<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                            _______________________

                                   FORM 10-K
                            _______________________


   (Mark one)
      [X]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1996

                                      OR

      [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                    For the transition period from      to


                         Commission file number 1-7150


                      BELL ATLANTIC - WEST VIRGINIA, INC.


A West Virginia Corporation        I.R.S. Employer Identification No. 55-0142020


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


                        Telephone Number (304) 343-9911

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


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

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


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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes   X    No 
                                        -----     -----     
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


                                   SCHEDULE A


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

                                                       Name of each exchange
     Title of each class                                on which registered
-----------------------------                          ----------------------
Forty Year 7 1/4% Debentures,           
   due February 1, 2013                                New York Stock Exchange
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
 
Item No.                                                                    Page
--------                                                                    ----
<S>                                                                         <C>
 
                                    PART I
 
    1.  Business..........................................................     1
    2.  Properties........................................................     8
    3.  Legal Proceedings.................................................     9
    4.  Submission of Matters to a Vote of Security Holders...............    10
 
 
                                    PART II
 
    5.  Market for Registrant's Common Equity and Related Stockholder 
        Matters...........................................................    10
    6.  Selected Financial Data...........................................    10
    7.  Management's Discussion and Analysis of Results of Operations
        (Abbreviated pursuant to General Instruction I(2).)...............    11
    8.  Financial Statements and Supplementary Data.......................    21
    9.  Changes in and Disagreements with Accountants on Accounting and 
        Financial Disclosure..............................................    21
 
 
                                   PART III
 
   10.  Directors and Executive Officers of the Registrant................    21
   11.  Executive Compensation............................................    21
   12.  Security Ownership of Certain Beneficial Owners and Management....    21
   13.  Certain Relationships and Related Transactions....................    21
 

                                    PART IV

   14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K....  21

</TABLE> 

      UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MARCH 20, 1997.
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


                                     PART I

Item 1.  Business

                                    GENERAL

   Bell Atlantic - West Virginia, Inc. (the "Company") is incorporated under the
laws of the State of West Virginia and has its principal offices at 1500
MacCorkle Avenue, S.E., Charleston, West Virginia 25314 (telephone number 304-
343-9911).  The Company is a wholly owned subsidiary of Bell Atlantic
Corporation ("Bell Atlantic"), which is one of the seven regional holding
companies ("RHCs") formed in connection with the court-approved divestiture (the
"Divestiture"), effective January 1, 1984, of those assets of American Telephone
and Telegraph Company ("AT&T") related to exchange telecommunications, exchange
access functions, printed directories and cellular mobile communications.

   The Company presently serves a territory consisting of two complete Local
Access and Transport Areas ("LATAs") and part of a third LATA.  These LATAs are
generally centered on a city or based on some other identifiable common
geography and, with certain limited exceptions, each LATA marks the boundary
within which the Company has been permitted by the "Modification of Final
Judgment" ("MFJ") to provide telephone service.

   The Company currently 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 by other pay telephone
providers).  Among other local services provided are Centrex (telephone
subsidiary 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) and 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.  The Company also provides exchange access service to interexchange
carriers which provide intrastate intraLATA toll service.


     LINE OF BUSINESS RESTRICTIONS AND THE TELECOMMUNICATIONS ACT OF 1996

   The consent decree entitled MFJ and the Plan of Reorganization ("Plan")
approved by the United States District Court for the District of Columbia set
forth the terms of Divestiture and established certain restrictions on the post-
Divestiture activities of the RHCs, including Bell Atlantic, and their
affiliates. The MFJ's principal restrictions on post-Divestiture RHC activities
included prohibitions on (i) providing interLATA (long distance)
telecommunications, and (ii) engaging in the manufacture of telecommunications
equipment and customer premises equipment.

   The Telecommunications Act of 1996 (the "Act") became effective on February
8, 1996 and replaces the MFJ.  In general, the Act includes provisions that open
local exchange markets to competition and permit Bell Atlantic to provide
interLATA services and engage in manufacturing.  However, the ability of Bell
Atlantic to engage in businesses previously prohibited by the MFJ is largely
dependent on satisfying certain conditions contained in the Act and regulations
to be promulgated thereunder.

   With regard to the rules governing competition in the interLATA market, the
Act takes a two-fold approach. Effective February 8, 1996, Bell Atlantic was
permitted to apply for state approval to offer interLATA services in states
outside of the geographic region in which it currently operates as a local
exchange carrier.  In addition, Bell Atlantic's wireless businesses are now
permitted to offer interLATA services without having to comply with the
conditions imposed in waivers granted under the MFJ.

   Secondly, each of Bell Atlantic's telephone subsidiaries, including the
Company, must demonstrate to the Federal Communications Commission ("FCC") that
it has satisfied certain requirements in order for Bell Atlantic to be permitted
to offer interLATA services for calls originating within the geographic region
in which the telephone subsidiary operates as a local exchange carrier.  Among
the requirements with which the Company must comply is a 14-point "competitive
checklist" which includes steps the Company must take which will help
competitors offer local service, either through 

                                       1
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


resale, through the purchase of unbundled network elements, or through the
competitors' own networks. The Company must also demonstrate to the FCC that its
entry into the interLATA market would be in the public interest.

   The FCC is required to conduct a number of rulemakings to implement the Act.
See "FCC Regulation and Interstate Rates - Access Charge and Universal Service
Reform" and "Competition - Local Exchange Services."  The ultimate outcome of
FCC rulemakings could have a significant impact upon successful implementation
of the Act and the extent, nature and timing of competition in the local
exchange and interLATA markets.

   No definitive prediction can be made as to the impact of the Act on the
business, results of operations or financial condition of the Company.  The
financial impact on the Company will depend on several factors, including the
timing, extent and success of competition in the Company's markets, and the
timing, extent and success of the Company's pursuit of new business
opportunities resulting from the Act.


            PROPOSED MERGER OF BELL ATLANTIC AND NYNEX CORPORATION

   In April 1996, Bell Atlantic and NYNEX Corporation announced a definitive
agreement for a merger of equals; the agreement was amended in July, 1996 (the
agreement, as amended, hereinafter the "Merger Agreement").

   NYNEX is another of the RHCs created at Divestiture, and the Bell System
operating companies ("BOCs") owned by NYNEX serve the Northeastern portion of
the United States.  The business of the NYNEX BOCs is qualitatively similar to
that of Bell Atlantic's telephone subsidiaries, including the Company as
described above under "General."  NYNEX is also subject to the Act, and to FCC
regulation, in much the same ways as the Company is, as described above under
"Line of Business Restrictions and the Telecommunications Act of 1996" and below
under "FCC Regulation and Interstate Rates," respectively.  The operations of
the NYNEX BOCs are also subject to regulation by the public utility commissions
of New York, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire
and Maine.  In addition, Bell Atlantic and NYNEX have previously formed
partnerships which contain substantially all of their domestic cellular, paging
and personal communications services businesses.

   Bell Atlantic believes that the proposed merger will be an effective means of
achieving the operating efficiency, scale, scope and financial resources
necessary to expand into the new markets available to Bell Atlantic under the
Act and to compete with new market entrants in its existing markets.

   As a result of the merger, Bell Atlantic will incur certain transition costs,
currently estimated at $700 million to $900 million.  Bell Atlantic also expects
to recognize recurring expense savings of approximately $600 million annually by
the third year following completion of the merger as a result of consolidating
operating systems and other administrative functions and reducing management
positions.  Incremental savings in annual capital expenditures for Bell Atlantic
should grow to approximately $250 million to $300 million, including
efficiencies relating to purchasing, marketing trials and equipment testing.  It
is anticipated that the Company will recognize a portion of these savings and
costs.  See "Management's Discussion and Analysis of Results of Operations -
Other Matters, Proposed Bell Atlantic - NYNEX Merger" on page 19 for a further
discussion of this matter.

   Shareowners of both companies approved the merger in November 1996.
Completion of the merger remains subject to a number of conditions, the
principal ones relating to regulatory reviews.  Bell Atlantic is unable to
predict when it will be able to complete the merger.


                                  OPERATIONS

   During 1993, Bell Atlantic reorganized certain functions formerly performed
by each of its seven telephone subsidiaries, including the Company
(collectively, the "telephone subsidiaries"), into lines of business ("LOBs")
operating across these companies.  The LOBs focus on specific market segments.
The telephone subsidiaries remain responsible within their respective service
areas for the provision of telephone services, financial performance and
regulatory matters.

   The Consumer Services LOB markets communications services to residential
customers within the service territories of the telephone subsidiaries.

                                       2
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


   The Carrier Services LOB markets (i) switched and special access to the
telephone subsidiaries' 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 ("IXCs"); AT&T is the
largest single customer.  Other customers include business customers and
government agencies with their own special access network connections, wireless
companies 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).

   The Large Business Services LOB markets communications and information
services to large businesses (customers having more than 20 access 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 service, intelligent vehicle highway systems), video
services (distance learning, telemedicine, videoconferencing) and interactive
multimedia 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.

   In order to satisfy the requirements of the Act, the Company transferred
certain assets and liabilities associated with its directory publishing
activities to a newly formed, wholly owned subsidiary, effective January 1,
1997.  The stock of the subsidiary was immediately distributed to Bell Atlantic.

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

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

   The Network LOB manages the technologies, services and systems platforms
required by the other LOBs and the telephone subsidiaries to meet the needs of
their respective customers, including switching, feature development and on-
premises installation and maintenance services.


                      FCC REGULATION AND INTERSTATE RATES

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

   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.  In
general, the tariff structures prescribed by the FCC provide that interstate
costs of the Company which do not vary based on usage are recovered from
subscribers through flat monthly charges ("subscriber line charges"), and from
IXCs through usage-sensitive Carrier Common Line ("CCL") charges.  Traffic-
sensitive interstate costs are recovered from carriers through variable access
charges based on several factors, primarily usage.

