Condensed Consolidating Financial Information | Condensed Consolidating Financial Information Certain debt obligations of the Company described in Note 6, "Financing," which constitute debt obligations of Parent’s 100%-owned subsidiary, Macy’s Retail Holdings, Inc. (“Subsidiary Issuer”), 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 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 2018 , 2017 and 2016 , Consolidating Balance Sheets as of February 2, 2019 and February 3, 2018 , and the related Condensed Consolidating Statements of Cash Flows for 2018 , 2017 , and 2016 are presented on the following pages. MACY’S, INC. Condensed Consolidating Statement of Comprehensive Income For 2018 (millions) Parent Subsidiary Issuer Other Subsidiaries Consolidating Adjustments Consolidated Net sales $ — $ 9,051 $ 23,720 $ (7,800 ) $ 24,971 Credit card revenues (expense), net — (3 ) 771 — 768 Cost of sales — (5,786 ) (17,229 ) 7,800 (15,215 ) Selling, general and administrative expenses — (3,509 ) (5,530 ) — (9,039 ) Gains on sale of real estate — 141 248 — 389 Restructuring, impairment, store closing and other costs — (33 ) (103 ) — (136 ) Operating income (loss) — (139 ) 1,877 — 1,738 Benefit plan income, net — 15 24 — 39 Settlement charges (5 ) (30 ) (53 ) — (88 ) Interest (expense) income, net: External 20 (260 ) 4 — (236 ) Intercompany — (72 ) 72 — — Losses on early retirement of debt — (33 ) — — (33 ) Equity in earnings of subsidiaries 1,104 345 — (1,449 ) — Income (loss) before income taxes 1,119 (174 ) 1,924 (1,449 ) 1,420 Federal, state and local income (11 ) 219 (530 ) — (322 ) Net income 1,108 45 1,394 (1,449 ) 1,098 Net loss attributable to noncontrolling interest — — 10 — 10 Net income attributable to Macy's, Inc. shareholders $ 1,108 $ 45 $ 1,404 $ (1,449 ) $ 1,108 Comprehensive income (loss) $ 1,045 $ (15 ) $ 1,353 $ (1,348 ) $ 1,035 Comprehensive loss attributable to noncontrolling interest — — 10 — 10 Comprehensive income (loss) attributable to Macy's, Inc. shareholders $ 1,045 $ (15 ) $ 1,363 $ (1,348 ) $ 1,045 MACY’S, INC. Condensed Consolidating Statement of Comprehensive Income For 2017 (millions) Parent Subsidiary Issuer Other Subsidiaries Consolidating Adjustments Consolidated Net sales $ — $ 9,490 $ 23,317 $ (7,868 ) $ 24,939 Credit card revenues (expense), net — (2 ) 704 — 702 Cost of sales — (6,122 ) (16,927 ) 7,868 (15,181 ) Selling, general and administrative expenses — (3,426 ) (5,528 ) — (8,954 ) Gains on sale of real estate — 201 343 — 544 Restructuring, impairment, store closing and other costs — (40 ) (146 ) — (186 ) Operating income — 101 1,763 — 1,864 Benefit plan income, net — 22 35 — 57 Settlement charges — (35 ) (70 ) — (105 ) Interest (expense) income, net: External — (313 ) 3 — (310 ) Intercompany — (139 ) 139 — — Gains on early retirement of debt — 10 — — 10 Equity in earnings of subsidiaries 1,574 773 — (2,347 ) — Income before income taxes 1,574 419 1,870 (2,347 ) 1,516 Federal, state and local income (8 ) 356 (309 ) — 39 Net income 1,566 775 1,561 (2,347 ) 1,555 Net loss attributable to noncontrolling interest — — 11 — 11 Net income attributable to $ 1,566 $ 775 $ 1,572 $ (2,347 ) $ 1,566 Comprehensive income $ 1,738 $ 935 $ 1,673 $ (2,619 ) $ 1,727 Comprehensive loss attributable to — — 11 — 11 Comprehensive income attributable to $ 1,738 $ 935 $ 1,684 $ (2,619 ) $ 1,738 MACY’S, INC. Condensed Consolidating Statement of Comprehensive Income For 2016 (millions) Parent Subsidiary Issuer Other Subsidiaries Consolidating Adjustments Consolidated Net sales $ — $ 10,735 $ 23,508 $ (8,335 ) $ 25,908 Credit card revenues (expense), net — 17 639 — 656 Cost of sales — (6,818 ) (17,183 ) 8,335 (15,666 ) Selling, general and administrative expenses (2 ) (3,899 ) (5,356 ) — (9,257 ) Gains on sale of real estate — 95 114 — 209 Restructuring, impairment, store closing and other costs — (295 ) (184 ) — (479 ) Operating income (loss) (2 ) (165 ) 1,538 — 1,371 Benefit plan income, net — 21 34 — 55 Settlement charges — (34 ) (64 ) — (98 ) Interest (expense) income, net: External 