ANR PIPELINE CO, 10-K, 2000-02-25

ANR PIPELINE CO
10-K, 2000-02-25
NATURAL GAS TRANSMISSION

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended December 31, 1999 or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

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

---------------------------

Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------

9-5/8% Debentures, due 2021
7-3/8% Debentures, due 2024 { New York Stock Exchange
7% Debentures, due 2025

Securities registered pursuant to Section 12(g) of the Act: None

---------------------------

Registrant meets the conditions set forth in General Instructions (I)(1)(a)
and (b) of Form 10-K and is therefore filing this Report with reduced disclosure
format.

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 _____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of February 1, 2000, 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.

Documents incorporated by reference: None

================================================================================

<PAGE>

TABLE OF CONTENTS

Item No. Page

Glossary......................................................(ii)

PART I

1. Business...................................................... 1
Introduction.............................................. 1
Recent Development........................................ 1
Natural Gas System........................................ 1
Operations............................................ 1
General........................................... 1
Transportation and Storage Services............... 2
Competition....................................... 3
Access to Gas Supply.................................. 3
Regulations Affecting Gas System...................... 3
Environmental......................................... 3
2. Properties.................................................... 4
3. Legal Proceedings............................................. 4
4. Submission of Matters to a Vote of Security Holders........... 5

PART II

5. Market for the Registrant's Common Equity and Related
Stockholder Matters........................................... 5
6. Selected Financial Data....................................... 5
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 5
7A. Quantitative and Qualitative Disclosures About Market Risk.... 5
8. Financial Statements and Supplementary Data................... 6
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure...................................... 6

PART III

10. Directors and Executive Officers of the Registrant............ 6
11. Executive Compensation........................................ 6
12. Security Ownership of Certain Beneficial Owners and
Management.................................................... 6
13. Certain Relationships and Related Transactions................ 6

PART IV

14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K...................................................... 7

(i)

<PAGE>

GLOSSARY

"AICPA" means American Institute of Certified Public Accountants
"ANR" means American Natural Resources Company
"ANR Pipeline" or the "Company" means ANR Pipeline Company
"ANR Storage" means ANR Storage Company and its subsidiaries
"Bcf" means billion cubic feet
"Blue Lake" means Blue Lake Gas Storage Company in which an affiliate of the
Company has a 75% ownership interest.
"Coastal" means The Coastal Corporation
"Coastal Natural Gas" means Coastal Natural Gas Company
"Colorado" means Colorado Interstate Gas Company and its subsidiaries
"Empire" means Empire State Pipeline
"EPA" means U.S. Environmental Protection Agency
"FAS" means Statement of Financial Accounting Standards
"FASB" means Financial Accounting Standards Board
"FERC" means Federal Energy Regulatory Commission
"Great Lakes" means Great Lakes Gas Transmission Limited Partnership in which
affiliates of the Company have a 50% ownership interest.
"Gulfstream System" means Gulfstream Natural Gas System, a proposed pipeline
system consisting of 744 miles of pipeline and related facilities,
originating near Mobile, Alabama, crossing the Gulf of Mexico, and
terminating near Florida's east coast in West Palm Beach, Florida.
"HIOS" means High Island Offshore System, L.L.C.
"JolietMarket Hub" means a gas trading area near Chicago, Illinois,
interconnected with numerous pipelines, where gas from all major
continental North American supply basins is available.
"MMcf" means million cubic feet "NGA" means Natural Gas Act of 1938, as amended
"UTOS" means U-T Offshore System, L.L.C.
"working gas" means that volume of gas available for withdrawal from natural
gas storage fields and for use by the Company's customers

NOTES:

This Annual Report includes certain forward-looking statements. The
forward-looking statements reflect the Company's expectations, objectives and
goals with respect to future events and financial performance and are based on
assumptions and estimates which the Company believes are reasonable. However,
actual results could differ materially from anticipated results. Important
factors which may affect the actual results include, but are not limited to,
commodity prices, political developments, market and economic conditions,
industry competition, the weather, changes in financial markets, and changing
legislation and regulations. The forward-looking statements contained in this
Report are intended to qualify for the safe harbor provisions of Section 21E of
the Securities Exchange Act of 1934, as amended.

Unless otherwise noted, all natural gas volumes presented in this Annual Report
are stated at a pressure base of 14.73 pounds per square inch absolute and 60
degrees Fahrenheit.

(ii)

<PAGE>

PART I

Item 1. Business.

INTRODUCTION

ANR Pipeline is a Delaware corporation organized in 1945. All of ANR
Pipeline's outstanding common stock is owned by ANR. ANR is a direct, wholly
owned subsidiary of Coastal Natural Gas, and an indirect subsidiary of Coastal.
ANR Pipeline owns and operates an interstate natural gas pipeline system. At
December 31, 1999, the Company had 1,695 employees engaged in the operation of
ANR Pipeline and 198 employees engaged in the operation of HIOS, UTOS, ANR
Storage and Empire.

RECENT DEVELOPMENT

Coastal and El Paso Energy Corporation ("El Paso Energy") announced on
January 18, 2000 the execution of definitive agreements for the merger of
Coastal and El Paso Energy. Each share of Coastal common stock and Class A
common stock will be converted on a tax-free basis (except for cash paid in lieu
of fractional shares) into 1.23 shares of El Paso Energy common stock. The
outstanding convertible preferred stock of Coastal will be exchanged tax free
(except for cash paid in lieu of fractional shares) for El Paso Energy common
stock on the same basis as if the preferred stock had been converted into
Coastal common stock immediately prior to the merger. It is expected that the
merger will be completed during the fourth quarter of 2000 and be accounted for
as a pooling of interests. The merger is subject to various conditions,
particularly federal regulatory approval.

NATURAL GAS SYSTEM

OPERATIONS

General

The Company is involved in the "open access" transportation, storage,
gathering and balancing of natural gas owned by third parties. ANR Pipeline
provides these services for various customers through its facilities located in
Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan,
Mississippi, Missouri, Nebraska, Ohio, Oklahoma, Tennessee, Texas, Wisconsin and
offshore in the Gulf of Mexico.

The Company's two interconnected, large-diameter multiple pipeline systems
transport gas for markets in the Midwest and the Northeast regions of the United
States from (a) the Hugoton Field and other fields in the Anadarko Basin in
Texas and Oklahoma, (b) the Louisiana onshore and the offshore Gulf of Mexico
areas and (c) Canada and other basins received through interconnections with
other pipelines located throughout its system.

The Company's principal pipeline facilities at December 31, 1999 consisted
of 10,580 miles of pipeline and 75 compressor stations with 1,022,217 installed
horsepower. At December 31, 1999, the design peak day delivery capacity of the
transmission system, considering supply sources, storage, markets and
transportation for others, was approximately 6 Bcf per day.

ANR Pipeline has approximately 202 Bcf of underground working gas storage
capacity, with a maximum day delivery capacity of 3 Bcf. Working gas storage
capacity operated by ANR Pipeline of 126.3 Bcf is available from five owned and
five leased underground storage facilities in Michigan. In addition, the Company
has the contracted rights for 75.4 Bcf of working gas storage capacity of which
45.4 Bcf is provided by Blue Lake and 30 Bcf is provided by ANR Storage.