                                       3
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


   Price Caps

   The FCC's price cap system, which became effective in 1991, places caps on
the Company's prices for interstate access services.  The caps are modified
annually, in inflation-adjusted terms, to reflect increases in productivity, and
can also be adjusted to reflect certain "exogenous" changes, such as changes in
FCC separations procedures.

   Under the current form of the price cap system, Bell Atlantic's price cap
index is adjusted by an inflation index (GDP-PI) less a fixed percentage, either
4.0%, 4.7% or 5.3% as Bell Atlantic may elect, which is intended to reflect
increases in productivity ("Productivity Factor").  If Bell Atlantic selects the
4.0% or 4.7% Productivity Factor, it is required to share a portion of its
future interstate earnings in excess of a rate of return of 12.25%.  If Bell
Atlantic selects the 5.3% Productivity Factor, it is not required to share a
portion of its future interstate earnings.

   In July 1996, Bell Atlantic selected the 5.3% Productivity Factor for the
July 1996 to June 1997 tariff period.  The rates included in the July 1996
filing resulted in price increases for the Company totaling approximately
$900,000 on an annual basis.

   Access Charge and Universal Service Reform

   In December 1996, the FCC commenced a proceeding to reform the interstate
access charge system. The FCC is considering two approaches for establishing a
transition to access charges which more closely reflect the economic cost of
access services and for deregulating access services as competition develops in
the local exchange and exchange access markets.  Under a market-based approach,
the FCC would rely on actual and potential competition from new facilities-based
service providers and market entrants purchasing unbundled network elements to
drive prices for access services toward appropriate levels.  As competition
develops, the FCC would gradually relax, and ultimately remove, existing access
rate structure requirements and price cap restrictions.  Under an alternative
prescriptive approach, the FCC would specify the nature and timing of changes to
the current access charge rate levels.  The FCC is expected to release its order
in this proceeding in the second quarter of 1997.  The Company is unable to
predict the amount of any modifications in access charges that could result from
this proceeding, the manner in which such modifications would be effectuated, or
the time period over which such modifications would occur.

   The FCC has also initiated a rulemaking under the Act designed to preserve
"universal service" by ensuring that local exchange service remains reasonably
available to all residential customers, including low-income customers and
customers in areas which are expensive to serve.  The FCC proposes to
restructure the current federal Universal Service Fund, which provides support
for high cost access and low-income assistance, and, as required by the Act, to
establish new support mechanisms for discounted services for schools, libraries
and rural health care providers.  The FCC must issue an order resolving the
universal service issues by May 1997.  The Company is unable to predict the
ultimate size of the Fund, how contributions to the Fund by telecommunications
providers will be determined, how payments from the Fund will be distributed, or
the financial impact of this proceeding on the Company.

   FCC Cost Allocation and Affiliate Transaction Rules

   FCC rules govern (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.

   Under the cost allocation rules, unregulated activities include 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
assigned 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.

   The affiliate transaction rules govern the pricing of assets transferred, and
services provided, between 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, (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.

                                       4
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


   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.


                 STATE REGULATION AND COMPETITIVE ENVIRONMENT

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

   In December 1991, the PSC approved an "Incentive Regulation Plan".  The
Incentive Regulation Plan continued the major provisions of the prior plan,
including pricing flexibility for competitive services and a freeze on rates for
basic local exchange service.  It also committed the Company to invest $450
million from 1991 through 1995 in West Virginia's telecommunications
infrastructure.

   In December 1994, the PSC issued an order extending the Incentive Regulation
Plan for three years, with certain modifications.  Basic rates remain frozen
through January 15, 1998 and Touch-Tone charges will be eliminated over a three
year period.  The Company is committed to invest at least $375 million in its
network over the five year period from 1995 through 1999.

   COMPETITION

   Legislative changes, including provisions of the Act discussed above under
"Line of Business Restrictions and the Telecommunications Act of 1996,"
regulatory changes and 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,
nationwide presence and brand name recognition.

   Local Exchange Services

   The ability to offer local exchange services has historically been subject to
regulation by the PSC.

   One of the purposes of the Act was to ensure, and accelerate, the emergence
of competition in local exchange markets.  Toward this end, the Act requires
most existing local exchange carriers (incumbent local exchange carriers, or
"ILECs"), including the Company, to permit potential competitors (competitive
local exchange carriers, or "CLECs") to (i) purchase service from the ILEC for
resale to CLEC customers, (ii) purchase unbundled network elements from the
ILEC, and/or (iii) interconnect its network with the ILEC's network.  The Act
provides for arbitration by the state public utility commission if an ILEC and a
CLEC are unable to reach agreement on the terms of the arrangement sought by the
CLEC.

   In August 1996, the FCC adopted an order (the "Interconnection Order")
relating to these types of arrangements between ILECs and CLECs.  The
Interconnection Order set forth cost methodology to be used by state commissions
in arbitration proceedings to set cost-based rates for purchase of unbundled
network elements and for purchase of services for resale, and established
guideline amounts to be used by state commissions in the absence of full cost
studies.  Several parties, including Bell Atlantic, appealed the Interconnection
Order on the grounds that it was inconsistent with the Act.  In October, 1996,
the U.S. Court of Appeals for the Eighth Circuit granted a stay of the
effectiveness of the pricing provisions of the Interconnection Order pending a
final decision on their validity.

   Notwithstanding the existence of the stay of the Interconnection Order,
negotiations between the Company and CLECs, and arbitrations before the PSC,
have continued.  As of March 1, 1997, the Company had entered into one agreement
with a CLEC.

   The Company expects that this agreement, and the Act, will lead to
substantially increased competition in its local exchange market in 1997 and
subsequent years.  The Company believes that this competition will be both on a
facilities basis and in the form of resale by CLECs of the Company's service.
Under the agreement discussed above, the Company is generally required to sell
its services to CLECs at discounts ranging from approximately 9% to 12% from the
prices the Company charges its retail customers.

                                       5
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


   IntraLATA Toll Services

   Competition to offer intrastate intraLATA toll services is currently
permitted in the Company's jurisdiction. Increased competition from IXCs has
resulted in a decline in several components of the Company's toll service
revenues.

   Currently, intraLATA toll calls are completed by the Company unless the
customer dials a code to access a competing carrier.  This dialing method would
be changed by "presubscription," which would enable customers to make intraLATA
toll calls using another carrier without having to dial an access code.

   In general, the Act prohibits a state from requiring intraLATA
presubscription until the earlier of such time as a BOC in the state is
authorized to provide long distance services within the state or three years
from the effective date of the Act. This prohibition does not apply to an order
requiring a BOC to implement presubscription that was issued on or prior to
December 19, 1995 or to states consisting of a single LATA.

   In December 1995, the PSC issued a final order directing the implementation
of presubscription within eighteen months of that order.  The Company filed a
petition for review of that order with the West Virginia Supreme Court, which
was denied.  In January 1997, the PSC extended the implementation date to August
15, 1997, or the date that the Company is authorized by the FCC to enter the
interLATA market, whichever is earlier.

   Implementation of presubscription for intraLATA toll services could have a
material negative effect on toll service revenues.

   Alternative Access

   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, IXCs and alternative access vendors, which are
capable of originating and/or terminating calls without the use of the 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
virtual collocated interconnection for special and switched access services.

   Other potential sources of competition include 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.

   Personal Communications Services

   Personal communications services ("PCS") also constitute potential sources of
competition to the Company.  PCS consists of wireless portable telephone
services employing digital technology, which will allow customers to make and
receive telephone calls from any location using small handsets, and which could
also be used for data transmission.

   Public Telephone Services

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

   Operator Services

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

                                       6
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


                             LONG DISTANCE SERVICE

   The Company is currently working towards completing the "competitive
checklist" and other prerequisites under the Act for entering the interLATA
market in its jurisdiction.  The Company expects to apply to the FCC for
permission to offer interLATA services later in 1997, and expects to receive
permission before the end of the year.


                      CERTAIN CONTRACTS AND RELATIONSHIPS

   Certain planning, marketing, procurement, financial, legal, accounting,
technical support and other management services are provided to 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 was created to furnish 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 could be provided
more effectively on a centralized basis.  Bellcore has also served as 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, and helps to mobilize the combined resources of the RHCs in times of
natural disasters.  In November, 1996, the seven RHCs entered into a definitive
agreement to sell their interests in Bellcore to Science Applications
International Corporation.  The transaction is subject to regulatory approvals,
and is expected to be completed near the end of 1997.  After the sale is
completed, centralized national security and emergency preparedness functions
will be performed for the RHCs by National Telecommunications Association, owned
by the seven RHCs.


                                   EMPLOYEES

   As of December 31, 1996, the Company had approximately 1,800 employees.  This
work force is augmented by employees of the centralized staff of NSI, who
perform services for the Company on a contract basis.


          CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

   Information set forth above regarding expected or possible future events is
forward-looking and subject to risks and uncertainties.  For those statements,
the Company claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.

   The following important factors could affect the future results of the
Company and could cause those results to differ materially from those expressed
in the forward-looking statements: (i) materially adverse changes in economic
conditions in the markets served by the Company; (ii) a significant delay in the
expected closing of the merger; (iii) the final outcome of FCC rulemakings with
respect to interconnection agreements, access charge reform and universal
service; (iv) the timing of presubscription for toll services; (v) future state
regulatory actions and economic conditions in the Company's operating area; and
(vi) the extent, timing and success of competition from others in the local
telephone and toll service markets.

                                       7
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

Item 2.  Properties

                                    GENERAL

   The principal properties of the Company do not lend themselves to simple
description by character and location.  The Company's investment in plant,
property and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
 
                                1996   1995
                                -----  -----
<S>                             <C>    <C>
 
   Central office equipment...    38%    37%
   Cable, wiring and conduit..    40     40
   Land and buildings.........     8      8
   Other equipment............    13     13
   Other......................     1      2
                                ----   ----
                                 100%   100%
                                ====   ====
</TABLE>


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

   The Company's customers are served by electronic switching systems that
provide a wide variety of services.  Since December 31, 1994, the Company's
network has been fully transitioned from an analog to a digital network, which
provides the capabilities to furnish advanced data transmission and information
management services.


