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    Letter to Shareholders 667 Madison Ave. New York, NY 10065 www.loews.com 20 17


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    Financial Highlights Year Ended December 31 (In millions, except per share data) 2017 2016 2015 2014 2013 Results of Operations: Revenues $ 13,735 $ 13,105 $ 13,415 $ 14,325 $ 14,613 Income before income tax $ 1,582 $ 936 $ 244 $ 1,810 $ 2,277 Income from continuing operations $ 1,412 $ 716 $ 287 $ 1,353 $ 1,621 Discontinued operations, net (391) (552) Net income 1,412 716 287 962 1,069 Amounts attributable to noncontrolling interests (248) (62) (27) (371) (474) Net income attributable to Loews Corporation $ 1,164 $ 654 $ 260 $ 591 $ 595 Net income attributable to Loews Corporation: Income from continuing operations $ 1,164 $ 654 $ 260 $ 962 $ 1,149 Discontinued operations, net (371) (554) Net income $ 1,164 $ 654 $ 260 $ 591 $ 595 Diluted Net Income Per Share: Income from continuing operations $ 3.45 $ 1.93 $ 0.72 $ 2.52 $ 2.95 Discontinued operations, net (0.97) (1.42) Net income $ 3.45 $ 1.93 $ 0.72 $ 1.55 $ 1.53 Financial Position: Investments $ 52,226 $ 50,711 $ 49,400 $ 52,032 $ 52,945 Total assets 79,586 76,594 76,006 78,342 79,913 Debt Parent company 1,776 1,775 1,679 1,680 1,678 Subsidiaries 9,757 9,003 8,881 8,963 8,640 Shareholders’ equity 19,204 18,163 17,561 19,280 19,458 Cash dividends per share 0.25 0.25 0.25 0.25 0.25 Book value per share 57.83 53.96 51.67 51.70 50.25 Shares outstanding 332.09 336.62 339.90 372.93 387.21 Results of Operations Consolidated net income for 2017 was $1.16 billion, or $3.45 per share, interest expense and a charge related to the early redemption of debt in the compared to $654 million, or $1.93 per share, in 2016. Net income for 2017 third quarter of 2017. includes a benefit of $200 million, or $0.59 per share, resulting from the Boardwalk Pipeline’s earnings decreased slightly due to the loss on the sale enactment on December 22, 2017 of the Tax Cuts and Jobs Act of 2017 of the Flag City processing plant in the second quarter of 2017, lower storage (the “Tax Act”). The net benefit primarily relates to the remeasurement of and parking and lending revenues, and a decrease in revenues related to the Loews Corporation’s net deferred tax liability caused by the lowering of the restructuring of a firm transportation customer contract, mostly offset by U.S. federal corporate tax rate. Excluding the impact of the Tax Act, net revenues from growth projects recently placed into service. Boardwalk also income for 2017 would have been $964 million, or $2.86 per share. benefited from lower interest expense due to higher capitalized interest related Net income attributable to Loews Corporation for 2017 increased as compared to growth projects. to the prior year partially due to the net benefit from the Tax Act as discussed Loews Hotels’ earnings increased primarily due to higher joint venture equity above. Absent the benefit, net income increased $310 million primarily from income, which included a net benefit of $14 million (after tax) primarily related higher earnings at CNA, Loews Hotels and Diamond Offshore. to an asset sale in the first quarter of 2017. Improved performance at several The following discussion excludes the impact on each segment of the Tax Act. large properties, including the completion of renovations at the Loews Miami Beach Hotel in early 2017, also drove the increase. CNA’s earnings increased due to improved non-catastrophe current accident year underwriting results from its property and casualty operations, higher Income generated by the parent company investment portfolio was net investment income driven by improved limited partnership results, higher approximately the same as the prior year. realized investment gains and lower adverse reserve development from CNA’s Corporate and other results decreased due to higher operating expenses from 2010 asbestos and environmental pollution loss portfolio transfer. These costs related to the acquisition of Consolidated Container in May 2017. increases were partially offset by higher net catastrophe losses and a charge related to the early redemption of debt in the third quarter of 2017. At December 31, 2017, excluding other comprehensive income, the book value per share of Loews common stock was $57.91 as compared to $54.62 at Diamond Offshore’s results improved due to a $235 million decrease in asset December 31, 2016. impairment charges and lower depreciation expense resulting mainly from the asset impairment charges taken in 2016 and in the first half of 2017 that At December 31, 2017, there were 332.1 million shares of Loews common reduced the depreciable asset base. These increases were partially offset by stock outstanding. In 2017, the Company purchased 4.8 million shares of its lower contract drilling revenue, higher contract drilling expense, higher common stock at an aggregate cost of $237 million. Where you can find more information: This Annual Report 2017 Letter to Shareholders summarizes certain information about Loews and its subsidiaries and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017, including the risk factors set forth therein, and the other reports we file with the Securities and Exchange Commission, all of which are available to the public at our website (www.loews.com) or at the SEC’s website (www.sec.gov).


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    To Our Shareholders At Loews, while history certainly influences our decisions and actions, our focus is on the future and on creating value for the long term. We study the world around us, thinking about what’s happening today and what may happen in the days, months and years to come — and then we analyze how those potential outcomes may affect our businesses and the investments we make. We believe it is essential to maintain this wide-angle perspective as a basis for our business strategy and our investment decisions. Jonathan M. Tisch James S. Tisch Andrew H. Tisch Co-Chairman of the Board President and Chief Executive Co-Chairman of the Board of of Loews, Chairman and Officer of Loews Loews, and Chairman of the Chief Executive Officer of Executive Committee of Loews Annual Report Loews Hotels & Co 1


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    Because our focus is broad, we understand that We give ourselves high marks for the current one of our most important responsibilities is the roster of outstanding chief executives running our selection of the CEOs for our underlying businesses. five businesses today. We believe we have the right We rely on their vision, deep industry expertise people in these leadership positions, each with and leadership — as well as that of their teams — tremendous management skills, vision and domain to make each business as successful as possible. knowledge. We engage with them in key areas — Our CEOs concentrate on strategy, operations specifically, reviewing major capital allocation and responsible growth, focusing all the while on decisions and medium- to long-term strategic their appropriate key financial metrics, such as plans, and providing financial planning and capital earnings per share and EBITDA. And while we markets guidance. understand the importance of quarterly results, we make clear that sound business decisions should not be determined by a company’s need to meet its quarterly numbers. The Value of a Long-Term View Over the years, there have been many occasions More recently, our long-term approach has when, guided by the Loews perspective, our helped guide Loews Hotels to hone its strategy subsidiaries’ leadership teams were able to plan and focus on what the company does best: owning for the long term instead of merely reacting to and operating hotels. The owner/operator business short-term market conditions. model is increasingly rare for hotel companies and gives Loews Hotels a distinct competitive Diamond Offshore provides a case in point. advantage. With the financial support of the From 2006 through 2014, during the oil industry’s parent company, Loews Hotels is able to invest in most recent boom years, oil companies expanded its own projects, making it an attractive partner their exploration and production budgets. In for developers, “immersive destination” owners response, offshore drillers and other speculators and municipalities alike. Over the coming years, ordered an estimated 125 drilling rigs, flooding Loews Hotels will leverage its solid industry the market with additional rig capacity. Despite standing, continue to focus on delivering strong the temptation to dramatically expand during operating results and seek to invest in projects with an up-cycle that seemed like it would never above-market returns, while cultivating new and end, Diamond Offshore was guided by Loews’s existing partnerships. experience in the cyclical supertanker industry, and instead used its strong cash flow to selectively Loews’s long-term perspective also influenced renew and upgrade its fleet, while also returning Boardwalk Pipeline Partners’ recent decision capital to shareholders through dividends. During to restructure its existing firm transportation Loews Corporation that time, Diamond Offshore paid regular and agreements with Southwestern Energy Company. special dividends of more than $5 billion to While the restructured agreements have negatively shareholders, including Loews, substantially affected EBITDA in the short term, this action is cushioning the recent dramatic price declines helping Boardwalk to achieve greater long-term of offshore drilling shares. revenue generation and future revenue upside. 2


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    Shares Outstanding Since 2007 In every decade since 1970 we have repurchased more than one-quarter of our outstanding shares. Since 2007 we have reduced our shares outstanding by nearly 40%. 550 530 MILLION 500 450 435 MILLION 425 MILLION 415 MILLION 397 MILLION 400 392 MILLION 387 MILLION 373 MILLION 350 340 MILLION 337 MILLION 332 MILLION 326 MILLION 300 250 Annual Report 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Feb 2018 Includes retirement of 93.5 million shares in connection with the split-off of Lorillard in 2008. 3


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    Net Investment Income and Dividends Paid to Loews $1,000 $1,000 $950 $926 175 $877 $876 $838 146 $823 146 94 22 $800 141 52 52 $744 $665 52 36 52 187 61 264 181 $616 $600 245 297 293 268 274 ($ MILLIONS) $400 728 728 752 429 245 561 245 485 245 $200 368 194 145 109 97 $0 (54) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -$200 DIVIDENDS ¹ Loews Corporation CNA Financial Diamond Offshore Boardwalk Pipeline ² Corporate ³ 1. Excludes dividends received from former subsidiaries. All dividends are subject to declaration by the respective Boards of Directors. 2. Includes Loews’s common units and GP interest in BWP. 4 3. Parent company pretax net investment income.


