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 FDS Bank, West 34th Street Insurance Company and its subsidiary 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, and Macy's Merchandising Group International (Hong Kong) 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 Balance Sheets as of August 2, 2014, August 3, 2013 and February 1, 2014, the related Condensed Consolidating Statements of Comprehensive Income for the 13 and 26 weeks ended August 2, 2014 and August 3, 2013, and the related Condensed Consolidating Statements of Cash Flows for the 26 weeks ended August 2, 2014 and August 3, 2013 are presented on the following pages.

Condensed Consolidating Balance Sheet

As of August 2, 2014

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	1,287	$	85	$	258	$	—		$	1,630
Receivables	—		91		261		—			352
Merchandise inventories	—		2,799		2,617		—			5,416
Prepaid expenses and other current assets	6		94		299		—			399
Income taxes	34		—		—		(34		)	—
Total Current Assets	1,327		3,069		3,435		(34		)	7,797
Property and Equipment – net	—		4,438		3,333		—			7,771
Goodwill	—		3,315		428		—			3,743
Other Intangible Assets – net	—		85		427		—			512
Other Assets	4		123		669		—			796
Deferred Income Taxes	20		—		—		(20		)	—
Intercompany Receivable	—		—		3,412		(3,412		)	—
Investment in Subsidiaries	4,832		3,340		—		(8,172		)	—
Total Assets	$	6,183	$	14,370	$	11,704	$	(11,638	)	$	20,619
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	481	$	2	$	—		$	483
Merchandise accounts payable	—		926		1,064		—			1,990
Accounts payable and accrued liabilities	122		951		1,077		—			2,150
Income taxes	—		45		109		(34		)	120
Deferred income taxes	—		305		88		—			393
Total Current Liabilities	122		2,708		2,340		(34		)	5,136
Long-Term Debt	—		6,722		20		—			6,742
Intercompany Payable	188		3,224		—		(3,412		)	—
Deferred Income Taxes	—		568		739		(20		)	1,287
Other Liabilities	66		482		1,099		—			1,647
Shareholders' Equity	5,807		666		7,506		(8,172		)	5,807
Total Liabilities and Shareholders' Equity	$	6,183	$	14,370	$	11,704	$	(11,638	)	$	20,619

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended August 2, 2014

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	2,961		$	5,008		$	(1,702	)	$	6,267
Cost of sales	—			(1,778		)	(3,582		)	1,688			(3,672		)
Gross margin	—			1,183			1,426			(14		)	2,595
Selling, general and administrative expenses	(2		)	(1,044		)	(992		)	14			(2,024		)
Operating income (loss)	(2		)	139			434			—			571
Interest (expense) income, net:
External	—			(100		)	—			—			(100		)
Intercompany	—			(58		)	58			—			—
Equity in earnings of subsidiaries	293			113			—			(406		)	—
Income before income taxes	291			94			492			(406		)	471
Federal, state and local income tax benefit (expense)	1			3			(183		)	—			(179		)
Net income	$	292		$	97		$	309		$	(406	)	$	292
Comprehensive income	$	296		$	101		$	311		$	(412	)	$	296

Condensed Consolidating Statement of Comprehensive Income

For the 26 Weeks Ended August 2, 2014

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	5,879		$	10,478		$	(3,811	)	$	12,546
Cost of sales	—			(3,664		)	(7,628		)	3,784			(7,508		)
Gross margin	—			2,215			2,850			(27		)	5,038
Selling, general and administrative expenses	(4		)	(2,052		)	(1,995		)	27			(4,024		)
Operating income (loss)	(4		)	163			855			—			1,014
Interest (expense) income, net:
External	—			(200		)	—			—			(200		)
Intercompany	—			(116		)	116			—			—
Equity in earnings of subsidiaries	518			179			—			(697		)	—
Income before income taxes	514			26			971			(697		)	814
Federal, state and local income tax benefit (expense)	2			41			(341		)	—			(298		)
Net income	$	516		$	67		$	630		$	(697	)	$	516
Comprehensive income	$	524		$	75		$	634		$	(709	)	$	524

