GUARANTOR/NON-GUARANTOR SUBSIDIARY FINANCIAL INFORMATION

At August 4, 2018, the principal amount outstanding of the Old Senior Secured Notes and New Senior Secured Notes was $264 million, including paid-in-kind interest. The Old Senior Secured Notes were issued in 2010 by Sears Holdings Corporation ("Parent"). The Old Senior Secured Notes and New Senior Secured Notes are guaranteed by certain of our 100% owned domestic subsidiaries that own the collateral for the Old Senior Secured Notes and New Senior Secured Notes, as well as by Sears Holdings Management Corporation and SRAC (the "guarantor subsidiaries"). The following condensed consolidated financial information presents the Condensed Consolidating Balance Sheets at August 4, 2018, July 29, 2017 and February 3, 2018, the Condensed Consolidating Statements of Operations and the Condensed Consolidating Statements of Comprehensive Income (Loss) for the 13- and 26- week periods ended August 4, 2018 and July 29, 2017, and the Condensed Consolidating Statements of Cash Flows for the 26 week periods ended August 4, 2018 and July 29, 2017 of (i) Parent; (ii) the guarantor subsidiaries; (iii) the non-guarantor subsidiaries; (iv) eliminations and (v) the Company on a consolidated basis.

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

August 4, 2018



millions	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—		$	159	$	34	$	—		$	193
Restricted cash	248			—		—		—			248
Intercompany receivables	—			—		29,162		(29,162		)	—
Accounts receivable	2			301		24		—			327
Merchandise inventories	—			2,714		—		—			2,714
Prepaid expenses and other current assets	234			866		690		(1,404		)	386
Total current assets	484			4,040		29,910		(30,566		)	3,868
Total property and equipment, net	—			847		597		—			1,444
Goodwill and intangible assets	—			337		1,120		(98		)	1,359
Other assets	185			1,320		962		(2,201		)	266
Investment in subsidiaries	8,356			28,136		—		(36,492		)	—
TOTAL ASSETS	$	9,025		$	34,680	$	32,589	$	(69,357	)	$	6,937
Current liabilities
Short-term borrowings	$	—		$	1,440	$	24	$	(210	)	$	1,254
Current portion of long-term debt and capitalized lease obligations	89			477		—		(370		)	196
Merchandise payables	—			487		—		—			487
Intercompany payables	11,094			18,068		—		(29,162		)	—
Other current liabilities	15			1,871		1,313		(859		)	2,340
Total current liabilities	11,198			22,343		1,337		(30,601		)	4,277
Long-term debt and capitalized lease obligations	2,608			2,644		499		(2,247		)	3,504
Pension and postretirement benefits	—			1,162		2		—			1,164
Deferred gain on sale-leaseback	—			290		15		—			305
Sale-leaseback financing obligation	—			128		219		—			347
Long-term deferred tax liabilities	—			—		350		(231		)	119
Unearned revenues	—			603		415		(165		)	853
Other long-term liabilities	—			703		67		—			770
Total Liabilities	13,806			27,873		2,904		(33,244		)	11,339
EQUITY (DEFICIT)
Shareholder's equity (deficit)	(4,781		)	6,807		29,685		(36,113		)	(4,402		)
Total Equity (Deficit)	(4,781		)	6,807		29,685		(36,113		)	(4,402		)
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	9,025		$	34,680	$	32,589	$	(69,357	)	$	6,937

