BELL ATLANTIC WASHINGTON DC INC, 10-K, 1994-03-31

BELL ATLANTIC WASHINGTON DC INC
10-K, 1994-03-31
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

Previous: CENTURY TELEPHONE ENTERPRISES INC, S-3, 1994-03-31

Next: BELL ATLANTIC MARYLAND INC, 10-K, 1994-03-31

<PAGE>

UNITED STATES
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
For the fiscal year ended December 31, 1993

[ ] 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 1-7368

BELL ATLANTIC - WASHINGTON, D.C., INC.

(Former Name: The Chesapeake and Potomac Telephone Company)

A New York Corporation I.R.S. Employer Identification No. 53-0046277

1710 H Street, N.W., Washington, D.C. 20006

Telephone Number (202) 392-9900

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

Securities registered pursuant to Section 12(b) of the Act: See attached
Schedule A.

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

THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF BELL ATLANTIC CORPORATION, MEETS
THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1) (a) AND (b) OF FORM 10-K
AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO
GENERAL INSTRUCTION J(2).

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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

SCHEDULE A

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
- -------------------------------------------------- ---------------------

Forty Year 7 3/4% Debentures, due November 1, 2013 New York Stock
Exchange
<PAGE>

TABLE OF CONTENTS

Item No. Page
- -------- ----
<S> <C>
PART I

1. Business ..................................................... 1
2. Properties ................................................... 14
3. Legal Proceedings ............................................ 15
4. Submission of Matters to a Vote of Security Holders .......... 16

PART II

5. Market for Registrant's Common Equity and Related
Stockholder Matters .......................................... 16
6. Selected Financial Data ...................................... 16
7. Management's Discussion and Analysis of Results of Operations
(Abbreviated pursuant to General Instruction J(2)) ........... 17
8. Financial Statements and Supplementary Data .................. 22
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure ..................................... 22

PART III

10. Directors and Executive Officers of the Registrant ........... 22
11. Executive Compensation ....................................... 22
12. Security Ownership of Certain Beneficial Owners and
Management ................................................... 22
13. Certain Relationships and Related Transactions ............... 22

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K ..................................................... 23

</TABLE>

UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MARCH 24, 1994.
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.
PART I

Item 1. Business

GENERAL

Bell Atlantic - Washington, D.C., Inc. (formerly The Chesapeake and Potomac
Telephone Company) (the "Company") is incorporated under the laws of the State
of New York and has its principal offices at 1710 H Street, N.W., Washington,
D.C. 20006 (telephone number 202-392-9900). The Company is a wholly owned
subsidiary of Bell Atlantic Corporation ("Bell Atlantic"), which is one of the
seven regional holding companies ("RHCs") formed in connection with the court-
approved divestiture (the "Divestiture"), effective January 1, 1984, of those
assets of the American Telephone and Telegraph Company ("AT&T") related to
exchange telecommunications, exchange access functions, printed directories and
cellular mobile communications.

The Company presently serves a territory consisting of a single Local
Access and Transport Area ("LATA"). A LATA is generally centered on a city or
based on some other identifiable common geography and, with certain limited
exceptions, a LATA marks the boundary within which the Company may provide
telephone service.

The Company provides two basic types of telecommunications services. First,
the Company transports telecommunications traffic between subscribers located
within the same LATA ("intraLATA service"), including both local and toll
services. Local service includes the provision of local exchange ("dial
tone"), local private line and public telephone services (including dial tone
service for pay telephones owned by the Company and other pay telephone
providers). Among other local services provided are Centrex (telephone company
central office-based switched telephone service enabling the subscriber to
make both intercom and outside calls) and a variety of special and custom
calling services. Toll service includes message toll service (calling service
beyond the local calling area) within LATA boundaries, and intraLATA Wide Area
Toll Service (WATS)/800 services (volume discount offerings for customers with
highly concentrated demand). Second, the Company provides exchange access
service, which links a subscriber's telephone or other equipment to the
transmission facilities of interexchange carriers which, in turn, provide
telecommunications service between LATAs ("interLATA service") to their
customers. See "Competition - IntraLATA Toll Competition."

The communications industry is currently undergoing fundamental changes
driven by the accelerated pace of technological innovation, the convergence of
the telecommunications, cable television, information services and entertainment
businesses, and a regulatory environment in which many traditional regulatory
barriers are being lowered and competition permitted or encouraged. Although no
definitive prediction can be made of the market opportunities these changes will
present or whether Bell Atlantic and its subsidiaries, including the Company,
will be able successfully to take advantage of these opportunities, Bell
Atlantic is positioning itself to be a leading communications, information
services and entertainment company.

1
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

OPERATIONS

During 1993, Bell Atlantic reorganized certain functions formerly performed
by each of the seven Bell System operating companies ("BOCs") transferred to it
pursuant to the Divestiture, including the Company (collectively, the "Network
Services Companies"), into nine lines of business ("LOBs") organized across the
Network Service Companies around specific market segments. The Network Services
Companies, however, remain responsible within their respective service areas for
the provision of telephone services, for financial performance and for
regulatory matters. The nine LOBs are:

The Consumer Services LOB markets communications services to residential
-----------------
customers within the service territories of the Network Services Companies,
including the service territory of the Company, and plans in the future to
market information services and entertainment programming.

The Carrier Services LOB markets (i) switched and special access to the
----------------
Company's local exchange network, and (ii) billing and collection services,
including recording, rating, bill processing and bill rendering. The principal
customers of this LOB are interexchange carriers; AT&T is the largest single
customer. Other customers include business customers and government agencies
with their own special access network connections, wireless customers and
other local exchange carriers ("LECs") which resell network connections to
their own customers.

The Small Business Services LOB markets communications and information
-----------------------
services to small businesses (customers having up to 20 access lines or 100
Centrex lines).

The Large Business Services LOB markets communications and information
-----------------------
services to large businesses (customers having more than 20 access lines or
more than 100 Centrex lines). These services include voice
switching/processing services (e.g., dedicated private lines, custom Centrex,
call management and voice messaging), end-user networking (e.g., credit and
debit card transactions, and personal computer-based conferencing, including
data and video), internetworking (establishing links between the
geographically disparate networks of two or more companies or within the same
company), network integration (integrating multiple geographically disparate
networks into one system), network optimization (disaster avoidance, 911,
intelligent vehicle highway systems), video services (distance learning,
telemedicine, surveillance, videoconferencing) and integrated multi-media
applications services.

The Directory Services LOB manages the provision of (i) advertising and
------------------
marketing services to advertisers, and (ii) listing information (e.g., White
Pages and Yellow Pages). These services are currently provided primarily
through print media, but the Company expects that use of electronic formats
will increase in the future. In addition, the Directory Services LOB manages
the provision of photocomposition, database management and other related
products and services to publishers.

The Public and Operator Services LOB markets pay telephone and operator
----------------------------
services in the service territories of the Network Services Companies to meet
consumer needs for accessing public networks, locating and identifying network
subscribers, providing calling assistance and arranging billing alternatives
(e.g., calling card, collect and third party calls).

The Federal Systems LOB markets communications and information technology and
---------------
services to departments, agencies and offices of the executive, judicial and
legislative branches of the federal government.

2
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

The Information Services LOB has been established to provide programming
--------------------
services, including on-demand entertainment, transactions and interactive
multimedia applications within the Territory and in selected other markets. See
"FCC Regulation and Interstate Rates - Telephone Company Provision of Video Dial
Tone and Video Programming".

The Network LOB manages the technologies, services and systems platforms
-------
required by the other eight LOBs and the Network Services Companies, including
the Company, to meet the needs of their respective customers, including, without
limitation, switching, feature development and on-premises installation and
maintenance services.

The Company has been making and expects to continue to make significant
capital expenditures on its networks to meet the demand for communications
services and to further improve such services. Capital expenditures were
approximately $109 million in 1991, $103 million in 1992, and $106 million in
1993. The total investment in plant, property and equipment decreased from
approximately $1.41 billion at December 31, 1991 to approximately $1.31 billion
at December 31, 1992 and 1993, in each case after giving effect to retirements,
but before deducting accumulated depreciation at such date.

The Company is projecting capital expenditures for 1994 at an amount
similar to 1993. However, subject to regulatory approvals, the Network Services
Companies, including the Company, plan to allocate capital resources to the
deployment of broadband network platforms (technologies ultimately capable of
providing a switched facility for access to and transport of high-speed data
services, video-on-demand, and image and interactive multimedia applications).
Most of the funds for these expenditures are expected to be generated
internally. Some additional external financing may be necessary or desirable.

LINE OF BUSINESS RESTRICTIONS

The consent decree entitled "Modification of Final Judgment" ("MFJ") approved
by the United States District Court for the District of Columbia (the "D.C.
District Court") which, together with the Plan of Reorganization ("Plan")
approved by the D.C. District Court set forth the terms of Divestiture also
established certain restrictions on the post-Divestiture activities of the RHCs,
including Bell Atlantic. The MFJ's principal restrictions on post-Divestiture
RHC activities included prohibitions on (i) providing interexchange
telecommunications, (ii) providing information services, (iii) engaging in the
manufacture of telecommunications equipment and customer premises equipment
("CPE"), and (iv) entering into any non-telecommunications businesses, in each
case without the approval of the D.C. District Court. Since Divestiture, the
D.C. District Court has retained jurisdiction over the construction,
modification, implementation and enforcement of the MFJ.

In September 1987, the D.C. District Court rendered a decision which
eliminated the need for the RHCs to obtain its approval prior to entering into
non-telecommunications businesses. However, the D.C. District Court refused to
eliminate the restrictions relating to equipment manufacturing or providing
interexchange services. With respect to information services, the Court issued
a ruling in March 1988 which permitted the RHCs to engage in a number of
information transport functions as well as voice storage and retrieval services,
including voice messaging, electronic mail and certain information gateway
services. However, the RHCs were generally prohibited from providing the
content of the data they transmitted. As the result of an appeal of the D.C.
District Court's September 1987 and March 1988 decisions by the RHCs and other
parties, the United States Court of Appeals for the District of Columbia Circuit
ordered the D.C. District Court to reconsider the RHCs' request to provide
information content and determine whether removal of the restrictions thereon
would be in the

3
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

public interest. In July 1991, the D.C. District Court removed the remaining
restrictions on RHC participation in information services, but imposed a stay
pending appeal of that decision. In October 1991, the United States Court of
Appeals for the District of Columbia Circuit vacated the stay, thereby
permitting the RHCs to provide information services, and in May 1993 affirmed
the D.C. District Court's July 1991 decision. The United States Supreme Court
denied certiorari in November 1993.

Several bills have been introduced in the current session of Congress
pursuant to which the line of business restrictions established by the MFJ could
be eliminated or modified. No definitive prediction can be made as to whether
or when any such legislation will be enacted, the provisions thereof or their
impact on the business or financial condition of the Company.

FCC REGULATION AND INTERSTATE RATES

The Company is subject to the jurisdiction of the Federal Communications
Commission ("FCC") with respect to interstate services and certain related
matters. The FCC prescribes a uniform system of accounts for telephone
companies, interstate depreciation rates and the principles and standard
procedures used to separate plant investment, expenses, taxes and reserves
between those applicable to interstate services under the jurisdiction of the
FCC and those applicable to intrastate services under the jurisdiction of the
respective state regulatory authorities ("separations procedures"). The FCC
also prescribes procedures for allocating costs and revenues between regulated
and unregulated activities.

Interstate Access Charges

The Company provides intraLATA service and does not participate in the
provision of interLATA service except through offerings of exchange access
service. The FCC has prescribed structures for exchange access tariffs to
specify the charges ("Access Charges") for use and availability of the Company's
facilities for the origination and termination of interstate interLATA service.
Access Charges are intended to recover the related costs of the Company which
have been allocated to the interstate jurisdiction ("Interstate Costs") under
the FCC's separations procedures.

In general, the tariff structures prescribed by the FCC provide that
Interstate Costs of the Company which do not vary based on usage ("non-traffic
sensitive costs") are recovered from subscribers through flat monthly charges
("Subscriber Line Charges"), and from interexchange carriers through usage-
sensitive Carrier Common Line ("CCL") charges. See "FCC Regulation and
Interstate Rates - FCC Access Charge Pooling Arrangements". Traffic-sensitive
Interstate Costs are recovered from carriers through variable access charges
based on several factors, primarily usage.

In May 1984, the FCC authorized the implementation of Access Charge tariffs
for "switched access service" (access to the local exchange network) and of
Subscriber Line Charges for multiple line business customers (up to $6.00 per
month per line). In 1985, the FCC authorized Subscriber Line Charges for
residential and single-line business customers at the rate of $1.00 per month
per line, which increased in installments to $3.50 effective April 1, 1989.

As a result of the phasing in of Subscriber Line Charges, a substantial
portion of non-traffic sensitive Interstate Costs is now recovered directly from
subscribers, thereby reducing the per-minute CCL charges to interexchange
carriers. This significant reduction in CCL charges has tended to reduce the

4
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

incentive for interexchange carriers and their high-volume customers to bypass
the Company's switched network via special access lines or alternative
communications systems. However, competition for this access business has
increased in recent years. See "Competition - Alternative Access and Local
Services".

FCC Access Charge Pooling Arrangements

The FCC previously required that all LECs, including the Company, pool
revenues from CCL and Subscriber Line Charges that cover the non-traffic
sensitive costs of the local exchange network, that is, the Interstate Costs
associated with the lines from subscribers' premises to telephone company
central offices. To administer such pooling arrangements, the FCC mandated the
formation of the National Exchange Carrier Association, Inc. Some LECs
received more revenue from the pool than they billed their interexchange
carrier customers using the nationwide average CCL rate. Other companies,
including the Company, received substantially less from the pool than the
amount billed to their interexchange carrier customers.