<PAGE>

Transportation and Storage Services

ANR Pipeline transports and stores gas owned by third parties, including
distributors, intrastate and interstate pipelines, producers, brokers, marketers
and end users, for markets both on and off its system. Transportation service
revenues amounted to $431 million for 1999 compared to $481 million for 1998 and
$497 million for 1997. Gas storage revenues amounted to $136 million for 1999 as
compared to $139 million for 1998 and $146 million for 1997.

ANR Pipeline's system deliveries for the years 1999, 1998 and 1997 were as
follows:

Total System Daily Average
Year Deliveries System Deliveries
---- ---------- -----------------
(Bcf) (MMcf)

1999 1,362 3,732
1998 1,354 3,710
1997 1,424 3,901

In September 1998, the Company received FERC approval to expand its
Wisconsin system by constructing 11.7 miles of 30-inch looping and a meter
station. These facilities were completed and placed in service for the 1999/2000
heating season and provide an additional 120 MMcf per day of capacity into
Wisconsin from the Chicago area for a 10-cent rate.

The Company filed with the FERC in March 1999 for approval to further
expand its Wisconsin system by constructing 3 miles of 42-inch looping in
Illinois and installing an additional 23,000 horsepower of compression at
existing compressor stations in Illinois and Wisconsin. These facilities, which
are estimated to cost $37.5 million, will deliver an additional 194 MMcf per day
of capacity into Wisconsin from the Chicago area. In January 2000, ANR filed an
amendment with the FERC for approval to phase in construction of these
facilities. The initial phase, to be placed in service by the end of 2000, would
include 20,000 horsepower of compression and provide 109 MMcf per day of
additional capacity. The remaining facilities will be constructed at a later
date, pending approval of other related facilities.

Combined, these expansions of the Company's existing system will provide an
efficient means for customers to gain access to increased supplies of natural
gas at the Joliet Market Hub via flexible and economical transportation and
storage services.

The Company's proposed SupplyLink Project, which consists of the
construction of approximately 73 miles of mainline looping and the installation
of an additional 15,000 horsepower at an existing compressor station, will
increase the transmission capacity by up to 750 MMcf per day on the Company's
mainline between the Joliet Market Hub and Defiance, Ohio.

The proposed Independence Pipeline, of which a subsidiary of ANR owns a
one-third general partnership interest, will interconnect with the ANR Pipeline
system at Defiance, Ohio and will extend to the Leidy, Pennsylvania facilities
of Williams Gas Pipelines - Transco and other interstate pipelines. The proposed
Independence Pipeline project consists of the construction of 400 miles of
36-inch diameter pipe, with a designed delivery capacity of more than 950 MMcf
per day.

In December 1999, the FERC issued an interim order conditionally approving
the applications for both the SupplyLink and Independence Projects. The Company
has requested a rehearing of the order.

The Company has an indirect 50% interest in the East Breaks Gathering
Company L.L.C. ("East Breaks"). East Breaks has entered into agreements with
Exxon Company U.S.A. ("Exxon") and BP Amoco Plc ("BP Amoco") whereby East Breaks
will own and operate pipeline facilities and provide related services for the
development of the Exxon and BP Amoco Diana and Hoover production prospects in
the Gulf of Mexico. The pipeline facilities will consist of an 86- mile 20-inch
pipeline, extending from an Exxon and BP Amoco production facility in the Gulf
of Mexico to a point of

<PAGE>

interconnection with the existing HIOS transmission facilities. The new pipeline
will have a capacity of over 400 MMcf per day, will cost approximately $90
million and is expected to be in service during the summer of 2000. HIOS
interconnects with ANR Pipeline's transportation facilities at West Cameron
Block 167, offshore Louisiana.

Competition

Natural gas competes with other forms of energy available to customers,
primarily on the basis of price paid by end users. These competitive forms of
energy include electricity, coal, propane and fuel oils. Changes in the
availability or price of natural gas or other forms of energy, as well as
changes in business conditions, conservation, legislation or governmental
regulations, capability to convert to alternate fuels, the weather, changes in
rate structure, taxes and other factors may affect the demand for natural gas in
the areas served by ANR Pipeline.

In recent years, the FERC issued orders designed to increase competition in
the natural gas industry. These orders have resulted in: (1) pipelines offering
more service options and pricing flexibility in order to maintain and increase
business volumes, and (2) pipelines competing with their customers, who are now
allowed to resell, i.e., release, their unused firm capacity. In addition, firm
contracts traditionally had terms of five to ten years; however, due to
increased competition, new firm contracts are of a shorter average duration.

ACCESS TO GAS SUPPLY

Gas deliverability available to shippers on ANR Pipeline's system from the
Mid-Continent, Rocky Mountain, Western Canada, and Gulf Coast producing areas
through direct connections and interconnecting pipelines and gatherers is
approximately 4,900 MMcf per day. The Company remains active in locating and
connecting new sources of natural gas to facilitate transportation arrangements
made by third-party shippers. During 1999, field development, newly connected
gas wells, gas production facilities and pipeline interconnections contributed
approximately 1,100 MMcf per day to total deliverability accessible to shippers
on the Company's system.

REGULATIONS AFFECTING GAS SYSTEM

Under the NGA, the FERC has jurisdiction over ANR Pipeline as to rates and
charges for the transportation, storage and balancing of natural gas, the
construction of new facilities, the extension or abandonment of service and
facilities, accounts and records and certain other matters. All of the Company's
service options are subject to rate regulation by the FERC. Under the NGA, ANR
Pipeline must file with the FERC to establish or adjust its services and rates.
The FERC may also initiate proceedings to determine whether the Company's rates
are "just and reasonable." ANR Pipeline holds certificates of public convenience
and necessity issued by the FERC covering its jurisdictional facilities,
activities and services.

ANR Pipeline is also subject to regulation with respect to safety
requirements in the design, construction, operation and maintenance of its
interstate gas transmission and storage facilities by the U.S. Department of
Transportation. Operations on United States government land are regulated by the
U.S. Department of the Interior.

For further discussion of ANR Pipeline's regulatory matters, see Note 4 of
Notes to Consolidated Financial Statements, which is incorporated herein by
reference.

ENVIRONMENTAL

ANR Pipeline's environmental matters are discussed in Note 4 of Notes to
Consolidated Financial Statements, which is incorporated herein by reference.

<PAGE>

Item 2. Properties.

Information on properties of ANR Pipeline is in Item 1, "Business,"
included herein.

The real property owned by the Company in fee consists principally of sites
for compressor and metering stations and microwave and terminal facilities. With
respect to the five owned storage fields, the Company holds title to gas storage
rights representing ownership of, or has long-term leases on, various subsurface
strata and surface rights and also holds certain additional gas rights. Under
the NGA, the Company may acquire, by the exercise of the right of eminent domain
through proceedings in United States District Courts or in state courts,
necessary rights-of-way to construct, operate and maintain pipelines and
necessary land or other property for compressor and other stations and equipment
necessary to the operation of pipelines.

