
	Exhibit Index	15

PART I. FINANCIAL INFORMATION

Dayton Hudson Corporation
and Subsidiaries

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

(Millions of Dollars, Except Per Share Data)

	Three Months Ended					Nine Months Ended						Twelve Months Ended
(Unaudited)	October 30, 1999			October 31, 1998		October 30, 1999			October 31, 1998			October 30, 1999			October 31, 1998
Revenues	$	8,009		$	7,288	$	22,975		$	20,812		$	33,114		$	29,765
Costs and Expenses:
Cost of retail sales, buying and occupancy		5,799			5,333		16,642			15,203			24,073			21,868
Selling, publicity and administrative		1,368			1,228		3,925			3,516			5,486			4,823
Depreciation and amortization		213			200		631			577			834			751
Interest expense		102			104		294			301			391			396
Taxes other than income taxes		135			121		400			364			542			488
Total Costs and Expenses		7,617			6,986		21,892			19,961			31,326			28,326
Earnings Before Income Taxes and Extraordinary Charges		392			302		1,083			851			1,788			1,439
Provision for Income Taxes		151			119		420			336			678			569
Net Earnings Before Extraordinary Charges		241			183		663			515			1,110			870
Extraordinary Charges from Purchase and Redemption of Debt, Net of Tax		9			1		13			3			37			3
Net Earnings	$	232		$	182	$	650		$	512		$	1,073		$	867
Basic Earnings Per Share:
Earnings before extraordinary charges	$	.54		$	.40	$	1.47		$	1.14		$	2.47		$	1.94
Extraordinary charges		(.02	)		—		(.03	)		(.01	)		(.08	)		(.01	)
Basic Earnings Per Share	$	.52		$	.40	$	1.44		$	1.13		$	2.39		$	1.93
Diluted Earnings Per Share:
Earnings before extraordinary charges	$	.52		$	.39	$	1.42		$	1.09		$	2.37		$	1.85
Extraordinary charges		(.02	)		—		(.03	)		(.01	)		(.08	)		(.01	)
Diluted Earnings Per Share	$	.50		$	.39	$	1.39		$	1.08		$	2.29		$	1.84
Dividends Declared Per Common Share	$	.10		$	.09	$	.30		$	.27		$	.39		$	.36
Weighted Average Common Shares Outstanding (Millions):
Basic		439.3			440.5		440.9			439.5			441.0			439.0
Diluted		463.7			466.3		466.5			466.8			467.1			466.3

See accompanying Notes to Condensed Consolidated Financial Statements.

1

Dayton Hudson Corporation
and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Millions of Dollars)

	October 30, 1999			January 30, 1999*			October 31, 1998
	(Unaudited)						(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	246		$	255		$	239
Retained securitized receivables		1,479			1,656			1,357
Merchandise inventories		4,757			3,475			4,669
Other		622			619			677
Total Current Assets		7,104			6,005			6,942
Property and Equipment		13,641			12,737			12,624
Accumulated depreciation		(3,875	)		(3,768	)		(3,823	)
Property and Equipment, net		9,766			8,969			8,801
Other		752			692			687
Total Assets	$	17,622		$	15,666		$	16,430
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Accounts payable	$	3,394		$	3,150		$	3,363
Current portion of long-term debt and notes payable		1,015			256			685
Other		1,561			1,651			1,520
Total Current Liabilities		5,970			5,057			5,568
Long-term Debt		5,263			4,452			5,166
Deferred Income Taxes and Other		884			822			783
Convertible Preferred Stock, net		3			24			28
Shareholders' Investment		5,502			5,311			4,885
Total Liabilities and Shareholders' Investment	$	17,622		$	15,666		$	16,430
Common Shares Outstanding (Millions)		438.2			441.8			440.8

*

The January 30, 1999 Consolidated Statement of Financial Position is condensed from the audited financial statement.

See accompanying Notes to Condensed Consolidated Financial Statements.

2

Dayton Hudson Corporation
and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of Dollars)

	Nine Months Ended
	October 30, 1999			October 31, 1998
	(Unaudited)
Operating Activities
Net earnings before extraordinary charges	$	663		$	515
Reconciliation to cash flow:
Depreciation and amortization		631			577
Deferred tax provision		76			(17	)
Other non-cash items affecting earnings		88			28
Changes in operating accounts providing/(requiring) cash:
Retained securitized receivables		177			243
Sold securitized receivables		—			400
Maturity of sold securitized receivables		—			(400	)
Merchandise inventories		(1,282	)		(1,391	)
Other current assets		(56	)		(82	)
Other assets		(73	)		(65	)
Accounts payable		244			549
Accrued liabilities		(51	)		8
Income taxes payable		(27	)		(61	)
Cash Flow Provided by Operations		390			304
Investing Activities
Expenditures for property and equipment		(1,443	)		(1,237	)
Proceeds from disposals of property and equipment		40			36
Acquisition of subsidiaries, net of cash received		—			(100	)
Other		(5	)		(8	)
Cash Flow Required by Investing Activities		(1,408	)		(1,309	)
Net Financing Requirements		(1,018	)		(1,005	)
Financing Activities
Increase in notes payable, net		1,578			829
Additions to long-term debt		285			400
Reductions of long-term debt		(312	)		(95	)
Dividends paid		(146	)		(133	)
Repurchase of stock		(435	)		—
Other		39			32
Cash Flow Provided by Financing Activities		1,009			1,033
Net (Decrease)/Increase in Cash and Cash Equivalents		(9	)		28
Cash and Cash Equivalents at Beginning of Period		255			211
Cash and Cash Equivalents at End of Period	$	246		$	239

Amounts in this statement are presented on a cash basis and therefore may differ from those shown elsewhere in this 10-Q report.

See accompanying Notes to Condensed Consolidated Financial Statements.

3

Dayton Hudson Corporation
and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

Accounting Policies

    The accompanying condensed consolidated financial statements should be read in conjunction with the financial statement disclosures contained in our 1998 Annual Shareholders' Report throughout pages 25-36. As explained on page 36 of the Annual Report, the same accounting policies are followed in preparing quarterly financial data as are followed in preparing annual data. In the opinion of management, all adjustments necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature.

    Due to the seasonal nature of the retail industry, quarterly earnings are not necessarily indicative of the results that may be expected for the full fiscal year.

Per Share Data

    References to earnings per share relate to diluted earnings per share.

	Basic EPS												Diluted EPS
	Three Months Ended				Nine Months Ended				Twelve Months Ended				Three Months Ended				Nine Months Ended				Twelve Months Ended
	Oct, 30 1999		Oct. 31, 1998		Oct. 30, 1999		Oct. 31, 1998		Oct. 30, 1999		Oct. 31, 1998		Oct. 30, 1999		Oct. 31, 1998		Oct. 30, 1999		Oct. 31, 1998		Oct. 30, 1999		Oct. 31, 1998
Net earnings*	$	241	$	183	$	663	$	515	$	1,110	$	870	$	241	$	183	$	663	$	515	$	1,110	$	870
Less: ESOP net earnings adjustment		(5)		(5)		(14)		(15)		(18)		(19)		(1)		(1)		(3)		(7)		(4)		(9)
Adjusted net earnings*	$	236	$	178	$	649	$	500	$	1,092	$	851	$	240	$	182	$	660	$	508	$	1,106	$	861
Weighted average common shares outstanding		439.3		440.5		440.9		439.5		441.0		439.0		439.3		440.5		440.9		439.5		441.0		439.0
Performance shares		—		—		—		—		—		—		—		.8		.1		.9		.2		.9
Stock options		—		—		—		—		—		—		5.0		4.3		5.7		5.2		5.9		5.0
Assumed conversion of ESOP preferred shares		—		—		—		—		—		—		19.4		20.7		19.8		21.2		20.0		21.4
Total common equivalent shares outstanding		439.3		440.5		440.9		439.5		441.0		439.0		463.7		466.3		466.5		466.8		467.1		466.3
Earnings per share*	$	.54	$	.40	$	1.47	$	1.14	$	2.47	$	1.94	$	.52	$	.39	$	1.42	$	1.09	$	2.37	$	1.85

*

Before extraordinary charges

Share Repurchase Program

    In January 1999, our Board of Directors authorized the repurchase of $1 billion of our common stock, which we expect to complete over approximately two years. In the third quarter and first nine months of 1999, we repurchased 3.3 and 7.1 million shares of our common stock at average costs of $59 and $62 per share, respectively. As of the end of third quarter, we have repurchased $441 million of our common stock, net of the premium from exercised and expired put options.

    We sold put options for 1.4 and 3.4 million shares in the third quarter and first nine months of 1999, respectively. Holders of options on the 1.4 million shares which were outstanding at the end of the third quarter are entitled to sell shares of our common stock to us at prices ranging from $55 to $66 per share on

4 specific dates during November 1999 through January 2000. Premiums received from the sale of the put options, which settled during the quarter and first nine months, totaled $6.0 and $15.8 million, respectively, and were recorded in retained earnings.

Long-Term Debt

    During the third quarter and year-to-date, we repurchased $81 and $139 million of long-term debt at a weighted average interest rate of 9.4 percent for both periods, resulting in after-tax extraordinary charges of $9 and $13 million ($.02 and $.03 per share), respectively.

    Also during the third quarter and year-to-date, we issued $60 and $285 million of floating rate notes, respectively, bearing interest at initial rates between 5.32 and 5.52 percent, maturing in July through September 2001. Proceeds from the note issuances were used for general corporate purposes.

Segment Disclosures (Millions of Dollars)

    Revenues by segment were as follows:

	Three Months Ended				Nine Months Ended
	Oct 30, 1999		Oct. 31, 1998		Oct. 30, 1999		Oct. 31, 1998
Target	$	6,101	$	5,357	$	17,550	$	15,458
Mervyn's		966		1,006		2,827		2,831
Department Stores		819		807		2,307		2,265
Corporate and other		123		118		291		258
Total revenues	$	8,009	$	7,288	$	22,975	$	20,812

    Pre-tax segment profit and reconciliation to pre-tax earnings were as follows:

	Three Months Ended					Nine Months Ended
	Oct 30, 1999			Oct 31, 1998		Oct 30, 1999		Oct 31, 1998
Target	$	411		$	293	$	1,211	$	932
Mervyn's		46			53		136		136
Department Stores		79			78		176		164
Total pre-tax segment profit		536			424		1,523		1,232
Securitization adjustments:
SFAS 125 loss		—			(3)		—		(3)
Interest equivalent		(12	)		(12)		(36)		(36)
Interest expense		(102	)		(104)		(294)		(301)
Corporate and other		(30	)		(3)		(110)		(41)
Earnings before income taxes and extraordinary charges	$	392		$	302	$	1,083	$	851

    The revenues and operating results of The Associated Merchandising Corporation and Rivertown Trading Company acquired in February and April 1998, respectively, were immaterial in 1999 and 1998 and are included in corporate and other.

5

Mainframe Outsourcing

    In fourth quarter 1998, we announced our plan to outsource our mainframe computer data center functions. In third quarter 1999, we completed the transition. We expensed $2 million (less than $.01 per share) and $5 million ($.01 per share) in third quarter and year-to-date, respectively, related to the outsourcing. The expenses are included in selling, publicity and administrative expenses in our Consolidated Results of Operations on page 1 and in corporate and other in our pre-tax earnings reconciliation on page 5.

6

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
THIRD QUARTER 1999

ANALYSIS OF OPERATIONS

    Third quarter 1999 net earnings before extraordinary charges were $241 million, or $.52 per share, compared with $183 million, or $.39 per share, for the same period last year. Net earnings before extraordinary charges for the first nine months of 1999 were $663 million, or $1.42 per share, compared with $515 million, or $1.09 per share, for the first nine months of 1998. The extraordinary charges relate to the early extinguishment of debt and were $9 million ($.02 per share) and $13 million ($.03 per share), net of tax, in the third quarter and first nine months of 1999, respectively, and $1 million (less than $.01 per share) and $3 million ($.01 per share), net of tax, in the third quarter and first nine months of 1998, respectively. Target generated over 100 percent and 96 percent of our net growth in pre-tax segment profit for the third quarter and first nine months of 1999, respectively.

