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 28, 2017 and October 29, 2016, Condensed Consolidating Balance Sheets as of October 28, 2017, October 29, 2016 and January 28, 2017, and the related Condensed Consolidating Statements of Cash Flows for the 39 weeks ended October 28, 2017 and October 29, 2016 are presented on the following pages.

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended October 28, 2017

(millions)



	Parent		Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—	$	2,077		$	5,861		$	(2,657	)	$	5,281
Cost of sales	—		(1,391		)	(4,441		)	2,657			(3,175		)
Gross margin	—		686			1,420			—			2,106
Selling, general and administrative expenses	—		(813		)	(1,182		)	—			(1,995		)
Gains on sale of real estate	—		24			41			—			65
Restructuring and other costs	—		(1		)	(32		)	—			(33		)
Settlement charges	—		(8		)	(14		)	—			(22		)
Operating income (loss)	—		(112		)	233			—			121
Interest (expense) income, net:
External	1		(76		)	1			—			(74		)
Intercompany	—		(34		)	34			—			—
Equity in earnings (loss) of subsidiaries	35		(61		)	—			26			—
Income (loss) before income taxes	36		(283		)	268			26			47
Federal, state and local income tax benefit (expense)	—		59			(72		)	—			(13		)
Net income (loss)	36		(224		)	196			26			34
Net loss attributable to noncontrolling interest	—		—			2			—			2
Net income (loss) attributable to Macy's, Inc. shareholders	$	36	$	(224	)	$	198		$	26		$	36
Comprehensive income (loss)	$	61	$	(201	)	$	212		$	(13	)	$	59
Comprehensive loss attributable to noncontrolling interest	—		—			2			—			2
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	61	$	(201	)	$	214		$	(13	)	$	61

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		)	(950		)	(1,161		)	—			(2,112		)
Gains on sale of real estate	—			41			—			—			41
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 39 weeks ended October 28, 2017

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	6,319		$	15,727		$	(5,875	)	$	16,171
Cost of sales	—			(4,126		)	(11,543		)	5,875			(9,794		)
Gross margin	—			2,193			4,184			—			6,377
Selling, general and administrative expenses	(1		)	(2,430		)	(3,422		)	—			(5,853		)
Gains on sale of real estate	—			116			60			—			176
Restructuring and other costs	—			(1		)	(32		)	—			(33		)
Settlement charges	—			(24		)	(49		)	—			(73		)
Operating income (loss)	(1		)	(146		)	741			—			594
Interest (expense) income, net:
External	4			(243		)	2			—			(237		)
Intercompany	—			(102		)	102			—			—
Net premiums on early retirement of debt	—			(1		)	—			—			(1		)
Equity in earnings (loss) of subsidiaries	220			(30		)	—			(190		)	—
Income (loss) before income taxes	223			(522		)	845			(190		)	356
Federal, state and local income tax benefit (expense)	(1		)	142			(281		)	—			(140		)
Net income (loss)	222			(380		)	564			(190		)	216
Net loss attributable to noncontrolling interest	—			—			6			—			6
Net income (loss) attributable to Macy's, Inc. shareholders	$	222		$	(380	)	$	570		$	(190	)	$	222
Comprehensive income (loss)	$	318		$	(290	)	$	627		$	(343	)	$	312
Comprehensive loss attributable to noncontrolling interest	—			—			6			—			6
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	318		$	(290	)	$	633		$	(343	)	$	318

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		)	(2,803		)	(3,334		)	—			(6,139		)
Gains on sale of real estate	—			71			5			—			76
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 Balance Sheet

As of October 28, 2017

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	116	$	89	$	329		$	—		$	534
Receivables	—		67		152			—			219
Merchandise inventories	—		3,218		3,847			—			7,065
Income tax receivable	—		2		—			(2		)	—
Prepaid expenses and other current assets	—		86		346			—			432
Total Current Assets	116		3,462		4,674			(2		)	8,250
Property and Equipment – net	—		3,184		3,558			—			6,742
Goodwill	—		3,315		582			—			3,897
Other Intangible Assets – net	—		46		445			—			491
Other Assets	1		62		772			—			835
Deferred Income Taxes	26		—		—			(26		)	—
Intercompany Receivable	1,436		—		1,971			(3,407		)	—
Investment in Subsidiaries	2,882		3,644		—			(6,526		)	—
Total Assets	$	4,461	$	13,713	$	12,002		$	(9,961	)	$	20,215
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	6	$	16		$	—		$	22
Merchandise accounts payable	—		1,339		1,834			—			3,173
Accounts payable and accrued liabilities	139		975		2,048			—			3,162
Income taxes	20		—		16			(2		)	34
Total Current Liabilities	159		2,320		3,914			(2		)	6,391
Long-Term Debt	—		6,280		17			—			6,297
Intercompany Payable	—		3,407		—			(3,407		)	—
Deferred Income Taxes	—		707		872			(26		)	1,553
Other Liabilities	71		476		1,203			—			1,750
Shareholders' Equity:
Macy's, Inc.	4,231		523		6,003			(6,526		)	4,231
Noncontrolling Interest	—		—		(7		)	—			(7		)
Total Shareholders' Equity	4,231		523		5,996			(6,526		)	4,224
Total Liabilities and Shareholders' Equity	$	4,461	$	13,713	$	12,002		$	(9,961	)	$	20,215