By an order adopted in 1987, the FCC changed its mandatory pooling
requirements. These changes, which became effective April 1, 1989, permitted
all of the Network Services Companies as a group to withdraw from the pool and
to charge CCL rates which more closely reflect their non-traffic sensitive
costs. The Network Services Companies, including the Company, are still
obligated to make contributions of CCL revenues to companies who choose to
continue to pool non-traffic sensitive costs so that the pooling companies can
charge a CCL rate no greater than the nationwide average CCL rate. In addition
to this continuing obligation, the Network Services Companies, including the
Company, have a transitional support obligation to high cost companies who
left the pool in 1989 and 1990. This transitional support obligation phases
out over five years. These long-term and transitional support requirements
will be recovered in the Network Services Companies' (including the Company's)
CCL rates.

Depreciation

Depreciation rates provide for the recovery of the Company's investment in
telephone plant and equipment, and are revised periodically to reflect more
current estimates of remaining service lives and future net salvage values. In
October 1993, the FCC issued an order simplifying the depreciation filing
process by reducing the information required for certain categories of plant
and equipment whose remaining service life, salvage estimates and depreciation
rates fall within an approved range. Petitions for reconsideration of that
order were filed in December 1993. In November 1993, the FCC issued a further
order inviting comments on proposed ranges for an initial group of categories
of plant and equipment.

Price Caps

In September 1990, the FCC adopted "price cap" regulation to replace the
traditional rate of return regulation of LECs. LEC price cap regulation became
effective on January 1, 1991.

The price cap system places a cap on overall prices for interstate services
and requires that the cap decrease annually, in inflation-adjusted terms, by a
fixed percentage which is intended to reflect expected increases in
productivity. The price cap level can also be adjusted to reflect "exogenous"
changes, such as changes in FCC separations procedures or accounting rules.
LECs subject to price caps have somewhat increased flexibility to change the
prices of existing services within certain groupings of interstate services,
known as "baskets".

5
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Under price cap regulation, the FCC set an authorized rate of return of
11.25% for the years 1991 and beyond. To the extent that a company is able to
earn a higher rate of return through improved efficiency, the FCC's price cap
rules permit them to retain the full amount of this higher return up to 100
basis points above the authorized rate of return (currently, up to a 12.25% rate
of return). If a company's rate of return is between 100 and 500 basis points
above the authorized rate of return (that is, currently, between 12.25% and
16.25%), the company must share 50% of the earnings above the 100-basis-point
level with customers by reducing rates prospectively. All earnings above the
500-basis-point level must be returned to customers in the form of prospective
rate decreases. If, on the other hand, a company's rate of return is more than
100 basis points below the authorized rate of return (that is, currently, below
10.25%), the company is permitted to increase rates prospectively to make up the
deficiency.

Under FCC-approved tariffs, the Network Services Companies are charging
uniform rates for interstate access services (with the exception of Subscriber
Line Charges) throughout their service areas and are regarded as a single unit
by the FCC for rate of return measurement.

On February 16, 1994, the FCC initiated a rulemaking proceeding to determine
the effectiveness of LEC price cap rules and decide what changes, if any, should
be made to those rules. This rulemaking is expected to be concluded by the end
of 1994.

In January 1993, the FCC denied the Company exogenous treatment of the
increased expense for postretirement benefits required under Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", which the Company adopted
effective January 1, 1991. The Company has appealed this decision. The appeal
is likely to be decided during the second half of 1994.

Computer Inquiry III

In August 1985, the FCC initiated Computer Inquiry III to re-examine its
regulations requiring that "enhanced services" (e.g., voice messaging services,
electronic mail, videotext gateway, protocol conversion) be offered only through
a structurally separated subsidiary. In 1986, the FCC eliminated this
requirement, permitting the Company to offer enhanced services, subject to
compliance with a series of nonstructural safeguards designed to promote an
effectively competitive market. These safeguards include detailed cost
accounting, protection of customer information and certain reporting
requirements.

In June 1990, the United States Court of Appeals for the Ninth Circuit
vacated and remanded the Computer Inquiry III decisions to the FCC, finding that
the FCC had not fully justified those decisions. In December 1991, the FCC
adopted an order which reinstated relief from the separate subsidiary
requirement upon a company's compliance with the FCC's Computer III Open Network
Architecture ("ONA") requirements and strengthened some of the nonstructural
safeguards. In the interim, the Network Services Companies, including the
Company, had filed interstate tariffs implementing the ONA requirements. Those
tariffs became effective in February 1992, subject to further investigation.
That investigation was completed on December 15, 1993, when an order was
released making minor changes to the Network Services Companies' ONA rates. In
March 1992, the Company certified to the FCC that it had complied with all
initial ONA obligations and therefore should be granted structural relief for
enhanced services. The FCC granted the Company structural relief in June 1992.
Other parties have appealed this decision, which remains in effect pending the
outcome of the appeal. A decision on the appeal is likely by the end of 1994.

6
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

The FCC's December 1991 order has been appealed to the United States Court of
Appeals for the Ninth Circuit by several parties. Pending decision on those
appeals, the FCC's decision remains in effect. If a court again reverses the
FCC, the Company's right to offer enhanced services could be impaired.

FCC Cost Allocation and Affiliate Transaction Rules

In 1987, the FCC adopted rules governing (i) the allocation of costs between
the regulated and unregulated activities of a communications common carrier and
(ii) transactions between the regulated and unregulated affiliates of a
communications common carrier.

The cost allocation rules apply to certain unregulated activities:
activities that have never been regulated as communications common carrier
offerings and activities that have been preemptively deregulated by the FCC. The
costs of these activities are removed prior to the separations procedures
process and are allocated to unregulated activities in the aggregate, not to
specific services for pricing purposes. Other activities must be accounted for
as regulated activities, and their costs are subject to separations procedures.
These activities include (i) those which have been deregulated by the FCC
without preempting state regulation, (ii) those which have been deregulated by a
state but not the FCC and (iii) "incidental activities," which cannot, in the
aggregate, generate more than 1% of a company's revenues. Since the Network
Services Companies, including the Company, engage in these types of activities,
the Network Services Companies, including the Company, pursuant to the FCC's
cost allocation rules, filed a cost allocation manual, which has been approved
by the FCC.

The affiliate transaction rules govern the pricing of assets transferred to
and services provided by affiliates. These rules generally require that assets
be transferred between affiliates at "market price", if such price can be
established through a tariff or a prevailing price actually charged to third
parties. In the absence of a tariff or prevailing price, "market price" cannot
be established, in which case (i) asset transfers from a regulated to an
unregulated affiliate must be valued at the higher of cost or fair market value,
and (ii) asset transfers from an unregulated to a regulated affiliate must be
valued at the lower of cost or fair market value. The affiliate transaction
rules require that a service provided by one affiliate to another affiliate,
which service is also provided to unaffiliated entities, must be valued at
tariff rates or market prices. If the affiliate does not also provide the
service to unaffiliated entities, the price must be determined in accordance
with the FCC's cost allocation principles. In October 1993, the FCC proposed new
affiliate transaction rules which would essentially eliminate the different
rules for the provision of services and apply the asset transfer rules to all
affiliate transactions. The Network Services Companies, including the Company,
have filed comments opposing the proposed rules.

The FCC has not attempted to make its cost allocation or affiliate
transaction rules preemptive. State regulatory authorities are free to use
different cost allocation methods and affiliate transaction rules for intrastate
ratemaking and to require carriers to keep separate allocation records.

Telephone Company Provision of Video Dial Tone and Video Programming

In 1987, the FCC initiated an inquiry into whether developments in the cable
and telephone industries warranted changes in the rules prohibiting telephone
companies such as the Company from providing video programming in their
respective service territories directly or indirectly through an affiliate.

7
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

In November 1991, the FCC released a Further Notice of Proposed Rulemaking in
these proceedings. In August 1992, the FCC issued an order permitting telephone
companies such as the Company to provide "video dial tone" service. Video dial
tone permits telephone companies to provide video transport to multiple
programmers on a non-discriminatory common carrier basis. The FCC has also
ruled that neither telephone companies that provide video dial tone service, nor
video programmers that use these services, are required to obtain local cable
franchises. Other parties have appealed these orders, which remain in effect
pending the outcome of the appeal.

In December 1992, two Bell Atlantic Companies, Bell Atlantic - Virginia, Inc.
and Bell Atlantic Video Services Company, filed a lawsuit against the federal
government in the United States District Court for the Eastern District of
Virginia seeking to overturn the prohibition in the Cable Communications Policy
Act of 1984 against LECs providing video programming in their respective service
areas. In a decision rendered in August 1993 and clarified in October 1993, the
court struck down this prohibition as a violation of the First Amendment's
freedom of speech protections and enjoined its enforcement against Bell
Atlantic, the Network Services Companies, including the Company, and Bell
Atlantic Video Services Company. This decision has been appealed to the United
States Court of Appeals for the Fourth Circuit.

In early 1993, the FCC granted Bell Atlantic authority to test a new
technology known as Asynchronous Digital Subscriber Line ("ADSL") for use in
delivering video entertainment and information over existing copper telephone
lines. Beginning in March 1993, Bell Atlantic began a one-year technical trial
of ADSL serving up to 400 Bell Atlantic employees in northern Virginia. In the
Fall of 1993, Bell Atlantic petitioned the FCC for authorization to expand and
convert this technical trial upon its completion into a six month market trial
serving up to 2,000 customers. Bell Atlantic also requested authority to offer
a commercial video dial tone service to customers served by 25 central offices
in part of northern Virginia and southern Maryland upon completion of the six
month market trial. These applications are pending at the FCC.

Interconnection and Collocation

In October 1992, the FCC issued an order allowing third parties to collocate
their equipment in telephone company offices to provide special access (private
line) services to the public. The FCC's stated purpose was to encourage greater
competition in the provision of interstate special access services. The order
permits collocating parties to pay LECs an interconnection charge that is lower
than the existing tariffed rates for similar non-collocated services; it allows
LECs limited additional pricing flexibility for their own special access
services when collocated interconnection is operational. In February 1993, Bell
Atlantic's seven telephone subsidiaries, including the Company, filed an
interstate tariff to allow collocation for special access services. This tariff
is currently effective. Bell Atlantic and certain other parties have appealed
the FCC's special access collocation order. Bell Atlantic expects the appeal to
be decided in 1994.

On September 2, 1993, the FCC extended collocation to switched access
services. The terms and conditions for switched access collocation are similar
to those for special access collocation. On November 18, 1993, Bell Atlantic's
seven telephone subsidiaries, including the Company, filed an interstate tariff
to allow collocation for switched access services. This tariff became effective
on February 16, 1994. Bell Atlantic and certain other parties have appealed the
FCC's switched access collocation order. Appeals of this order have been stayed
pending a decision on the appeals of the special access collocation order.

8
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Increased competition through collocation will adversely affect the revenues
of the Company, although some of the lost revenues could be offset by increased
demand of the Company's own special access services as a result of the slightly
increased pricing flexibility that the FCC has permitted. The Company does not
expect the net revenue impact of special access collocation to be material.
Revenue losses from switched access collocation, however, may be larger than
from special access collocation.

Intelligent Networks

In December 1991, the FCC issued a Notice of Inquiry into the plans of the
BOCs, including the Company, to deploy new "modular" network architectures, such
as Advanced Intelligent Network ("AIN") technology. The Notice of Inquiry asks
what, if any, regulatory action the FCC should take to assure that such
architectures are deployed in a manner that is "open, responsive, and
procompetitive". On August 31, 1993, the FCC issued a Notice of Proposed
Rulemaking proposing a schedule for AIN deployment. The proposals in that
Notice of Proposed Rulemaking generally follow those that Bell Atlantic proposed
in its response to the Notice of Inquiry. The Company cannot estimate when the
FCC will conclude this proceeding.

The results of this proposed rulemaking could include a requirement that the
Company offer individual components of its services, such as switching and
transport, to competitors who will provide the remainder of such services
through their own facilities. Such increased competition could divert revenues
from the Company. However, deployment of AIN technology may also enable the
Company to respond more quickly and efficiently to customer requests for new
services. This could result in increased revenues from new services that could
at least partially offset losses resulting from increased competition.

STATE REGULATION AND INTRASTATE RATES

The communications services of the Company are subject to regulation by the
District of Columbia Public Service Commission (the "PSC") with respect to
intrastate rates and services and other matters.

In January 1993, as the outcome of a process begun by a Company proposal to
the PSC in 1988, the PSC adopted a regulatory reform plan for the in-territory
services of the Company. Under the plan, the PSC adopted a banded rate of return
on equity (based on earnings from all services) with 12.5% as the midpoint: the
Company would be allowed to seek rate increases if its return on equity falls
below 11.5% and would be required to share, through prospective rate cuts, 50%
of any earnings in excess of a return on equity of 13.5%. The Company's rates
for most residential services were frozen at the levels set in the prior rate
proceeding in March 1992. The PSC granted pricing flexibility, including custom
contracting and 14-day tariffing, for all Centrex services and for high capacity
private line services since these services were found to be subject to
competition. The PSC also established a screen for determining what other
services are competitive and

9
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

therefore should be subject to flexible pricing in the future. The plan will be
in effect for three years after which the PSC will investigate the Company's
performance and determine what regulatory structure is appropriate at that time.