Revenues and Comparable-Store Sales

    Total revenues for the quarter increased 9.9 percent to $8,009 million compared with $7,288 million for the same period a year ago. Total revenues for the first nine months increased 10.4 percent to $22,975 million compared with $20,812 million for the same period a year ago. Our consolidated comparable-store sales (sales from stores open longer than one year) increased 5.0 and 5.9 percent for the three and nine-month periods, respectively. Year-over-year changes in revenues and comparable-store sales by business segment were as follows:

	Three Months Percentage Change				Nine Months Percentage Change
	Revenues		Comparable- Store Sales		Revenues		Comparable- Store Sales
Target	13.9	%	7.1	%	13.5	%	7.2	%
Mervyn's	(3.9	)	(2.2	)	(0.1	)	1.3
Department Stores	1.5		(0.2	)	1.8		1.9
Total	9.9	%	5.0	%	10.4	%	5.9	%

Pre-tax Segment Profit

    Pre-tax segment profit is first-in, first-out (FIFO) earnings from operations before securitization effects, interest, corporate and other, and unusual items. Our third quarter pre-tax segment profit increased 26 percent to $536 million compared with $424 million for the same period a year ago. Pre-tax segment profit in the first nine months increased 24 percent to $1,523 million compared with $1,232 million for the same period a year ago. Year-over-year changes in pre-tax segment profit were as follows:

	Three Months Percentage Change		Nine Months Percentage Change
Target	40	%	30	%
Mervyn's	(13	)	—
Department Stores	2		7
Total	26	%	24	%

Target's third quarter and nine-month pre-tax profit increased 40 and 30 percent, respectively, to $411 and $1,211 million compared with $293 and $932 million for the same periods a year ago, reflecting comparable-store sales growth of 7.1 and 7.2 percent, respectively. During the third quarter and first nine months, the gross margin rate improved significantly due to favorable markup, while the operating expense

7 rate was essentially even with last year for the quarter and slightly unfavorable year-to-date. For the fourth quarter of 1999, we expect mid-single-digit comparable-store sales growth at Target and a pre-tax profit margin rate somewhat expanded over that of 1998.

Mervyn's third quarter and nine-month pre-tax profit figures were $46 and $136 million, respectively, compared with $53 and $136 million for the same periods a year ago, reflecting comparable-store sales changes of (2.2) and 1.3 percent, respectively. During the third quarter and first nine months, the gross margin rate improved due to favorable markup. The operating expense rate was unfavorable for the quarter due to lack of sales leverage and was slightly unfavorable year-to-date. Given early fourth quarter sales trends, we expect a pre-tax profit margin rate lower than last year.

Department Stores' third quarter and nine-month pre-tax profit figures were $79 and $176 million, respectively, compared with $78 and $164 million for the same periods a year ago, reflecting comparable-store sales changes of (0.2) and 1.9 percent, respectively. The gross margin rate declined slightly due to unfavorable markup for the quarter and was essentially even with last year for the first nine months. The operating expense rate was unfavorable for the quarter due to lack of sales leverage and was essentially even on a year-to-date basis. For the fourth quarter of 1999, we expect low-single-digit comparable-store sales growth and a pre-tax profit margin rate essentially even with last year.

Other Performance Factors

    Our proprietary guest credit programs strategically support our core retail operations and are an integral component of each business segment. Therefore, credit contribution is reflected in each business segment's pre-tax profit. Net of all expenses, including bad debt expense, pre-tax contribution from guest credit for the third quarter and first nine months increased over the prior year, principally due to continued growth of the Target Guest Card. We expect to continue to grow guest credit's contribution during 1999 by opening new accounts, enhancing guest loyalty programs, controlling bad debt expense and leveraging operating expenses.

    The last-in, first-out (LIFO) provision, included in cost of retail sales, was zero in the third quarter and first nine months for both 1999 and 1998. The cumulative LIFO provision was $60 million at October 30, 1999 and January 30, 1999, and $92 million at October 31, 1998.

    "Interest equivalent", as shown in our pre-tax earnings reconciliation on page 5, represents payments to holders of our sold securitized receivables and is included in our Consolidated Results of Operations on page 1 as a reduction of finance charge revenues. We expect interest equivalent of approximately $12 million in the fourth quarter of this year. For analytical purposes, we combine interest equivalent with interest expense.

    Combined interest expense and interest equivalent was $114 and $330 million in the third quarter and first nine months of 1999, representing a $2 and $7 million decrease, respectively, from last year due to a lower average portfolio interest rate, partially offset by higher average funded balances. Combined interest expense and interest equivalent in 1999 is expected to be similar to 1998, as we anticipate the continuing benefit of a lower average portfolio interest rate, offset by higher debt levels, for the remainder of the year.

    The estimated annual effective income tax rate was 38.8 percent in the third quarter and first nine months of 1999 compared to 39.5 percent for the same periods last year.

Year 2000 Readiness Disclosure

    We began mitigating the risks associated with the year 2000 date conversion in 1993. In 1997, we established a corporate-wide, comprehensive plan of action designed to achieve an uninterrupted transition into the year 2000. This project included three major elements: 1) information technology (IT) systems, 2) non-IT, or embedded technology, systems and 3) relationships with our key business partners.

8 The project was divided into five phases: awareness, assessment, renovation, validation and implementation. We have now completed all phases for the three elements, using both internal and external resources to implement our plan. During the fourth quarter, we will maintain the year 2000 readiness of our existing systems and add infrastructure in the normal course of business that is year 2000 ready.

    For our IT systems, we assessed both existing and newly implemented hardware, application software and operating systems. Our hardware, application software and key operating systems have been tested and we believe they are ready for the year 2000. Our year 2000 readiness in this area was significantly enhanced by our substantial common systems development initiatives through which we invested heavily in IT over the past four years.

    We began addressing non-IT systems, or embedded technology/infrastructure, risks at our stores, distribution centers and headquarters facilities early in our initiative, and we believe they are now year 2000 ready.

    We identified our key business partners and worked closely with them to assess their readiness and mitigate the risk to us if they are not prepared for the year 2000. We installed the year 2000 ready version of Electronic Data Interchange (EDI) software and completed EDI testing with our key vendors. We are currently exchanging data electronically with our vendors using our new version of EDI software.

    In planning for the most reasonably likely worst case scenarios, we addressed all three major elements in our project. We believe our IT systems are ready for the year 2000, but we may experience isolated incidences of non-compliance. Our contingency plans for non-IT areas are complete and have been implemented in key areas, such as our stores. We plan to allocate internal resources and retain dedicated consultants and vendor representatives to take action, if necessary.

    We contacted our critical business partners, assessed their year 2000 readiness and finalized the development of contingency plans, as considered necessary. Although we value our established relationships with key vendors, substitute products for most of the goods we sell in our stores may be obtained from other vendors. If certain vendors are unable to deliver product on a timely basis, due to their own year 2000 issues, we anticipate there will be others who will be able to deliver similar goods. However, the lead time involved in sourcing certain goods may result in temporary shortages of relatively few items; therefore, we have arranged advance delivery of a limited amount of product. We also recognize the risks to us if other key suppliers in areas such as utilities, communications, transportation, banking and government are not ready for the year 2000, and have developed contingency plans to minimize the potential adverse impacts of these risks.

    In the third quarter and first nine months of 1999, we expensed $1 and $15 million, respectively, related to year 2000 readiness. Prior to 1999, we expensed $32 million related to year 2000 readiness. We estimate that less than $1 million of expense related to year 2000 readiness will be incurred in the fourth quarter. In addition, this program accelerated the timing of approximately $15 million of planned capital expenditures. To date, we have incurred $14 million of these planned capital expenditures, with less than $1 million anticipated to be incurred in the fourth quarter. All expenditures related to our year 2000 readiness initiative were funded by cash flow from operations and did not materially impact our other operating or investment plans.

ANALYSIS OF FINANCIAL CONDITION

    Our financial condition remains strong. We continue to fund the growth in our business through a combination of retained earnings, debt and sold securitized receivables. The ratio of debt to total capitalization attributable to our retail operations was 49 percent at the end of third quarter 1999, compared with 50 percent a year ago and 41 percent at year-end. Due to the seasonality of our business, quarterly comparisons will fluctuate.

9

    At October 30, 1999, working capital was $1,134 million, a 17 percent decrease from a year ago, principally due to an increase in notes payable to fund the growth in our business. In addition, retained securitized receivables increased $122 million, or 9 percent, over last year principally reflecting continued growth of the Target Guest Card. Merchandise inventories increased $88 million, or 2 percent, over last year, reflecting Mervyn's planned increases and its recent soft sales trends. The inventory growth was partially funded by a $31 million, or 1 percent, increase in accounts payable.

    Capital expenditures for the first nine months of 1999 were $1,443 million, compared with $1,237 million for the same period a year ago; 87 percent of the current year expenditures were made by Target, 6 percent by Mervyn's and 7 percent by Department Stores. Target's third quarter expenditures include the purchase of real estate assets of a membership-based, general merchandise retailer for approximately $125 million.

    Our share repurchase program is described on page 4. The reduction in shares outstanding and incremental interest expense related to the share repurchase program had an insignificant impact on earnings per share.

STORE DATA

    During the quarter, we opened 33 net new Target stores and one department store. At October 30, 1999, our number of stores and retail square feet were as follows:

	Number of Stores			Retail Square Feet*
	Oct 30, 1999	Jan 30, 1999	Oct 31, 1998	Oct 30, 1999	Jan 30, 1999	Oct 31, 1998
Target	914	851	851	102,859	94,553	94,193
Mervyn's	267	268	268	21,661	21,729	21,729
Department Stores	64	63	64	14,058	13,890	13,935
Total	1,245	1,182	1,183	138,578	130,172	129,857

*

In thousands, reflects total square feet, less office, warehouse and vacant space

10

FORWARD-LOOKING STATEMENTS

    The preceding Management's Discussion and Analysis contains forward-looking statements regarding our performance, liquidity and the adequacy of our capital resources. Those statements are based on our current assumptions and expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. We caution that the forward-looking statements are qualified by the risks and challenges posed by increased competition, shifting consumer demand, changing consumer credit markets and general economic conditions, hiring and retaining effective team members, sourcing merchandise from domestic and international vendors, preparing for the impact of year 2000, and other risks and uncertainties. As a result, while we believe that there is a reasonable basis for the forward-looking statements, you should not place undue reliance on those statements. You are encouraged to review Exhibit (99)C attached to our Form 10-K Report for the year ended January 30, 1999, which contains additional important factors that may cause actual results to differ materially from those predicted in the forward-looking statements.

11

PART II. OTHER INFORMATION

Item 5. Other Information

On-Line Annual Meeting Materials

    For our 2000 Annual Shareholders' Meeting, we are again offering our shareholders the opportunity to receive our Annual Report and Proxy Statement over the Internet, rather than by mail.

    Shareholders wishing to take advantage of this opportunity are required to complete an on-line consent form.

•

Registered shareholders may provide consent at: http://www.econsent.com/dhc or by contacting our transfer agent at 1-800-317-4445 for assistance.



•

Beneficial shareholders may provide consent at: http://www.InvestorDelivery.com.

    To receive materials electronically, your consent must be received by March 24, 2000.

    Instructions for accessing the on-line Annual Meeting materials will be sent to consenting shareholders following our record date.

    In addition to voting by proxy card or telephone, all shareholders will be able to vote their proxies electronically for the 2000 Annual Shareholders' Meeting. Information regarding this option will be available after March 24, 2000.

12

Item 6. Exhibits and Reports on Form 8-K

a)

Exhibits

(2).	Not applicable
(4).	Instruments defining the rights of security holders, including indentures. Registrant agrees to furnish the Commission on request copies of instruments with respect to long-term debt.
(10)A.	Director Stock Option Plan of 1995, as amended and restated effective September 8, 1999.
(10)B.	Executive Long Term Incentive Plan of 1981, as amended and restated effective September 8, 1999.
(10)C.	Executive Incentive Plan (Personal Score), as amended and restated effective May 21, 1997.
(11).	Not applicable
(12).	Statements re Computations of Ratios
(15).	Not applicable
(18).	Not applicable
(19).	Not applicable
(22).	Not applicable
(23).	Not applicable
(24).	Not applicable
(27).	Financial Data Schedule

b)

Reports on Form 8-K:




Registrant did not file any reports on Form 8-K during the quarter ended October 30, 1999.