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    A Strong Corporate Parent Loews’s long-term viewpoint is backed by its Loews has received $3.2 billion in dividends from financial strength and liquid balance sheet, adding CNA. The capital allocation decision to invest in further value to our subsidiaries. During the CNA has certainly benefited Loews shareholders. financial crisis a decade ago, many companies such Although it took time and hard work to turn CNA as CNA experienced substantial declines in their around, we and CNA’s management had a vision for investment portfolios, seemingly overnight. To what the company could be — and we were able to shore up their balance sheets, other companies were support that vision with capital when it mattered. forced to raise significant amounts of equity, causing massive dilution for their shareholders. CNA, Our other subsidiaries have also benefited from the however, had access to capital through Loews, backing of a strong corporate parent at different which invested $1.25 billion in CNA by purchasing points in their industries’ cycles. Since 2010 Loews non-voting cumulative senior preferred stock with has invested more than $1.5 billion of holding a 10.0% dividend. By 2010, these shares had been company cash to help facilitate transactions for redeemed in their entirety. Boardwalk and Loews Hotels — and has been repaid for more than two-thirds of that amount. Our Over the last 15 years, CNA Financial has worked conservatively-managed and liquid balance sheet hard to transform itself from an un-focused multi- has helped our subsidiaries meet challenges and line insurance company into a highly-focused take advantage of market opportunities in order to commercial property and casualty company. This emerge stronger and better positioned. transformation didn’t happen overnight — it required enormous discipline by the management team at Currently CNA provides the lion’s share of dividends CNA, guided by Loews’s strategic insights. from the subsidiaries to the parent company. It was not too long ago, however, that Diamond and Today, CNA common shares are up by a factor Boardwalk contributed the majority of dividends of almost seven times from their low in 2009. The to Loews. This evolution underscores the benefit to company has a fortress balance sheet in terms of our shareholders of a portfolio of diverse businesses. both capital and liquidity. Over the last four years, Driving Value through Capital Allocation Investing in our existing subsidiaries is just one CCC is an outstanding company that checked Annual Report way we deploy capital to build shareholder value all the Loews acquisition criteria boxes, including at Loews. While it doesn’t happen often, we the fragmentation of the industry, its defensive also may allocate capital by acquiring a business position in consumer end markets, strong cash-on- in a new industry — and last year we purchased cash returns, and — last but certainly not least — Consolidated Container Company (CCC), a rigid a highly-qualified management team. plastics manufacturer based in Atlanta, Georgia. 5


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    With the acquisition of CCC, Loews added offered attractive value. Both of these factors a new industry to its already diverse portfolio influenced our decision to repurchase 4.6 million of businesses — one that will provide a great Loews shares. This trend continued in the first foundation for expansion through organic growth quarter, and in the first two months of 2018 and bolt-on acquisitions. These add-on acquisitions we repurchased another 6 million shares. Since should afford CCC substantial revenue and October 31, 2017 we’ve bought back 10.6 million operating synergies. shares at a cost of $534 million, representing 3% of the company’s shares outstanding. Repurchasing Another important capital allocation lever at Loews shares at a significant discount to their intrinsic has been and continues to be share repurchases. In value inures to the benefit of all Loews shareholders. the fourth quarter of 2017, we recognized that our In the past decade, we have acquired almost 40% shares were trading at a particularly compelling of our outstanding shares — continuing our nearly discount to our view of their intrinsic value. We half-century practice of substantial share buy-backs. also believed that our publicly-traded subsidiaries In Conclusion, Our Thanks As always, we are thankful to the executive teams and the employees of our subsidiaries, as well as to all Loews employees, for their dedication and professionalism, and we thank our board of directors for their sound guidance. We also thank you, our shareholders, for your support and trust. As shareholders ourselves, our interests align with yours — in fact, members of the Tisch family own more than 30% of the company. As we look toward the future, we affirm our commitment to stay focused on making decisions that best position Loews and its subsidiaries for sustainable long-term value creation, an approach that has guided this company for well over half a century. Sincerely, Loews Corporation James S. Tisch Andrew H. Tisch Jonathan M. Tisch Office of the President February 28, 2018 6


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    Our Portfolio CNA Financial NYSE Symbol CNA of Businesses: Owned Industry CEO 89% Commercial Property & Casualty Insurance Dino E. Robusto CNA Financial Corporation was founded in 1897 and has been headquartered in Chicago since 1900. In 2017, CNA celebrated its 120th year in business. As one of the largest commercial property and casualty insurance organizations in the United States, CNA provides business insurance protection to more than one million businesses and professionals in the U.S. and internationally. Today, CNA has more than 75 offices around the world. CNA’s insurance products include standard commercial lines, specialty lines, surety and other property and casualty coverage. www.cna.com Diamond Offshore Drilling NYSE Symbol DO Owned 53% Industry Offshore Drilling CEO Marc Edwards Diamond Offshore Drilling, Inc. provides contract drilling services to the global energy industry. Diamond is a leader in deepwater drilling and has a strong and liquid balance sheet. The company’s fleet consists of 17 offshore drilling rigs including 13 semisubmersibles and four dynamically positioned drillships. www.diamondoffshore.com Loews’s assets currently consist of three Boardwalk Pipeline Partners publicly-traded subsidiaries: CNA NYSE Symbol BWP Financial, Diamond Offshore Drilling, Owned 51% and Boardwalk Pipeline Partners; and two Industry Natural Gas & Liquids Pipelines & Storage CEO Stanley C. Horton non-public operating subsidiaries: Loews Boardwalk Pipeline Partners L.P. is a midstream master limited partnership that primarily Hotels & Co and Consolidated Container transports and stores natural gas and natural gas liquids for its customers. Boardwalk owns Company; as well as a large portfolio of and operates approximately 14,300 miles of natural gas and liquids pipelines. Additionally, cash and investments. Boardwalk owns and operates natural gas and liquids underground storage facilities. www.bwpmlp.com Our unique structure gives us the freedom to make investments and acquisitions across a broad spectrum of industries, Loews Hotels & Co wherever we see opportunity. Owned 100% Industry Luxury Lodging CEO Jonathan M. Tisch Loews Hotels & Co owns and/or operates 24 hotels and resorts in the United States and Canada. Located in major city centers and resort destinations from coast to coast, the Loews portfolio features one-of-a-kind properties that go beyond Four Diamond standards to delight guests with exciting, approachable and local travel experiences. www.loewshotels.com Consolidated Container Company Owned 99% Industry Rigid Plastic Packaging CEO Sean R. Fallmann Annual Report CCC provides packaging solutions to stable consumer end markets such as beverage, food, and household chemicals. With 55 rigid plastic packaging manufacturing facilities, two recycled resins manufacturing facilities, and 2,300 employees, the company has a nationwide network that consistently delivers reliable and cost-effective packaging and recycled resin solutions. CCC also operates a leading recycled and custom compounded post-consumer resin business, Envision Plastics. www.cccllc.com 7


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    Subsidiaries’ Performance Highlights Loews has majority positions in three publicly-traded subsidiaries: CNA Financial, Diamond Offshore Drilling and Boardwalk Pipeline Partners. We also have two non-publicly traded subsidiaries, Loews Hotels & Co and our recently-acquired packaging business, Consolidated Container Company. CNA Financial By the Numbers (Year ended December 31, 2017, $ in millions) Revenue $9,542 Worldwide Field Offices 78 Employees 6,300 Invested Assets $46,870 Worldwide Agents & Brokers 4,800* *(3,300 Domestic, 1,500 International) CNA is a property and casualty (P&C) insurance company with a well- respected brand, an extensive network of independent agents and brokers, a targeted focus on select industries, strong underwriting discipline and dedicated teams of professionals. Loews Corporation The P&C business at CNA consists of three business units — specialty, commercial and international — each of which is focused on select customer segments where CNA has a significant presence, and specialized insurance products in which CNA has demonstrated expertise. Its specialty business unit focuses on areas of the professional services and healthcare markets that are difficult to replicate. It also includes a significant presence in the surety and warranty spaces, where CNA has long maintained market- 8 leading positions. The commercial lines business unit provides P&C


