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 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 Procurement, LLC, Macy's Merchandising Group International, LLC, Macy's Merchandising Group International (Hong Kong) Limited, Macy's Merchandising Group (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 Balance Sheets as of October 31, 2015, November 1, 2014 and January 31, 2015, the related Condensed Consolidating Statements of Comprehensive Income for the 13 and 39 weeks ended October 31, 2015 and November 1, 2014, and the related Condensed Consolidating Statements of Cash Flows for the 39 weeks ended October 31, 2015 and November 1, 2014 are presented on the following pages.

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	—		4,053		4,092		—			8,145
Prepaid expenses and other current assets	—		92		333		—			425
Income taxes	32		—		—		(32		)	—
Total Current Assets	43		4,277		4,956		(32		)	9,244
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		74		722		—			798
Deferred Income Taxes	17		—		—		(17		)	—
Intercompany Receivable	—		—		3,413		(3,413		)	—
Investment in Subsidiaries	4,644		3,621		—		(8,265		)	—
Total Assets	$	4,706	$	15,458	$	13,649	$	(11,727	)	$	22,086
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	856	$	1	$	—		$	857
Merchandise accounts payable	—		1,825		1,951		—			3,776
Accounts payable and accrued liabilities	103		1,118		1,471		—			2,692
Income taxes	—		4		130		(32		)	102
Deferred income taxes	—		304		71		—			375
Total Current Liabilities	103		4,107		3,624		(32		)	7,802
Long-Term Debt	—		7,087		19		—			7,106
Intercompany Payable	601		2,812		—		(3,413		)	—
Deferred Income Taxes	—		396		699		(17		)	1,078
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	$	15,458	$	13,649	$	(11,727	)	$	22,086

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		)
Asset impairments	—		(102		)	(9		)	—			(111		)
Operating income (loss)	—		(166		)	424			—			258
Interest (expense) income, net:
External	—		(79		)	(1		)	—			(80		)
Intercompany	—		(58		)	58			—			—
Equity in earnings 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 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		)
Asset impairments	—			(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 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
Asset impairments	—			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

Condensed Consolidating Balance Sheet

As of November 1, 2014

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	650	$	105	$	293	$	—		$	1,048
Receivables	—		58		234		—			292
Merchandise inventories	—		3,997		3,792		—			7,789
Prepaid expenses and other current assets	—		95		329		—			424
Income taxes	—		—		—		—			—
Total Current Assets	650		4,255		4,648		—			9,553
Property and Equipment – net	—		4,447		3,340		—			7,787
Goodwill	—		3,315		428		—			3,743
Other Intangible Assets – net	—		80		424		—			504
Other Assets	3		122		700		—			825
Deferred Income Taxes	15		—		—		(15		)	—
Intercompany Receivable	245		—		3,396		(3,641		)	—
Investment in Subsidiaries	4,596		3,362		—		(7,958		)	—
Total Assets	$	5,509	$	15,581	$	12,936	$	(11,614	)	$	22,412
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	75	$	1	$	—		$	76
Merchandise accounts payable	—		1,763		2,051		—			3,814
Accounts payable and accrued liabilities	115		1,067		1,381		—			2,563
Income taxes	3		38		73		—			114
Deferred income taxes	—		310		86		—			396
Total Current Liabilities	118		3,253		3,592		—			6,963
Long-Term Debt	—		7,110		20		—			7,130
Intercompany Payable	—		3,641		—		(3,641		)	—
Deferred Income Taxes	—		524		805		(15		)	1,314
Other Liabilities	40		520		1,094		—			1,654
Shareholders' Equity:
Macy's, Inc.	5,351		533		7,425		(7,958		)	5,351
Noncontrolling Interest	—		—		—		—			—
Total Shareholders' Equity	5,351		533		7,425		(7,958		)	5,351
Total Liabilities and Shareholders' Equity	$	5,509	$	15,581	$	12,936	$	(11,614	)	$	22,412

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended November 1, 2014

(millions)



	Parent		Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—	$	2,920		$	6,365		$	(3,090	)	$	6,195
Cost of sales	—		(1,916		)	(4,940		)	3,090			(3,766		)
Gross margin	—		1,004			1,425			—			2,429
Selling, general and administrative expenses	—		(1,069		)	(938		)	—			(2,007		)
Operating income (loss)	—		(65		)	487			—			422
Interest (expense) income, net:
External	—		(96		)	—			—			(96		)
Intercompany	—		(56		)	56			—			—
Equity in earnings of subsidiaries	217		21			—			(238		)	—
Income (loss) before income taxes	217		(196		)	543			(238		)	326
Federal, state and local income tax benefit (expense)	—		60			(169		)	—			(109		)
Net income (loss)	217		(136		)	374			(238		)	217
Net loss attributable to noncontrolling interest	—		—			—			—			—
Net income (loss) attributable to Macy's, Inc. shareholders	$	217	$	(136	)	$	374		$	(238	)	$	217
Comprehensive income (loss)	$	220	$	(133	)	$	377		$	(244	)	$	220
Comprehensive loss attributable to noncontrolling interest	—		—			—			—			—
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	220	$	(133	)	$	377		$	(244	)	$	220