13

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DAYTON HUDSON CORPORATION
	Registrant
Date: December 10, 1999	By  /s/ Douglas A. Scovanner
	Douglas A. Scovanner
	Senior Vice President and
	Chief Financial Officer
Date: December 10, 1999	By  /s/ J.A. Bogdan
	JoAnn Bogdan
	Controller and
	Chief Accounting Officer

14

Exhibit Index

(10)A.	Director Stock Option Plan of 1995, as amended and restated effective September 8, 1999
(10)B.	Executive Long Term Incentive Plan of 1981, as amended and restated effective September 8, 1999
(10)C.	Executive Incentive Plan (Personal Score), as amended and restated effective May 21, 1997
(12).	Statements re Computations of Ratios
(27).	Financial Data Schedule

15

QuickLinks

EX-10.A

Dayton Hudson Corporation
DIRECTOR STOCK OPTION PLAN OF 1995
(As amended and restated effective September 8, 1999)

ARTICLE I
Establishment of the Plan

    1.1  The name of this plan shall be "The Dayton Hudson Corporation Director Stock Option Plan of 1995" (hereinafter called the "Plan").

    1.2  The purpose of the Plan is to advance the interim performance and long-term growth of the Company by offering long-term incentives, in addition to current compensation and other benefits, to outside directors of the Company.

ARTICLE II
Definitions

    2.1  Award.  An "Award" is used at times in the Plan to refer to the act of granting a Stock Option under the Plan.

    2.2  Board.  "Board" is the Board of Directors of the Company.

    2.3  Code.  "Code" is the Internal Revenue Code of 1986, as amended, as now in force or as hereafter amended.

    2.4  Company.  "Company" is Dayton Hudson Corporation, a Minnesota corporation, and any successor thereof.

    2.5  Date of Grant.  "Date of Grant" in 1995 shall be the date of the Company's Annual Shareholder's meeting. Each year thereafter, Date of Grant shall be the second Wednesday in the month of April.

    2.6  Fair Market Value.  "Fair Market Value" of a share of Company common stock on any date is 100% of the mean between the high and low prices for such stock as reported for such stock on the New York Stock Exchange Composite Transactions Listing ("Composite Listing") on such date, or in the absence of such report 100% of the mean between the high and low prices of such stock on the New York Stock Exchange on such date or, if no sale has been recorded on the Composite Listing or made on such Exchange on such date, then on the last preceding date on which any such sale shall have been made in the order of primacy above indicated.

    2.7  Participant.  A "Participant" is a member of the Board who is not an employee of Company or any of its Subsidiaries.

    2.8  Plan Committee.  The "Plan Committee" is the Committee referenced in Article VI hereof.

    2.9  Plan Year.  The "Plan Year" shall be a fiscal year of the Company falling within the term of this Plan except for the first year of the Plan, for which the Plan Year shall commence as of the effective date of the Plan and terminate as of February 3, 1996.

    2.10  Relevant Change Adjustments.  Appropriate adjustments in the number of shares and in the Stock Option price per share designated in Section 2.11 of this Article II, may be made by the Plan Committee, in its discretion except as provided in Section 7.6 hereof, to give effect to adjustments made in the number of shares of Company common stock through a merger, consolidation, recapitalization, reclassification, combination, spin-off, common stock dividend, stock split, or other relevant change.

    2.11  Stock Option.  A "Stock Option" is a right accruing in a Participant to purchase from the Company one share of the Company's $.3333 par value common stock at the Fair Market Value of such share of common stock on the Date of Grant of the Stock Option, and containing the terms and conditions set forth or allowed under Article VI hereof. Such Stock Option shall be a Non-Qualified Stock Options that are not intended to qualify under Section 422 of the Code.

    2.12  Subsidiary Corporation.  For purposes of this Plan, the term "Subsidiary" or "Subsidiary Corporation" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, in which each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain as determined at the point in time when reference is made to such "Subsidiary" or "Subsidiary Corporation" in this Plan.

    2.13  Change in Control.  A "Change in Control" shall be deemed to have occurred if:

(a)

a majority of the directors of the Company shall be persons other than persons



(i)

for whose election proxies shall have been solicited by the Board or



(ii)

who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation (but not by removal) or to fill newly-created directorships,




(b)

30% or more of the outstanding Voting Stock (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company) of the Company is acquired or beneficially owned (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company) by any person (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company), or



(c)

the shareholders of the Company approve a definitive agreement or plan to



(i)

merge or consolidate the Company with or into another corporation (other than (1) a merger or consolidation with a Subsidiary of the Company or (2) a merger in which the Company is the surviving corporation and either (A) no outstanding Voting Stock of the Company (other than fractional shares) held by shareholders immediately prior to the merger is converted into cash (except cash upon the exercise by holders of Voting Stock of the Company of statutory dissenters' rights), securities, or other property or (B) all holders of outstanding Voting Stock of the Company (other than fractional shares) immediately prior to the merger (except those that exercise statutory dissenters' rights) have substantially the same proportionate ownership of the Voting Stock of the Company or its parent corporation immediately after the merger),



(ii)

exchange, pursuant to a statutory exchange of shares of Voting Stock of the Company held by shareholders of the Company immediately prior to the exchange, shares of one or more classes or series of Voting Stock of the Company for shares of another corporation or other securities, cash or other property,



(iii)

sell or otherwise dispose of all or substantially all of the assets of the Company (in one transaction or a series of transactions) or



(iv)

liquidate or dissolve the Company.

ARTICLE III
Granting of Stock Options

    3.1  Automatic Grant of Stock Options.  Each year on the Date of Grant each Participant shall, without any Plan Committee action, automatically be granted Stock Options, the number of which will be determined by dividing $100,000 by the Fair Market Value on the Date of Grant.

    3.2  Notification to Participants and Delivery of Documents.  As soon as practicable after the Award, the Participant shall receive a Stock Option exercisable for purchase of one share of the Company's $.3333

2 par value common stock for each Stock Option granted to the Participant pursuant to this Plan or indicating the aggregate of such grant, which Stock Option shall be in conformity with the provisions of Article IV hereof.

ARTICLE IV
Stock Options

    4.1  Stock Option.  The Stock Option shall be evidenced by Stock Option agreements in such form and not inconsistent with the Plan as the Plan Committee shall in its sole discretion approve from time to time, which agreements shall specify the number of shares to which they pertain and the purchase price of such shares and shall, but without limitation, contain in substance the following terms and conditions:

(a)

Option Period.  Each Stock Option granted shall expire and all rights to purchase shares thereunder shall cease ten years and one day after the Date of Grant of the Stock Option or on such date prior thereto as may be fixed by the Plan Committee, or on such date prior thereto as is provided by this Plan in the event of reorganization pursuant to Section 7.6(b) hereof. No Stock Option shall permit the purchase of any shares thereunder during the first year after the Date of Grant of such Stock Option, except as provided in Section 4.2 hereof.



(b)

Transferability and Termination of Options.  During the lifetime of an individual to whom a Stock Option is granted, the Stock Option may be exercised only by such individual and shall terminate at the earlier of i) five years after the date the Participant ceased to be a director of Company or, ii) ten years and one day after the Date of Grant of the Stock Option. Rights of a Participant may, upon the death of a Participant, be exercised or perfected by his/her duly designated beneficiary or otherwise by his/her applicable legal representatives, heirs or legatees to the extent vested in and unexercised or perfected by the Participant at the date of his/her death. Provided however, that if a Participant dies, the Stock Option must be exercised within five years after the date of death or the life of the Stock Option, whichever is less, but in no event less than one year after the date of death.




No Stock Option shall be assignable or transferable by the individual to whom it is granted, except that it may be transferable (X) by assignment by the Participant to the extent provided in the applicable option agreement, or (Y) by will or the laws of descent and distribution in accordance with the provisions of the Plan. A Stock Option transferred after the death of the Participant to whom it is granted may only be exercised by such individual's beneficiary designated to exercise the Stock Option or otherwise by his/her applicable legal representatives, heirs or legatees, and only within the specific time period set forth above.

In no event, whether by the Participant directly or by his/her proper assignee or beneficiary or other representative, shall any Stock Option be exercisable at any time after its expiration date as stated in the Stock Option agreement. When a Stock Option is no longer exercisable it shall be deemed for all purposes and without further act to have lapsed and terminated.

(c)

Exercise of Options.  An individual entitled to exercise a Stock Option may, subject to its terms and conditions and the terms and conditions of the Plan, exercise it in whole at any time, or in part from time to time, by delivery to the Company at its principal office of written notice of exercise, specifying the number of whole shares with respect to which the Stock Option is being exercised. Before shares may be issued payment must be made in full, in legal United States tender, in the amount of the purchase price of the shares to be purchased at the time and any amounts for withholding, if any, as provided in Section 7.7 hereof; provided, however, in lieu of paying for the exercise price in cash as described above, the individual may pay all or part of such exercise price by delivering owned and unencumbered shares of the Company common stock having a Fair Market Value on the date of exercise of the Stock Option equal to or less than the

3

exercise price of the Stock Options exercised, with cash, as set forth above, for the remainder, if any, of the purchase price.

    4.2  Change in Control.  In the event of a Change in Control, all outstanding Stock Options granted under the Plan shall accelerate and will be exercisable in full for a period of two hundred ten (210) days after the Change in Control; provided that no Stock Option shall be exercisable by a Participant after the termination date of the Stock Option.

ARTICLE V
Shares of Stock Subject to the Plan

    5.1  The total number of shares that may be available for issuance under all Stock Options granted pursuant to the Plan shall not exceed in the aggregate 300,000 shares (which reflects the three-for-one split on July 17, 1996 of the 100,000 shares initially reserved) of the Company's $.3333 par value common stock. Stock Options which are forfeited for any reason or are not distributed or are covered by Stock Options that lapse or are canceled before exercise, shall (unless the Plan shall have been terminated) again be available in the same relative amounts for other Stock Option grants under the Plan.

ARTICLE VI
Administration of the Plan

    6.1  The Plan will be administered by a committee of two or more members of the Board appointed from time to time by the Board. Each member of the committee shall be a "non-employee director" as that term is defined under Rule 16b-3, promulgated under the Securities Exchange Act of 1934, as amended, or any successor statute or regulation comprehending the same subject matter.

    6.2  The Plan Committee shall have and exercise all of the powers and responsibilities granted expressly or by implication to it by the provisions of the Plan. Subject to and as limited by such provisions, the Plan Committee may from time to time enact, amend and rescind such rules, regulations and procedures with respect to the administration of the Plan as it deems appropriate or convenient. Notwithstanding any contrary provisions of this Plan, the Plan Committee shall have no discretion with respect to the granting of Stock Options to any Participant or to alter or amend any terms, conditions and eligibility requirements of a Stock Option granted or to be granted to any Participant under this Plan, it being understood that the granting and terms, conditions and eligibility requirements of such Stock Options are governed solely by the provisions set forth in this Plan pertaining thereto.

    6.3  All questions arising under the Plan or any Stock Option agreement, or any rule, regulation or procedure adopted by the Plan Committee shall be determined by the Plan Committee, and its determination thereof shall be conclusive and binding upon all parties.

    6.4  Any action required or permitted to be taken by the Plan Committee under the Plan shall require the affirmative vote of a majority of a quorum of the members of the Plan Committee. A majority of all members of the Plan Committee shall constitute a "quorum" for Plan Committee business. The Plan Committee may act by written determination instead of by affirmative vote at a meeting, provided that any written determination shall be signed by all members of the Plan Committee, and any such written determination shall be as fully effective as a majority vote of a quorum at a meeting.

4

ARTICLE VII
General Provisions

    7.1  Amendment or Termination.  The Board may at any time amend, suspend, discontinue or terminate the Plan; provided, however, that no amendment by the Board shall, without further approval of the shareholders of the Company:

(a)

except as provided at Section 2.10 hereof increase the total number of shares of Company common stock which may be made subject to the Plan; or



(b)

except as provided at Section 2.10 hereof change the purchase price of Company common stock under the Plan; or



(c)

change the Date of Grant; or



(d)

change the calculation used to determine the number of Stock Options granted on the Date of Grant.

No action taken pursuant to this Section 7.1 of the Plan shall, without the consent of a Participant, alter or impair any Stock Options which have been previously granted to a Participant. Provisions relating to Stock Options may not be amended more often than once every six months other than to comport with changes in the Code or the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder

    7.2  Non-Alienation of Rights and Benefits.  Except as expressly provided herein, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such right or benefit. If any Participant or beneficiary hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit hereunder, then such right or benefit shall, in the sole discretion of the Plan Committee, cease and in such event the Company may hold or apply the same or any or no part thereof for the benefit of the Participant or beneficiary, his/her spouse, children or other dependents or any of them in any such manner and in such proportion as the Plan Committee in its sole discretion may deem proper.

