BELL ATLANTIC WEST VIRGINIA INC /, 10-K, 1994-03-31

BELL ATLANTIC WEST VIRGINIA INC /
10-K, 1994-03-31
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<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 1-7150

BELL ATLANTIC - WEST VIRGINIA, INC.

(Former Name: The Chesapeake and Potomac Telephone Company of West Virginia)

A West Virginia Corporation I.R.S. Employer Identification No. 54-0142020

1500 MacCorkle Avenue, S.E., Charleston, West Virginia 25314

Telephone Number (304) 343-9911

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

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 _____
-----
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BELL ATLANTIC - WEST VIRGINIA, 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 1/4% Debentures, due February 1, 2013 New York Stock
Exchange
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM NO. PAGE
-------- ----
<S> <C> <C>
PART I

1. Business .................................................... 1
2. Properties .................................................. 13
3. Legal Proceedings ........................................... 14
4. Submission of Matters to a Vote of Security Holders ......... 15

PART II

5. Market for Registrant's Common Equity and Related
Stockholder Matters ......................................... 15
6. Selected Financial Data ..................................... 15
7. Management's Discussion and Analysis of Results of Operations
(Abbreviated pursuant to General Instruction J(2))........... 16
8. Financial Statements and Supplementary Data ................. 21
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure .................................... 21

PART III

10. Directors and Executive Offices of the Registrant ........... 21
11. Executive Compensation ...................................... 21
12. Security Ownership of Certain Beneficial Owners and
Management .................................................. 21
13. Certain Relationships and Related Transactions .............. 21

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K .................................................... 21
</TABLE>

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

BELL ATLANTIC - WEST VIRGINIA, INC.

PART I

ITEM 1. BUSINESS

GENERAL

Bell Atlantic - West Virginia, Inc. (formerly The Chesapeake and Potomac
Telephone Company of West Virginia) (the "Company") is incorporated under the
laws of the State of West Virginia and has its principal offices at 1500
MacCorkle Avenue, S.E., Charleston, West Virginia 25314 (telephone number 304-
343-9911). 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 two complete Local
Access and Transport Areas ("LATAs") and part of a third LATA. These LATAs are
generally centered on a city or based on some other identifiable common
geography and, with certain limited exceptions, each 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 "Line of
Business Restrictions". The Company also provides exchange access service to
interexchange carriers which provide intrastate intraLATA long distance
telecommunications service. 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.

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 Services 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:

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BELL ATLANTIC - WEST VIRGINIA, INC.

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.

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 of the
Company were approximately $115 million in 1991, $110 million in 1992, and $100
million in 1993. The total investment of the Company in plant, property and
equipment decreased from approximately $1.51 billion at December 31, 1991 to

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BELL ATLANTIC - WEST VIRGINIA, INC.

approximately $1.46 billion at December 31, 1992, and increased to approximately
$1.52 billion at December 31, 1993, in each case after giving effect to
retirements, but before deducting accumulated depreciation at such date.

The Company is projecting construction expenditures for 1994 at approximately
$91 million. 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 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

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BELL ATLANTIC - WEST VIRGINIA, INC.

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
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,
including the Company, received more revenue from the pool than they billed
their interexchange carrier customers.

By an order adopted in 1987, the FCC changed its mandatory pooling
requirements. In accordance with these changes, which became effective April 1,
1989, the Company, together with the other Network Services Companies, withdrew
from the pool.

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

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BELL ATLANTIC - WEST VIRGINIA, INC.

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".

Under price cap regulation, the FCC set an authorized rate of return of 11.25%
for the years 1991 and beyond. To 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

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BELL ATLANTIC - WEST VIRGINIA, INC.

("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.

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.

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BELL ATLANTIC - WEST VIRGINIA, INC.

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.

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
parts 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.

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BELL ATLANTIC - WEST VIRGINIA, 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
Public Service Commission of West Virginia (the "PSC") with respect to
intrastate rates and services and other matters.

In April 1988, the PSC approved a stipulation among the Company, AT&T, MCI
Communications Corporation ("MCI"), Sprint, the PSC Staff and the Consumer
Advocate Division of the PSC which gave the Company flexibility in the pricing
of competitive services (e.g., intraLATA toll service, intraLATA "800" service,
intraLATA WATS service, billing and collection services and directory
advertising) and provided for a freeze on rates for basic local exchange
services through December 31, 1990 and a lifting, on January 1, 1989, of the
moratorium on intraLATA toll competition. This "Flexible Regulation Plan" was
subsequently extended through December 31, 1991. As part of the stipulation, the
Company invested in excess of $300 million dollars from 1988 through 1990 to
modernize West Virginia's telecommunications infrastructure.

In March 1990, the West Virginia legislature enacted legislation, which became
effective on January 1, 1991, requiring the PSC to cease its regulation of the
rates charged by a telephone utility for any service that the PSC finds to be
subject to workable competition, unless the PSC finds that to do so would
adversely affect the continued availability of adequate, economical and reliable
local telephone service.

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BELL ATLANTIC - WEST VIRGINIA, INC.

separations procedures and accounting rules. The stipulation also provides for
the phased elimination of Locality Rate Area charges, which are basic service
charges paid by customers who are located farthest from the central office.
Under the PSC's December 1991 order, the freeze on rates for basic service and
the phase out of Locality Rate Area charges will end on December 31, 1994
instead of the July 1, 1996 date set forth in the stipulation.

In January 1989, AT&T, MCI and Sprint filed petitions with the PSC to require
the Company to reduce intrastate access charges by $3 million annually. On June
29, 1993, the PSC approved a settlement agreement in which the parties agreed
that access charges would be reduced by $1.5 million annually, that the
interexchange carriers would not seek additional reductions until the year 2000
and that the Company would not seek additional increases until the year 2000.

NEW PRODUCTS AND SERVICES

Bell Atlantic(R) IQ(SM) Services

All of the Network Services Companies, including the Company, have introduced
the Bell Atlantic(R) IQ(SM) Services family of calling features (although not
all features are available in all states). These features include Identa
------
Ring(SM), which allows a single line to have multiple telephone numbers, each
- ----
with a distinctive ring; Repeat Call, which allows customers automatically to
-----------
redial busy phone numbers; Return Call, which allows customers automatically to
-----------
return the last incoming call, even without knowing the number; Ultra
-----
Forward(SM), which customers can use to program call-forwarding instructions;
- -------
Home Intercom, which allows for phone-to-phone dialing within the home; and
- -------------
Caller ID service, which displays the number of the calling party.
- ---------

Data Services

The Network Services Companies, including the Company, have introduced several
high speed data transmission services. In 1993, Switched Multi-Megabit Data
---------------------------
Service, a high-speed public, packet-switched data transmission service, was
- -------
available under tariff from the Company.