Condensed Consolidating Statement of Cash Flows

For the 26 Weeks Ended August 2, 2014

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income	$	516		$	67		$	630		$	(697	)	$	516
Equity in earnings of subsidiaries	(518		)	(179		)	—			697			—
Dividends received from subsidiaries	319			—			—			(319		)	—
Depreciation and amortization	—			225			282			—			507
(Increase) decrease in working capital	55			(48		)	(381		)	—			(374		)
Other, net	6			(27		)	18			—			(3		)
Net cash provided by operating activities	378			38			549			(319		)	646
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net	—			(61		)	(276		)	—			(337		)
Other, net	—			6			43			—			49
Net cash used by investing activities	—			(55		)	(233		)	—			(288		)
Cash flows from financing activities:
Debt issued, net of debt repaid	—			42			(1		)	—			41
Dividends paid	(204		)	—			(319		)	319			(204		)
Common stock acquired, net of issuance of common stock	(773		)	—			—			—			(773		)
Intercompany activity, net	(137		)	8			129			—			—
Other, net	68			(32		)	(101		)	—			(65		)
Net cash provided (used) by financing activities	(1,046		)	18			(292		)	319			(1,001		)
Net increase (decrease) in cash and cash equivalents	(668		)	1			24			—			(643		)
Cash and cash equivalents at beginning of period	1,955			84			234			—			2,273
Cash and cash equivalents at end of period	$	1,287		$	85		$	258		$	—		$	1,630

Condensed Consolidating Balance Sheet

As of August 3, 2013

(millions)



	Parent		Subsidiary Issuer			Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	1,104	$	35		$	285	$	—		$	1,424
Receivables	—		86			261		—			347
Merchandise inventories	—		2,759			2,598		—			5,357
Prepaid expenses and other current assets	—		94			293		—			387
Income taxes	69		—			—		(69		)	—
Total Current Assets	1,173		2,974			3,437		(69		)	7,515
Property and Equipment – net	—		4,562			3,439		—			8,001
Goodwill	—		3,315			428		—			3,743
Other Intangible Assets – net	—		109			434		—			543
Other Assets	4		69			556		—			629
Intercompany Receivable	527		—			3,135		(3,662		)	—
Investment in Subsidiaries	4,273		2,757			—		(7,030		)	—
Total Assets	$	5,977	$	13,786		$	11,429	$	(10,761	)	$	20,431
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	573		$	2	$	—		$	575
Merchandise accounts payable	—		966			1,098		—			2,064
Accounts payable and accrued liabilities	36		887			1,120		—			2,043
Income taxes	—		16			120		(69		)	67
Deferred income taxes	—		315			107		—			422
Total Current Liabilities	36		2,757			2,447		(69		)	5,171
Long-Term Debt	—		6,317			22		—			6,339
Intercompany Payable	—		3,662			—		(3,662		)	—
Deferred Income Taxes	8		441			768		—			1,217
Other Liabilities	78		620			1,151		—			1,849
Shareholders' Equity (Deficit)	5,855		(11		)	7,041		(7,030		)	5,855
Total Liabilities and Shareholders' Equity	$	5,977	$	13,786		$	11,429	$	(10,761	)	$	20,431

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended August 3, 2013

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	2,898		$	4,831		$	(1,663	)	$	6,066
Cost of sales	—			(1,763		)	(3,420		)	1,650			(3,533		)
Gross margin	—			1,135			1,411			(13		)	2,533
Selling, general and administrative expenses	(2		)	(1,054		)	(956		)	13			(1,999		)
Operating income (loss)	(2		)	81			455			—			534
Interest (expense) income, net:
External	—			(96		)	—			—			(96		)
Intercompany	—			(39		)	39			—			—
Equity in earnings of subsidiaries	282			89			—			(371		)	—
Income before income taxes	280			35			494			(371		)	438
Federal, state and local income tax benefit (expense)	1			10			(168		)	—			(157		)
Net income	$	281		$	45		$	326		$	(371	)	$	281
Comprehensive income	$	305		$	69		$	336		$	(405	)	$	305