                             CAPITAL EXPENDITURES

   The Company has been making and expects to continue to make significant
capital expenditures to meet the demand for communications services and to
further improve such services.  Capital expenditures were approximately $90
million in 1996, $88 million in 1995 and $85 million in 1994.  The total
investment in plant, property and equipment was approximately $1.67 billion at
December 31, 1996, $1.63 billion at December 31, 1995, and $1.57 billion at
December 31, 1994, in each case after giving effect to retirements, but before
deducting accumulated depreciation at such date.

                                       8
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


Item 3.  Legal Proceedings

   General

   The Company is a party to litigation and other claims arising in the ordinary
course of business, including matters relating to employment disputes, customer
claims, taxes, contracts, and alleged torts.  Some of these claims purport to be
class actions.

   While complete assurance cannot be given as to the outcome of any 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 the
foregoing matters would not be material in amount to the results of operations
or financial position of the Company.

   Pre-Divestiture Contingent Liabilities and Litigation

   The Plan provides for the recognition and payment by AT&T and the former BOCs
(including the Company) of liabilities that are attributable to pre-Divestiture
events but do not become certain until after Divestiture.  These contingent
liabilities relate principally to litigation and other claims with respect to
the former Bell System's rates, taxes, contracts and torts (including business
torts, such as alleged violations of the antitrust laws).  Except to the extent
that affected parties otherwise agree, contingent liabilities that are
attributable to pre-Divestiture events are shared by AT&T and the BOCs in
accordance with formulas prescribed by the Plan, whether or not an entity was a
party to the proceeding and regardless of whether an entity was dismissed from
the proceeding by virtue of settlement or otherwise.  Each company's allocable
share of liability under these formulas depends on several factors, including
the type of contingent liability involved and each company's relative net
investment as of the effective date of Divestiture.  Under the formula generally
applicable to most of the categories of these contingent liabilities, the
Company's aggregate allocable share of liability is approximately 0.6%.

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

   Effective in 1994, the Company and the other Regional Holding Companies
agreed to discontinue sharing of new pre-Divestiture claims and certain existing
claims other than claims relating to environmental matters.  AT&T is not a party
to this agreement.

   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 results of operations
or financial position of the Company.

                                       9
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


                                    PART I


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

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

                                       10
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


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

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


RESULTS OF OPERATIONS
---------------------

   The Company reported net income of $74,349,000 in 1996, compared to net
income of $81,247,000 in 1995.

   In the fourth quarter of 1996, the Company changed its method of accounting
for directory publishing revenues and expenses, effective January 1, 1996.  The
Company adopted the point-of-publication method, which requires directory
revenues and expenses to be recognized upon publication rather than over the
lives of the directories.  As a result of this change, results of operations for
the first three quarters of 1996 have been restated (see Note 15 to the
financial statements). The Company recorded an after-tax increase in income of
$1,979,000 in the first quarter of 1996, representing the cumulative effect of
this accounting change.  This accounting change did not have a material impact
on operating income in 1996.  Effective January 1, 1997, the Company
transferred, at net book value without gain or loss, certain assets and
liabilities associated with its directory publishing activities to a newly
formed, wholly owned subsidiary.  See "Factors That May Impact Future Results -
Federal Legislation - Directory Publishing Activities" on pages 17 and 18 for
further discussion of this issue.

   Other items affecting the comparison of operating results between 1996 and
1995 are discussed in the following sections.

<TABLE>
<CAPTION>
 
OPERATING REVENUES
------------------
(Dollars in Thousands)  

For the Years Ended December 31                     1996               1995
------------------------------------------------------------------------------
<S>                                              <C>                 <C>  
Transport services                            
 Local service...............................     $262,518            $257,858
 Network access..............................      163,872             170,757
 Toll service................................       59,123              64,027
Ancillary services                                                    
 Directory publishing........................       37,567              32,408
 Other.......................................       17,673              12,280
Value-added services.........................       54,682              47,855
                                                  --------            --------
Total........................................     $595,435            $585,185
                                                  ========            ========
</TABLE>

                                       11
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


TRANSPORT SERVICES OPERATING STATISTICS
---------------------------------------
<TABLE>
<CAPTION>
 
 
                                                               Percentage
                                               1996    1995     Increase
                                             ------  ------    -----------------
<S>                                          <C>     <C>       <C>
At Year-End                                          
-----------                                          
 Access Lines in Service (In thousands)              
   Residence..............................      575     568        1.2%
   Business...............................      195     183        6.6
   Public.................................       10      10          -
                                             ------  ------
                                                780     761        2.5
                                             ======  ======
                                                     
For The Year                                         
------------                                         
 Access Minutes of Use (In millions)                 
   Interstate.............................    2,372   2,175        9.1
   Intrastate.............................      525     449       16.9
                                             ------  ------
                                              2,897   2,624       10.4
                                             ======  ======
                                                     
 Toll Messages (In thousands)                        
   Intrastate.............................   43,848  41,145        6.6
   Interstate.............................    2,946   2,669       10.4
                                             ------  ------
                                             46,794  43,814        6.8
                                             ======  ======            
</TABLE>

LOCAL SERVICE REVENUES

                                       Increase
--------------------------------------------------------------------------------
   1996 - 1995                   $4,660        1.8%
--------------------------------------------------------------------------------

   Local service revenues are earned by the Company from the provision of local
exchange, local private line and public telephone (pay phone) services.

   Higher usage of the Company's network facilities was the primary reason for
the increase in local service revenues in 1996. The growth was generated by an
increase in access lines in service of 2.5% in 1996, and higher message volumes.
This access line growth reflects higher demand for Centrex services.  Volume-
related revenue growth was partially offset by price reductions on certain basic
calling options in accordance with the Company's Incentive Regulation Plan.

   For a discussion of the Telecommunications Act of 1996, which will open the
local exchange market to competition, see "Factors That May Impact Future
Results" beginning on page 17.


NETWORK ACCESS REVENUES

                                      (Decrease)
--------------------------------------------------------------------------------
   1996 - 1995                  $(6,885)      (4.0)%
--------------------------------------------------------------------------------

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

                                       12
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


   The Federal Communications Commission (FCC) regulates the rates that the
Company can charge long distance carriers and end-user subscribers for
interstate access services.  Each year, new access rates are required to be
filed with the FCC under the rules of its Interim Price Cap Plan.  Beginning on
August 1, 1995, the Company implemented price decreases totaling approximately
$16,100,000 on an annual basis.  These price decreases included the scheduled
expiration of a temporary rate increase of approximately $5,200,000 on an
annualized basis that was in effect from March 17, 1995 through July 31, 1995 to
recover prior years "exogenous" postemployment benefit costs.  On July 20, 1996,
the Company implemented price increases, which will be in effect for the period
July 1996 through June 1997.  The rates included in the 1996 filing resulted in
price increases totaling approximately $900,000 on an annual basis.

   Network access revenues decreased due to the effect of price reductions
implemented during 1995 in connection with the FCC's Interim Price Cap Plan and
lower revenues from affiliated companies pursuant to an interstate revenue
sharing agreement (See Note 14 to the financial statements).  Revenues in 1996
were also reduced by special charges for reserves associated with regulatory
issues.

   Higher customer demand as reflected by growth in access minutes of use of
10.4% in 1996 partially offset the decrease in network access revenues.  Volume
growth in 1996 was boosted by the expansion of the business market, particularly
for high capacity services.

   The Company expects that network access revenue growth in 1997, relative to
1996 revenues, will be positively affected by continued volume growth and by
price increases effective on July 20, 1996.  For a discussion of proposed FCC
rulemakings concerning access charges, see "Factors That May Impact Future
Results" beginning on page 17.


TOLL SERVICE REVENUES

                                      (Decrease)
--------------------------------------------------------------------------------
   1996 - 1995                   $(4,904)       (7.7)%
--------------------------------------------------------------------------------

   Toll service revenues are earned primarily from calls made outside a
customer's local calling area, but within the same service area of the Company,
referred to as Local Access and Transport Areas (LATAs).  Other toll services
include 800 services and Wide Area Telephone Service (WATS).

   The reduction in toll service revenues was caused by company-initiated price
reductions and a discount offering on certain toll services in response to
competition.  The Company reduced residential intrastate intraLATA toll rates by
$6,000,000 on an annual basis in July 1995.  In addition, the Company
implemented a discount offering to residential customers beginning in August
1996.  The discount offering is expected to reduce toll service revenues by
$3,000,000 annually.  Partially offsetting these decreases was higher network
usage, as reflected by a 6.8% increase in toll message volumes.

   The Company expects that competition for toll services will continue to
impact future revenue growth.  See "Factors That May Impact Future Results -
Competition - IntraLATA Toll Services" on page 18 for a further discussion of
toll service revenue issues.


DIRECTORY PUBLISHING REVENUES

                                       Increase
--------------------------------------------------------------------------------
   1996 - 1995                   $ 5,159        15.9%
--------------------------------------------------------------------------------

   Directory publishing revenues are earned primarily from local advertising
and marketing services provided to businesses in White and Yellow Pages
directories. The Company also provides database services and directory marketing
services outside of its region.

   The increase in directory publishing revenues was principally due to higher
rates charged for these services.  The change in accounting for directory
publishing revenues in 1996 also contributed to the revenue increase.

                                       13
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


   Effective January 1, 1997, the Company transferred certain assets and
liabilities associated with its directory publishing activities to a newly
formed, wholly owned subsidiary.  As a result, revenues associated with
directory publishing activities transferred will no longer be earned by the
Company.  See "Factors That May Impact Future Results - Federal Legislation -
Directory Publishing Activities" on pages 17 and 18 for further discussion of
this issue.


