NOTE 10 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following tables present condensed consolidating financial information for: (1) Saks Incorporated, and (2) on a combined basis, the guarantors of Saks Incorporated's senior notes and revolving credit facility (which include all of the 100%-owned subsidiaries of Saks Incorporated).

The condensed consolidating financial statements presented as of and for the three-month periods ended April 30, 2011 and May 1, 2010 and as of January 29, 2011 reflect the legal entity compositions at the respective dates. Additionally, certain reclassifications were made to prior period amounts to conform to the current year presentation.

Separate financial statements of the guarantor subsidiaries are not presented because the guarantors are jointly, severally, fully and unconditionally liable under the guarantees. Borrowings and the related interest expense under the Company's revolving credit agreement are allocated to Saks Incorporated and the guarantor subsidiaries under an intercompany revolving credit arrangement. There is also a management fee arrangement among Saks Incorporated and its subsidiaries. As of April 30, 2011, Saks Incorporated was the sole obligor for a majority of the Company's long-term debt.

SAKS INCORPORATED

CONDENSED CONSOLIDATING BALANCE SHEET AS OF APRIL 30, 2011

(Dollar amounts in thousands)

(Unaudited)


	Saks		Guarantor
	Incorporated		Subsidiaries		Eliminations		Consolidated
ASSETS
Current Assets
Cash and cash equivalents	$	192,786	$	9,197			$	201,983
Merchandise inventories				732,212				732,212
Other current assets				144,602				144,602
Deferred income taxes, net				58,849				58,849

Total current assets		192,786		944,860		-		1,137,646
Property and equipment, net				881,265				881,265
Deferred income taxes, net		93,189		69,261				162,450
Other assets		12,171		17,574				29,745
Investment in and advances to subsidiaries		1,347,593			$	(1,347,593)		-

TOTAL ASSETS	$	1,645,739	$	1,912,960	$	(1,347,593)	$	2,211,106


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable			$	146,258			$	146,258
Accrued expenses and other current liabilities	$	6,639		225,876				232,515
Current portion of long-term debt		141,557		6,624				148,181

Total current liabilities		148,196		378,758		-		526,954

Long-term debt		312,682		50,318				363,000
Other long-term liabilities				136,291				136,291
Investment by and advances from parent				1,347,593	$	(1,347,593)		-
Shareholders' equity		1,184,861						1,184,861

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,645,739	$	1,912,960	$	(1,347,593)	$	2,211,106

SAKS INCORPORATED

CONDENSED CONSOLIDATING STATEMENT OF INCOME

FOR THE THREE MONTHS ENDED APRIL 30, 2011

(Dollar amounts in thousands)

(Unaudited)


	Saks		Guarantor
	Incorporated		Subsidiaries		Eliminations		Consolidated

NET SALES			$	725,998			$	725,998
Cost of sales				406,064				406,064

Gross margin		-		319,934		-		319,934

Selling, general and administrative expenses	$	371		178,000				178,371
Other operating expenses		5		78,123				78,128
Store pre-opening costs				134				134
Impairments and dispositions				2,868				2,868

Operating income (loss)		(376)		60,809		-		60,433

Equity in earnings of subsidiaries		35,758			$	(35,758)		-
Interest expense		(12,076)		(1,520)				(13,596)
Loss on extinguishment of debt		(539)						(539)
Other income, net		533						533

INCOME BEFORE INCOME TAXES		23,300		59,289		(35,758)		46,831

Provision (benefit) for income taxes		(5,109)		23,531				18,422

NET INCOME	$	28,409	$	35,758	$	(35,758)	$	28,409

SAKS INCORPORATED

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED APRIL 30, 2011

(Dollar amounts in thousands)

(Unaudited)


	Saks		Guarantor
	Incorporated		Subsidiaries		Eliminations		Consolidated
OPERATING ACTIVITIES
Net income	$	28,409	$	35,758	$	(35,758)	$	28,409

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Equity in earnings of subsidiaries		(35,758)				35,758		-
Loss on extinguishment of debt		539						539
Depreciation and amortization				29,224				29,224
Stock-based compensation				4,160				4,160
Amortization of discount on convertible notes		3,131						3,131
Deferred income taxes		(377)		17,295				16,918
Impairments and dispositions				(51)				(51)
Excess tax benefit from stock-based compensation				(656)				(656)
Gain on sale of property and equipment				(156)				(156)
Changes in operating assets and liabilities, net		(1,481)		(58,169)				(59,650)


NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(5,537)		27,405		-		21,868

INVESTING ACTIVITIES
Purchases of property and equipment				(12,095)				(12,095)
Proceeds from the sale of property and equipment				156				156


NET CASH USED IN INVESTING ACTIVITIES		-		(11,939)		-		(11,939)

FINANCING ACTIVITIES
Intercompany borrowings, contributions and distributions		13,264		(13,264)				-
Payments of long-term debt		(2,438)						(2,438)
Payments of capital lease obligations				(1,520)				(1,520)
Payment of financing fees		(2,961)						(2,961)
Excess tax benefit from stock-based compensation		-		656				656
Net proceeds from the issuance of common stock		451						451


NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		8,316		(14,128)		-		(5,812)

INCREASE IN CASH AND CASH EQUIVALENTS		2,779		1,338				4,117
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		190,007		7,859				197,866

