<PAGE>
<PAGE> 1
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-7320
ANR PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 38-1281775
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Renaissance Center
Detroit, Michigan 48243-1902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (313) 496-0200
-----------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
As of April 28, 1995, there were outstanding 1,000 shares of common
stock of the Registrant, $100 par value per share, its only class of common
stock. None of the voting stock of the Registrant is held by nonaffiliates.
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<PAGE>
<PAGE> 2
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements of ANR Pipeline Company and its subsidiaries
(the "Company" or "ANR Pipeline") are presented herein and are unaudited,
except for balances as of December 31, 1994, and therefore are subject to
year-end adjustments; however, all adjustments which are, in the opinion of
management, necessary for a fair statement of the results of operations for
the periods covered have been made. The adjustments which have been made are
of a normal recurring nature. Such results are not necessarily indicative of
results to be expected for the year due to seasonal variations and market
conditions affecting natural gas deliveries.
<TABLE>
ANR PIPELINE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<CAPTION>
March 31, December 31,
ASSETS 1995 1994
--------------- --------------
(Unaudited)
<S> <C> <C>
Property, Plant and Equipment, at cost . . . . . . . . . . . . . . . . $ 3,425.0 $ 3,421.3
Less - Accumulated depreciation . . . . . . . . . . . . . . . . . . 2,240.4 2,226.1
----------- -----------
1,184.6 1,195.2
----------- -----------
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . 21.9 22.0
Note receivable from related party . . . . . . . . . . . . . . . . . 253.0 235.2
Accounts receivable:
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.3 65.4
Related parties . . . . . . . . . . . . . . . . . . . . . . . . . 18.4 23.5
Materials and supplies, at average cost . . . . . . . . . . . . . . 41.0 41.1
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 .8
----------- -----------
393.3 388.0
----------- -----------
Other Assets:
Assets related to excess gas supply . . . . . . . . . . . . . . . . 83.5 90.8
Investment in pipeline partnerships . . . . . . . . . . . . . . . . 41.2 41.2
Deferred charges and other . . . . . . . . . . . . . . . . . . . . . 104.4 143.4
----------- -----------
229.1 275.4
----------- -----------
$ 1,807.0 $ 1,858.6
----------- -----------
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
- 1 -
<PAGE>
<PAGE> 3
<TABLE>
ANR PIPELINE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<CAPTION>
March 31, December 31,
STOCKHOLDER'S EQUITY AND LIABILITIES 1995 1994
--------------- ---------------
(Unaudited)
<S> <C> <C>
Common Stock and Other Stockholder's Equity:
Common stock, $100 par value, authorized, issued and outstanding
1,000 shares . . . . . . . . . . . . . . . . . . . . . . . . . . $ .1 $ .1
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 466.2 466.2
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 341.0 322.2
----------- -----------
807.3 788.5
----------- -----------
Long-Term Debt and Capital Lease Obligations . . . . . . . . . . . . . 436.5 437.0
----------- -----------
Current Liabilities:
Maturities and sinking fund requirements of long-term debt and capital
lease obligations . . . . . . . . . . . . . . . . . . . . . . . 61.1 61.1
Accounts payable:
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.9 168.8
Related parties . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 7.4
Taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . 30.9 2.5
Other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5 23.9
Provision for regulatory matters . . . . . . . . . . . . . . . . . . 43.1 38.1
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.9 28.6
----------- -----------
309.6 330.4
----------- -----------
Deferred Credits and Other:
Accumulated deferred income taxes . . . . . . . . . . . . . . . . . 229.0 230.1
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.6 72.6
----------- -----------
253.6 302.7
----------- -----------
$ 1,807.0 $ 1,858.6
----------- -----------
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
- 2 -
<PAGE>
<PAGE> 4
<TABLE>
ANR PIPELINE COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED EARNINGS
(Millions of Dollars)
<CAPTION>
Three Months Ended
March 31,
---------------------
1995 1994
--------- ---------
(Unaudited)
<S> <C> <C>
Revenues:
Storage and transportation:
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 191.8 $ 189.8
Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 5.8
Gas sales:
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 14.1
Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 29.0
Other revenues:
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 3.2
Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 2.5
--------- ---------
220.8 244.4
--------- ---------
Costs and Expenses:
Operation and maintenance:
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.0 77.4
Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.5 26.9
Cost of gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.3 40.3
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 12.3
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 12.2
Taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0 26.7
--------- ---------
171.9 195.8
--------- ---------
Net Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.9 48.6
Dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . - .8
--------- ---------
Earnings Available for Common Stockholder . . . . . . . . . . . . . . . . . . . . . $ 48.9 $ 47.8
--------- ---------
--------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
- 3 -
<PAGE>
<PAGE> 5
<TABLE>
ANR PIPELINE COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Millions of Dollars)
<CAPTION>
Three Months Ended
March 31,
------------------------
1995 1994
-------- --------
(Unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48.9 $ 48.6
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6 12.9
Net (increase) decrease in working capital:
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13.3) 30.6
Related parties . . . . . . . . . . . . . . . . . . . . . . . . 4.9 (7.7)
Net (increase) decrease in other assets/liabilities . . . . . . . . (4.1) 12.5
-------- --------
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . 1.1 48.3
-------- --------
Net cash provided by operating activities . . . . . . . . . . . . . 50.0 96.9
-------- --------
Cash Flows from Investing Activities:
(Increase) decrease in note receivable from related party . . . . . . . (17.8) 104.4
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . (1.8) (44.0)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 .1
-------- --------
Net cash (used in) provided by investing activities . . . . . . . . (19.5) 60.5
-------- --------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . - 125.0
Retirement of long-term debt and capital lease obligations . . . . . . . (.5) (.8)
Common stock dividends paid . . . . . . . . . . . . . . . . . . . . . . (30.1) (255.0)
Preferred stock dividends paid . . . . . . . . . . . . . . . . . . . . . - (.8)
-------- --------
Net cash used in financing activities . . . . . . . . . . . . . . . (30.6) (131.6)
-------- --------
Net (Decrease) Increase in Cash and Cash Equivalents . . . . . . . . . . . (.1) 25.8
Cash and Cash Equivalents at Beginning of Period . . . . . . . . . . . . . 22.0 33.9
-------- --------
Cash and Cash Equivalents at End of Period . . . . . . . . . . . . . . . . $ 21.9 $ 59.7
-------- --------
-------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
- 4 -
<PAGE>
<PAGE> 6
ANR PIPELINE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
For additional information relative to operations and financial
position, reference is made to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994. Certain reclassifications of prior
period statements have been made to conform with current reporting
practices. The effect of the reclassifications was not material to the
Company's consolidated financial position or results of operations.
Supplemental information relative to the Statement of Consolidated Cash
Flows includes the following: The Company made cash payments for interest,
net of interest capitalized, of $7.5 million and $2.2 million for the
three-month periods ended March 31, 1995 and 1994, respectively. Cash
refunds of income taxes amounted to $2.0 million and $14.8 million for the
three-month periods ended March 31, 1995 and 1994, respectively.
2. Income Taxes
<TABLE>
Provisions for income taxes were as follows (millions of dollars):
<CAPTION>
Three Months Ended
March 31,
---------------------
1995 1994
--------- ---------
(Unaudited)
<S> <C> <C>
Federal Income Taxes:
Currently payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28.5 $ 32.3
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.0) (8.0)
--------- ---------
26.5 24.3
State and City Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . (.5) 2.4
--------- ---------
$ 26.0 $ 26.7
--------- ---------
--------- ---------
</TABLE>
3. Common Stock
All of the issued and outstanding common stock of the Company is owned
by American Natural Resources Company, a wholly-owned subsidiary of Coastal
Natural Gas Company. Coastal Natural Gas Company is a wholly-owned
subsidiary of The Coastal Corporation. Therefore, earnings and cash
dividends per common share have no significance and are not presented.
