BELL ATLANTIC DELAWARE INC, 10-K, 1994-03-31

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

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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 1-7757

BELL ATLANTIC - DELAWARE, INC.

(Former Name: The Diamond State Telephone Company)

A Delaware Corporation I.R.S. Employer Identification No.
23-0523775

901 Tatnall Street, Wilmington, Delaware 19801

Telephone Number (302) 576-5420

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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 - Delaware, 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% Debentures, due December 1, 2008 New York Stock
Exchange
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Bell Atlantic - Delaware, Inc.

TABLE OF CONTENTS

Item No. Page
- -------- ----
<S> <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 .................. 22
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure ..................................... 22

PART III

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

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K ..................................................... 22

</TABLE>

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

PART I

Item 1. Business

GENERAL

Bell Atlantic - Delaware, Inc. (formerly The Diamond State Telephone
Company) (the "Company") is incorporated under the laws of the State of
Delaware and has its principal offices at 901 Tatnall Street, Wilmington,
Delaware 19801 (telephone number 302-576-5420). The Company is a wholly owned
subsidiary of Bell Atlantic Corporation ("Bell Atlantic"), which is one of the
seven regional holding companies ("RHCs") formed in connection with the court-
approved divestiture (the "Divestiture"), effective January 1, 1984, of those
assets of the American Telephone and Telegraph Company ("AT&T") related to
exchange telecommunications, exchange access functions, printed directories
and cellular mobile communications.

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

The Company provides two basic types of telecommunications services. First,
the Company transports telecommunications traffic between subscribers located
within the same LATA ("intraLATA service"), including both local and toll
services. Local service includes the provision of local exchange ("dial tone"),
local private line and public telephone services (including dial tone service
for pay telephones owned by the Company and other pay telephone providers).
Among other local services provided are Centrex (telephone company central
office-based switched telephone service enabling the subscriber to make both
intercom and outside calls) and a variety of special and custom calling
services. Toll service includes message toll service (calling service beyond
the local calling area) within LATA boundaries, and intraLATA Wide Area Toll
Service (WATS)/800 services (volume discount offerings for customers with
highly concentrated demand). Second, the Company provides exchange access
service, which links a subscriber's telephone or other equipment to the
transmission facilities of interexchange carriers which, in turn, provide
telecommunications service between LATAs ("interLATA service") to their
customers. See "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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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
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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
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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
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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
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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 $51 million in 1991, $45 million in 1992, and $48
million in 1993. The total investment of the Company in plant, property and

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equipment decreased from approximately $661 million at December 31, 1991 to
approximately $626 million at December 31, 1992, and increased to
approximately $656 million 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 an amount
similar to 1993. However, subject to regulatory approvals, the Network Services
Companies, including the Company, plan to allocate capital resources to the
deployment of broadband network platforms (technologies ultimately capable of
providing a switched facility for access to and transport of high-speed data
services, video-on-demand, and image and interactive multimedia applications).
Most of the funds for these expenditures are expected to be generated
internally. Some additional external financing may be necessary or desirable.

LINE OF BUSINESS RESTRICTIONS

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

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

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between those applicable to interstate services under the jurisdiction of the
FCC and those applicable to intrastate services under the jurisdiction of the
respective state regulatory authorities ("separations procedures"). The FCC
also prescribes procedures for allocating costs and revenues between regulated
and unregulated activities.

Interstate Access Charges

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

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

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

As a result of the phasing in of Subscriber Line Charges, a substantial
portion of non-traffic sensitive Interstate Costs is now recovered directly from
subscribers, thereby reducing the per-minute CCL charges to interexchange
carriers. This significant reduction in CCL charges has tended to reduce the
incentive for interexchange carriers and their high-volume customers to bypass
the Company's switched network via special access lines or alternative
communications systems. However, competition for this access business has
increased in recent years. See "Competition - Alternative Access and Local
Services".

FCC Access Charge Pooling Arrangements

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

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

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and 1990. This transitional support obligation phases out over five years.
These long-term and transitional support requirements will be recovered in the
Network Services Companies' (including the Company's) CCL rates.

Depreciation

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

On March 3, 1994, the Company filed its triennial Depreciation Rate Study
with the FCC, which presents proposed depreciation rates for all depreciable
plant of the Company. The Company is requesting changes in rates retroactive to
January 1, 1994 which will result in an increase of $12.5 million annually.

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

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

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

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

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Computer Inquiry III

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

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

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

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require that a service provided by one affiliate to another affiliate, which
service is also provided to unaffiliated entities, must be valued at tariff
rates or market prices. If the affiliate does not also provide the service to
unaffiliated entities, the price must be determined in accordance with the FCC's
cost allocation principles. In October 1993, the FCC proposed new affiliate
transaction rules which would essentially eliminate the different rules for the
provision of services and apply the asset transfer rules to all affiliate
transactions. The Network Services Companies, including the Company, have filed
comments opposing the proposed rules.

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

Telephone Company Provision of Video Dial Tone and Video Programming

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

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 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

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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.

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
Delaware Public Service Commission (the "PSC") with respect to intrastate rates
and services and other matters.

In August 1992, the Company filed an intrastate rate case with the PSC to
increase intrastate net revenues by $14.3 million annually. In November 1993,
the PSC voted to award the Company a $3.8 million annual intrastate revenue
increase based on the stipulated 10.58% overall rate of return. The Company
then filed a petition for reargument of the decision, requesting that the PSC
increase the Company's revenue award by an additional $6.3 million annually. On
December 6, 1993, the Company entered into an agreement with the Office of
Public Advocate of the Delaware state government which stipulated an increase in
the Company's revenue award of $1.5 million annually. The PSC approved the
stipulation and ordered a revised annual intrastate revenue increase of $5.3
million. The Company put final rates into effect on December 15, 1993.

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The Delaware Telecommunications Technology Investment Act of 1993 (the
"Delaware Telecommunications Act") became effective on July 8, 1993. The
Delaware Telecommunications Act modified telecommunications industry regulation
for intrastate services and allows the Company to elect to be regulated under
an alternative regulation plan instead of traditional rate of return
regulation. The Delaware Telecommunications Act provides:

-- that the prices of "Basic Telephone Services" (e.g., dial tone and local
usage) will remain regulated and cannot change in any one year by more
than the rate of inflation, less 3%;

-- that the prices of "Discretionary Services" (e.g., Identa Ring(SM) and
Calling Waiting) cannot increase more than 15% per year per service,
after an initial one-year cap;

-- that the prices of "Competitive Services" (e.g., directory advertising
and message toll service) will not be subject to tariff; and

-- that the Company develop a technology deployment plan with a commitment
to invest a minimum of $250 million in Delaware's telecommunications
network during the first five years of the plan.

The Delaware Telecommunications Act also provides protections to ensure that
competitors will not be unfairly disadvantaged, including a prohibition on
cross-subsidization, imputation rules, services unbundling and resale service
availability requirements, and a review by the PSC during the fifth year of the
plan. On July 20, 1993, the PSC has initiated a rulemaking to develop
regulations for the implementation of the Delaware Telecommunications Act.

On March 24, 1994, the Company elected to be regulated under the
alternative regulation provisions of the Delaware Telecommunications Act. On
such date, the Company also filed a technology deployment plan consistent with
such legislation pursuant to which it committed to (i) link public schools,
major medical facilities and state government offices to the "information
superhighway", (ii) digitize all of its telephone switches by 1998, and (iii)
connect all of its central offices with fiber optic cable by 1998.

Management does not believe that operating under the provisions of the
Delaware Telecommunications Act will have a material impact on the financial
condition or results of operations of the Company.

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, which displays the number of the
---------
calling party.

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.

9
<PAGE>

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.

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

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

Well-financed competitors are seeking authority, or are likely soon to seek
authority, to offer competing local exchange services, such as dial tone and
local usage, in some of the most lucrative of the Company's local telephone
service areas.

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 a controlling
interest in McCaw Cellular Communications Inc. ("McCaw"), the largest cellular
company in the United States, and to integrate McCaw's wireless local service
network with AT&T's long distance network.

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.

10
<PAGE>

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

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.

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 Delaware. In addition, the
PSC has initiated a proceeding to determine whether to require presubscription
and dialing parity ("+1 dialing") for intraLATA toll competitors of the Company.

Management believes that intraLATA presubscription, if implemented without
adequate compensation and regulatory relief, could have a material effect on the
Company's financial condition and results of operations.

Directories

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

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.

11
<PAGE>

Operator Services

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

CERTAIN CONTRACTS AND RELATIONSHIPS

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

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

EMPLOYEE RELATIONS

As of December 31, 1993, the Company employed approximately 980 persons,
including employees of the centralized staff at NSI. This represents
approximately a 2% 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 86% 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>

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 .................... 46%
Central office equipment ............ 40
Land and buildings .................. 7
Telephone instruments and
related equipment .................. 3
Other ............................... 4
---
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 % of
# of Local Subscriber # of Local Subscriber
Exchanges Lines Served Exchanges Lines Served
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Digital.................... 55 56.4 50 52.1
Analog..................... 54 43.6 54 47.9
---- ---- ---- ----
109 100 104 100
==== ==== ==== ====
</TABLE>

13
<PAGE>

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 0.2%.

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>

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>

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

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

RESULTS OF OPERATIONS

Net income for 1993 decreased $1,363,000 or 3.4% from the same period last
year. Results in 1993 reflect an after-tax charge of $877,000 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 $996,000 for the early extinguishment of debt.