Item 3. Legal Proceedings.

In October 1996, Coastal, along with certain of its affiliates, including
ANR Pipeline, was named as a defendant in a suit filed by several former and
current African American employees in the U.S. District Court, Southern District
of Texas (the "Texas suit"). The Texas suit alleges racially discriminatory
employment policies and practices. Coastal and its affiliates vigorously deny
these allegations and have filed responsive pleadings. Plaintiffs' counsel are
seeking to have the Texas suit certified as a class action of all former and
current African American employees and initially claimed compensatory and
punitive damages of $400 million. In February 1999, in response to Coastal's
motion to deny class certification, plaintiffs' counsel obtained permission from
the Court to delete all claims for compensatory and punitive damages and to seek
equitable relief only.

In January 1998, the plaintiffs in the Texas suit amended their suit to
exclude ANR Pipeline employees from the potential class. A new suit was then
filed in state court in Wayne County, Michigan, seeking to have the Michigan
suit certified as a class action of African American employees of ANR Pipeline
and seeking unspecified damages as well as attorneys and expert fees. The
Company has filed responsive pleadings denying these allegations. In August
1999, the court denied plaintiffs' motion to have the Michigan suit certified as
a class action. Plaintiffs filed with the Michigan Court of Appeals an
application for leave to appeal the denial of the class certification. On
November 5, 1999, the Michigan Court of Appeals denied the application for leave
to appeal.

Two legal proceedings, one in federal court and the other in state court,
have been instituted against a number of gas pipeline companies and their
affiliates, including ANR Pipeline, Coastal and several of Coastal's other
subsidiaries. The plaintiffs in each suit seek damages for the alleged
undermeasurement of the heating value and the volume of natural gas. In the
federal proceeding, Jack Grynberg filed 77 separate False Claim Act suits in
September 1997 against natural gas transmission companies and producers,
gatherers, and processors of natural gas, seeking unspecified damages which
could include treble damages for the maximum period permitted by law
(potentially as much as ten years) and penalties of up to $10,000 per false
claim. In addition to the measurement claims, these suits also allege that the
defendants undervalued the gas in paying royalties. The Coastal defendants were
sued in the U.S. District Courts of Colorado and the Eastern District of
Michigan. In April 1999, the U.S. Department of Justice notified the Company
that the United States will not intervene in these cases at this time. The
MultiDistrict Litigation Panel has consolidated the Grynberg suits with several
other Grynberg cases for pre-trial proceedings in Wyoming. The defendants have
filed a motion to dismiss which will be argued in March of 2000.

In the state proceedings, the Quinque Operating Company, on behalf of
itself and subclasses of gas producers, royalty owners, overriding royalty
owners, and state taxing authorities, in May 1999 instituted a legal proceeding
in State Court in Stevens County, Kansas against over 200 gas companies,
including ANR Pipeline and several other Coastal subsidiaries. The Quinque suit
seeks unspecified actual, punitive and treble damages for the alleged
undermeasurement of all natural gas measured in the United States from
non-federal and non-Indian lands since 1974. The plaintiffs are seeking
certification of a national class of all similarly situated gas producers,
royalty owners, overriding royalty owners, and state taxing authorities. The
suit has been removed to the U.S. District Court for the District of Kansas. The
plaintiffs have filed a motion to remand the case back to the state court, and
several defendants have filed a motion under the MultiDistrict Litigation rules
to have the suit transferred to Wyoming and consolidated with the Grynberg
proceedings for pre-trial proceedings.

<PAGE>

Numerous other 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 determined should not have a
material adverse effect on the Company's consolidated financial position or
results of operations.

Item 4. Submission of Matters to a Vote of Security Holders.

The information called for by this item is omitted pursuant to General
Instruction (I) of Form 10-K.

PART II

Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.

All common stock of ANR Pipeline is owned by ANR.

Item 6. Selected Financial Data.

The information called for by this item is omitted pursuant to General
Instruction (I) of Form 10-K.

Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.

Management's Discussion and Analysis of Financial Condition and Results of
Operations is presented on page F-1 herein.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company has issued fixed rate debt to partially finance expenditures
and debt retirements. These agreements expose the Company to market risk related
to changes in interest rates.

The following table presents hypothetical changes in fair values in the
Company's debt obligations at December 31, 1999 and 1998. The modeling technique
used measures the change in fair values arising from selected changes in
interest rates. Market changes reflect immediate hypothetical changes in
interest rates at December 31. Fair values are calculated as the net present
value of the expected cash flows of the financial instrument.

<TABLE>
<CAPTION>
Millions of Dollars No Change 10% Increase 10% Decrease
--------- ------------------------ -------------------

Impact of changes in market Fair Fair Increase Fair Increase
rates of interest on: Value Value (Decrease) Value (Decrease)
- --------------------------------------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Long-term debt subject to fixed
interest rates
1999......................... $ 538.9 $ 506.7 ($ 32.2) $ 575.0 $ 36.1
1998......................... 592.4 561.8 ( 30.6) 624.9 32.5
</TABLE>

The Company has a note receivable from a related party with a carrying
value of $136 million and $156.1 million at December 31, 1999 and 1998,
respectively. The note earns interest at a variable rate tied to market rates of
interest and therefore, the carrying amount is a reasonable estimate of its fair
value. A 10% change in interest rates from December 31 levels would not have a
material impact on earnings.

The Company's management of market risks is consistent with the prior year.

<PAGE>

Item 8. Financial Statements and Supplementary Data.

The Financial Statements and Supplementary Data required hereunder are
included in this Annual Report as set forth in Item 14(a) herein.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

PART III

Item 10. Directors and Executive Officers of the Registrant.

The information called for by this item is omitted pursuant to General
Instruction (I) of Form 10-K.

Item 11. Executive Compensation.

The information called for by this item is omitted pursuant to General
Instruction (I) of Form 10-K.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information called for by this item is omitted pursuant to General
Instruction (I) of Form 10-K.

Item 13. Certain Relationships and Related Transactions.

The information called for by this item is omitted pursuant to General
Instruction (I) of Form 10-K.

<PAGE>

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a) The following documents are filed as part of this Annual Report or
incorporated herein by reference:

1. Financial Statements.

The following Consolidated Financial Statements of ANR Pipeline
and Subsidiaries are included in response to Item 8 hereof on the
attached pages as indicated:

<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report...................................................................... F-2
Consolidated Balance Sheet at December 31, 1999 and 1998.......................................... F-3
Statement of Consolidated Earnings for the Years Ended December 31, 1999, 1998 and 1997........... F-5
Statement of Consolidated Retained Earnings for the Years Ended December 31, 1999, 1998
and 1997....................................................................................... F-5
Statement of Consolidated Cash Flows for the Years Ended December 31, 1999, 1998 and
1997........................................................................................... F-6
Notes to Consolidated Financial Statements........................................................ F-7
</TABLE>

2. Financial Statement Schedules.

Schedules are omitted as not applicable or not required, or the
required information is shown in the Consolidated Financial Statements
or Notes thereto.

3. Exhibits.

(3.1)+ Composite Certificate of Incorporation of ANR Pipeline
effective as of December 31, 1987. (Filed as Module
ANRCertIncorp on March 29, 1994.)

