Macy's, Inc.
Reconciliation of GAAP to non-GAAP Financial Measures
($ in millions)

The following information relates to, and should be read in conjunction with, a conference call hosted by the management of Macy's, Inc. on November 11, 2009 to discuss the Company's financial condition and results of operations as of and for the 13 and 39 weeks ended October 31, 2009. An audio archive of the conference call and the text of the related press release can be accessed at http://www.macysinc.com/ir/.

The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP performance and condition measures and ratios, used in managing the Company's business, provide users of the Company's financial information with additional useful information. See the tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. Certain of the items that may be excluded or included in these non-GAAP financial measures may constitute significant items that could impact the Company's financial position, results of operations and cash flows and should therefore be considered in assessing the Company's actual financial condition and performance. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies.

Management believes that total debt to total capitalization is a useful measure to assist the reader in evaluating the capital structure of the Company. Management believes that this measure is useful in evaluating the amount of leverage employed by the Company.

Management believes that total net debt to total capitalization is a useful measure to assist the reader in evaluating the capital structure of the Company. As computed above, the ratio of total net debt to total capitalization includes as components of total net debt the Company's long-term debt and short-term debt, as offset by cash recorded on the balance sheet. Management believes that this measure is useful in evaluating the amount of leverage employed by the Company.

Management believes that operating income and operating income as a percent to net sales, excluding division consolidation costs are useful measures in evaluating the Company's ability to leverage sales. Management believes that excluding the division consolidation costs from the calculation of these measures is particularly useful where the amounts of such items are not consistent in the periods presented.

Management believes that operating income and operating income as a percent to net sales, excluding division consolidation costs and asset impairment charges, are useful measures in evaluating the Company's ability to leverage sales. Management believes that excluding the division consolidation costs and asset impairment charges from the calculation of these measures is particularly useful where the amounts of such items are not consistent in the periods presented.

Management believes that providing a measure of diluted loss per share excluding the effects of division consolidation costs is a useful measure to assist the reader in evaluating the Company's ability to generate earnings and that providing such a measure will allow investors to more readily compare the earnings referred to in the press release to the earnings reported by the Company in past and future periods. Management believes that excluding the effects of these costs from the calculation of this measure is particularly useful where the amounts of such items are not consistent in the periods presented.

Management believes that providing a measure of diluted earnings per share excluding the effects of division consolidation costs and asset impairment charges is a useful measure to assist the reader in evaluating the Company's ability to generate earnings and that providing such a measure will allow investors to more readily compare the earnings referred to in the press release to the earnings reported by the Company in past and future periods. Management believes that excluding the effects of these items from the calculation of this measure is particularly useful where the amounts of such items are not consistent in the periods presented.

Management believes that cash flow from operating activities net of cash used in investing activities is a useful measure in evaluating the Company's ability to generate cash from operations after giving effect to cash used by investing activities. Management believes that excluding cash flows from financing activities from the calculation of this measure is particularly useful where the amounts of such items are not consistent in the periods presented.

Note 1:

For interim periods, accounting standards require that income taxes be determined by applying the estimated annual effective tax rate to year-to-date income or loss at the end of each quarter. At the end of each quarter, income taxes are adjusted to the latest estimate and the difference from the previous year-to-date amount is adjusted in the current quarter. Due to the seasonal nature of the retail business, with a disproportionately large amount of income occurring in the fourth fiscal quarter, the application of estimated annual effective tax rates to interim periods can result in significant fluctuations in the effective tax rates for such interim periods.

Management believes that providing a measure of income before income taxes, federal, state and local income taxes, net income (loss), diluted earnings (loss) per share and the effective tax rate excluding the effects of division consolidation costs is a useful measure to assist the reader in evaluating the Company's ability to generate earnings and that providing such measures will allow investors to more readily compare the earnings referred to in the press release to the earnings reported by the Company in past and future periods. Management believes that excluding these items from the calculation of these measures is particularly useful where the amounts of such items are not consistent in the periods presented.

Go to top of page