OPERATING REVENUES

Operating revenues increased $11,909,000 or 5.1% in 1993. The increase in
total operating revenues was comprised of the following:

(Dollars In Thousands)
----------------------
<S> <C>
Local service ..................... $ 6,564
Network access .................... 3,511
Toll service ...................... 676
Directory advertising,
billing services and other ...... 1,642
Less: Provision for
uncollectibles .................. 484
-------
$11,909
=======

</TABLE>

Local service revenues are earned from the provision of local exchange, local
private line, and public telephone services. Local service revenues increased
$6,564,000 or 6.5% in 1993. The increase was due from higher revenues resulting
from a rate increase, net of refunds, as authorized by the Delaware Public
Service Commission in Docket No. 92-47, 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 15,700 lines or a 3.5%
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 $3,511,000 or 5.8% in 1993, primarily due
to lower support payments to the National Exchange Carrier Association (NECA)
interstate common line pool and an 8.9% growth in access minutes of use. Also
contributing to this increase were higher end-user revenues, principally due to
growth in network access lines in service. 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 estimated price cap sharing liabilities.

Toll service revenues are earned from interexchange usage services such as
Message Toll Services (MTS) and Unidirectional Services (Wide Area
Telecommunications Services (WATS) and 800 Services). Toll service revenues
increased $676,000 or 1.9% in 1993. Total toll message volume growth was 4.5%
in 1993. Volume-related message toll service revenue increases were partially
offset in 1993 by declines in revenues from WATS and private line services,
principally due to competitive pressures.

16
<PAGE>

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

Directory advertising, billing services and other revenues increased
$1,642,000 or 4.2% in 1993, primarily due to increased revenues from directory
advertising due to higher rates and from growth in revenues from Answer Call, a
nonregulated enhanced network service. Directory advertising revenue growth was
adversely impacted by decreasing sales volume attributable primarily to
competition. These revenue increases were offset in part by declines in billing
and collection revenue resulting from reductions in services provided under
long-term contracts with certain IXCs.

The provision for uncollectibles, expressed as a percentage of total revenue,
was 1.0% in 1993 and .8% in 1992. The increase was principally due to growth
in revenues.

OPERATING EXPENSES

Operating expenses increased $413,000 or .2% in 1993. The increase in total
operating expenses was comprised of the following:

Increase/(Decrease)
(Dollars In Thousands)
----------------------
<S> <C>
Employee costs ................. $2,567
Depreciation and amortization .. 1,883
Other .......................... (4,037)
------
$ 413
======
</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 increased $2,567,000 or
4.9% in 1993. Higher employee costs from salary and wage increases and overtime
were offset in part by savings resulting from workforce reduction programs
implemented in 1992.

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

Depreciation and amortization expense increased $1,883,000 or 4.8% in 1993.
The increase was primarily a result of the effect of a one-time adjustment
associated with the retirement of certain central office equipment, which
reduced depreciation expense in 1992, and growth in the level of depreciable
plant in 1993.

Other operating expenses consist primarily of contracted services including
centralized service expenses allocated from NSI, rent, network software costs,
operating taxes other than income taxes, and other general and administrative
expenses. Other operating expenses decreased $4,037,000 or 5.0% in 1993. The
decrease in other operating expenses was principally due to the effect of the
termination of billing agreements with certain affiliated companies and lower
rent expense. These decreases were partially offset by higher costs for
contracted services as a result of higher employee costs and taxes allocated
from NSI.

17
<PAGE>

OPERATING INCOME TAXES

The provision for income taxes increased $10,446,000 or 72.5% in 1993. The
Company's effective income tax rate was 38.0% in 1993 compared to 26.7% 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%, a decrease in the amortization of investment tax credits, and
the effect of recording in 1992 an adjustment to deferred taxes associated with
the retirement of certain plant investment. A reconciliation of the statutory
federal income tax rate to the effective rate for each period is provided in
Note 5 of Notes to Financial Statements.

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 $62,000 in the first quarter of 1993 (see Note 5 of Notes to
Financial Statements).

OTHER INCOME AND EXPENSE

The change in other income and expense, net, was $380,000 in 1993. This
change was primarily due to the effect of interest income recognized in 1992 in
connection with the settlement of various federal income tax matters related to
prior periods.

INTEREST EXPENSE

Interest expense increased $160,000 or 1.9% in 1993, principally as a result
of an adjustment, related to Docket 84-800 for excess earnings refunds, which
reduced interest expense in 1992. A higher level of short-term debt in 1993 also
contributed to the increase.

EXTRAORDINARY ITEM

The Company called $40,000,000 in 1993 of long-term debentures which were
refinanced at more favorable interest rates. As a result of these early
retirements, the Company incurred an after-tax charge of $996,000 in 1993.
These debt refinancings will reduce interest costs on the refinanced debt by
approximately $800,000 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
$877,000 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.

18
<PAGE>

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 is considering
an alternative regulation plan, which has been signed into law, that allows the
Company to elect to be regulated under a price regulation plan instead of
traditional rate of return regulation.

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
Delaware Public Service Commission (the PSC) with respect to intrastate rates
and services and other matters.

19
<PAGE>

The Delaware Telecommunications Technology Investment Act of 1993 (the
Delaware Telecommunications Act) became effective on July 8, 1993. The
Delaware Telecommunications Act modified telecommunications industry
regulation for intrastate services and allows the Company to elect to be
regulated under an alternative regulation plan instead of traditional rate
of return regulation. The Delaware Telecommunications Act provides:

-- that the prices of "Basic Telephone Services" (e.g., dial tone and local
usage) will remain regulated and cannot change in any one year by more
than the rate of inflation, less 3%;

-- that the prices of "Discretionary Services" (e.g., Identa Ring(SM) and
Calling Waiting) cannot increase more than 15% per year per service,
after an initial one-year cap;

-- that the prices of "Competitive Services" (e.g., directory advertising
and message toll service) will not be subject to tariff; and

-- that the Company develop a technology deployment plan with a commitment
to invest a minimum of $250 million in Delaware's telecommunications
network during the first five years of the plan.

The Delaware Telecommunications Act also provides protections to ensure
that competitors will not be unfairly disadvantaged, including a prohibition on
cross-subsidization, imputation rules, services unbundling and resale service
availability requirements, and a review by the PSC during the fifth year of the
plan. On July 20, 1993 the PSC initiated a rulemaking to develop
regulations for the implementation of the Delaware Telecommunications Act.

Management does not believe that operating under the provisions of the
Delaware Telecommunications Act will have a material impact on the financial
condition or results of operations of the Company.

The PSC has initiated a proceeding to determine whether to require
presubscription and dialing parity ("+1 dialing") for intraLATA toll
competitors of the Company. Management believes that intraLATA
presubscription, if implemented without adequate compensation and regulatory
relief, could have a material effect on the Company's financial condition and
results of operations.

OTHER MATTERS

The Company has been designated as a potentially responsible party by the
U.S. Environmental Protection Agency in connection with two Superfund sites.
Designation as a potentially responsible party subjects the named company to
potential liability for costs relating to cleanup of the affected sites.
Management believes that the aggregate amount of any potential liability would
not have a material effect on the Company's financial condition or results of
operations.

20
<PAGE>

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 $79,177,000 for the year ended December 31, 1993.

The primary use of capital resources continued to be capital expenditures.
The Company invested $48,393,000 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 37.4% as of December 31, 1993 compared to 36.7%
at December 31, 1992.

On December 16, 1993, the Company sold $20,000,000 of Thirty Year 7%
Debentures, and $20,000,000 of Ten Year 6 1/8% Debentures, through a public
offering. The thirty year debentures are not redeemable by the Company prior to
December 1, 2013 and the ten year debentures are not redeemable prior to
maturity. The net proceeds from these issuances were used to redeem $15,000,000
of Forty Year 8 3/4% Debentures, $15,000,000 of Forty Year 8 1/5% Debentures,
and $10,000,000 of Forty Year 9% Debentures. These debt refinancings will
reduce interest costs on the refinanced debt by approximately $800,000
annually.

As of December 31, 1993, the Company had no amounts outstanding under a shelf
registration statement filed with the Securities and Exchange Commission.

21
<PAGE>

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 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.

22
<PAGE>

PART IV

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

(3) Exhibits

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

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

3a Certificate of Incorporation of the registrant, as amended and
restated June 17, 1987 (Exhibit 3a to the registrant's Annual
Report on Form 10-K for 1987, File No. 1-7757)

3a(i) Certificate of Amendment of Certificate of Incorporation
dated August 14, 1992 (Exhibit 3a to the registrant's
Annual Report on Form 10-K for the year ended December
31, 1992, File No. 1-7757)

3a(ii) Certificate of Amendment of Certificate of Incorporation,
dated January 10, 1994 and filed January 13, 1994.

3b By-Laws of the registrant, as amended through January 27, 1994.

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

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

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

24 Powers of attorney.

(b) Reports on Form 8-K

A Current Report on Form 8-K, dated December 1, 1993, was filed
reporting on Item 7 (Financial Statements and Exhibits) in connection
with the sale of debt securities.

23
<PAGE>

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 - Delaware, Inc.

By /s/ John J. Parker
--------------------------------
John J. Parker
Controller and Treasurer

March 29, 1994

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

Principal Executive }
Officer: }
Carolyn S. Burger President and }
Chief Executive }
Officer }
Principal Financial }
Officer: }
}
John J. Parker Controller }
and Treasurer
Directors: } By /s/ John J. Parker
Harry Bonk } ---------------------------
Carolyn S. Burger } John J. Parker
Charles W. Crist } (individually and as
Archie W. Dunham } attorney-in-fact)
Joshua W. Martin, III } March 29, 1994
Robert F. Rider }
David P. Roselle }
}
(constituting a majority
of the registrant's Board
of Directors)

24
<PAGE>

Index to Financial Statements and Financial Statement Schedules

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>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareowner of
Bell Atlantic - Delaware, Inc.