Condensed Consolidating Balance Sheet

July 29, 2017



millions	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—		$	180	$	32		$	—		$	212
Restricted cash	230			—		—			—			230
Intercompany receivables	—			—		27,871			(27,871		)	—
Accounts receivable	—			350		20			—			370
Merchandise inventories	—			3,433		—			—			3,433
Prepaid expenses and other current assets	31			677		432			(806		)	334
Total current assets	261			4,640		28,355			(28,677		)	4,579
Total property and equipment, net	—			1,262		707			—			1,969
Goodwill and intangible assets	—			355		1,261			(98		)	1,518
Other assets	405			1,304		1,532			(2,940		)	301
Investment in subsidiaries	9,302			27,717		—			(37,019		)	—
TOTAL ASSETS	$	9,968		$	35,278	$	31,855		$	(68,734	)	$	8,367
Current liabilities
Short-term borrowings	$	—		$	689	$	—		$	(143	)	$	546
Current portion of long-term debt and capitalized lease obligations	—			1,052		—			—			1,052
Merchandise payables	—			672		(2		)	—			670
Intercompany payables	11,416			16,455		—			(27,871		)	—
Other current liabilities	37			2,147		1,133			(611		)	2,706
Total current liabilities	11,453			21,015		1,131			(28,625		)	4,974
Long-term debt and capitalized lease obligations	2,130			3,036		—			(2,761		)	2,405
Pension and postretirement benefits	—			1,727		4			—			1,731
Deferred gain on sale-leaseback	—			455		—			—			455
Sale-leaseback financing obligation	—			141		89			—			230
Long-term deferred tax liabilities	48			—		738			(143		)	643
Unearned revenues	—			305		481			(193		)	593
Other long-term liabilities	—			913		79			—			992
Total Liabilities	13,631			27,592		2,522			(31,722		)	12,023
EQUITY (DEFICIT)
Shareholder's equity (deficit)	(3,663		)	7,686		29,333			(37,012		)	(3,656		)
Noncontrolling interest	—			—		—			—			—
Total Equity (Deficit)	(3,663		)	7,686		29,333			(37,012		)	(3,656		)
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	9,968		$	35,278	$	31,855		$	(68,734	)	$	8,367

Condensed Consolidating Balance Sheet

February 3, 2018



millions	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—		$	152	$	30	$	—		$	182
Restricted cash	154			—		—		—			154
Intercompany receivables	—			—		27,993		(27,993		)	—
Accounts receivable	—			322		21		—			343
Merchandise inventories	—			2,798		—		—			2,798
Prepaid expenses and other current assets	309			910		478		(1,351		)	346
Total current assets	463			4,182		28,522		(29,344		)	3,823
Total property and equipment, net	—			1,043		686		—			1,729
Goodwill and intangible assets	—			346		1,189		(98		)	1,437
Other assets	179			1,331		1,159		(2,385		)	284
Investment in subsidiaries	8,787			27,774		—		(36,561		)	—
TOTAL ASSETS	$	9,429		$	34,676	$	31,556	$	(68,388	)	$	7,273
Current liabilities
Short-term borrowings	$	144		$	937	$	—	$	(166	)	$	915
Current portion of long-term debt and capitalized lease obligations	303			897		—		(232		)	968
Merchandise payables	—			576		—		—			576
Intercompany payables	11,099			16,894		—		(27,993		)	—
Other current liabilities	16			1,970		1,426		(949		)	2,463
Total current liabilities	11,562			21,274		1,426		(29,340		)	4,922
Long-term debt and capitalized lease obligations	1,991			2,734		—		(2,476		)	2,249
Pension and postretirement benefits	—			1,616		3		—			1,619
Deferred gain on sale-leaseback	—			360		2		—			362
Sale-leaseback financing obligation	—			158		89		—			247
Long-term deferred tax liabilities	—			—		349		(223		)	126
Unearned revenues	—			271		446		(178		)	539
Other long-term liabilities	—			867		68		—			935
Total Liabilities	13,553			27,280		2,383		(32,217		)	10,999
EQUITY (DEFICIT)
Shareholder's equity (deficit)	(4,124		)	7,396		29,173		(36,171		)	(3,726		)
Noncontrolling interest	—			—		—		—			—
Total Equity (Deficit)	(4,124		)	7,396		29,173		(36,171		)	(3,726		)
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	9,429		$	34,676	$	31,556	$	(68,388	)	$	7,273

Condensed Consolidating Statement of Operations

For the 13 Weeks Ended August 4, 2018



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Merchandise sales	$	—		$	2,416		$	—		$	12		$	2,428
Services and other	1			766			528			(541		)	754
Total revenues	1			3,182			528			(529		)	3,182
Cost of sales, buying and occupancy - merchandise sales	1			2,028			—			26			2,055
Cost of sales and occupancy - services and other	—			521			215			(311		)	425
Total cost of sales, buying and occupancy	1			2,549			215			(285		)	2,480
Selling and administrative	3			918			187			(244		)	864
Depreciation and amortization	—			53			13			—			66
Impairment charges	—			—			77			—			77
Gain on sales of assets	—			(80		)	(23		)	—			(103		)
Total costs and expenses	4			3,440			469			(529		)	3,384
Operating income (loss)	(3		)	(258		)	59			—			(202		)
Interest expense	(205		)	(278		)	(75		)	370			(188		)
Interest and investment income	56			117			218			(389		)	2
Other loss	—			(139		)	—			—			(139		)
Income (loss) before income taxes	(152		)	(558		)	202			(19		)	(527		)
Income tax (expense) benefit	—			27			(8		)	—			19
Equity (deficit) in earnings in subsidiaries	(337		)	98			—			239			—
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS	$	(489	)	$	(433	)	$	194		$	220		$	(508	)

