Condensed Consolidating Financial Information

Certain debt obligations of the Company, which constitute debt obligations of Macy's Retail Holdings, Inc. ("Subsidiary Issuer"), a 100%-owned subsidiary of Macy's, Inc. ("Parent"), are fully and unconditionally guaranteed by Parent. In the following condensed consolidating financial statements, "Other Subsidiaries" includes all other direct subsidiaries of Parent, including Bluemercury, Inc., FDS Bank, West 34th Street Insurance Company New York, Macy's Merchandising Corporation, Macy's Merchandising Group, Inc. and its subsidiaries Macy's Merchandising Group (Hong Kong) Limited, Macy's Merchandising Group Procurement, LLC, Macy's Merchandising Group International, LLC, Macy's Merchandising Group International (Hong Kong) Limited, and its majority-owned subsidiary Macy's China Limited. "Subsidiary Issuer" includes operating divisions and non-guarantor subsidiaries of the Subsidiary Issuer on an equity basis. The assets and liabilities and results of operations of the non-guarantor subsidiaries of the Subsidiary Issuer are also reflected in "Other Subsidiaries."

Condensed Consolidating Statements of Comprehensive Income for the 13 and 39 weeks ended October 29, 2016 and October 31, 2015, Condensed Consolidating Balance Sheets as of October 29, 2016, October 31, 2015 and January 30, 2016, and the related Condensed Consolidating Statements of Cash Flows for the 39 weeks ended October 29, 2016 and October 31, 2015 are presented on the following pages.

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended October 29, 2016

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	2,376		$	6,183		$	(2,933	)	$	5,626
Cost of sales	—			(1,577		)	(4,742		)	2,933			(3,386		)
Gross margin	—			799			1,441			—			2,240
Selling, general and administrative expenses	(1		)	(909		)	(1,161		)	—			(2,071		)
Settlement charges	—			(24		)	(38		)	—			(62		)
Operating income (loss)	(1		)	(134		)	242			—			107
Interest (expense) income, net:
External	1			(82		)	—			—			(81		)
Intercompany	—			(51		)	51			—			—
Equity in earnings (loss) of subsidiaries	17			(101		)	—			84			—
Income (loss) before income taxes	17			(368		)	293			84			26
Federal, state and local income tax benefit (expense)	—			68			(79		)	—			(11		)
Net income (loss)	17			(300		)	214			84			15
Net loss attributable to noncontrolling interest	—			—			2			—			2
Net income (loss) attributable to Macy's, Inc. shareholders	$	17		$	(300	)	$	216		$	84		$	17
Comprehensive income (loss)	$	62		$	(255	)	$	241		$	12		$	60
Comprehensive loss attributable to noncontrolling interest	—			—			2			—			2
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	62		$	(255	)	$	243		$	12		$	62

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended October 31, 2015

(millions)



	Parent		Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—	$	2,654		$	6,366		$	(3,146	)	$	5,874
Cost of sales	—		(1,761		)	(4,922		)	3,146			(3,537		)
Gross margin	—		893			1,444			—			2,337
Selling, general and administrative expenses	—		(957		)	(1,011		)	—			(1,968		)
Impairments and other costs	—		(102		)	(9		)	—			(111		)
Operating income (loss)	—		(166		)	424			—			258
Interest (expense) income, net:
External	—		(79		)	(1		)	—			(80		)
Intercompany	—		(58		)	58			—			—
Equity in earnings (loss) of subsidiaries	117		(9		)	—			(108		)	—
Income (loss) before income taxes	117		(312		)	481			(108		)	178
Federal, state and local income tax benefit (expense)	1		84			(146		)	—			(61		)
Net income (loss)	118		(228		)	335			(108		)	117
Net loss attributable to noncontrolling interest	—		—			1			—			1
Net income (loss) attributable to Macy's, Inc. shareholders	$	118	$	(228	)	$	336		$	(108	)	$	118
Comprehensive income (loss)	$	125	$	(221	)	$	339		$	(119	)	$	124
Comprehensive loss attributable to noncontrolling interest	—		—			1			—			1
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	125	$	(221	)	$	340		$	(119	)	$	125