We have audited the financial statements and financial statement schedules of
Bell Atlantic - Delaware, 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 - Delaware, Inc.
as of December 31, 1993 and 1992, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly, in
all material respects, the information required to be included therein.

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

/s/ COOPERS & LYBRAND

2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 7, 1994

F-2
<PAGE>

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

1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
OPERATING REVENUES
Local service................................ $107,468 $100,904 $ 98,571
Network access............................... 63,654 60,143 60,807
Toll service................................. 36,593 35,917 34,420
Directory advertising, billing
services and other (including $561,
$634, and $754 from affiliates)............. 41,071 39,429 38,552
Provision for uncollectibles................. (2,424) (1,940) (1,962)
-------- -------- --------
246,362 234,453 230,388
-------- -------- --------
OPERATING EXPENSES
Employee costs, including benefits
and taxes................................... 55,174 52,607 53,163
Depreciation and amortization................ 40,970 39,087 39,165
Taxes other than income...................... 4,575 4,657 4,410
Other (including $42,722, $42,512, and
$38,452 expense to affiliates).............. 71,701 75,656 70,739
-------- -------- --------
172,420 172,007 167,477
-------- -------- --------

NET OPERATING REVENUES........................ 73,942 62,446 62,911
-------- -------- --------

OPERATING INCOME TAXES
Federal...................................... 18,673 10,081 14,734
State........................................ 6,182 4,328 5,352
-------- -------- --------
24,855 14,409 20,086
-------- -------- --------

OPERATING INCOME.............................. 49,087 48,037 42,825
-------- -------- --------

OTHER INCOME (EXPENSE)
Allowance for funds used during
construction............................... 185 54 65
Miscellaneous - net (including $62, $45,
and $85 from affiliate)..................... (442) 69 (275)
-------- -------- --------
(257) 123 (210)
-------- -------- --------
INTEREST EXPENSE (including $109,
$129, and $113 to affiliate)................. 8,702 8,542 7,763
-------- -------- --------

INCOME BEFORE EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES..................... 40,128 39,618 34,852

EXTRAORDINARY ITEM
Early Extinguishment of Debt,
Net of Tax................................. (996) --- ---

CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES
Postemployment Benefits, Net of Tax......... (877) --- ---
Postretirement Benefits Other Than
Pensions, Net of Tax....................... --- --- (26,129)
-------- -------- --------

NET INCOME.................................... $ 38,255 $ 39,618 $ 8,723
======== ======== ========

REINVESTED EARNINGS
At beginning of year......................... $ 52,773 $ 40,245 $ 63,815
Add: net income............................. 38,255 39,618 8,723
-------- -------- --------
91,028 79,863 72,538
Deduct: dividends........................... 36,600 27,090 32,267
other changes....................... 193 --- 26
-------- -------- --------
At end of year............................... $ 54,235 $ 52,773 $ 40,245
======== ======== ========

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

</TABLE>

F-3
<PAGE>

BALANCE SHEETS
(Dollars in Thousands)

December 31,
----------------
1993 1992
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash.......................................... $ 313 $ 392
Note from affiliate........................... --- 2,882
Accounts receivable:
Customers and agents, net of allowances for
uncollectibles of $2,767 and $2,635........ 23,091 26,145
Affiliates................................... 3,651 4,815
Other........................................ 376 598
Material and supplies......................... 1,490 991
Prepaid expenses.............................. 6,498 4,966
Deferred income taxes......................... 2,545 3,390
Other......................................... 335 335
-------- --------
38,299 44,514
-------- --------
PLANT, PROPERTY AND EQUIPMENT
In service.................................... 647,266 609,879
Under construction and other.................. 8,546 15,840
-------- --------
655,812 625,719
Less accumulated depreciation................. 241,595 218,934
-------- --------
414,217 406,785
-------- --------

OTHER ASSETS .................................. 16,666 2,836
-------- --------

TOTAL ASSETS .................................. $469,182 $454,135
======== ========

</TABLE>

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

F-4
<PAGE>

BALANCE SHEETS
(Dollars in Thousands)

December 31,
------------------
1993 1992
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREOWNER'S INVESTMENT
CURRENT LIABILITIES
Debt maturing within one year:
Affiliate.................................... $ 4,263 $ ---
Accounts payable:
Parent and affiliates........................ 15,185 15,639
Other........................................ 20,845 24,719
Accrued expenses:
Vacation pay................................. 3,502 3,197
Interest..................................... 1,071 2,155
Taxes........................................ 2,561 5,518
Other........................................ 4,299 2,795
Advance billings and customer deposits........ 15,896 17,429
-------- --------
67,622 71,452
-------- --------

LONG-TERM DEBT................................. 98,991 99,285
-------- --------

EMPLOYEE BENEFIT OBLIGATIONS................... 43,793 40,629
-------- --------

DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes......................... 45,294 50,268
Unamortized investment tax credits............ 10,367 11,614
Other......................................... 30,438 9,672
-------- --------
86,099 71,554
-------- --------

COMMITMENTS (Note 3)

SHAREOWNER'S INVESTMENT
Common stock, $25 par value per share......... 118,442 118,442
Authorized shares: 5,262,280
Outstanding shares: 4,737,686
Reinvested earnings........................... 54,235 52,773
-------- --------
172,677 171,215
-------- --------

TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT.. $469,182 $454,135
======== ========

</TABLE>

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

F-5
<PAGE>

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

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

CASH FLOWS FROM OPERATING ACTIVITIES
Net income ........................................ $ 38,255 $39,618 $ 8,723
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization .................. 40,970 39,087 39,165
Extraordinary item related to early
extinguishment of debt, net of tax benefit.... 996 --- ---
Cumulative effect of changes in accounting
principles ................................... 877 --- 26,129
Allowance for funds used during construction ... (185) (54) (65)
Other items, net................................ (102) 108 82
Changes in certain assets and liabilities:
Accounts receivable.......................... 4,440 183 300
Material and supplies........................ (888) 356 97
Other assets................................. (1,735) 2,240 1,172
Accounts payable and accrued taxes........... (6,795) 11,209 (7,309)
Deferred income taxes, net................... 1,998 (6,898) 2,680
Unamortized investment tax credits........... (1,247) (1,402) (1,455)
Employee benefit obligations................. 1,976 1,296 (3,107)
Other liabilities............................ 617 1,325 (3,034)
------- ------ ------
Net cash provided by operating activities.......... 79,177 87,068 63,378
------- ------ ------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to plant, property and equipment......... (48,393)(45,034) (50,405)
Net change in note receivable from affiliate....... 2,882 (2,882) ---
Other plant-related changes........................ 565 (540) (1,014)
------- ------ ------

Net cash used in investing activities.............. (44,946)(48,456) (51,419)
------- ------ -------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings........................... 39,416 --- 14,777
Principal repayments of borrowings and
capital lease obligations......................... --- (5,030) (28)
Early extinguishment of debt and related
call premium...................................... (41,389) --- ---
Net change in note payable to affiliate............ 4,263 (2,500) 1,027
Dividends paid..................................... (36,600)(27,090) (32,267)
Net change in outstanding checks drawn
on controlled disbursement accounts ............... --- (3,600) 3,600
-------- ------- -------
Net cash used in financing activities.............. (34,310)(38,220) (12,891)
-------- ------- -------

(DECREASE) INCREASE IN CASH........................ (79) 392 (932)

CASH, BEGINNING OF YEAR............................ 392 --- 932
-------- ------- ------

CASH, END OF YEAR.................................. $ 313 $ 392 $ ---
======== ======= =======
</TABLE>

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

F-6
<PAGE>

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

Revenue Recognition

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

Cash and Cash Equivalents

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

Material and Supplies

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

Prepaid Directory

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

Plant and Depreciation

The Company's provision for depreciation is based principally on the
remaining life method of depreciation and straight-line composite rates. The
provision for depreciation is based on the following estimated remaining
service lives: buildings, 25 to 35 years; central office equipment, 5 to 11
years; telephone instruments and related equipment, 5 to 8 years; poles, 22
years; cable and wiring, 11 to 18 years; conduit, 43 years; office equipment
and furniture, 4 to 9 years; and 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>

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 noncontributory
multi-employer 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 Pensions," which requires accrual accounting for all postretirement
benefits other than pensions. Under the prescribed accrual method, the
Company's obligation for these postretirement benefits is to be fully accrued by
the date employees attain full eligibility for such benefits.

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

Postemployment Benefits

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

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

Income Taxes

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

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

F-8
<PAGE>

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

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

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

Reclassifications

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

2. DEBT

Long-Term

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

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

Ten year 6 1/8%, due 2003................ $ 20,000 $ ---
Forty year 4 5/8%, due 2005.............. 7,000 7,000
Forty year 7%, due 2008.................. 10,000 10,000
Forty year 8 3/4%, due 2010.............. --- 15,000
Forty year 8 1/5%, due 2011.............. --- 15,000
Forty year 7 3/4%, due 2013.............. 15,000 15,000
Forty year 9%, due 2018.................. --- 10,000
Thirty year 8 3/8%, due 2019............. 15,000
Thirty year 7%, due 2023................. 20,000 ---
Forty year 8 5/8%, due 2031.............. 15,000 15,000
-------- --------
102,000 102,000
Unamortized discount and premium, net.... (3,009) (2,715)
-------- --------
Total long-term debt, including current
maturities............................. 98,991 99,285
Less maturing within one year............ --- ---
-------- --------
Total long-term debt..................... $ 98,991 $ 99,285
======== ========
</TABLE>

Long-term debt outstanding at December 31, 1993 includes $32,000,000 that is
callable by the Company. The call prices range from 103.1% to 100.9% of face
value, depending upon the remaining term to maturity of the issue. In addition,
long-term debt includes $15,000,000 that will become redeemable only on
September 15, 1999, at the option of the holders. The redemption prices will be
100% of face value plus accrued interest.