(3.2)+ Amended By-laws of ANR Pipeline effective as of September 21,
1994. (Filed as Exhibit 3.2 to ANR Pipeline's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994.)

(4) With respect to instruments defining the rights of holders of
long-term debt, the Company will furnish to the Securities
and Exchange Commission any such document on request.

(4.1)+ Indenture dated as of February 15, 1994 and First Supplemental
Indenture dated as of February 15, 1994 for the $125
million of 7-3/8% Debentures due February 15, 2024. (Filed
as Exhibit 4.4 to ANR Pipeline's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993.)

(10.1)+ Agreement for Consulting Services between ANR Pipeline and
Harold Burrow, dated as of January 1, 1996. (Filed as
Exhibit 10.3 to ANR Pipeline's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.)

(24)* Power of Attorney (included on signature pages herein).

(27)* Financial Data Schedule.

- ----------------------

Note:

+ Indicates documents incorporated by reference from the prior filings
indicated.
* Indicates documents filed herewith.

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the quarter ended December 31,
1999.

<PAGE>

POWER OF ATTORNEY

Each person whose signature appears below hereby appoints Coby C. Hesse,
William L. Johnson and Austin M. O'Toole and each of them, any one of whom may
act without the joinder of the others, as his attorney-in-fact to sign on his
behalf and in the capacity stated below and to file all amendments to this
Annual Report on Form 10-K, which amendment or amendments may make such changes
and additions thereto as such attorney-in-fact may deem necessary or
appropriate.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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)

By: JEFFREY A. CONNELLY
------------------------------------
Jeffrey A. Connelly
President and Chief Executive Officer
February 25, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

By: DAVID A. ARLEDGE By: JEFFREY A. CONNELLY
---------------------------- ----------------------------
David A. Arledge Jeffrey A. Connelly
Director Director
February 25, 2000 February 25, 2000

By: WILLIAM L. JOHNSON By: RICHARD A. LIETZ
---------------------------- ----------------------------
William L. Johnson Richard A. Lietz
Principal Accounting Officer Director
February 25, 2000 February 25, 2000

By: HAROLD BURROW By: JON A. WHITNEY
---------------------------- ----------------------------
Harold Burrow Jon A. Whitney
Director Director
February 25, 2000 February 25, 2000

By: DONALD H. GULQUIST
---------------------------
Donald H. Gulquist
Senior Vice President
and Principal Financial Officer
February 25, 2000

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this Item is presented in a reduced disclosure
format pursuant to General Instruction (I) of Form 10-K.

Results of Operations

Revenues. Storage and transportation revenues decreased by $53.7 million in
1999 as compared to 1998. The decrease in revenues was primarily due to an
adjustment to the provision for rate related contingencies of $38.7 million
recorded in the first quarter of 1998, as a result of the Company's rate case
settlement. The remaining decrease was largely the result of a continuing
decline in surcharge revenues related to transition cost recoveries of $18.2
million, partially offset by an increase in the amortization of deferred
revenues of $3.8 million.

Other revenues decreased by $31.6 million in 1999 as compared to 1998. The
decrease is due to proceeds of $26.7 million received from the termination of
gas transportation contracts in 1998 and lower interest income, partially offset
by recognition of gains on sales of certain assets.

Operation and Maintenance. Operation and maintenance expenses decreased by
$38.7 million in 1999 as compared to 1998. The primary factors contributing to
the decrease were (a) a $14.2 million benefit recorded in 1999 related to
revisions of certain gas cost accruals, (b) lower environmental costs of $14.7
million primarily due to a provision recorded in 1998 for environmental
regulatory compliance, (c) lower property and use tax expenses of $4.5 million
resulting primarily from favorable settlements of prior years tax issues in
certain states, and (d) net lower operating and other expenses of $5.3 million
in connection with the Company's comprehensive program undertaken in 1999 to
reduce costs and improve efficiencies.

Taxes on Income. Taxes on income decreased $3.3 million in 1999 as compared
to 1998. The decrease was primarily the result of lower pre-tax income, largely
offset by an adjustment to accumulated deferred income taxes recorded in 1998.

F-1

<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholder
ANR Pipeline Company
Detroit, Michigan

We have audited the accompanying consolidated balance sheets of ANR
Pipeline Company (an indirect, wholly owned subsidiary of The Coastal
Corporation) and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of earnings, retained earnings and cash flows for each
of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of ANR Pipeline Company and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Detroit, Michigan
February 8, 2000

F-2

<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)

<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998
---------- ---------

ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents............................................................. $ 3.2 $ 3.4
Notes receivable from a related party................................................. 136.0 156.1
Accounts receivable:
Others............................................................................. 20.4 24.8
Related parties.................................................................... 44.4 26.1
Materials and supplies, at average cost............................................... 27.9 27.8
Current deferred income taxes......................................................... 26.6 25.0
---------- ---------
258.5 263.2
---------- ---------

Property, Plant and Equipment, at cost................................................... 3,462.3 3,446.6
Less - Accumulated depreciation....................................................... 2,168.3 2,165.0
---------- ---------
1,294.0 1,281.6
---------- ---------

Other Assets:
Investment in related parties:
Pipeline partnerships.............................................................. 69.2 51.1
Other.............................................................................. 64.8 68.3
Deferred charges and other............................................................ 14.4 29.0
---------- ---------
148.4 148.4
---------- ---------

$ 1,700.9 $ 1,693.2
========== =========
</TABLE>

See Notes to Consolidated Financial Statements.

F-3

<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998
---------- ---------

LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable:
Others............................................................................. $ 94.2 $ 82.5
Related parties.................................................................... 8.1 11.6
Taxes on income....................................................................... 32.0 37.8
Other taxes........................................................................... 24.2 24.1
Other................................................................................. 39.8 50.0
---------- ---------
198.3 206.0
---------- ---------

Long-Term Debt........................................................................... 498.0 497.9
---------- ---------

Deferred Credits and Other:
Accumulated deferred income taxes..................................................... 205.9 174.4
Other deferred credits:
Others............................................................................. 58.6 103.3
Related parties.................................................................... 4.5 8.0
---------- ---------
269.0 285.7
---------- ---------

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..................................................................... 269.3 237.3
---------- ---------
735.6 703.6
---------- ---------

$ 1,700.9 $ 1,693.2
========== =========
</TABLE>

See Notes to Consolidated Financial Statements.