OTHER ANCILLARY SERVICES REVENUES

                                      Increase
--------------------------------------------------------------------------------
   1996 -  1995                  $5,393        43.9%
--------------------------------------------------------------------------------

   Other ancillary services include billing and collection services provided to
long distance carriers, facilities rental services provided to affiliates and
non-affiliates, and sales of materials and supplies to affiliates.

   The increase in other ancillary services revenues in 1996 resulted
principally from higher facilities rental revenues from affiliates and the
introduction of customer late payment charges in the third quarter of 1995.


VALUE-ADDED SERVICES REVENUES

                                      Increase
--------------------------------------------------------------------------------
   1996 - 1995                   $6,827        14.3%
--------------------------------------------------------------------------------

   Value-added services represent a family of services which expand the
utilization of the network.  These services include products such as voice
messaging services, Caller ID, Call Waiting, and Return Call, as well as more
mature products such as Touch-Tone and other customer premises wiring and
maintenance services.

   Improved revenue growth from value-added services is principally the result
of increased marketing and promotional efforts which have stimulated customer
demand and usage.  Demand for these services also has been fueled by the
introduction of new and enhanced optional features.

   These revenue increases were partially offset by lower Touch-Tone service
revenues.  In accordance with the Incentive Regulation Plan, the Company reduced
its Touch-Tone service charges by approximately $4,000,000 annually effective
December 31, 1995 and by an additional $4,000,000 annually beginning on December
31, 1996.

<TABLE>
<CAPTION>
 
OPERATING EXPENSES
------------------
(Dollars in Thousands)
 
For the Years Ended December 31                          1996          1995
-----------------------------------------------------------------------------

<S>                                                    <C>           <C> 
Employee costs, including benefits and taxes..         $106,535      $117,149
Depreciation and amortization.................          131,628       119,732
Other operating expenses......................          220,475       196,428
                                                       --------      --------
Total.........................................         $458,638      $433,309
                                                       ========      ========
</TABLE>

EMPLOYEE COSTS

                                     (Decrease)
--------------------------------------------------------------------------------
   1996 - 1995                 $(10,614)       (9.1)%
--------------------------------------------------------------------------------

   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.

                                       14
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


   The Company reached a final settlement with the Communications Workers of
America (CWA) on a three-year labor agreement in January 1996.  The agreement
includes a 10.6% wage increase over the three-year contract period, a
ratification bonus, improved pensions and benefits, and certain employment
security provisions.

   The decrease in employee costs was principally attributable to savings
associated with lower work force levels in 1996 and the effect of certain
contract labor and separation pay costs recognized in 1995 associated with the
contract settlement with the CWA.  These cost reductions were partially offset
by annual salary and wage increases, as well as increased overtime pay for
repair and maintenance activity, primarily as a result of higher business
volumes.  The Company also recognized additional benefit costs associated with
an amendment to a Bell Atlantic separation pay plan.

   In 1995, Bell Atlantic announced that the pension plan covering most of its
management employees, including employees of the Company, would be converted to
a cash balance plan, effective December 31, 1995.  This change did not have a
material impact on the Company's pension benefit costs in 1996 or 1995.


DEPRECIATION AND AMORTIZATION

                                     Increase
--------------------------------------------------------------------------------
   1996 - 1995                 $11,896         9.9%
--------------------------------------------------------------------------------

   The Company uses the composite group remaining life method to depreciate
plant assets. Under this method, the Company periodically revises depreciation
rates based on a number of factors.  The composite depreciation rates were 8.1%
in 1996 and 7.6% in 1995.

   Depreciation and amortization increased due to growth in depreciable
telephone plant and higher rates of depreciation and amortization.


OTHER OPERATING EXPENSES

                                     Increase
--------------------------------------------------------------------------------
   1996 - 1995                 $24,047        12.2%
--------------------------------------------------------------------------------

   Other operating expenses consist primarily of contract services including
centralized services expenses allocated from NSI, rent, network software costs,
operating taxes other than income, the provision for uncollectible accounts
receivable and other costs.

   The increase in other operating expenses was largely attributable to higher
centralized services expenses allocated from NSI (see Note 14 to the financial
statements).  This increase was due, in part, to higher employee costs incurred
in that organization as a result of annual salary and wage increases.
Additional operating costs incurred to enhance billing and operating systems,
and market and advertise services also contributed to the increase in
centralized services expenses in 1996.  Other operating expenses were further
increased by the impact of the aforementioned change in accounting for directory
expenses, as well as additional costs to upgrade network software and comply
with certain aspects of the Telecommunications Act of 1996.

   Effective January 1, 1997, the Company transferred certain assets and
liabilities associated with its directory publishing activities to a newly
formed, wholly owned subsidiary. As a result, certain direct and allocated
expenses related to directory publishing activities transferred, which are
included in other operating expenses, will no longer be incurred by the Company.
See "Factors That May Impact Future Results - Federal Legislation - Directory
Publishing Activities" on pages 17 and 18 for a further discussion of this
issue.

                                       15
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


OTHER INCOME AND EXPENSE, NET

                                     Increase
--------------------------------------------------------------------------------
   1996 - 1995                         $532
--------------------------------------------------------------------------------

   The change in other income and expense, net was largely attributable to
additional interest income related to a note receivable from an affiliate.  This
increase was partially offset by higher nonoperating costs.


INTEREST EXPENSE

                                     Increase
--------------------------------------------------------------------------------
   1996 - 1995                   $341        1.9%
--------------------------------------------------------------------------------

   Interest expense increased principally due to a reduction in capitalized
interest costs in 1996.  This increase was partially offset by the effect of
additional interest expense in 1995 related to the settlement of federal income
tax matters associated with prior years.

EFFECTIVE INCOME TAX RATES

   For the Years Ended December 31
--------------------------------------------------------------------------------
   1996                             39.4%
--------------------------------------------------------------------------------
   1995                             39.5%
--------------------------------------------------------------------------------

   The effective income tax rate is the provision for income taxes as a
percentage of income before taxes, extraordinary items and cumulative effect of
accounting changes.  The Company's effective income tax rate was lower
principally as a result of prior period adjustments, including research and
development credits, recorded in 1996.

   A reconciliation of the statutory federal income tax rate to the effective
income tax rate for each period is provided in Note 12 to the financial
statements.


FINANCIAL CONDITION
-------------------

   The Company uses the net cash generated from operations and from external
financing to fund capital expenditures for network expansion and modernization,
and pay dividends.  While current liabilities exceeded current assets at
December 31, 1995, the Company's sources of funds, primarily from operations and
to the extent necessary from readily available financing arrangements with an
affiliate, are sufficient to meet ongoing operating requirements.  Management
expects that presently foreseeable capital requirements will continue to be
financed primarily through internally generated funds.  Additional long-term
debt may be needed to fund development activities or to maintain the Company's
capital structure to ensure financial flexibility.

   As of December 31, 1996, the Company had $69,600,000 of an unused line of
credit with an affiliate, Bell Atlantic Network Funding Corporation.  In
addition, the Company had $50,000,000 remaining under a shelf registration
statement filed with the Securities and Exchange Commission for the issuance of
unsecured debt securities.

   The Company's debt ratio was 48.8% at December 31, 1996, compared to 47.7% at
December 31, 1995.

   On February 3, 1997, the Company declared and paid a cash dividend in the
amount of $15,000,000 to Bell Atlantic.

                                       16
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

FACTORS THAT MAY IMPACT FUTURE RESULTS
--------------------------------------

   FEDERAL LEGISLATION

   The telecommunications industry is undergoing substantial changes as a result
of the Telecommunications Act of 1996 (the Act), other public policy changes and
technological advances.  These changes are likely to bring increased competitive
pressures to the Company's current business, but will also open new markets to
Bell Atlantic.

   The Act became law on February 8, 1996 and replaced the Modification of Final
Judgment (MFJ).  In general, the Act includes provisions that open local
exchange markets to competition and permit Bell Atlantic to provide interLATA
(long distance) services and to engage in manufacturing. However, the ability of
Bell Atlantic to engage in businesses previously prohibited by the MFJ is
largely dependent on satisfying certain conditions contained in the Act.  Among
the requirements with which the Company must comply is a 14-point "competitive
checklist" which includes steps the Company must take which will help
competitors offer local service, either through resale, through the purchase of
unbundled network elements, or through their own networks.  The Company must
also demonstrate to the FCC that its entry into the long distance market would
be in the public interest.

   The Company is unable to predict definitively the impact that the Act will
have on its business, results of operations or financial condition.  The
financial impact will depend on several factors, including the timing, extent
and success of competition in the Company's markets, and the timing, extent and
success of Bell Atlantic's pursuit of new business opportunities resulting from
the Act.  These factors will in turn depend, in part, on the final outcome of
several FCC rulemakings and the outcome of state interconnection proceedings
(see also "Recent Developments" below).

   The Company anticipates that these industry changes, together with the rapid
growth, enormous size and global scope of these markets, will attract new
entrants and encourage existing competitors to broaden their offerings.  Current
and potential competitors in telecommunication services include long distance
companies, other local telephone companies, cable companies, wireless service
providers, and other companies that offer network services.  Some of these
companies have a strong market presence, brand recognition and existing customer
relationships, all of which contribute to intensifying competition and may
affect the Company's future revenue growth.  See the "Competition" section on
page 18 for additional information.

   Directory Publishing Activities

   On January 1, 1997, the Company transferred, at net book value without gain
or loss, certain assets and liabilities associated with its directory publishing
activities to a newly formed, wholly owned subsidiary.  The stock of the
subsidiary was immediately distributed to Bell Atlantic.  The transfer of such
assets and liabilities was completed as part of Bell Atlantic and the Company's
response to the requirements of the Act, which prohibits the Company from
engaging in electronic publishing or joint sales and marketing of electronic
products.

   Net assets transferred by the Company totaled approximately $2,000,000, and
consisted of deferred directory production costs (included in prepaid expenses),
fixed assets, and related deferred tax liabilities.