Pursuant to the PSC's January 1993 regulatory reform plan, in December 1993,
the PSC re-set the Company's banded rate of return on equity to range from
10.45% to 12.45%, with a midpoint of 11.45%. However, the PSC also found that
the Company was entitled to increased annual revenues of $15.8 million. The PSC
increased the rates for public telephone service, increased the message unit
rate for business customers and increased certain other business and residential
rates to cover the increased revenue requirement.

Rates for basic residential service remain frozen at the level set in March
1992. Under the plan, the Company also applied for and received pricing
flexibility for several competitive services, including digital data services,
paging services, speed calling, Repeat Call, Home Intercom and Home Intercom
Extra.

NEW PRODUCTS AND SERVICES

The following were among the new products and services introduced by the
Company in 1993:

IntelliLinQ PRI (Integrated Service Digital Network - Primary Rate Interface
---------------
(ISDN-PRI)) is an optional arrangement for local exchange access, directed at
medium and large business customers with PBX service, which enables customers
to increase the efficacy of their current trunking and to transmit 64Kbps
circuit-switch data over the public network.

Frame Relay Service allows for data connectivity between or among widely
-------------------
distributed locations through the use of Frame Relay Subscriber Network Access
Lines from the customer's premises to Bell Atlantic's serving wire centers.

Centrex Extend permits multi-location Centrex intercom service for a closed
--------------
end user group of a single Centrex customer.

The Company also introduced the Centrex/Direct Inward Dialing Intercept
---------------------------------------
Service, Switched Redirect, Fiber Distributed Data Interface and Individual Line
- ------- ----------------- --------------------------------- ----------------
Business (ISDN) products.
- --------

COMPETITION

Regulatory proceedings, as well as new technology, are continuing to expand
the types of available communications services and equipment and the number of
competitors offering such services. An increasing amount of this competition is
from large companies which have substantial capital, technological and marketing
resources, many of which do not face the same regulatory constraints as the
Company.

Alternative Access and Local Services

A substantial portion of the Company's revenues from business and government
customers is derived from a relatively small number of large, multiple-line
subscribers.

The Company faces competition from alternative communications systems,
constructed by large end users, interexchange carriers and alternative access
vendors, which are capable of originating and/or terminating calls without the
use of the local telephone company's plant. In Washington, D.C.,

10
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Institutional Communications Company has deployed an optical fiber network to
compete with the Company in the provision of switched and special access
services and local services.

The ability of such alternative access providers to compete with the Company
has been enhanced by the FCC's orders requiring the Company to offer
collocated interconnection for special and switched access services.

Other potential sources of competition are cable television systems, shared
tenant services and other non-carrier systems which are capable of bypassing the
Company's local plant, either partially or completely, through substitution of
special access for switched access or through concentration of
telecommunications traffic on fewer of the Company's lines.

Well-financed competitors are seeking authority, or are likely soon to seek
authority, to offer competing local exchange services, such as dial tone and
local usage, in some of the most lucrative of the Company's local telephone
service areas. Southwestern Bell Corporation provides cellular service in the
Washington, D.C. Metropolitan area.

The two largest long-distance carriers are also positioning themselves to
begin to offer services that will compete with the Company's local exchange
services. In November 1992, AT&T announced its intention to acquire a
controlling interest in McCaw Cellular Communications Inc. ("McCaw"), the
largest cellular company in the United States, and to integrate McCaw's wireless
local service network with AT&T's long distance network. In December 1993, MCI
Communications Corporation ("MCI") announced its intention to invest $2 billion
to begin building competing local exchange and access networks in twenty major
markets in the United States, some of which are likely to be in the Company's
service territory. In March 1994, MCI also announced its intention to acquire a
substantial interest in Nextel Communications Inc. (formerly Fleet Call Inc.),
and to integrate Nextel's wireless local service network with MCI's long
distance network in at least 10 major markets, one or more of which might be in
the Company's service territory.

The entry of these and other local exchange service competitors will almost
certainly reduce the local exchange service revenues of the Company, at least in
the market segments and geographical areas in which the competitors operate.
Depending on such competitors' success in marketing their services, and the
conditions of interconnection established by the regulatory commissions, these
reductions could be significant. These revenue reductions may be offset to some
extent by revenues from interconnection charges to be paid to the Company by
these competitors.

The Company seeks to meet such competition by establishing and/or maintaining
competitive cost-based prices for local exchange services (to the extent the FCC
and state regulatory authorities permit the Company's prices to move toward
costs), by keeping service quality high and by effectively implementing advances
in technology. See "FCC Regulation and Interstate Rates - Interstate Access
Charges" and "- FCC Access Charge Pooling Arrangements".

Personal Communications Services

Radio-based personal communications services ("PCS") also constitute
potential sources of competition to the Company. PCS consists of wireless
portable telephone services which would allow customers to make and receive
telephone calls from any location using small handsets, and which could also be
used for data transmission. The FCC has authorized trials of such services,
using a variety of technologies, by numerous companies.

11
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

In September 1993, the FCC issued a report and order allocating radio
spectrum to be licensed for use in providing PCS. Under the order, seven
separate bandwidths of spectrum, ranging in size from 10 MHz to 30 MHz, would be
auctioned to potential PCS providers in each geographic area of the United
States; five of the spectrum blocks would be auctioned by "basic trading area"
and the remaining two would be auctioned by larger "major trading area" (as such
trading areas are defined by Rand McNally). LECs and companies with LEC
subsidiaries, such as Bell Atlantic, are eligible to bid for PCS licenses,
except that cellular carriers, such as Bell Atlantic, are limited to obtaining
only 10 MHz of PCS bandwidth in areas where they provide cellular service.
Bidders other than cellular providers may obtain multiple licenses aggregating
up to 40 MHz of bandwidth in any area. Bell Atlantic has stated that it intends
to pursue PCS licenses in the auctions, which are expected to be held in 1994 or
in early 1995.

In December 1993, the FCC awarded pioneer's preference PCS licenses to, among
other entities, American Personal Communications ("APC"), which is owned in
part by The Washington Post Company. APC's license authorizes it to provide
PCS service in competition with the local exchange services of the Network
Services Companies in all or large portions of Pennsylvania, the District of
Columbia, Maryland, Virginia and West Virginia. APC has announced its
intention to build out an operational system by the first quarter of 1995.

If implemented, PCS and other similar services would compete with services
currently offered by the Company, and could result in losses of revenues.

Centrex

The Company offers Centrex service, which is a telephone company central
office-based communications system for business, government and other
institutional customers consisting of a variety of integrated software-based
features located in a centralized switch or switches and extended to the
customer's premises primarily via local distribution facilities. In the
provision of Centrex, the Company is subject to significant competition from the
providers of CPE systems, such as private branch exchanges ("PBXs"), which
perform similar functions with less use of the Company's switching facilities.

Users of Centrex systems generally require more subscriber lines than users
of PBX systems of similar capacity. The FCC increased the maximum Subscriber
Line Charge on embedded Centrex lines to $6.00 per month per line effective
April 1, 1989. Increases in Subscriber Line Charges result in Centrex users
incurring higher charges than users of comparable PBX systems. The PSC has
approved Centrex tariff revisions designed to offset the effects of such higher
Subscriber Line Charges.

Directories

The Company continues to face significant competition from other providers of
directories as well as competition from other advertising media. In particular,
the former sales representative of several of the Network Services Companies,
including the Company, publishes directories in competition with those published
by the Company in its service territory.

12
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Public Telephone Services

The Company faces increasing competition in the provision of pay telephone
services from other pay telephone service providers. In addition, the growth of
wireless communications negatively impacts usage of public telephones.

Operator Services

Alternative operator services providers have entered into competition with
the Company's operator services product line.

CERTAIN CONTRACTS AND RELATIONSHIPS

Certain planning, marketing, procurement, financial, legal, accounting,
technical support and other management services are provided on behalf of the
Company on a centralized basis by Bell Atlantic's wholly owned subsidiary, Bell
Atlantic Network Services, Inc. ("NSI"). Bell Atlantic Network Funding
Corporation provides short-term financing and cash management services to the
Company.

The seven RHCs each own (directly or through subsidiaries) a one-seventh
interest in Bell Communications Research, Inc. ("Bellcore"). Pursuant to the
Plan, Bellcore furnishes the RHCs and their BOC subsidiaries with technical
assistance such as network planning, engineering and software development, as
well as various other consulting services that can be provided more effectively
on a centralized basis. Bellcore is the central point of contact for
coordinating the efforts of the RHCs in meeting the national security and
emergency preparedness requirements of the federal government. It also helps to
mobilize the combined resources of the RHCs in times of natural disasters.

EMPLOYEE RELATIONS

As of December 31, 1993, the Company employed approximately 2,900 persons,
including employees of the centralized staff at NSI. This represents
approximately a 1% decrease from the number of employees at December 31, 1992.

The Company's workforce is augmented by members of the centralized staff of
NSI, who perform services for the Company on a contract basis.

Approximately 88% of the employees of the Company are represented by the
Communications Workers of America, which is affiliated with the American
Federation of Labor - Congress of Industrial Organizations.

Under the terms of the three-year contracts ratified in October 1992 by
unions representing associate employees of the Network Services Companies,
including the Company, and NSI, represented associates received a base wage
increase of 3.74% in August 1993. Under the same contracts, associates received
a Corporate Profit Sharing payment of $495 per person in 1994 based upon
Bell Atlantic's 1993 financial performance.

13
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Item 2. Properties

The principal properties of the Company do not lend themselves to simple
description by character and location. At December 31, 1993, the Company's
investment in plant, property and equipment consisted of the following:

<TABLE>
<S> <C>
Connecting lines.......................... 42%
Central office equipment.................. 21
Land and buildings........................ 13
Telephone instruments and
related equipment........................ 2
Other..................................... 22
---
100%
===
</TABLE>

"Connecting lines" consists primarily of aerial cable, underground cable,
poles, conduit and wiring. "Central office equipment" consists of switching
equipment, transmission equipment and related facilities. "Land and buildings"
consists of land owned in fee and improvements thereto, principally central
office buildings. "Telephone instruments and related equipment" consists
primarily of public telephone terminal equipment and other terminal equipment.
"Other" property consists primarily of furniture, office equipment, vehicles and
other work equipment, capital leases, leasehold improvements and plant under
construction.

The Company's central offices are served by various types of switching
equipment. At December 31, 1993 and 1992, the number of local exchanges and the
percent of subscriber lines served by each type of equipment were as follows:

1993 1992
--------------------------- ---------------------------
# of Local % of Subscriber # of Local % of Subscriber
Exchanges Lines Served Exchanges Lines Served
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>

Digital... 149 63.3 122 55.4
Analog.... 90 36.7 110 44.6
---- ---- --- ----
239 100 232 100
==== ==== === ====
</TABLE>

14
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Item 3. Legal Proceedings

Pre-Divestiture Contingent Liabilities and Litigation

The Plan provides for the recognition and payment by AT&T and the former BOCs
(including the Company) of liabilities that are attributable to pre-Divestiture
events but do not become certain until after Divestiture. These contingent
liabilities relate principally to litigation and other claims with respect to
the former Bell System's rates, taxes, contracts and torts (including business
torts, such as alleged violations of the antitrust laws). Except to the extent
that affected parties otherwise agree, contingent liabilities that are
attributable to pre-Divestiture events are shared by AT&T and the BOCs in
accordance with formulas prescribed by the Plan, whether or not an entity was a
party to the proceeding and regardless of whether an entity was dismissed from
the proceeding by virtue of settlement or otherwise. Each company's allocable
share of liability under these formulas depends on several factors, including
the type of contingent liability involved and each company's relative net
investment as of the effective date of Divestiture. Under the formula generally
applicable to most of the categories of these contingent liabilities, the
Company's aggregate allocable share of liability is approximately 0.5%.

AT&T and various of its subsidiaries and the BOCs (including, in some cases,
the Company) have been and are parties to various types of litigation relating
to pre-Divestiture events, including actions and proceedings involving
environmental claims and allegations of violations of equal employment laws.
Damages, if any, ultimately awarded in the remaining actions relating to pre-
Divestiture events could have a financial impact on the Company whether or not
the Company is a defendant since such damages will be treated as contingent
liabilities and allocated in accordance with the allocation rules established by
the Plan.

While complete assurance cannot be given as to the outcome of any contingent
liabilities or litigation, in the opinion of the Company's management, any
monetary liability or financial impact to which the Company would be subject
after final adjudication of all of the remaining potential or actual pre-
Divestiture claims would not be material in amount to the financial position of
the Company.

15
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

PART I

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

(Omitted pursuant to General Instruction J(2).)

PART II

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

(Inapplicable.)

Item 6. Selected Financial Data

(Omitted pursuant to General Instruction J(2).)

16
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Item 7. Management's Discussion and Analysis of Results of Operations
(Abbreviated pursuant to General Instruction J (2).)

This discussion should be read in conjunction with the Financial Statements
and Notes to Financial Statements included in the index set forth on page F-1.

RESULTS OF OPERATIONS

Net income for 1993 decreased $8,157,000 or 23.0% from the same period last
year. Results for 1993 reflect an after-tax charge of $4,221,000 for the
adoption of Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" (Statement No. 112) and a $4,494,000
extraordinary charge, net of tax, for the early extinguishment of debt.