    7.3  No Rights as Shareholder.  The granting of Stock Option(s) under the Plan shall not entitle a Participant or any other person succeeding to his/her rights, to any dividend, voting or other right as a shareholder of the Company unless and until the issuance of a stock certificate to the Participant or such other person pursuant to the provisions of the Plan and then only subsequent to the date of issuance thereof.

    7.4  Government Regulations.  Notwithstanding any other provisions of the Plan seemingly to the contrary, the obligation of the Company with respect to Stock Options granted under the Plan shall at all times be subject to any and all applicable laws, rules, and regulations and such approvals by any government agencies as may be required or deemed by the Board or Plan Committee as reasonably necessary or appropriate for the protection of the Company.

    In connection with any sale, issuance or transfer hereunder, the Participant acquiring the shares shall, if requested by the Company give assurances satisfactory to counsel of the Company that the shares are being acquired for investment and not with a view to resale or distribution thereof and assurances in respect of such other matters as the Company may deem desirable to assure compliance with all applicable legal requirements.

    7.5  Effective Date.  Subject to the approval of this Plan by the holders of a majority of the voting power of the shares present and entitled to vote at the Company's Annual Meeting of Shareholders to be

5 held May 24, 1995 and any necessary approval being obtained from any department, board or agency of the United States or states having jurisdiction, the Plan shall be effective as of May 24, 1995.

    7.6  Reorganization.  In case the Company is merged or consolidated with another corporation, or in case the property or stock of the Company is acquired by another corporation, or in case of a separation, reorganization or liquidation of the Company, the Plan Committee or a comparable committee of any corporation assuming the obligations of the Company hereunder, shall either:

(a)

make appropriate provision for the protection of any outstanding Stock Options granted thereunder by the substitution on an equitable basis of appropriate stock of the Company, or of the merged, consolidated or otherwise reorganized corporation which will be issuable in respect to the shares of the Company's $.3333 par value common stock.



(b)

upon written notice to the Participant, provide that all outstanding Stock Options shall accelerate and become exercisable in full but that all outstanding Stock Options, whether or not exercisable prior to such acceleration, must be exercised within not less than sixty days of the date of such notice or they will be terminated. In any such case the Plan Committee may, in its discretion, extend the sixty day-exercise period.

    7.7  Withholding Taxes, etc.  All distributions under the Plan shall be subject to any required withholding taxes and other withholdings and, in case of distributions in Company common stock, the Participant or other recipient may, as a condition precedent to the delivery of the common stock, be required to pay to the Company the excess, if any, of the amount of required withholding over the withholdings, if any, from any distributions in cash under the Plan. No distribution under the Plan shall be made in fractional shares of the Company's common stock, but the proportional market value thereof shall be paid in cash.

    7.8  General Restriction.  Each Stock Option shall be subject to the requirement that, if at any time the Board shall determine, in its discretion, that the listing, registration or qualification of the shares subject to such Stock Option upon any securities exchange or under any state or Federal Law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with the granting of such Stock Option or the issue or purchase of shares thereunder, such Stock Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board.

    7.9  Use of Proceeds.  The proceeds derived from the sale of the stock pursuant to Stock Options granted under the Plan shall constitute general funds of the Company.

    7.10  Headings.  The headings of the Articles and their subparts in this Plan are for convenience of reading only and are not meant to be of substantive significance and shall not add to or detract from the meaning of such Article or subpart to which it refers.

6

QuickLinks

Dayton Hudson Corporation DIRECTOR STOCK OPTION PLAN OF 1995 (As amended and restated effective September 8, 1999)
ARTICLE I Establishment of the Plan
ARTICLE II Definitions
ARTICLE III Granting of Stock Options
ARTICLE IV Stock Options
ARTICLE V Shares of Stock Subject to the Plan
ARTICLE VI Administration of the Plan
ARTICLE VII General Provisions

EX-10.B

Dayton Hudson Corporation
EXECUTIVE LONG TERM INCENTIVE PLAN
OF 1981
(As amended and restated September 8, 1999)

ARTICLE I
Establishment of the Plan

    1.1  The name of this plan shall be "The Dayton Hudson Corporation Executive Long Term Incentive Plan of 1981" (hereinafter called the "Plan").

    1.2  The purpose of the Plan is to advance the interim performance and long-term growth of the Company by offering long-term incentives, in addition to current compensation and other benefits, to those key employees of the Company and its Subsidiaries who the Plan Committee determines will contribute to such performance and growth inuring to the benefit of the shareholders of the Company. Such long-term incentives may take the form of Stock Options, or Performance Shares, or Restricted Stock Awards or any combination.

ARTICLE II
Definitions

    2.1  Award.  An "Award" is used at times in the Plan to refer to the act of granting a Stock Option, Performance Share or Restricted Stock Award under the Plan.

    2.2  Board.  "Board" is the Board of Directors of Dayton Hudson Corporation.

    2.3  Code.  "Code" is the Internal Revenue Code of 1986, as amended, as now in force or as hereafter amended.

    2.4  Company.  "Company" is Dayton Hudson Corporation, a Minnesota corporation, and any successor thereof.

    2.5  Covered Officer.  "Covered Officer" includes all Participants whose compensation, in the year in which the Award is made, is subject to the compensation expense deduction limitations set forth in Section 162(m) of the Code.

    2.6  Date of Grant.  "Date of Grant" shall be the date designated in the resolution by the Plan Committee as the date of such Stock Option(s) or Performance Share(s) or Restricted Stock Award(s), but such date shall not be earlier than the date of the resolution and action thereon by the Plan Committee, or earlier than the effective date of the Plan, and in the absence of a date of grant or a fixed method of computing such date being specifically set forth in the Plan Committee's resolution, then the Date of Grant shall be the date of such Plan Committee's resolution and action.

    2.7  Fair Market Value.  "Fair Market Value" of a share of Company common stock on any date is 100% of the mean between the high and low prices for such stock as reported for such stock on the New York Stock Exchange Composite Transactions Listing ("Composite Listing") on such date, or in the absence of such report 100% of the mean between the high and low prices of such stock on the New York Stock Exchange on such date or, if no sale has been recorded on the Composite Listing or made on such Exchange on such date, then on the last preceding date on which any such sale shall have been made in the order of primacy above indicated.

    2.8  Holder.  A "Holder" is a person who has been granted a Restricted Stock Award.

    2.9  Incentive Stock Options.  "Incentive Stock Options" are Stock Options that are intended to qualify under Section 422 of the Code.

    2.10  Non-Qualified Options.  "Non-Qualified Options" are Stock Options that are not intended to qualify under Section 422 of the Code.

    2.11  Participant.  A "Participant" is a person designated as such by the Plan Committee, pursuant to Article III hereof, for participation in the Plan.

    2.12  Performance Goals.  "Performance Goals" are defined in Section 4.1 hereof.

    2.13  Performance Period.  "Performance Period", with respect to a Performance Share, is a period of four consecutive fiscal years of the Company, beginning with the fiscal year in which such Performance Share is granted and may be referred to herein and by the Plan Committee by use of the calendar year in which a particular Performance Period commences.

    2.14  Performance Share.  A "Performance Share" is a potential award consisting of a right to one share of the Company's $.3333 par value common stock (subject to increase as provided in Section 4.2 hereof) or a lesser number of shares and the cash payment set forth in Section 5.2 hereof. A Performance Share shall be of no value to a Participant unless and until earned in accordance with Article V hereof.

    2.15  Plan Committee.  The "Plan Committee" is the Committee referenced in Article IX hereof.

    2.16  Plan Year.  The "Plan Year" shall be a fiscal year of the Company falling within the term of this Plan.

    2.17  Relevant Change Adjustments.  Appropriate adjustments in the number of shares and in the option price per share as authorized herein, may be made by the Plan Committee, in its discretion (except as provided in Section 11.8 hereof), to give effect to adjustments made in the number of shares of Company common stock through a merger, consolidation, recapitalization, reclassification, combination, spin-off, common stock dividend, stock split or other relevant change.

    2.18  Restricted Stock Award.  A "Restricted Stock Award" is an Award granted under Article VII of this Plan.

    2.19  Stock Option.  A "Stock Option" is a right accruing in a Participant to purchase from the Company one share of the Company's $.3333 par value common stock at the Fair Market Value of such share of common stock on the Date of Grant of the Stock Option, such exercise of option to be made any time within ten years and one day (ten years with respect to Incentive Stock Options) following the Date of Grant, and containing the terms and conditions set forth or allowed under Article VI hereof. Stock Options may be either Non-Qualified Options or Incentive Stock Options.

    2.20  Subsidiary Corporation.  For purposes of this Plan, the term "Subsidiary" or "Subsidiary Corporation" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, in which each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain as determined at the point in time when reference is made to such "Subsidiary" or "Subsidiary Corporation" in this Plan.

    2.21  Change in Control.  A "Change in Control" shall be deemed to have occurred if:

(a)

a majority of the directors of the Company shall be persons other than persons



(i)

for whose election proxies shall have been solicited by the Board or



(ii)

who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation (but not by removal) or to fill newly-created directorships,




(b)

30% or more of the outstanding Voting Stock (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company) of the Company is acquired or beneficially owned (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company) by any person (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company), or

2

(c)

the shareholders of the Company approve a definitive agreement or plan to



(i)

merge or consolidate the Company with or into another corporation (other than (1) a merger or consolidation with a Subsidiary of the Company or (2) a merger in which the Company is the surviving corporation and either (A) no outstanding Voting Stock of the Company (other than fractional shares) held by shareholders immediately prior to the merger is converted into cash (except cash upon the exercise by holders of Voting Stock of the Company of statutory dissenters' rights), securities, or other property or (B) all holders of outstanding Voting Stock of the Company (other than fractional shares) immediately prior to the merger (except those that exercise statutory dissenters' rights) have substantially the same proportionate ownership of the Voting Stock of the Company or its parent corporation immediately after the merger),



(ii)

exchange, pursuant to a statutory exchange of shares of Voting Stock of the Company held by shareholders of the Company immediately prior to the exchange, shares of one or more classes or series of Voting Stock of the Company for shares of another corporation or other securities, cash or other property,



(iii)

sell or otherwise dispose of all or substantially all of the assets of the Company (in one transaction or a series of transactions) or



(iv)

liquidate or dissolve the Company.

ARTICLE III
Granting of Stock Options, Performance Shares
and Restricted Stock Awards to Participants

    3.1  Eligible Employees.  Stock Options, Restricted Stock Awards or Performance Shares may be granted by the Plan Committee to any key employee of the Company or a Subsidiary Corporation. A Stock Option(s) or Performance Share(s) or Restricted Stock Award(s) may be granted to a director of the Company provided that he/she is also at the time of grant a key employee of the Company or a Subsidiary Corporation. No Stock Option(s) or Performance Share(s) or Restricted Stock Award(s) shall be granted to a person who is at the time of award a member of the Plan Committee. A person who has been engaged by the Company for employment shall be eligible for grants under the Plan, provided such person actually reports for and commences such employment within ninety days after the Date of Grant.

    3.2  Designation of Participants.  At any time and from time to time during the Plan Year, the Plan Committee may designate the key employees of the Company and its Subsidiaries eligible for Awards.

    3.3  Allocation of Stock Option(s), Performance Share(s) or Restricted Stock Award(s).  Contemporaneously with the designation of a Participant pursuant to Section 3.2 hereof, the Plan Committee shall determine the number of Stock Option(s) and/or Restricted Stock Award(s) and/or Performance Share(s) to be granted to such Participant and the Date of Grant for such related Stock Option or Performance Share or Restricted Stock Award, taking into consideration such factors as it deems relevant, which may include the following:

(a)

the total number of Stock Option(s) and/or Restricted Stock Award(s) and/or Performance Share(s) available for allocation to all Participants; and



(b)

the work assignment or the position of the Participant and its sensitivity and/or impact in relationship to the profitability and growth of the Company and its Subsidiaries; and



(c)

the Participant's current and potential performance in reference to such factors.

Allocation of Awards may, in the discretion of the Plan Committee, be in the form of Stock Option(s) solely or Performance Share(s) solely, or Restricted Stock Award(s) solely, or any combination in whatever

3 relationship one to the other, if any, as the Plan Committee in its discretion so determines. Allocation of Stock Options may, in the discretion of the Plan Committee, be in the form of Incentive Stock Option(s) solely or Non-Qualified Option(s) solely or a combination in whatever relationship to the other, if any, as the Plan Committee in its discretion so determines.

