GUARANTOR/NON-GUARANTOR SUBSIDIARY FINANCIAL INFORMATION

At May 4, 2013, the principal amount outstanding of the Company’s 65/8% senior secured notes due 2018 was $1.24 billion. These notes were issued in 2010 by Sears Holdings Corporation (“Parent”). The notes are guaranteed by certain of our 100% owned domestic subsidiaries that own the collateral for the notes, as well as by SRAC (the “guarantor subsidiaries”). The following condensed consolidated financial information presents the Condensed Consolidating Balance Sheets at May 4, 2013, April 28, 2012 and February 2, 2013, the Condensed Consolidating Statements of Operations and the Condensed Consolidating Statements of Comprehensive Income (Loss) for the 13-week periods ended May 4, 2013 and April 28, 2012, and the Condensed Consolidating Statements of Cash flows for the 13-week periods ended May 4, 2013 and April 28, 2012 of (i) Parent; (ii) the guarantor subsidiaries; (iii) the non-guarantor subsidiaries; (iv) eliminations and (v) the Company on a consolidated basis.

The following condensed consolidated financial statements had total assets and total liabilities of approximately $670 million and $130 million, respectively, at April 28, 2012 attributable to the Sears Hometown and Outlet businesses. Merchandise sales and services included revenues of approximately $620 million from the Sears Hometown and Outlet businesses for the period ended April 28, 2012. Net income (loss) attributable to Holdings' shareholders included net income of approximately $20 million from the Sears Hometown and Outlet businesses for the period ended April 28, 2012. The financial information for the Sears Hometown and Outlet businesses is reflected within the guarantor subsidiaries balances for this period. The condensed consolidated financial information at and for the period ended May 4, 2013 reflects the effects of the separation of SHO.

The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions including transactions with our wholly-owned non-guarantor insurance subsidiary. The Company has accounted for investments in subsidiaries under the equity method. The guarantor subsidiaries are 100% owned directly or indirectly by the Parent and all guarantees are joint, several and unconditional. Additionally, the notes are secured by a security interest in certain assets consisting primarily of domestic inventory and credit card receivables of the guarantor subsidiaries, and consequently may not be available to satisfy the claims of the Company’s general creditors. Certain investments primarily held by non-guarantor subsidiaries are recorded by the issuers at historical cost and are recorded at fair value by the holder.

Condensed Consolidating Balance Sheet

May 4, 2013



millions	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—	$	347	$	124	$	—		$	471
Intercompany receivables	—		—		25,818		(25,818		)	—
Accounts receivable	—		497		111		—			608
Merchandise inventories	—		7,019		881		—			7,900
Prepaid expenses and other current assets	92		951		459		(1,030		)	472
Total current assets	92		8,814		27,393		(26,848		)	9,451
Total property and equipment, net	—		4,309		1,601		—			5,910
Goodwill and intangible assets	—		961		2,289		—			3,250
Other assets	16		229		3,118		(2,578		)	785
Investment in subsidiaries	16,174		25,105		—		(41,279		)	—
TOTAL ASSETS	$	16,282	$	39,418	$	34,401	$	(70,705	)	$	19,396
Current liabilities
Short-term borrowings	$	—	$	1,754	$	—	$	—		$	1,754
Current portion of long-term debt and capitalized lease obligations	—		55		17		—			72
Merchandise payables	—		2,522		340		—			2,862
Intercompany payables	12,556		13,262		—		(25,818		)	—
Short-term deferred tax liabilities	3		412		—		(33		)	382
Other current liabilities	4		2,379		2,379		(997		)	3,765
Total current liabilities	12,563		20,384		2,736		(26,848		)	8,835
Long-term debt and capitalized lease obligations	1,237		2,937		132		(2,377		)	1,929
Pension and postretirement benefits	—		2,229		409		—			2,638
Long-term deferred tax liabilities	—		12		943		11			966
Other long-term liabilities	—		843		1,512		(248		)	2,107
Total Liabilities	13,800		26,405		5,732		(29,462		)	16,475
EQUITY
Shareholder’s equity	2,482		13,013		28,669		(41,646		)	2,518
Noncontrolling interest	—		—		—		403			403
Total Equity	2,482		13,013		28,669		(41,243		)	2,921
TOTAL LIABILITIES AND EQUITY	$	16,282	$	39,418	$	34,401	$	(70,705	)	$	19,396