OPERATING REVENUES

Operating revenues increased $9,843,000 or 1.8% in 1993. The increase in
operating revenues was comprised of the following:

<TABLE>
<CAPTION>
Increase/(Decrease)
-------------------
(Dollars In Thousands)
<S> <C>
Local service ............................. $ 3,666
Network access ............................ (780)
Toll service .............................. (52)
Directory advertising, billing services
and other ................................ 5,764
Less: Provision for uncollectibles ....... (1,245)
-------
$ 9,843
=======

</TABLE>

Local service revenues are earned from the provision of local exchange, local
private line and public telephone services. Local service revenues increased
$3,666,000 or 1.3% in 1993. The increase was primarily due to higher demand for
value-added central office services such as Custom Calling and Caller ID. Also
contributing to the higher revenues was growth in private line services and
directory assistance revenues due to higher demand for these services. These
increases were offset in part by a decrease in rates for basic service. Access
lines in service at December 31, 1993 were substantially unchanged from 1992.

Network access revenues are received from interexchange carriers (IXCs) for
their use of local exchange facilities in providing interstate long-distance
services to IXCs' customers, and from end-user subscribers. Switched access
revenues are derived from usage-based charges paid by IXCs for access to the
Company's network. Special access revenues arise from access charges paid by
customers who have private lines, and end-user access revenues are earned from
local exchange carrier customers who pay for access to the network.

Network access revenues decreased $780,000 or .6% in 1993, due to the
effect of interstate rate reductions filed by the Company with the Federal
Communications Commission (FCC) which became effective on July 2, 1993 and
July 1, 1992, and by related estimated price cap sharing liabilities. This
decrease was partly offset by a 5.8% growth in access minutes of use, and
lower support payments to the National Exchange Carrier Association (NECA)
interstate common line pool.

Toll service revenues are earned from interexchange usage services such as
Message Telecommunication Services. Toll service revenues remained
substantially unchanged from 1992.

Directory advertising, billing services and other revenues include revenues
earned from directory advertising, billing and collection services provided to
IXCs and others, premises services such as inside wire installation and
maintenance services, rent of Company facilities by affiliates and non-
affiliates and certain nonregulated enhanced network services.

17
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Directory advertising, billing services and other revenues increased
$5,764,000 or 4.3% in 1993. This increase was primarily due to increased
customer demand for premises services and for Answer Call, a nonregulated
enhanced network service. These revenue increases were offset in part by
decreased billing and collection revenue in 1993 as a result of reductions in
services provided under long-term contracts with certain IXCs and decreased
directory advertising revenue due to decreasing volumes attributable primarily
to competition.

The provision for uncollectibles, expressed as a percentage of total
operating revenues was .8% in 1993 and 1.0% in 1992. The decrease in the
provision reflects favorable collection experience.

OPERATING EXPENSES

Operating expenses increased $12,446,000 or 2.7% in 1993. The increase in
operating expenses was comprised of the following:

<TABLE>
<CAPTION>
Increase/(Decrease)
-------------------
(Dollars In Thousands)
<S> <C>
Employee costs ............................ $ 7,817
Depreciation and amortization ............. (2,600)
Taxes other than income ................... (3,138)
Other ..................................... 10,367
-------
$12,446
=======

</TABLE>

Employee costs consist of salaries, wages and other employee compensation,
employee benefits, and payroll taxes paid directly by the Company. Similar
costs incurred by employees of Bell Atlantic Network Services, Inc. (NSI) are
allocated to the Company and are included in other operating expenses. Employee
costs increased $7,817,000 or 5.2% in 1993. Higher employee costs from salary
and wage increases and overtime were offset in part by savings resulting from
workforce reduction programs implemented in 1992.

The Company continues to evaluate ways to streamline and restructure its
operations and reduce its workforce requirements in an effort to improve its
cost structure.

Depreciation and amortization expense decreased $2,600,000 or 2.4% in 1993,
principally due to lower depreciation expense as a result of reduction in the
level of depreciable plant in 1993.

Taxes other than income decreased $3,138,000 or 7.3% in 1993 due to lower
property assessments and a reduction in the use tax paid to the District of
Columbia.

Other operating expenses consist primarily of contracted services, including
centralized service expenses allocated from NSI, rent, network software costs,
and other general and administrative expenses. Other operating expenses
increased $10,367,000 or 6.5% in 1993, primarily reflecting higher costs for
contracted services as a result of higher employee costs and taxes allocated
from NSI and increased network software costs associated with enhancing the
Company's network.

OPERATING INCOME TAXES

The provision for income taxes decreased $1,337,000 or 7.3% in 1993. The
Company's effective income tax rate was 31.0% in 1993 compared to 33.9% in 1992.
The decrease in the effective tax rate resulted primarily from the effect of
recording in 1992 an adjustment to deferred taxes associated with the retirement
of certain plant investments. This decrease was offset in part by the effect of
the recently enacted federal tax legislation which increased the federal
corporate tax rate from 34% to 35%. A reconciliation of the statutory federal
income tax rate to the effective rate for each period is provided in Note 5 of
Notes to Financial Statements.

18
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement No. 109).
In connection with the adoption of Statement No. 109, the Company recorded a
charge to income of $381,000 in the first quarter of 1993 (see Note 5 of Notes
to Financial Statements).

OTHER INCOME AND EXPENSE

Other income, net of expense, decreased $90,000 in 1993, principally due to
the effect of interest income recognized in 1992 in connection with the
settlement of various federal income tax matters relating to prior periods.
This decrease was substantially offset by an increase in the allowance for
funds used during construction as a result of higher telephone plant under
construction in 1993.

INTEREST EXPENSE

Interest expense decreased $1,914,000 or 9.0% in 1993, principally due to the
effects of lower short-term interest rates and long-term debt refinancings.

EXTRAORDINARY ITEM

The Company called $90,000,000 in 1993 of long-term debentures which were
refinanced at more favorable interest rates. As a result of this early
retirement, the Company incurred an after-tax charge of $4,494,000 in 1993.
This debt refinancing will reduce interest costs on the refinanced debt by
approximately $1,400,000 annually.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

In connection with the adoption of Statement No. 112, effective January 1,
1993, the Company recorded a one-time, cumulative effect after-tax charge of
$4,221,000 in 1993 (see Note 4 of Notes to Financial Statements).

The adoption of Statement No. 112 did not have a significant effect on the
Company's ongoing level of expense in 1993 and is not expected to have a
significant effect in future periods.

COMPETITION AND REGULATORY ENVIRONMENT

The telecommunications industry is currently undergoing fundamental changes
which may have a significant impact on future financial performance of all
telecommunications companies. These changes are driven by a number of factors,
including the accelerated pace of technology change, customer requirements, a
changing industry structure characterized by strategic alliances and the
convergence of telecommunications and cable television, and a changing
regulatory environment in which traditional regulatory barriers are being
lowered and competition encouraged.

The convergence of cable television, computer technology, and
telecommunications can be expected to dramatically increase competition in the
future. The Company is already subject to competition from numerous sources,
including competitive access providers for network access services, competing
cellular telephone companies and others.

During 1993, a number of business alliances were announced that have the
potential to significantly increase competition both within the industry and
within the areas currently served by Bell Atlantic. Over the past several
years, Bell Atlantic has taken a number of actions in anticipation of the
increasingly competitive environment. Cost reductions have been achieved,
giving greater pricing flexibility for services exposed to competition. A new
lines of business organization structure was adopted. Subject to regulatory
approval, the Company plans to allocate capital resources to the deployment of
broadband network platforms. On the regulatory front, an alternative
regulation plan has been approved on a trial basis by the District of Columbia
Public Service Commission (PSC).

19
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

The Company conducts ongoing evaluations of its accounting practices, many of
which have been prescribed by regulators. These evaluations include the
assessment of whether costs that have been deferred as a result of actions of
regulators and the cost of the Company's telephone plant will be recoverable in
the future. In the event recoverability of costs becomes unlikely due to
decisions by the Company to accelerate deployment of new technology in response
to specific regulatory actions or increasing levels of competition, the Company
may no longer apply the provisions of Statement of Financial Accounting
Standards No. 71, "Accounting for the Effects of Certain Types of Regulation"
(Statement No. 71). The discontinued application of Statement No. 71 would
require the Company to write off its regulatory assets and liabilities and may
require the Company to adjust the carrying amount of its telephone plant should
it determine that such amount is not recoverable. The Company believes that it
continues to meet the criteria for continued financial reporting under Statement
No. 71. A determination in the future that such criteria are no longer met may
result in a significant one-time, non-cash, extraordinary charge, if the Company
determines that a substantial portion of the carrying value of its telephone
plant may not be recoverable.

In September 1993, the FCC issued a report and order allocating radio
spectrum to be licensed for use in providing personal communications services
(PCS). Under the order, seven separate bandwidths of spectrum, ranging in size
from 10 MHz to 30 MHz, would be auctioned to potential PCS providers in each
geographic area of the United States. The geographical units by which the
licenses would be allocated will be "basic trading areas" or larger "major
trading areas." Five of the spectrum blocks are to be auctioned on a basic
trading area basis, and the remaining two are to be auctioned by major trading
area. Local exchange carriers such as the Company are eligible to bid for PCS
licenses, except that cellular carriers are limited to obtaining 10 MHz of PCS
bandwidth in areas where they provide cellular service. Bidders other than
cellular providers may obtain multiple licenses aggregating up to 40 MHz of
bandwidth in any area. Bell Atlantic has stated that it intends to pursue PCS
licenses in the auctions, which are expected to be held in 1994.

In August 1993, the United States District Court for the Eastern District of
Virginia ruled unconstitutional the 1984 Cable Act's limitation on in-territory
provision of programming by local exchange carriers such as the Company. The
Cable Act currently prohibits local exchange carriers from owning more than 5%
of any company that provides cable programming in their local service area. In
a case originally brought by two Bell Atlantic subsidiaries, the court ruled
that this prohibition violates the First Amendment's freedom of speech
protections, and enjoined enforcement of the prohibition against Bell Atlantic
and its telephone subsidiaries. The ruling has been appealed.

STATE REGULATORY ENVIRONMENT

The communications services of the Company are subject to regulation by the
PSC with respect to intrastate rates and services and other matters.

20
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

FINANCIAL CONDITION

Management believes that the Company has adequate internal and external
resources available to meet ongoing requirements including network expansion and
modernization, and payment of dividends. Management expects that presently
foreseeable capital requirements will be financed primarily through internally
generated funds, although additional long-term debt may be needed to fund
development activities and to maintain the Company's capital structure within
management's guidelines.

During 1993, as in prior years, the Company's primary source of funds
continued to be cash generated from operations. Revenue growth, cost containment
measures and savings on interest costs contributed to cash provided from
operations of $149,902,000 for the year ended December 31, 1993.

The primary use of capital resources continued to be capital expenditures.
The Company invested $106,265,000 in 1993 in the network. This level of
investment is expected to continue in 1994. The Company plans to allocate
capital resources to the deployment of broadband network platforms, subject to
regulatory approval.

As of December 31, 1993, the Company's debt ratio was 46.3% compared to 45.3%
at December 31, 1992.

On February 1, 1993, the Company sold $90,000,000 of Thirty Year 7 3/4%
Debentures through a public offering. The debentures are not redeemable prior to
February 1, 2003. The net proceeds were used on February 22, 1993 to redeem
$90,000,000 of Forty Year 9 3/8% Debentures. This debt refinancing will reduce
annual interest costs on the refinanced debt by approximately $1,400,000.

As of December 31, 1993, the Company had $60,000,000 outstanding under a
shelf registration statement filed with the Securities and Exchange
Commission.

21
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

PART II

Item 8. Financial Statements and Supplementary Data

The information required by this Item is set forth on pages F-1
through F-24.

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

(Omitted pursuant to General Instruction J(2).)

Item 11. Executive Compensation

(Omitted pursuant to General Instruction J(2).)

Item 12. Security Ownership of Certain Beneficial Owners and Management

(Omitted pursuant to General Instruction J(2).)

Item 13. Certain Relationships and Related Transactions

(Omitted pursuant to General Instruction J(2).)

22
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

PART IV

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

(a) The following documents are filed as part of this report:

(1) Financial Statements

See Index to Financial Statements and Financial Statement
Schedules appearing on Page F-1.

(2) Financial Statement Schedules

See Index to Financial Statements and Financial Statement
Schedules appearing on Page F-1.

(3) Exhibits

Exhibits identified in parentheses below, on file with the
SEC, are incorporated herein by reference as exhibits hereto.

Exhibit Number (Referenced to Item 601 of Regulation S-K)
---------------------------------------------------------

3a Restated Certificate of Incorporation of the registrant, as
amended September 14, 1990. (Exhibit 3a to the registrant's
Annual Report on Form 10-K for the year ended December 31,
1990, File No. 1-7368.)

3a(i) Certificate of Amendment of the registrant's
Certificate of Incorporation, dated January 12,
1994 and filed January 13, 1994.

3b By-Laws of the registrant, as amended June 18, 1992.
(Exhibit 3b to the registrant's Annual Report on Form 10-K for
the year ended December 31, 1992, File No. 1-7368.)

4 No instrument which defines the rights of holders of long and
intermediate term debt of the registrant is filed herewith
pursuant to Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant
to this regulation, the registrant hereby agrees to furnish
a copy of any such instrument to the SEC upon request.

10a Agreement Concerning Contingent Liabilities, Tax Matters and
Termination of Certain Agreements among AT&T, Bell Atlantic
Corporation, and the Bell Atlantic Corporation telephone
subsidiaries, and certain other parties, dated as of
November 1, 1983. (Exhibit 10a to Bell Atlantic Corporation
Annual Report on Form 10-k for the year ended December 31,
1993, File No. 1-8606.)

10b Agreement among Bell Atlantic Network Services, Inc. and the
Bell Atlantic Corporation telephone subsidiaries, dated
November 7, 1983. (Exhibit 10b to Bell Atlantic Corporation
Annual Report on Form 10-K for the year ended December 31,
1993, File No. 1-8606.)