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    coverage for small, mid-sized and selected larger businesses, and has been steadily improving its underwriting margin. The international business unit includes a consistently high-performing operation in Canada, strong contributions from its London Company Market business, and a solid core Lloyd’s syndicate business that serves customers in more than 200 countries and territories. Over the last decade CNA has laid a strong foundation upon which it can profitably and responsibly grow its business. Management has improved underwriting performance in commercial lines, continued to build its presence in specialty lines, and exited non-performing lines of business while actively managing its long-term care business. CNA also has worked to improve its relationship with key distribution partners including independent brokers and agents. CNA has been an important contributor of dividends to the parent company. The regular quarterly dividend was increased by 20% to $0.30 per share in mid-year 2017. In 2017, Loews received $752 million in total dividends from CNA and, in early 2018, CNA will once again pay Loews a special dividend of $485 million. This amount is in addition to the $291 million Loews expects to receive from CNA in 2018 through its quarterly dividend. Diamond Offshore Drilling By the Numbers (Year ended December 31, 2017, $ in millions) Revenue $1,486 Employees 2,400 Rig Fleet 17 Diamond Offshore operates in an industry that has been suffering through a tough, protracted downturn. This environment has led to reduced exploration and development spending by oil and gas producers and fewer opportunities for new contracts, even as new ultra-deepwater drillships continue to enter the market. Although it has not been immune to these market forces, Diamond’s Annual Report strategy has placed the company in a stable position, unlike many other offshore drillers. The company’s selective addition of newbuild drillships and semisubmersible rigs has created an active floater fleet that is among the youngest in the industry. Diamond has also focused on managing its cost structure and on technology and process innovation. For example, the company’s recently-introduced service model, Pressure Control by 9


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    the Hour ®, aligns the equipment manufacturer’s interests with Diamond’s. In this model, the manufacturer remains responsible for owning and maintaining the blowout preventer (BOP) and related equipment, while Diamond pays for usage of the BOP on a day-rate basis. Although Diamond reported a net loss in 2017 after taking into account restructuring costs, asset impairment and other items, the company was also able to strengthen its balance sheet and increase its liquidity. At year end, Diamond had approximately $375 million in cash and cash equivalents and an undrawn $1.5 billion revolver, with no newbuild capital expenditures and no bond maturities until 2023. Additionally, the company settled litigation with a customer that had sought to cancel a drilling contract, extending the contract for the Ocean Valor until September 2020, and adding $144 million in backlog. It is inevitable that the offshore drilling market will recover since, by some estimates, offshore oil production supplies up to 25% of the world’s oil. This is a significant percentage of worldwide production that cannot be replaced by conventional onshore drilling or shale production. As Diamond Offshore’s customers ultimately return to active offshore drilling programs, the company will be ready to meet their needs. Boardwalk Pipeline Partners By the Numbers (Year ended December 31, 2017, $ in millions) Revenue $1,323 Total Miles of Pipeline 14,335 Average Daily Throughput 6.4 Bcf Underground Gas Storage 205 Bcf Employees 1,260 Boardwalk Pipeline Partners is benefitting from natural gas demand that has begun to catch up with supply and is forecasted to grow substantially in the next few years. The favorable market dynamics in the natural gas space have created opportunities for the company to continue its pipeline expansion program. Loews Corporation Boardwalk has $1.3 billion of growth projects under construction through 2020 that will service the increased demand from natural gas end-users such as liquefied natural gas (LNG) export terminals, power generation plants, and industrials, as well as liquids demand from petrochemical facilities. 10


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    The largest such project, the Coastal Bend Header, will provide 1.4 billion cubic feet a day of firm transportation service to customers of the Freeport LNG export facility. Boardwalk also is proceeding with three Gulf South projects that will provide firm transportation services to new power plant customers, two in Louisiana and one in Texas. These three projects represent more than 0.5 billion cubic feet of load to power generation end-users. Finally, the company is progressing with the construction of a range of natural gas liquids growth projects. All projects are backed by firm agreements with a weighted-average contract life of 17 years, providing an attractive rate of return to Boardwalk. Over the next few years Boardwalk will be facing recontracting shortfalls as contracts expire on expansion projects that were placed into service during the shale boom late in the last decade. The company has started to make progress addressing this situation by restructuring and extending the terms of agreements with a customer that had contracted the majority of capacity on one of those expansion projects. Loews Hotels & Co By the Numbers (Year ended December 31, 2017, $ in millions) System-Wide Revenue $1,355 System-Wide Hotels 24* System-Wide System-Wide Guest Rooms 12,361* Employees 9,348 *(excludes 6 hotels under development) Loews Hotels & Co is benefitting from its focused strategy, despite a hospitality industry environment marked by slowing RevPAR growth, technological disruption, and competition from large consolidators. As the company has been expanding, operating margins have been increasing steadily — with adjusted EBITDA rising nearly 14% in 2017 versus the prior year. The company’s growth strategy is built around two solid pillars. The first pillar is represented by highly-profitable, distinguished group- oriented properties such as the Loews Chicago Hotel, Loews Vanderbilt Hotel in Nashville, Loews Philadelphia Hotel and Loews Miami Beach Hotel. These properties serve the upper-upscale market and cater to group business. Secondly, Loews Hotels seeks partners whose immersive destinations are unique demand generators, such as its long-term Annual Report partnership with Universal Orlando Resorts. The company has capitalized on this opportunity by joining forces with its partners to create one-of- a-kind destinations, such as the Hard Rock Hotel and the Cabana Bay Beach Resort, and now has five hotels and 5,600 rooms in Orlando. Loews 11


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    Hotels will open its sixth Orlando property, the 600-room Aventura Hotel, in the summer of 2018. And it has announced the joint venture’s largest investment ever in the Orlando market, with 2,800 rooms across two hotels that are expected to open in phases during 2019 and 2020. Other recent investments include the 800-key Loews Kansas City Hotel, slated to open in 2020. This property will be connected to the Kansas City Convention Center and is aligned with Loews Hotels’ core group business strategy. Expanding on its immersive destination strategy, the company will open two new hotels called Live! by Loews in partnership with The Cordish Companies, a leading real estate developer with expertise in entertainment districts. These Live! by Loews properties will open in Arlington, Texas in 2019 and in St. Louis, Missouri in 2020, each being adjacent to major sports arenas and entertainment facilities. Consolidated Container Company By the Numbers (Year ended December 31, 2017) Number of Manufacturing Facilities 57 Design & Utility Patents 150+ Employees 2,300 In 2017 Loews acquired a new subsidiary: Consolidated Container Company (CCC), a rigid plastic packaging manufacturer. CCC is well positioned to deliver custom and standard packaging solutions to small and mid-sized companies across a number of consumer and industrial end-markets. The company has a particular focus on small but growing brands that have been challenging traditional incumbents in various product classes, such as Seventh Generation cleaning products and Persil laundry detergent. CCC’s strategy gives the company a competitive position in a fragmented industry. It has a network of 57 manufacturing facilities across North America, either co-located with or close to its customers, which allows Loews Corporation CCC to reliably provide quality products while minimizing transportation costs. The company also has a strong commitment to innovation and the environment, with an engineering and development center that creates new and enhanced products, along with manufacturing techniques and processes that make CCC an even more valuable partner for its customers. 12


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    ESG at Loews Loews Corporation recognizes the importance of identifying, assessing and managing environmental, social and governance (ESG) issues as a fundamental part of conducting business. We believe that this approach helps strengthen the ties between our success and the well- being of our employees, partners, shareholders and the communities in which we live and work. Environmental We believe that diverse ecosystems and healthy natural resources — fresh water, oceans, and air — are critical components of our society and economy. Across our businesses we continually seek opportunities to improve our operational sustainability. Social Loews Corporation has a deeply rooted tradition of acting in a responsible and ethical manner, and being actively and positively present in the communities where we operate. We do not tolerate discrimination or harassment. We foster an environment where all employees are given the tools to succeed and to contribute to the community through meaningful civic and volunteer activities. Governance We are committed to high standards in corporate governance, including a strong and independent board of directors, a robust ethics and compliance program, and a compensation framework that incentivizes desirable behaviors. Annual Report Additional details can be found at ir.loews.com and in our annual proxy statement. 13


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    Board of Directors Lawrence S. Bacow Philip A. Laskawy Hauser Leader-in-Residence, Retired Chairman and Harvard Kennedy School Chief Executive Officer, Director since 2011 Ernst & Young LLP Director since 2003 Ann E. Berman Retired Senior Advisor to the President, Ken Miller Harvard University President and Chief Executive Officer, Director since 2006 Ken Miller Capital, LLC Director since 2008 Joseph L. Bower Donald K. David Professor Emeritus, James S. Tisch Harvard Business School Office of the President, Director since 2001 President and Chief Executive Officer Director since 1986 Charles D. Davidson Venture Partner, Andrew H. Tisch Quantum Energy Partners Office of the President and Director since 2015 Co-Chairman of the Board Chairman of Executive Committee Charles M. Diker Director since 1985 Managing Partner, Diker Management LLC, and Chairman of the Board, Jonathan M. Tisch Cantel Medical Corp. Office of the President and Director since 2003 Co-Chairman of the Board; Chairman, Loews Hotels Jacob A. Frenkel Director since 1986 Chairman of the Board of Trustees, the Group of Thirty; Anthony Welters Chairman, JPMorgan Chase International Executive Chairman, Director since 2009 Black Ivy Group, LLC Director since 2013 Paul J. Fribourg Chairman of the Board, President and Chief Executive Officer, Continental Grain Company Director since 1997 Walter L. Harris President and CEO, FOJP Service Corporation and Hospital Insurance Company Director since 2004 Loews Corporation Key Member of Audit Committee Member of Executive Committee Member of Compensation Committee 14 Member of Nominating and Governance Committee