On December 16, 1993, the Company sold $20,000,000 of Thirty Year 7%
Debentures, due December 1, 2023 and $20,000,000 of Ten Year 6 1/8% Debentures,
due December 1, 2003, through a public offering. The Thirty Year 7% Debentures
are not redeemable by the Company prior to December 1, 2013. The Ten Year 6
1/8% Debentures are not redeemable by the Company prior to maturity. The net
proceeds from these issuances were used on December 31, 1993, to redeem the
following debentures: $15,000,000 Forty Year 8 3/4% Debentures due in 2010, at
a call price of 103.2% of the principal amount, plus accrued interest from July
1, 1993; $15,000,000 Forty Year 8 1/5% Debentures due in 2011, at a call price
of 103.1% of the principal amount, plus accrued interest from August 1, 1993;
and $10,000,000 Forty Year 9% Debentures due in 2018, at a call price of 104.5%
of the principal amount, plus accrued interest from December 15, 1993. As a
result of the early extinguishment of these debentures, the Company recorded a
charge of $996,000, net of an income tax benefit of $685,000, in the fourth
quarter of 1993.

F-9
<PAGE>

In 1992, the Company recorded a charge associated with the early
extinguishment of debentures called by the Company. The financial impact of the
early extinguishment of debt was not material.

At December 31, 1993, the Company had no amounts 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 $106,900,000 and
$103,100,000, respectively. The Company has entered into an interest rate swap
agreement expiring on April 1, 1994, which has the effect of fixing the rate
of interest on $5,000,000 of debt at a rate of 3.65%.

The fair value of the interest rate swap agreement is the estimated amount
that the Company would receive or pay upon termination of the swap agreement
at December 31, 1993 and 1992, taking into account current interest rates and
the creditworthiness of the swap counterparties. The Company would pay $5,000
to terminate its interest rate swap agreement at December 31, 1993. The
Company would have received $38,000 to terminate its interest rate swap
agreement at December 31, 1992.

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.. $4,263 $ --- $2,500 3.3% ---% 4.9%
==== ==== ====
Capital lease obligations.. --- --- 30
------ ------- ------
Total...................... $4,263 $ --- $2,530
====== ======= ======

Average amount of note
payable outstanding
during the year*.......... $3,451 $ 3,312 $1,863 3.2% 3.9% 6.0%
==== ==== ====
Maximum amount of note
payable at any month-end
during the year........... $6,597 $11,600 $9,078
</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
$23,500,000 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 $125,000 and $125,000 and related accumulated amortization of
$125,000 and $125,000 at December 31, 1993 and 1992, respectively. In 1993,
1992, and 1991, the Company did not incur any initial capital lease obligations.

Total rent expense amounted to $3,521,000 in 1993, $7,743,000 in 1992, and
$6,059,000 in 1991. Of these amounts, the Company incurred rent expense of
$1,693,000, $5,607,000, and $4,167,000 in 1993, 1992, and 1991, respectively,
from affiliated companies.

F-10
<PAGE>

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

Years Operating Leases
----- ----------------------
(Dollars in Thousands)
<S> <C>
1994 .......................... $ 676
1995 .......................... 516
1996 .......................... 313
1997 .......................... 180
1998 .......................... 87
Thereafter .................... ---
------
Total ......................... $1,772
======
</TABLE>

4. EMPLOYEE BENEFITS

Pension Plans
- -------------

Substantially all of the Company's management and associate employees are
covered under noncontributory multi-employer 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..................... $1,864 $2,105 $1,983
====== ====== ======

Pension cost as a percentage of
salaries and wages.............. 4.5% 4.7% 4.4%
====== ====== ======
</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 $634,000 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
$1,017,000 reduction in pension cost (which reduced operating expenses by
$915,000 after capitalization of amounts related to the construction program)
and substantially offset the 1992 cost increase.

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

F-11
<PAGE>

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 cost
(transition obligation), in the amount of $26,129,000, net of a deferred
income tax benefit of $17,233,000.

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

For intrastate ratemaking purposes, the Delaware Public Service Commission has
authorized recognition of postretirement benefit cost on a pay-as-you-go basis.

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 postretirement life insurance benefit formula used in the
determination of postretirement benefit cost is primarily based on annual basic
pay at retirement.

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

The aggregate postretirement benefit cost for the year ended December 31,
1993, 1992, and 1991 was $4,185,000, $3,743,000, and $3,470,000, 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

F-12
<PAGE>

Company. The increases in the postretirement benefit cost between 1993 and 1991
were primarily due to the change in benefit levels and claims experience. Also
contributing to these increases were changes in actuarial assumptions and
demographic experience.

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

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

Postretirement benefits other than pensions have been included in collective
bargaining agreements and have been modified from time to time. The Company has
periodically modified benefits under 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 $877,000, net of a deferred income tax benefit of
$578,000. 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.

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 $62,000, representing the cumulative
effect of adopting Statement No. 109, which has been reflected in Operating
Income Taxes of the Statement of Income and Reinvested Earnings.

Upon adoption of Statement No. 109, the effects of required adjustments to
deferred tax balances were primarily deferred on the balance sheet as regulatory
assets and liabilities in accordance with Statement of Financial Accounting
Standards No. 71, "Accounting for the Effects of Certain Types of Regulation"
(Statement No. 71). At January 1, 1993, the Company recorded income tax-related
regulatory assets totaling $15,111,000 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

F-13
<PAGE>

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
$23,155,000 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 $11,132,000 and $1,985,000 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. At December
31, 1992 and 1991, deferred state taxes had not been provided on an additional
$34,620,000 and $39,718,000, respectively, of income tax timing differences,
principally related to accelerated tax 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 $155,000, which included a $563,000 charge for
the nine month effect of the 1% rate increase, largely offset by a one-time net
benefit of $408,000 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 $478,000 and the reduction of regulatory liabilities of
$1,725,000. The Company did not recognize regulatory assets and liabilities
related to the postretirement benefit obligation or the associated deferred
income tax asset.

The components of income tax expense are as follows:

<S> <C> <C>
Years Ended December 31,
----------------------------
1993 1992 1991
------ ------ ------
(Dollars in Thousands)
Current:
Federal................................ $19,107 $17,796 $14,672
State.................................. 4,997 4,913 4,189
------- ------- -------
24,104 22,709 18,861
------- ------- -------
Deferred:
Federal................................ 813 (6,313) 1,517
State.................................. 1,185 (585) 1,163
------- ------- -------
1,998 (6,898) 2,680
------- ------- -------
26,102 15,811 21,541
Investment tax credits................. (1,247) (1,402) (1,455)
------- ------- -------
Total.................................. $24,855 $14,409 $20,086
======= ======= =======
</TABLE>

Income tax expense (benefit) which relates to non-operating income and
expense and is included in Miscellaneous-net was $(230,000), $41,000, and
$(193,000) in 1993, 1992, and 1991, respectively.

F-14
<PAGE>

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......... $(3,828) $ 497
Interstate earnings adjustments.. 361 3,936
Employee benefits................ (1,546) (558)
Other, net....................... (1,885) (1,195)
------- -------
Total............................ $(6,898) $ 2,680
======= =======
</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.............. (1.6) (2.1) (2.8)
State income taxes, net of federal
income tax benefits................ 5.7 5.2 6.4
Benefit of rate differential
applied to reversing timing
differences........................ (1.4) (3.9) (2.0)
Reversal of previously capitalized
taxes and payroll-related
construction costs ................ .9 (5.4) .9
Prior year tax adjustment........... (1.3) (2.3) .2
Other, net.......................... .7 1.2 (.4)
----- ---- -------
Effective income tax rate........... 38.0% 26.7% 36.3%
===== ==== =======
</TABLE>

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

<TABLE>
<CAPTION>
Deferred Tax Deferred Tax
Assets Liabilities
------------ ------------
(Dollars in Thousands)

<S> <C> <C>
Depreciation............................ $ --- $76,400
Employee benefits ...................... 24,800 ---
Investment tax credits ................. 7,100 ---
Advance payments ....................... 1,800 ---
Other................................... 500 500
------- -------
Total.................................. $34,200 $76,900
======= =======
</TABLE>

Total deferred tax assets include approximately $20,000,000 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

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

Supplemental Cash Flow Information:
Interest paid, net of interest
capitalized........................... $ 9,740 $ 8,634 $ 7,396
Income taxes paid ..................... $25,637 $20,085 $19,692

Additional Financial Information:
Interest expense (income):
Interest on long-term debt............ $ 8,399 $ 8,489 $ 7,454
Interest on note payable to affiliate. 109 129 113
Other................................. 194 (76) 196
------- ------- -------
Total interest expense.................. $ 8,702 $ 8,542 $ 7,763
======= ======= =======
</TABLE>

F-15
<PAGE>

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 $25,842,000, $28,128,000,
and $30,554,000, respectively. At December 31, 1993 and 1992, Accounts
receivable, net, included $463,000 and $484,000, 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.

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 $38,438,000,
$36,905,000, and $34,285,000 in operating expenses for the years ended December
31, 1993, 1992, and 1991, respectively. Included in these expenses were
$2,999,000 in 1993, $4,001,000 in 1992, and $3,269,000 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 $888,000 associated with NSI's adoption of
Statement No. 106. In addition, in 1991, the Company recognized a charge of
$8,973,000 representing the Company's proportionate share of NSI's accrued
transition obligation under Statement No. 106.