Information Services

The Company offers various types of information services, such as message
storage services, voice mail and electronic mail, including Answer Call, a
-----------
telephone answering service aimed at residential and small business customers.

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.

9
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

The ability of 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.

The largest long-distance carrier is also positioning itself 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 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.

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.

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" (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.

10
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

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. In West Virginia, the
intercom portion of Centrex service has been detariffed. This enables the
Company to charge rates for these services which offset the effects of such
higher Subscriber Line Charges.

IntraLATA Toll Competition

The ability of interexchange carriers to engage in the provision of intrastate
intraLATA toll service in competition with the Company is subject to state
regulation. Such competition is permitted in West Virginia.

Directories

The Network Services Companies, including the Company, continue to face
significant competition from other providers of directories as well as
competition from other advertising media.

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

11
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

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 3,200 persons,
including employees of the centralized staff at NSI. This represents
approximately a 6% increase 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 89% 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.

12
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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 .................... 48%
Central office equipment ............ 36
Land and buildings .................. 8
Telephone instruments and
related equipment .................. 1
Other ............................... 7
---
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:

<TABLE>
<CAPTION>
1993 1992
--------------------------- ---------------------------
# OF LOCAL % OF SUBSCRIBER # OF LOCAL % OF SUBSCRIBER
EXCHANGES LINES SERVED EXCHANGES LINES SERVED
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>

Digital.. 214 98.1 205 94.1
Analog... 1 - 7 3.0
Other.... 7 1.9 8 2.9
---- ---- --- ----
222 100 220 100
==== ==== === ====
</TABLE>

13
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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 0.6%.

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.

14
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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).)

15
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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 the Financial Statements included in the index set forth on page
F-1.

RESULTS OF OPERATIONS

Net income for 1993 decreased $5,079,000, or 7.0% from the same period last
year. Results for 1993 reflect an after-tax charge of $7,397,000 for the
adoption of Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" (Statement No. 112), and an
extraordinary charge, net of tax, of $1,456,000 for the early extinguishment of
debt. Results for 1992 included a $1,948,000 extraordinary charge, net of tax,
for the early extinguishment of debt.

OPERATING REVENUES

Operating revenues increased $10,371,000 or 1.8% for 1993. The increase in
total operating revenues was comprised of the following:

<TABLE>
<CAPTION>
Increase/(Decrease)
(Dollars in Thousands)
------------------------
<S> <C>
Local service.................................. $ 6,731
Network access................................. 4,319
Toll service................................... (3,100)
Directory advertising, billing
services and other............................ 1,839
Less: Provision for uncollectibles............ (582)
-------
$10,371
=======
</TABLE>

Local service revenues are earned from the provision of local exchange, local
private line, and public telephone services. Local service revenues increased
$6,731,000 or 2.4% in 1993. The increase resulted primarily from growth in
network access lines and higher demand for value-added central office services
such as Custom Calling and Caller ID. The growth in access lines in service was
approximately 17,000 lines or a 2.5% increase in 1993.

Network access revenues are received from interexchange carriers (IXCs) for
their use of the Company's local exchange facilities in providing 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 increased $4,319,000 or 2.7% in 1993, primarily due to
a 9.1% increase in access minutes of use. Also contributing to this increase
were higher end-user revenues, principally due to growth in network access
lines. These increases were partially offset by 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
price cap sharing liabilities. The effect of intrastate rate reductions, which
became effective in August 1993, further offset the growth-related revenue
increases.

Toll service revenues are earned from interexchange usage services such as
Message Toll Services (MTS), Unidirectional Services (Wide Area
Telecommunications Services (WATS) and 800 Services), and private line services.
Toll service revenues decreased $3,100,000 or 3.8% in 1993 due to a 3.9%
decrease in toll message volume and from declines in revenues from WATS and
private line services, principally due to competitive pressures.

Directory advertising, billing services and other revenues include amounts
earned from directory advertising, billing and collection services provided to
IXCs, premises services such as inside wire installation and maintenance, rent

16
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

of Company facilities by affilites and non-affiliates, and certain nonregulated
enhanced network services.

Directory advertising, billing services and other revenues increased
$1,839,000 or 3.7% in 1993. This increase was primarily the result of higher
directory advertising revenues and an increase in rent revenues. Partially
offsetting these increases was a decrease in billing and collection revenues
primarily as a result reductions in services provided under long-term contracts
with certain IXCs.

The provision for uncollectibles, expressed as a percentage of total revenues,
was .6% in 1993 and .7% in 1992. The decrease reflects favorable collection
experience.

OPERATING EXPENSES

Operating expenses decreased $1,253,000 or .3% in 1993. The decrease in total
operating expenses was comprised of the following:

<TABLE>
<CAPTION>
Increase/(Decrease)
(Dollars in Thousands)
----------------------
<S> <C>
Employee costs ...................... $ (542)
Depreciation and amortization ....... 4,274
Taxes other than income ............. 1,793
Other ............................... (6,778)
-------
$(1,253)
=======
</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), who provide
centralized services on a contract basis, are allocated to the Company and are
included in other operating expenses. Employee costs decreased $542,000 or .4%
in 1993. Savings resulting from workforce reduction programs implemented in
1992 were partially offset by higher employee costs from salary and wage
increases and overtime in 1993.

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 increased $4,274,000 or 3.8% in 1993 due
primarily to additional expense resulting from interstate depreciation rate
changes, which became effective in 1993. Also contributing to the increase was
growth in the level of depreciable plant in 1993.

Taxes other than income increased $1,793,000 or 6.9% in 1993, primarily due to
an increase in gross receipts tax resulting from an increase in operating
revenues and an increase in property taxes, due to higher property assessments.

Other operating expenses consist primarily of contracted services including
centralized service expenses allocated from NSI, rent, network software costs
and other general administrative expenses. Other operating expenses decreased
$6,778,000 or 4.3% in 1993, principally due to decreases in rent and network
software costs. These decreases were partially offset by higher costs for
contracted services as a result of higher employee costs and taxes allocated
from NSI.