4. Litigation, Environmental and Regulatory Matters
Litigation
Numerous lawsuits and other proceedings which have arisen in the
ordinary course of business are pending or threatened against the Company or
its subsidiaries. Although no assurances can be given and no determination
can be made at this time as to the outcome of any particular lawsuit or
proceeding, the Company believes there are meritorious defenses to
substantially all such claims and that any liability which may finally be
- 5 -
<PAGE>
<PAGE> 7
determined should not have a material adverse effect on the Company's
consolidated financial position or results of operations.
Environmental Matters
The Company's operations are subject to extensive and evolving federal,
state and local environmental laws and regulations which may affect such
operations and costs as a result of their effect on the construction,
operation and maintenance of its pipeline facilities. The Company
anticipates annual capital expenditures of $2 million over the next several
years aimed at maintaining compliance with such laws and regulations.
Additionally, appropriate governmental authorities may enforce the laws and
regulations with a variety of civil and criminal enforcement measures,
including monetary penalties and remediation requirements.
The Comprehensive Environmental Response, Compensation and Liability
Act, also known as Superfund, as reauthorized, imposes liability, without
regard to fault or the legality of the original act, for disposal of a
"hazardous substance." The Company has been named as a potentially
responsible party in five Superfund waste disposal sites. At the four sites
for which the Environmental Protection Agency has developed sufficient
information to estimate total cleanup costs of approximately $31.6 million,
the Company estimates its pro-rata exposure is approximately $.8 million. At
the fifth site, the Company has been named a de minimis potentially
responsible party. Since no estimate has been made of the total cleanup
costs, the Company is unable to calculate its share of those costs.
There are additional areas of environmental remediation
responsibilities which may fall on the Company. The states have regulatory
programs that mandate waste cleanup. The Clean Air Act Amendments of 1990
include new permitting regulations which will result in increased operating
expenditures.
Future information and developments will require the Company to
continually reassess the expected impact of these environmental matters.
However, the Company has evaluated its total environmental exposure based on
currently available data, including its potential joint and several
liability, and believes that compliance with all applicable laws and
regulations will not have a material adverse impact on the Company's
liquidity, consolidated financial position or results of operations.
Regulatory Matters
On March 10, 1992, the Company submitted to the Federal Energy
Regulatory Commission ("FERC") a comprehensive Interim Settlement designed
to resolve all outstanding issues resulting from its 1989 rate case and its
1990 proposed service restructuring proceeding. The Interim Settlement
became effective November 1, 1992 and expired with the Company's
implementation of Order 636 on November 1, 1993. Under the Interim
Settlement, gas inventory demand charges were collected from the Company's
resale customers for the period November 1, 1992 through October 31, 1993.
This method of gas cost recovery required refunds for any over-collections
and placed the Company at risk for under-collections. As required by the
Interim Settlement, the Company filed with the FERC on April 29, 1994, a
reconciliation report showing over-collections and, therefore, proposed
refunds totaling $45.1 million. Certain customers have disputed the level of
those refunds. By an order issued February 27, 1995, the FERC directed the
Company to make immediate refunds of $45.1 million, together with applicable
interest, subject to further investigation of the claims which the customers
have made. On May 2, 1995, the FERC issued a further order setting these
issues for an evidentiary hearing. Applicable refunds, including interest,
were paid on March 29, 1995.
- 6 -
<PAGE>
<PAGE> 8
On April 8, 1992, the FERC issued Order 636, which required significant
changes in the services provided by interstate natural gas pipelines. The
Company and numerous other parties have sought judicial review of aspects of
Order 636. The case is currently in the briefing phase before the United
States Court of Appeals for the D.C. Circuit. ANR Pipeline placed its
restructured services under Order 636 into effect on November 1, 1993. As a
result, the Company no longer provides a merchant service and now offers a
wide range of "unbundled" transportation, storage and balancing services.