2 (366 ) 1 — (363 ) Intercompany — (200 ) 200 — — Equity in earnings of subsidiaries 627 267 — (894 ) — Income (loss) before income taxes 627 (477 ) 1,709 (894 ) 965 Federal, state and local income — 278 (624 ) — (346 ) Net income (loss) 627 (199 ) 1,085 (894 ) 619 Net loss attributable to noncontrolling interest — — 8 — 8 Net income (loss) attributable to $ 627 $ (199 ) $ 1,093 $ (894 ) $ 627 Comprehensive income (loss) $ 774 $ (52 ) $ 1,164 $ (1,120 ) $ 766 Comprehensive loss attributable to — — 8 — 8 Comprehensive income (loss) attributable to $ 774 $ (52 ) $ 1,172 $ (1,120 ) $ 774 MACY’S, INC. Condensed Consolidating Balance Sheet As of February 2, 2019 (millions) Parent Subsidiary Issuer Other Subsidiaries Consolidating Adjustments Consolidated ASSETS: Current Assets: Cash and cash equivalents $ 889 $ 59 $ 214 $ — $ 1,162 Receivables — 68 332 — 400 Merchandise inventories — 2,342 2,921 — 5,263 Prepaid expenses and other current assets — 143 477 — 620 Total Current Assets 889 2,612 3,944 — 7,445 Property and Equipment – net — 3,287 3,350 — 6,637 Goodwill — 3,326 582 — 3,908 Other Intangible Assets – net — 38 440 — 478 Other Assets — 41 685 — 726 Deferred Income Taxes 12 — — (12 ) — Intercompany Receivable 1,713 — 1,390 (3,103 ) — Investment in Subsidiaries 4,030 3,119 — (7,149 ) — Total Assets $ 6,644 $ 12,423 $ 10,391 $ (10,264 ) $ 19,194 LIABILITIES AND SHAREHOLDERS’ EQUITY: Current Liabilities: Short-term debt $ — $ 42 $ 1 $ — $ 43 Merchandise accounts payable — 713 942 — 1,655 Accounts payable and accrued liabilities 170 950 2,246 — 3,366 Income taxes 14 52 102 — 168 Total Current Liabilities 184 1,757 3,291 — 5,232 Long-Term Debt — 4,692 16 — 4,708 Intercompany Payable — 3,103 — (3,103 ) — Deferred Income Taxes — 679 571 (12 ) 1,238 Other Liabilities 24 406 1,150 — 1,580 Shareholders’ Equity: Macy's, Inc. 6,436 1,786 5,363 (7,149 ) 6,436 Noncontrolling Interest — — — — — Total Shareholders’ Equity 6,436 1,786 5,363 (7,149 ) 6,436 Total Liabilities and Shareholders’ Equity $ 6,644 $ 12,423 $ 10,391 $ (10,264 ) $ 19,194 MACY’S, INC. Condensed Consolidating Balance Sheet As of February 3, 2018 (millions) Parent Subsidiary Issuer Other Subsidiaries Consolidating Adjustments Consolidated ASSETS: Current Assets: Cash and cash equivalents $ 1,109 $ 58 $ 288 $ — $ 1,455 Receivables — 85 278 — 363 Merchandise inventories — 2,344 2,834 — 5,178 Prepaid expenses and other current assets — 165 485 — 650 Total Current Assets 1,109 2,652 3,885 — 7,646 Property and Equipment – net — 3,349 3,323 — 6,672 Goodwill — 3,315 582 — 3,897 Other Intangible Assets – net — 44 444 — 488 Other Assets 1 89 790 — 880 Deferred Income Taxes 11 — — (11 ) — Intercompany Receivable 884 — 2,381 (3,265 ) — Investment in Subsidiaries 4,032 4,119 — (8,151 ) — Total Assets $ 6,037 $ 13,568 $ 11,405 $ (11,427 ) $ 19,583 LIABILITIES AND SHAREHOLDERS’ EQUITY: Current Liabilities: Short-term debt $ — $ 6 $ 16 $ — $ 22 Merchandise accounts payable — 653 937 — 1,590 Accounts payable and accrued liabilities 159 980 2,132 — 3,271 Income taxes 113 30 153 — 296 Total Current Liabilities 272 1,669 3,238 — 5,179 Long-Term Debt — 5,844 17 — 5,861 Intercompany Payable — 3,265 — (3,265 ) — Deferred Income Taxes — 559 600 (11 ) 1,148 Other Liabilities 20 430 1,212 — 1,662 Shareholders’ Equity: Macy's, Inc. 5,745 1,801 6,350 (8,151 ) 5,745 Noncontrolling Interest — — (12 ) — (12 ) Total Shareholders’ Equity 5,745 1,801 6,338 (8,151 ) 5,733 Total Liabilities and Shareholders’ Equity $ 6,037 $ 13,568 $ 11,405 $ (11,427 ) $ 19,583 MACY’S, INC. Condensed Consolidating Statement of Cash Flows For 2018 (millions) Parent Subsidiary Issuer Other Subsidiaries Consolidating Adjustments Consolidated Cash flows from operating activities: Net income $ 1,108 $ 45 $ 1,394 $ (1,449 ) $ 1,098 Restructuring, impairment, store closing and other costs — 33 103 — 136 Settlement charges 5 30 53 — 88 Gains on sale of real estate — (141 ) (248 ) — (389 ) Equity in earnings of subsidiaries (1,104 ) (345 ) — 1,449 — Dividends received from subsidiaries 1,040 200 — (1,240 ) — Depreciation and amortization — 334 628 — 962 Changes in assets, liabilities and other items not separately identified (91 ) 198 (266 ) (1 ) (160 ) Net cash provided by 958 354 1,664 (1,241 ) 1,735 Cash flows from investing activities: Purchase of property and equipment and capitalized software, net — (135 ) (323 ) — (458 ) Other, net — (16 ) (33 ) 51 2 Net cash used by investing activities — (151 ) (356 ) 51 (456 ) Cash flows from financing activities: Debt repaid — (1,098 ) (1 ) (50 ) (1,149 ) Dividends paid (463 ) — (1,240 ) 1,240 (463 ) Issuance of common stock, net of common stock acquired 45 — — — 45 Proceeds from noncontrolling interest — — 7 — 7 Intercompany activity, net (767 ) 875 (108 ) — — Other, net 7 5 4 — 16 Net cash used by (1,178 ) (218 ) (1,338 ) 1,190 (1,544 ) Net decrease in cash, cash equivalents and restricted cash (220 ) (15 ) (30 ) — (265 ) Cash, cash equivalents and restricted cash at 1,109 79 325 — 1,513 Cash, cash equivalents and restricted cash at $ 889 $ 64 $ 295 $ — $ 1,248 MACY’S, INC. Condensed Consolidating Statement of Cash Flows For 2017 (millions) Parent Subsidiary Issuer Other Subsidiaries Consolidating Adjustments Consolidated Cash flows from operating activities: Net income $ 1,566 $ 775 $ 1,561 $ (2,347 ) $ 1,555 Restructuring, impairment, store closing and other costs — 40 146 — 186 Settlement charges — 35 70 — 105 Gains on sale of real estate — (201 ) (343 ) — (544 ) Equity in earnings of subsidiaries (1,574 ) (773 ) — 2,347 — Dividends received from subsidiaries 903 450 — (1,353 ) — Depreciation and amortization — 354 637 — 991 Changes in assets, liabilities and other items not separately identified 14 79 (410 ) — (317 ) Net cash provided by 909 759 1,661 (1,353 ) 1,976 Cash flows from investing activities: Disposition (purchase) of property and equipment and capitalized software, net — 68 (417 ) — (349 ) Other, net — 7 (9 ) — (2 ) Net cash provided (used) by — 75 (426 ) — (351 ) Cash flows from financing activities: Debt repaid — (987 ) (1 ) — (988 ) Dividends paid (461 ) — (1,353 ) 1,353 (461 ) Common stock acquired, net of 5 — — — 5 Proceeds from noncontrolling interest — — 13 — 13 Intercompany activity, net (427 ) 249 178 — — Other, net 145 (98 ) (62 ) — (15 ) Net cash used by financing activities (738 ) (836 ) (1,225 ) 1,353 (1,446 ) Net increase (decrease) in cash, cash equivalents and restricted cash 171 (2 ) 10 — 179 Cash, cash equivalents and restricted cash at 938 81 315 — 1,334 Cash, cash equivalents and restricted cash at $ 1,109 $ 79 $ 325 $ — $ 1,513 MACY’S, INC. Condensed Consolidating Statement of Cash Flows For 2016 (millions) Parent Subsidiary Issuer Other Subsidiaries Consolidating Adjustments Consolidated Cash flows from operating activities: Net income (loss) $ 627 $ (199 ) $ 1,085 $ (894 ) $ 619 Restructuring, impairment, store closing and other costs — 295 184 — 479 Settlement charges — 34 64 — 98 Gains on sale of real estate — (95 ) (114 ) — (209 ) Equity in earnings of subsidiaries (627 ) (267 ) — 894 — Dividends received from subsidiaries 957 575 — (1,532 ) — Depreciation and amortization — 407 651 — 1,058 Changes in assets, liabilities and other items not separately identified 138 (312 ) (70 ) — (244 ) Net cash provided by 1,095 438 1,800 (1,532 ) 1,801 Cash flows from investing activities: Disposition (purchase) of property and equipment and capitalized software, net — 13 (252 ) — (239 ) Other, net — (18 ) 14 — (4 ) Net cash used by — (5 ) (238 ) — (243 ) Cash flows from financing activities: Debt repaid — (753 ) (1 ) — (754 ) Dividends paid (459 ) — (1,532 ) 1,532 (459 ) Common stock acquired, net of (280 ) — — — (280 ) Proceeds from noncontrolling interest — — 6 — 6 Intercompany activity, net (144 ) 233 (89 ) — — Other, net (15 ) 27 49 — 61 Net cash used by (898 ) (493 ) (1,567 ) 1,532 (1,426 ) Net increase (decrease) in cash, cash equivalents and restricted cash 197 (60 ) (5 ) — 132 Cash, cash equivalents and restricted cash at 741 141 320 — 1,202 Cash, cash equivalents and restricted cash at $ 938 $ 81 $ 315 $ — $ 1,334 |