OPERATING INCOME TAXES

The provision for income taxes increased $8,190,000 or 19.1% in 1993. The
Company's effective income tax rate was 39.7% in 1993 compared to 37.3% in 1992.
The increase in the 1993 effective tax rate is principally the result of federal
tax legislation enacted in 1993, which increased the federal corporate tax rate
from 34% to 35%, and the effect of recording in 1992 an adjustment to deferred
taxes associated with the retirement of certain plant investment. A

17
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

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.

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 $173,000 in the first quarter of 1993 (see Note 5 of Notes
to Financial Statements).

OTHER INCOME AND EXPENSE

Other income, net of expense, decreased $3,686,000 in 1993, primarily 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.

INTEREST EXPENSE

Interest expense decreased $2,078,000 or 9.3% in 1993, principally due to
long-term debt refinancings in 1993 and 1992.

EXTRAORDINARY ITEM

The Company called $50,000,000 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 $1,456,000 in 1993. This
debt refinancing will reduce interest costs on the refinanced debt by
approximately $1,500,000 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
$7,397,000 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, the Company has achieved
alternative regulation, which gives the Company pricing flexibility for its
competitive services.

18
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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
Public Service Commission of West Virginia (PSC) with respect to intrastate
rates and services and other matters.

In April 1988, the PSC approved a stipulation among the Company, AT&T, MCI
Communications Corporation (MCI), Sprint Communications Company, L.P. (Sprint),
the PSC Staff and the Consumer Advocate Division of the PSC which gave the
Company flexibility in the pricing of competitive services (e.g., intraLATA toll
service, intraLATA "800" service, intraLATA WATS service, billing and collection
services and directory advertising) and provided for a freeze on rates for basic
local exchange services through December 31, 1990 and a lifting, on January 1,
1989, of the moratorium on intraLATA toll competition. This "Flexible Regulation
Plan" was subsequently extended through December 31, 1991. As part of the
stipulation, the Company invested in excess of $300 million dollars from 1988
through 1990 to modernize West Virginia's telecommunications infrastructure.

19
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

to be subject to workable competition, unless the PSC finds that to do so would
adversely affect the continued availability of adequate, economical and reliable
local telephone service.

In December 1991, the PSC approved, with some modifications, a stipulation
signed by the Company, the Consumer Advocate Division of the PSC, the PSC Staff
and AT&T which set forth a new "Incentive Regulation Plan". The Incentive
Regulation Plan continues the major provisions of the Flexible Regulation Plan,
including pricing flexibility for competitive services and a freeze on the rates
for basic local exchange service. It also committed the Company to invest an
additional $450 million from 1991 through 1995 in West Virginia's
telecommunications infrastructure. The Incentive Regulation Plan permitted the
Company to increase operator directory assistance and Call Waiting charges,
provides the Company some flexibility in setting depreciation rates and allows
the Company to petition for a surcharge to reflect changes in federally mandated
separations procedures and accounting rules. The stipulation also provides for
the phased elimination of Locality Rate Area charges, which are basic service
charges paid by customers who are located farthest from the central office.
Under the PSC's December 1991 order, the freeze on rates for basic service and
the phase out of Locality Rate Area charges will end on December 31, 1994
instead of the July 1, 1996 date set forth in the stipulation.

FINANCIAL CONDITION

Management believes that the Company has adequate internal and external
resources available to meet ongoing operating 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 $191,498,000 for the year ended December 31, 1993.

The primary use of capital resources continued to be capital expenditures.
The Company invested $99,701,000 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.

The Company's debt ratio was 42.3% as of December 31, 1993 compared to 42.1%
at December 31, 1992.

On May 19, 1993, the Company sold $50,000,000 of Ten Year 6.05% Debentures
through a public offering. The debentures are not redeemable prior to maturity.
The net proceeds from this issuance were used on June 7, 1993 to redeem
$50,000,000 of Forty Year 9.0% Debentures. This refinancing will reduce annual
interest costs on the refinanced debt by approximately $1,500,000.

As of December 31, 1993, the Company had $50,000,000 outstanding under a shelf
registration statement filed with the Securities and Exchange Commission.

20
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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)).

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as a 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
Securities and Exchange Commission (SEC), are incorporated
herein by reference as exhibits hereto.

21
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

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

3a Certificate of Incorporation of the registrant as amended July 30,
1975 (Exhibit 3a to the registrant's Annual Report on Form 10-K
for the year ended December 31, 1985, File No. 1-7150).

3a(i) Articles of Amendment dated August 29, 1990 (Exhibit
3a(1) to the registrant's Annual Report on Form 10-K for
the year ended December 31, 1990, File No. 1-7150).

3a(ii) Articles of Incorporation Profit Amendment, dated January
6, 1994 and filed January 13, 1994.

3b By-Laws of the registrant, as amended October 27, 1992. (Exhibit
3(b) to the registrant's Annual Report on Form 10-K for the year
ended December 31, 1992, File No. 1-7150).

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, the Bell Atlantic Corporation telephone subsidiaries,
and certain other parties, dated as of November 1, 1993. (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.

22
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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 - WEST VIRGINIA, INC.

By /s/ Ritchie A. Ireland, II
--------------------------------
Ritchie A. Ireland, II
Vice President-External
Affairs and Finance

March 29, 1994

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

___
Principal Executive Officer: )
)
Dave E. Lowe President and )
Chief Executive )
Officer )
)
Principal Financial Officer: )
)
Ritchie A. Ireland, II Vice President- )
External Affairs )
and Finance )
) /s/ Ritchie A. Ireland, II
) --------------------------
Directors: ) Ritchie A. Ireland, II
Neil S. Bucklew ) (individually and as
William C. Campbell ) attorney-in-fact)
David K. Hall ) March 29, 1994
Russell L. Isaacs )
Wilbur S. Jones, Jr. )
Brian J. Kelly )
David E. Lowe )
Dan R. Moore )
Lacy I. Rice, Jr. )
Susan S. Ross )
____)

23
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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 - WEST VIRGINIA, INC.

REPORT OF INDEPENDENT ACCOUNTANTS

To The Board of Directors and Shareowner of
Bell Atlantic - West Virginia, Inc.