However, the Company still purchases a residual quantity of gas under
certain remaining gas purchase contracts. The Company's Order 636
restructured tariff provides a transitional mechanism for the purpose of
recovering from, or refunding to, its customers any pricing differential
between costs incurred to purchase this gas and the amount the Company
recovers through the auctioning of such gas on the open market in producing
areas. Several persons, including ANR Pipeline, have sought judicial review
of aspects of the FERC's orders approving the Company's restructuring
filings. Those appeals have been held in abeyance by the United States Court
of Appeals for the D.C. Circuit, pending further order. On March 24, 1994,
the FERC issued its "Fourth Order on Compliance Filing and Third Order on
Rehearing," which addressed numerous rehearing issues and confirmed that
after minor required tariff modifications, the Company is now fully in
compliance with Order 636 and the requirements of the orders on ANR
Pipeline's restructuring filings. The FERC issued a further order regarding
certain compliance issues on July 1, 1994. In accordance with this order,
the Company filed revised tariff sheets on July 18, 1994, which were
accepted by order issued April 12, 1995.
On November 1, 1993, the Company filed a general rate increase with the
FERC under Docket No. RP94-43. The increase represents the effects of higher
plant investment, Order 636 restructuring costs, rate of return and tax rate
changes, and increased costs related to the required adoption of recent
accounting rule changes, i.e., Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits." On March 23, 1994, the
FERC issued an order granting and denying various requests for summary
disposition and establishing hearing procedures for issues remaining to be
investigated in this proceeding. The order required the reduction or
elimination of certain costs which resulted in revised rates that reflect an
$85.7 million increase in the cost of service from that approved in the
Interim Settlement and a $182.8 million increase over the Company's approved
rates for its restructured services under Order 636. On April 29, 1994, the
Company filed a motion with the FERC that placed the new rates into effect
May 1, 1994, subject to refund. On September 21, 1994, the FERC accepted the
Company's filing in compliance with the March 23, 1994 order, subject to
further modifications including an additional reduction in cost of service
of approximately $5 million. The Company submitted its compliance filing to
the FERC on October 6, 1994, which the FERC accepted by order issued
February 8, 1995, subject to a further compliance filing requirement. This
compliance filing was submitted by ANR Pipeline on March 10, 1995, and was
accepted by order issued May 3, 1995, subject to one additional compliance
filing requirement, which the Company expects to submit in May 1995.
Further, on December 8, 1994, the FERC issued its order denying rehearing of
the March 23, 1994 order. On January 26, 1995, ANR Pipeline sought judicial
review of these orders before the United States Court of Appeals for the
D.C. Circuit.
ANR Pipeline has executed a Settlement Agreement (the "Settlement
Agreement") with Dakota Gasification Company ("Dakota") and the Department
of Energy which resolves litigation concerning purchases of synthetic gas by
the Company from the Great Plains Coal Gasification Plant (the "Plant").
That litigation, originally filed in 1990 in the United States District
- 7 -
<PAGE>
<PAGE> 9
Court in North Dakota, involved claims regarding the Company's obligations
under certain gas purchase and transportation contracts with the Plant. The
Settlement Agreement resolves all disputes between the parties, amends the
gas purchase agreement between the Company and Dakota and terminates the
transportation contract. The Settlement Agreement is subject to final FERC
approval, including an approval for the Company to recover the settlement
costs from its customers. On August 3, 1994, the Company filed a petition
with the FERC requesting: (a) that the Settlement Agreement be approved;
(b) an order approving ANR Pipeline's proposed tariff mechanism for the
recovery of the costs incurred to implement the Settlement Agreement; and
(c) an order dismissing a proceeding currently pending before the FERC,
wherein certain of ANR Pipeline's customers have challenged Dakota's pricing
under the original gas supply contract. On October 18, 1994, the FERC issued
an order consolidating the Company's petition with similar petitions of
three other pipeline companies and setting the Settlement Agreement and
other Dakota-related proceedings for limited hearing before an
Administrative Law Judge who must render an initial decision by December 31,
1995. On December 20, 1994, ANR Pipeline filed its testimony, and has
responded to numerous discovery requests. Intervenors from the ratepayer
group submitted their answering testimony on March 28, 1995. The hearing is
scheduled to commence on June 20, 1995.
