Saks 8-K Entry into a Material Definitive Agreement

Exhibit 99.2

Unaudited Pro Forma Consolidated Statement of Income

(In Thousands, except per share amounts)

				Adjustments												Pro Forma Year Ended January 29, 2005 (Unaudited)
	Year Ended January 29, 2005			Remove Historical NDSG Amounts (1)			Remove Historical Proffitt’s Amounts (2)			TSA Revenue (3), (4)			Total Pro Forma Adjustments
NET SALES	$	6,437,277		$	(2,162,673	)	$	(690,326	)				$	(2,852,999	)	$	3,584,278
Cost of sales (excluding depreciation and amortization)		3,995,460			(1,354,363	)		(430,964	)					(1,785,327	)		2,210,133
Gross margin		2,441,817			(808,310	)		(259,362	)					(1,067,672	)		1,374,145
Selling, general and administrative expenses		1,614,658			(523,110	)		(154,820	)	$	(50,631	)		(728,561	)		886,097
Other operating expenses
Property and equipment rentals		203,451			(59,565	)		(12,028	)					(71,593	)		131,858
Depreciation and amortization		229,145			(61,910	)		(22,614	)					(84,524	)		144,621
Taxes other than income taxes		164,067			(55,311	)		(14,482	)					(69,793	)		94,274
Store pre-opening costs		4,520			(1,090	)		(1,343	)					(2,433	)		2,087
Impairments and dispositions		31,751			(6,346	)								(6,346	)		25,405
OPERATING INCOME		194,225			(100,978	)		(54,075	)		50,631			(104,422	)		89,803
Interest expense		(114,035	)		8,442									8,442			(105,593	)
Other income (expense), net		4,048			—									—			4,048
INCOME BEFORE INCOME TAXES		84,238			(92,536	)		(54,075	)		50,631			(95,980	)		(11,742	)
Provision for income taxes		23,153			(37,334	)		(19,737	)		18,480			(38,591	)		(15,438	)
NET INCOME	$	61,085		$	(55,202	)	$	(34,338	)	$	32,151		$	(57,389	)	$	3,696
Earnings per common share:
Basic earnings per common share	$	0.44														$	0.03
Diluted earnings per common share	$	0.42														$	0.03
Weighted average common shares:
Basic		139,470															139,470
Diluted		144,034															144,034

Unaudited Pro Forma Consolidated Statement of Income

(In Thousands, except per share amounts)

				Adjustments											Pro Forma Nine Months Ended October 29, 2005 (Unaudited)
	Nine Months Ended October 29, 2005 (Unaudited)			Remove Historical NDSG Amounts (1)			Remove Historical Proffitt’s Amounts (2)			TSA Revenue (3), (4)		Total Pro Forma Adjustments
NET SALES	$	4,180,529		$	(1,453,020	)	$	(162,555	)			$	(1,615,575	)	$	2,564,954
Cost of sales (excluding depreciation and amortization)		2,605,026			(904,261	)		(103,489	)				(1,007,750	)		1,597,276
Gross margin		1,575,503			(548,759	)		(59,066	)		—		(607,825	)		967,678
Selling, general and administrative expenses		1,151,805			(384,153	)		(41,080	)				(425,233	)		726,572
Other operating expenses		428,849			(134,078	)		(13,206	)				(147,284	)		281,565
Store pre-opening costs		3,443			(1,295	)		—					(1,295	)		2,148
Impairments and dispositions		(169,290	)		—			155,516					155,516			(13,774	)
OPERATING INCOME		160,696			(29,233	)		(160,296	)		—		(189,529	)		(28,833	)
Interest expense		(70,922	)		6,249			—					6,249			(64,673	)
Loss on extinguishment of debt		(29,020	)		—			—					—			(29,020	)
Other income (expense), net		6,449			—			—					—			6,449
INCOME BEFORE INCOME TAXES		67,203			(22,984	)		(160,296	)		—		(183,280	)		(116,077	)
Provision for income taxes		42,613			(9,239	)		(82,361	)				(91,600	)		(48,987	)
NET INCOME	$	24,590		$	(13,745	)	$	(77,935	)	$	—	$	(91,680	)	$	(67,090	)
Earnings per common share:
Basic earnings per common share	$	0.18													$	(0.48	)
Diluted earnings per common share	$	0.17													$	(0.46	)
Weighted average common shares:
Basic		138,996														138,996
Diluted		144,937														144,937

Saks Incorporated

Notes to Unaudited Pro Forma Consolidated Statements of Income

(1) To reflect the removal of the historical operating contribution of the NDSG stores sold, in addition to the distribution, administrative, merchandising and store operations associated with the NDSG’s divisional operating and distribution facilities.