23 Consent of Coopers & Lybrand.

24 Powers of attorney.

(b) Reports on Form 8-K

There were no Current Reports on Form 8-K filed during the
quarter ended December 31, 1993.

23
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

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.

Bell Atlantic - Washington, D.C., Inc.

By /s/ Sheila D. Shears
--------------------------------
Sheila D. Shears
Controller

March 29, 1994

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

]
]
Principal Executive Officer: ]
William M. Freeman President and ]
Chief Executive ]
Officer ]
]
Principal Financial Officer: ]
Sheila D. Shears Controller ]
]
]
]
Directors: ] By /s/ Sheila D. Shears
] -----------------------
Joseph T. Ambrozy ] Sheila D. Shears
Sherry F. Bellamy ] (individually and
Samuel L. Foggie ] as attorney-in-
William M. Freeman ] fact March 29,
Franklyn G. Jenifer ] 1994
Eduardo Pena, Jr. ]
(constituting a majority ]
of the registrant's ]
Board of Directors) ]
]
]

24
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Index to Financial Statements and Financial Statement Schedules

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants ................................. F-2

Statements of Income and Reinvested Earnings
For the years ended December 31, 1993, 1992, and 1991 ..... F-3

Balance Sheets - December 31, 1993 and 1992 ....................... F-4

Statements of Cash Flows
For the years ended December 31, 1993, 1992, and 1991 ..... F-6

Notes to Financial Statements ..................................... F-7

Schedule V - Plant, Property and Equipment
For the years ended December 31, 1993, 1992, and 1991 ..... F-18

Schedule VI - Accumulated Depreciation
For the years ended December 31, 1993, 1992, and 1991 ..... F-22

Schedule VIII - Valuation and Qualifying Accounts
For the years ended December 31, 1993, 1992, and 1991 ..... F-23

Schedule X - Supplementary Income Statement Information
For the years ended December 31, 1993, 1992, and 1991 ..... F-24

</TABLE>

Financial statement schedules other than those listed above have been omitted
either because the required information is contained in the financial statements
and the notes thereto, or because such schedules are not required or applicable.

F-1
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareowner of
Bell Atlantic - Washington, D.C., Inc.

We have audited the financial statements and financial statement schedules of
Bell Atlantic - Washington, D.C., Inc. as listed in the index on page F-1 of
this Form 10-K. These financial statements and financial statement schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Bell Atlantic - Washington,
D.C., Inc. as of December 31, 1993 and 1992, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1993, in conformity with generally accepted accounting principles. In addition,
in our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.

As discussed in Notes 1, 4 and 5 to financial statements, the Company changed
its method of accounting for income taxes and postemployment benefits in 1993
and postretirement benefits other than pensions in 1991.

/s/ COOPERS & LYBRAND

2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 7, 1994

F-2
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

STATEMENTS OF INCOME AND REINVESTED EARNINGS
For the Years Ended December 31
(Dollars in Thousands)
<TABLE>
<CAPTION>

1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
OPERATING REVENUES
Local service............................. $284,136 $280,470 $272,840
Network access............................ 124,349 125,129 134,376
Toll service.............................. 4,102 4,154 5,928
Directory advertising, billing
services and other (including $59,750,
$57,326, and $56,856 from affiliates).... 138,989 133,225 135,654
Provision for uncollectibles.............. (4,260) (5,505) (6,125)
-------- -------- --------
547,316 537,473 542,673
-------- -------- --------
OPERATING EXPENSES
Employee costs, including benefits
and taxes................................ 158,149 150,332 151,815
Depreciation and amortization............. 107,658 110,258 96,503
Taxes other than income................... 39,750 42,888 37,088
Other (including $111,657, $106,029, and
$102,035 to affiliates).................. 169,584 159,217 162,696
-------- -------- --------
475,141 462,695 448,102
-------- -------- --------

NET OPERATING REVENUES..................... 72,175 74,778 94,571
-------- -------- --------

OPERATING INCOME TAXES
Federal................................... 10,665 12,835 18,310
State..................................... 6,215 5,382 7,937
-------- -------- --------
16,880 18,217 26,247
-------- -------- --------

OPERATING INCOME........................... 55,295 56,561 68,324
-------- -------- --------

OTHER INCOME (EXPENSE)
Allowance for funds used during
construction............................. 699 394 218
Miscellaneous - net (including $214,
$54, and $2 from affiliate).............. (542) (147) (795)
-------- -------- --------
157 247 (577)
-------- -------- --------

INTEREST EXPENSE (including $124,
$818, and $1,587 to affiliate)............ 19,391 21,305 21,135
-------- -------- --------

INCOME BEFORE EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES..................... 36,061 35,503 46,612
EXTRAORDINARY ITEM
Early Extinguishment of Debt,
Net of Tax............................... (4,494) --- ---
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES
Postemployment Benefits, Net of Tax...... (4,221) --- ---
Postretirement Benefits Other Than
Pensions, Net of Tax.................... --- --- (79,725)
-------- -------- --------

NET INCOME (LOSS).......................... $ 27,346 $ 35,503 $(33,113)
======== ======== ========

REINVESTED EARNINGS
At beginning of year...................... $ 41,340 $ 37,234 $104,676
Add: net income (loss)................... 27,346 35,503 (33,113)
-------- -------- --------
68,686 72,737 71,563
Deduct: dividends........................ 34,800 31,371 34,329
other changes.................... 147 26 ---
-------- -------- --------
At end of year............................ $ 33,739 $ 41,340 $ 37,234
======== ======== ========

</TABLE>
The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

BALANCE SHEETS
(Dollars in Thousands)

December 31,
--------------------
1993 1992
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash.......................................... $ 36 $ 47
Note from affiliate........................... 6,728 4,658
Accounts receivable:
Customers and agents, net of allowances for
uncollectibles of $5,705 and $7,074........ 111,122 104,005
Affiliates................................... 16,639 28,638
Other........................................ 24,376 25,024
Material and supplies......................... 1,979 2,338
Prepaid expenses.............................. 11,476 15,001
Deferred income taxes......................... 2,818 3,544
Other......................................... 4,845 3,287
---------- ----------
180,019 186,542
---------- ----------
PLANT, PROPERTY AND EQUIPMENT
In service.................................... 1,265,750 1,288,800
Under construction and other.................. 39,453 17,347
---------- ----------
1,305,203 1,306,147
Less accumulated depreciation................. 518,432 521,429
---------- ----------
786,771 784,718
---------- ----------

OTHER ASSETS................................... 31,163 13,681
---------- ----------

TOTAL ASSETS................................... $ 997,953 $ 984,941
========== ==========

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

BALANCE SHEETS
(Dollars in Thousands)

December 31,
--------------------
1993 1992
--------- ---------
<S> <C> <C>
LIABILITIES AND SHAREOWNER'S INVESTMENT
CURRENT LIABILITIES
Debt maturing within one year................. $ 1,006 $ 1,552
Accounts payable:
Parent and affiliates........................ 82,570 90,432
Other........................................ 45,221 35,872
Accrued expenses:
Vacation pay................................. 9,920 9,883
Interest..................................... 6,205 3,737
Taxes........................................ 3,601 148
Other........................................ 11,816 10,237
Advance billings and customer deposits........ 8,277 6,012
-------- --------
168,616 157,873
-------- --------

LONG-TERM DEBT................................. 243,367 239,776
-------- --------

EMPLOYEE BENEFIT OBLIGATIONS................... 137,120 125,294
-------- --------

DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes......................... 76,360 107,776
Unamortized investment tax credits............ 16,350 19,932
Other......................................... 72,433 42,982
-------- --------
165,143 170,690
-------- --------
COMMITMENTS (Note 3)

SHAREOWNER'S INVESTMENT
Common stock - one share, without
par value, owned by parent................... 249,968 249,968
Reinvested earnings........................... 33,739 41,340
-------- --------
283,707 291,308
-------- --------

TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT.. $997,953 $984,941
======== ========

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

STATEMENTS OF CASH FLOWS
For the Years Ended December 31
(Dollars in Thousands)

1993 1992 1991
-------- -------- ---------
<S> <C> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).............................. $ 27,346 $ 35,503 $(33,113)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization............... 107,658 110,258 96,503
Extraordinary item related to early
extinguishment of debt, net of tax benefit. 4,494 --- ---
Cumulative effect of changes in accounting
principles ................................ 4,221 --- 79,725
Allowance for funds used during construction. (699) (394) (218)
Other items, net ............................ 164 449 342
Changes in certain assets and liabilities:
Accounts receivable ...................... 5,530 (1,342) (5,430)
Material and supplies .................... (1,547) (473) 653
Other assets.............................. 1,677 13,185 (14,843)
Accounts payable and accrued taxes ....... 8,575 19,941 (733)
Deferred income taxes, net................ (13,134) (1,613) 3,710
Unamortized investment tax credits ....... (3,582) (3,627) (1,990)
Employee benefit obligations ............. 5,649 3,175 13,713
Other liabilities......................... 3,550 (4,651) (5,542)
-------- -------- --------
Net cash provided by operating activities...... 149,902 170,411 132,777
-------- -------- --------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to plant, property and equipment..... (106,265) (103,052) (108,710)
Net change in note receivable from affiliate... (2,070) (4,658) ---
Other plant-related changes.................... 3,504 451 (785)
-------- -------- --------

Net cash used in investing activities.......... (104,831) (107,259) (109,495)
-------- -------- --------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings ...................... 89,652 --- ---
Principal repayments of borrowings and capital
lease obligations ............................ (1,620) (1,521) (1,895)
Early extinguishment of debt and related
call premium.................................. (97,095) --- ---
Net change in note payable to affiliate ....... --- (29,100) 29,100
Dividends paid ................................ (34,800) (31,371) (45,378)
Net change in outstanding checks drawn on
controlled disbursement accounts.............. (1,219) (1,113) (5,109)
-------- -------- -------

Net cash used in financing activities.......... (45,082) (63,105) (23,282)
-------- -------- -------
INCREASE (DECREASE) IN CASH ................... (11) 47 ---
CASH, BEGINNING OF YEAR........................ 47 --- ---
-------- -------- -------

CASH, END OF YEAR.............................. $ 36 $ 47 $ ---
======== ======== =======

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Bell Atlantic - Washington, D.C., Inc. (formerly The Chesapeake and Potomac
Telephone Company) (the Company), a wholly owned subsidiary of Bell Atlantic
Corporation (Bell Atlantic), maintains its accounts in accordance with the
Uniform System of Accounts (USOA) prescribed by the Federal Communications
Commission (FCC) and makes certain adjustments necessary to present the
accompanying financial statements in accordance with generally accepted
accounting principles applicable to regulated entities. Such principles differ
in certain respects from those used by unregulated entities, but are required to
appropriately reflect the financial and economic impacts of regulation and the
ratemaking process. Significant differences resulting from the application of
these principles are disclosed elsewhere in these Notes to Financial Statements
where appropriate.

Revenue Recognition

Revenues are recognized as earned on the accrual basis, which is generally
when services are rendered based on the usage of the Company's local exchange
network and facilities.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of 90
days or less when purchased to be cash equivalents. Cash equivalents are
stated at cost, which approximates market value.

Material and Supplies

New and reusable materials are carried in inventory, principally at average
original cost, except that specific costs are used in the case of large
individual items. Nonreusable material is carried at estimated salvage value.

Prepaid Directory

Costs of directory production and advertising sales are deferred until the
directory is published. Such costs are amortized to expense and the related
advertising revenues are recognized over the average life of the directory,
which is generally 12 months.

Plant and Depreciation

The Company's provision for depreciation is based principally on the
remaining life method of depreciation and straight-line composite rates. The
provision for depreciation is based on the following estimated remaining
service lives: buildings, 25 to 35 years; central office equipment, 3 to 10
years; telephone instruments and related equipment, 3 to 6 years; poles, 19
years; cable and wiring, 5 to 17 years; conduit, 34 years; office equipment
and furniture, 5 to 8 years; and vehicles and other work equipment, 3 to 8
years. This method provides for the recovery of the remaining net investment
in telephone plant, less anticipated net salvage value, over the remaining
service lives authorized by regulatory commissions. Depreciation expense also
includes amortization of certain classes of telephone plant (and certain
identified depreciation reserve deficiencies) over periods authorized by
regulatory commissions.

When depreciable plant is replaced or retired, the amounts at which such
plant has been carried in plant, property and equipment are removed from the
respective accounts and charged to accumulated depreciation, and any gains or
losses on disposition are amortized over the remaining service lives of the
remaining net investment in telephone plant.

F-7
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Maintenance and Repairs

The cost of maintenance and repairs of plant, including the cost of replacing
minor items not constituting substantial betterments, is charged to operating
expenses.

Allowance for Funds Used During Construction

Regulatory commissions allow the Company to record an allowance for funds
used during construction, which includes both interest and equity return
components, as a cost of plant and, for interstate, as an item of other
income. Such income is not recovered in cash currently, but will be
recoverable over the service life of the plant through higher depreciation
expense recognized for regulatory purposes.

Employee Benefits

Pension Plans

Substantially all employees of the Company are covered under multi-employer
noncontributory defined pension benefit plans sponsored by Bell Atlantic and its
subsidiaries, including the Company. The Company uses the projected unit credit
actuarial cost method for determining pension cost for financial reporting
purposes. Amounts contributed to the Company's pension plans are actuarially
determined, principally under the aggregate cost actuarial method, and are
subject to applicable federal income tax regulations.

Postretirement Benefits Other Than Pensions

Substantially all employees of the Company are covered under postretirement
health and life insurance benefit plans.