Condensed Consolidating Statement of Operations

For the 13 Weeks Ended July 29, 2017



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Merchandise sales	$	—		$	3,406		$	—		$	8		$	3,414
Services and other	—			885			563			(584		)	864
Total revenues	—			4,291			563			(576		)	4,278
Cost of sales, buying and occupancy - merchandise sales	—			2,795			—			20			2,815
Cost of sales and occupancy - services and other	—			584			220			(313		)	491
Total cost of sales, buying and occupancy	—			3,379			220			(293		)	3,306
Selling and administrative	(33		)	1,229			210			(283		)	1,123
Depreciation and amortization	—			67			16			—			83
Impairment charges	—			5			—			—			5
(Gain) loss on sales of assets	6			(386		)	—			—			(380		)
Total costs and expenses	(27		)	4,294			446			(576		)	4,137
Operating income (loss)	27			(3		)	117			—			141
Interest expense	(154		)	(237		)	(4		)	272			(123		)
Interest and investment income (loss)	28			64			168			(272		)	(12		)
Other loss	—			(246		)	—			—			(246		)
Income (loss) before income taxes	(99		)	(422		)	281			—			(240		)
Income tax (expense) benefit	—			21			(31		)	—			(10		)
Equity (deficit) in earnings in subsidiaries	(151		)	176			—			(25		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS	$	(250	)	$	(225	)	$	250		$	(25	)	$	(250	)

Condensed Consolidating Statement of Operations

For the 26 Weeks Ended August 4, 2018



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Merchandise sales	$	—		$	4,619		$	—		$	21		$	4,640
Services and other	1			1,446			1,045			(1,059		)	1,433
Total revenues	1			6,065			1,045			(1,038		)	6,073
Cost of sales, buying and occupancy - merchandise sales	1			3,894			—			59			3,954
Cost of sales and occupancy - services and other	—			998			427			(613		)	812
Total cost of sales, buying and occupancy	1			4,892			427			(554		)	4,766
Selling and administrative	6			1,873			375			(484		)	1,770
Depreciation and amortization	—			106			27			—			133
Impairment charges	—			11			80			—			91
Gain on sales of assets	—			(187		)	(81		)	—			(268		)
Total costs and expenses	7			6,695			828			(1,038		)	6,492
Operating income (loss)	(6		)	(630		)	217			—			(419		)
Interest expense	(387		)	(564		)	(91		)	688			(354		)
Interest and investment income	89			176			445			(707		)	3
Other loss	—			(172		)	—			—			(172		)
Income (loss) before income taxes	(304		)	(1,190		)	571			(19		)	(942		)
Income tax (expense) benefit	—			61			(51		)	—			10
Equity (deficit) in earnings in subsidiaries	(609		)	357			—			252			—
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS	$	(913	)	$	(772	)	$	520		$	233		$	(932	)

Condensed Consolidating Statement of Operations

For the 26 Weeks Ended July 29, 2017



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Merchandise sales	$	—		$	6,730		$	—		$	13		$	6,743
Services and other	—			1,756			1,161			(1,183		)	1,734
Total revenues	—			8,486			1,161			(1,170		)	8,477
Cost of sales, buying and occupancy - merchandise sales	—			5,547			—			47			5,594
Cost of sales and occupancy - services and other	—			1,188			443			(651		)	980
Total cost of sales, buying and occupancy	—			6,735			443			(604		)	6,574
Selling and administrative	(32		)	2,515			427			(566		)	2,344
Depreciation and amortization	—			138			32			—			170
Impairment charges	—			20			—			—			20
Gain on sales of assets	(486		)	(635		)	—			—			(1,121		)
Total costs and expenses	(518		)	8,773			902			(1,170		)	7,987
Operating income (loss)	518			(287		)	259			—			490
Interest expense	(271		)	(458		)	(8		)	486			(251		)
Interest and investment income (loss)	38			103			331			(486		)	(14		)
Other loss	—			(292		)	—			—			(292		)
Income (loss) before income taxes	285			(934		)	582			—			(67		)
Income tax (expense) benefit	—			150			(88		)	—			62
Equity (deficit) in earnings in subsidiaries	(290		)	349			—			(59		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS	$	(5	)	$	(435	)	$	494		$	(59	)	$	(5	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the 13 Weeks Ended August 4, 2018