Condensed Consolidating Balance Sheet

April 28, 2012



millions	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—	$	385	$	392	$	—		$	777
Intercompany receivables	—		—		25,292		(25,292		)	—
Accounts receivable	—		429		215		—			644
Merchandise inventories	—		7,910		907		—			8,817
Prepaid expenses and other current assets	62		669		466		(807		)	390
Total current assets	62		9,393		27,272		(26,099		)	10,628
Total property and equipment, net	—		4,717		1,719		—			6,436
Goodwill and intangible assets	—		1,167		2,596		—			3,763
Other assets	21		194		2,585		(2,020		)	780
Investment in subsidiaries	17,614		25,899		—		(43,513		)	—
TOTAL ASSETS	$	17,697	$	41,370	$	34,172	$	(71,632	)	$	21,607
Current liabilities
Short-term borrowings	$	—	$	1,103	$	—	$	—		$	1,103
Current portion of long-term debt and capitalized lease obligations	—		134		17		—			151
Merchandise payables	—		2,811		447		—			3,258
Intercompany payables	11,934		13,358		—		(25,292		)	—
Short-term deferred tax liabilities	5		543		—		(30		)	518
Other current liabilities	7		2,806		2,321		(777		)	4,357
Total current liabilities	11,946		20,755		2,785		(26,099		)	9,387
Long-term debt and capitalized lease obligations	1,237		2,412		111		(1,785		)	1,975
Pension and postretirement benefits	—		2,210		456		—			2,666
Other long-term liabilities	—		56		817		(6		)	867
Non-current liabilities of discontinued operations	—		846		1,517		(229		)	2,134
Total Liabilities	13,183		26,279		5,686		(28,119		)	17,029
EQUITY
Shareholder’s equity	4,514		15,091		28,486		(43,577		)	4,514
Noncontrolling interest	—		—		—		64			64
Total Equity	4,514		15,091		28,486		(43,513		)	4,578
TOTAL LIABILITIES AND EQUITY	$	17,697	$	41,370	$	34,172	$	(71,632	)	$	21,607

Condensed Consolidating Balance Sheet

February 2, 2013



millions	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—	$	320	$	289	$	—		$	609
Intercompany receivables	—		—		25,553		(25,553		)	—
Accounts receivable	—		506		129		—			635
Merchandise inventories	—		6,709		849		—			7,558
Prepaid expenses and other current assets	92		970		461		(1,060		)	463
Total current assets	92		8,505		27,281		(26,613		)	9,265
Total property and equipment, net	—		4,412		1,641		—			6,053
Goodwill and intangible assets	—		968		2,292		—			3,260
Other assets	17		223		3,147		(2,625		)	762
Investment in subsidiaries	16,413		24,988		—		(41,401		)	—
TOTAL ASSETS	$	16,522	$	39,096	$	34,361	$	(70,639	)	$	19,340
Current liabilities
Short-term borrowings	$	—	$	1,094	$	—	$	—		$	1,094
Current portion of long-term debt and capitalized lease obligations	—		66		17		—			83
Merchandise payables	—		2,392		369		—			2,761
Intercompany payables	12,594		12,959		—		(25,553		)	—
Short-term deferred tax liabilities	3		412		—		(33		)	382
Other current liabilities	26		2,640		2,455		(1,027		)	4,094
Total current liabilities	12,623		19,563		2,841		(26,613		)	8,414
Long-term debt and capitalized lease obligations	1,237		3,081		135		(2,510		)	1,943
Pension and postretirement benefits	—		2,310		420		—			2,730
Long-term deferred tax liabilities	—		—		914		41			955
Other long-term liabilities	—		861		1,513		(248		)	2,126
Total Liabilities	13,860		25,815		5,823		(29,330		)	16,168
EQUITY
Shareholder’s equity	2,662		13,281		28,538		(41,726		)	2,755
Noncontrolling interest	—		—		—		417			417
Total Equity	2,662		13,281		28,538		(41,309		)	3,172
TOTAL LIABILITIES AND EQUITY	$	16,522	$	39,096	$	34,361	$	(70,639	)	$	19,340

Condensed Consolidating Statement of Operations

For the 13 Weeks Ended May 4, 2013



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Merchandise sales and services	$	—		$	7,578		$	1,695		$	(821	)	$	8,452
Cost of sales, buying and occupancy	—			5,767			912			(383		)	6,296
Selling and administrative	—			2,087			569			(438		)	2,218
Depreciation and amortization	—			144			47			—			191
Impairment charges	—			8			—			—			8
Gain on sales of assets	—			(14		)	—			—			(14		)
Total costs and expenses	—			7,992			1,528			(821		)	8,699
Operating income (loss)	—			(414		)	167			—			(247		)
Interest expense	(55		)	(94		)	(26		)	114			(61		)
Interest and investment income	—			9			112			(114		)	7
Income (loss) before income taxes	(55		)	(499		)	253			—			(301		)
Income tax (expense) benefit	—			49			(40		)	—			9
Equity (loss) in earnings in subsidiaries	(237		)	127			—			110			—
Net income (loss)	(292		)	(323		)	213			110			(292		)
Loss attributable to noncontrolling interests	—			—			—			13			13
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS’ SHAREHOLDERS	$	(292	)	$	(323	)	$	213		$	123		$	(279	)