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 January 28, 2017

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	938	$	81	$	278		$	—		$	1,297
Receivables	—		169		353			—			522
Merchandise inventories	—		2,565		2,834			—			5,399
Prepaid expenses and other current assets	—		84		324			—			408
Total Current Assets	938		2,899		3,789			—			7,626
Property and Equipment – net	—		3,397		3,620			—			7,017
Goodwill	—		3,315		582			—			3,897
Other Intangible Assets – net	—		51		447			—			498
Other Assets	—		47		766			—			813
Deferred Income Taxes	26		—		—			(26		)	—
Intercompany Receivable	375		—		2,428			(2,803		)	—
Investment in Subsidiaries	3,137		3,540		—			(6,677		)	—
Total Assets	$	4,476	$	13,249	$	11,632		$	(9,506	)	$	19,851
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	306	$	3		$	—		$	309
Merchandise accounts payable	—		590		833			—			1,423
Accounts payable and accrued liabilities	16		1,064		2,483			—			3,563
Income taxes	71		16		265			—			352
Total Current Liabilities	87		1,976		3,584			—			5,647
Long-Term Debt	—		6,544		18			—			6,562
Intercompany Payable	—		2,803		—			(2,803		)	—
Deferred Income Taxes	—		688		781			(26		)	1,443
Other Liabilities	66		500		1,311			—			1,877
Shareholders' Equity:
Macy's, Inc.	4,323		738		5,939			(6,677		)	4,323
Noncontrolling Interest	—		—		(1		)	—			(1		)
Total Shareholders' Equity	4,323		738		5,938			(6,677		)	4,322
Total Liabilities and Shareholders' Equity	$	4,476	$	13,249	$	11,632		$	(9,506	)	$	19,851

Condensed Consolidating Statement of Cash Flows

For the 39 Weeks Ended October 28, 2017

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	222		$	(380	)	$	564		$	(190	)	$	216
Restructuring and other costs	—			1			32			—			33
Settlement charges	—			24			49			—			73
Equity in loss (earnings) of subsidiaries	(220		)	30			—			190			—
Dividends received from subsidiaries	571			—			—			(571		)	—
Depreciation and amortization	—			265			476			—			741
(Increase) decrease in working capital	(52		)	35			(633		)	—			(650		)
Other, net	8			2			(34		)	—			(24		)
Net cash provided (used) by operating activities	529			(23		)	454			(571		)	389
Cash flows from investing activities:
Disposition (purchase) of property and equipment and capitalized software, net	—			30			(368		)	—			(338		)
Other, net	—			2			(10		)	—			(8		)
Net cash provided (used) by investing activities	—			32			(378		)	—			(346		)
Cash flows from financing activities:
Debt repaid	—			(553		)	(1		)	—			(554		)
Dividends paid	(346		)	—			(571		)	571			(346		)
Issuance of common stock, net of common stock acquired	2			—			—			—			2
Proceeds from noncontrolling interest	—			—			13			—			13
Intercompany activity, net	(1,016		)	584			432			—			—
Other, net	9			(32		)	102			—			79
Net cash used by financing activities	(1,351		)	(1		)	(25		)	571			(806		)
Net increase (decrease) in cash and cash equivalents	(822		)	8			51			—			(763		)
Cash and cash equivalents at beginning of period	938			81			278			—			1,297
Cash and cash equivalents at end of period	$	116		$	89		$	329		$	—		$	534

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 loss (earnings) of subsidiaries	(144		)	69			—			75			—
Dividends received from subsidiaries	535			575			—			(1,110		)	—
Depreciation and amortization	—			298			489			—			787
Increase in working capital	(59		)	(572		)	(328		)	—			(959		)
Other, net	19			(36		)	28			—			11
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		)	(1		)	—			(123		)
Dividends paid	(344		)	—			(1,110		)	1,110			(344		)
Common stock acquired, net of issuance of common stock	(199		)	—			—			—			(199		)
Proceeds from noncontrolling interest	—			—			7			—			7
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