    3.4  Notification to Participants and Delivery of Documents.  As soon as practicable after such determinations have been made, each Participant, shall be notified of (i) his/her designation as a Participant, (ii) the Date of Grant, and (iii) the number of Stock Option(s), and/or Restricted Stock Award(s) and/or the number of Performance Share(s) granted to the Participant, and in the case of Performance Share(s), the Performance Period and in the case of Restricted Stock Award(s), the Restriction Period. The Participant shall thereafter be supplied with written evidence of any such granted Performance Share(s) and/or Restricted Stock Award(s), and shall receive a Stock Option exercisable for purchase of one share of the Company's $.3333 par value common stock for each Stock Option granted to the Participant pursuant to this Plan or indicating the aggregate of such grant, which option agreement(s) shall be in conformity with the provisions of Article VI hereof.

ARTICLE IV
Performance Goals and Maximum Award

    4.1  Establishment of Goals.  Within a reasonable period of time after the beginning of each Performance Period, Performance Goals relative to such Performance Period shall be established by the Plan Committee in its absolute discretion. Such Performance Goals may include, but, except as provided below, are not limited to, criteria such as PTOC, EVA, amount or rate of growth in consolidated profits of the Company expressed as a percent, earnings per share, return on capital, return on investment, return on shareholders' equity. Performance Goals for Covered Officers must be based upon one or more of the foregoing specifically described performance goals. Performance Goals may be absolute in their terms or be measured against or in relationship to other companies comparably, similarly or otherwise situated. The Plan Committee, in its sole discretion, may modify the Performance Goals if it determines that circumstances have changed and modification is required to reflect the original intent of the Performance Goals. The Plan Committee may in its discretion classify Participants into as many groups as it determines, and as to any Participant(s) relate his/her Performance Goals partially, or entirely, to the measured performance, either absolutely or relatively, of an identified Subsidiary, operating company or test strategy or new venture of the Company.

    4.2  Levels of Performance Required to Earn Performance Shares.  At or about the same time that Performance Goals are established for a specific period, the Plan Committee shall in its absolute discretion establish the percentage (not to exceed 150% thereof) of the Performance Share(s) granted for such Performance Period which shall be earned by the Participant for various levels of performance measured in relation to achievement of Performance Goals for such Performance Period.

    4.3  Other Restrictions.  The Plan Committee may provide restrictions on the delivery of common stock of the Company upon the earning of Performance Shares, including the future forfeiture of all or part of the common stock earned. The Plan Committee may provide that the shares of the Company's .3333 par value common stock issued on Performance Shares Earned be held in escrow and/or legended.

    4.4  Notification to Participants.  Promptly after the Plan Committee has established Performance Goals for a specific Performance Period or modified such goals, each Participant who has received a grant of any Performance Share(s) for that period shall be provided with written evidence of the Performance Goals so established or modified.

    4.5  During any Plan Year, no Covered Officer may receive Awards that, in the aggregate, could result in that Participant receiving, earning or acquiring more than 1,000,000 shares of the Company's $.3333 par value common stock, subject to the adjustments described in Section 2.17.

4

ARTICLE V
Earning of Performance Shares

    5.1  Measurement of Performance against Performance Goals.  The Plan Committee shall as soon as practicable after the close of each Performance Period, make a determination of:

(a)

the extent to which the Performance Goals for such Performance Period have been achieved;



(b)

the percentage of the Performance Shares granted for such Performance Period which are earned for such Performance Period by Participants who have been from his/her date of hire in the continuous employ of the Company or Subsidiary or a combination thereof, during the subject Performance Period; and



(c)

the percentage of Performance Shares to be paid in cash, if any. The percentage paid in cash shall be uniform for all Participants in a particular Performance Period.

These determinations shall be absolute and final as to the facts and conclusions therein made and be binding on all parties. Promptly after the Plan Committee has made the foregoing determination each Participant who has earned Performance Share(s) based thereon shall be notified, in writing, of the number of Performance Shares so earned. For all purposes of this Plan notice shall be deemed to have been given the date action is taken by the Plan Committee making the determination.

    5.2  Treatment of Performance Shares Earned.  Upon the determination that a percentage of the Performance Share(s) has been earned for a Performance Period, a Participant to whom such earned Performance Share(s) has been granted and who has been (or was) in the employ of the Company or a Subsidiary thereof continuously from the date of his/her hire during the subject Performance Period to which the grant relates, subject to the exceptions set forth at Section 5.5 and Section 5.6 hereof, shall be entitled, subject to the other conditions of this Plan, to receive the shares of the Company's $.3333 par value common stock for each Performance Share earned (less the shares paid in cash), plus a cash payment in the amount of the Fair Market Value of the shares of common stock to be paid in cash as determined in Section 5.1(c) hereof, calculated as of the close of business on the date of the notice referred to in Section 5.1 hereof. The provisions of Section 5.5 to the contrary notwithstanding, the Plan Committee may provide that the issued shares of common stock be held in escrow and/or be legended and that the common stock be subject to restrictions, including the future forfeiture of all or a part of the shares. Performance Shares shall under no circumstances become earned or have any value whatsoever for any Participant who is not in the employ of the Company or its Subsidiaries continuously during the entire Performance Period for which such Performance Shares are granted, except as provided at Section 5.5 or Section 5.6 hereof.

    5.3  Stock-Cash Distribution.  Each distribution determined in accordance with Section 5.2 above shall be made as soon as practicable after Performance Shares have been determined to have been earned unless the provisions of Section 5.4(a) hereof are applicable to a Participant.

    5.4(a)  Deferral of Receipt of Performance Share Earnout.  A Participant who has received a grant of Performance Shares may by compliance with the then applicable procedures under the Plan irrevocably elect in writing to defer receipt of all or any part of the stock-cash distribution associated with the earnout, if any, of the Performance Shares (the combination thereof hereafter referred to as the "deferred account"). The deferral shall be effective until the Participant terminates his/her employment with the Company and its Subsidiaries except as otherwise provided herein.

    The terms and conditions of such deferral, including but not limited to, the period of time for, and form of, election; the manner and method of payout; the form in which the deferred account shall be held; the interest equivalent or other payment that shall accrue upon the deferred account pending its payout; and the use and form of dividend equivalents in respect of stock units included within any deferred

5 account, shall be as determined from time to time by the Plan Committee, which Plan Committee may change any and all of the terms and conditions at any time applicable to deferrals thereafter made.

    5.4(b)  Amendment of Deferral Arrangements.  The Plan Committee may, at any time and from time to time, but prospectively only except as hereinafter provided, amend, modify, change, suspend or cancel any and all of the rights, procedures, mechanics and timing parameters relating to the deferral of receipt of Performance Share earnout under the Plan as set forth at Section 5.4(a) hereof. In addition, the Plan Committee may, in its sole discretion, accelerate the payout of the deferred account, or any portion thereof, either in a lump sum or in a series of payments, but under the following conditions only:

(a)

the Federal tax statutes, regulations or interpretations are amended, modified, or otherwise changed or affected in such a manner as to adversely alter or modify the tax effect of the "deferred account" as it is comprehended under the tax law and interpretations in effect for deferred accounts as of the effective date of this Plan, or



(b)

the deferred account holder suffers or incurs an event that would qualify for a "withdrawal" of contributions that have not been accumulated for two years without adverse consequences on the tax status of a qualified profit-sharing or stock bonus plan under the Federal tax laws applicable from time to time to such types of plans.

    5.5  Non-Disqualifying Termination of Employment.  Except for Section 5.6 hereof, the only exceptions to the requirement of continuous employment during a Performance Period for Performance Share earnout eligibility are termination of a Participant's employment by reason of death (in which event the Performance Shares may be transferable by will or the laws of descent and distribution only to such Participant's beneficiary designated to receive the Performance Shares or to the Participant's applicable legal representatives, heirs or legatees), total and permanent disability, normal or late retirement or early retirement, with the consent of the Plan Committee, or transfer of an executive in a spin-off, with the consent of the Plan Committee, occurring during the Performance Period applicable to the subject Performance share grant. In such instance an earnout of the Performance Shares shall be made, as of the end of the Performance Period, and 100% of the total Performance Shares that would have been earned during the Performance Period shall be earned and paid out; provided, however, in a spin-off situation the Plan Committee may set additional conditions, such as, without limiting the generality of the foregoing, continuous employment with the spin-off entity. If a Participant's termination of employment does not meet the criteria set forth above, but the Participant had at least 15 years of continuous employment with the Corporation or a Subsidiary or any combination thereof, provided that if the person is not an Executive Officer (as defined under the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder) of the Corporation at time of termination such 15 years need not be continuous, the Plan Committee may allow earn-outs of up to 100% of the total Performance Shares for the Performance Period(s) in which the termination of employment occurred, subject to any conditions that the Plan Committee shall determine.

    5.6  Change in Control.  In the event of a Change in Control, all outstanding Performance Shares granted under the Plan shall be proratably payable ten days after the Change in Control; provided that no Performance Share shall be payable to a Participant within six months after the Date of Grant. The amount of Performance Shares payable shall be determined by multiplying 100% of each Performance Share grant by a fraction, the numerator of which shall be the number of months that have elapsed in the applicable Performance Period and the denominator of which shall be forty-eight.

ARTICLE VI
Stock Options

    6.1  Non-Qualified Option.  Non-Qualified Options granted under the Plan are not intended to be Incentive Stock Options under the provisions of Section 422 of the Code. The Non-Qualified Options shall be evidenced by Non-Qualified Option agreements in such form and not inconsistent with the Plan as the

6 Plan Committee shall in its sole discretion approve from time to time, which agreements shall specify the number of shares to which they pertain and the purchase price of such shares and shall, but without limitation, contain in substance the following terms and conditions:

(a)

Option Period.  Each option granted shall expire and all rights to purchase shares thereunder shall cease ten years and one day after the Date of Grant of the Stock Option or on such date prior thereto as may be fixed by the Plan Committee, or on such date prior thereto as is provided by this Plan in the event of termination of employment or death or reorganization pursuant to Section 11.8(b) hereof. No option shall permit the purchase of any shares thereunder during the first year after the Date of Grant of such option, except as provided in Section 6.3 hereof.



(b)

Transferability and Termination of Options.  During the lifetime of an individual to whom an option is granted, the option may be exercised only by such individual and only while such individual is an employee of the Company or a Subsidiary and only if the Participant has been continuously so employed by any one or combination thereof since the Date of Grant of the option; provided, however, that if the employment of such Participant by the Company or a Subsidiary Corporation terminates, the option may additionally be exercised as follows, or in any other manner provided by the Plan Committee, but in no event later than 10 years and one day after the Date of Grant of the Stock Option, except as set forth in (ii) below:



(i)

if a Participant's termination of employment occurs by reason of normal or late retirement under any retirement plan of the Company or its Subsidiaries, such Participant's Stock Options may be exercised within five years after the date of such termination of employment. If a Participant's termination of employment occurs by reason of early retirement under any retirement plan of the Company or its Subsidiaries, or, by reason of the transfer of an executive in a spin-off, or by reason of total and permanent disability, as determined by the Plan Committee, without retirement, then such Participant's Stock Options shall be exercisable for a period of up to five years after the date of such termination of employment if the Plan Committee consents to such an extension. During the extension period the right to exercise options, if any, accruing in installments, shall continue; provided, however, in an early retirement or a spin-off situation the Plan Committee may set additional conditions, such as, without limiting the generality of the foregoing, an agreement to not provide services to a competitor of the Company and its Subsidiaries and/or continuous employment with the spin-off entity.



(ii)

if a Participant's termination of employment occurs by reason of death, then within five years after the date of death or the life of the option, whichever is less, but in no event less than one year after the date of death, during which time installments shall continue to accrue.



(iii)

if a Participant's termination of employment occurs for any reason other than as specified in Section 6.1(b)(i) or (ii) hereof, the Participant has been continuously employed by the Company or a Subsidiary or any combination for more than 15 years, provided that if the person is not an Executive Officer (as defined under the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder) of the Corporation at the time of termination such 15 years need not be continuous, and if the Plan Committee so approves, then within a period of up to five years after the date of termination of employment. During the period the right to exercise options, if any, accruing in installments shall continue; provided, however, the Plan Committee may set additional conditions.