   Revenues related to the Company's directory publishing activities transferred
were approximately $35,000,000, $29,900,000 and $27,400,000 for the years ended
December 31, 1996, 1995 and 1994, respectively.  Direct expenses related to the
directory publishing activities transferred were approximately $15,600,000,
$12,900,000 and $13,900,000 for the years ended December 31, 1996, 1995 and
1994, respectively.  The Company does not separately identify indirect expenses
attributable to the directory publishing activities, including expenses related
to billing and data management and processing services, legal, external affairs,
depreciation, interest expense and any corresponding tax expense.

   Beginning in 1997, revenues from directory publishing activities transferred
will no longer be earned, and the related expenses will no longer be incurred,
by the Company.  Certain other revenues, primarily fees for non-publication of
telephone numbers and multiple white page listings will continue to be earned by
the Company.  Additionally, contracts between the Company and another affiliate
of Bell Atlantic for billing and collection services related to the directory

                                       17
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

activities, use of directory listings, and rental charges will create new
revenue sources for the Company.  As a result of the transfer, past operating
results are not indicative of future operating results of the Company.

   Recent Developments

   On August 1, 1996, the FCC adopted an order establishing rules for
implementation of the interconnection requirements set forth in the Act.  The
FCC's order establishes rules to govern interconnection agreements that are
reached through state arbitrations, when negotiations fail.

   Bell Atlantic and other telecommunication companies appealed the
interconnection order to the U.S. Court of Appeals.  This case is currently
pending.  The Court has stayed the effectiveness of the uniform national pricing
rules adopted by the FCC, and the FCC rule that permitted competitors to "pick
and choose" isolated terms out of negotiated interconnection agreements.
Private negotiations and state arbitrations are continuing while the stay is in
effect, pending the Court's final decision.  As of March 1, 1997, the Company
has entered into one interconnection agreement.

   Pursuant to the Act, on January 17, 1997, the Company filed its "Statement of
Generally Available Terms and Conditions for Interconnection, Unbundled Network
Elements, Ancillary Services and Resale of Telecommunications Services" with the
Public Service Commission of West Virginia (PSC).

   The FCC has also initiated proceedings to address universal service
obligations and access charges, and will adopt regulations regarding these
issues in subsequent orders.

   Although the Company is unable to predict the final outcome, either of these
proceedings could have a material effect on future operating revenues.

   COMPETITION

   IntraLATA Toll Services

   IntraLATA toll services are calls that originate and terminate within the
same LATA, but cover a greater distance than a local call.  These services are
generally regulated by the PSC rather than federal authorities.  The PSC permits
other carriers to offer intrastate intraLATA toll services in the Company's
jurisdiction.

   Currently, intraLATA toll calls are completed by the Company unless the
customer dials a code to access a competing carrier.  This dialing method would
be changed by "presubscription," which would enable customers to make these toll
calls using another carrier without having to dial an access code.

   The Act addressed the issue of presubscription by prohibiting a state from
requiring presubscription or "dialing parity" until the earlier of such time as
an operating telephone company in the state is authorized to provide long
distance services within the state or three years from the effective date of the
Act.  This prohibition does not apply to an order requiring presubscription that
was issued on or prior to December 19, 1995 or to states consisting of a single
LATA.

   In December 1995, the PSC issued a final order directing the implementation
of presubscription within eighteen months of that order.  The Company filed a
petition for review of that order with the West Virginia Supreme Court, which
was denied.  In January 1997, the PSC extended the implementation date to August
15, 1997, or the date that the Company is authorized by the FCC to enter the
interLATA market, whichever is earlier.

   Implementation of presubscription for intraLATA toll services could have a
material negative effect on toll service revenues.

                                       18
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

   Local Exchange Services

   Local exchange services have historically been subject to regulation by the
PSC.  The Act is expected to significantly increase the level of competition in
the Company's local exchange market.

   See Item 1 - "Description of Business, State Regulation and Competitive
Environment - Competition - Local Exchange Services" on page 5 for the specific
requirements of the Act relating to local exchange services.


   OTHER STATE REGULATORY MATTERS

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

   See Item 1 - "Description of Business, State Regulation and Competitive
Environment" on page 5 for a description of the Company's current regulatory
plan.


OTHER MATTERS
-------------

   Proposed Bell Atlantic - NYNEX Merger

   Bell Atlantic and NYNEX Corporation announced a proposed merger of equals
under a definitive merger agreement entered into on April 21, 1996 and amended
on July 2, 1996.  In November 1996, stockholders of both companies approved the
merger.  The completion of the merger is subject to a number of other
conditions, including certain regulatory approvals.  Bell Atlantic is unable to
predict when it will be able to complete the merger.

   As a result of the merger, Bell Atlantic will incur special transition and
integration costs of approximately $500 million in the first year following the
completion of the merger and an additional $200 million to $400 million over the
two succeeding years, in connection with completing the transaction and
integrating the operations of Bell Atlantic and NYNEX.  The transition costs
consist principally of professional and registration fees, systems modification
costs, costs associated with the elimination and consolidation of duplicate
facilities, and employee severance and relocation costs.  Of these costs, the
Company expects to incur a portion of a one-time charge for employee severance
costs in the quarter in which the merger is completed.  The total severance
charge for Bell Atlantic is currently estimated to be in the range of $200
million to $300 million.  The amount of the charge will vary depending on a
number of factors including: (i) the number of employees that will be terminated
under severance arrangements, (ii) the timing of employee terminations, and
(iii) changes, if any, to severance plan provisions.  It is anticipated that the
Company will bear a portion of the remaining transition and integration costs.

   Bell Atlantic also expects to recognize recurring expense savings of
approximately $600 million annually by the third year following completion of
the merger as a result of consolidating operating systems and other
administrative functions and reducing management positions.  Incremental savings
in annual capital expenditures for Bell Atlantic should grow to approximately
$250 million to $300 million, including efficiencies relating to purchasing,
marketing trials and equipment testing.  It is anticipated that the Company will
recognize a portion of these savings.

   Bell Atlantic's Disposition of Bellcore Investment

   In November 1996, Bell Atlantic and other Bellcore owners entered into an
agreement to sell their jointly owned investment in Bellcore.  The transaction
is subject to regulatory approvals, and is expected to be completed near the end
of 1997.  After the sale is completed, the Company will continue to contract
with Bellcore for technical and support services. It is anticipated that the
Company will incur costs in 1997 at levels similar to those of prior years (see
Note 14 to the financial statements).

                                       19
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

   Cautionary Statement Concerning Forward-Looking Statements

   Information contained above with respect to the expected financial impact of
the proposed merger, and other statements in this Management's Discussion and
Analysis, regarding expected future events and financial results is forward-
looking and subject to risks and uncertainties.  For those statements, the
Company claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.

   The following important factors could affect the future results of the
Company and could cause those results to differ materially from those expressed
in the forward-looking statements: (i) materially adverse changes in economic
conditions in the markets served by the Company; (ii) a significant delay in the
expected closing of the merger; (iii) the final outcome of FCC rulemakings with
respect to interconnection agreements, access charge reform and universal
service; (iv) the timing of presubscription for toll services; (v) future state
regulatory actions and economic conditions in the Company's operating area; and
(vi) the extent, timing and success of competition from others in the local
telephone and toll service markets.

                                       20
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


                                    PART II


Item 8.   Financial Statements and Supplementary Data

          The information required by this Item is set forth on pages F-1
          through F-21.


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

          None.


                                   PART III


Item 10.  Directors and Executive Officers of Registrant

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


Item 11.  Executive Compensation

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


Item 12.  Security Ownership of Certain Beneficial Owners and Management

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


Item 13.  Certain Relationships and Related Transactions

          (Omitted pursuant to General Instruction I(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 Schedule
              appearing on Page F-1.

          (2) Financial Statement Schedules

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

                                       21
<PAGE>
 

                      Bell Atlantic - West Virginia, Inc.


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

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

               3a(ii)  Articles of Amendment, dated January 6, 1994 and filed
                       January 13, 1994. (Exhibit 3a(ii) to the registrant's
                       Annual Report on Form 10-K for the year ended December
                       31, 1993, File No. 1-7150.)

          3b   By-Laws of the registrant, as amended December 15, 1995. (Exhibit
               3b to the registrant's Annual Report on Form 10-K for the year
               ended December 31, 1995, File No. 1-7150.)

               3b(i)   Consent of Sole Stockholder of Bell Atlantic - West
                       Virginia, Inc., dated December 15, 1995. (Exhibit 3b(i)
                       to the registrant's Annual Report on Form 10-K for the
                       year ended December 31, 1995, File No. 1-7150.)

          4    No instrument which defines the rights of holders of long-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.)

         18    Letter regarding change in accounting principle.

         23    Consent of Independent Accountants.

         27    Financial Data Schedule.

     (b) Reports on Form 8-K:

               There were no Current Reports on Form 8-K filed during the
               quarter ended December 31, 1996.

                                       22
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


                                  SIGNATURES


   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



                                      Bell Atlantic - West Virginia, Inc.



                                      By   /s/  Ritchie A. Ireland, II
                                         -----------------------------
                                           Ritchie A. Ireland, II
                                           Principal Financial
                                           Officer and Controller



March 24, 1997


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


Signature                         Title                         Date
---------                         -----                         ----


/s/ Dennis M. Bone                President and                 March 24, 1997
-----------------------------     Chief Executive Officer
    Dennis M. Bone                and Director   
                                  (Principal Executive Officer)


/s/ Ritchie A. Ireland, II        Principal Financial Officer   March 24, 1997
-----------------------------     and Controller and Director
    Ritchie A. Ireland, II  


/s/ David B. Frost                Director                      March 24, 1997
-----------------------------
    David B. Frost

                                       23
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

<TABLE> 
<CAPTION> 
 
                                                                            Page
                                                                            ----
<S>                                                                         <C>
 
     Report of Independent Accountants....................................   F-2
 
     Statements of Operations and Reinvested Earnings (Accumulated Deficit)
          For the years ended December 31, 1996, 1995 and 1994............   F-3
 
     Balance Sheets - December 31, 1996 and 1995..........................   F-4
 
     Statements of Cash Flows
          For the years ended December 31, 1996, 1995 and 1994............   F-6
 
     Notes to Financial Statements........................................   F-7
 
     Schedule II - Valuation and Qualifying Accounts
          For the years ended December 31, 1996, 1995 and 1994............  F-21
</TABLE>

Financial statement schedules other than that listed above have been omitted
because such schedules are not required or applicable.