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    Officers James S. Tisch Susan Becker Office of the President, Vice President, Tax President and Chief Executive Officer Laura K. Cushing Andrew H. Tisch Vice President, Office of the President, Human Resources Co-Chairman of the Board, and Chairman of the Executive Committee Herb E. Hofmann Vice President, Jonathan M. Tisch Information Technology Office of the President, Co-Chairman of the Board, Jonathan Koplovitz and Chairman and CEO, Vice President, Loews Hotels Corporate Development Marc A. Alpert Mark S. Schwartz Senior Vice President, Vice President, General Counsel and Corporate Secretary Chief Accounting Officer David B. Edelson Mary Skafidas Senior Vice President and Vice President, Chief Financial Officer Investor Relations and Corporate Communications Richard W. Scott Senior Vice President and Alexander H. Tisch Chief Investment Officer Vice President Kenneth I. Siegel Benjamin J. Tisch Senior Vice President Vice President Edmund Unneland Treasurer Jane Wang Vice President Principal Subsidiaries CNA Financial Corporation Loews Hotels Dino E. Robusto Jonathan M. Tisch Chairman and Chief Executive Officer Chairman and Chief Executive Officer 333 South Wabash Avenue 667 Madison Avenue Chicago, IL 60604-4107 New York, NY 10065-8087 www.cna.com www.loewshotels.com Diamond Offshore Drilling, Inc. Consolidated Container Company Marc Edwards Sean R. Fallmann President and Chief Executive Officer President and Chief Executive Officer 15415 Katy Freeway 3101 Towercreek Parkway, Suite 300 Houston, TX 77094-1810 Atlanta, GA 30339-3056 Annual Report www.diamondoffshore.com www.cccllc.com Boardwalk Pipeline Partners L.P. Stanley C. Horton President and Chief Executive Officer 9 Greenway Plaza, Suite 2800 Houston, TX 77046-0946 www.bwpmlp.com 15


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    Dividend Information We have paid quarterly cash dividends in each year since 1967. Regular dividends of $0.0625 per share of Loews common stock were paid in each calendar quarter of 2017 and 2016. Annual Meeting The Annual Meeting of Shareholders will be held at the Loews Regency New York Hotel, 540 Park Avenue, New York, New York, on Tuesday, May 8, 2018, at 11:00 a.m. Eastern Time. Transfer Agent and Registrar Computershare P.O. Box 30170 College Station, TX 77842-3170 800-358-9151 www.computershare.com/investor Independent Auditors Deloitte & Touche LLP 30 Rockefeller Plaza New York, NY 10112 www.deloitte.com Forward-Looking Statements Statements contained in this letter which are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are inherently uncertain and subject to a variety of risks that could cause actual results to differ materially from those expected by management. A discussion of the important risk factors and other considerations that could materially impact these Loews Corporation matters as well as our overall business and financial performance can be found in our reports filed with the Securities and Exchange Commission and readers of this letter are urged to review those reports carefully when considering these forward-looking statements. Copies of these reports are available through our website (www.loews.com). Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Any such forward-looking statements speak only as of the date of this letter. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations with regard thereto or any change 16 in events, conditions or circumstances on which any forward-looking statement is based.


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    ,WHP$5LVN)DFWRUV CNA is subject to capital adequacy requirements and, if it is unable to maintain or raise sufficient capital to meet these requirements, regulatory agencies may restrict or prohibit CNA from operating its business.   ,QVXUDQFH FRPSDQLHV VXFK DV &1$ DUH VXEMHFW WR FDSLWDO DGHTXDF\ VWDQGDUGV VHW E\ UHJXODWRUV WR KHOS LGHQWLI\ FRPSDQLHV WKDW PHULW IXUWKHU UHJXODWRU\ DWWHQWLRQ 7KHVH VWDQGDUGV DSSO\ VSHFLILHG ULVN IDFWRUV WR YDULRXV DVVHW SUHPLXPDQGUHVHUYHFRPSRQHQWVRI&1$¶VOHJDOHQWLW\VWDWXWRU\EDVLVRIDFFRXQWLQJILQDQFLDOVWDWHPHQWV&XUUHQW UXOHV LQFOXGLQJ WKRVH SURPXOJDWHG E\ LQVXUDQFH UHJXODWRUV DQG VSHFLDOL]HG PDUNHWV VXFK DV /OR\G¶V UHTXLUH FRPSDQLHVWRPDLQWDLQVWDWXWRU\FDSLWDODQGVXUSOXVDWDVSHFLILHGPLQLPXPOHYHOGHWHUPLQHGXVLQJWKHDSSOLFDEOH MXULVGLFWLRQ¶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¶V SUHVFULEHGFDSLWDOUHTXLUHPHQWWKHOHYHODWZKLFKUHJXODWRU\VFUXWLQ\LQWHQVLILHVDVZHOODVVLJQLILFDQWO\LQFUHDVHLWV FRVWRIUHJXODWRU\FRPSOLDQFH  CNA’s insurance subsidiaries, upon whom CNA depends for dividends in order to fund its corporate obligations, are limited by insurance regulators in their ability to pay dividends.   &1$LVDKROGLQJFRPSDQ\DQGLVGHSHQGHQWXSRQGLYLGHQGVORDQVDQGRWKHUVRXUFHVRIFDVKIURPLWVVXEVLGLDULHV LQRUGHUWRPHHWLWVREOLJDWLRQV2UGLQDU\GLYLGHQGSD\PHQWVRUGLYLGHQGVWKDWGRQRWUHTXLUHSULRUDSSURYDOE\WKH LQVXUDQFHVXEVLGLDULHV¶GRPLFLOLDU\LQVXUDQFHUHJXODWRUDUHJHQHUDOO\OLPLWHGWRDPRXQWVGHWHUPLQHGE\IRUPXODVWKDW YDU\ E\ MXULVGLFWLRQ ,I &1$ LV UHVWULFWHG IURP SD\LQJ RU UHFHLYLQJ LQWHUFRPSDQ\ GLYLGHQGV E\ UHJXODWRU\ UXOH RU RWKHUZLVH&1$PD\QRWEHDEOHWRIXQGLWVFRUSRUDWHREOLJDWLRQVDQGGHEWVHUYLFHUHTXLUHPHQWVIURPDYDLODEOHFDVK $V D UHVXOW &1$ ZRXOG QHHG WR ORRN WR RWKHU VRXUFHV RI FDSLWDO ZKLFK PD\ EH PRUH H[SHQVLYH RU PD\ QRW EH DYDLODEOHDWDOO  Rating agencies may downgrade their ratings of CNA and thereby adversely affect its ability to write insurance at competitive rates or at all.   5DWLQJVDUHDQLPSRUWDQWIDFWRULQHVWDEOLVKLQJWKHFRPSHWLWLYHSRVLWLRQRILQVXUDQFHFRPSDQLHV&1$¶VLQVXUDQFH FRPSDQ\VXEVLGLDULHVDVZHOODV&1$¶VSXEOLFGHEWDUHUDWHGE\UDWLQJDJHQFLHVLQFOXGLQJ$0%HVW&RPSDQ\ ³$0%HVW´ 0RRG\¶V,QYHVWRUV6HUYLFH,QF ³0RRG\¶V´ DQG6 3*OREDO5DWLQJV ³6 3´ 5DWLQJVUHIOHFWWKH UDWLQJ DJHQF\¶V RSLQLRQV RI DQ LQVXUDQFH FRPSDQ\¶V RU LQVXUDQFH KROGLQJ FRPSDQ\¶V ILQDQFLDO VWUHQJWK FDSLWDO DGHTXDF\ HQWHUSULVH ULVN PDQDJHPHQW SUDFWLFHV RSHUDWLQJ SHUIRUPDQFH VWUDWHJLF SRVLWLRQ DQG DELOLW\ WR PHHW LWV REOLJDWLRQVWRSROLF\KROGHUVDQGGHEWKROGHUV   7KHUDWLQJDJHQFLHVPD\WDNHDFWLRQWRORZHU&1$¶VUDWLQJVLQWKHIXWXUHDVDUHVXOWRIDQ\VLJQLILFDQWILQDQFLDO ORVVRUSRVVLEOHFKDQJHVLQWKHPHWKRGRORJ\RUFULWHULDDSSOLHGE\WKHUDWLQJDJHQFLHV7KHVHYHULW\RIWKHLPSDFWRQ &1$¶V EXVLQHVV LV GHSHQGHQW RQ WKH OHYHO RI GRZQJUDGH DQG IRU FHUWDLQ SURGXFWV ZKLFK UDWLQJ DJHQF\ WDNHV WKH UDWLQJDFWLRQ$PRQJWKHDGYHUVHHIIHFWVLQWKHHYHQWRIVXFKGRZQJUDGHVZRXOGEHWKHLQDELOLW\WRREWDLQDPDWHULDO YROXPHRIEXVLQHVVIURPFHUWDLQPDMRULQVXUDQFHEURNHUVWKHLQDELOLW\WRVHOODPDWHULDOYROXPHRI&1$¶VLQVXUDQFH SURGXFWVWRFHUWDLQPDUNHWVDQGWKHUHTXLUHGFROODWHUDOL]DWLRQRIFHUWDLQIXWXUHSD\PHQWREOLJDWLRQVRUUHVHUYHV   ,QDGGLWLRQLWLVSRVVLEOHWKDWDVLJQLILFDQWORZHULQJRIRXUFRUSRUDWHGHEWUDWLQJVE\FHUWDLQRIWKHUDWLQJDJHQFLHV FRXOGUHVXOWLQDQDGYHUVHDIIHFWRQ&1$¶VUDWLQJVLQGHSHQGHQWRIDQ\FKDQJHLQ&1$¶VFLUFXPVWDQFHV  