We have audited the financial statements and the financial statement
schedules of Bell Atlantic - West Virginia, 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 - West
Virginia, 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 the 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 - WEST VIRGINIA, INC.

STATEMENTS OF INCOME AND REINVESTED EARNINGS
FOR THE YEARS ENDED DECEMBER 31
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

1993 1992 1991
-------- --------- ---------
OPERATING REVENUES
<S> <C> <C> <C>
Local service........................... $281,862 $275,131 $264,128
Network access.......................... 163,030 158,711 153,365
Toll service............................ 77,728 80,828 89,736
Directory advertising, billing
services and other (including $4,967,
$5,050, and $4,811 from affiliates).... 51,885 50,046 46,340
Provision for uncollectibles............ (3,518) (4,100) (3,939)
-------- -------- --------
570,987 560,616 549,630
-------- -------- --------

OPERATING EXPENSES
Employee costs, including benefits
and taxes.............................. 127,736 128,278 124,398
Depreciation and amortization........... 116,164 111,890 106,964
Taxes other than income................. 27,861 26,068 26,707
Other (including $94,945, $90,873,
and $90,021 to affiliates)............. 151,267 158,045 162,058
-------- -------- --------
423,028 424,281 420,127
-------- -------- --------

NET OPERATING REVENUES................... 147,959 136,335 129,503
-------- -------- --------

OPERATING INCOME TAXES
Federal................................. 35,727 26,919 25,839
State................................... 15,324 15,942 12,210
-------- -------- --------
51,051 42,861 38,049
-------- -------- --------

OPERATING INCOME......................... 96,908 93,474 91,454
-------- -------- --------

OTHER INCOME (EXPENSE)
Allowance for funds used during
construction........................... 544 849 778
Miscellaneous - net..................... (704) 2,677 (607)
-------- -------- --------
(160) 3,526 171
-------- -------- --------

INTEREST EXPENSE (including $829,
$1,113, and $1,931 to affiliate)....... 20,306 22,384 23,354
-------- -------- --------

INCOME BEFORE EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES................... 76,442 74,616 68,271
EXTRAORDINARY ITEM
Early Extinguishment of Debt,
Net of Tax............................. (1,456) (1,948) ---
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES
Postemployment Benefits, Net of Tax.... (7,397) --- ---
Postretirement Benefits Other Than
Pensions, Net of Tax.................. --- --- (69,964)
-------- -------- --------

NET INCOME (LOSS)........................ $ 67,589 $ 72,668 $ (1,693)
======== ======== ========

REINVESTED EARNINGS
At beginning of year.................... $ 47,769 $ 37,875 $108,268
Add: net income (loss)................. 67,589 72,668 (1,693)
-------- -------- --------
115,358 110,543 106,575
Deduct: dividends...................... 73,150 62,750 68,700
other changes.................. 375 24 ---
-------- -------- --------
At end of year.......................... $ 41,833 $ 47,769 $ 37,875
======== ======== ========
</TABLE>

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

F-3
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1992
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash.......................................... $ 6,730 $ ---
Accounts receivable:
Customers and agents, net of allowances for
uncollectibles of $3,077 and $3,452......... 63,925 70,802
Affiliates................................... 15,166 9,585
Other........................................ 2,848 3,294
Material and supplies......................... 2,836 2,986
Prepaid expenses.............................. 11,605 13,711
Deferred income taxes......................... 680 7,477
Other......................................... 1,101 1,101
---------- ----------
104,891 108,956
---------- ----------

PLANT, PROPERTY AND EQUIPMENT
In service.................................... 1,492,560 1,434,496
Under construction and other.................. 25,794 28,508
---------- ----------
1,518,354 1,463,004
Less accumulated depreciation................. 577,344 508,125
---------- ----------
941,010 954,879
---------- ----------

OTHER ASSETS................................... 50,789 23,698
---------- ----------

TOTAL ASSETS................................... $1,096,690 $1,087,533
========== ==========
</TABLE>

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

F-4
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
---------- ----------
<S> <C> <C>
LIABILITIES AND SHAREOWNER'S INVESTMENT
CURRENT LIABILITIES
Debt maturing within one year:
Affiliate.............................. $ 20,387 $ 22,175
Other.................................. 55 500
Accounts payable:
Affiliates............................. 35,466 29,388
Other.................................. 30,379 53,994
Accrued expenses:
Vacation pay........................... 10,161 9,390
Interest............................... 5,012 5,243
Taxes.................................. 9,687 10,430
Other.................................. 11,770 17,252
Advance billings and customer deposits.. 13,956 14,176
---------- ----------
136,873 162,548
---------- ----------

LONG-TERM DEBT........................... 263,679 264,213
---------- ----------

EMPLOYEE BENEFIT OBLIGATIONS............. 128,866 110,278
---------- ----------

DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes................... 88,064 104,844
Unamortized investment tax credits...... 24,100 28,685
Other................................... 67,136 23,057
---------- ----------
179,300 156,586
---------- ----------

COMMITMENTS (Note 3)

SHAREOWNER'S INVESTMENT
Common stock - one share, without
par value, owned by parent............. 340,482 340,482
Contributed capital..................... 5,657 5,657
Reinvested earnings..................... 41,833 47,769
---------- ----------
387,972 393,908
---------- ----------

TOTAL LIABILITIES AND SHAREOWNER'S
INVESTMENT.............................. $1,096,690 $1,087,533
========== ==========
</TABLE>

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

F-5
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(DOLLARS IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................ $ 67,589 $ 72,668 $ (1,693)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization................. 116,164 111,890 106,964
Extraordinary item related to early
extinguishment of debt, net of tax benefit.. 1,456 1,948 ---
Cumulative effect of changes in accounting
principles.................................. 7,397 --- 69,964
Allowance for funds used during construction.. (544) (849) (778)
Other items, net.............................. (304) 44 60
Changes in certain assets and liabilities:
Accounts receivable........................ 1,742 (13,164) 6,760
Material and supplies...................... (270) (66) 3,265
Other assets............................... 16,817 (5,211) (3,826)
Accounts payable and accrued taxes......... (12,941) 24,988 19,342
Deferred income taxes, net................. (3,511) (3,782) (1,007)
Unamortized investment tax credits......... (4,585) (4,785) (6,046)
Employee benefit obligations............... 6,899 873 36
Other liabilities.......................... (4,411) (406) 910
--------- --------- ---------