(iv)

if a Participant's termination of employment occurs for any reason other than as specified in Section 6.1(b)(i) or (ii) hereof, the Plan Committee has not approved an extension pursuant to Section 6.1(b)(iii) and Participant's termination of employment is not occasioned by the commission of a dishonest or other illegal act, then, but only with respect to installments that have as of the date of termination already accrued, within ninety days after the date of such

7

termination of employment except in the case of Participants who would at the time be subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, in which instance the period of exercise shall be two hundred ten days after termination. Those Participants terminated because of the commission of a dishonest or other illegal act shall have no additional period after termination of employment in which to exercise their options. Absence on a leave of absence approved by the Plan Committee shall not be deemed a termination or interruption of continuous employment for the purposes of the Plan.

(v)

Rights accruing to a Participant under the aforesaid Subsections (b)(i), (b)(iii) and (b)(iv) may, upon the death of a Participant subsequent to his/her termination of employment, be exercised or perfected by his/her duly designated beneficiary or otherwise by his/her applicable legal representatives, heirs or legatees to the extent vested in and unexercised or perfected by the Participant at the date of his/her death.




No option shall be assignable or transferable by the individual to whom it is granted, except that it may be transferable (X) by assignment by the Participant to the extent provided in the applicable option agreement, or (Y) by will or the laws of descent and distribution in accordance with the provisions of this Plan. An option transferred after the death of the Participant to whom it is granted may only be exercised by such individual's beneficiary designated to exercise the option or otherwise by his/her applicable legal representatives, heirs or legatees, and only within the specific time period set forth above and only to the extent vested in and unexercised by the Participant at the date of his/her death, except as provided in Section 6.1(b)(ii).

In no event, whether by the Participant directly or by his/her proper assignee or beneficiary or other representative, shall any option be exercisable at any time after its expiration date as stated in the option agreement, except as provided in Section 6.1(b)(ii). When an option is no longer exercisable it shall be deemed for all purposes and without further act to have lapsed and terminated. The Plan Committee may in its sole discretion, but shall not be required to, determine, solely for the purposes of the Plan, that a Participant is permanently and totally disabled, and the acts and decisions of the Plan Committee made in good faith in relation to any such determination shall be conclusive upon all persons and interests affected thereby.

(c)

Exercise of Options.  An individual entitled to exercise an option may, subject to its terms and conditions and the terms and conditions of the Plan, exercise it in whole at any time, or in part from time to time, by delivery to the Company at its principal office of written notice of exercise, specifying the number of whole shares with respect to which the option is being exercised. Before shares may be issued payment must be made in full, in legal United States tender, in the amount of the purchase price of the shares to be purchased at the time and any amounts for withholding as provided in Section 11.9 hereof; provided, however, in lieu of paying for the exercise price in cash as described above, the individual may pay (subject to such conditions and procedures as the Plan Committee may establish) all or part of such exercise price by delivering owned and unencumbered shares of the Company common stock having a Fair Market Value on the date of exercise of the option equal to or less than the exercise price of the options exercised, with cash, as set forth above, for the remainder, if any, of the purchase price. Subject to rules established by the Plan Committee, the withholdings required by Section 11.9 hereof may be satisfied by the Company withholding shares of Company common stock issued on exercise that have a Fair Market Value on the date of exercise of the option equal to or less than the withholding required by Section 11.9 hereof.

8

    6.2  Incentive Stock Option.  Incentive Stock Options granted under the Plan are intended to be incentive stock options under Section 422 of the Code and the Plan shall be administered, except with respect to the right to exercise options after termination of employment, to qualify Incentive Stock Options issued hereunder as incentive stock options under Section 422 of the Code. An Incentive Stock Option shall not be granted to an employee who owns, or is deemed under Section 424(d) of the Code to own, stock of the Company (or of any parent or Subsidiary of the Company) possessing more than 10% of the total combined voting power of all classes of stock therein. The aggregate Fair Market Value (determined as of the time the option is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all incentive stock option plans of the Company or any parent or Subsidiary of the Company) shall not exceed $100,000. The Incentive Stock Options shall be evidenced by Incentive Stock Option Agreements in such form and not inconsistent with the Plan as the Plan Committee shall in its sole discretion approve from time to time, which agreements shall specify the number of shares to which they pertain and the purchase price of such shares.

    The terms and conditions set forth in Subsections (a) through (c) of Section 6.1 hereof shall apply to an Incentive Stock Option; provided that the term of the Incentive Stock Option shall not exceed ten years; and provided, further, that in the event Section 6.1(b)(i) hereof is applicable, all installments shall become immediately exercisable.

    6.3  Change in Control.  In the event of a Change in Control, all outstanding options granted under the Plan shall accelerate and will be exercisable in full for a period of two hundred ten (210) days after the Change in Control; provided that no option shall be exercisable by a Participant (i) within six months after the Date of Grant of the option or (ii) after the termination date of the option.

ARTICLE VII
Restricted Stock

    7.1  Restriction Period to be Established by the Plan Committee.  At the time a Restricted Stock Award is made, the Plan Committee shall establish a period of time (the "Restriction Period") applicable to such Award, which shall be not less than three years. Each Restricted Stock Award may have a different Restriction Period, at the discretion of the Plan Committee. Except as permitted or pursuant to Sections 7.4, 7.5 or 11.8 hereof, the Restriction Period applicable to a particular Restricted Stock Award shall not be changed.

    7.2  Other Terms and Conditions.  Company common stock awarded pursuant to a Restricted Stock Award shall be represented by a stock certificate registered in the name of the Holder of such Restricted Stock Award. The Holder shall have the right to enjoy all shareholder rights during the Restriction Period with the exception that:

(i)

The Holder shall not be entitled to delivery of the stock certificate until the Restriction Period shall have expired.



(ii)

The Company may either issue shares subject to such restrictive legends and/or stop-transfer instructions as it deems appropriate or provide for retention of custody of the Company common stock during the Restriction Period.



(iii)

The Holder may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Company common stock during the Restriction Period.



(iv)

A breach of the terms and conditions established by the Plan Committee pursuant to the Restricted Stock Award shall cause a forfeiture of the Restricted Stock Award, and any dividends withheld thereon.

9

(v)

Dividends payable in cash or in shares of stock or otherwise may be either currently paid or withheld by the Company for the Holder's account. At the discretion of the Plan Committee, interest may be paid on the amount of cash dividends withheld, including cash dividends on stock dividends, at a rate and subject to such terms as determined by the Plan Committee.

Provided, however, and the provisions of Section 7.4 to the contrary notwithstanding, in lieu of the foregoing, the Plan Committee may provide that no shares of common stock be issued until the Restriction Period is over and further provide that the shares of common stock issued after the Restriction Period has been completed, be issued in escrow and/or be legended and that the common stock be subject to restrictions including the forfeiture of all or a part of the shares.

    7.3  Payment for Restricted Stock.  A Holder shall not be required to make any payment for Company common stock received pursuant to a Restricted Stock Award, unless the Plan Committee requires payment for such stock in the Restricted Stock Award.

    7.4  Forfeiture Provisions.  Subject to Section 7.5, in the event a Holder terminates employment during a Restriction Period, a Restricted Stock Award will be forfeited; provided, however, when the Plan Committee issues the Restricted Stock Award, it may provide in the Restricted Stock Award agreement for proration or full payout in the event of a termination of employment because of normal or late retirement, early retirement or spin-off with the consent of the Plan Committee, or death or total and permanent disability, as determined by the Plan Committee, or termination of employment after 15 years of continuous employment with the Corporation or a Subsidiary or any combination thereof, provided that if the person is not an Executive Officer (as defined under the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder) of the Corporation at the time of termination such 15 years need not be continuous, subject to any other conditions the Plan Committee may determine.

    7.5  Change in Control.  In the event of a Change in Control, all outstanding Restricted Stock Awards granted under the Plan will be proratably payable ten days after the Change in Control; provided that no Restricted Stock Award shall be payable to a Participant within six months after the Date of Grant. The amount of Company common stock payable shall be determined by multiplying each Restricted Stock Award granted by a fraction, the numerator of which shall be the number of months that have elapsed in the applicable Restriction Period and the denominator of which shall be the number of months in the Restriction Period.

ARTICLE VIII
Shares of Stock Subject to the Plan

    8.1  The total number of shares that may be available for issuance under all Performance Shares, Stock Options and Restricted Stock Awards granted pursuant to the Plan shall not exceed in the aggregate 18,600,000 shares of the Company's $.3333 par value common stock. Shares covered by granted Performance Shares which are not earned pursuant to any of the provisions of Article V hereof, or Stock Options or Performance Shares or Restricted Stock Awards which are forfeited for any reason or are not distributed or are covered by options that lapse or are cancelled before exercise, shall (unless the Plan shall have been terminated) again be available in the same relative amounts for other Performance Share, Restricted Stock Award and Stock Option grants under the Plan (except for shares for which cash equivalent payments are received by Participants pursuant to the Plan), except that 660,825 shares for Stock Options, Performance Shares or Restricted Stock Awards that were outstanding on April 10, 1991 that are not earned or are forfeited for any reason or are not distributed or lapse or are cancelled before exercise shall be available for future grants and any additional shares for Stock Options, Performance Shares or Restricted Stock Awards that were outstanding on April 10, 1991 that are not earned or are forfeited for any reason or are not distributed or lapse or are cancelled before exercise shall not be available for future Performance Shares, Restricted Stock Awards or Stock Option Grants. Such shares

10 may be authorized and unissued shares, or may be treasury shares held by the Company or may be shares purchased or held by the Company or a Subsidiary for purposes of the Plan, or any combination thereof.

ARTICLE IX
Administration of the Plan

    9.1  The Plan will be administered by a committee of the Board appointed from time to time by the Board. Each member of the committee shall be a "non-employee director" as that term is defined under Rule 16b-3, promulgated under the Securities Exchange Act of 1934, as amended, or any successor statute or regulation comprehending the same subject matter.

    9.2  The Plan Committee shall have and exercise all of the powers and responsibilities granted expressly or by implication to it by the provisions of the Plan. Subject to and as limited by such provisions, the Plan Committee may from time to time enact, amend and rescind such rules, regulations and procedures with respect to the administration of the Plan as it deems appropriate or convenient.

    9.3  All questions arising under the Plan, any Incentive Stock Option, Non-Qualified Stock Option, Performance Share or Restricted Stock Award agreement, or any rule, regulation or procedure adopted by the Plan Committee shall be determined by the Plan Committee, and its determination thereof shall be conclusive and binding upon all parties.

    9.4  Any action required or permitted to be taken by the Plan Committee under the Plan shall require the affirmative vote of a majority of a quorum of the members of the Plan Committee. A majority of all members of the Plan Committee shall constitute a "quorum" for Plan Committee business. The Plan Committee may act by written determination instead of by affirmative vote at a meeting, provided that any written determination shall be signed by all members of the Plan Committee, and any such written determination shall be as fully effective as a majority vote of a quorum at a meeting.

ARTICLE X
Reduction in Awards

    10.1  Anything in this Plan to the contrary notwithstanding, the provisions of this Article X shall apply to a Participant if Ernst & Young determines that each of (a) and (b) below are applicable.

(a)

Payments or distributions hereunder, determined without application of this Article X, either alone or together with other payments in the nature of compensation to the Participant which are contingent on a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, or otherwise (but after any elimination or reduction of such payments under the terms of the Company's Income Continuance Policy Statement or SMG Income Continuance Policy Statement), would result in any portion of the payments hereunder being subject to an excise tax on excess parachute payments imposed under Section 4999 of the Code.



(b)

The excise tax imposed on the Participant under Section 4999 of the Code on excess parachute payments, from whatever source, would result in a lesser net aggregate present value of payments and distributions to the Participant (after subtraction of the excise tax) than if payments and distributions to the Participant were reduced to the maximum amount that could be made without incurring the excise tax.

    10.2  Under this Article X the payments and distributions under this Plan shall be reduced (but not below zero) so that the present value of such payments and distributions shall equal the Reduced Amount. The "Reduced Amount" (which may be zero) shall be an amount expressed in present value which maximizes the aggregate present value of payments and distributions under this Plan which can be made without causing any such payment to be subject to the excise tax under Section 4999 of the Code. The determinations and reductions under this paragraph shall be made after eliminations or reductions, if any,

11 have been made under the Company's Income Continuance Policy Statement or SMG Income Continuance Policy Statement.

