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 (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 26 weeks ended July 30, 2016 and August 1, 2015, Condensed Consolidating Balance Sheets as of July 30, 2016, August 1, 2015 and January 30, 2016, and the related Condensed Consolidating Statements of Cash Flows for the 26 weeks ended July 30, 2016 and August 1, 2015 are presented on the following pages.

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended July 30, 2016

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	2,494		$	4,989		$	(1,617	)	$	5,866
Cost of sales	—			(1,523		)	(3,562		)	1,617			(3,468		)
Gross margin	—			971			1,427			—			2,398
Selling, general and administrative expenses	—			(941		)	(1,085		)	—			(2,026		)
Impairments and other costs	—			(184		)	(65		)	—			(249		)
Settlement charges	—			(2		)	(4		)	—			(6		)
Operating income (loss)	—			(156		)	273			—			117
Interest (expense) income, net:
External	—			(97		)	—			—			(97		)
Intercompany	—			(57		)	57			—			—
Equity in earnings of subsidiaries	11			22			—			(33		)	—
Income (loss) before income taxes	11			(288		)	330			(33		)	20
Federal, state and local income tax benefit (expense)	—			114			(125		)	—			(11		)
Net income (loss)	11			(174		)	205			(33		)	9
Net loss attributable to noncontrolling interest	—			—			2			—			2
Net income (loss) attributable to Macy's, Inc. shareholders	$	11		$	(174	)	$	207		$	(33	)	$	11
Comprehensive income (loss)	$	(6	)	$	(191	)	$	195		$	(6	)	$	(8	)
Comprehensive loss attributable to noncontrolling interest	—			—			2			—			2
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	(6	)	$	(191	)	$	197		$	(6	)	$	(6	)

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended August 1, 2015

(millions)



	Parent		Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—	$	2,761		$	5,049		$	(1,706	)	$	6,104
Cost of sales	—		(1,688		)	(3,628		)	1,706			(3,610		)
Gross margin	—		1,073			1,421			—			2,494
Selling, general and administrative expenses	—		(1,025		)	(1,033		)	—			(2,058		)
Operating income	—		48			388			—			436
Interest (expense) income, net:
External	—		(93		)	—			—			(93		)
Intercompany	—		(57		)	57			—			—
Equity in earnings of subsidiaries	217		86			—			(303		)	—
Income (loss) before income taxes	217		(16		)	445			(303		)	343
Federal, state and local income tax benefit (expense)	—		42			(168		)	—			(126		)
Net income	217		26			277			(303		)	217
Net loss attributable to noncontrolling interest	—		—			—			—			—
Net income attributable to Macy's, Inc. shareholders	$	217	$	26		$	277		$	(303	)	$	217
Comprehensive income	$	224	$	33		$	282		$	(315	)	$	224
Comprehensive loss attributable to noncontrolling interest	—		—			—			—			—
Comprehensive income attributable to Macy's, Inc. shareholders	$	224	$	33		$	282		$	(315	)	$	224

Condensed Consolidating Statement of Comprehensive Income

For the 26 Weeks Ended July 30, 2016

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	4,948		$	10,363		$	(3,674	)	$	11,637
Cost of sales	—			(3,127		)	(7,531		)	3,674			(6,984		)
Gross margin	—			1,821			2,832			—			4,653
Selling, general and administrative expenses	(1		)	(1,823		)	(2,168		)	—			(3,992		)
Impairments and other costs	—			(184		)	(65		)	—			(249		)
Settlement charges	—			(5		)	(14		)	—			(19		)
Operating income (loss)	(1		)	(191		)	585			—			393
Interest (expense) income, net:
External	1			(196		)	—			—			(195		)
Intercompany	—			(115		)	115			—			—
Equity in earnings of subsidiaries	127			32			—			(159		)	—
Income (loss) before income taxes	127			(470		)	700			(159		)	198
Federal, state and local income tax benefit (expense)	—			175			(249		)	—			(74		)
Net income (loss)	127			(295		)	451			(159		)	124
Net loss attributable to noncontrolling interest				—			3			—			3
Net income (loss) attributable to Macy's, Inc. shareholders	$	127		$	(295	)	$	454		$	(159	)	$	127
Comprehensive income (loss)	$	102		$	(320	)	$	436		$	(119	)	$	99
Comprehensive loss attributable to noncontrolling interest	—			—			3			—			3
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	102		$	(320	)	$	439		$	(119	)	$	102