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    ,WHP$5LVN)DFWRUV   CNA is subject to extensive regulations that restrict its ability to do business and generate revenues.   7KH LQVXUDQFH LQGXVWU\ LV VXEMHFW WR FRPSUHKHQVLYH DQG GHWDLOHG UHJXODWLRQ DQG VXSHUYLVLRQ 0RVW LQVXUDQFH UHJXODWLRQV DUH GHVLJQHG WR SURWHFW WKH LQWHUHVWV RI &1$¶V SROLF\KROGHUV DQG WKLUGSDUW\ FODLPDQWV UDWKHU WKDQ LWV LQYHVWRUV (DFK MXULVGLFWLRQ LQ ZKLFK &1$ GRHV EXVLQHVV KDV HVWDEOLVKHG VXSHUYLVRU\ DJHQFLHV WKDW UHJXODWH WKH PDQQHULQZKLFK&1$FRQGXFWVLWVEXVLQHVV$Q\FKDQJHVLQUHJXODWLRQFRXOGLPSRVHVLJQLILFDQWEXUGHQVRQ&1$ ,QDGGLWLRQWKH/OR\G¶VPDUNHWSODFHVHWVUXOHVXQGHUZKLFKLWVPHPEHUVLQFOXGLQJ&1$¶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¶V VKDUH RI WKHVH LQYROXQWDU\ ULVNV LV PDQGDWRU\ DQG JHQHUDOO\ D IXQFWLRQ RI LWV UHVSHFWLYH VKDUHRIWKHYROXQWDU\PDUNHWE\OLQHRILQVXUDQFHLQHDFKMXULVGLFWLRQ  The United Kingdom’s expected exit from the European Union is expected to increase the complexity and cost of regulatory compliance of CNA’s European business.   ,Q  WKH 8. KHOG D UHIHUHQGXP LQ ZKLFK YRWHUV DSSURYHG DQ H[LW IURP WKH (8 FRPPRQO\ UHIHUUHG WR DV ³%UH[LW´$VDUHVXOWRIWKHUHIHUHQGXPLQWKH%ULWLVKJRYHUQPHQWIRUPDOO\FRPPHQFHGWKHSURFHVVWROHDYH WKH (8 DQG EHJDQ QHJRWLDWLQJ WKH WHUPV RI WUHDWLHV WKDW ZLOOJRYHUQ WKH 8.¶V IXWXUH UHODWLRQVKLS ZLWK WKH (8 $OWKRXJKWKHWHUPVRIDQ\IXWXUHWUHDWLHVDUHXQNQRZQ&1$EHOLHYHVFKDQJHVLQLWVLQWHUQDWLRQDORSHUDWLQJSODWIRUP ZLOOEHUHTXLUHGWRDOORZ&1$WRFRQWLQXHWRZULWHEXVLQHVVLQWKH(8DIWHUWKHFRPSOHWLRQRI%UH[LW7KHUHIRUH &1$KDVEHJXQWKHSURFHVVRIHVWDEOLVKLQJDQHZ(XURSHDQVXEVLGLDU\LQ/X[HPERXUJ$VDUHVXOWRIWKHVHFKDQJHV WKHFRPSOH[LW\DQGFRVWRIUHJXODWRU\FRPSOLDQFHRI&1$¶V(XURSHDQEXVLQHVVLVOLNHO\WRLQFUHDVH  5LVNV5HODWHGWR8VDQG2XU6XEVLGLDU\'LDPRQG2IIVKRUH'ULOOLQJ,QF  The worldwide demand for Diamond Offshore’s drilling services has historically been dependent on the price of oil and has declined significantly as a result of the decline in oil prices, and demand has continued to be depressed in 2017.  'HPDQG IRU 'LDPRQG 2IIVKRUH¶V GULOOLQJ VHUYLFHV GHSHQGV LQ ODUJH SDUW XSRQ WKH RLO DQG QDWXUDO JDV LQGXVWU\¶V RIIVKRUHH[SORUDWLRQDQGSURGXFWLRQDFWLYLW\DQGH[SHQGLWXUHOHYHOVZKLFKDUHGLUHFWO\DIIHFWHGE\RLODQGJDVSULFHV DQG PDUNHW H[SHFWDWLRQV RI SRWHQWLDO FKDQJHV LQ RLO DQG JDV SULFHV &RPPHQFLQJ LQ WKH VHFRQG KDOI RI  RLO SULFHV GHFOLQHG VLJQLILFDQWO\ UHVXOWLQJ LQ D VKDUS GHFOLQH LQ WKH GHPDQG IRU RIIVKRUH GULOOLQJ VHUYLFHV LQFOXGLQJ VHUYLFHVWKDW'LDPRQG2IIVKRUHSURYLGHVDQGDGYHUVHO\DIIHFWLQJ'LDPRQG2IIVKRUH¶VRSHUDWLRQVDQGFDVKIORZVLQ   DQG  FRPSDUHG WR SUHYLRXV \HDUV $Q\ SURORQJHG FRQWLQXDWLRQ RI ORZ RLO SULFHV ZRXOG KDYH D PDWHULDODGYHUVHHIIHFWRQPDQ\RI'LDPRQG2IIVKRUH¶VFXVWRPHUVDQGWKHUHIRUHRQGHPDQGIRULWVVHUYLFHVDQGRQ LWVEXVLQHVV   2LO SULFHVKDYH EHHQ DQG DUH H[SHFWHG WRFRQWLQXH WR EH YRODWLOH DQG DUH DIIHFWHGE\QXPHURXVIDFWRUVEH\RQG 'LDPRQG2IIVKRUH¶VFRQWURO    