                                      F-1
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

                       REPORT OF INDEPENDENT ACCOUNTANTS



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


We have audited the financial statements and financial statement schedule of
Bell Atlantic - West Virginia, Inc. as listed in the index on page F-1 of this
Form 10-K.  The financial statements and financial statement schedule are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on the financial statements and financial statement schedule based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bell Atlantic - West Virginia,
Inc. as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.  In addition, in our
opinion, the financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.

As discussed in Notes 1 and 3 to the financial statements, the Company changed
its method of accounting for directory publishing revenues and expenses in 1996.
Also, as discussed in Notes 1 and 4 to the financial statements, the Company
discontinued accounting for its operations in accordance with Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of Certain
Types of Regulation," effective August 1, 1994.



/s/ COOPERS & LYBRAND L.L.P.



2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 5, 1997

                                      F-2
<PAGE>

                      Bell Atlantic - West Virginia, Inc.
 
     STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS (ACCUMULATED DEFICIT)
                        FOR THE YEARS ENDED DECEMBER 31
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
 
 
                                               1996        1995        1994
                                            ----------  ----------   ----------
<S>                                         <C>         <C>          <C>
OPERATING REVENUES (including $34,076,
 $39,293 and $45,633 from affiliates).....   $595,435    $585,185     $592,804
                                             --------    --------     --------
                                                       
OPERATING EXPENSES                                     
  Employee costs, including benefits                   
   and taxes..............................    106,535     117,149      133,996
  Depreciation and amortization...........    131,628     119,732      107,083
  Other (including $128,265, $106,822                  
   and $103,517 to affiliates)............    220,475     196,428      191,066
                                             --------    --------     --------
                                              458,638     433,309      432,145
                                             --------    --------     --------
                                                       
OPERATING INCOME..........................    136,797     151,876      160,659
                                                       
OTHER INCOME AND EXPENSE, NET                          
  Allowance for funds used during                      
   construction...........................        ---         ---          492
  Other, net (including $1,370, $466                   
   and $274 from affiliate)...............        450         (82)      (1,009)
                                             --------    --------     --------
                                                  450         (82)        (517)
INTEREST EXPENSE (including $1, $114                   
 and $186 to affiliate)...................     17,914      17,573       18,468
                                             --------    --------     --------
                                                       
INCOME BEFORE PROVISION FOR INCOME TAXES,              
  EXTRAORDINARY ITEM, AND CUMULATIVE                   
  EFFECT OF CHANGE IN ACCOUNTING                       
  PRINCIPLE...............................    119,333     134,221      141,674
                                                       
PROVISION FOR INCOME TAXES................     46,963      52,974       57,415
                                             --------    --------     --------
                                                       
INCOME BEFORE EXTRAORDINARY ITEM AND                   
 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING             
 PRINCIPLE................................     72,370      81,247       84,259
                                             --------    --------     --------
                                                       
EXTRAORDINARY ITEM                                     
  Discontinuation of Regulatory                        
   Accounting Principles, Net of Tax......        ---         ---      (76,616)
                                                       
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING              
 PRINCIPLE                                             
  Directory Publishing, Net of Tax........      1,979         ---          ---
                                             --------    --------     --------
                                                       
NET INCOME................................   $ 74,349    $ 81,247     $  7,643
                                             ========    ========     ========
                                                       
                                                       
REINVESTED EARNINGS (ACCUMULATED DEFICIT)              
  At beginning of year....................   $ 17,538    $ (6,549)    $ 41,833
  Add:  net income........................     74,349      81,247        7,643
                                             --------    --------     --------
                                               91,887      74,698       49,476
  Deduct:  dividends......................     85,800      56,990       56,060
           other changes..................        500         170          (35)
                                             --------    --------     --------
  At end of year..........................   $  5,587    $ 17,538     $ (6,549)
                                             ========    ========     ========
</TABLE>
                       See Notes to Financial Statements.

                                      F-3
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

                                 BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)


                                    ASSETS
                                    ------
<TABLE>
<CAPTION>
                                                      DECEMBER 31
                                                 ----------------------
                                                    1996        1995
                                                 ----------  ----------
<S>                                              <C>         <C>
 
CURRENT ASSETS
Short-term investments........................   $   10,538  $      ---
Note receivable from affiliate................       33,823       4,939
Accounts receivable:
  Trade and other, net of allowances for
   uncollectibles of $5,421 and $4,178.........      94,949      81,695
  Affiliates...................................       6,486       8,037
Material and supplies..........................       4,187       2,693
Prepaid expenses...............................       6,253      16,412
Deferred income taxes..........................         ---       1,899
                                                 ----------  ----------
                                                    156,236     115,675
                                                 ----------  ----------
 
PLANT, PROPERTY AND EQUIPMENT..................   1,667,139   1,625,779
Less accumulated depreciation..................     933,797     849,205
                                                 ----------  ----------
                                                    733,342     776,574
                                                 ----------  ----------
 
OTHER ASSETS...................................       4,124      11,124
                                                 ----------  ----------
 
TOTAL ASSETS...................................  $  893,702  $  903,373
                                                 ==========  ==========
</TABLE>

                       See Notes to Financial Statements.

                                      F-4
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

                                 BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)


                    LIABILITIES AND SHAREOWNER'S INVESTMENT
                    ---------------------------------------
<TABLE>
<CAPTION>
 
 
                                                      DECEMBER 31
                                                 ---------------------
                                                   1996        1995
                                                 ---------  ----------
<S>                                              <C>        <C>
CURRENT LIABILITIES                                        
Debt maturing within one year:                             
  Other........................................   $     44   $     10
Accounts payable and accrued liabilities:                    
  Affiliates...................................     56,198     41,020
  Other........................................     77,048     74,571
Other liabilities..............................     15,468     16,684
                                                  --------   --------
                                                   148,758    132,285
                                                  --------   --------
                                                             
LONG-TERM DEBT.................................    264,066    263,750
                                                  --------   --------
                                                             
EMPLOYEE BENEFIT OBLIGATIONS...................    141,392    144,193
                                                  --------   --------
                                                             
DEFERRED CREDITS AND OTHER LIABILITIES                       
Deferred income taxes..........................     33,720     42,708
Unamortized investment tax credits.............      8,246     10,112
Other..........................................     20,449     21,303
                                                  --------   --------
                                                    62,415     74,123
                                                  --------   --------
                                                             
COMMITMENTS (Note 6)                                         
                                                             
SHAREOWNER'S INVESTMENT                                      
Common stock - one share, owned by                           
  parent, at stated value......................    264,065    264,065
Capital surplus................................      7,419      7,419
Reinvested earnings............................      5,587     17,538
                                                  --------   --------
                                                   277,071    289,022
                                                  --------   --------
                                                             
TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT..   $893,702   $903,373
                                                  ========   ========

</TABLE>

                       See Notes to Financial Statements.

                                      F-5
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

                            STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
 
 
                                                            1996              1995              1994
                                                          ---------         ---------         ---------    
<S>                                                       <C>               <C>               <C>
 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................        $  74,349         $  81,247         $   7,643
Adjustments to reconcile net income to
 net cash provided by operating activities:
   Depreciation and amortization..................          131,628           119,732           107,083
   Extraordinary item, net of tax.................              ---               ---            76,616
   Cumulative effect of change in accounting
    principle, net of tax.........................           (1,979)              ---               ---
   Allowance for funds used during construction...              ---               ---              (492)
   Other items, net...............................             (398)                4               126
   Changes in certain assets and liabilities:
      Accounts receivable.........................           (1,319)            3,815           (15,284)
      Material and supplies.......................           (1,494)              835            (1,501)
      Other assets................................            3,567             2,908            (9,111)
      Accounts payable and accrued liabilities....           15,246            (4,915)           10,665
      Deferred income taxes, net..................           (8,197)           (9,333)           (3,354)
      Unamortized investment tax credits..........           (1,866)           (2,954)           (2,616)
      Employee benefit obligations................           (2,801)             (108)           15,435
      Other liabilities...........................            3,488            (1,379)            1,987
                                                          ---------         ---------         ---------
Net cash provided by operating activities.........          210,224           189,852           187,197
                                                          ---------         ---------         ---------
 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments...............          (14,838)           (5,697)              ---
Proceeds from sale of short-term investments......            4,300             5,697               ---
Additions to plant, property and equipment........          (90,184)          (88,499)          (84,902)
Net change in note receivable from affiliate......          (28,884)            6,438           (11,377)
Other, net........................................            1,243              (681)           (2,914)
                                                          ---------         ---------         ---------
Net cash used in investing activities.............         (128,363)          (82,742)          (99,193)
                                                          ---------         ---------         ---------
 
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments of capital lease obligations.              (27)              (26)              (44)
Net change in note payable to affiliate...........              ---               ---           (20,387)
Dividends paid....................................          (85,800)          (56,990)          (56,060)
Capital surplus distribution......................              ---           (52,245)          (22,410)
Net change in outstanding checks drawn
 on controlled disbursement accounts..............            3,966             2,151             4,167
                                                          ---------         ---------         ---------
Net cash used in financing activities.............          (81,861)         (107,110)          (94,734)
                                                          ---------         ---------         ---------
 
NET CHANGE IN CASH................................              ---               ---            (6,730)
 
CASH, BEGINNING OF YEAR...........................              ---               ---             6,730
                                                          ---------         ---------         ---------
 
CASH, END OF YEAR.................................        $     ---         $     ---         $     ---
                                                          =========         =========         =========

</TABLE>

                       See Notes to Financial Statements.