Net cash provided by operating activities........ 191,498 184,148 193,951
--------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to plant, property and equipment....... (99,701) (109,036) (113,634)
Other plant-related changes...................... (1,630) (3,022) (4,220)
--------- --------- ---------

Net cash used in investing activities............ (101,331) (112,058) (117,854)
--------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings......................... 49,250 49,640 ---
Principal repayments of
capital lease obligations....................... (500) (532) (205)
Early extinguishment of debt and related
call premium.................................... (52,185) (52,515) ---
Net change in note payable to affiliate.......... (1,788) (11,145) 1,374
Dividends paid................................... (73,150) (62,750) (68,700)
Net change in outstanding checks drawn on
controlled disbursement accounts................ (5,064) 4,861 (8,215)
--------- --------- ---------

Net cash used in financing activities............ (83,437) (72,441) (75,746)
--------- --------- ---------

NET CHANGE IN CASH............................... 6,730 (351) 351

CASH, BEGINNING OF YEAR.......................... --- 351 ---
--------- --------- ---------

CASH, END OF YEAR................................ $ 6,730 $ --- $ 351
========= ======== =========
</TABLE>

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

F-6
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

Bell Atlantic - West Virginia, Inc. (formerly The Chesapeake and Potomac
Telephone Company of West Virginia (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, 1 to 11 years; telephone
instruments and related equipment, 8 to 9 years; poles, 15 years; cable and
wiring, 6 to 16 years; conduit, 36 years; office equipment and furniture, 5 to 9
years; vehicles and other work equipment, 3 to 9 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 - WEST VIRGINIA, 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 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 benefit pension 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 Pen-sions," 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 the 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 - WEST VIRGINIA, 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 Company
did not fully provide deferred income taxes on certain timing differences when
regulators permitted only income taxes actually paid to be recognized currently
as a cost of service.

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:

<TABLE>
<CAPTION>
1993 1992
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>

Forty year 5%, due 2000................... $ 25,000 $ 25,000
Ten year 6.05%, due 2003.................. 50,000 ---
Twelve year 7%, due 2004.................. 50,000 50,000
Forty year 7 1/4%, due 2009............... 40,000 40,000
Forty year 7 1/4%, due 2013............... 50,000 50,000
Forty year 9%, due 2015................... --- 50,000
Forty year 8.4%, due 2029................. 50,000 50,000
-------- --------
265,000 265,000

Unamortized discount and premium, net..... (1,437) (958)
Capital lease obligations - average rate
11.7% and 6.6%.......................... 171 671
-------- --------
Total long-term debt, including
current maturities...................... 263,734 264,713
Less maturing within one year............. 55 500
-------- --------
Total long-term debt...................... $263,679 $264,213
======== ========
</TABLE>

Long-term debt outstanding at December 31, 1993 includes $115,000,000 that
is callable by the Company. The call prices of these debentures range from
102.8% to 100.3% of face value, depending on the remaining term to maturity of
the issue. In addition, long-term debt includes $50,000,000 which will become
redeemable only on October 15, 1996 at the option of the holders. The
redemption price will be 100.0% of face value plus accrued interest.

On May 19, 1993, the Company sold $50,000,000 of Ten Year 6.05% Debentures,
due May 15, 2003, through a public offering. These debentures are not
redeemable by the Company prior to maturity. The net proceeds of this issuance
were used to refinance $50,000,000 of Forty Year 9% Debentures due May 15, 2015,
which were redeemed by the Company on June 7, 1993 at a call price equal to
104.37% of the face value of the issue, plus accrued interest from May 15, 1993.
As a result of the early extinguish-ment of this debt, the Company recorded a
charge of $2,425,000 before an income tax benefit of $969,000.

F-9
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

In 1992, the Company recorded an extraordinary charge associated with the
early extinguishment of debentures called by the Company of $3,246,000, before
an income tax benefit of $1,298,000.

At December 31, 1993, the Company had $50,000,000 outstanding under a shelf
registration statement filed with the Securities and Exchange Commission.

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 $277,000,000 and
$262,000,000, respectively.

MATURING WITHIN ONE YEAR

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

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
INTEREST RATES**
------------------
1993 1992 1991 1993 1992 1991
-------- -------- -------- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>

Note payable to affiliate.. $20,387 $22,175 $33,320 3.3% 3.7% 5.0%
=== === ===
Capital lease obligations... 55 500 166
------- ------- -------
Total....................... $20,442 $22,675 $33,486
======= ======= =======
Average amount of the note
payable outstanding during
the year*.................. $26,135 $29,287 $31,754 3.2% 3.8% 6.1%
=== === ===
Maximum amount of the note
payable at any month-end
during the year............ $35,877 $49,100 $45,300
</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
$49,200,000 with an affiliate, Bell Atlantic Network Funding Corporation (BANFC)
(Note 7).

At December 31, 1993 and 1992, the carrying amount of debt maturing within
one year, excluding capital lease obligations, approximates fair value.

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 $1,737,000 and $1,749,000 and related accumulated amortization
of $1,561,000 and $1,063,000 at December 31, 1993 and 1992, respectively. The
Company incurred no initial capital lease obligations in 1993, as compared to
$860,000 in 1992, and $47,000 in 1991.

Total rent expense amounted to $23,207,000 in 1993, $26,257,000 in 1992, and
$27,081,000 in 1991. Of these amounts, the Company incurred rent expense of
$10,332,000, $10,531,000, and $10,579,000 in 1993, 1992, and 1991, respectively,
from affiliated companies.

F-10
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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....................... $ 65 $ 2,258
1995....................... 57 2,068
1996....................... 10 1,729
1997....................... -- 1,570
1998....................... -- 1,271
Thereafter................. -- 4,145
---- -------
Total...................... 132 $13,041
=======

Plus salvage value, net
of imputed interest....... 39
----
Present value of net
minimum lease payments.... 171
Less current installments.. 55
----
Long-term obligation at
December 31, 1993......... $116
====
</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.................. $3,886 $6,793 $4,697
====== ====== ======

Pension cost as a percentage
of salaries and wages......... 4.2% 5.9% 4.1%
====== ====== ======
</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 $3,106,000 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
losses 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 $3,231,000 reduction in pension cost (which reduced operating
expense by $2,746,000 after capitalization of amounts related to the
construction program) and partially offset the 1992 cost increase.