F-4

<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED EARNINGS
(Millions of Dollars)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
1999 1998 1997
--------- ---------- ---------
<S> <C> <C> <C>
Revenues:
Storage and transportation:
Others................................................................ $ 543.5 $ 613.1 $ 630.4
Related parties....................................................... 22.8 6.9 12.3
Other revenues:
Others................................................................ 75.5 97.5 34.1
Related parties....................................................... 20.3 29.9 52.9
--------- ---------- ---------
662.1 747.4 729.7
--------- ---------- ---------

Costs and Expenses:
Operation and maintenance:
Others................................................................ 261.0 292.2 269.0
Related parties....................................................... 62.6 70.1 81.4
Depreciation and amortization............................................ 38.0 36.6 49.2
Interest expense......................................................... 47.0 46.6 63.0
Taxes on income.......................................................... 94.5 97.8 98.2
--------- ---------- ---------
503.1 543.3 560.8
--------- ---------- ---------

Net Earnings................................................................ $ 159.0 $ 204.1 $ 168.9
========= ========== =========
</TABLE>

STATEMENT OF CONSOLIDATED RETAINED EARNINGS
(Millions of Dollars)

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
1999 1998 1997
--------- ---------- ---------
<S> <C> <C> <C>
Balance - Beginning of Year................................................. $ 237.3 $ 193.7 $ 119.8

Net Earnings................................................................ 159.0 204.1 168.9

Dividends on Common Stock................................................... (127.0) ( 160.5) ( 95.0)
--------- ---------- ---------

Balance - End of Year....................................................... $ 269.3 $ 237.3 $ 193.7
========= ========== =========
</TABLE>

See Notes to Consolidated Financial Statements.

F-5

<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Millions of Dollars)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings................................................................ $ 159.0 $ 204.1 $ 168.9
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization............................................ 38.3 36.9 51.6
Deferred income taxes.................................................... 29.8 44.7 1.9
Provision for regulatory matters......................................... - ( 180.6) 39.9
Undistributed equity in earnings of pipeline partnerships................ ( 10.0) ( 16.7) ( 18.8)
Changes in other assets and liabilities affecting operating activities:
Decrease (increase) in accounts receivable:
Others................................................................ 4.4 1.8 15.3
Related parties....................................................... ( 18.3) ( 2.1) .2
(Decrease) increase in accounts payable and other accruals:
Others................................................................ ( 13.1) 40.7 ( 34.0)
Related parties....................................................... ( 3.1) 1.8 ( 5.1)
Net (decrease) increase in other assets/liabilities...................... ( 7.7) ( 12.3) 17.4
-------- -------- --------
Total adjustments..................................................... 20.3 ( 85.8) 68.4
-------- -------- --------

Net cash provided by operating activities............................. 179.3 118.3 237.3
-------- -------- --------

Cash Flows from Investing Activities:
Investment in pipeline partnerships......................................... ( 27.8) - -
Decrease (increase) in notes receivable from related party.................. 20.1 109.8 ( 97.2)
Decrease in note receivable - other......................................... - - 18.5
Investment in related parties............................................... 3.5 5.8 4.0
Proceeds from sale of plant to related party................................ 37.5 4.8 -
Capital expenditures........................................................ ( 82.8) ( 77.2) ( 93.6)
-------- -------- --------

Net cash (used in) provided by investing activities................... ( 49.5) 43.2 ( 168.3)
-------- -------- --------

Cash Flows from Financing Activities:
Common stock dividends paid................................................. ( 127.0) ( 160.5) ( 95.0)
Other....................................................................... ( 3.0) ( 2.8) ( 3.0)
-------- -------- --------

Net cash used in financing activities................................. ( 130.0) ( 163.3) ( 98.0)
-------- -------- --------

Net Decrease in Cash and Cash Equivalents...................................... ( .2) ( 1.8) ( 29.0)

Cash and Cash Equivalents at Beginning of Year................................. 3.4 5.2 34.2
-------- -------- --------

Cash and Cash Equivalents at End of Year....................................... $ 3.2 $ 3.4 $ 5.2
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-6

<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

- - Basis of Presentation

ANR Pipeline is a wholly owned subsidiary of ANR, which is a direct
subsidiary of Coastal Natural Gas and an indirect subsidiary of Coastal. The
financial statements presented herewith are presented on the basis of historical
cost and do not reflect the basis of cost to Coastal Natural Gas. The
preparation of these financial statements, in conformity with generally accepted
accounting principles, requires estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses. Actual results
could differ from the estimates and assumptions used.

- - Reclassifications

Certain reclassifications of prior period statements have been made to
conform with current reporting practices. The effect of these reclassifications
was not material to the Company's consolidated financial position, results of
operations or cash flows.

- - Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, after eliminating all significant
intercompany transactions. The equity method of accounting is used for
investments in which the Company has a 20% to 50% voting interest and exercises
significant influence. The equity method is also being used for an investment in
a limited partnership in which the Company has an interest of more than 5%.

- - Property, Plant and Equipment

Property additions include capitalized interest costs allocable to
construction. Such costs amounted to $2.1 million, $3.2 million and $2.3 million
in 1999, 1998 and 1997, respectively.

The Company's annual provisions for depreciation of gas plant are computed
on a straight-line basis using rates of depreciation which vary by type of
property. The annual composite depreciation rate was approximately 1.2% for 1999
and 1998, and 1.7% for 1997. In 1997, the Company re-examined the useful lives
of its assets, and effective October 1, 1997, the depreciation rates associated
with certain of these assets were revised, which had the effect of increasing
net earnings by $14.7 million in 1998 and $3.6 million in 1997.

Costs of minor property units (or components thereof) retired or abandoned
are charged or credited, net of salvage, to accumulated depreciation. Gain or
loss on sales of major property units is credited or charged to income.

- - Income Taxes

The Company is a member of a consolidated group which files a consolidated
federal income tax return. Members of the consolidated group with taxable
incomes are charged with the amount of income taxes as if they filed separate
federal income tax returns, and members providing deductions and credits which
result in income tax savings are allocated credits for such savings.

- - Statement of Cash Flows

For purposes of this financial statement, cash equivalents include time
deposits, certificates of deposit and all highly liquid instruments with
original maturities of three months or less. The Company made cash payments for
interest, net of interest capitalized, of $46.9 million, $61 million and $49.5
million in 1999, 1998 and 1997, respectively.

F-7

<PAGE>

Cash payments for income taxes amounted to $70.5 million, $53.8 million and
$92.4 million in 1999, 1998 and 1997, respectively.

- - Nature of Operations and Concentrations of Credit Risk

ANR Pipeline is involved in the transportation, storage and balancing of
natural gas primarily for markets in the Midwest and Northeast regions of the
United States. The Company operates under arrangements with other companies
including distributors, intrastate and interstate pipelines, producers, brokers,
marketers and end-users. As a result, the Company has a concentration of
receivables due from these customers. This may affect the Company's overall
credit risk in that the customers may be similarly affected by changes in
economic, regulatory and other factors. Trade receivables are generally not
collateralized; however, the Company analyzes customers' credit positions prior
to extending credit.

- - Accounting Pronouncements

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS 133"), as amended by Statement of Financial Accounting
Standards No. 137, to be effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. FAS 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The accounting for changes
in the fair value of a derivative will depend on the intended use of the
derivative and the resulting designation. The Company is currently evaluating
the impact, if any, of FAS 133.

The Company adopted AICPA Statement of Position 98-5, "Reporting on the
Costs of Start-Up Activities" ("SOP 98-5"), in 1999. The application of SOP 98-5
did not have a material effect on the Company's consolidated financial
statements.