Effective January 1, 1991, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," which requires accrual accounting for all postretirement
benefits other than pensions. Under the prescribed accrual method, the
Company's obligation for these postretirement benefits is to be fully accrued by
the date employees attain full eligibility for such benefits.

A portion of the postretirement accrued benefit obligation is contributed to
501(c)(9) trusts and 401h accounts under applicable federal income tax
regulations. The amounts contributed to these trusts and accounts are
actuarially determined, principally under the aggregate cost actuarial method.

Postemployment Benefits

The Company provides employees with postemployment benefits such as
disability benefits, workers' compensation, and severance pay.

Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," which requires accrual accounting for the estimated cost of benefits
provided to former or inactive employees after employment but before retirement.
Prior to 1993, the cost of these benefits was charged to expense as the benefits
were paid.

Income Taxes

Bell Atlantic and its domestic subsidiaries, including the Company, file a
consolidated federal income tax return.

Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement No. 109),
which requires the determination of deferred taxes using the liability method.
Under the liability method, deferred taxes are provided on book and tax basis
differences and deferred tax balances are adjusted to reflect enacted changes in
income tax rates.

F-8
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

The consolidated amount of current and deferred tax expense is allocated by
applying the provisions of Statement No. 109 to each subsidiary as if it were a
separate taxpayer.

Prior to 1993, the Company accounted for income taxes based on the provisions
of Accounting Principles Board Opinion No. 11, "Accounting for Income Taxes"
(APB No. 11). Under APB No. 11, deferred taxes were generally provided to
reflect the effect of timing differences on the recognition of revenue and
expense determined for financial and income tax reporting purposes.

The Tax Reform Act of 1986 repealed the investment tax credit (ITC) as of
January 1, 1986, subject to certain transitional rules. ITCs were deferred and
are being amortized as a reduction to income tax expense over the estimated
service lives of the related assets.

Reclassifications

Certain reclassifications of prior years' data have been made to conform to
1993 classifications.

2. DEBT

Long-Term

Long-term debt consists principally of debentures issued by the Company.
Interest rates and maturities of the amounts outstanding at December 31 are as
follows:

1993 1992
--------- ---------
(Dollars in Thousands)
<S> <C> <C>

Thirty-seven year 4 3/8%, due 1998..... $ 20,000 $ 20,000
Forty year 5 5/8%, due 2006............ 25,000 25,000
Forty year 7%, due 2009................ 50,000 50,000
Forty year 7 3/4%, due 2013............ 60,000 60,000
Thirty year 7 3/4%, due 2023........... 90,000 ---
Forty year 9 3/8%, due 2026............ --- 90,000
-------- --------
245,000 245,000

Unamortized discount and premium, net.. (7,686) (8,081)
Capital lease obligations-average
rate 8.7% and 11.5%.................. 6,786 4,409
Other long-term debt-average rate
12.2%, due 1998...................... 273 ---
-------- --------
Total long-term debt, including
current maturities................... 244,373 241,328
Less maturing within one year.......... 1,006 1,552
-------- --------
Total long-term debt................... $243,367 $239,776
======== ========
</TABLE>

Long-term debt outstanding at December 31, 1993 includes $155,000,000 that is
callable by the Company. The call prices range from 102.8% to 100.0% of face
value, depending upon the remaining term to maturity of the issue.

On February 1, 1993, the Company sold $90,000,000 of Thirty Year 7 3/4%
Debentures, due February 1, 2023, through a public offering. The debentures are
not redeemable by the Company prior to February 1, 2003. The net proceeds from
this issue were used on February 22, 1993 to redeem $90,000,000 of Forty Year
9 3/8% Debentures due in 2026, at a call price of 107.5% of the face value of
the issue. As a result of the early extinguishment of this debt, which was
called on January 23, 1993, the Company recorded a charge of $7,576,000,
before an income tax benefit of $3,082,000, in the first quarter of 1993.

At December 31, 1993, the Company had $60,000,000 outstanding under a shelf
registration statement filed with the Securities and Exchange Commission.

F-9
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

The fair value of long-term debt is estimated based on the quoted market
prices for the same or similar issues. At December 31, 1993 and 1992, the fair
value of the Company's long-term debt, excluding unamortized discount and
premium and capital lease obligations, is estimated at $251,000,000 and
$241,000,000, respectively.

Maturing Within One Year

Debt maturing within one year consists of the following at December 31:

Weighted Average
Interest Rates**
-------------------
1993 1992 1991 1993 1992 1991
------ ------ ------ ----- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>

Note payable to affiliate....... $ --- $ --- $29,100 ---% ---% 4.5%
==== ==== ====
Capital lease obligations....... 1,006 1,552 1,513
------ ------- -------
Total........................... $1,006 $ 1,552 $30,613
====== ======= =======

Average amount of note
payable outstanding
during the year *.............. $3,934 $20,942 $26,923 3.2% 3.9% 6.0%
==== ==== ====
Maximum amount of note
payable at any month-end
during the year................ $5,004 $36,700 $47,108

</TABLE>

* Amounts represent average daily face amount of the note.
** Weighted average interest rates are computed by dividing the average daily
face amount of the note into the aggregate related interest expense.

At December 31, 1993, the Company had an unused line of credit balance of
$125,000,000 with an affiliate, Bell Atlantic Network Funding Corporation
(BANFC) (Note 7).

3. LEASES

The Company has entered into both capital and operating leases for facilities
and equipment used in operations. Plant, property and equipment included
capital leases of $15,227,000 and $11,252,000 and related accumulated
amortization of $9,067,000 and $7,535,000 at December 31, 1993 and 1992,
respectively. In 1993, 1992, and 1991, the Company incurred initial capital
lease obligations of $4,346,000, $26,000, and $76,000, respectively.

Total rent expense amounted to $11,062,000 in 1993, $11,864,000 in 1992, and
$15,393,000 in 1991. Of these amounts, the Company incurred rent expense of
$7,558,000, $6,876,000, and $7,416,000 in 1993, 1992, and 1991, respectively,
from affiliated companies.

F-10
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

At December 31, 1993, the aggregate minimum rental commitments under
noncancelable leases for the periods shown are as follows:

Years Capital Leases Operating Leases
----- -------------- ----------------
(Dollars in Thousands)
<S> <C> <C>

1994....................... $1,555 $ 437
1995....................... 1,477 376
1996....................... 1,470 370
1997....................... 176 333
1998....................... 176 326
Thereafter................. 4,220 1,150
------ ------
Total...................... 9,074 $2,992
======

Less imputed interest and
executory costs........... 2,288
------
Present value of net
minimum lease payments.... 6,786
Less current installments.. 1,006
------
Long-term obligation at
December 31, 1993......... $5,780
======
</TABLE>

4. EMPLOYEE BENEFITS

Pension Plans

Substantially all of the Company's management and associate employees are
covered under multi-employer noncontributory defined benefit pension plans
sponsored by Bell Atlantic and certain of its subsidiaries, including the
Company. The pension benefit formula is based on a flat dollar amount per year
of service according to job classification under the associate plan and a stated
percentage of adjusted career average earnings under the plans for management
employees. The Company's objective in funding the plans is to accumulate funds
at a relatively stable level over participants' working lives so that benefits
are fully funded at retirement. Plan assets consist principally of investments
in domestic and foreign corporate equity securities, U.S. and foreign Government
and corporate debt securities, and real estate.

Aggregate pension cost for the plans is as follows:
<TABLE>
<CAPTION>

Years Ended December 31,
---------------------------
1993 1992 1991
-------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C>

Pension cost.................. $5,343 $5,696 $5,427
====== ====== ======

Pension cost as a percentage
of salaries and wages....... 4.6% 4.2% 4.0%
====== ====== ======
</TABLE>

The decrease in pension cost in 1993 is due to the net effect of the
elimination of one-time charges associated with special termination benefits
that were recognized in the preceding years, favorable investment experience,
and changes in plan demographics due to retirement and severance programs.

In 1992, the Company recognized $1,838,000 of special termination benefit
costs related to the early retirement of associate employees. The special
termination benefit costs and the net effect of changes in plan provisions,
certain actuarial assumptions, and the amortization of actuarial gains and
loss related to demographic and investment experience increased pension cost
in 1992. A change in the expected long-term rate of return on plan assets
resulted in a $3,119,000 reduction in pension cost (which reduced operating
expenses by $2,807,000 after capitalization of amounts related to the
construction program) and substantially offset the 1992 cost increase.

F-11
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Statement of Financial Accounting Standards No. 87, "Employers' Accounting
for Pensions" (Statement No. 87) requires a comparison of the actuarial
present value of projected benefit obligations with the fair value of plan
assets, the disclosure of the components of net periodic pension costs and a
reconciliation of the funded status of the plans with amounts recorded on the
balance sheets. The Company participates in multi-employer plans and
therefore, such disclosures are not presented for the Company because the
structure of the plans does not allow for the determination of this
information on an individual participating company basis.

Significant actuarial assumptions are as follows:

<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- -------
<S> <C> <C> <C>
Discount rate used to measure the
projected benefit obligation ...... 7.25% 7.75% 7.75%
Assumed rate of future increases in
compensation levels ............... 5.25% 5.25% 5.25%
Expected long-term rate of return on
plan assets used to calculate
pension cost ...................... 8.25% 8.25% 7.50%

</TABLE>

The Company has in the past entered into collective bargaining agreements
with unions representing certain employees and expects to do so in the future.
Pension benefits have been included in these agreements and improvements in
benefits have been made from time to time. Additionally, the Company has
amended the benefit formula under pension plans maintained for its management
employees. Expectations with respect to future amendments to the Company's
pension plans have been reflected in determining the Company's pension cost
under Statement No. 87.

Postretirement Benefits Other Than Pensions

Effective January 1, 1991, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pension," (Statement No. 106). Statement No. 106 requires accrual
accounting for all postretirement benefits other than pensions. Under the
prescribed accrual method, the Company's obligation for these postretirement
benefits is to be fully accrued by the date employees attain full eligibility
for such benefits.

In conjunction with the adoption of Statement No. 106, the Company elected,
for financial reporting purposes, to recognize immediately the accumulated
postretirement benefit obligation for current and future retirees, net of the
fair value of plan assets and recognized accrued postretirement benefit cost
(transition obligation), in the amount of $79,725,000, net of a deferred
income tax benefit of $54,927,000.

For purposes of measuring the interstate rate of return achieved by the
Company, the Federal Communications Commission (FCC) permits recognition of
postretirement benefit costs, including amortization of the transition
obligation, in accordance with the prescribed accrual method included in
Statement No. 106. In January 1993, the FCC denied adjustments to the
interstate price cap formula which would have permitted tariff increases to
reflect the incremental postretirement benefit cost resulting from the adoption
of Statement No. 106.

For intrastate ratemaking purposes, regulators issued an order on December
21, 1993, as part of a general rate preceding, which provided for the
recognition of accrued postretirement benefits cost, including amortization of
the transition benefit obligation over a twenty year period.

Pursuant to Statement of Financial Accounting Standards No. 71, "Accounting
for the Effects of Certain Types of Regulation" (Statement No. 71), a
regulatory asset associated with the recognition of the transition obligation
was not recorded because of uncertainties as to the timing and extent of
recovery given the Company's assessment of its long-term competitive
environment.

F-12
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Substantially all of the Company's management and associate employees are
covered under postretirement health and life insurance benefit plans sponsored
by Bell Atlantic and certain of its subsidiaries, including the Company. The
determination of benefit cost for postretirement health benefit plans is based
on comprehensive hospital, medical, surgical and dental benefit plan provisions.
The postretirement life insurance benefit formula used in the determination of
postretirement benefit cost is primarily based on annual basic pay at
retirement.

The Company funds the postretirement health and life insurance benefits of
current and future retirees. Plan assets consist principally of investments in
domestic and foreign corporate equity securities, and U.S. Government and
corporate debt securities.

The aggregate postretirement benefit cost for the year ended December 31,
1993, 1992, and 1991 was $13,694,000, $12,084,000, and $11,875,000,
respectively. As a result of the 1992 collective bargaining agreements, Bell
Atlantic amended the postretirement medical benefit plan for associate
employees and certain associate retirees of the Company. The increases in the
postretirement benefit cost between 1993 and 1991 were primarily due to the
change in benefit levels and claims experience. Also contributing to these
increases were changes in actuarial assumptions and demographic experience.

Statement No. 106 requires a comparison of the actuarial present value of
projected benefit obligations with the fair value of plan assets, the disclosure
of the components of net periodic postretirement benefit costs, and a
reconciliation of the funded status of the plan with amounts recorded on the
balance sheets. The Company participates in multi-employer plans and therefore,
such disclosures are not presented for the Company because the structure of the
plans does not provide for the determination of this information on an
individual participating company basis.

The assumed discount rate used to measure the accumulated postretirement
benefit obligation was 7.25% at December 31, 1993 and 7.75% at December 31,
1992. The assumed rate of future increases in compensation levels was 5.25% at
December 31, 1993 and 1992. The expected long-term rate of return on plan
assets was 8.25% for 1993 and 1992 and 7.5% for 1991. The medical cost trend
rate in 1993 was approximately 13.0%, grading down to an ultimate rate in 2003
of approximately 5.0%. The dental cost trend rate in 1993 and thereafter is
approximately 4.0%.

Postretirement benefits other than pensions have been included in collective
bargaining agreements and have been modified from time to time. The Company has
periodically modified benefits under plans maintained for its management
employees. Expectations with respect to future amendments to the Company's
postretirement benefit plans have been reflected in determining the Company's
postretirement benefit cost under Statement No. 106.