Condensed Consolidating Statement of Comprehensive Income

For the 39 Weeks Ended October 29, 2016

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	7,324		$	16,546		$	(6,607	)	$	17,263
Cost of sales	—			(4,704		)	(12,273		)	6,607			(10,370		)
Gross margin	—			2,620			4,273			—			6,893
Selling, general and administrative expenses	(2		)	(2,732		)	(3,329		)	—			(6,063		)
Impairments and other costs	—			(184		)	(65		)	—			(249		)
Settlement charges	—			(29		)	(52		)	—			(81		)
Operating income (loss)	(2		)	(325		)	827			—			500
Interest (expense) income, net:
External	2			(278		)	—			—			(276		)
Intercompany	—			(166		)	166			—			—
Equity in earnings (loss) of subsidiaries	144			(69		)	—			(75		)	—
Income (loss) before income taxes	144			(838		)	993			(75		)	224
Federal, state and local income tax benefit (expense)	—			243			(328		)	—			(85		)
Net income (loss)	144			(595		)	665			(75		)	139
Net loss attributable to noncontrolling interest				—			5			—			5
Net income (loss) attributable to Macy's, Inc. shareholders	$	144		$	(595	)	$	670		$	(75	)	$	144
Comprehensive income (loss)	$	164		$	(575	)	$	677		$	(107	)	$	159
Comprehensive loss attributable to noncontrolling interest	—			—			5			—			5
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	164		$	(575	)	$	682		$	(107	)	$	164

Condensed Consolidating Statement of Comprehensive Income

For the 39 Weeks Ended October 31, 2015

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	8,191		$	17,106		$	(7,087	)	$	18,210
Cost of sales	—			(5,258		)	(12,776		)	7,087			(10,947		)
Gross margin	—			2,933			4,330			—			7,263
Selling, general and administrative expenses	(1		)	(2,962		)	(3,086		)	—			(6,049		)
Impairments and other costs	—			(102		)	(9		)	—			(111		)
Operating income (loss)	(1		)	(131		)	1,235			—			1,103
Interest (expense) income, net:
External	—			(267		)	(1		)	—			(268		)
Intercompany	—			(173		)	173			—			—
Equity in earnings of subsidiaries	528			137			—			(665		)	—
Income (loss) before income taxes	527			(434		)	1,407			(665		)	835
Federal, state and local income tax benefit (expense)	1			163			(472		)	—			(308		)
Net income (loss)	528			(271		)	935			(665		)	527
Net loss attributable to noncontrolling interest	—			—			1			—			1
Net income (loss) attributable to Macy's, Inc. shareholders	$	528		$	(271	)	$	936		$	(665	)	$	528
Comprehensive income (loss)	$	550		$	(249	)	$	948		$	(700	)	$	549
Comprehensive loss attributable to noncontrolling interest	—			—			1			—			1
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	550		$	(249	)	$	949		$	(700	)	$	550