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated
Net income (loss)	$	(489	)	$	(433	)	$	194		$	220	$	(508	)
Other comprehensive income (loss)
Pension and postretirement adjustments, net of tax	—			218			—			—		218
Currency translation adjustments, net of tax	—			—			(1		)	—		(1		)
Unrealized net loss, net of tax	(8		)	—			—			8		—
Total other comprehensive income (loss)	(8		)	218			(1		)	8		217
Comprehensive income (loss) attributable to Holdings' shareholders	$	(497	)	$	(215	)	$	193		$	228	$	(291	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the 13 Weeks Ended July 29, 2017



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	(250	)	$	(225	)	$	250	$	(25	)	$	(250	)
Other comprehensive income
Pension and postretirement adjustments, net of tax	—			127			—		—			127
Total other comprehensive income	—			127			—		—			127
Comprehensive income (loss) attributable to Holdings' shareholders	$	(250	)	$	(98	)	$	250	$	(25	)	$	(123	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the 26 Weeks Ended August 4, 2018



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations		Consolidated
Net income (loss)	$	(913	)	$	(772	)	$	520	$	233	$	(932	)
Other comprehensive income (loss)
Pension and postretirement adjustments, net of tax	—			254			—		—		254
Currency translation adjustments, net of tax	—			—			—		—		—
Unrealized net gain (loss), net of tax	(8		)	—			3		5		—
Total other comprehensive income (loss)	(8		)	254			3		5		254
Comprehensive income (loss) attributable to Holdings' shareholders	$	(921	)	$	(518	)	$	523	$	238	$	(678	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the 26 Weeks Ended July 29, 2017



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	(5	)	$	(435	)	$	494	$	(59	)	$	(5	)
Other comprehensive income
Pension and postretirement adjustments, net of tax	—			177			—		—			177
Currency translation adjustments, net of tax	—			—			1		—			1
Unrealized net gain, net of tax	—			—			26		(26		)	—
Total other comprehensive income	—			177			27		(26		)	178
Comprehensive income (loss) attributable to Holdings' shareholders	$	(5	)	$	(258	)	$	521	$	(85	)	$	173

Condensed Consolidating Statement of Cash Flows

For the 26 Weeks Ended August 4, 2018



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	8		$	(1,170	)	$	126		$	—		$	(1,036	)
Proceeds from sales of property and investments	—			160			162			—			322
Purchases of property and equipment	—			(28		)	(4		)	—			(32		)
Net investing with Affiliates	(245		)	(94		)	(795		)	1,134			—
Net cash provided by (used in) investing activities	(245		)	38			(637		)	1,134			290
Proceeds from debt issuances	327			195			713			—			1,235
Repayments of long-term debt	(88		)	(611		)	(170		)	—			(869		)
Increase in short-term borrowings, primarily 90 days or less	—			389			—			—			389
Proceeds from sale-leaseback financing	—			130			—			—			130
Debt issuance costs	(2		)	(4		)	(28		)	—			(34		)
Net borrowing with Affiliates	94			1,040			—			(1,134		)	—
Net cash provided by financing activities	331			1,139			515			(1,134		)	851
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	94			7			4			—			105
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH BEGINNING OF YEAR	154			152			30			—			336
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH END OF PERIOD	$	248		$	159		$	34		$	—		$	441

Condensed Consolidating Statement of Cash Flows

For the 26 Weeks Ended July 29, 2017



millions	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(11	)	$	(1,436	)	$	309		$	—		$	(1,138	)
Proceeds from sales of property and investments	—			569			—			—			569
Proceeds from Craftsman sale	572			—			—			—			572
Proceeds from sales of receivables	293			—			—			—			293
Purchases of property and equipment	—			(36		)	(5		)	—			(41		)
Net investing with Affiliates	(582		)	—			(298		)	880			—
Net cash provided by (used in) investing activities	283			533			(303		)	880			1,393
Proceeds from debt issuances	—			330			—			—			330
Repayments of long-term debt	(39		)	(678		)	—			—			(717		)
Increase in short-term borrowings, primarily 90 days or less	—			216			—			—			216
Proceeds from sale-leaseback financing	—			89			—			—			89
Debt issuance costs	(3		)	(14		)	—			—			(17		)
Net borrowing with Affiliates	—			880			—			(880		)	—
Net cash provided by (used in) financing activities	(42		)	823			—			(880		)	(99		)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	230			(80		)	6			—			156
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH BEGINNING OF YEAR	—			260			26			—			286
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH END OF PERIOD	$	230		$	180		$	32		$	—		$	442