2. Long-Term Debt

Balances at December 31 were as follows (millions of dollars):

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Debentures:
9-5/8% series, due 2021.......................................................... $ 300.0 $ 300.0
7-3/8% series, due 2024.......................................................... 125.0 125.0
7% series, due 2025.............................................................. 75.0 75.0

Unamortized discount related to outstanding debt, net of premium.................... ( 2.0) ( 2.1)
-------- --------

$ 498.0 $ 497.9
======== ========
</TABLE>

None of the above debt issuances have maturity or sinking fund requirements
prior to their retirement due dates.

Alternatives to finance additional capital and other expenditures are
limited principally by the terms of a Coastal Natural Gas debt instrument. As of
December 31, 1999, ANR Pipeline and certain affiliates could incur in the
aggregate approximately $3 billion of additional indebtedness.

3. Fair Value of Financial Instruments

The estimated fair value amounts of the Company's financial instruments
have been determined by the Company, using appropriate market information and
valuation methodologies. Considerable judgment is required to develop the
estimates of fair value, thus, the estimates provided herein are not necessarily
indicative of the amounts that the Company could realize in a current market
exchange.

F-8

<PAGE>

<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
-------------------------- ------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------ ----------- ----------- -----------
(millions of dollars)
<S> <C> <C> <C> <C>
Nonderivatives:
Financial assets:
Cash and cash equivalents................... $ 3.2 $ 3.2 $ 3.4 $ 3.4
Note receivable from a related party........ 136.0 136.0 156.1 156.1

Financial liabilities:
Long-term debt.............................. 500.0 538.9 500.0 592.4
</TABLE>

The note receivable from a related party is at a floating market rate of
interest and therefore, the carrying amount is a reasonable estimate of its fair
value. The estimated values of the Company's long-term debt are based on
interest rates at December 31, 1999 and 1998, respectively, for new issues with
similar remaining maturities.

4. Litigation, Environmental and Regulatory Matters

- Litigation Matters

F-9

<PAGE>

subsidiaries. The Quinque suit seeks unspecified actual, punitive and treble
damages for the alleged undermeasurement of all natural gas measured in the
United States from non-federal and non-Indian lands since 1974. The plaintiffs
are seeking certification of a national class of all similarly situated gas
producers, royalty owners, overriding royalty owners, and state taxing
authorities. The suit has been removed to the U.S. District Court for the
District of Kansas. The plaintiffs have filed a motion to remand the case back
to the state court, and several defendants have filed a motion under the
MultiDistrict Litigation rules to have the suit transferred to Wyoming and
consolidated with the Grynberg proceedings for pre-trial proceedings.

- 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. Compliance with such laws and
regulations can be costly. Additionally, governmental authorities may enforce
the laws and regulations with a variety of civil and criminal enforcement
measures, including monetary penalties and remediation requirements.

The Company spent approximately $2.2 million in 1999 on environmental
capital projects and anticipates capital expenditures of approximately $5 to $7
million per year over the next several years aimed at maintaining compliance
with such laws and regulations.

The Comprehensive Environmental Response, Compensation and Liability Act,
also known as "Superfund," imposes liability for the release of a "hazardous
substance" into the environment. Superfund liability is imposed without regard
to fault and even if the waste disposal was in compliance with the then current
laws and regulations. With the joint and several liability imposed under
Superfund, a potentially responsible party ("PRP") may be required to pay more
than its proportional share of such costs. The Company has been named as a PRP
in three Superfund waste disposal sites. At these sites, there is sufficient
information to estimate total cleanup costs of approximately $52 million and the
Company estimates its pro-rata exposure, to be paid over a period of several
years, is approximately $1.3 million and has made appropriate provisions. At a
fourth site, the Company's liability has been resolved for a de minimis amount.

In Michigan, where the Company has extensive operations, the Environmental
Response Act requires individuals (including corporations) who have caused
contamination to remediate the contamination to regulatory standards. Owners or
operators of contaminated property who did not cause the contamination are not
required to remediate the contamination, but must exercise due care in their use
of the property so that the contamination is not exacerbated and the property
does not pose a threat to human health. ANR Pipeline estimates that its costs to
comply with the Michigan regulations will be approximately $6.2 million, which
will be expended over a period of several years and for which appropriate
provisions have been made.

In October 1998, the EPA announced a "Finding of Significant Contribution
and Rulemaking for Certain States in the Ozone Transport Assessment Group Region
for Purposes of Reducing Regional Transport of Ozone" ("NOx SIP Call"). The NOx
SIP Call requires 22 states, including eight states in which ANR Pipeline
operates, and the District of Columbia to submit state implementation plans
("SIP Plans"), with each state showing how it intends to reduce NOx emissions
from sources located within its borders to specified levels. Under the schedule
proposed by the EPA in the NOx SIP Call, states had until September 1999 to
submit SIP Plans to the EPA, and reduction measures would have to be in place by
May 1, 2003. The NOx SIP Call provided that if a state failed to submit
compliant SIP Plans by the September 1999 deadline, the EPA would impose
reductions upon specific sources within the state. The NOx SIP Call is the
subject of legal proceedings instituted by nine of the affected states and
numerous affected industries. In a May 1999 order, the U. S. District Court,
District of Columbia stayed, until further order of the court, the date by which
states must submit compliant SIP Plans. ANR Pipeline operates compressor engines
that emit nitrogen oxide and is, therefore,

F-10

<PAGE>

potentially subject to any state or EPA rules issued under the NOx SIP Call.
Until the legal proceedings referenced above are resolved, final rules are
determined and the states have submitted compliant SIP Plans, the Company will
not be able to reasonably estimate the amount of any obligation resulting from
the NOx SIP Call.

Future information and developments, including legislative and enforcement
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 consolidated financial position or results of operations.

- Regulatory Matters

On July 29, 1998, the FERC issued a "Notice of Proposed Rulemaking," in
which the FERC has proposed a number of significant changes to the industry,
including, among other things, removal of price caps in the short-term market
(less than one year), capacity auctions, changed reporting obligations, the
ability to negotiate terms and conditions of all services, elimination of the
requirement of a matching term cap on the renewal of existing contracts and a
review of its policies for approving capacity construction. On the same day, the
FERC also issued a "Notice of Inquiry" soliciting industry input on various
matters affecting the pricing of long-term service and certificate pricing in
light of changing market conditions. On February 9, 2000, the FERC issued a
final rule implementing certain of the changes that were discussed in these two
proposals. Among other things, the final rule: (a) removes the price ceilings
for short-term secondary market capacity releases for a trial period through
September 30, 2002; (b) permits pipelines to propose seasonally and
term-differentiated rates; (c) revises requirements relating to pipeline
scheduling procedures, capacity segmentation and penalties; (d) narrows the
right-of-first-refusal granted to long-term shippers to retain their capacity;
and (e) expands pipeline reporting requirements. ANR Pipeline and its
affiliates will seek clarification of certain aspects of the final rule.