Condensed Consolidating Statement of Comprehensive Income

For the 26 Weeks Ended August 1, 2015

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	5,537		$	10,740		$	(3,941	)	$	12,336
Cost of sales	—			(3,497		)	(7,854		)	3,941			(7,410		)
Gross margin	—			2,040			2,886			—			4,926
Selling, general and administrative expenses	(1		)	(2,005		)	(2,075		)	—			(4,081		)
Operating income (loss)	(1		)	35			811			—			845
Interest (expense) income, net:
External	—			(188		)	—			—			(188		)
Intercompany	—			(115		)	115			—			—
Equity in earnings of subsidiaries	411			146			—			(557		)	—
Income (loss) before income taxes	410			(122		)	926			(557		)	657
Federal, state and local income tax benefit (expense)	—			79			(326		)	—			(247		)
Net income (loss)	410			(43		)	600			(557		)	410
Net loss attributable to noncontrolling interest	—			—			—			—			—
Net income (loss) attributable to Macy's, Inc. shareholders	$	410		$	(43	)	$	600		$	(557	)	$	410
Comprehensive income (loss)	$	425		$	(28	)	$	609		$	(581	)	$	425
Comprehensive loss attributable to noncontrolling interest	—			—			—			—			—
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	425		$	(28	)	$	609		$	(581	)	$	425

Condensed Consolidating Balance Sheet

As of July 30, 2016

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	621	$	89	$	290	$	—		$	1,000
Receivables	—		146		277		—			423
Merchandise inventories	—		2,500		2,822		—			5,322
Income tax receivable	8		11		—		(19		)	—
Prepaid expenses and other current assets	—		84		387		—			471
Total Current Assets	629		2,830		3,776		(19		)	7,216
Property and Equipment – net	—		3,586		3,601		—			7,187
Goodwill	—		3,315		582		—			3,897
Other Intangible Assets – net	—		49		453		—			502
Other Assets	—		155		749		—			904
Deferred Income Taxes	23		—		—		(23		)	—
Intercompany Receivable	—		—		2,710		(2,710		)	—
Investment in Subsidiaries	4,524		3,247		—		(7,771		)	—
Total Assets	$	5,176	$	13,182	$	11,871	$	(10,523	)	$	19,706
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	1,062	$	1	$	—		$	1,063
Merchandise accounts payable	—		825		1,052		—			1,877
Accounts payable and accrued liabilities	29		1,380		1,105		—			2,514
Income taxes	—		—		42		(19		)	23
Total Current Liabilities	29		3,267		2,200		(19		)	5,477
Long-Term Debt	—		6,549		18		—			6,567
Intercompany Payable	1,043		1,667		—		(2,710		)	—
Deferred Income Taxes	—		653		818		(23		)	1,448
Other Liabilities	58		573		1,533		—			2,164
Shareholders' Equity:
Macy's, Inc.	4,046		473		7,298		(7,771		)	4,046
Noncontrolling Interest	—		—		4		—			4
Total Shareholders' Equity	4,046		473		7,302		(7,771		)	4,050
Total Liabilities and Shareholders' Equity	$	5,176	$	13,182	$	11,871	$	(10,523	)	$	19,706