    10.3  If Ernst & Young determines that this Article X is applicable to a Participant, it shall so advise the Plan Committee. The Plan Committee shall then promptly give the Participant notice to that effect together with a copy of the detailed calculation supporting such determination which shall include a statement of the Reduced Amount. The Participant may then elect, in his/her sole discretion, which and how much of the Stock Options, Restricted Stock Awards and/or Performance Shares otherwise awarded under this Plan shall be eliminated or reduced (as long as after such election the aggregate present value of the remaining Stock Options, Restricted Stock Awards and/or Performance Shares under this Plan equals the Reduced Amount), and shall advise the Plan Committee in writing of his/her election within ten days of his/her receipt of notice. If no such election is made by the Participant within such ten-day period, the Plan Committee may elect which and how much of the Stock Options, Restricted Stock Awards, and/or Performance Shares shall be eliminated or reduced (as long as after such election their aggregate present value equals the Reduced Amount) and shall notify the Participant promptly of such election. For purposes of this Article X, present value shall be determined in accordance with Section 280G of the Code. All the foregoing determinations made by Ernst & Young under this Article X shall be made as promptly as practicable after it is determined that parachute payments will be made to the Participant if an elimination or reduction is not made. As promptly as practicable following the election hereunder, the Company shall provide to or for the benefit of the Participant such amounts and shares as are then due to the Participant under this Plan and shall promptly provide to or for the benefit of the Participant in the future such amounts and shares as become due to the Participant under this Plan.

    10.4  As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by Ernst & Young hereunder, it is possible that payments or distributions under this Plan will have been made which should not have been made ("Overpayment") or that additional payments or distributions which will have not been made could have been made ("Underpayment"), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that Ernst & Young, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant which Ernst & Young believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Participant which the Participant shall repay together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Participant if and to the extent such payment would not reduce the amount which is subject to the excise tax under Section 4999 of the Code. In the event that Ernst & Young, based upon controlling precedent, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid to or for the benefit of the Participant together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

    10.5  In making its determination under this Article X, the value of any non-cash benefit shall be determined by Ernst & Young in accordance with the principles of Section 280G(d)(3) of the Code.

    10.6  All determinations made by Ernst & Young under this Article X shall be binding upon the Company, the Plan Committee and the Participant.

ARTICLE XI
General Provisions

    11.1  Amendment or Termination.  The Board may at any time amend, suspend, discontinue or terminate the Plan (including the making of any necessary enabling, conforming and procedural amendments to the Plan to authorize and implement the granting of qualified Stock Options or other income tax preferred stock options which may be authorized by enactment of the United States Congress and/or the

12 Internal Revenue Service subsequent to the effective date of this Plan); provided, however, that no amendment by the Board shall, without further approval of the shareholders of the Company:

(a)

except as provided at Section 2.17 hereof, increase the total number of shares of Company common stock which may be made subject to the Plan; or



(b)

except as provided at Section 2.17 hereof, change the purchase price of Company common stock under the Plan; or



(c)

materially modify the class of employees that are eligible to receive Stock Options and/or Performance Shares and/or Restricted Stock Awards pursuant to the Plan.

No action taken pursuant to this Section 11.1 of the Plan shall, without the consent of a Participant, alter or impair any Performance Share(s) or Stock Option(s) or Restricted Stock Award(s) which have been previously granted to a Participant.

    11.2  Non-Alienation of Rights and Benefits.  Except as expressly provided herein, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such right or benefit. If any Participant or beneficiary hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit hereunder, then such right or benefit shall, in the sole discretion of the Plan Committee, cease and in such event the Company may hold or apply the same or any or no part thereof for the benefit of the Participant or beneficiary, his/her spouse, children or other dependents or any of them in any such manner and in such proportion as the Plan Committee in its sole discretion may deem proper.

    11.3  No Rights as Shareholder.  The granting of Performance Share(s) and/or Stock Option(s) and/or Restricted Stock Award(s) under the Plan shall not entitle a Participant or any other person succeeding to his/her rights, to any dividend, voting or other right as a shareholder of the Company unless and until the issuance of a stock certificate to the Participant or such other person pursuant to the provisions of the Plan and then only subsequent to the date of issuance thereof.

    11.4  Limitation of Liability or Obligation of the Company.  As illustrative only of the limitations of liability or obligation of the Company and not intended to be exhaustive thereof, nothing in the Plan shall be construed:

(a)

to give any employee of the Company any right to be granted any Stock Option and/or Performance Share and/or Restricted Stock Award other than at the sole discretion of the Plan Committee;



(b)

to give any Participant any rights whatsoever with respect to shares of the Company's $.3333 par value common stock except as specifically provided in the Plan;



(c)

to limit in any way the right of the Company or any Subsidiary to terminate, change or modify, with or without cause, the employment of any Participant at any time; or



(d)

to be evidence of any agreement or understanding, express or implied, that the Company or any Subsidiary will employ any Participant in any particular position at any particular rate of compensation or for any particular period of time.

    11.5  Government Regulations.  Notwithstanding any other provisions of the Plan seemingly to the contrary, the obligation of the Company with respect to Performance Shares, Stock Options or Restricted Stock Awards granted under the Plan shall at all times be subject to any and all applicable laws, rules, and regulations and such approvals by any government agencies as may be required or deemed by the Board or Plan Committee as reasonably necessary or appropriate for the protection of the Company.

13

    In connection with any sale, issuance or transfer hereunder, the Participant acquiring the shares shall, if requested by the Company give assurances satisfactory to counsel of the Company that the shares are being acquired for investment and not with a view to resale or distribution thereof and assurances in respect of such other matters as the Company may deem desirable to assure compliance with all applicable legal requirements.

    11.6  Non-exclusivity of the Plan.  Neither the adoption of the Plan by the Board nor the submission of the Plan to shareholders of the Company for approval shall be construed as creating any limitations on the power or authority of the Board to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees, which the Company or any Subsidiary now has lawfully put into effect, including, without limitation, any retirement, pension, savings, profit sharing or stock purchase plan, insurance, death and disability benefits, and executive short term incentive plans.

    11.7  Effective Date.  Subject to the approval of this restated Plan by the holders of a majority of the voting power of the shares present and entitled to vote at the Company's Annual Meeting of Shareholders to be held May 21, 1997 and any necessary approval being obtained from any department, board or agency of the United States or states having jurisdiction, the Plan shall be effective as of May 21, 1997.

    11.8  Reorganization.  In case the Company is merged or consolidated with another corporation, or in case the property or stock of the Company is acquired by another corporation, or in case of a separation, reorganization or liquidation of the Company, the Plan Committee or a comparable committee of any corporation assuming the obligations of the Company hereunder, shall either:

(a)

make appropriate provision for the protection of any outstanding Performance Shares, Stock Options and Restricted Stock Awards granted thereunder by the substitution on an equitable basis of appropriate stock of the Company, or of the merged, consolidated or otherwise reorganized corporation which will be issuable in respect to the shares of the Company's $.3333 par value common stock. Stock to be issued pursuant to such Performance Shares shall be limited so that the excess of the aggregate fair market value of the shares subject to the Performance Shares immediately after such substitution over the purchase price thereof is not more than the excess of the aggregate fair market value of the shares subject to such Performance Shares immediately before such substitution over the purchase price thereof; or



(b)

upon written notice to the Participant, provide that all Performance Shares granted to the Participant are deemed earned, that the Restriction Period of all Restricted Stock Awards has been eliminated and that all outstanding Stock Options shall accelerate and become exercisable in full but that all outstanding Stock Options, whether or not exercisable prior to such acceleration, must be exercised within not less than sixty days of the date of such notice or they will be terminated. In any such case the Plan Committee may, in its discretion, extend the sixty-day exercise period.

    11.9  Withholding Taxes, etc.  All distributions under the Plan shall be subject to any required withholding taxes and other withholdings and, in case of distributions in Company common stock, the Participant or other recipient may, as a condition precedent to the delivery of the common stock, be required to pay to his/her participating employer the excess, if any, of the amount of required withholding over the withholdings, if any, from any distributions in cash under the Plan. No distribution under the Plan shall be made in fractional shares of the Company's common stock, but the proportional market value thereof shall be paid in cash.

    11.10  General Restriction.  Each Performance Share, Stock Option and Restricted Stock Award shall be subject to the requirement that, if at any time the Board shall determine, in its discretion, that the

14 listing, registration or qualification of the shares subject to such option and/or right upon any securities exchange or under any state or Federal Law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with the granting of such Performance Share or Stock Option or Restricted Stock Award or the issue or purchase of shares respectively thereunder, such Performance Share or Stock Option or Restricted Stock Award may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board.

    11.11  Use of Proceeds.  The proceeds derived from the sale of the stock pursuant to Stock Options or Restricted Stock Awards granted under the Plan shall constitute general funds of the Company.

    11.12  Headings.  The headings of the Articles and their subparts in this Plan are for convenience of reading only and are not meant to be of substantive significance and shall not add to or detract from the meaning of such Article or subpart to which it refers.

15

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Dayton Hudson Corporation EXECUTIVE LONG TERM INCENTIVE PLAN OF 1981 (As amended and restated September 8, 1999)
ARTICLE I Establishment of the Plan
ARTICLE II Definitions
ARTICLE III Granting of Stock Options, Performance Shares and Restricted Stock Awards to Participants
ARTICLE IV Performance Goals and Maximum Award
ARTICLE V Earning of Performance Shares
ARTICLE VI Stock Options
ARTICLE VII Restricted Stock
ARTICLE VIII Shares of Stock Subject to the Plan
ARTICLE IX Administration of the Plan
ARTICLE X Reduction in Awards
ARTICLE XI General Provisions

EX-10.C

DAYTON HUDSON CORPORATION
EXECUTIVE INCENTIVE PLAN
(PERSONAL SCORE)
(As amended and restated May 21, 1997)