F-11
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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 cost 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 Pensions," (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 costs
(transition obligation), in the amount of $69,964,000, net of a deferred income
tax benefit of $46,822,000.

For purposes of measuring the interstate rate of return achieved by the
Company, the 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 the purposes of measuring intrastate rate of return, the Company
recognizes the accrued postretirement benefit cost, including amortization of
the transition obligation, in accordance with the prescribed method in Statement
No. 106. This method is subject to authoritative approval by the Board of
Regulatory Commissioners.

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.

Substantially all of the Company's management and associate employees are
covered under multi-employer 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

F-12
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

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 for 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. and foreign
government and corporate debt securities.

The aggregate postretirement benefit cost for the year ended December 31,
1993, 1992, and 1991 was $11,396,000, $16,065,000, and $9,357,000 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 the net periodic postretirement benefit cost, and a
reconciliation of the funded status of the plans with the 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 for 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 the plans maintained for its management
employees. Expectations with respect to future amendments to the Company's
postretirement plans have been reflected in determining the Company's
postretirement benefit costs 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 $7,397,000, net of a deferred income tax benefit of
$4,919,000. The adoption of Statement No. 112 did not have a significant effect
on the Company's ongoing level of operating expense in 1993.

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.

F-13
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

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 $173,000, 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 Regulations"
(Statement No. 71). At January 1, 1993, the Company recorded income tax-related
regulatory assets totaling $43,899,000 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 $48,460,000 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 decreases 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 $32,938,000 and $37,800,000 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
charge to the tax provision of $212,000, which included a $1,202,000 charge for
the nine month effect of the 1% rate increase, largely offset by a one-time net
benefit of $990,000 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
the deferred tax balances was primarily deferred through the establishment of
regulatory assets of $1,483,000 and the reduction of regulatory liabilities of
$4,379,000. 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 - WEST VIRGINIA, INC.

The components of operating income tax expense are as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1993 1992 1991
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal............... $46,465 $40,124 $35,531
State................. 12,682 11,304 9,571
------- ------- -------
59,147 51,428 45,102
------- ------- -------
Deferred:
Federal............... (6,153) (8,420) (3,646)
State................. 2,642 4,638 2,639
------- ------- -------
(3,511) (3,782) (1,007)
------- ------- -------
55,636 47,646 44,095
Investment tax credits...... (4,585) (4,785) (6,046)
------- ------- -------

Total....................... $51,051 $42,861 $38,049
======= ======= =======
</TABLE>

Income tax expense (benefit) which relate to non-operating income and
expense included in Miscellaneous-net was $(694,000), $1,453,000 and $(337,000),
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:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1992 1991
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>

Accelerated depreciation.. $ 2,484 $ (666)
Employee benefits......... (4,299) (1,340)
Other, net................ (1,967) 999
------- -------
Total..................... $(3,782) $(1,007)
======= =======
</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:

<TABLE>
<CAPTION>
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................... (2.6) (3.6) (4.0)
State income taxes, net of federal
income tax benefits..................... 6.2 6.8 7.6
Benefit of rate differential applied
to reversing timing differences......... .5 (2.3) (3.3)
Reversal of previously capitalized
interest, taxes and payroll-related
construction costs...................... 1.7 1.9 1.8
Prior year tax adjustment............. (1.4) (.2) (2.0)
Other, net............................ .3 .7 1.5
---- ---- ----
Effective income tax rate............. 39.7% 37.3% 35.6%
==== ==== ====
</TABLE>

F-15
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

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............ $ --- $183,700
Employee benefits....... 67,500 ---
Investment tax credits.. 16,600 ---
Advance payments........ 200 ---
Other................... 17,200 5,200
-------- --------
Total................... $101,500 $188,900
======== ========
</TABLE>

Total deferred tax assets include approximately $55,000,000 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............................... $20,311 $23,015 $22,989
Income taxes paid.......................... $58,589 $49,836 $44,487

Additional Financial Information:
Interest expense:
Interest on long-term debt............. $19,407 $21,031 $21,199
Interest on note payable to affiliate.. 829 1,113 1,931
Other.................................. 70 240 224
------- ------- -------
Total interest expense................... $20,306 $22,384 $23,354
======= ======= =======
</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 $79,506,000, $85,436,000,
and $87,437,000, respectively. At December 31, 1993 and 1992, Accounts
receivable, net, included $6,504,000 and $6,664,000, 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, $4,891,000 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 $84,061,000,
$80,342,000, and $79,442,000 in operating expenses for the years ended December
31, 1993, 1992, and 1991, respectively. Included in these expenses were
$6,982,000 in 1993, $9,301,000 in 1992, and $7,601,000 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 $2,086,000, associated with NSI's adoption of
Statement No. 106. In addition, in 1991, the Company recognized a charge of
$21,089,000 representing the Company's proportionate share of NSI's accrued
transition obligation under Statement No. 106.

F-16
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

In connection with the adoption of Statement No. 112 in 1993, the cumulative
effect included $377,000, net of a deferred income tax benefit of $251,000,
representing the Company's proportionate share of NSI's accrued cost of
postemployment benefits at January 1, 1993.

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 of their behalf. In connection with this arrangement, the
Company recognized interest expense of $829,000, $1,113,000, and $1,931,000 in
1993, 1992, and 1991, respectively, and $28,000 and $42,000 in interest income
in 1993 and 1992, respectively.

In 1993, the Company received $4,967,000 in revenue from affiliates
principally, related to rent received for use of Company facilities and
equipment, and paid $10,884,000 in other operating expenses to affiliated
companies. These amounts were $5,050,000 and $10,531,000, respectively, in 1992
and $4,811,000 and $10,579,000, respectively in 1991.

On February 1, 1994, the Company declared and paid a dividend in the amount
of $17,140,000 to Bell Atlantic.

8. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
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 .................. $141,267 $ 36,136 $17,900 $10,503
June 30 ................... 142,949 38,170 19,976 18,520
September 30 .............. 144,900 38,993 21,062 21,062
December 31 ............... 141,871 34,660 17,504 17,504
-------- -------- ------- --------
Total .................. $570,987 $147,959 $76,442 $67,589
======== ======== ======= ========

1992:
March 31 .................. $137,964 $ 37,730 $21,561 $21,561
June 30 ................... 143,424 37,578 19,424 19,424
September 30 .............. 140,350 35,044 18,631 16,683
December 31 ............... 138,878 25,983 15,000 15,000
-------- -------- ------- --------
Total .................. $560,616 $136,335 $74,616 $72,668
======== ======== ======= ========
</TABLE>

Net income for the first quarter of 1993 has been restated to include a
charge of $7,397,000, net of a deferred income tax benefit of $4,919,000,
related to the adoption of Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits" (Note 4).

F-17
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

SCHEDULE V - PLANT, PROPERTY AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)

Land......................................... $ 6,012 $ (18) $ 54 $ --- $ 5,940
Buildings.................................... 105,368 5,719 461 --- 110,626
Central Office Equipment..................... 522,007 55,415 25,201 --- 552,221
Telephone Instruments and Related Equipment.. 16,008 1,597 (612) --- 18,217
Poles........................................ 100,517 4,301 1,801 --- 103,017
Cable and Wiring............................. 566,684 27,222 10,467 --- 583,439
Conduit...................................... 37,823 2,258 45 --- 40,036
Office Equipment and Furniture............... 39,120 2,069 3,903 --- 37,286
Vehicles and Other Work Equipment............ 34,091 3,633 3,218 --- 34,506
Other........................................ 6,866 479 73 --- 7,272
---------- -------- ------- ------- ----------
Total in Service (c)....................... 1,434,496 102,675 44,611 --- 1,492,560

Plant Under Construction..................... 28,044 (2,715) --- --- 25,329
Other........................................ 464 1 --- --- 465
---------- -------- ------- ------- ----------

Total Plant, Property and Equipment........ $1,463,004 $ 99,961 $44,611 $ --- $1,518,354
========== ======== ======= ======= ==========
</TABLE>

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

F-18
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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......................................... $ 6,009 $ 3 $ --- $ --- $ 6,012
Buildings.................................... 102,334 3,915 881 --- 105,368
Central Office Equipment..................... 506,765 51,704 36,462 --- 522,007
Telephone Instruments and Related Equipment.. 18,935 1,487 4,414 --- 16,008
Poles........................................ 97,519 4,702 1,704 --- 100,517
Cable and Wiring............................. 649,133 25,800 108,249 --- 566,684
Conduit...................................... 36,641 1,299 117 --- 37,823
Office Equipment and Furniture............... 34,395 6,082 1,357 --- 39,120
Vehicles and Other Work Equipment............ 32,386 2,749 1,044 --- 34,091
Other........................................ 5,409 1,578 121 --- 6,866
---------- -------- -------- ------- ----------
Total in Service (c)....................... 1,489,526 99,319 154,349 --- 1,434,496

Plant Under Construction..................... 16,570 11,474 --- --- 28,044
Other........................................ 464 --- --- --- 464
---------- -------- -------- ------- ----------

Total Plant, Property and Equipment........ $1,506,560 $110,793 $154,349 $ --- $1,463,004
========== ======== ======== ======= ==========
</TABLE>

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

F-19
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

SCHEDULE V - PLANT, PROPERTY AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(DOLLARS IN THOUSANDS)

- ----------------------------------------------------------------------------------------------------------------
BALANCE AT ADDITIONS OTHER
BEGINNING AT COST RETIREMENTS CHANGES BALANCE AT
CLASSIFICATION OF PERIOD NOTE (a) NOTE (b) NOTE (d) END OF PERIOD
- -------------- -------------- ---------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C>

Land......................................... $ 6,012 $ (3) $ --- $ --- $ 6,009
Buildings.................................... 98,268 5,005 939 --- 102,334
Central Office Equipment..................... 505,268 67,434 65,937 --- 506,765
Telephone Instruments and Related Equipment.. 17,670 1,867 602 --- 18,935
Poles........................................ 95,103 4,387 1,971 --- 97,519
Cable and Wiring............................. 639,919 25,993 16,779 --- 649,133
Conduit...................................... 35,085 1,653 97 --- 36,641
Office Equipment and Furniture............... 36,069 3,091 2,311 (2,454) 34,395
Vehicles and Other Work Equipment............ 31,491 3,196 2,301 --- 32,386
Other........................................ 5,681 385 657 --- 5,409
---------- -------- ------- ------- ----------
Total in Service (c)....................... 1,470,566 113,008 91,594 (2,454) 1,489,526

Plant Under Construction..................... 14,412 2,158 --- --- 16,570
Other........................................ 476 3 15 --- 464
---------- -------- ------- ------- ----------

Total Plant, Property and Equipment........ $1,485,454 $115,169 $91,609 $(2,454) $1,506,560
========== ======== ======= ======= ==========
</TABLE>

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

F-20
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, 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 1993 and 1991, 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. The rulings 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 8.0%, 7.8%, and 7.2%, respectively.

(d) The decrease to Office Equipment and Furniture of $2,454,000 in 1991
resulted from the transfer of Bell Atlantic Knowledge Systems, Inc. (BAKS),
a wholly owned subsidiary of the Company, to Bell Atlantic Corporation
(BAC), effective January 1, 1991.

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

F-21
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

SCHEDULE VI - ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO OTHER
BEGINNING EXPENSE CHANGES BALANCE AT
CLASSIFICATION OF PERIOD NOTE (b) RETIREMENTS NOTE (a) END OF PERIOD
- -------------- -------------- ---------- ----------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Year 1993.. $508,125 $116,164 $ 46,675 $ (270) $577,344

Year 1992.. $555,039 $110,518 $157,432 $ --- $508,125

Year 1991.. $541,828 $108,336 $ 93,986 $(1,139) $555,039
</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. In addition, 1991 included approximately $900,000
resulting from the transfer of BAKS, a wholly owned subsidiary of the
Company, to BAC, effective January 1, 1991.

(b) For years 1992 and 1991, "Additions Charged to Expense" reflects the impact
of $1,372,000 associated with the deferral of reserve deficiency
amortizations (RDAs) in 1991, and subsequent reversal in 1992, as directed
under the FCC's "Modifications and Clarifications effected by LEC Price Cap
Reconsideration Order" dated April 9, 1991.

F-22
<PAGE>

BELL ATLANTIC - WEST VIRGINIA, INC.