On September 15, 1999, the FERC issued a Policy Statement addressing the
certification and pricing of new pipeline construction projects. Under the
Policy Statement, applicants must first satisfy a threshold pricing requirement
of demonstrating that their projects can be constructed without subsidies from
existing customers. Second, the applicants must show that any adverse impacts of
the project on identified interests (existing customers of the applicant, other
existing pipelines and their captive customers, landowners and the surrounding
communities) are outweighed by its benefits. On October 19, 1999, ANR Pipeline
and its affiliates sought clarification and/or rehearing of the Policy Statement
insofar as it does not apply directly to those projects filed for approval under
the FERC's "optional certificate" regulations. Other parties also sought
rehearing of this and other aspects of the Policy Statement. On February 9,
2000, the FERC issued an order which, among other things, held that the Policy
Statement balancing criteria would apply to new optional certificate
applications while it receives comments on its companion notice proposing to
eliminate its optional certificate regulations.

On March 16, 1998, the Company's comprehensive settlement of its November
1, 1993 rate case became effective. In compliance with the settlement, lower
rates were placed into effect retroactive to November 1, 1997, and refunds and
applicable interest were paid on April 15, 1998.

Certain 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 these 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.

5. Lease Commitments

Operating lease rentals included in operating expenses amounted to $20
million for 1999, $12 million for 1998 and $15 million for 1997, respectively.
Aggregate minimum lease payments under existing noncapitalized, long-term leases
are estimated to be $18 million for each of the years 2000 through 2002, $26
million for 2003 and 2004 and $273 million thereafter.

F-11

<PAGE>

6. Taxes On Income

Provisions for income taxes are composed of the following (millions of
dollars):

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Federal:
Currently payable................................................... $ 60.8 $ 47.1 $ 87.0
Deferred............................................................ 27.2 40.2 1.9
-------- -------- --------
88.0 87.3 88.9
-------- -------- --------
State and City:
Currently payable................................................... 3.9 6.0 9.3
Deferred............................................................ 2.6 4.5 -
-------- -------- --------
6.5 10.5 9.3
-------- -------- --------

Total income taxes................................................ $ 94.5 $ 97.8 $ 98.2
======== ======== ========
</TABLE>

Provisions for income taxes were different from the amount computed by
applying the statutory U.S. federal income tax rate to earnings before tax. The
reasons for these differences are (millions of dollars):

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Tax expense computed by applying the U.S. federal income tax rate
of 35%.............................................................. $ 88.7 $ 105.6 $ 93.4

Increases (reductions) in taxes resulting from:
State and city income taxes reduced by federal income tax benefit... 4.2 6.8 6.0
Other............................................................... 1.6 ( 14.6) ( 1.2)
-------- -------- --------
Taxes on income................................................. $ 94.5 $ 97.8 $ 98.2
======== ======== ========
</TABLE>

Deferred tax liabilities (assets) which are recognized for the estimated
future tax effects attributable to temporary differences are (millions of
dollars):

<TABLE>
<CAPTION>
December 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Depreciation........................................................................ $ 222.8 $ 210.2
Other............................................................................... 14.5 14.9
-------- --------
Deferred tax liabilities......................................................... 237.3 225.1
-------- --------

Inventory capitalization............................................................ ( 1.7) ( 1.7)
Purchased gas and other recoverable costs........................................... ( 4.9) ( 16.2)
Benefit plans and accrued expenses.................................................. ( 24.3) ( 22.0)
Environmental costs................................................................. ( 2.9) ( 4.7)
Certain lease costs................................................................. ( 5.4) ( 5.7)
Other............................................................................... ( 18.8) ( 25.4)
-------- --------
Deferred tax assets.............................................................. ( 58.0) ( 75.7)
-------- --------

Deferred income taxes............................................................ $ 179.3 $ 149.4
======== ========
</TABLE>

Coastal and the Internal Revenue Service ("IRS") Appeals Office have
concluded a final settlement of adjustments originally proposed to federal
income tax returns filed for the years 1985 through 1987 and have concluded a
tentative settlement of the additional adjustments proposed by the IRS to those
returns. Coastal and the IRS Appeals Office have

F-12

<PAGE>

also concluded a tentative settlement of the adjustments proposed to Coastal's
federal income tax returns filed for the years 1988 through 1990. Coastal has
received notice of proposed adjustments to Coastal's federal income tax returns
filed for the years 1991 through 1994, and Coastal is currently contesting
certain of these adjustments before the IRS Appeals Office. Examination of
Coastal's federal income tax returns filed for the years 1995, 1996 and 1997
began in 1999. It is the opinion of management that adequate provisions for
federal income taxes have been reflected in the consolidated financial
statements.

7. Benefit Plans

The Company participates with its affiliates in the non-contributory
pension plan of Coastal (the "Plan") which covers substantially all employees.
The Plan provides benefits based on final average monthly compensation and years
of service. As of December 31, 1999, the Plan did not have an unfunded
accumulated benefit obligation. ANR Pipeline made no contributions to the Plan
for 1999, 1998 or 1997. Assets of the Plan are not segregated or restricted by
its participating subsidiaries and pension obligations for Company employees
would remain the obligation of the Plan if the Company were to withdraw.

ANR Pipeline also makes contributions to a thrift plan, which is a
trusteed, voluntary and contributory plan for eligible employees of the Company.
The Company's contributions, which are based on matching employee contributions,
amounted to $6.2 million for 1999 and $5.9 million for 1998 and $5.6 million for
1997.

The Company provides certain health care and life insurance benefits for
substantially all of its retired employees. The estimated costs of retiree
benefit payments are accrued during the years the employee provides services.

The following provides a reconciliation of the changes in the
postretirement benefit obligation and the fair value of the plan assets over
each of the years ending December 31, 1999 and 1998 and a statement of the
funded status as of December 31, 1999 and 1998 (millions of dollars):

<TABLE>
<CAPTION>
Year Ended
December 31,
----------------------
1999 1998
---------- ---------
<S> <C> <C>
Change in Benefit Obligation
Benefit obligation at beginning of year....................................... $ 51.4 $ 49.6
Service cost.................................................................. .6 .5
Interest cost................................................................. 3.1 3.4
Participant contributions..................................................... 1.1 1.2
Plan amendments............................................................... -
Benefit payments.............................................................. ( 4.5) ( 5.1)
Actuarial loss/(gain)......................................................... ( 3.4) 1.8
---------- ---------
Benefit obligation at end of year............................................. $ 48.3 $ 51.4
========== =========

Change in Plan Assets
Fair value of plan assets at beginning of year................................ $ 15.3 $ 15.2
Actual return on plan assets.................................................. .9 .3
Employer contributions........................................................ 9.0 4.0
Benefit payments.............................................................. ( 3.8) ( 4.1)
Administrative expenses....................................................... ( 1.6) ( .1)
---------- ---------
Fair value of plan assets at end of year...................................... $ 19.8 $ 15.3
========== =========
</TABLE>

F-13

<PAGE>

<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998
---------- ---------
<S> <C> <C>
Funded status
Funded status at year end..................................................... ($ 28.5) ($ 36.1)
Unrecognized transition obligation............................................ 37.6 40.4
Unrecognized net gain......................................................... ( 14.3) ( 13.3)
---------- ---------
Accrued postretirement benefit obligation..................................... ($ 5.2) ($ 9.0)
========== =========
</TABLE>

The following table provides the components of net periodic postretirement
benefit cost for 1999, 1998 and 1997 (millions of dollars):