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     ,WHP$5LVN)DFWRUV    $QLQFUHDVHLQWKHSULFHRIRLODQGJDVZLOOQRWQHFHVVDULO\UHVXOWLQDQLQFUHDVHLQRIIVKRUHGULOOLQJDFWLYLW\RUDQ LQFUHDVHLQWKHPDUNHWGHPDQGIRU'LDPRQG2IIVKRUH¶VULJVDOWKRXJKKLVWRULFDOO\KLJKHUFRPPRGLW\SULFHVKDYH JHQHUDOO\UHVXOWHGLQLQFUHDVHVLQRIIVKRUHGULOOLQJSURMHFWV7KHWLPLQJRIFRPPLWPHQWWRRIIVKRUHDFWLYLW\LQDF\FOH GHSHQGVRQSURMHFWGHSOR\PHQWWLPHVUHVHUYHUHSODFHPHQWQHHGVDYDLODELOLW\RIFDSLWDODQGDOWHUQDWLYHRSWLRQVIRU UHVRXUFH GHYHORSPHQW 7LPLQJ FDQ DOVR EH DIIHFWHG E\ DYDLODELOLW\ DFFHVV WR DQG FRVW RI HTXLSPHQW WR SHUIRUP ZRUN  Diamond Offshore’s business depends on the level of activity in the offshore oil and gas industry, which has been cyclical and is significantly affected by many factors outside of its control.   'HPDQG IRU 'LDPRQG 2IIVKRUH¶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¶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¶VULJVPD\QRWREWDLQ FRQWUDFWV IRU IXWXUH ZRUN DQG PD\ EH LGOH IRU ORQJ SHULRGV RI WLPH RU PD\ EH DEOH WR REWDLQ ZRUN RQO\ XQGHU FRQWUDFWVZLWKORZHUGD\UDWHVRUOHVVIDYRUDEOHWHUPV$GGLWLRQDOO\SURORQJHGSHULRGVRIORZXWLOL]DWLRQDQGGD\UDWHV FRXOGDOVRUHVXOWLQWKHUHFRJQLWLRQRIIXUWKHULPSDLUPHQWFKDUJHVRQFHUWDLQRI'LDPRQG2IIVKRUH¶VGULOOLQJULJVLI IXWXUHFDVKIORZHVWLPDWHVEDVHGXSRQLQIRUPDWLRQDYDLODEOHWRPDQDJHPHQWDWWKHWLPHLQGLFDWHWKDWWKHFDUU\LQJ YDOXHRIWKHVHULJVPD\QRWEHUHFRYHUDEOH Diamond Offshore’s industry is highly competitive, with oversupply and intense price competition.  7KH RIIVKRUH FRQWUDFW GULOOLQJ LQGXVWU\ LV KLJKO\ FRPSHWLWLYH ZLWK QXPHURXV LQGXVWU\ SDUWLFLSDQWV 6RPH RI 'LDPRQG2IIVKRUH¶VFRPSHWLWRUVPD\EHODUJHUFRPSDQLHVKDYHODUJHURUPRUHWHFKQRORJLFDOO\DGYDQFHGIOHHWVDQG KDYHJUHDWHUILQDQFLDORURWKHUUHVRXUFHVWKDQLWGRHV7KHGULOOLQJLQGXVWU\KDVH[SHULHQFHGFRQVROLGDWLRQLQWKHSDVW DQGPD\H[SHULHQFHDGGLWLRQDOFRQVROLGDWLRQZKLFKFRXOGFUHDWHDGGLWLRQDOODUJHFRPSHWLWRUV'ULOOLQJFRQWUDFWVDUH WUDGLWLRQDOO\DZDUGHGRQDFRPSHWLWLYHELGEDVLV3ULFHLVW\SLFDOO\WKHSULPDU\IDFWRULQGHWHUPLQLQJZKLFKTXDOLILHG FRQWUDFWRULVDZDUGHGDMRE   1HZ ULJ FRQVWUXFWLRQ DQG XSJUDGHV RI H[LVWLQJ GULOOLQJ ULJV FDQFHODWLRQ RU WHUPLQDWLRQ RI GULOOLQJ FRQWUDFWV DQG HVWDEOLVKHG ULJV FRPLQJ RII FRQWUDFW KDYH FRQWULEXWHG WR WKH FXUUHQW RYHUVXSSO\ RI GULOOLQJ ULJV LQWHQVLI\LQJ SULFH FRPSHWLWLRQ  Diamond Offshore can provide no assurance that its drilling contracts will not be terminated early or that its current backlog of contract drilling revenue will be ultimately realized.   &XUUHQWO\'LDPRQG2IIVKRUH¶VFXVWRPHUVPD\WHUPLQDWHWKHLUGULOOLQJFRQWUDFWVXQGHUFHUWDLQFLUFXPVWDQFHVVXFK DVWKHGHVWUXFWLRQRUORVVRIDGULOOLQJULJRULI'LDPRQG2IIVKRUHVXVSHQGVGULOOLQJRSHUDWLRQVIRUDVSHFLILHGSHULRG RIWLPHDVDUHVXOWRIDEUHDNGRZQRIPDMRUHTXLSPHQWH[FHVVLYHGRZQWLPHIRUUHSDLUVIDLOXUHWRPHHWPLQLPXP SHUIRUPDQFH FULWHULD LQFOXGLQJ FXVWRPHU DFFHSWDQFH WHVWLQJ  RU LQ VRPH FDVHV GXH WR RWKHU HYHQWV EH\RQG WKH FRQWURORIHLWKHUSDUW\   ,Q DGGLWLRQ VRPH RI 'LDPRQG 2IIVKRUH¶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     ,WHP$5LVN)DFWRUV   FRQWUDFWV $GGLWLRQDOO\ EHFDXVH RI GHSUHVVHG FRPPRGLW\ SULFHV UHVWULFWHG FUHGLW PDUNHWV HFRQRPLF GRZQWXUQV FKDQJHV LQ SULRULWLHV RU VWUDWHJ\ RU RWKHU IDFWRUV EH\RQG 'LDPRQG 2IIVKRUH¶V FRQWURO D FXVWRPHU PD\ QR ORQJHU ZDQWRUQHHGDULJWKDWLVFXUUHQWO\XQGHUFRQWUDFWRUPD\EHDEOHWRREWDLQDFRPSDUDEOHULJDWDORZHUGD\UDWH)RU WKHVH UHDVRQV FXVWRPHUV PD\ VHHN WR UHQHJRWLDWH WKH WHUPV RI 'LDPRQG 2IIVKRUH¶V H[LVWLQJ GULOOLQJ FRQWUDFWV WHUPLQDWH WKHLU FRQWUDFWV ZLWKRXW MXVWLILFDWLRQ RU UHSXGLDWH RU RWKHUZLVH IDLO WR SHUIRUP WKHLU REOLJDWLRQV XQGHU WKH FRQWUDFWV$VDUHVXOWRIVXFKFRQWUDFWUHQHJRWLDWLRQVRUWHUPLQDWLRQV'LDPRQG2IIVKRUH¶VFRQWUDFWEDFNORJPD\EH DGYHUVHO\LPSDFWHGLWPLJKWQRWUHFRYHUDQ\FRPSHQVDWLRQ RUDQ\UHFRYHU\LWREWDLQVPD\QRWIXOO\FRPSHQVDWHLW IRUWKHORVVRIWKHFRQWUDFW DQGLWPD\EHUHTXLUHGWRLGOHRQHRUPRUHULJVIRUDQH[WHQGHGSHULRGRIWLPH  Diamond Offshore may not be able to renew or replace expiring contracts for its rigs.   $VRIWKHGDWHRIWKLV5HSRUWDOORI'LDPRQG2IIVKRUH¶VFXUUHQWFXVWRPHUFRQWUDFWVZLOOH[SLUHEHWZHHQDQG 'LDPRQG2IIVKRUH¶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³KRW´VWDFNHGULJVRYHUFROGVWDFNHGULJV  Diamond Offshore’s contract drilling expense includes fixed costs that will not decline in proportion to decreases in rig utilization and dayrates.  'LDPRQG2IIVKRUH¶VFRQWUDFWGULOOLQJH[SHQVHLQFOXGHVDOOGLUHFWDQGLQGLUHFWFRVWVDVVRFLDWHGZLWKWKHRSHUDWLRQ PDLQWHQDQFHDQGVXSSRUWRILWVGULOOLQJHTXLSPHQWZKLFKLVRIWHQQRWDIIHFWHGE\FKDQJHVLQGD\UDWHVDQGXWLOL]DWLRQ 'XULQJSHULRGVRIUHGXFHGUHYHQXHDQGRUDFWLYLW\FHUWDLQRI'LDPRQG2IIVKRUH¶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ontracts for Diamond Offshore’s drilling rigs are generally fixed dayrate contracts, and increases in Diamond Offshore’s operating costs could adversely affect the profitability of those contracts.   'LDPRQG2IIVKRUH¶VFRQWUDFWVIRULWVGULOOLQJULJVJHQHUDOO\SURYLGHIRUWKHSD\PHQWRIDQDJUHHGGD\UDWHSHUULJ RSHUDWLQJ GD\ DOWKRXJK VRPH FRQWUDFWV GR SURYLGH IRU D OLPLWHG HVFDODWLRQ LQ GD\UDWH GXH WR LQFUHDVHG RSHUDWLQJ FRVWVLWLQFXUVRQWKHSURMHFW0DQ\RI'LDPRQG2IIVKRUH¶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iamond Offshore is subject to extensive domestic and international laws and regulations that could significantly limit its business activities and revenues and increase its costs.   &HUWDLQFRXQWULHVDUHVXEMHFWWRUHVWULFWLRQVVDQFWLRQVDQGHPEDUJRHVLPSRVHGE\WKH8QLWHG6WDWHVJRYHUQPHQWRU RWKHUJRYHUQPHQWDORULQWHUQDWLRQDODXWKRULWLHV7KHVHUHVWULFWLRQVVDQFWLRQVDQGHPEDUJRHVPD\SURKLELWRUOLPLW 'LDPRQG2IIVKRUHIURPSDUWLFLSDWLQJLQFHUWDLQEXVLQHVVDFWLYLWLHVLQWKRVHFRXQWULHV'LDPRQG2IIVKRUH¶V 