Condensed Consolidating Balance Sheet

As of October 29, 2016

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	60	$	99	$	298	$	—		$	457
Receivables	—		74		188		—			262
Merchandise inventories	—		3,621		3,966		—			7,587
Income tax receivable	99		—		—		(39		)	60
Prepaid expenses and other current assets	—		89		365		—			454
Total Current Assets	159		3,883		4,817		(39		)	8,820
Property and Equipment – net	—		3,534		3,615		—			7,149
Goodwill	—		3,315		582		—			3,897
Other Intangible Assets – net	—		47		452		—			499
Other Assets	1		153		755		—			909
Deferred Income Taxes	24		—		—		(24		)	—
Intercompany Receivable	878		—		1,876		(2,754		)	—
Investment in Subsidiaries	2,954		3,173		—		(6,127		)	—
Total Assets	$	4,016	$	14,105	$	12,097	$	(8,944	)	$	21,274
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	935	$	3	$	—		$	938
Merchandise accounts payable	—		1,481		1,894		—			3,375
Accounts payable and accrued liabilities	164		910		1,856		—			2,930
Income taxes	—		3		36		(39		)	—
Total Current Liabilities	164		3,329		3,789		(39		)	7,243
Long-Term Debt	—		6,545		18		—			6,563
Intercompany Payable	—		2,754		—		(2,754		)	—
Deferred Income Taxes	—		694		878		(24		)	1,548
Other Liabilities	63		565		1,501		—			2,129
Shareholders' Equity:
Macy's, Inc.	3,789		218		5,909		(6,127		)	3,789
Noncontrolling Interest	—		—		2		—			2
Total Shareholders' Equity	3,789		218		5,911		(6,127		)	3,791
Total Liabilities and Shareholders' Equity	$	4,016	$	14,105	$	12,097	$	(8,944	)	$	21,274

Condensed Consolidating Balance Sheet

As of October 31, 2015

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	11	$	94	$	369	$	—		$	474
Receivables	—		38		162		—			200
Merchandise inventories	—		3,959		4,012		—			7,971
Income tax receivable	32		—		—		(32		)	—
Prepaid expenses and other current assets	—		93		333		—			426
Total Current Assets	43		4,184		4,876		(32		)	9,071
Property and Equipment – net	—		4,112		3,517		—			7,629
Goodwill	—		3,315		582		—			3,897
Other Intangible Assets – net	—		59		459		—			518
Other Assets	2		44		722		—			768
Deferred Income Taxes	17		—		—		(17		)	—
Intercompany Receivable	—		—		3,413		(3,413		)	—
Investment in Subsidiaries	4,644		3,621		—		(8,265		)	—
Total Assets	$	4,706	$	15,335	$	13,569	$	(11,727	)	$	21,883
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	856	$	1	$	—		$	857
Merchandise accounts payable	—		1,734		1,874		—			3,608
Accounts payable and accrued liabilities	103		1,116		1,468		—			2,687
Income taxes	—		4		130		(32		)	102
Total Current Liabilities	103		3,710		3,473		(32		)	7,254
Long-Term Debt	—		7,057		19		—			7,076
Intercompany Payable	601		2,812		—		(3,413		)	—
Deferred Income Taxes	—		700		770		(17		)	1,453
Other Liabilities	31		580		1,514		—			2,125
Shareholders' Equity:
Macy's, Inc.	3,971		476		7,789		(8,265		)	3,971
Noncontrolling Interest	—		—		4		—			4
Total Shareholders' Equity	3,971		476		7,793		(8,265		)	3,975
Total Liabilities and Shareholders' Equity	$	4,706	$	15,335	$	13,569	$	(11,727	)	$	21,883

Condensed Consolidating Balance Sheet

As of January 30, 2016

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	741	$	91	$	277	$	—		$	1,109
Receivables	—		217		341		—			558
Merchandise inventories	—		2,702		2,804		—			5,506
Income tax receivable	44		—		—		(44		)	—
Prepaid expenses and other current assets	—		135		344		—			479
Total Current Assets	785		3,145		3,766		(44		)	7,652
Property and Equipment – net	—		3,925		3,691		—			7,616
Goodwill	—		3,315		582		—			3,897
Other Intangible Assets – net	—		52		462		—			514
Other Assets	—		154		743		—			897
Deferred Income Taxes	14		—		—		(14		)	—
Intercompany Receivable	—		—		3,800		(3,800		)	—
Investment in Subsidiaries	4,725		3,804		—		(8,529		)	—
Total Assets	$	5,524	$	14,395	$	13,044	$	(12,387	)	$	20,576
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	641	$	1	$	—		$	642
Merchandise accounts payable	—		667		859		—			1,526
Accounts payable and accrued liabilities	35		1,439		1,859		—			3,333
Income taxes	—		41		230		(44		)	227
Total Current Liabilities	35		2,788		2,949		(44		)	5,728
Long-Term Debt	—		6,976		19		—			6,995
Intercompany Payable	1,218		2,582		—		(3,800		)	—
Deferred Income Taxes	—		693		798		(14		)	1,477
Other Liabilities	21		558		1,544		—			2,123
Shareholders' Equity:
Macy's, Inc.	4,250		798		7,731		(8,529		)	4,250
Noncontrolling Interest	—		—		3		—			3
Total Shareholders' Equity	4,250		798		7,734		(8,529		)	4,253
Total Liabilities and Shareholders' Equity	$	5,524	$	14,395	$	13,044	$	(12,387	)	$	20,576