In connection with the adoption of Statement No. 112 in 1993, the cumulative
effect included $161,000, net of a deferred income tax benefit of $106,000,
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 on their behalf. In connection with this arrangement, the
Company recognized interest expense of $109,000, $129,000, and $113,000 in 1993,
1992, and 1991, respectively, and $62,000, $45,000, and $85,000 in interest
income in 1993, 1992, and 1991, respectively.

In 1993, the Company received $561,000 in revenue from affiliates,
principally, related to rent received for the use of Company facilities and
equipment, and paid $4,284,000 in other operating expenses to affiliated
companies. These amounts were $634,000 and $5,607,000, respectively, in 1992
and $754,000 and $4,167,000, respectively, in 1991.

On February 1, 1994, the Company declared and paid a dividend in the
amount of $10,060,000 to Bell Atlantic.

F-16
<PAGE>

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>
1993:
March 31.......................... $ 60,123 $15,904 $ 8,279 $ 7,402
June 30........................... 61,101 18,751 10,063 10,063
September 30...................... 63,799 19,935 10,495 10,495
December 31....................... 61,339 19,352 11,291 10,295
-------- ------- ------- -------
Total............................. $246,362 $73,942 $40,128 $38,255
======== ======= ======= =======

1992:
March 31.......................... $ 58,257 $17,180 $10,959 $10,959
June 30........................... 58,366 16,100 9,639 9,639
September 30...................... 58,548 14,899 8,919 8,919
December 31....................... 59,282 14,267 10,101 10,101
-------- ------- ------- -------
Total............................. $234,453 $62,446 $39,618 $39,618
======== ======= ======= =======

</TABLE>

Net income for the first quarter of 1993 has been restated to include a
charge of $877,000, net of a deferred income tax benefit of $578,000, related to
the adoption of Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" (Note 4).

9. REGULATORY MATTERS

In November 1993, the Delaware Public Service Commission (PSC) issued its
opinion and order on Docket No. 92-47 approving a $3,800,000 annual intrastate
revenue increase based on a stipulated 10.58% overall rate of return. After
petition for reargument of the PSC decision, the Company entered into an
agreement with the Office of Public Advocate which stipulated: (i) an increase
in the Company's revenue award of $1,500,000 over the originally awarded
$3,800,000; (ii) no increase on residence dial tone line rates beyond the level
specified in the stipulation until January 1, 1997; (iii) the Company would
forgo its right to appeal the PSC decision in Docket No. 92-47. The PSC
approved this stipulation on December 6, 1993. The Company put final rates
into effect on December 15, 1993. Amounts which were previously collected from
residence customers under temporary increases were refunded for the amount in
excess of the final residence dial tone line rate. Refunds totaling
approximately $5,800,000 were paid through a one-time credit on residence
bills beginning February 1, 1994.

F-17
<PAGE>

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

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

Land....................... $ 3,029 $ --- $ --- $ --- $ 3,029
Buildings.................. 40,869 1,210 284 --- 41,795
Central Office Equipment... 245,811 32,135 13,650 --- 264,296
Telephone Instruments and
Related Equipment......... 17,508 2,841 (57) --- 20,406
Poles...................... 8,392 458 97 --- 8,753
Cable and Wiring........... 236,866 15,136 3,786 --- 248,216
Conduit.................... 42,041 1,559 95 --- 43,505
Office Equipment and
Furniture................. 6,383 2,666 509 --- 8,540
Vehicles and Other Work
Equipment................. 7,768 399 811 --- 7,356
Other...................... 1,212 158 --- --- 1,370
-------- ------- ------- ------- --------
Total in Service (c)..... 609,879 56,562 19,175 --- 647,266

Plant Under Construction... 15,654 (7,308) --- --- 8,346
Other...................... 186 14 --- --- 200
-------- ------- ------- ------- --------

Total Plant, Property
and Equipment........... $625,719 $49,268 $19,175 $ --- $655,812
======== ======= ======= ======= ========

</TABLE>

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

F-18
<PAGE>

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

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
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....................... $ 2,969 $ 60 $ --- $ --- $ 3,029
Buildings.................. 38,957 1,912 --- --- 40,869
Central Office Equipment... 245,847 22,889 22,925 --- 245,811
Telephone Instruments and
Related Equipment......... 18,342 2,500 3,334 --- 17,508
Poles...................... 8,230 271 109 --- 8,392
Cable and Wiring........... 278,579 12,714 54,427 --- 236,866
Conduit.................... 40,763 1,295 17 --- 42,041
Office Equipment and
Furniture................ 5,790 766 173 --- 6,383
Vehicles and Other Work
Equipment................. 7,245 821 298 --- 7,768
Other...................... 1,155 57 --- --- 1,212
-------- ------- ------- ------- --------
Total in Service (c)..... 647,877 43,285 81,283 --- 609,879

Plant Under Construction... 13,114 2,540 --- --- 15,654
Other...................... 245 (59) --- --- 186
-------- ------- ------- ------- --------
Total Plant, Property
and Equipment........... $661,236 $45,766 $81,283 $ --- $625,719
======== ======= ======= ======= ========

</TABLE>

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

F-19
<PAGE>

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

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
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....................... $ 2,964 $ 5 $ --- $ --- $ 2,969
Buildings.................. 37,711 1,383 137 --- 38,957
Central Office Equipment... 233,205 23,526 10,884 --- 245,847
Telephone Instruments and
Related Equipment......... 17,111 1,944 713 --- 18,342
Poles...................... 7,978 408 156 --- 8,230
Cable and Wiring........... 267,567 14,625 3,613 --- 278,579
Conduit.................... 38,777 2,056 70 --- 40,763
Office Equipment and
Furniture................ 5,205 789 204 --- 5,790
Vehicles and Other Work
Equipment................. 6,100 1,730 585 --- 7,245
Other...................... 888 267 --- --- 1,155
-------- ------- ------- ------- --------
Total in Service (c)..... 617,506 46,733 16,362 --- 647,877

Plant Under Construction... 8,931 4,183 --- --- 13,114
Other...................... 245 --- --- --- 245
-------- ------- ------- ------- --------

Total Plant, Property
and Equipment........... $626,682 $50,916 $16,362 $ --- $661,236
======== ======= ======= ======= ========

</TABLE>

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

F-20
<PAGE>

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 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.
This ruling will allow a more rapid recovery of the Company's investment in
plant, property and equipment through closer alignment with current
estimates of its remaining economic useful life. For the years 1993, 1992,
and 1991, depreciation expressed as a percentage of average depreciable
plant was 6.5%, 6.4%, and 6.2%, respectively.

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

F-21
<PAGE>

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

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

Year 1993....... $218,934 $40,970 $18,476 $ 167 $241,595

Year 1992....... $261,221 $39,087 $81,283 $ (91) $218,934

Year 1991....... $238,718 $39,165 $16,362 $(300) $261,221

</TABLE>

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

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

F-22
<PAGE>

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

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

Year 1993............................ $2,635 $2,407 $2,996 $5,271 $2,767

Year 1992............................ $2,446 $2,351 $2,262 $4,424 $2,635

Year 1991............................ $1,664 $2,333 $2,127 $3,678 $2,446

</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 - Delaware, Inc.

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

Charged to
Costs and
Item Expenses
- --------------------------------------------------------------------------------------------
<S> <C>
Year 1993
Maintenance and repairs................................................. $49,620
=======
Taxes other than payroll and income taxes:
Local taxes on outside plant.......................................... $ 2,959
Gross receipts........................................................ 519
Property.............................................................. 248
Capital stock......................................................... 26
Other................................................................. 823
-------
$ 4,575
=======
Year 1992
Maintenance and repairs................................................. $47,042
=======
Taxes other than payroll and income taxes:
Local taxes on outside plant.......................................... $ 2,697
Gross receipts........................................................ 490
Property.............................................................. 239
Capital stock......................................................... 33
Other................................................................. 1,198
-------
$ 4,657
=======
Year 1991
Maintenance and repairs................................................. $43,661
=======
Taxes other than payroll and income taxes:
Local taxes on outside plant.......................................... $ 2,586
Gross receipts........................................................ 460
Property.............................................................. 176
Capital stock......................................................... 19
Other................................................................. 1,169
-------
$ 4,410
=======
</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 - Delaware, Inc.

COMMISSION FILE NUMBER 1-7757
<PAGE>

Form 10-K for 1993
File No. 1-7757
Page 1 of 1

EXHIBIT INDEX

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

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

3a Certificate of Incorporation of the registrant, as amended and restated
June 17, 1987 (Exhibit 3a to the registrant's Annual Report on Form
10-K for the year ended December 31, 1987, File No. 1-7757)

3a(i) Certificate of Amendment of Certificate of Incorporation
dated August 14, 1992 (Exhibit 3a to the registrant's
Annual Report on Form 10-K for the year ended December
31, 1992, File No. 1-7757)

3a(ii) Certificate of Amendment of Certificate of Incorporation,
dated January 10, 1994 and filed January 13, 1994.

3b By-Laws of the registrant, as amended through January 27, 1994.

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

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

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

24 Powers of attorney.

<PAGE>

Exhibit 3(a)(ii)

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

* * * * *

The Diamond State Telephone Company, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

FIRST: That the Board of Directors of said corporation, by the unanimous
written consent of its members, filed with the minutes of the Board, adopted a
resolution proposing and declaring advisable the following amendment to the
Certificate of Incorporation of said corporation:

RESOLVED, that the Certificate of Incorporation of The Diamond State
Telephone Company be amended by changing the First Article thereof so that, as
amended, said Article shall be and read as follows:

"1. The name of the corporation is Bell Atlantic - Delaware, Inc."

SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.

THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation Law
of the State of Delaware.
<PAGE>

IN WITNESS WHEREOF, said The Diamond State Telephone Company has caused
this certificate to be signed by Carolyn S. Burger, its President, and attested
by Joshua W. Martin III, its Secretary, this 10th day of January, 1994.

The Diamond State Telephone Company

By: \s\ Carolyn S. Burger
---------------------
Carolyn S. Burger
President

ATTEST:

By: \s\ Joshua W. Martin III
------------------------
Joshua W. Martin III
Secretary

<PAGE>

Exhibit 3b

BY-LAWS

BELL ATLANTIC - DELAWARE, INC.

(as amended through 1/27/94)

ARTICLE I

STOCKHOLDERS' MEETINGS

Section 1-a Place of Meetings. All meetings of the stockholders
shall be held at the registered office of the corporation or at such other
place, within or without the State of Delaware, as the Board of Directors or
stockholders may from time to time determine.

Section 1-b Annual Meeting. An annual meeting of the stockholders
shall be held in April of every year on a business day and at an hour to be
fixed by the President and set forth in the notice of the meeting, for the
election of Directors and the transaction of such other business as may
properly be brought before the meeting.

Section 1-c Special Meetings. Special meetings of the stockholders
may be called at any time by the Board of Directors, the President, or the
holder or holders of not less than one-fifth of all the shares of the
corporation outstanding and entitled to vote at the particular meeting.

Section 1-d Notice of Meetings. Written notice of every meeting of
the stockholders shall be given by or at the direction of the person or persons
authorized to call the meeting, to each stockholder of record entitled to vote
at the meeting, not less than ten (10) nor more than sixty (60) days prior to
the date named for the meeting, unless a greater period of notice is required by
law in a particular case, by delivery of or by mailing such notice to each
stockholder addressed to such stockholder at such stockholder's address
appearing on the books of the corporation for the purpose of notice. Such
notice shall specify the place, day and hour of the meeting, and shall state the
nature of the business to be transacted if, and to the extent, required by law.

Section 1-e Quorum. The presence, in person or by proxy, of the
stockholders entitled to cast at least a majority of the votes which all
stockholders are entitled to cast shall constitute a quorum at any meeting of
the stockholders for the election of Directors or for the transaction of other
business, except as otherwise provided by statute or in the Certificate of
Incorporation.

Section 1-f Stockholders Entitled to Vote. Except as may be otherwise
provided by law or in the Certificate of
<PAGE>

Incorporation, every stockholder shall have the right at every stockholders'
meeting to cast one vote, either in person or by proxy, for every share having
voting power standing in his or her name on the books of the corporation.

Section 1-g Voting. When a quorum exists at any meeting and unless
otherwise provided by law or in the Certificate of Incorporation, the acts of
the stockholders present, in person or by proxy, entitled to cast at least a
majority of the votes which all stockholders present are entitled to cast shall
be the acts of the stockholders, except that Directors shall be elected by a
plurality of such votes.

Section 1-h Informal Action. Except as may be otherwise provided in
the Certificate of Incorporation, any action which could be taken at a meeting
of the stockholders may be taken without a meeting, if a consent in writing,
setting forth the action so taken, is signed by all of the stockholders who
would be entitled to vote at a meeting for such purpose and is filed with the
Secretary of the corporation.

ARTICLE II

DIRECTORS

Section 2-a Number and Term of Office. The business and affairs of
the corporation shall be managed by or under the direction of the Board of
Directors. The Board of Directors shall consist of not less than seven (7) nor
more than fifteen (15) Directors, the exact number within such limits to be
determined from time to time by the Board of Directors, provided that not more
than three (3) Directors shall be employees of the corporation or any
affiliated company and not more than twelve (12) shall be outside Directors.
Directors shall be natural persons of full age. At each annual meeting the
directors shall be elected by the stockholders to serve until their respective
successors shall be elected and shall qualify or until his or her earlier
death, resignation or removal.

Section 2-b Place of Meetings. The meetings of the Board of Directors
may be held at such place, within or without the State of Delaware, as a
majority of the Directors may, from time to time, by resolution prescribe, or as
may be designated in the notice or waiver of notice of a particular meeting. In
the absence of specification, such meetings shall be held at the registered
office of the corporation.

Section 2-c Time of Meetings. The first meeting of each newly
elected Board of Directors shall be the regularly scheduled meeting of the
Board of Directors next following the annual meeting of the stockholders,
unless otherwise provided in the notice of the meeting. Such meeting shall be
for the purpose
<PAGE>

of organization, the election of officers and the transaction of other business.

Regular meeting of the Board of Directors may be held at such times as
the Board of Directors may by resolution determine. Unless otherwise specified
by resolution of the Board of Directors, if any day fixed for a regular meeting
shall be a legal holiday, then the meeting shall be held at the same hour and
place on the immediately preceding business day which is not a legal holiday.

Special meetings of the Board of Directors may be called at any time
by the President, and shall be called upon the written request of any two or
more Directors delivered to the Secretary. Upon receipt of such request it
shall be the duty of the Secretary promptly to issue the call for such meeting.

Section 2-d Notice of Meetings. Written notice of every meeting of
the Board of Directors shall be given personally or by mailing the same at least
forty-eight (48) hours before the time named for such meeting, except that
notice of a special meeting of the Board of Directors may instead be give by
telegraphing or telephoning the same, at least twenty-four (24) hours before the
time named for such meeting. Such notice shall specify the place, day and hour
of the meeting, and shall also state the nature of the business to be transacted
at a special meeting or if otherwise required by law.

Section 2-e Quorum. At all meetings of the Board of Directors one-
third of the total number of Directors shall be necessary to constitute a
quorum for the transaction of business, and the acts of a majority of the
Directors present at a meeting at which a quorum is present shall be the acts
of the Board of Directors, except as may otherwise be specifically provided by
statute.

Section 2-f Vacancies. Vacancies in the Board of Directors, whether
or not caused by an increase in the number of Directors, may be filled by a
majority of the remaining members of the Board though less than a quorum, and
each person so elected shall be a Director until his successor is elected and
qualified or until his or her earlier death, resignation or removal. Any
Director may resign at any time upon written notice to the corporation.

Section 2-g Removal of Directors. Any Director, or the entire Board,
may be removed with or without cause by vote of the holders of a majority of
the shares then entitled to vote at an election of Directors.

Section 2-h General Powers. The Board of Directors may exercise all
such powers of the corporation and do all such lawful acts and things as are
not by statute, or by the Certificate of Incorporation, directed or required
to be
<PAGE>

exercised and done by the stockholders. The Board of Directors may adopt and
enforce such rules and regulations, not inconsistent herewith, as they may deem
necessary for the conduct of the corporation's business; the Board of Directors
may, from time to time, designate one of its members to serve as Chairman, with
such duties as the Board of Directors shall specify. The Chairman or, if the
position is vacant, the President, shall preside at all Board Meetings.

Section 2-i Board Committees. The Board of Directors shall, by
resolution adopted by a majority of the whole Board of Directors, designate an
Executive Committee, which shall consist of not more than five Directors, the
majority of whom must be outside Directors and the Board of Directors may, by
resolution adopted by a majority of the whole Board of Directors, designate
from time to time such other committees consisting of three or more Directors,
as it shall deem necessary or appropriate, each to have such powers, in
addition to those set forth in these By-Laws, as the Board of Directors by
resolution shall authorize. Vacancies in the membership of any Committee shall
be filled by the Board of Directors of a regular or special meeting of the
Board of Directors. The Board of Directors may designate one or more Directors
as alternate members of the Executive or other Committee (to serve in the
order named if more than one) who may replace any absent or disqualified
member at any meeting of such Committee. If the Board has not made such
designation, or if none of the alternate members designated is available, in
the absence or disqualification of any member of the Executive or other
Committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not the member or members constitute a
quorum, may unanimously appoint another Director to act at the meeting in the
place of any such absent or disqualified member. The Executive or other
Committee shall keep regular minutes of its proceedings and shall report
actions taken by it to the next meeting of the Board of Directors.

Section 2-j Specific Powers of Executive and Other Committees. The
President, if a Director, shall be a member of the Executive Committee. Except
as prohibited by law or granted to another Committee by resolution of the
Board of Directors, the Executive Committee shall have and exercise all the
powers of the Board of Directors provided that neither the Executive nor any
other Committee shall have the power to adopt, amend or repeal the By-Laws of
the corporation or to elect Directors. At any meeting of a Committee a
majority of such Committee shall constitute a quorum. Each committee may fix
the time and place of its regular of its regular meetings, and after such time
and place shall have been fixed no notice of such regular meeting shall be
necessary. Special meetings of the Executive Committee may be called by the
President whenever he or she shall think proper, and the President shall call
such meetings whenever requested, in writing, by any two members of the
Executive Committee. Special Meetings of other Committees may be called by
<PAGE>

the respective chairmen. Notice of the time and place of every special meeting
of a Committee shall be given by the Secretary to each member of the Committee
in the manner prescribed in Section 2-d for special meetings of the whole Board
of Directors.

Section 2-k Informal Action. Any action which could be taken at a
meeting of the Board or the Executive or other Board Committee, may be taken
without a meeting, if consent in writing setting forth the action so taken is
signed by all of the Directors or the members of the Executive or other
Committee, as the case may be, and is filed by the Secretary of the Corporation
with the minutes of the proceedings of the Board of Directors or the
appropriate Committee.

Section 2-l Emergency Authority. The Board of Directors may adopt
emergency succession rules which make advance provision or the continuity and
authority of the corporation's management in the event of a major catastrophe,
such as a nuclear attack, or other disaster resulting in the loss or
unavailability of officers of the corporation, and in the event of such a major
catastrophe or disaster, the terms of any such rules shall have the same effect
as if included in these By-Laws and shall supersede the terms of these By-Laws
and any resolutions of the Board of Directors, to the extent that they may be
inconsistent therewith, until the Board of Directors can be convened pursuant to
such rules.