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	192,786	$	9,197	$	-	$	201,983

SAKS INCORPORATED

CONDENSED CONSOLIDATING BALANCE SHEET AS OF MAY 1, 2010

(Dollar amounts in thousands)

(Unaudited)


	Saks		Guarantor
	Incorporated		Subsidiaries		Eliminations		Consolidated
ASSETS
Current Assets
Cash and cash equivalents	$	170,573	$	8,483			$	179,056
Merchandise inventories				702,132				702,132
Other current assets				92,991				92,991
Deferred income taxes, net				34,013				34,013

Total current assets		170,573		837,619		-		1,008,192

Property and equipment, net				938,292				938,292
Deferred income taxes, net		76,249		143,243				219,492
Other assets		12,947		17,518				30,465
Investment in and advances to subsidiaries		1,306,131			$	(1,306,131)		-

TOTAL ASSETS	$	1,565,900	$	1,936,672	$	(1,306,131)	$	2,196,441


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable			$	148,071			$	148,071
Accrued expenses and other current liabilities	$	7,786		233,374				241,160
Current portion of long-term debt		22,859		5,780				28,639

Total current liabilities		30,645		387,225		-		417,870

Long-term debt		444,793		52,200				496,993
Other long-term liabilities				191,116				191,116
Investment by and advances from parent				1,306,131	$	(1,306,131)		-
Shareholders' equity		1,090,462						1,090,462

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,565,900	$	1,936,672	$	(1,306,131)	$	2,196,441

SAKS INCORPORATED

CONDENSED CONSOLIDATING STATEMENT OF INCOME

FOR THE THREE MONTHS ENDED MAY 1, 2010

(Dollar amounts in thousands)

(Unaudited)


	Saks		Guarantor
	Incorporated		Subsidiaries		Eliminations		Consolidated
NET SALES			$	667,438			$	667,438
Cost of sales				379,707				379,707

Gross margin		-		287,731		-		287,731

Selling, general and administrative expenses	$	420		163,075				163,495
Other operating expenses		1		76,964				76,965
Store pre-opening costs				2				2
Impairments and dispositions				1,815				1,815

Operating income (loss)		(421)		45,875		-		45,454

Equity in earnings of subsidiaries		26,566			$	(26,566)		-
Interest expense		(12,525)		(1,614)				(14,139)
Other income, net		190						190

INCOME BEFORE INCOME TAXES		13,810		44,261		(26,566)		31,505

Provision (benefit) for income taxes		(4,975)		17,695				12,720

NET INCOME	$	18,785	$	26,566	$	(26,566)	$	18,785

SAKS INCORPORATED

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MAY 1, 2010

(Dollar amounts in thousands)

(Unaudited)


	Saks		Guarantor
	Incorporated		Subsidiaries		Eliminations		Consolidated
OPERATING ACTIVITIES
Net income	$	18,785	$	26,566	$	(26,566)	$	18,785
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Equity in earnings of subsidiaries		(26,566)				26,566		-
Depreciation and amortization				28,860				28,860
Stock-based compensation				5,003				5,003
Amortization of discount on convertible notes		2,879						2,879
Deferred income taxes		545		3,096				3,641
Changes in operating assets and liabilities, net		(2,686)		(16,000)				(18,686)


NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(7,043)		47,525		-		40,482

INVESTING ACTIVITIES
Purchases of property and equipment				(7,891)				(7,891)


NET CASH USED IN INVESTING ACTIVITIES		-		(7,891)		-		(7,891)

FINANCING ACTIVITIES
Intercompany borrowings, contributions and distributions		40,855		(40,855)				-
Payments of capital lease obligations				(1,250)				(1,250)
Net proceeds from the issuance of common stock		414						414


NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		41,269		(42,105)		-		(836)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		34,226		(2,471)				31,755
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		136,347		10,954				147,301

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	170,573	$	8,483	$	-	$	179,056

SAKS INCORPORATED

CONDENSED CONSOLIDATING BALANCE SHEET AT JANUARY 29, 2011

(Dollar amounts in thousands)

(Unaudited)


	Saks		Guarantor
	Incorporated		Subsidiaries		Eliminations		Consolidated
ASSETS
Current Assets
Cash and cash equivalents	$	190,007	$	7,859			$	197,866
Merchandise inventories				671,383				671,383
Other current assets				105,404				105,404
Deferred income taxes, net				86,116				86,116

Total current assets		190,007		870,762		-		1,060,769

Property and equipment, net				890,364				890,364
Deferred income taxes, net		93,562		69,846				163,408
Other assets		10,127		18,432				28,559
Investment in and advances to subsidiaries		1,332,009			$	(1,332,009)		-

TOTAL ASSETS	$	1,625,705	$	1,849,404	$	(1,332,009)	$	2,143,100


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable			$	88,378			$	88,378
Accrued expenses and other current liabilities	$	9,121		236,910				246,031
Current portion of long-term debt		141,557		5,941				147,498

Total current liabilities		150,678		331,229		-		481,907

Long-term debt		311,462		47,788				359,250
Other long-term liabilities				138,378				138,378
Investment by and advances from parent				1,332,009	$	(1,332,009)		-
Shareholders' equity		1,163,565						1,163,565

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,625,705	$	1,849,404	$	(1,332,009)	$	2,143,100