Condensed Consolidating Statement of Cash Flows

For the 39 Weeks Ended October 29, 2016

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	144		$	(595	)	$	665		$	(75	)	$	139
Impairments and other costs	—			184			65			—			249
Settlement charges	—			29			52			—			81
Equity in (earnings) loss of subsidiaries	(144		)	69			—			75			—
Dividends received from subsidiaries	535			575			—			(1,110		)	—
Depreciation and amortization	—			298			489			—			787
Increase in working capital	(59		)	(582		)	(344		)	—			(985		)
Other, net	19			(26		)	44			—			37
Net cash provided (used) by operating activities	495			(48		)	971			(1,110		)	308
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net	—			(23		)	(520		)	—			(543		)
Other, net	—			47			5			—			52
Net cash provided (used) by investing activities	—			24			(515		)	—			(491		)
Cash flows from financing activities:
Debt repaid, net of debt issued	—			(122		)	2			—			(120		)
Dividends paid	(344		)	—			(1,110		)	1,110			(344		)
Common stock acquired, net of issuance of common stock	(199		)	—			—			—			(199		)
Proceeds from noncontrolling interest	—			—			4			—			4
Intercompany activity, net	(642		)	158			484			—			—
Other, net	9			(4		)	185			—			190
Net cash provided (used) by financing activities	(1,176		)	32			(435		)	1,110			(469		)
Net increase (decrease) in cash and cash equivalents	(681		)	8			21			—			(652		)
Cash and cash equivalents at beginning of period	741			91			277			—			1,109
Cash and cash equivalents at end of period	$	60		$	99		$	298		$	—		$	457

Condensed Consolidating Statement of Cash Flows

For the 39 Weeks Ended October 31, 2015

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	528		$	(271	)	$	935		$	(665	)	$	527
Impairments and other charges	—			102			9			—			111
Equity in earnings of subsidiaries	(528		)	(137		)	—			665			—
Dividends received from subsidiaries	597			—			—			(597		)	—
Depreciation and amortization	—			330			461			—			791
(Increase) decrease in working capital	55			(329		)	(867		)	—			(1,141		)
Other, net	(3		)	2			(9		)	—			(10		)
Net cash provided (used) by operating activities	649			(303		)	529			(597		)	278
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net	—			(216		)	(530		)	—			(746		)
Other, net	—			14			(129		)	—			(115		)
Net cash used by investing activities	—			(202		)	(659		)	—			(861		)
Cash flows from financing activities:
Debt issued, net of debt repaid	—			640			(1		)	—			639
Dividends paid	(344		)	—			(597		)	597			(344		)
Common stock acquired, net of issuance of common stock	(1,625		)	—			—			—			(1,625		)
Proceeds from noncontrolling interest	—			—			5			—			5
Intercompany activity, net	(587		)	(73		)	660			—			—
Other, net	10			(62		)	188			—			136
Net cash provided (used) by financing activities	(2,546		)	505			255			597			(1,189		)
Net increase (decrease) in cash and cash equivalents	(1,897		)	—			125			—			(1,772		)
Cash and cash equivalents at beginning of period	1,908			94			244			—			2,246
Cash and cash equivalents at end of period	$	11		$	94		$	369		$	—		$	474