Postemployment Benefits

Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" (Statement No. 112). Statement No. 112 requires accrual accounting
for the estimated cost of benefits provided to former or inactive employees
after employment but before retirement. This change principally affects the
Company's accounting for disability and workers' compensation benefits, which
previously were charged to expense as the benefits were paid.

The cumulative effect at January 1, 1993 of adopting Statement No. 112
reduced net income by $4,221,000, net of a deferred tax benefit of $2,891,000.
The adoption of Statement No. 112 did not have a significant effect on the
Company's ongoing level of operating expense in 1993.

F-13
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

5. INCOME TAXES

Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement No. 109).
Statement No. 109 requires the determination of deferred taxes using the
liability method. Under the liability method, deferred taxes are provided on
book and tax basis differences and deferred tax balances are adjusted to reflect
enacted changes in income tax rates. Prior to 1993, the Company accounted for
income taxes based on the provisions of Accounting Principles Board Opinion
No. 11.

Statement No. 109 has been adopted on a prospective basis and amounts
presented for prior years have not been restated. As of January 1, 1993, the
Company recorded a charge to income of $381,000, representing the cumulative
effect of adopting Statement No. 109, which has been reflected in Operating
Income Taxes in the Statement of Income and Reinvested Earnings.

Upon adoption of Statement No. 109, the effects of required adjustments to
deferred tax balances were primarily deferred on the balance sheet as regulatory
assets and liabilities in accordance with Statement of Financial Accounting
Standards No. 71, "Accounting for the Effects of Certain Types of Regulation"
(Statement No. 71). At January 1, 1993, the Company recorded income tax-related
regulatory assets totaling $19,245,000 in Other Assets. These regulatory assets
represent the anticipated future regulatory recognition of the Statement No. 109
adjustments to recognize (i) temporary differences for which deferred taxes had
not been provided and (ii) the increase in the deferred state tax liability
which resulted from increases in state income tax rates subsequent to the dates
the deferred taxes were recorded. In addition, income tax-related regulatory
liabilities totaling $40,199,000 were recorded in Deferred Credits and Other
Liabilities - Other. These regulatory liabilities represent the anticipated
future regulatory recognition of the Statement No. 109 adjustments to recognize
(i) a reduced deferred tax liability resulting from decrease in federal income
tax rates subsequent to the dates the deferred taxes were recorded and (ii) a
deferred tax benefit required to recognize the effects of the temporary
differences attributable to the Company's policy of accounting for investment
tax credits using the deferred method. These deferred taxes and regulatory
assets and liabilities have been increased for the tax effect of future revenue
requirements. These regulatory assets and liabilities are amortized at the time
the related deferred taxes are recognized in the ratemaking process.

Prior to the adoption of Statement No. 109, the Company had income tax timing
differences for which deferred taxes had not been provided pursuant to the
ratemaking process of $18,484,000 and $24,273,000 at December 31, 1992 and 1991,
respectively. These timing differences principally related to the allowance for
funds used during construction and certain taxes and payroll-related
construction costs capitalized for financial statement purposes, but deducted
currently for income tax purposes, net of applicable depreciation.

The Omnibus Budget Reconciliation Act of 1993, which was enacted in August
1993, increased the federal corporate income tax rate from 34% to 35%,
effective January 1, 1993. In the third quarter of 1993, the Company recorded a
net benefit to the tax provision of $131,000, which included a $919,000 charge
for the nine month effect of the 1% rate increase, more than offset by a one-
time net benefit of $1,050,000 related to adjustments to deferred tax assets
associated with the postretirement benefit obligation of the Company.

Pursuant to Statement No. 71, the effect of the income tax rate increase on
deferred tax balances was primarily deferred through the establishment of
regulatory assets of $722,000 and the reduction of regulatory liabilities of
$4,319,000. The Company did not recognize regulatory assets and liabilities
related to the postretirement benefit obligation or the associated deferred
income tax asset.

F-14
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

The components of income tax expense are as follows:

Years Ended December 31,
----------------------------
1993 1992 1991
-------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C>
Current:
Federal............... $ 25,276 $17,822 $19,209
State................. 8,320 5,635 7,583
-------- ------- -------
33,596 23,457 26,792
-------- ------- -------
Deferred:
Federal............... (11,029) (1,360) 1,422
State................. (2,105) (253) 354
-------- ------- -------
(13,134) (1,613) 1,776
-------- ------- -------
20,462 21,844 28,568
Investment tax credits.. (3,582) (3,627) (2,321)
-------- ------- -------
Total................... $ 16,880 $18,217 $26,247
======== ======= =======
</TABLE>

Income tax benefits which relates to non-operating income and expense and is
included in Miscellaneous-net were $665,000, $10,000, and $352,000 in 1993,
1992, and 1991, respectively.

For the years ended December 31, 1992 and 1991, deferred income tax expense
resulted from timing differences in the recognition of revenue and expense for
financial and income tax accounting purposes. The sources of these timing
differences and the tax effects of each were as follows:

Years Ended December 31,
--------------------------
1992 1991
------------ ------------
(Dollars in Thousands)
<S> <C> <C>

Accelerated depreciation.. $ 4,616 $ 4,231
Employee benefits......... (4,968) (1,892)
Other, net................ (1,261) (563)
------- -------
Total..................... $(1,613) $ 1,776
======= =======
</TABLE>

The provision for income taxes varies from the amount computed by applying
the statutory federal income tax rate to income before provision for income
taxes. The difference is attributable to the following factors:

Years Ended December 31,
------------------------------
1993 1992 1991
-------- -------- ---------
<S> <C> <C> <C>

Statutory federal income tax rate........... 35.0% 34.0% 34.0%
Investment tax credits...................... (5.6) (5.9) (3.8)
State and local income taxes, net of
federal income tax benefits................ 6.7 5.9 7.2
Benefit of rate differential applied to
reversing timing differences............... (4.9) (4.3) (3.8)
Reversal of previously capitalized taxes
and payroll-related construction costs..... 2.3 5.3 1.5
Prior year tax adjustment................... (3.2) (2.4) (.6)
Other, net.................................. .7 1.3 1.2
----- ----- -----
Effective income tax rate................... 31.0% 33.9% 35.7%
===== ===== =====
</TABLE>

At December 31, 1993, the significant components of deferred tax assets and
liabilities were as follows:

<TABLE>
<CAPTION>
Deferred Tax Deferred Tax
Assets Liabilities
------------ ------------
(Dollars in Thousands)
<S> <C> <C>
Depreciation............................... $ --- $163,900
Employee benefits.......................... 74,900 ---
Investment tax credits..................... 11,600 ---
Advance payments........................... 2,500 ---
Other...................................... 4,300 3,000
------- --------
Total...................................... $93,300 $166,900
======= ========
</TABLE>

F-15
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

Total deferred tax assets include approximately $58,000,000 related to
postretirement benefit costs recognized in accordance with Statement No. 106.
This deferred tax asset will gradually be realized over the estimated lives of
current retirees and employees.

6. SUPPLEMENTAL CASH FLOW AND ADDITIONAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>

Years Ended December 31,
--------------------------
1993 1992 1991
------- ------- -------
(Dollars in Thousands)
<S> <C> <C> <C>

Supplemental Cash Flow Information:
Interest paid, net of interest
capitalized............................ $16,126 $20,455 $21,139
Income taxes paid........................ $26,533 $25,374 $27,011

Additional Financial Information:
Interest expense (income):
Interest on long-term debt............. $18,365 $19,808 $19,963
Interest on note payable to affiliate.. 124 818 1,587
Other.................................. 902 679 (415)
------- ------- -------
Total interest expense................... $19,391 $21,305 $21,135
======= ======= =======
</TABLE>

For the years ended December 31, 1993, 1992, and 1991, revenues generated
from services provided to AT&T, principally network access, billing and
collection, and sharing of network facilities, were $42,983,000, $57,144,000
and $60,879,000 respectively. At December 31, 1993 and 1992, Accounts
receivable, net, included $14,672,000 and $13,205,000 respectively, from AT&T.

Financial instruments that potentially subject the Company to
concentrations of credit risk consist of trade receivables with AT&T, as noted
above. Credit risk with respect to other trade receivables is limited due to
the large number of customers included in the Company's customer base.

At December 31, 1992, $510,000 of negative cash was classified as Accounts
payable.

7. TRANSACTIONS WITH AFFILIATES

The Company has contractual arrangements with an affiliated company, Bell
Atlantic Network Services, Inc. (NSI), for the provision of various centralized
corporate, administrative, planning, financial and other services. These
arrangements serve to fulfill the common needs of Bell Atlantic's telephone
subsidiaries on a centralized basis.

In connection with these services, the Company recognized $103,684,000,
$99,153,000, and $94,619,000 in operating expenses for the years ended December
31, 1993, 1992, and 1991, respectively. Included in these expenses were
$6,908,000 in 1993, $9,450,000 in 1992, and $7,673,000 in 1991 billed to NSI and
allocated to the Company by Bell Communications Research, Inc., another
affiliated company owned jointly by the seven regional holding companies. In
1991, these charges included $2,680,000, associated with NSI's adoption of
Statement No. 106. In addition, in 1991, the Company recognized $27,124,000
representing the Company's proportionate share of NSI's accrued transition
obligation under Statement No. 106.

In connection with the adoption of Statement No. 112 in 1993, the cumulative
effect included $555,000, net of a deferred income tax benefit of $380,000,
representing the Company's proportionate share of NSI's accrued cost of
postemployment benefits at January 1, 1993.

F-16
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

The Company has a contractual agreement with an affiliated company, BANFC,
for the provision of short-term financing and cash management services. BANFC
issues commercial paper and secures bank loans to fund the working capital
requirements of the telephone subsidiaries and NSI and invests funds in
temporary investments on their behalf. In connection with this arrangement,
the Company recognized interest expense of $124,000, $818,000, and $1,587,000
in 1993, 1992, and 1991, respectively, and $214,000, $54,000, and $2,000 in
interest income in 1993, 1992, and 1991, respectively.

In 1993, the Company received $59,750,000 in revenue from affiliates,
principally related to rent received for the use of Company facilities and
equipment, and paid $7,973,000 in other operating expense to affiliated
companies. These amounts were $57,326,000 and $6,876,000, respectively, in
1992, and $56,856,000 and $7,416,000, respectively, in 1991.

On February 1, 1994, the Company declared and paid a dividend in the amount
of $7,672,000 to Bell Atlantic.

8. QUARTERLY FINANCIAL INFORMATION (unaudited)

Income Before
Extraordinary
Item and
Cumulative
Total Net Effect of Change
Operating Operating in Accounting Net
Quarter Ended Revenues Revenues Principle Income
--------------- --------- --------- ------------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C>

1993:
March 31....... $134,463 $19,601 $ 9,269 $ 554
June 30........ 136,680 17,739 8,571 8,571
September 30... 139,922 20,628 10,048 10,048
December 31.... 136,251 14,207 8,173 8,173
-------- ------- ------- -------
Total.......... $547,316 $72,175 $36,061 $27,346
======== ======= ======= =======

1992:
March 31....... $131,045 $23,949 $11,355 $11,355
June 30........ 136,538 22,918 10,800 10,800
September 30... 137,427 15,542 6,455 6,455
December 31.... 132,463 12,369 6,893 6,893
-------- ------- ------- -------
Total.......... $537,473 $74,778 $35,503 $35,503
======== ======= ======= =======
</TABLE>

Net income for the first quarter of 1993 has been restated to include a
charge of $4,221,000, net of a deferred income tax benefit of $2,891,000,
related to the adoption of Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits" (Note 4).

F-17
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

SCHEDULE V - PLANT, PROPERTY AND EQUIPMENT
------------------------------------------
For the Year Ended December 31, 1993
(Dollars in Thousands)

- -----------------------------------------------------------------------------------------------------------
Balance at Additions
Beginning at Cost Retirements Other Balance at
Classification of Period Note (a) Note (b) Changes End of Period
- --------------------------------------------- ---------- --------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C>

Land......................................... $ 10,602 $ --- $ --- $(248) $ 10,354
Buildings.................................... 160,707 3,727 7,381 --- 157,053
Central Office Equipment..................... 559,210 41,897 53,710 --- 547,397
Telephone Instruments and Related Equipment.. 31,032 1,612 211 (1) 32,432
Poles........................................ 3,438 238 29 1 3,648
Cable and Wiring............................. 208,816 8,943 2,449 --- 215,310
Conduit...................................... 57,647 741 2 2 58,388
Office Equipment and Furniture............... 225,900 30,012 49,030 1 206,883
Vehicles and Other Work Equipment............ 14,578 40 1,337 --- 13,281
Other........................................ 16,870 4,781 646 (1) 21,004
---------- -------- -------- ----- ----------
Total in Service (c)....................... 1,288,800 91,991 114,795 (246) 1,265,750

Plant Under Construction..................... 14,390 21,376 --- --- 35,766
Other........................................ 2,957 730 --- --- 3,687
---------- -------- -------- ----- ----------

Total Plant, Property and Equipment........ $1,306,147 $114,097 $114,795 $(246) $1,305,203
========== ======== ======== ===== ==========

</TABLE>

The notes on page F-21 are an integral part of this schedule.