Order 636 provides mechanisms for recovery of transition costs
associated with compliance with that Order. The Company has estimated that
its transition costs will amount to approximately $150 million, which will
consist primarily of gas supply realignment costs, the cost of stranded
pipeline investment and the Dakota costs described above. As of March 31,
1995, the Company has incurred transition costs in the amount of
$45.4 million. The Company has filed for recovery of approximately
$40.5 million of these transition costs, which have been accepted and made
effective by the FERC, subject to refund and further proceedings. On May 1,
1995, the Company filed for recovery of an additional $4 million, which the
Company expects will also be accepted subject to refund and further
proceedings. In addition, the Company has filed for recovery of
approximately $90 million of costs associated with the Settlement Agreement,
as discussed above. Additional transition cost filings will be made by the
Company in the future.
Certain of the above regulatory matters and other regulatory issues
remain unresolved among the Company, its customers, its suppliers and the
FERC. The Company has made provisions which represent management's
assessment of the ultimate resolution of the above issues. As a result, the
Company anticipates that these regulatory matters will not have a material
adverse effect on its consolidated financial position or results of
operations. While the Company estimates the provisions to be adequate to
cover potential adverse rulings on these and other issues, it cannot
estimate when each of these issues will be resolved.
- 8 -
<PAGE>
<PAGE> 10
Item 2.A. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The Notes to Consolidated Financial Statements contain information that
is pertinent to the following analysis.
Liquidity and Capital Resources
General. Management believes that the Company's stable financial
position and earnings ability will enable it to continue to generate and
obtain capital for financing needs in the foreseeable future.
Environmental. Information concerning environmental matters is set
forth in Note 4 of Notes to Consolidated Financial Statements included
herein.
Results of Operations
ANR Pipeline placed its restructured services under Order 636 into
effect on November 1, 1993 (see Note 4 of Notes to Consolidated Financial
Statements). As a result, the Company no longer offers a merchant service
and has bought out or assigned a significant portion of its gas purchase
contracts. The Company is continuing to negotiate the termination of the
remaining gas purchase contract obligations. The Company's Order 636
restructured tariff provides mechanisms for the purpose of recovering from
or refunding to its transportation customers any pricing differential
between costs incurred to purchase gas under these contracts and the amounts
recovered through auctioning of such gas on the open market. As a result of
Order 636 recovery mechanisms, the Company believes it will recover any
costs associated with the resolution of these negotiations with no
significant financial impact.
The change in the Company's earnings for the three-month period ended
March 31, 1995 in comparison to the same period in 1994 is a result of the
following:
Revenues. Storage and transportation revenues decreased for the
three-month period ended March 31, 1995 as compared to the same period in
1994 by $2.1 million. The primary factor contributing to the decrease was a
reduction in revenues associated with certain transportation services
provided by others. The earnings impact of this decrease was offset by a
corresponding reduction in operation and maintenance. The revenue decrease
was largely offset by an increase associated with cost recovery mechanisms
related to above market gas purchases, as discussed above.
Gas sales revenues decreased for the three-month period ended March 31,
1995 as compared to the same period in 1994 by $23.4 million as a result of
decreases in the quantity of gas auctioned on the open market, discussed
above, and to a lesser extent due to lower spot market prices.
Operation and Maintenance. Operation and maintenance expenses
decreased for the three-month period ended March 31, 1995 as compared to the
same period in 1994 by $17.8 million, primarily due to a reduction in
transportation and storage services provided by others and adjustments for
prior periods related to ad valorem taxes.