Article I

Sec. 1.1	Name.  The name of the short term incentive plan set forth herein is "Dayton Hudson Corporation Executive Incentive Plan (Personal Score)". It is sometimes hereinafter referred to as the "Plan". "Company" refers to Dayton Hudson Corporation and its subsidiaries. Division refers to an operating company, test strategy, staff group or other subdivision of the Company.
Sec. 1.2	Compensation Policy and Plan Intent.  The Plan has been designed to provide financial incentives ("incentive bonuses") to designated upper level executive employees, who through their efforts directly and significantly impact the achievement of Company goals and objectives. Such incentive bonuses are intended to reflect the executive's personal achievements.
Sec. 1.3	Eligibility.  Participation in this Plan is restricted to those upper level executive employees who, through their position and performance, have a decided impact upon the performance of the Company and/or a Division, and therefore upon the operating results of the Company. The Compensation Committee shall determine which individuals or groups of individuals by title or position or rank shall participate in the Plan.
	Divisions which participate in the Plan shall at times hereinafter be referred to as "Participating Divisions". Executives participating in the Plan are referred to as "participants" at times herein.
	Those Divisions which do not participate in this Plan shall at times hereinafter be referred to as "Non-Participating Divisions".
Sec. 1.4	Transfer and Termination.  A participant who transfers to another Division or the Company, or who terminates employment for the purpose of early or normal retirement from the Company, or who dies or becomes disabled shall be eligible for incentive compensation at Plan Year end if they were an actual participant in the plan at the commencement of such Plan Year. The incentive bonus, when determined, pursuant to the provisions hereof shall be prorated to reflect that portion of the Plan Year (including all if such is the case) during which the participant was enrolled and participating in the Plan as a participant. Participants in this category will be treated in accordance with the following guidelines:
	a.	Transfers Between Participating Divisions.  In the event of a transfer between then Participating Divisions, a pro rata share of the incentive bonus shall be contributed by each Participating Division if the participant has been designated as such in each Participating Division from the commencement of the Plan Year, or in the case of the successor Participating Division, from his/her commencement of employment to Plan Year end.
	b.	Transfers Between Participating Division and Non-Participating Division and Retirement, Death or Disability of Participating Executive.  In the event a participant transfers from a Participating Division to a Non-Participating Division, a pro rata incentive bonus calculated on the basis of the number of months (a major portion of a month to be considered a whole month) during the Plan Year the executive was a Participant in the Plan, over 12, will be awarded in the due course of the Plan's administration. The same formula shall be utilized for executives who transfer from a Non-Participating Division to a Participating Division. The same method of calculating an incentive bonus shall also be utilized in calculating incentive bonuses for participants who die, become disabled or who retire from the Company during the year. Any such incentive bonuses would be paid only in the normal course of administration of the Plan.
	c.	New Executive Employees.  Upon recommendation of the Chief Administrative Officer or the Chief Executive Officer of a Division, whichever is applicable, and following approval thereof by the Chairman of the Company, a new executive employee who will have been employed by a Participating Division prior to the end of a Plan Year may be designated as a participant in the Plan, subject to the conditions of the Plan.
	d.	Termination Other Than Retirement, Death or Disability.  A participant who terminates his/her employment during the Plan Year for any reason other than retirement, death or disability, shall not be eligible for and shall not receive an incentive bonus for the subject Plan Year. A participant who terminates following the completion of the subject Plan Year, but prior to the payout of such incentive bonus shall receive the incentive bonus under procedures which would, only for such purpose, treat them as still employed at the time of the Plan payout.
	e.	Promotion or Job Change.  A participant who has a promotion and/or a job change during a Plan Year will have his/her incentive bonus calculated using each grade level separately. The score and grade level shall determine the bonus percentage and that percentage shall be applied to the Midpoint of Salary Range while in the grade level. The total incentive bonus will be the sum of the bonuses for each grade level.
	f.	Market Pricing Adjustment.  A participant whose grade level is adjusted during the Plan Year due to a "market pricing adjustment" will have his/her bonuses calculated for the entire period using the adjusted grade. If a, b and/or e are applicable, those sections shall also apply and this section f shall be applicable only for the period that the "market pricing adjustment" relates to.
Sec. 1.5	Process For Determination of Incentive Bonuses
	a.	Compensation Policy and Intent of Plan
		Incentive bonuses under the Plan are based on the participant's individual accomplishments in his/her assigned job during the Plan Year.
	b.	Defined Incentive Bonus Terms
		"Bonus Matrix"
			The "Bonus Matrix" is a table setting forth figures which indicate, at varying participant scoring levels and interrelated with varying job grade level classifications, the percentage of incentive bonus attributable to each score in relationship to the participant's Midpoint of Salary Range. The "Bonus Matrix" may be changed from time to time at the election of the Compensation Committee but any change in the Bonus Matrix shall have prospective application only.
2
		"Covered Officer"
			"Covered Officer" includes all participants whose compensation, in the year for which the bonus is calculated, is subject to the compensation expense deduction limitations set forth in Section 162(m) of the Internal Revenue Code of 1986, as amended.
		"Midpoint of Salary Range"
			The "Midpoint of Salary Range" of a participant during the related incentive bonus fiscal year is the midpoint for his/her job grade as set forth in the salary range by job grade that is applicable.
	c.	Determination of Bonus
		(1)	Non-Pooled
			Incentive bonuses for each participant will be calculated by taking the participant's bonus percentage from the Bonus Matrix, using his/ her personal score above the specified minimum and job grade and multiplying it by his/her Midpoint of Salary Range.
		(2)	Pooled
			A bonus pool is calculated by multiplying the percentage from the Bonus Matrix using the personal score for each participant above the specified minimum by the participant's Midpoint of Salary Range.
			The bonus for each participant will be based on a ratio of his/her bonus to do all bonuses paid under the Executive Incentive Plan (Personal Score). The percentage determined by that ratio will be multiplied by the bonus pool.
	d.	Maximum Bonus
		The maximum bonus payable under the Plan is equal to 400% of the salary of the Chief Executive Officer (the "CEO") or other Covered Officer set forth in the Proxy Statement covering the year during which the bonus was earned. If the CEO or other Covered Officer held a different office or was not employed in his/her position for the full year covered by that Proxy Statement, the maximum bonus is 400% of the highest salary reported in such year. Provided, however, in either case the aggregate of all bonuses paid to the CEO or other Covered Officer under any combination of this Plan and the Pre-Tax Segment Profit and EVA Plan may not exceed 400% of the relevant salary. In addition, for purposes of calculating the maximum bonus payable to the CEO or any other Covered Officer, the salary of the participant may not exceed 200% of the salary earned by the Company's CEO for Fiscal 1996 as reported in its Proxy Statement covering that year. The aggregate of all bonuses paid to any other executive not listed above under any combination of this Plan and the Pre-Tax Segment Profit and EVA Plan may not exceed 400% of his/her base salary. If it is necessary to reduce a bonus in order to comply with the limitation on the maximum aggregate bonus payable to a participant, then the reduction shall be applied first to the bonus payable under this Plan and then, if necessary, to the bonus payable under the Pre-Tax Segment Profit and EVA Plan.
Article II
Sec. 2.1	Payment of Bonus.  Normally the total incentive bonus for a Fiscal Year will be paid in cash as soon as administratively feasible after the amount of the incentive bonus has been computed.
3
	However, any participant who is a participant in a deferred compensation plan or arrangement of the Company, may have his/her incentive bonus deferred pursuant to that plan or arrangement.
Article III
Sec. 3.1	Beneficiary.  Any incentive bonus payments which become distributable after the death of a participant shall be distributed as they become due to such person or persons, or other legal entity as the participant may have designated in writing delivered to his/her Participating Division's personnel office on an approved form. The participant may, from time to time, revoke or change any such designation by writing delivered to such Participating Division's personnel office on an approved form. If there is no unrevoked designation on file with such corporate personnel office at the participant's death, or if the person or persons designated therein shall have all predeceased the participant, such distributions shall be made to the participant's spouse, or in the absence of a spouse, children and if the participant has no spouse or children, to the participant's estate. If a participant has deferred his/her incentive bonus pursuant to a plan or arrangement, the plan or arrangement shall govern the beneficiary designation.
Article IV
Sec. 4.1	Administration and Interpretation of Plan.  This Plan shall be interpreted by the Compensation Committee of the Company and its interpretations shall be final and binding on participants, Participating Divisions, and all other parties in interest.
	The Plan shall be administered by the Compensation Committee selected by the Board of Directors. The Plan Committee reserves the right, from time to time, to prescribe rules and regulations, not inconsistent with the provisions of the Plan, and to modify or revoke such rules and regulations at such time and in such manner as it may deem proper. A copy of this Plan and all such rules and regulations will be supplied to each person participating in the Plan and a copy of the then current Plan shall be maintained in the Company's personnel office and at the personnel office of each Participating Division and shall be available, upon request, for review by any participant or his duly authorized agent. All persons in the Plan shall be bound by the terms of the Plan and of all rules and regulations pursuant thereto, all as now in effect or hereafter amended, promulgated or passed which shall likewise be maintained at the Company and each Participating Division personnel office.
Article V
Sec. 5.1	Rights of Participants and Beneficiaries.  The Plan is not an employment agreement and does not assure or evidence to any degree the continued employment or the claim to continued employment of any participant for any time or period or job.
	No participant or beneficiary shall, by virtue of this Plan, have any interest in any specific asset or assets of the Company or any Participating Division. A participant or beneficiary has only an unsecured contract right to receive cash payments in accordance with and at the times specified by the Plan.
	No participant shall have the right or ability to assign, pledge, or otherwise dispose of any part of an incentive bonus hereunder (except as provided in Section 3.1 hereof).
4
Article VI
Sec. 6.1	Overview.  It is specifically understood that the Chairman of the Board and Chief Executive Officer of the Company shall at all times retain the authority to veto or rescind any appointment or designation of an individual as a participant (except an Executive Officer) under this Plan but it is the intent of the Plan that such authority shall be exercised with restraint and only for circumstances deemed by said officer to be of importance for preserving the integrity of the Plan's policy and/or its performance.
Article VII
Sec. 7.1	Termination of Plan.  This Plan may be amended or terminated at any time by the Board of Directors of the Company. Such amendment or termination, will not, without the participant's written consent, affect his/her incentive bonus or bonuses previously earned.
Article VIII
Sec. 8.1	Miscellaneous Definitions.
	a.	"Compensation Committee": shall mean that committee of the Board of Directors of the Company designated as such on January 12, 1994 or as it is thereafter designated during the term hereof and if during the term hereof no such named committee shall be designated by the Board of Directors it shall mean the Committee of the Board most nearly performing the duties of the Compensation Committee as defined at the time of its elimination as a Board Committee.
	b.	"Plan Year": Plan Year shall be the applicable financial "Fiscal Year" of the Company.
	c.	"Retire or Retirement": Retire or Retirement means a termination of employment pursuant to an arrangement contained in any formal private retirement plan or written agreement then in effect by the Company or any participating Division relative to the subject participant.
	d.	"Chairman": Chairman shall at all times refer to the incumbent Chairman of the Board of Directors of the Dayton Hudson Corporation.
Article IX
Sec. 9.1	Miscellaneous Provisions
	a.	Headings.  Headings at the beginning of sections hereof are for convenience of reference, shall not be considered a part of the text of the Plan, and shall not influence its construction.
	b.	Capitalized Definitions.  Capitalized terms used in the Plan shall have their meaning as defined in the Plan unless the context clearly indicates to the contrary.
	c.	Gender.  Any references to gender also include the opposite gender.
	d.	Use of Compounds of Word "Here".  Use of the words "hereof", "herein", "hereunder", or similar compounds of the word "here" shall mean and refer to the entire Plan unless the context clearly indicates to the contrary.
	e.	Construed as a Whole.  The provisions of the Plan shall be construed as a whole in such manner as to carry out the provisions thereof and shall not be construed separately without relation to the context.
5

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EX-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 for the
Nine Months Ended October 30, 1999 and October 31, 1998
and for the Five Years Ended January 30, 1999
(Millions of Dollars)

	Nine Months Ended						Fiscal Year Ended
	Oct. 30, 1999			Oct. 31, 1998			Jan. 30, 1999			Jan. 31, 1998			Feb. 1, 1997			Feb. 3, 1996			Jan. 28, 1995
Ratio of Earnings to Fixed Charges:
Earnings:
Consolidated net earnings before extraordinary charges	$	663		$	515		$	962		$	802		$	474		$	311		$	434
Income taxes		420			336			594			524			309			190			280
Total earnings before extraordinary charges		1,083			851			1,556			1,326			783			501			714
Fixed charges:
Interest expense		309			316			421			437			464			461			439
Interest portion of rental expense		51			45			63			59			59			59			56
Total fixed charges		360			361			484			496			523			520			495
Less:
Capitalized interest		(13	)		(14	)		(16	)		(16	)		(16	)		(14	)		(7	)
Fixed charges in earnings		347			347			468			480			507			506			488
Earnings available for fixed charges	$	1,430		$	1,198		$	2,024		$	1,806		$	1,290		$	1,007		$	1,202
Ratio of earnings before extraordinary charges to fixed charges		3.98			3.32			4.18			3.65			2.46			1.94			2.43
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends:
Total fixed charges, as above	$	360		$	361		$	484		$	496		$	523		$	520		$	495
Dividends on preferred stock (pre-tax basis)		22			25			32			35			37			37			39
Total fixed charges and preferred stock dividends		382			386			516			531			560			557			534
Earnings available for fixed charges and preferred stock dividends	$	1,430		$	1,198		$	2,024		$	1,806		$	1,290		$	1,007		$	1,202
Ratio of earnings before extraordinary charges to fixed charges and preferred stock dividends		3.74			3.10			3.92			3.40			2.30			1.81			2.25

EX-27

 


<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DAYTON
HUDSON CORPORATION'S FORM 10Q FOR THE THIRD QUARTER ENDED OCTOBER 30, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER> 1,000,000

                             
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          JAN-29-2000
<PERIOD-START>                             JAN-31-1999
<PERIOD-END>                               OCT-30-1999
<CASH>                                             246
<SECURITIES>                                         0
<RECEIVABLES>                                     1479
<ALLOWANCES>                                         0
<INVENTORY>                                       4757
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<DEPRECIATION>                                    3875
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<CURRENT-LIABILITIES>                             5970
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<PREFERRED-MANDATORY>                                3
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<COMMON>                                            73
<OTHER-SE>                                        5429
<TOTAL-LIABILITY-AND-EQUITY>                     17622
<SALES>                                          22975
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<CGS>                                            16642
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<OTHER-EXPENSES>                                  1031
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<INTEREST-EXPENSE>                                 294
<INCOME-PRETAX>                                   1083
<INCOME-TAX>                                       420
<INCOME-CONTINUING>                                663
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                     13
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<NET-INCOME>                                       650
<EPS-BASIC>                                       1.44
<EPS-DILUTED>                                     1.39