SCHEDULE VIII - VALUATION OF QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
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............................ $3,452 $3,508 $4,803 $8,686 $3,077

Year 1992............................ $2,756 $4,100 $5,122 $8,526 $3,452

Year 1991............................ $1,610 $3,909 $3,233 $5,996 $2,756
</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 - WEST VIRGINIA, 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 .................................. $100,905
========

Other operating taxes:
Property................................................ $ 12,405
Gross receipts.......................................... 11,645
Capital stock........................................... 2,954
Other................................................... 857
--------

Total other operating taxes............................... $ 27,861
========

Year 1992
Maintenance and repairs................................... $109,824
========
Other operating taxes:
Property................................................ $ 11,654
Gross receipts.......................................... 10,651
Capital stock........................................... 2,866
Other................................................... 897
--------
Total other operating taxes............................... $ 26,068
========

Year 1991
Maintenance and repairs................................... $102,572
========

Other operating taxes:
Property................................................ $ 11,078
Gross receipts.......................................... 10,212
Capital stock........................................... 4,140
Other................................................... 1,277
--------
Total other operating taxes................................ $ 26,707
========
</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 - WEST VIRGINIA, INC.

COMMISSION FILE NUMBER 1-7150
<PAGE>

Form 10-K for 1993
File No. 1-7150
Page 1 of 1

EXHIBIT INDEX

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 Certificate of Incorporation of the registrant as amended July 30,
1975 (Exhibit 3a to the registrant's Annual Report on Form 10-K for
the year ended December 31, 1985, File No. 1-7150).

3a(i) Articles of Amendment dated August 29, 1990 (Exhibit 3a(1)
to the registrant's Annual Report on Form 10-K for the year
ended December 31, 1990, File No. 1-7150).

3a(ii) Articles of Incorporation Profit Amendment, dated January 6,
1994 and filed January 13, 1994.

3b By-Laws of the registrant, as amended October 27, 1992. (Exhibit
3(b) to the registrant's Annual Report on Form 10-K for the year
ended December 31, 1992, File No. 1-7150).

10a Agreement Concerning Contingent Liabilities, Tax Matters and
Termination of Certain Agreements among AT&T, Bell Atlantic
Corporation, the Bell Atlantic Corporation telephone subsidiaries,
and certain other parties, dated as of November 1, 1993. (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(ii)

WEST VIRGINIA
ARTICLES OF INCORPORATION
PROFIT AMENDMENT

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

Pursuant to the provisions of Section 31, Article 1, Chapter 31 of the Code
of West Virginia, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:

FIRST: The name of the corporation is The Chesapeake and Potomac Telephone
Company of West Virginia.

SECOND: The following Amendment(s) to the Articles of Incorporation was
adopted by the shareholders (Note 1) of the corporation on December 31, 1993, in
the manner prescribed by Sections 107 and 147, Article 1, Chapter 31.

The name of the corporation has been changed to:

Bell Atlantic - West Virginia, Inc.

THIRD: The number of shares of the corporation outstanding at the time of
such adoption was one; and the number of shares entitled to vote was one.

FOURTH: The designation and number of outstanding shares of each class
entitled to vote, as a class, were as follows:

CLASS NUMBER OF SHARES

Common Stock One

FIFTH: The number of shares voted for such amendment(s) was one; and the
number of shares voted against such amendment(s) was none.

SIXTH: The number of shares of each class entitled to vote as a class
voted for and against such amendment(s) was;

CLASS NUMBER OF SHARES VOTED

FOR AGAINST

Common Stock One None

SEVENTH: The manner in which any exchange, reclassification, or
cancellation of issued shares provided for in the amendment(s) shall be
effected, is as follows: N/A
<PAGE>

EIGHTH: The amount of the authorized capital stock of this corporation
shall be increased/decreased from _____ shares at the par value
_________________ to ______________ shares at the par value of _______________.
The total authorized capital stock shall hereafter be $_____________. N/A

Dated January 6, 1994.

The Chesapeake and Potomac Telephone
Company of West Virginia

By: \s\ David E. Lowe
-----------------
David E. Lowe
President

By: \s\ David K. Hall
-----------------
David K. Hall
Secretary

State of West Virginia
County of Kanawha

I, Patricia L. Pulliam, a Notary Public, do hereby certify that on this
6th day of January, 1994, personally appeared before me, David K. Hall, who,
being by me first duly sworn, declared that he is the Secretary of The
Chesapeake and Potomac Telephone Company of West Virginia, that he signed the
foregoing document as Secretary of the corporation, and that the statements
therein contained are true.

\s\ Patricia L. Pulliam
-----------------------
Notary Public

My commission expires: Setpember 1, 2001

(Notarial Seal)

Notes: 1. Change to "board of directors" if no shares have
been issued.

<PAGE>

EXHIBIT 23
FORM 10-K FOR 1993
FILE NO. 1-7150

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement
of Bell Atlantic - West Virginia, Inc. on Form S-3 (File No. 33-60126) 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 - West Virginia, 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 - WV 10K

POWER OF ATTORNEY

WHEREAS, BELL ATLANTIC - WEST VIRGINIA, INC., a West Virginia 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 10K
pursuant to the provisions of the Securities Exchange Act of 1934, as amended,
and implementing regulations thereto; and

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

NOW, THEREFORE, the undersigned hereby constitutes and appoints David E.
Lowe, Ritchie A. Ireland, II and John R. Ruddick 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 reports,
hereby granting to 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 conforming all that said attorneys may or shall
lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this power of attorney on
the 22nd day of March, 1994.

\s\ David E. Lowe \s\ Neil S. Bucklew
- ----------------- -------------------
David E. Lowe Neil S. Bucklew
Director, President Director

\s\ William C. Campbell David K. Hall
- ----------------------- -------------
William C. Campbell David K. Hall
Director Director, Vice President

\c\ Russell L. Isaacs \s\ Wilbur S. Jones
- --------------------- -------------------
Russell L. Isaacs Wilbur S. Jones
Director Director

\s\ Brian J. Kelly \s\ Dan R. Moore
- ------------------ ----------------
Brian J. Kelly Dan R. Moore
Director Director

\s\ Lacy I. Rice, Jr. \s\ Susan S. Ross
- --------------------- -----------------
Lacy I. Rice, Jr. Susan S. Ross
Director Director