                                      F-6
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

                         NOTES TO FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   DESCRIPTION OF BUSINESS

   Bell Atlantic - West Virginia, Inc. (the Company) is a wholly owned
subsidiary of Bell Atlantic Corporation (Bell Atlantic).  The Company operates
in a single industry segment - communications and related services.  The Company
provides two basic types of telecommunications services in a territory
consisting of two complete Local Access and Transport Areas (LATAs) and part of
a third LATA in the state of West Virginia.  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, local private line and public
telephone services.  Toll service includes message toll service and intraLATA
Wide Area Toll Service/800 services.  Second, the Company provides exchange
access service, which links a subscriber's telephone equipment to the facilities
of an interexchange carrier (IXC) which, in turn, provides telecommunications
service between LATAs (interLATA service) to their customers. The Company also
provides exchange access service to IXCs which provide intrastate intraLATA long
distance telecommunications service.  Other services provided by the Company
include customer premises wiring and maintenance and billing and collection
services.  Effective January 1, 1997, the Company transferred certain assets and
liabilities associated with its directory publishing activities to a newly
formed, wholly owned subsidiary (see Note 16).

   The telecommunications industry is undergoing substantial changes as a result
of the Telecommunications Act of 1996, other public policy changes and
technological advances.  These changes are likely to bring increased competitive
pressures, but will also open new markets to Bell Atlantic, such as long
distance services within its geographic region, upon completion of certain
requirements of the Telecommunications Act.

   BASIS OF PRESENTATION

   The Company prepares its financial statements in accordance with generally
accepted accounting principles (GAAP). Effective August 1, 1994, the Company
discontinued accounting for its operations under the provisions of Standard of
Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of
Certain Types of Regulation" (see Note 4).

   USE OF ESTIMATES

   The Company prepares its financial statements under generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts or certain disclosures.  Actual results could
differ from those estimates.

   RECLASSIFICATIONS

   The Company reclassified certain amounts from previous years to conform to
1996 presentation.

   REVENUE RECOGNITION

   The Company recognizes revenues when services are rendered based on usage of
its local exchange network and facilities.

   MAINTENANCE AND REPAIRS

   The Company charges the cost of maintenance and repairs, including the cost
of replacing minor items not constituting substantial betterments, to operating
expense.

                                      F-7
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

   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, except cash equivalents held
as short-term investments.  Cash equivalents are stated at cost, which
approximates market value.

   SHORT-TERM INVESTMENTS

   Short-term investments consist of cash equivalents held in trust to pay for
certain employee benefits.  Short-term investments 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.

   PLANT AND DEPRECIATION

   The Company states plant, property, and equipment at cost.  Depreciation
expense is principally based on the composite group remaining life method and
straight-line composite rates.  This method provides for the recognition of the
cost of the remaining net investment in telephone plant, less anticipated net
salvage value, over the remaining asset lives. This method requires the periodic
revision of depreciation rates.

   Effective, August 1, 1994, the Company discontinued accounting for its
operations under SFAS No. 71 (see Note 4). For financial reporting purposes, the
Company no longer uses asset lives set by regulators.  As a result, the Company
began using shorter estimated asset lives for certain categories of plant and
equipment.

   The following asset lives were used before and after the discontinuation of
SFAS No. 71:

<TABLE>
<CAPTION>

AVERAGE LIVES (IN YEARS)           BEFORE       AFTER
-------------------------------------------------------
<S>                                <C>         <C>
                                      
Buildings.....................     30 - 50        30
Central office equipment......      8 - 18      5 - 12
Cable, wiring and conduit.....     20 - 50     16 - 50
Other equipment...............      7 - 27      6 - 27
</TABLE>

   When depreciable plant is replaced or retired, the carrying amount of such
plant is deducted from the respective accounts and charged to accumulated
depreciation.  Gains or losses on disposition are amortized with remaining net
investment in telephone plant.

   CAPITALIZATION OF INTEREST COSTS

   The Company capitalizes interest on funds borrowed to finance the acquisition
or construction of plant assets. Capitalized interest is reported as a cost of
plant and a reduction in interest cost.  Prior to the discontinuation of SFAS
No. 71, the Company recorded an allowance for funds used during construction,
which included both interest and equity return components, as a cost of plant
and as an item of other income.

   INCOME TAXES

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

   The consolidated amount of current and deferred tax expense is allocated by
applying the provisions of SFAS No. 109, "Accounting for Income Taxes" to each
subsidiary as if it were a separate taxpayer.

   The Company uses the deferral method of accounting for investment tax credits
earned prior to repeal of investment tax credits by the Tax Reform Act of 1986.
The Company also defers certain transitional credits earned after the repeal.

                                      F-8
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

These credits are being amortized as a reduction to the provision for income
taxes over the estimated service lives of the related assets.

   DIRECTORY PUBLISHING

   Effective, January 1, 1996, the Company changed its method of accounting for
directory publishing revenues and expenses from the amortized method to the
point-of-publication method.  Under the point-of-publication method, revenues
and expenses are recognized when the directories are published, rather than over
the lives of the directories (see Note 3).

   STOCK-BASED COMPENSATION

   The Company participates in stock-based compensation plans sponsored by Bell
Atlantic.  Bell Atlantic accounts for stock-based employee compensation plans
under Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations. Effective January 1, 1996,
Bell Atlantic adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" (see Note 10).


2. PROPOSED BELL ATLANTIC - NYNEX MERGER

   Bell Atlantic and NYNEX Corporation announced a proposed merger of equals
under a definitive merger agreement entered into on April 21, 1996 and amended
on July 2, 1996.  At special meetings held in November 1996, the stockholders of
both companies approved the merger.  The completion of the merger is subject to
a number of conditions, including certain regulatory approvals and receipt of
opinions that the merger will be tax free.  Bell Atlantic is unable to predict
when it will be able to complete the merger.


3. CHANGE IN ACCOUNTING PRINCIPLE - DIRECTORY PUBLISHING

   Effective January 1, 1996, the Company changed its method of accounting for
directory publishing revenues and expenses from the amortized method to the
point-of-publication method.  Under the point-of-publication method, revenues
and expenses are recognized when the directories are published rather than over
the lives of the directories, as under the amortized method.  The Company
believes the point-of-publication method is preferable because it is the method
generally followed by publishing companies.

   This accounting change resulted in a one-time, noncash increase in net income
of $1,979,000 (net of income tax of $1,365,000), which is reported as a
cumulative effect of a change in accounting principle at January 1, 1996.  On an
annual basis, the financial impact of applying this method in 1996 was not
significant, and it would not have been significant had it been applied in 1995
and 1994.  The Company restated its 1996 quarterly results of operations for the
effect of the change in accounting for directory publishing (see Note 15).  As a
result of this restatement, (unaudited) income before cumulative effect of
change in accounting principle decreased $921,000, increased $1,044,000 and
increased $1,595,000 in the first, second and third quarters of 1996,
respectively.

                                      F-9
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

4. DISCONTINUATION OF REGULATORY ACCOUNTING PRINCIPLES

   In the third quarter of 1994, the Company discontinued the use of regulatory
accounting principles under SFAS No. 71, which means for financial reporting
purposes, the Company no longer follows accounting practices set by regulators.
As a result, the Company recorded a noncash, extraordinary charge of
$76,616,000, which is net of an income tax benefit of $43,792,000.

   A summary of the components of the after-tax charge follows:
<TABLE>
<CAPTION>
                                                        (DOLLARS IN THOUSANDS)
                                                        -----------------------
<S>                                                     <C>
 
    Increase in plant and equipment depreciation
     reserve..........................................          $68,641
    Accelerated investment tax credit amortization....           (4,979)
    Tax-related regulatory asset and liability                  
     elimination......................................           10,374
    Other regulatory asset and liability elimination..            2,580
                                                                -------
    Total.............................................          $76,616
                                                                =======
</TABLE>

5.  PLANT, PROPERTY AND EQUIPMENT

    Plant, property and equipment, which is stated at cost, is summarized as
follows at December 31:
<TABLE>
<CAPTION>
                                   1996         1995
                                -----------  -----------
                                 (DOLLARS IN THOUSANDS)
<S>                             <C>          <C>
 
   Land.......................  $    6,622   $    6,523
   Buildings..................     133,831      120,589
   Central office equipment...     625,759      603,504
   Cable, wiring and conduit..     674,294      655,927
   Other equipment............     213,271      211,119
   Other......................       4,538        8,994
   Construction-in-progress...       8,824       19,123
                                ----------   ----------
                                 1,667,139    1,625,779
   Accumulated depreciation...    (933,797)    (849,205)
                                ----------   ----------
   Total......................  $  733,342   $  776,574
                                ==========   ==========
</TABLE>

                                      F-10
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

6.  LEASES

    The Company leases certain facilities and equipment for use in its
operations under both capital and operating leases.  Plant, property and
equipment included capital leases of $276,000 and $65,000, and related
accumulated amortization of $20,000 and $59,000 at December 31, 1996 and 1995,
respectively.  The Company incurred $276,000 in initial capital lease
obligations in 1996 and no initial capital lease obligations in 1995 and 1994.

    Total rent expense amounted to $21,092,000 in 1996, $20,781,000 in 1995 and
$19,878,000 in 1994.  Of these amounts, $10,437,000, $9,149,000 and $9,593,000
in 1996, 1995 and 1994, respectively, were lease payments to affiliated
companies.