Condensed Consolidating Balance Sheet

As of August 1, 2015

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	511	$	76	$	256	$	—		$	843
Receivables	—		85		249		—			334
Merchandise inventories	—		2,712		2,784		—			5,496
Income tax receivable	98		—		—		(98		)	—
Prepaid expenses and other current assets	—		104		333		—			437
Total Current Assets	609		2,977		3,622		(98		)	7,110
Property and Equipment – net	—		4,230		3,474		—			7,704
Goodwill	—		3,315		582		—			3,897
Other Intangible Assets – net	—		62		461		—			523
Other Assets	2		44		680		—			726
Deferred Income Taxes	24		—		—		(24		)	—
Intercompany Receivable	—		—		3,634		(3,634		)	—
Investment in Subsidiaries	4,779		3,640		—		(8,419		)	—
Total Assets	$	5,414	$	14,268	$	12,453	$	(12,175	)	$	19,960
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	82	$	1	$	—		$	83
Merchandise accounts payable	—		930		1,012		—			1,942
Accounts payable and accrued liabilities	23		980		1,274		—			2,277
Income taxes	—		10		152		(98		)	64
Total Current Liabilities	23		2,002		2,439		(98		)	4,366
Long-Term Debt	—		7,132		19		—			7,151
Intercompany Payable	483		3,151		—		(3,634		)	—
Deferred Income Taxes	—		736		737		(24		)	1,449
Other Liabilities	64		551		1,535		—			2,150
Shareholders' Equity:
Macy's, Inc.	4,844		696		7,723		(8,419		)	4,844
Noncontrolling Interest	—		—		—		—			—
Total Shareholders' Equity	4,844		696		7,723		(8,419		)	4,844
Total Liabilities and Shareholders' Equity	$	5,414	$	14,268	$	12,453	$	(12,175	)	$	19,960

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 26 Weeks Ended July 30, 2016

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	127		$	(295	)	$	451		$	(159	)	$	124
Impairments and other costs	—			184			65			—			249
Settlement charges	—			5			14			—			19
Equity in earnings of subsidiaries	(127		)	(32		)	—			159			—
Dividends received from subsidiaries	303			575			—			(878		)	—
Depreciation and amortization	—			205			315			—			520
(Increase) decrease in working capital	32			361			(733		)	—			(340		)
Other, net	17			(31		)	2			—			(12		)
Net cash provided by operating activities	352			972			114			(878		)	560
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net	—			(50		)	(327		)	—			(377		)
Other, net	—			43			(4		)	—			39
Net cash used by investing activities	—			(7		)	(331		)	—			(338		)
Cash flows from financing activities:
Debt repaid	—			(3		)	—			—			(3		)
Dividends paid	(228		)	—			(878		)	878			(228		)
Common stock acquired, net of issuance of common stock	(103		)	—			—			—			(103		)
Proceeds from noncontrolling interest	—			—			4			—			4
Intercompany activity, net	(139		)	(937		)	1,076			—			—
Other, net	(2		)	(27		)	28			—			(1		)
Net cash provided (used) by financing activities	(472		)	(967		)	230			878			(331		)
Net increase (decrease) in cash and cash equivalents	(120		)	(2		)	13			—			(109		)
Cash and cash equivalents at beginning of period	741			91			277			—			1,109
Cash and cash equivalents at end of period	$	621		$	89		$	290		$	—		$	1,000

Condensed Consolidating Statement of Cash Flows

For the 26 Weeks Ended August 1, 2015

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	410		$	(43	)	$	600		$	(557	)	$	410
Equity in earnings of subsidiaries	(411		)	(146		)	—			557			—
Dividends received from subsidiaries	337			—			—			(337		)	—
Depreciation and amortization	—			214			306			—			520
Increase in working capital	(11		)	(17		)	(503		)	—			(531		)
Other, net	24			2			(27		)	—			(1		)
Net cash provided by operating activities	349			10			376			(337		)	398
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net	—			(158		)	(349		)	—			(507		)
Other, net	—			9			(117		)	—			(108		)
Net cash used by investing activities	—			(149		)	(466		)	—			(615		)
Cash flows from financing activities:
Debt repaid	—			(72		)	—			—			(72		)
Dividends paid	(227		)	—			(337		)	337			(227		)
Common stock acquired, net of issuance of common stock	(751		)	—			—			—			(751		)
Intercompany activity, net	(722		)	262			460			—			—
Other, net	(46		)	(69		)	(21		)	—			(136		)
Net cash provided (used) by financing activities	(1,746		)	121			102			337			(1,186		)
Net increase (decrease) in cash and cash equivalents	(1,397		)	(18		)	12			—			(1,403		)
Cash and cash equivalents at beginning of period	1,908			94			244			—			2,246
Cash and cash equivalents at end of period	$	511		$	76		$	256		$	—		$	843