Condensed Consolidating Statement of Comprehensive Income

For the 26 Weeks Ended August 3, 2013

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	5,932		$	10,379		$	(3,858	)	$	12,453
Cost of sales	—			(3,660		)	(7,616		)	3,832			(7,444		)
Gross margin	—			2,272			2,763			(26		)	5,009
Selling, general and administrative expenses	(5		)	(2,104		)	(1,957		)	26			(4,040		)
Operating income (loss)	(5		)	168			806			—			969
Interest (expense) income, net:
External	—			(193		)	—			—			(193		)
Intercompany	—			(79		)	79			—			—
Equity in earnings of subsidiaries	501			144			—			(645		)	—
Income before income taxes	496			40			885			(645		)	776
Federal, state and local income tax benefit (expense)	2			37			(317		)	—			(278		)
Net income	$	498		$	77		$	568		$	(645	)	$	498
Comprehensive income	$	546		$	125		$	588		$	(713	)	$	546

Condensed Consolidating Statement of Cash Flows

For the 26 Weeks Ended August 3, 2013

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income	$	498		$	77		$	568		$	(645	)	$	498
Equity in earnings of subsidiaries	(501		)	(144		)	—			645			—
Dividends received from subsidiaries	303			—			—			(303		)	—
Depreciation and amortization	—			235			269			—			504
(Increase) decrease in working capital	(62		)	43			(416		)	—			(435		)
Other, net	18			76			3			—			97
Net cash provided by operating activities	256			287			424			(303		)	664
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net	—			(135		)	(176		)	—			(311		)
Other, net	—			—			(5		)	—			(5		)
Net cash used by investing activities	—			(135		)	(181		)	—			(316		)
Cash flows from financing activities:
Debt repaid	—			(6		)	(1		)	—			(7		)
Dividends paid	(173		)	—			(303		)	303			(173		)
Common stock acquired, net of issuance of common stock	(579		)	—			—			—			(579		)
Intercompany activity, net	145			(175		)	30			—			—
Other, net	(83		)	23			59			—			(1		)
Net cash used by financing activities	(690		)	(158		)	(215		)	303			(760		)
Net increase (decrease) in cash and cash equivalents	(434		)	(6		)	28			—			(412		)
Cash and cash equivalents at beginning of period	1,538			41			257			—			1,836
Cash and cash equivalents at end of period	$	1,104		$	35		$	285		$	—		$	1,424

Condensed Consolidating Balance Sheet

As of February 1, 2014

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	1,955	$	84	$	234	$	—		$	2,273
Receivables	—		102		336		—			438
Merchandise inventories	—		2,896		2,661		—			5,557
Prepaid expenses and other current assets	—		103		317		—			420
Income taxes	80		—		—		(80		)	—
Total Current Assets	2,035		3,185		3,548		(80		)	8,688
Property and Equipment – net	—		4,590		3,340		—			7,930
Goodwill	—		3,315		428		—			3,743
Other Intangible Assets – net	—		97		430		—			527
Other Assets	4		101		641		—			746
Deferred Income Taxes	19		—		—		(19		)	—
Intercompany Receivable	—		—		3,561		(3,561		)	—
Investment in Subsidiaries	4,625		3,157		—		(7,782		)	—
Total Assets	$	6,683	$	14,445	$	11,948	$	(11,442	)	$	21,634
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	461	$	2	$	—		$	463
Merchandise accounts payable	—		760		931		—			1,691
Accounts payable and accrued liabilities	10		1,265		1,535		—			2,810
Income taxes	—		80		362		(80		)	362
Deferred income taxes	—		315		85		—			400
Total Current Liabilities	10		2,881		2,915		(80		)	5,726
Long-Term Debt	—		6,708		20		—			6,728
Intercompany Payable	362		3,199		—		(3,561		)	—
Deferred Income Taxes	—		544		748		(19		)	1,273
Other Liabilities	62		522		1,074		—			1,658
Shareholders' Equity (Deficit)	6,249		591		7,191		(7,782		)	6,249
Total Liabilities and Shareholders' Equity	$	6,683	$	14,445	$	11,948	$	(11,442	)	$	21,634