F-18
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

SCHEDULE V - PLANT, PROPERTY AND EQUIPMENT
For the Year Ended December 31, 1992
(Dollars in Thousands)

- ----------------------------------------------------------------------------------------------------------
Balance at Additions
Beginning at Cost Retirements Other Balance at
Classification of Period Note (a) Note (b) Changes End of Period
- --------------------------------------------- ---------- --------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>

Land......................................... $ 7,740 $ 2,862 $ --- $ --- $ 10,602
Buildings.................................... 151,353 11,014 1,660 --- 160,707
Central Office Equipment..................... 547,551 46,488 34,829 --- 559,210
Telephone Instruments and Related Equipment.. 36,676 2,062 7,706 --- 31,032
Poles........................................ 3,361 138 61 --- 3,438
Cable and Wiring............................. 342,114 8,408 141,706 --- 208,816
Conduit...................................... 56,898 760 11 --- 57,647
Office Equipment and Furniture............... 214,976 28,205 17,281 --- 225,900
Vehicles and Other Work Equipment............ 14,348 732 502 --- 14,578
Other........................................ 20,526 249 3,905 --- 16,870
---------- -------- -------- ------ ----------
Total in Service (c)....................... 1,395,543 100,918 207,661 --- 1,288,800

Plant Under Construction..................... 10,766 3,624 --- --- 14,390
Other........................................ 2,957 --- --- --- 2,957
---------- -------- -------- ------ ----------

Total Plant, Property and Equipment........ $1,409,266 $104,542 $207,661 $ --- $1,306,147
========== ======== ======== ====== ==========

</TABLE>

The notes on page F-21 are an integral part of this schedule.

F-19
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

SCHEDULE V - PLANT, PROPERTY AND EQUIPMENT
For the Year Ended December 31, 1991
(Dollars in Thousands)

Land......................................... $ 7,740 $ --- $ --- $ --- $ 7,740
Buildings.................................... 144,558 8,082 1,287 --- 151,353
Central Office Equipment..................... 544,026 48,236 43,769 (942) 547,551
Telephone Instruments and Related Equipment.. 34,969 3,530 1,823 --- 36,676
Poles........................................ 3,232 148 19 --- 3,361
Cable and Wiring............................. 340,465 9,136 7,487 --- 342,114
Conduit...................................... 56,154 803 59 --- 56,898
Office Equipment and Furniture............... 194,895 38,847 18,766 --- 214,976
Vehicles and Other Work Equipment............ 13,067 1,914 633 --- 14,348
Other........................................ 21,109 235 818 --- 20,526
---------- -------- ------- ----- ----------
Total in Service (c)....................... 1,360,215 110,931 74,661 (942) 1,395,543

Plant Under Construction..................... 11,195 1,047 1,476 --- 10,766
Other........................................ 2,957 --- --- --- 2,957
---------- -------- ------- ----- ----------

Total Plant, Property and Equipment........ $1,374,367 $111,978 $76,137 $(942) $1,409,266
========== ======== ======= ===== ==========

</TABLE>

The notes on page F-21 are an integral part of this schedule.

F-20
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

NOTES TO SCHEDULE V - PLANT, PROPERTY AND EQUIPMENT

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

(a) These additions include (1) the original cost (estimated if not
specifically determinable) of reused material, which is concurrently
credited to material and supplies, and (2) allowance for funds used during
construction. Transfers between Plant in Service, Plant Under Construction
and Other are also included in Additions at Cost.

(b) Items of plant, property and equipment are deducted from the property
accounts when retired or sold at the amounts at which they are included
therein, estimated if not specifically determinable.

(c) The Company's provision for depreciation is principally based on the
remaining life method and straight-line composite rates prescribed by
regulatory authorities. The remaining life method provides for the full
recovery of the remaining net investment in plant, property and equipment.
In 1992, the Company implemented changes in depreciation rates approved by
regulatory authorities. These changes reflect decreases in estimated
service lives of the Company's plant, property and equipment in service.
This ruling will allow a more rapid recovery of the Company's investment in
plant, property and equipment through closer alignment with current
estimates of its remaining economic useful life. For the years 1993, 1992,
and 1991, depreciation expressed as a percentage of average depreciable
plant was 8.4%, 8.5%, and 7.0%, respectively.

(d) See Note 1 of Notes to Financial Statements for the Company's depreciation
policies.

F-21
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

SCHEDULE VI - ACCUMULATED DEPRECIATION
For the Years Ended December 31, 1993, 1992, and 1991
(Dollars in Thousands)

- --------------------------------------------------------------------------------
Balance at Additions Other
Beginning Charged to Changes Balance at
Classification of Period Expense Retirements Note(a) End of Period
- ---------------- ---------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>

Year 1993....... $521,429 $107,658 $110,724 $ 69 $518,432

Year 1992....... $617,458 $110,258 $206,680 $ 393 $521,429

Year 1991....... $595,876 $ 96,503 $ 74,658 $(263) $617,458

</TABLE>

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

(a) Includes any gains or losses on disposition of plant, property and
equipment. These gains and losses are amortized to depreciation expense
over the remaining service lives of remaining net investment in plant,
property and equipment.

F-22
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

SCHEDULE VIII - VALUATION OF QUALIFYING ACCOUNTS
For the Years Ended December 31, 1993, 1992, and 1991
(Dollars in Thousands)

- ----------------------------------------------------------------------------------------------------------------
Additions
-------------------------
Balance at Charged Charged to
Beginning of to Other Accounts Deductions Balance at
Description Period Expenses Note(a) Note(b) End of Period
- --------------------------------------- ------------ -------- ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C>

Allowance for Uncollectible Accounts:

Year 1993............................ $7,074 $4,263 $ 6,943 $12,575 $5,705

Year 1992............................ $6,547 $5,474 $ 8,749 $13,696 $7,074

Year 1991............................ $2,165 $6,080 $12,775 $14,473 $6,547

</TABLE>

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

(a) (i) Amounts previously written off which were credited directly to this
account when recovered; and (ii) accruals charged to accounts payable for
anticipated uncollectible charges on purchases of accounts receivable from
others which were billed by the Company.

(b) Amounts written off as uncollectible.

F-23
<PAGE>

BELL ATLANTIC - WASHINGTON, D.C., INC.

SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the Years Ended December 31, 1993, 1992, and 1991
(Dollars in Thousands)

<TABLE>
<CAPTION>
Charged to Costs
Item and Expenses
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Year 1993
Maintenance and repairs..................................................................... $124,847
========
Other operating taxes:
Property.................................................................................. $ 4,335
Gross receipts............................................................................ 35,232
Other..................................................................................... 183
--------
Total other operating taxes................................................................. $ 39,750
========

Year 1992
Maintenance and repairs.................................................................... $117,185
========
Other operating taxes:
Property.................................................................................. $ 5,198
Gross receipts............................................................................ 34,581
Other..................................................................................... 3,109
--------
Total other operating taxes................................................................. $ 42,888
========

Year 1991
Maintenance and repairs..................................................................... $106,925
========
Other operating taxes:
Property.................................................................................. $ 5,251
Gross receipts............................................................................ 29,510
Other..................................................................................... 2,327
--------
Total other operating taxes................................................................. $ 37,088
========

</TABLE>

Advertising costs for 1993, 1992, and 1991 are not presented, as such amounts
are less than 1 percent of total operating revenues.

Amounts reported for 1992 and 1991 for maintenance and repairs have been revised
to include certain additional costs.

F-24
<PAGE>

EXHIBITS

FILED WITH ANNUAL REPORT FORM 10-K

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993

Bell Atlantic - Washington, D.C., Inc.

COMMISSION FILE NUMBER 1-7368
<PAGE>

Form 10-K for 1993
File No. 1-7368
Page 1 of 1

EXHIBIT INDEX

Exhibits identified in parentheses below, on file with the Securities and
Exchange Commission (SEC), are incorporated herein by reference as exhibits
hereto.

Exhibit Number (Referenced to Item 601 of Regulation S-K)
- ----------------------------------------------------------

3a Restated Certificate of Incorporation of the registrant, as
amended September 14, 1990. (Exhibit 3a to the registrant's Annual
Report on Form 10-K for the year ended December 31, 1990, File No. 1-7368.)

3a(i) Certificate of Amendment of the registrant's Certificate of
Incorporation, dated January 12, 1994 and filed January 13, 1994.

3b By-Laws of the registrant, as amended June 18, 1992. (Exhibit 3b to
the registrant's Annual Report on Form 10-K for the year ended
December 31, 1992, File No. 1-7368.)

4 No instrument which defines the rights of holders of long and
intermediate term debt of the registrant is filed herewith pursuant to
Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this regulation, the
registrant hereby agrees to furnish a copy of any such instrument to the
SEC upon request.

10a Agreement Concerning Contingent Liabilities, Tax Matters and
Termination of Certain Agreements among AT&T, Bell Atlantic Corporation,
and the Bell Atlantic Corporation telephone subsidiaries, and certain
other parties, dated as of November 1, 1983. (Exhibit 10a to Bell
Atlantic Corporation Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-8606.)

10b Agreement among Bell Atlantic Network Services, Inc. and the Bell Atlantic
Corporation telephone subsidiaries, dated November 7, 1983. (Exhibit 10b
to Bell Atlantic Corporation Annual Report on Form 10-K for the year
ended December 31, 1993, File No. 1-8606.)

23 Consent of Coopers & Lybrand.

24 Powers of attorney.

<PAGE>

Exhibit 3a(i)

CERTIFICATE OF AMENDMENT OF
THE CERTIFICATE OF INCORPORATION
OF
THE CHESAPEAKE AND POTOMAC TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW

* * * * *

WE, THE UNDERSIGNED, The Chesapeake and Potomac Telephone Company, being
respectively the President and the Secretary of The Chesapeake and Potomac
Telephone Company hereby certify:

1. The name of the corporation is The Chesapeake and Potomac Telephone
Company.

2. The Certificate of Incorporation of said corporation was filed by the
Department of State on the 2nd day of July, 1883.

3. (a) The Certification of Incorporation is amended to change the name
of the corporation.

(b) To effect the foregoing, Article One is amended to read as follows:

The name of the corporation is Bell Atlantic - Washington, D.C., Inc.

4. The amendment was authorized by the unanimous written consent of all
the shareholders, subsequent to a vote of the board of directors.

IN WITNESS WHEREOF, we have signed this certificate on the 12th day of
January, 1994 and we affirm the statements contained therein as true under
penalties of perjury.

The Chesapeake and Potomac Telephone Company

By: \s\ William M. Freeman
----------------------
William M. Freeman
President

By: \s\ Sherry F. Bellamy
---------------------
Sherry F. Bellamy
Vice President and Secretary

<PAGE>

Exhibit 23
Form 10-K for 1993
File No. 1-7368

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement
of Bell Atlantic - Washington, D.C., Inc. on Form S-3 (File No. 33-53234) of our
report dated February 7, 1994, which includes an explanatory paragraph stating
that the Company changed its method of accounting for income taxes and
postemployment benefits in 1993 and postretirement benefits other than pensions
in 1991, on our audits of the financial statements and financial statement
schedules of Bell Atlantic - Washington, D.C., Inc. as of December 31, 1993 and
December 31, 1992, and for each of the three years in the period ended December
31, 1993, which report is included in this Annual Report on Form 10-K.

/s/ COOPERS & LYBRAND

2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 29, 1994

<PAGE>

Exhibit 24
BA - DC 10K

POWER OF ATTORNEY

WHEREAS, Bell Atlantic - Washington, D.C., Inc., a New York corporation
(hereinafter referred to as the "Company"), will file with the Securities and
Exchange Commission on or before March 31, 1994, an annual report on Form 10-K
pursuant to provisions of the Securities Exchange Act of 1934, as amended, and
implementing regulations thereto; and

WHEREAS, the undersigned is an officer or director, or both, of the Company
as stated below;

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints
Sheila D. Shears and Sherry F. Bellamy, and each of them, as attorneys for the
purpose of executing and filing such annual report, and thereafter to execute
and file any amended annual report or supplements to such report, hereby
granting said attorneys full power to do all things necessary to be done as
fully to all intents and purposes as if the undersigned were personally present,
hereby ratifying and confirming all that said attorneys may or shall lawfully do
or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this power of
attorney on this 29th day of March, 1994.

/s/ Joseph T. Ambrozy
---------------------
Joseph T. Ambrozy
Director
<PAGE>

POWER OF ATTORNEY

WHEREAS, the undersigned is an officer or director, or both, of the Company
as stated below;

IN WITNESS WHEREOF, each of the undersigned has executed this power of
attorney on this 29th day of March, 1994.

/s/ Sherry F. Bellamy
---------------------
Sherry F. Bellamy
Vice President, General
Counsel and Secretary;
Director
<PAGE>

POWER OF ATTORNEY

WHEREAS, the undersigned is an officer or director, or both, of the Company
as stated below;

IN WITNESS WHEREOF, each of the undersigned has executed this power of
attorney on this 29th day of March, 1994.

/s/ Samuel L. Foggie
--------------------
Samuel L. Foggie
Director
<PAGE>

POWER OF ATTORNEY

WHEREAS, the undersigned is an officer or director, or both, of the Company
as stated below;

IN WITNESS WHEREOF, each of the undersigned has executed this power of
attorney on this 29th day of March, 1994.

/s/ William M. Freeman
----------------------
William M. Freeman
President and Director

<PAGE>

POWER OF ATTORNEY

WHEREAS, the undersigned is an officer or director, or both, of the Company
as stated below;

IN WITNESS WHEREOF, each of the undersigned has executed this power of
attorney on this 29th day of March, 1994.

/s/ Franklyn G. Jenifer
-----------------------
Franklyn G. Jenifer
Director
<PAGE>

POWER OF ATTORNEY

WHEREAS, the undersigned is an officer or director, or both, of the Company
as stated below;

IN WITNESS WHEREOF, each of the undersigned has executed this power of
attorney on this 29th day of March, 1994.

/s/ Eduardo Pena, Jr.
---------------------
Eduardo Pena, Jr.
Director