Cost of Gas. Cost of gas decreased for the three-month period ended
March 31, 1995 as compared to the same period in 1994 by $8 million,
primarily as a result of a decrease in the quantity of gas purchased under
the Company's remaining gas purchase contracts, partially offset by an
increase in the amortization of previously deferred costs associated with
- 9 -
<PAGE>
<PAGE> 11
above market gas purchases, which are offset in transportation revenues, as
discussed above.
Item 2.B. Other Developments.
The Company has filed an application with the FERC to construct, at a
cost of $15.3 million, approximately 12 miles of new pipeline in the State
of Michigan (the "Link Project") which would interconnect to approximately 8
miles of new pipeline to be constructed by Niagara Gas Transmission, Ltd.
("Niagara"), a wholly-owned subsidiary of Consumers' Gas Company
("Consumers") at the Canadian-United States border. The new facilities will
have a capacity of 150 million cubic feet ("MMcf") per day and will serve
markets in the United States and Canada, including Consumers and Michigan
Consolidated Gas Company. On March 27, 1995, Niagara filed an application
with the National Energy Board of Canada for regulatory authorization for
the Canadian segment of the Link Project. Subject to the receipt of the
necessary FERC and Canadian regulatory approvals, the project could be in
service as early as November 1, 1995.
In August 1993, the Company and NorAm Energy Corporation ("NorAm")
announced execution of a restructured agreement under which the Company
would purchase an undivided property ownership interest equal to 250 MMcf
per day of capacity in NorAm's interstate pipeline facilities. In light of
current regulatory and market conditions, NorAm and ANR Pipeline have agreed
to terminate the agreement and substitute therefor agreements under which
NorAm will provide firm transportation service to ANR Pipeline up to a
maximum daily quantity of 100 MMcf from June 1, 1995 through the year 2005.
Effective September 9, 1994, Florida Power Corporation ("FPC") withdrew
as an equity partner in both the SunShine Interstate Transmission Company
and SunShine Pipeline Company partnerships. Interests in these partnerships
are now held by affiliates of the Company and TransCanada PipeLines Limited.
FPC has also terminated its agreements with the partnerships to transport
gas on the proposed SunShine pipeline system effective March 2, 1995. In
light of this termination, the partnerships have withdrawn their
applications with state and federal regulators and have exercised their
rights to terminate agreements with all other shippers on the system. Due to
market conditions, the SunShine pipeline project is unlikely to proceed in
the near future. Future development of this project is currently under
management review.
- 10 -
<PAGE>
<PAGE> 12
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The information required hereunder is incorporated by reference
into Part II of this Report from Note 4 of Notes to Consolidated Financial
Statements set forth in Part I of this Report.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
March 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
ANR PIPELINE COMPANY
(Registrant)
Date: May 11, 1995 By: WILLIAM L. JOHNSON
--------------------------
William L. Johnson
Vice President
and Controller
(As Authorized Officer and
Chief Accounting Officer)
- 11 -
<PAGE>
<PAGE> 13
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Exhibit
Number Description
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
27 Financial Data Schedule
</TABLE>
- 12 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ANR PIPELINE
COMPANY FORM 10-Q QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 330
<ALLOWANCES> 0
<INVENTORY> 41
<CURRENT-ASSETS> 393
<PP&E> 3,425
<DEPRECIATION> 2,240
<TOTAL-ASSETS> 1,807
<CURRENT-LIABILITIES> 310
<BONDS> 437
<COMMON> 0
0
0
<OTHER-SE> 807
<TOTAL-LIABILITY-AND-EQUITY> 1,807
<SALES> 20
<TOTAL-REVENUES> 221
<CGS> 32
<TOTAL-COSTS> 132
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> 75
<INCOME-TAX> 26
<INCOME-CONTINUING> 49
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