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     ,WHP$5LVN)DFWRUV   x LWPD\QRWKDYHWKHDELOLW\WRSXUVXHEXVLQHVVRSSRUWXQLWLHVWKDWEHFRPHDYDLODEOH  x WKH DPRXQW RI GHEW DQG WKH DPRXQW LW PXVW SD\ WR VHUYLFH LWV GHEW REOLJDWLRQV FRXOG SODFH 'LDPRQG 2IIVKRUHDWDFRPSHWLWLYHGLVDGYDQWDJHFRPSDUHGWRLWVFRPSHWLWRUVWKDWKDYHOHVVGHEW  x FXVWRPHUVPD\UHDFWDGYHUVHO\WRLWVVLJQLILFDQWGHEWOHYHODQGVHHNDOWHUQDWLYHVHUYLFHSURYLGHUVDQG  x IDLOXUHWRFRPSO\ZLWKWKHUHVWULFWLYHFRYHQDQWVLQLWVGHEWLQVWUXPHQWVWKDWDPRQJRWKHUWKLQJVUHTXLUH 'LDPRQG2IIVKRUHWRPDLQWDLQDVSHFLILHGUDWLRRILWVFRQVROLGDWHGLQGHEWHGQHVVWRWRWDOFDSLWDOL]DWLRQ DQGOLPLWWKHDELOLW\RILWVVXEVLGLDULHVWRLQFXUGHEWFRXOGUHVXOWLQDQHYHQWRIGHIDXOWWKDWLIQRWFXUHG RUZDLYHGFRXOGKDYHDPDWHULDODGYHUVHHIIHFWRQLWVEXVLQHVV   ,QDGGLWLRQ'LDPRQG2IIVKRUH¶VELOOLRQUHYROYLQJFUHGLWIDFLOLW\PDWXUHVRQ2FWREHUH[FHSWIRU PLOOLRQRIFRPPLWPHQWVWKDWPDWXUHRQ0DUFKDQGPLOOLRQRIFRPPLWPHQWVWKDWPDWXUHRQ2FWREHU 'LDPRQG2IIVKRUH¶VDELOLW\WRUHQHZRUUHSODFHLWVUHYROYLQJFUHGLWIDFLOLW\LVGHSHQGHQWRQQXPHURXVIDFWRUV LQFOXGLQJLWVILQDQFLDOFRQGLWLRQDQGSURVSHFWVDWWKHWLPHDQGWKHWKHQFXUUHQWVWDWHRIWKHEDQNDQGFDSLWDOPDUNHWV LQ WKH 86 'LDPRQG 2IIVKRUH¶V OLTXLGLW\ PD\ EH DGYHUVHO\ DIIHFWHG LI LW LV XQDEOH WR UHSODFH WKH UHYROYLQJ FUHGLW IDFLOLW\XSRQDFFHSWDEOHWHUPVZKHQLWPDWXUHV   ,Q-XO\RI0RRG\¶VGRZQJUDGHG'LDPRQG2IIVKRUH¶VFRUSRUDWHFUHGLWUDWLQJWR%DZLWKDQHJDWLYHRXWORRN IURP%DZLWKDVWDEOHRXWORRN,Q2FWREHURI6 3GRZQJUDGHG'LDPRQG2IIVKRUH¶VFRUSRUDWHFUHGLWUDWLQJWR %IURP%%ZLWKDQHJDWLYHRXWORRN7KHVHFUHGLWUDWLQJVDUHEHORZLQYHVWPHQWJUDGHDQGFRXOGUDLVHWKHFRVWRI ILQDQFLQJ$VD FRQVHTXHQFH 'LDPRQG2IIVKRUH PD\ QRW EHDEOH WR LVVXH DGGLWLRQDOGHEW LQ DPRXQWV DQGRUZLWK WHUPVWKDWLWFRQVLGHUVWREHUHDVRQDEOH   'LDPRQG2IIVKRUH¶VUHYROYLQJFUHGLWIDFLOLW\EHDUVLQWHUHVWDWYDULDEOHUDWHVEDVHGRQLWVFRUSRUDWHFUHGLWUDWLQJ DQGPDUNHWLQWHUHVWUDWHV,IPDUNHWLQWHUHVWUDWHVLQFUHDVH'LDPRQG2IIVKRUH¶VFRVWWRERUURZXQGHULWVUHYROYLQJ FUHGLWIDFLOLW\PD\DOVRLQFUHDVH$OWKRXJK'LDPRQG2IIVKRUHPD\HPSOR\KHGJLQJVWUDWHJLHVVXFKWKDWDSRUWLRQRI WKHDJJUHJDWHSULQFLSDODPRXQWRXWVWDQGLQJXQGHUWKLVFUHGLWIDFLOLW\ZRXOGHIIHFWLYHO\FDUU\DIL[HGUDWHRILQWHUHVW DQ\KHGJLQJDUUDQJHPHQWSXWLQSODFHPD\QRWRIIHUFRPSOHWHSURWHFWLRQIURPWKLVULVN  5LVNV5HODWHGWR8VDQG2XU6XEVLGLDU\%RDUGZDON3LSHOLQH3DUWQHUV/3  Boardwalk Pipeline may not be able to replace expiring natural gas transportation contracts at attractive rates or on a long-term basis and may not be able to sell short-term services at attractive rates or at all due to market conditions.   (DFK \HDU D SRUWLRQ RI %RDUGZDON 3LSHOLQH¶V ILUP QDWXUDO JDV WUDQVSRUWDWLRQ FRQWUDFWV H[SLUH DQG QHHG WR EH UHSODFHGRUUHQHZHG2YHUWKHSDVWVHYHUDO\HDUVDVDUHVXOWRIFXUUHQWPDUNHWFRQGLWLRQV%RDUGZDON3LSHOLQHKDV UHQHZHGVRPHH[SLULQJFRQWUDFWVDWORZHUUDWHVRUIRUVKRUWHUWHUPVWKDQLQWKHSDVW,QDGGLWLRQWRQRUPDOFRQWUDFW H[SLUDWLRQV LQ WKH  WR  WLPHIUDPH WUDQVSRUWDWLRQ DJUHHPHQWV DVVRFLDWHG ZLWK %RDUGZDON 3LSHOLQH¶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±%RDUGZDON3LSHOLQHVHFWLRQRI0' $XQGHU,WHP  


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    ,WHP$5LVN)DFWRUV The narrowing of the price differentials between natural gas supplies and market demand for natural gas has reduced the transportation rates that Boardwalk Pipeline can charge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¶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oardwalk Pipeline’s actual construction and development costs could exceed its forecasts, its anticipated cash flow from construction and development projects will not be immediate and its construction and development projects may not be completed on time or at all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¶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¶VDELOLW\WRUHDOL]HWKHDQWLFLSDWHGEHQHILWVIURPLWVJURZWKSURMHFWV  Boardwalk Pipeline’s natural gas transportation and storage operations are subject to extensive regulation by the FERC, including rules and regulations related to the rates it can charge for its services and its ability to construct or abandon facilities. Boardwalk Pipeline may not be able to recover the full cost of operating its pipelines, including earning a reasonable return.   %RDUGZDON3LSHOLQH¶VQDWXUDOJDVWUDQVSRUWDWLRQDQGVWRUDJH RSHUDWLRQVDUHVXEMHFWWRH[WHQVLYHUHJXODWLRQE\WKH )(5&LQFOXGLQJWKHW\SHVDQGWHUPVRIVHUYLFHV%RDUGZDON3LSHOLQHPD\RIIHUWRLWVFXVWRPHUVFRQVWUXFWLRQRIQHZ IDFLOLWLHV FUHDWLRQ PRGLILFDWLRQ RU DEDQGRQPHQW RIVHUYLFHV RU IDFLOLWLHV DQG UHFRUGNHHSLQJ DQGUHODWLRQVKLSVZLWK DIILOLDWHG FRPSDQLHV $Q DGYHUVH )(5& DFWLRQ LQ DQ\ RI WKHVH DUHDV FRXOG DIIHFW %RDUGZDON 3LSHOLQH¶V DELOLW\ WR FRPSHWHIRUEXVLQHVVFRQVWUXFWQHZIDFLOLWLHVRIIHUQHZVHUYLFHVRUUHFRYHUWKHIXOOFRVWRIRSHUDWLQJLWVSLSHOLQHV 7KLVUHJXODWRU\RYHUVLJKWFDQUHVXOWLQORQJHUOHDGWLPHVWRGHYHORSDQGFRPSOHWHDQ\IXWXUHSURMHFWWKDQFRPSHWLWRUV WKDWDUHQRWVXEMHFWWRWKH)(5&¶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¶V HVWDEOLVKPHQW RI D MXVW DQG UHDVRQDEOHUDWHLVEDVHGRQPDQ\FRPSRQHQWVDQGWKHUHGXFWLRQLQWKHFRUSRUDWHWD[UDWHPD\RQO\LPSDFWWZRVXFK FRPSRQHQWVWKHDOORZDQFHIRULQFRPHWD[HVDQGWKHDPRXQWIRUDFFXPXODWHGGHIHUUHGLQFRPHWD[HV7KH)(5&RU %RDUGZDON3LSHOLQH¶VVKLSSHUVPD\FKDOOHQJHUDWHVLQWKHIXWXUHZKLFKFRXOGUHVXOWLQDQHZUDWHWKDWPD\EHORZHU WKDQWKHUDWHV%RDUGZDON3LSHOLQHFXUUHQWO\FKDUJHV7KH)(5&RU%RDUGZDON3LSHOLQH¶VFXVWRPHUVFDQFKDOOHQJH WKH H[LVWLQJ UDWHV RQ DQ\ RI %RDUGZDON 3LSHOLQH¶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egislative and regulatory initiatives relating to pipeline safety that require the use of new or more prescriptive compliance activities, substantial changes to existing integrity management programs or withdrawal of regulatory waivers could subject Boardwalk Pipeline to increased capital and operating costs and operational delays.   %RDUGZDON 3LSHOLQH¶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¶VLQWUDVWDWHSLSHOLQHVDQGKDYHDGRSWHGUHJXODWLRQVVLPLODUWRH[LVWLQJ3+06$UHJXODWLRQV6WDWHUHJXODWLRQV PD\ LPSRVH PRUH VWULQJHQW UHTXLUHPHQWV WKDQ IRXQG XQGHU IHGHUDO ODZ WKDW DIIHFW %RDUGZDON 3LSHOLQH¶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¶V FDSLWDO DQG RSHUDWLQJ FRVWV RU LPSDFW WKH RSHUDWLRQRILWVSLSHOLQHV   %RDUGZDON3LSHOLQHKDVHQWHUHGLQWRFHUWDLQILUPWUDQVSRUWDWLRQFRQWUDFWVZLWKVKLSSHUVRQFHUWDLQRILWVH[SDQVLRQ SURMHFWVWKDWXWLOL]HWKHGHVLJQFDSDFLW\RIFHUWDLQRILWVSLSHOLQHDVVHWVEDVHGXSRQWKHDXWKRULW\%RDUGZDON3LSHOLQH UHFHLYHGIURP3+06$WRRSHUDWHWKRVHSLSHOLQHVXQGHUVSHFLDOSHUPLWVDWKLJKHUWKDQQRUPDORSHUDWLQJSUHVVXUHVRI   