(2) Effective July 2, 2005, the Company sold Proffitt’s to Belk. A non-recurring pre-tax gain of $155,516 from the sale was recognized in the historical consolidated statements of income during the second quarter of 2005. The unaudited pro forma consolidated statement of income eliminates both the results of operations of Proffitt’s from February 1, 2004 through July 2, 2005 and the non-recurring gain recognized on the sale since such gain is non-recurring and directly attributable to the transaction for which the pro forma financial statements are prepared.

(3) To reflect the revenue associated with the Bon-Ton TSA, included as part of the Purchase Agreement, whereby Bon-Ton will compensate the Company for providing certain back-office services, for varying periods as outlined in the agreement. The initial terms of the Bon-Ton TSA do not exceed twelve months, and thus, there is no Bon-Ton TSA revenue shown as a pro forma adjustment for the nine month period ended October 29, 2005. Bon-Ton TSA revenue for FY 2004 totaled $40,557.

(4) To reflect the revenue associated with the Belk TSA, included as part of the Asset Purchase Agreement, whereby Belk will compensate the Company for providing certain back-office services, for varying periods as outlined in the Belk TSA. The initial terms of the Belk TSA do not exceed twelve months, and thus, there is no Belk TSA revenue shown as a pro forma adjustment for the nine month period ended October 29, 2005. Belk TSA revenue for FY 2004 totaled $10,074.

Unaudited Pro Forma Consolidated Balance Sheet

(In Thousands)

	October 29, 2005 (Unaudited)		Pro Forma Adjustments			Pro Forma October 29, 2005 (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	27,886	$	448,391	(1)	$	476,277
Merchandise inventories		1,011,064					1,011,064
Other current assets		129,822					129,822
Deferred income taxes, net		71,211		(69,036	)(3)		2,175
Current assets - held for sale		654,123		(654,123	)(2)		—
TOTAL CURRENT ASSETS		1,894,106		(274,768	)		1,619,338
PROPERTY AND EQUIPMENT, NET		1,358,694					1,358,694
PROPERTY AND EQUIPMENT, NET - HELD FOR SALE		436,163		(436,163	)(2)		—
GOODWILL AND INTANGIBLES, NET OF AMORTIZATION		235,162		(172,000	)(2)		63,162
DEFERRED INCOME TAXES, NET		250,158		(23,987	)(2)		226,171
OTHER ASSETS		43,705					43,705
OTHER ASSETS - HELD FOR SALE		12,072		(12,072	)(2)		—
TOTAL ASSETS	$	4,230,060	$	(918,990	)	$	3,311,070
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	298,080				$	298,080
Accrued expenses and other current liabilities		399,027		(2,557	)(2)		396,470
Current portion of long-term debt		7,519					7,519
Current liabilities - held for sale		290,971		(290,971	)(2)		—
TOTAL CURRENT LIABILITIES		995,597		(293,528	)		702,069
LONG-TERM DEBT		718,083					718,083
LONG-TERM DEBT - HELD FOR SALE		33,819		(33,819	)(2)		—
OTHER LONG-TERM LIABILITIES		236,089		(18,828	)(2)		217,261
OTHER LONG-TERM LIABILITIES - HELD FOR SALE		90,833		(90,833	)(2)		—
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY		2,155,639		(481,982	)(4)		1,673,657
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	4,230,060	$	(918,990	)	$	3,311,070

Saks Incorporated

Notes to Unaudited Pro Forma Consolidated Balance Sheet

(1) To reflect net cash proceeds from the NDSG transaction as follows:

	October 29, 2005
Net cash received for sale of NDSG	$	1,107,676
Net cash received for adjustment to working capital		(60,901	)
Cash paid for transaction expenses and other items		(10,000	)
Cash paid for taxes		(48,384	)
Net cash received		988,391
Special cash dividend		(540,000	)
Net cash	$	448,391

(2) To reflect the removal of the assets and liabilities associated with the NDSG stores sold, in addition to the assets and liabilities associated with the distribution, administrative, merchandising and store operations associated with the NDSG’s divisional operating and distribution facilities.

(3) Reflects a $69,036 decrease in deferred income taxes resulting from the gain on the transaction.

(4) To reflect the increase due to the after-tax net gain on the transaction offset by the reduction due to the special cash dividend of $540,000.