Section 2-m Compensation of Directors. The Board of Directors shall
have the authority to fix the compensation of Directors and Committee Members
and to provide for reimbursement of expenses incurred in the performance of
duties as a Director or Committee Member. A Director may serve the corporation
in any other capacity and may receive compensation therefor.

Section 2-n Telecommunications. One or more Directors may
participate in a meeting of the Board of Directors or a Committee thereof, by
means of conference telephone or similar communication equipment by means of
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section shall constitute presence
in person at such meeting.

ARTICLE III

OFFICERS

Section 3-a Number, Qualifications and Designation. The officers of
the Corporation shall be a President, who shall be the chief executive officer,
a Secretary, a Treasurer and such other officers (who may also be officers of an
affiliated company) as may be required by law or may from time to time be
elected by the Board of Directors and whose powers and duties shall be
prescribed by these By-Laws or as from time to time
<PAGE>

prescribed by the Board of Directors. One person may hold more than one office
except that the same person shall not hold the offices of President and
Secretary.

Section 3-b Election and Term of Office. The officers of the
corporation, except subordinate officers appointed by delegate authority
pursuant to Section 3-c hereof, shall be elected by the Board of Directors for
such terms as may be specified by the Board of Directors, and each such officer
shall hold such office until such officer's successor shall have been elected
and qualified, or until such officer's earlier death, resignation or removal.
The Board of Directors shall designate a principal financial officer and a
principal accounting officer. Any officer may resign at any time up on written
notice to the corporation and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. If
the office of an officer elected by the Board of Directors becomes vacant for
any reason, the vacancy may be filled by the President on an interim basis until
the next meeting of the Board of Directors, at which time the position shall
be filled by the Board of Directors.

Section 3-c Subordinate Officers, Employees and Agents. The Board of
Directors may from time to time appoint such subordinate officers, employees
or agents (who may also be officers or employees of an affiliated company) as
it deems necessary, who shall hold such position for such terms and shall
exercise such powers and perform such duties as are provided in these By-laws,
or as the Board of Directors may from time to time determine. The Board of
Directors may delegate to any officer or Committee of the Board of Directors
the power to appoint or remove subordinate officers and to retain, appoint or
remove employees or other agents, and to prescribe the authority and duties,
not inconsistent with these By-Laws, of such subordinate officers, employees
or other agents. In the absence of any such specific delegation, the President
shall have the authority to appoint subordinate officers, employees or agents.
The President shall have the authority to approve giving one or more
subordinate officers the title of Vice President, if deemed appropriate under
the circumstances.

Section 3-d Removal of Officers, Agents or Employees. Any officer,
subordinate officer, agent or employee of the corporation may be removed, or
his or her authority revoked, by resolution of the Board of Directors whenever
in its judgment the best interests of the corporation will be served thereby.
Any subordinate officer, agent or employee likewise may be removed by the
President or, subject to the President's supervision, by the person having
authority with respect to the appointment of such subordinate officer, agent
or employee.

Section 3-e President. The President shall have such
<PAGE>

authority and perform such duties as usually appertain to that office in
business corporations, and shall perform such other duties as shall from time
to time be assigned to him or her by the Board of Directors.

Section 3-f Secretary. The Secretary, or an Assistant Secretary,
shall attend all meetings of the stockholders and of the Board of Directors
and shall record the proceedings of the stockholders and Directors in a book
or books to be kept for that purpose; see that notices are given and records
and reports properly kept and filed by the corporation as required by law; be
the custodian of the seal of the corporation and attest or cause to be attested
documents on behalf of the corporation under its seal; and in general, perform
all duties incident to the office of Secretary and such other duties as may from
time to time be assigned to him or her by the Board of Directors or President.
The Secretary shall appoint one or more Assistant Secretaries with such powers
and duties as the Board of Directors, the President or the Secretary shall
from time to time determine.

Section 3-g Treasurer. The Treasurer, or an Assistant Treasurer,
shall have or provide for the custody of the funds and other property of the
corporation and shall keep or cause to be kept full and accurate accounts of
receipts and disbursements in books belonging to the corporation; collect and
receive, or provide for the collection and receipt of, moneys earned by or in
any manner due to or received by the corporation; deposit all funds in his or
her custody as Treasurer in such banks or other places of deposit as may be
designated from time to time by the Board of Directors or pursuant to its
authority; whenever so required by the Board of Directors, render an account
showing his or her transactions as Treasurer and the financial condition of
the corporation; and, in general, discharge such other duties as may from time
to time be assigned to him or her by the Board of Directors or the President.
The Treasurer shall appoint one or more Assistant Treasurers with such powers
and duties as the Board of Directors, the President or the Treasurer shall
from time to time determine.

Section 3-h Controller. The Controller, if one shall have been
elected or appointed, shall have custody and charge of all books of account,
except those required by the Treasurer in keeping records of the work of the
Treasurer's office, and shall have supervision over subsidiary accounting
records, wherever located. The Controller shall have access to all books of
account, including the Treasurer's records, for purposes of audit and for
obtaining information necessary to verify or complete the records of the
Controller's office. Unless otherwise provided by the Board of Directors, the
Controller shall certify to authorization and approvals pertaining to vouchers
and shall perform such other duties as may be assigned by the Board of
Directors or the President. With the approval of the President, the controller
may designate one or more persons to perform all of the Controller's duties as
may be found necessary to delegate
<PAGE>

in the ordinary course of the business or in the event of the absence or
disability of the Controller.

Section 3-i Delegation of Duties. The President may delegate duties to
other officers, subordinate officers, employees or agents and may similarly
provide for the re-delegation thereof.

Section 3-j Voting of Stock. Unless otherwise provided by the Board
of Directors, the President or the Treasurer shall have full power and
authority, on behalf of the corporation to attend, and to act and vote, in
person or by proxy, at, any meeting of the stockholders of any company in
which the corporation may hold stock, and at any such meeting shall possess
and may exercise any and all of the rights and powers incident to the
ownership of such stock which, as the owner thereof the corporation might have
possessed and exercised if present. The Board of Directors may from time to
time confer like powers upon any other person or persons.

Section 3-k Endorsement of Securities for Transfer. The President and
the Treasurer shall each have power to endorse and deliver for sale, assignment
or transfer certificates of stock, bonds or other securities, registered in the
name of or belonging to the corporation, whether issued by this corporation or
by any other corporation, government, state or municipality or agency thereof.

ARTICLE IV

CERTIFICATES FOR STOCK, TRANSFER, ETC.

Section 4-a Issuance. Each stockholder shall be entitled to a
certificated or certificates, under the seal of the corporation, showing the
number of shares to which the stockholder is entitled. Such certificates shall
be signed by the President and by the Treasurer or an Assistant Treasurer.

Section 4-b Transfer. Stock shall be transferable on the books of the
corporation only by the holder thereof in person, or by attorney, upon surrender
of the outstanding certificate; provided, however, that in the case of a lost,
stolen or destroyed certificate, a new certificate may be issued in place
thereof upon such terms as the Board of Directors may prescribe.

Section 4-c Record Holder of Shares; Record Date. The corporation
shall be entitled to recognize the exclusive right of a person registered on
its books as the owner of shares to receive dividends and to vote as such
owner and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person except as
otherwise provided by law. In order that the corporation may
<PAGE>

determine the stockholders entitled to notice of or to vote at any meeting of
stockholders, to receive any dividend or other distribution, or to exercise any
other right to which a stockholder is entitled, the Board of Directors may fix
in advance a record date in accordance with the provisions specified by statute.
If no record date is fixed, then the record date shall be determined in
accordance with the applicable statutory provisions.

ARTICLE V

INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER
AUTHORIZED REPRESENTATIVES

Section 5-a Indemnification of Authorized Representatives in Third
Party Proceedings. The Corporation shall indemnify any person who was or is an
"authorized representative" of the corporation (which shall mean for purposes of
this Article a director or officer of the corporation) and who was or is a party
or is threatened to be made a party to any "third party proceeding" (which shall
include for purposes of this Article any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, other that an action by or in the right of the corporation) by
reason of the fact that such person was or is an authorized representative of
the corporation, against expenditures (which shall include for purposes of this
Article attorney's fees), judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such third party proceeding if such person acted in good faith an in a manner
such person reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal third party
proceeding (including any action or investigation which could or does lead to
a criminal third party proceeding), had no reasonable cause to believe such
conduct was unlawful. The termination of any third party proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not of itself create a presumption that the authorized
representative (i) did not act in good faith and in a manner which such person
reasonably believed to be in, or not opposed to, the best interests of the
corporation, or (ii) with respect to any criminal third party proceeding, had
reasonable cause to believe that such conduct was unlawful.

Section 5-b Indemnification of Authorized Representatives in Corporate
Proceedings. The corporation shall indemnify any person who was or is an
authorized representative of the corporation and who was or is a party or is
threatened to be made a party to any "corporate proceeding" (which shall include
for purposes of this Article any threatened, pending or completed action or suit
by or in the right of the corporation to procure a judgment in its favor and any
investigative proceeding by the corporation) by reason of the fact that such
person was or
<PAGE>

is an authorized representative of the corporation, against expenses actually
and reasonably incurred by such person in connection with the defense or
settlement of such corporate action if such person acted in good faith and in a
manner reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of such person's duty to
the corporation unless and only to the extent that the Court of Chancery or the
court in which such corporate proceedings was pending shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such authorized representative is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.