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     ,WHP$5LVN)DFWRUV   XSWRRIWKHSLSHOLQH¶V60<63+06$UHWDLQVGLVFUHWLRQWRZLWKGUDZRUPRGLI\WKLVDXWKRULW\,I3+06$ZHUH WRZLWKGUDZRUPDWHULDOO\PRGLI\VXFKDXWKRULW\LWFRXOGDIIHFW%RDUGZDON3LSHOLQH¶VDELOLW\WRWUDQVSRUWDOORILWV FRQWUDFWHGTXDQWLWLHVRIQDWXUDOJDVRQWKHVHSLSHOLQHDVVHWVDQGLWFRXOGLQFXUVLJQLILFDQWDGGLWLRQDOFRVWVWRUHLQVWDWH WKLVDXWKRULW\RUWRGHYHORSDOWHUQDWHZD\VWRPHHWLWVFRQWUDFWXDOREOLJDWLRQV  Boardwalk Pipeline is exposed to credit risk relating to default or bankruptcy by its customers.   &UHGLWULVNUHODWHVWRWKHULVNRIORVVUHVXOWLQJIURPWKHGHIDXOWE\DFXVWRPHURILWVFRQWUDFWXDOREOLJDWLRQVRUWKH FXVWRPHUILOLQJEDQNUXSWF\%RDUGZDON3LSHOLQHKDVFUHGLWULVNZLWKERWKLWVH[LVWLQJFXVWRPHUVDQGWKRVHVXSSRUWLQJ LWVJURZWKSURMHFWV   1DWXUDOJDVSURGXFHUVFRPSULVHDVLJQLILFDQWSRUWLRQRI%RDUGZDON3LSHOLQH¶VUHYHQXHVDQGVXSSRUWVHYHUDORILWV JURZWKSURMHFWVLQFOXGLQJWKRVHUHFHQWO\SODFHGLQWRVHUYLFH,QDSSUR[LPDWHO\RI%RDUGZDON3LSHOLQH¶V UHYHQXHV ZHUH JHQHUDWHG IURP FRQWUDFWV ZLWK QDWXUDO JDV SURGXFHUV )RU H[LVWLQJ FXVWRPHUV RQ LWV LQWHUVWDWH SLSHOLQHV)(5&JDVWDULIIVOLPLWWKHDPRXQWRIFUHGLWVXSSRUW%RDUGZDON3LSHOLQHFDQREWDLQ2YHUWKHSDVWVHYHUDO \HDUVWKHSULFHVRIRLODQGQDWXUDOJDVKDYHEHHQXQVWDEOH,IRLODQGQDWXUDOJDVSULFHVFRQWLQXHWRUHPDLQXQVWDEOH IRU D VXVWDLQHG SHULRG RI WLPH %RDUGZDON 3LSHOLQH¶V SURGXFHU FXVWRPHUV ZLOO EH DGYHUVHO\ DIIHFWHG ZKLFK FRXOG OHDGVRPHFXVWRPHUVWRGHIDXOWRQWKHLUREOLJDWLRQVWR%RDUGZDON3LSHOLQHRUILOHIRUEDQNUXSWF\   &UHGLW ULVN DOVR H[LVWV LQ UHODWLRQ WR %RDUGZDON 3LSHOLQH¶V JURZWK SURMHFWV ERWK EHFDXVH IRXQGDWLRQ FXVWRPHUV PDNHORQJWHUPILUPFDSDFLW\FRPPLWPHQWVWR%RDUGZDON3LSHOLQHIRUVXFKSURMHFWVDQGFHUWDLQRIWKRVHIRXQGDWLRQ FXVWRPHUVDJUHHWRSURYLGHFUHGLWVXSSRUWDVFRQVWUXFWLRQIRUVXFKSURMHFWVSURJUHVVHV,IDFXVWRPHUIDLOVWRSRVWWKH UHTXLUHGFUHGLWVXSSRUWGXULQJWKHJURZWKSURMHFWSURFHVVRYHUDOOUHWXUQVRQWKHSURMHFWPD\EHUHGXFHGWRWKHH[WHQW DQDGMXVWPHQWWRWKHVFRSHRIWKHSURMHFWUHVXOWVRU%RDUGZDON3LSHOLQHLVXQDEOHWRUHSODFHWKHGHIDXOWLQJFXVWRPHU   %RDUGZDON 3LSHOLQH¶V FUHGLW H[SRVXUH DOVR LQFOXGHV UHFHLYDEOHV IRU VHUYLFHV SURYLGHG IXWXUH SHUIRUPDQFH XQGHU ILUP DJUHHPHQWV DQG YROXPHV RI JDV RZHG E\ FXVWRPHUV IRU LPEDODQFHV RU JDV ORDQHG E\ %RDUGZDON 3LSHOLQH WR WKHPXQGHUFHUWDLQ116DQGSDUNLQJDQGOHQGLQJ ³3$/´ VHUYLFHV  Boardwalk Pipeline relies on a limited number of customers for a significant portion of its revenues.   )RUZKLOHQRFXVWRPHUFRPSULVHGRUPRUHRILWVRSHUDWLQJUHYHQXHVWKHWRSWHQFXVWRPHUVFRPSULVHG DSSUR[LPDWHO\  RI UHYHQXHV ,I DQ\ RI %RDUGZDON 3LSHOLQH¶V VLJQLILFDQW FXVWRPHUV KDYH FUHGLW RU ILQDQFLDO SUREOHPVZKLFKUHVXOWLQEDQNUXSWF\DGHOD\RUIDLOXUHWRSD\IRUVHUYLFHVSURYLGHGE\%RDUGZDON3LSHOLQHWRSRVW WKHUHTXLUHGFUHGLWVXSSRUWIRUFRQVWUXFWLRQDVVRFLDWHGZLWKLWVJURZWKSURMHFWVRUH[LVWLQJFRQWUDFWVRUWRUHSD\WKH JDVWKH\RZH%RDUGZDON3LSHOLQHLWFRXOGKDYHDPDWHULDODGYHUVHHIIHFWRQLWVEXVLQHVV  Changes in energy prices, including natural gas, oil and NGLs, impact the supply of and demand for those commodities, which impact Boardwalk Pipeline’s business.   %RDUGZDON3LSHOLQH¶VFXVWRPHUVHVSHFLDOO\SURGXFHUVDUHGLUHFWO\LPSDFWHGE\FKDQJHVLQFRPPRGLW\SULFHV7KH SULFHVRIQDWXUDOJDVRLODQG1*/VIOXFWXDWHLQUHVSRQVHWRFKDQJHVLQVXSSO\DQGGHPDQGPDUNHWXQFHUWDLQW\DQGD YDULHW\ RI DGGLWLRQDO IDFWRUV 7KH GHFOLQHV LQ WKH OHYHOV RI QDWXUDO JDV RLO DQG 1*/V SULFHV H[SHULHQFHG LQ UHFHQW KLVWRU\KDYHDGYHUVHO\DIIHFWHGWKHEXVLQHVVHVRI%RDUGZDON3LSHOLQH¶VSURGXFHUFXVWRPHUVDQGUHGXFHGWKHGHPDQG IRU%RDUGZDON3LSHOLQH¶VVHUYLFHVDQGFRXOGUHVXOWLQGHIDXOWVRUWKHQRQUHQHZDORI%RDUGZDON3LSHOLQH¶VFRQWUDFWHG FDSDFLW\ ZKHQ H[LVWLQJ FRQWUDFWV H[SLUH )XWXUH LQFUHDVHV LQ WKH SULFH RI QDWXUDO JDV DQG 1*/V FRXOG PDNH DOWHUQDWLYHHQHUJ\DQGIHHGVWRFNVRXUFHVPRUHFRPSHWLWLYHDQGUHGXFHGHPDQGIRUQDWXUDOJDVDQG1*/V$UHGXFHG OHYHORIGHPDQGIRUQDWXUDOJDVDQG1*/VFRXOGUHGXFHWKHXWLOL]DWLRQRIFDSDFLW\RQ%RDUGZDON3LSHOLQH¶VV\VWHPV DQGUHGXFHWKHGHPDQGRILWVVHUYLFHV  A significant portion of Boardwalk Pipeline’s debt will mature over the next five years and will need to be paid or refinanced and changes to the debt and equity markets could adversely affect its business.   $VLJQLILFDQWSRUWLRQRI%RDUGZDON3LSHOLQH¶VGHEWLVVHWWRPDWXUHLQWKHQH[WILYH\HDUVLQFOXGLQJLWVUHYROYLQJ FUHGLWIDFLOLW\%RDUGZDON3LSHOLQHPD\QRWEHDEOHWRUHILQDQFHLWVPDWXULQJGHEWRQFRPPHUFLDOO\UHDVRQDEOHWHUPV 

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