Condensed Consolidating Statement of Operations

For the 13 Weeks Ended April 28, 2012



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Merchandise sales and services	$	—		$	8,310		$	1,826		$	(866	)	$	9,270
Cost of sales, buying and occupancy	—			6,099			1,030			(426		)	6,703
Selling and administrative	—			2,283			602			(440		)	2,445
Depreciation and amortization	—			153			49			—			202
Gain on sales of assets	—			(233		)	(162		)	—			(395		)
Total costs and expenses	—			8,302			1,519			(866		)	8,955
Operating income	—			8			307			—			315
Interest expense	(56		)	(96		)	(27		)	113			(66		)
Interest and investment income	—			11			114			(113		)	12
Income (loss) before income taxes	(56		)	(77		)	394			—			261
Income tax (expense) benefit	19			(18		)	(68		)	—			(67		)
Equity in earnings in subsidiaries	231			244			—			(475		)	—
Net income (loss)	194			149			326			(475		)	194
Loss attributable to noncontrolling interests	—			—			—			(5		)	(5		)
NET INCOME ATTRIBUTABLE TO HOLDINGS’ SHAREHOLDERS	$	194		$	149		$	326		$	(480	)	$	189

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the 13 Weeks Ended May 4, 2013



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	(292	)	$	(323	)	$	213		$	110		$	(292	)
Other comprehensive income
Pension and postretirement adjustments, net of tax	—			42			4			—			46
Currency translation adjustments, net of tax	—			—			(7		)	—			(7		)
Unrealized net gain, net of tax	—			1			56			(57		)	—
Total other comprehensive income	—			43			53			(57		)	39
Comprehensive income (loss)	(292		)	(280		)	266			53			(253		)
Comprehensive loss attributable to noncontrolling interests	—			—			—			14			14
Comprehensive income (loss) attributable to Holdings’ shareholders	$	(292	)	$	(280	)	$	266		$	67		$	(239	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the 13 Weeks Ended April 28, 2012



millions	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	194		$	149	$	326	$	(475	)	$	194
Other comprehensive income (loss)
Pension and postretirement adjustments, net of tax	—			42		4		—			46
Deferred gain on derivatives, net of tax	2			—		—		—			2
Currency translation adjustments, net of tax	(17		)	—		11		—			(6		)
Total other comprehensive income (loss)	(15		)	42		15		—			42
Comprehensive income	179			191		341		(475		)	236
Comprehensive income attributable to noncontrolling interests	—			—		—		(6		)	(6		)
Comprehensive income attributable to Holdings’ shareholders	$	179		$	191	$	341	$	(481	)	$	230

Condensed Consolidating Statement of Cash Flows

For the 13 Weeks Ended May 4, 2013



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	—		$	(816	)	$	103		$	—		$	(713	)
Proceeds from sales of property and investments	—			5			—			—			5
Net increase in investments and restricted cash	—			—			(1		)	—			(1		)
Purchases of property and equipment	—			(50		)	(10		)	—			(60		)
Net investing with Affiliates	—			—			45			(45		)	—
Net cash provided by (used in) investing activities	—			(45		)	34			(45		)	(56		)
Proceeds from debt issuances	—			—			1			—			1
Repayments of long-term debt	—			(27		)	(1		)	—			(28		)
Increase in short-term borrowings, primarily 90 days or less	—			660			—			—			660
Intercompany dividend	112			—			(112		)	—			—
Net borrowing with Affiliates	(112		)	255			(188		)	45			—
Net cash provided by (used in) financing activities	—			888			(300		)	45			633
Effect of exchange rate changes on cash and cash equivalents	—			—			(2		)	—			(2		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	—			27			(165		)	—			(138		)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	—			320			289			—			609
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	347		$	124		$	—		$	471

Condensed Consolidating Statement of Cash Flows

For the 13 Weeks Ended April 28, 2012



millions	Parent		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	—	$	(150	)	$	91		$	—		$	(59	)
Proceeds from sales of property and investments	—		274			172			—			446
Net increase in investments and restricted cash	—		—			1			—			1
Purchases of property and equipment	—		(64		)	(16		)	—			(80		)
Net investing with Affiliates	—		—			(12		)	12			—
Net cash provided by investing activities	—		210			145			12			367
Proceeds from debt issuances	—		—			1			—			1
Repayments of long-term debt	—		(106		)	(105		)	—			(211		)
Decrease in short-term borrowings, primarily 90 days or less	—		(72		)	—			—			(72		)
Purchase of Sears Canada shares	—		—			(3		)	—			(3		)
Net borrowing with Affiliates	—		167			(155		)	(12		)	—
Net cash used in financing activities	—		(11		)	(262		)	(12		)	(285		)
Effect of exchange rate changes on cash and cash equivalents	—		—			7			—			7
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	—		49			(19		)	—			30
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	—		336			411			—			747
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—	$	385		$	392		$	—		$	777