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Service cost........................................................... $ .6 $ .5 $ .4
Interest cost.......................................................... 3.1 3.4 3.3
Amortization of transition obligation.................................. 2.9 2.9 2.9
Expected return on assets.............................................. ( .5) ( .4) ( .5)
Amortization of net gain............................................... ( .9) ( .8) ( 1.1)
-------- -------- --------
Net periodic postretirement benefit cost............................... $ 5.2 $ 5.6 $ 5.0
======== ======== ========
</TABLE>

The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 8.4% in 1999, declining gradually to 6.0%
by the year 2004. The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 9.0% and 9.7% in 1998 and
1997, respectively. A one percentage point increase in the assumed health care
cost trend rate for each year would increase the accumulated postretirement
benefit obligation as of December 31, 1999 by approximately 5.28% and the net
postretirement health care cost by approximately 4.84%. A one percentage point
decrease in the assumed health care cost trend rate for each year would decrease
the accumulated postretirement benefit obligation as of December 31, 1999 by
approximately 5.21% and the net postretirement health care cost by approximately
5.0%. The assumed discount rate used in determining the accumulated
postretirement benefit obligation was 8.0% in 1999, 7% in 1998 and 7.25% in 1997
and the expected long- term rate of return on assets was 4.3% in 1999, 1998 and
1997.

8. Transactions with Major Customers and Related Parties

- Major Customers:

The Statement of Consolidated Earnings includes revenues from major
customers amounting to 10% or more of the Company's consolidated revenues
as follows (millions of dollars):

<TABLE>
<CAPTION>
1999 1998 1997
------------------ ------------------ -----------------
Percent Percent Percent
Amount of Total Amount of Total Amount of Total
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Wisconsin Gas Company...................... $ 70.5 10.6% $ 67.6 9.0% $ 89.5 12.3%
</TABLE>

Revenues from any other single customer did not amount to 10% or more
of the Company's consolidated revenues for the years ended December 31,
1999, 1998 and 1997.

F-14

<PAGE>

- Related Parties:

"Operation and maintenance" expenses within the Statement of
Consolidated Earnings includes affiliate and other related party
transactions as follows (millions of dollars):

<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- ------
<S> <C> <C> <C>
Storage and transportation expense - affiliates........................ $ 11.5 $ 11.5 $ 11.7
Storage and transportation expense - other related parties............. 23.4 23.6 29.9
Services provided at cost - affiliates................................. 21.9 21.6 22.5
Facilities rental expense - affiliates................................. 5.8 13.4 17.3
</TABLE>

Services provided by the Company at cost for affiliated companies
were $11.6 million for 1999, $12.6 million for 1998 and $9.3 million for
1997. The services provided by the Company to affiliates, and by
affiliates to the Company, primarily reflect the allocation of costs
relating to the sharing of facilities and administrative functions,
characteristic of group operations. Such costs are allocated using a
three-factor formula consisting of revenues, property and payroll, which
is reasonable and has been applied on a consistent basis.

The Company has lease agreements with Coastal and its affiliates for
the rental of office space, natural gas storage fields and certain
pipeline facilities. The Company's investment in an affiliate, Coastal
Medical Services, Inc., was $64.8 million at December 31, 1999 and $68.3
million at December 31, 1998. The affiliate has assumed the responsibility
for facilitating the management of a portion of the medical obligations of
the Company and other Coastal subsidiaries. At December 31, 1999, the
Company's Accounts receivable-Related parties balance includes $21 million
of costs incurred for the proposed Gulfstream System. These costs will be
reimbursed by an affiliate of the Company which currently holds the
investment in this project. In 1999, the Company sold certain storage
facilities and related base gas to an affiliate for net book value of
$37.5 million.

ANR Pipeline participates in a program which matches short-term cash
excesses and requirements of participating affiliates, thus minimizing
borrowings from outside sources. The Company had advanced to an associated
company at a market rate of interest, $136.0 million at December 31, 1999
and $156.1 million at December 31, 1998. Such amounts are repayable on
demand.

9. Quarterly Results of Operations (Unaudited)

The results of operations by quarter for the years ended December 31, 1999
and 1998 were (millions of dollars):

<TABLE>
<CAPTION>
1999 Quarter Ended
--------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues................................................ $ 191.1 $ 148.1 $ 153.3 $ 169.6
Costs and expenses...................................... 127.1 121.0 125.6 129.4
--------- --------- -------- ---------
Net earnings......................................... $ 64.0 $ 27.1 $ 27.7 $ 40.2
========= ========= ======== =========
</TABLE>

<TABLE>
<CAPTION>
1998 Quarter Ended
-------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues................................................ $ 240.9 $ 166.4 $ 172.7 $ 167.4
Costs and expenses...................................... 151.0 128.6 131.6 132.1
--------- --------- -------- ---------
Net earnings......................................... $ 89.9 $ 37.8 $ 41.1 $ 35.3
========= ========= ======== =========
</TABLE>

F-15

<PAGE>

10. Merger

F-16

<PAGE>

EXHIBIT INDEX

Exhibit
Number Document
- --------------------------------------------------------------------------------
(3.1)+ Composite Certificate of Incorporation of ANR Pipeline effective as of
December 31, 1987. (Filed as Module ANRCertIncorp on March 29, 1994.)

(3.2)+ Amended By-laws of ANR Pipeline effective as of September 21, 1994.
(Filed as Exhibit 3.2 to ANR Pipeline's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994.)

(4) With respect to instruments defining the rights of holders of
long-term debt, the Company will furnish to the Securities and
Exchange Commission any such document on request.

(4.1)+ Indenture dated as of February 15, 1994 and First Supplemental
Indenture dated as of February 15, 1994 for the $125 million of
7-3/8% Debentures due February 15, 2024. (Filed as Exhibit 4.4 to
ANR Pipeline's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.)

(10.1)+ Agreement for Consulting Services between ANR Pipeline and Harold
Burrow, dated as of January 1, 1996. (Filed as Exhibit 10.3 to ANR
Pipeline's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.)

(24)* Power of Attorney (included on signature pages herein).

(27)* Financial Data Schedule.

- ----------------------

Note:

+ Indicates documents incorporated by reference from the prior filings
indicated.
* Indicates documents filed herewith.

<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACT ED FROM ANR PIPELINE COMPANY FORM 10-K
ANNUAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 3
<SECURITIES> 0
<RECEIVABLES> 201
<ALLOWANCES> 0
<INVENTORY> 28
<CURRENT-ASSETS> 259
<PP&E> 3,462
<DEPRECIATION> 2,168
<TOTAL-ASSETS> 1,701
<CURRENT-LIABILITIES> 198
<BONDS> 498
0
0
<COMMON> 0
<OTHER-SE> 736
<TOTAL-LIABILITY-AND-EQUITY> 1,701
<SALES> 0
<TOTAL-REVENUES> 662
<CGS> 0
<TOTAL-COSTS> 362
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 253
<INCOME-TAX> 94
<INCOME-CONTINUING> 159
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 159
<EPS-BASIC> 0
<EPS-DILUTED> 0

</TABLE>