Section 5-c Mandatory Indemnification of Authorized Representatives.
To the extent that an authorized representative of the corporation has been
successful on the merits or otherwise in defense of any third party or
corporate proceeding or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses actually and reasonably incurred
by such person in connection therewith.

Section 5-d Determination of Entitlement to Indemnification. Any
indemnification under Section 5-a, 5-b, or 5-c hereof (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the authorized representative is
proper in the circumstances because such person has either met the applicable
standard of conduct set forth in Section 5-a or 5-b or has been successful on
the merits or otherwise as set forth in Section 5-c and that the amount
requested has been actually and reasonably incurred. Such determination shall
be made:

(1) By the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such third party or corporate proceeding, or

(2) If such quorum is not obtainable or, even if obtainable, a majority
vote of such a quorum so directs, by independent legal counsel in a written
opinion, or

(3) By the stockholders.

Section 5-e Advancing Expenses. Expenses actually and reasonably
incurred in defending a third party or corporate proceeding shall be paid on
behalf of an authorized representative by the corporation in advance of the
final disposition of such third party or corporate proceeding and within 30
days of receipt by the Secretary of the corporation of (i) an application from
such authorized representative setting
<PAGE>

forth the basis for such application, and (ii) if required by law at the time
such application is made, and undertaking by or on behalf of the authorized
representative to repay such amount if it shall ultimately be determined that
such person is not entitled to be indemnified by the corporation under this
Article. The financial ability of such authorized representative to make such
repayment shall not be a prerequisite to the making of an advance.

Section 5-f Employee Benefit Plans. For purposes of this Article,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the corporation" shall include any service as director, officer, employee or
agent of the corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this Article.

Section 5-g Scope of Article. The indemnification and advancement of
expenses provided by or granted pursuant to this Article shall (i) not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office, (ii) unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be an authorized representative and (iii)
inure to the benefit of the heirs, executors and administrators of such a
person.

Section 5-h Reliance on Provisions. Each person who shall act as an
authorized representative of the corporation shall be deemed to be doing so in
reliance upon the rights of indemnification and advancement of expenses
provided by this Article.

Section 5-i Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was an authorized representative
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such person against
such liability under the provisions of this Article or otherwise.

<PAGE>

ARTICLE VI

MISCELLANEOUS

Section 6-a Waiver of Notice. Except as otherwise provided by law or
the Certificate of Incorporation, any notice required to be given under the
provisions of the By-Laws, or otherwise, may be waived in writing by the
stockholder, director or officer to whom such notice is required to be given,
either before or after the meeting or action of which notice is waived.
Attendance of any stockholder, in person or by proxy, and of any director or
officer at any meeting shall constitute a waiver of notice of such meeting
except where a person entitled to notice attends the meeting for the express
purpose of objecting to the transaction of any business because the meeting
was not lawfully called convened. A stockholder or director who signs a
written consent, in lieu of a meeting, as provided for in these By-Laws, shall
be deemed to have waived any notice of such meeting.

Section 6-b Checks, Notes, Etc. All checks, notes and evidences of
indebtedness of the corporation shall be signed by such person or persons as
the Board of Directors may from time to time designate or the Board may adopt
a single symbol to be affixed to such documents. In either case, the signature
of such person or persons, or a symbol, if such is adopted, and any facsimile
or facsimiles thereof, shall be an "authorized signature" of the corporation
and shall be affixed to such checks, notes, and evidences of indebtedness in
such manner, and by such persons, as the Board of Directors shall authorize.

Section 6-c Corporate Seal. The Corporate seal shall have inscribed
thereon the name of the corporation, with such device or devices as the Board
of Directors may determine. The seal may be used by causing it or a facsimile
thereof to be impressed or affixed in any other manner reproduced.

Section 6-d Amendment of By-Laws. The By-Laws may be adopted,
amended or repealed by the Board of Directors at any meeting, except that
Section 2-a, above, shall be amended or repealed only by the stockholders.

<PAGE>

Exhibit 24
BA - DE 10K

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, BELL ATLANTIC - DELAWARE, INC. (formerly known as THE DIAMOND
STATE TELEPHONE COMPANY), a Delaware corporation (hereinafter referred to as the
"Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and

WHEREAS, the undersigned is a director of the Company;

NOW, THEREFORE, the undersigned hereby constitutes and appoints CAROLYN S.
BURGER and JOHN J. PARKER and each of them, as attorneys for him and in his
name, place and stead as a director of the Company, to execute and file such
annual report, and thereafter to execute and file any amendment or amendments
thereto on Form 8, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully, to all intents and
purposes, as he might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 21st day
of March, 1994.

/s/ Harry Bonk
--------------
Harry Bonk
Director

<PAGE>

STATE OF DELAWARE )
) SS:
COUNTY OF SUSSEX )

On this 21st day of March, 1994, before me, the undersigned officer,
personally appeared Harry Bonk, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the same
for purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

/s/ Notary Public
-----------------
Notary Public

My commission expires:
April 23, 1996
<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 23rd day
of March, 1994.

/s/ Archie W. Dunham
--------------------
Archie W. Dunham
Director
<PAGE>

STATE OF TEXAS )
) SS:
COUNTY OF HARRIS )

On this 23rd day of March, 1994, before me, the undersigned officer,
personally appeared Archie W. Dunham, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the same
for purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

/s/ Notary Public
-----------------
Notary Public

My commission expires:
August 26, 1997
<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 22nd day
of March, 1994.

/s/ Charles W. Crist
--------------------
Charles W. Crist
Director
<PAGE>

STATE OF VIRGINIA )
) SS:
COUNTY OF ARLINGTON )

On this 22nd day of March, 1994, before me, the undersigned officer,
personally appeared Charles W. Crist, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the same
for purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

/s/ Notary Public
-----------------
Notary Public

My commission expires:
July 31, 1994
<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 22nd day
of March, 1994.

/s/ Robert F. Rider
-------------------
Robert F. Rider
Director
<PAGE>

STATE OF DELAWARE )
) SS:
COUNTY OF NEW CASTLE)

On this 22nd day of March, 1994, before me, the undersigned officer,
personally appeared Robert F. Rider, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the same
for purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

/s/ Notary Public
-----------------
Notary Public

My commission expires:
July 31, 1995
<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, BELL ATLANTIC - DELWARE, INC. (formerly known as THE DIAMOND STATE
TELEPHONE COMPANY), a Delaware corporation (hereinafter referred to as the
"Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and

WHEREAS, the undersigned is a director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 24th day
of March, 1994.

/s/ David P. Roselle
--------------------
David P. Roselle
Director
<PAGE>

STATE OF DELAWARE )
) SS:
COUNTY OF NEW CASTLE )

On this 24th day of March, 1994, before me, the undersigned officer,
personally appeared David P. Roselle, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the same
for purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

/s/ Notary Public
-----------------
Notary Public

My commission expires:
March 18, 1996
<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is an officer, a director, or both an officer and
director, of the Company, as indicated below his name;

NOW, THEREFORE, the undersigned hereby constitutes and appoints CAROLYN S.
BURGER and JOHN J. PARKER and each of them, as attorneys for him and in his
name, place and stead, and in each of his offices and capacities, as an officer,
a director, or both an officer and director, of the Company, to execute and file
such annual report, and thereafter to execute and file any amendment or
amendments thereto on Form 8, hereby giving and granting to said attorneys full
power and authority to do and perform all and every act and thing whatsoever
requisite and necessary to be done in and about the premises as fully, to all
intents and purposes, as he might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18th day
of March, 1994.

/s/ Joshua W. Martin III
------------------------
Joshua W. Martin III
Vice President and General
Counsel; Secretary; Director
<PAGE>

STATE OF DELAWARE )
) SS:
COUNTY OF NEW CASTLE )

On this 18th day of March, 1994, before me, the undersigned officer,
personally appeared Joshua W. Martin III, known to me to be the person whose
name is subscribed to the within instrument, and acknowledged that he executed
the same for purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

/s/ Notary Public
-----------------
Notary Public

My commission expires:
March 18, 1996
<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is an officer of the Company;

NOW, THEREFORE, the undersigned hereby constitutes and appoints CAROLYN S.
BURGER as attorney for him and in his name, place and stead as an officer of the
Company, to execute and file such annual report, and thereafter to execute and
file any amendment or amendments thereto on Form 8, hereby giving and granting
to said attorneys full power and authority to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and about the
premises as fully, to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 24th day
of March, 1994.

/s/ John J. Parker
------------------
John J. Parker
Controller and Treasurer
<PAGE>

STATE OF DELAWARE )
) SS:
COUNTY OF NEW CASTLE )

On this 24th day of March, 1994, before me, the undersigned officer,
personally appeared John J. Parker, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the same
for purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

/s/ Notary Public
-----------------
Notary Public

My commission expires:
August 27, 1994
<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is an officer and director of the Company;

NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN J.
PARKER as attorney for him and in his name, place and stead as an officer of the
Company, to execute and file such annual report, and thereafter to execute and
file any amendment or amendments thereto on Form 8, hereby giving and granting
to said attorneys full power and authority to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and about the
premises as fully, to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 24th day
of March, 1994.

/s/ Carolyn S. Burger
---------------------
Carolyn S. Burger
President and Director
<PAGE>

STATE OF DELAWARE )
) SS:
COUNTY OF NEW CASTLE )

On this 24th day of March, 1994, before me, the undersigned officer,
personally appeared Carolyn S. Burger, known to me to be the person whose name
is subscribed to the within instrument, and acknowledged that he executed the
same for purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

/s/ Notary Public
-----------------
Notary Public

My commission expires:
August 27, 1994

My commission expires:
August 27, 1994.