Condensed Consolidating Statement of Comprehensive Income

For the 39 Weeks Ended November 1, 2014

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	8,799		$	16,816		$	(6,874	)	$	18,741
Cost of sales	—			(5,580		)	(12,568		)	6,874			(11,274		)
Gross margin	—			3,219			4,248			—			7,467
Selling, general and administrative expenses	(2		)	(3,122		)	(2,907		)	—			(6,031		)
Operating income (loss)	(2		)	97			1,341			—			1,436
Interest (expense) income, net:
External	—			(296		)	—			—			(296		)
Intercompany	—			(172		)	172			—			—
Equity in earnings of subsidiaries	735			200			—			(935		)	—
Income (loss) before income taxes	733			(171		)	1,513			(935		)	1,140
Federal, state and local income tax benefit (expense)	—			102			(509		)	—			(407		)
Net income (loss)	733			(69		)	1,004			(935		)	733
Net loss attributable to noncontrolling interest	—			—			—			—			—
Net income (loss) attributable to Macy's, Inc. shareholders	$	733		$	(69	)	$	1,004		$	(935	)	$	733
Comprehensive income (loss)	$	744		$	(58	)	$	1,011		$	(953	)	$	744
Comprehensive loss attributable to noncontrolling interest	—			—			—			—			—
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	744		$	(58	)	$	1,011		$	(953	)	$	744

Condensed Consolidating Statement of Cash Flows

For the 39 Weeks Ended November 1, 2014

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	733		$	(69	)	$	1,004		$	(935	)	$	733
Equity in earnings of subsidiaries	(735		)	(200		)	—			935			—
Dividends received from subsidiaries	775			1			—			(776		)	—
Depreciation and amortization	—			331			439			—			770
(Increase) decrease in working capital	99			(250		)	(542		)	—			(693		)
Other, net	(14		)	(29		)	74			—			31
Net cash provided (used) by operating activities	858			(216		)	975			(776		)	841
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net	—			(209		)	(449		)	—			(658		)
Other, net	—			6			(8		)	—			(2		)
Net cash used by investing activities	—			(203		)	(457		)	—			(660		)
Cash flows from financing activities:
Debt issued, net of debt repaid	—			39			(1		)	—			38
Dividends paid	(314		)	—			(776		)	776			(314		)
Common stock acquired, net of issuance of common stock	(1,248		)	—			—			—			(1,248		)
Intercompany activity, net	(553		)	416			137			—			—
Other, net	(48		)	(15		)	181			—			118
Net cash provided (used) by financing activities	(2,163		)	440			(459		)	776			(1,406		)
Net increase (decrease) in cash and cash equivalents	(1,305		)	21			59			—			(1,225		)
Cash and cash equivalents at beginning of period	1,955			84			234			—			2,273
Cash and cash equivalents at end of period	$	650		$	105		$	293		$	—		$	1,048

Condensed Consolidating Balance Sheet

As of January 31, 2015

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	1,908	$	94	$	244	$	—		$	2,246
Receivables	—		97		327		—			424
Merchandise inventories	—		2,817		2,699		—			5,516
Prepaid expenses and other current assets	—		113		380		—			493
Income taxes	88		—		—		(88		)	—
Total Current Assets	1,996		3,121		3,650		(88		)	8,679
Property and Equipment – net	—		4,315		3,485		—			7,800
Goodwill	—		3,315		428		—			3,743
Other Intangible Assets – net	—		73		423		—			496
Other Assets	1		74		668		—			743
Deferred Income Taxes	10		—		—		(10		)	—
Intercompany Receivable	—		—		4,140		(4,140		)	—
Investment in Subsidiaries	4,655		3,526		—		(8,181		)	—
Total Assets	$	6,662	$	14,424	$	12,794	$	(12,419	)	$	21,461
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	75	$	1	$	—		$	76
Merchandise accounts payable	—		784		909		—			1,693
Accounts payable and accrued liabilities	42		1,360		1,707		—			3,109
Income taxes	—		22		362		(88		)	296
Deferred income taxes	—		295		67		—			362
Total Current Liabilities	42		2,536		3,046		(88		)	5,536
Long-Term Debt	—		7,245		20		—			7,265
Intercompany Payable	1,215		2,925		—		(4,140		)	—
Deferred Income Taxes	—		414		677		(10		)	1,081
Other Liabilities	27		593		1,581		—			2,201
Shareholders' Equity:
Macy's, Inc.	5,378		711		7,470		(8,181		)	5,378
Noncontrolling Interest	—		—		—		—			—
Total Shareholders' Equity	5,378		711		7,470		(8,181		)	5,378
Total Liabilities and Shareholders' Equity	$	6,662	$	14,424	$	12,794	$	(12,419	)	$	21,461