    At December 31, 1996, the aggregate minimum rental commitments under
noncancelable leases for the periods shown are as follows:
<TABLE>
<CAPTION>
 
   YEARS                                      CAPITAL LEASES  OPERATING LEASES
   -----                                      --------------  ----------------
<S>                                           <C>             <C>
                                                   (DOLLARS IN THOUSANDS)
 
   1997.....................................            $ 63            $1,610
   1998.....................................              64             1,365
   1999.....................................              64             1,088
   2000.....................................              65             1,010
   2001.....................................              51               872
   Thereafter...............................               9             1,525
                                                        ----            ------
   Total minimum rental commitments.........             316            $7,470
                                                                        ======
 
   Less interest............................              57
                                                        ----
 
   Present value of minimum lease payments..             259
   Less current installments................              44
                                                        ----
   Long-term obligation at
    December 31, 1996.......................            $215
                                                        ====
</TABLE>

7.  DEBT

    DEBT MATURING WITHIN ONE YEAR

    Long-term debt maturing within one year was $44,000 and $10,000 at December
31, 1996 and 1995, respectively.

    The Company has a contractual agreement with an affiliated company, Bell
Atlantic Network Funding Corporation (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 Bell Atlantic's
network services subsidiaries, including the Company, and invests funds in
temporary investments on their behalf.  At December 31, 1996 and 1995, there was
no outstanding Note payable balance with BANFC.  At December 31, 1996, the
Company had $69,600,000 of an unused line of credit with BANFC.

                                      F-11
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

    LONG-TERM DEBT

    Long-term debt consists principally of debentures issued by the Company.
Interest rates and maturities of the amounts outstanding are as follows at
December 31:
<TABLE>
<CAPTION>
                                                          1996         1995
                                                       -----------  -----------
                                                        (DOLLARS IN THOUSANDS)
<S>                                                    <C>          <C>
 
   Forty year 5%, due 2000...........................    $ 25,000     $ 25,000
   Ten year 6.05%, due 2003..........................      50,000       50,000
   Twelve year 7%, due 2004..........................      50,000       50,000
   Forty year 7 1/4%, due 2009.......................      40,000       40,000
   Forty year 7 1/4%, due 2013.......................      50,000       50,000
   Forty year 8.4%, due 2029.........................      50,000       50,000
                                                         --------     --------
                                                          265,000      265,000
   Unamortized discount and premium, net.............      (1,149)      (1,250)
   Capital lease obligations - average rate
    8.25% and 20.7%..................................         259           10
                                                         --------     --------
   Total long-term debt, including current maturities     264,110      263,760
   Less maturing within one year.....................          44           10
                                                         --------     --------
   Total long-term debt..............................    $264,066     $263,750
                                                         ========     ========
</TABLE>

    Long-term debt outstanding at December 31, 1996 includes $115,000,000 that
is callable by the Company.  The call prices range from 102.26% to 100.0% of
face value, depending upon the remaining term to maturity of the issue.

    At December 31, 1996, the Company had $50,000,000 remaining under a shelf
registration statement filed with the Securities and Exchange Commission for
issuance of unsecured debt securities.


8.  FINANCIAL INSTRUMENTS

    CONCENTRATIONS OF CREDIT RISK

    Financial instruments that subject the Company to concentrations of credit
risk consist primarily of short-term investments, trade receivables and a note
receivable from affiliate.

    Concentrations of credit risk with respect to trade receivables other than
those from AT&T are limited due to the large number of customers.  For the years
ended December 31, 1996, 1995 and 1994, revenues generated from services
provided to AT&T (primarily network access and billing and collection) were
$63,152,000, $72,512,000 and $78,455,000, respectively.  At December 31, 1996
and 1995, accounts receivable, net, included $3,833,000 and $3,910,000,
respectively, from AT&T.

                                      F-12
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

   FAIR VALUES OF FINANCIAL INSTRUMENTS

   The tables below provide additional information about the Company's material
financial instruments at December 31, 1996:


   FINANCIAL INSTRUMENT                      VALUATION METHOD
   --------------------                      ----------------
   Note receivable from affiliate (BANFC)    Carrying amounts
     and short-term investments

   Debt (excluding capital leases and        Market quotes for similar terms
     unamortized premium and discount)       and maturities or future cash flows
                                             discounted at current rates
<TABLE>
<CAPTION>
 
 
                                              1996                1995
                                       ------------------  ------------------
                                       CARRYING    FAIR    CARRYING    FAIR
                                        AMOUNT    VALUE     AMOUNT    VALUE
                                       --------  --------  --------  --------  
                                               (DOLLARS IN THOUSANDS)
<S>                                    <C>       <C>       <C>       <C>
                                   
    Debt............................   $265,000  $270,019  $265,000  $283,512
                                                                             
    Note receivable from affiliate..     33,823    33,823     4,939     4,939
</TABLE> 
 
9. SHAREOWNER'S INVESTMENT
 
<TABLE> 
<CAPTION> 

                                  
                                        COMMON    CAPITAL   REINVESTED EARNINGS
   (DOLLARS IN THOUSANDS)                STOCK    SURPLUS  (ACCUMULATED DEFICIT)
   ---------------------              --------   --------  ---------------------
   <S>                                <C>        <C>       <C>  
   Balance at December 31, 1993....   $304,065   $ 42,074       $ 41,833   
                                                                           
   Net income......................                                7,643   
   Dividends paid to Bell Atlantic.                              (56,060)  
   Distribution of capital surplus                                         
    to Bell Atlantic...............               (22,410)                 
   Other...........................                                   35   
                                      --------   --------       --------   
   Balance at December 31, 1994....    304,065     19,664         (6,549)  
                                                                           
   Net income......................                               81,247   
   Transfer of stated capital to                                           
    capital surplus................    (40,000)    40,000                  
   Distribution of capital surplus                                         
    to Bell Atlantic...............               (52,245)                 
   Dividends paid to Bell Atlantic.                              (56,990)  
   Other...........................                                 (170)  
                                      --------   --------       --------   
   Balance at December 31, 1995....    264,065      7,419         17,538   
                                                                           
   Net income......................                               74,349   
   Dividends paid to Bell Atlantic.                              (85,800)  
   Other...........................                                 (500)  
                                      --------   --------       --------   
   Balance at December 31, 1996....   $264,065   $  7,419       $  5,587   
                                      ========   ========       ========   
</TABLE>
    The Company has reclassified $36,417,000 previously reported for common
stock to capital surplus to conform to the classification adopted at December
31, 1994.

                                      F-13
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

     On January 31, 1995, the Board of Directors of the Company approved a
transfer in the amount of $40,000,000 from stated capital, as represented by the
Company's one issued share of common stock without par value, to capital
surplus.

     On February 3, 1997, the Company declared and paid a cash dividend in the
amount of $15,000,000 to Bell Atlantic.


10.  STOCK INCENTIVE PLANS

     The Company participates in stock-based compensation plans sponsored by
Bell Atlantic.  Bell Atlantic applies APB Opinion No. 25 and related
interpretations in accounting for the plans.  Effective January 1, 1996, Bell
Atlantic adopted the disclosure-only provisions of SFAS No. 123.  If Bell
Atlantic had elected to recognize compensation expense based on the fair value
at the grant dates for 1995 and subsequent awards consistent with the provisions
of SFAS No. 123, the Company's pro forma net income for the years ended December
31, 1996 and 1995 would have been $73,634,000 and $80,593,000, respectively,
compared to as reported net income of $74,349,000 and $81,247,000 for the
corresponding years.  These results may not be representative of the effects on
pro forma net income for future years.

   The pro forma net income amounts were determined using the Black-Scholes
option-pricing model based on the following weighted-average assumptions:
<TABLE>
<CAPTION>
 
                                                             1996   1995
                                                             -----  -----
<S>                                                          <C>    <C>
                             
   Dividend yield..........................................    4.9%   5.1%
   Expected volatility.....................................   14.7%  15.9%
   Risk-free interest rate.................................    5.4%   7.6%
   Expected lives (in years)...............................    4.5    4.5 
</TABLE>
   The weighted average value of options granted was $7.23 per option during
1996 and $7.46 per option during 1995.


11. EMPLOYEE BENEFITS

    PENSION PLANS

   Bell Atlantic and certain of its subsidiaries, including the Company, sponsor
multi-employer noncontributory defined benefit pension plans covering
substantially all of its management and associate employees.  Benefits for
associate employees are determined by a flat dollar amount per year of service
according to job classification.  Effective December 31, 1995, the plan covering
management employees was converted to a cash balance plan with benefits
determined by compensation credits related to age and service and interest
credits based on individual account balances. The management pension benefit for
prior years was based on a stated percentage of adjusted career average
earnings.

   Under the cash balance plan, each management employee's opening account
balance was determined by converting the accrued pension benefit as of December
31, 1995 to a lump-sum amount based on the prior plan's provisions.  The lump-
sum value was then multiplied by a transition factor based on age and service to
arrive at the opening balance.

    Bell Atlantic'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.

    Pension cost was $1,459,000, $1,411,000 and $4,569,000 for the years ended
December 31, 1996, 1995 and 1994, respectively.  The change in pension cost from
year-to-year was caused by a number of variables, including changes in actuarial
assumptions (see table below), returns on plan assets and plan amendments.

    SFAS No. 87, "Employers' Accounting for Pensions" 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 

                                      F-14
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

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.

    The significant assumptions used for the pension measurements were as
follows at December 31:
<TABLE>
<CAPTION>
 
                                                      1996   1995   1994
                                                      -----  -----  -----
<S>                                                   <C>    <C>    <C>
 
   Discount rate....................................   7.75%  7.25%  8.25%
   Rate of future increases in compensation levels..   4.75%  4.75%  5.25%
</TABLE>

    The expected long-term rate of return on plan assets was 8.25% for 1996,
1995 and 1994.

    Pension benefits for associate employees are subject to collective
bargaining and modifications in pension benefits have been bargained from time
to time.  Additionally, the Company has periodically amended the benefit formula
under pension plans maintained for its management employees.  Substantive
commitments for future amendments to the Company's pension plans have been
reflected in determining the Company's pension cost.  The actuarial assumptions
used to determine pension cost are based on financial market interest rates,
past experience, and management's best estimate of future benefit changes and
economic conditions.  Changes in these assumptions may impact future pension
costs level and benefit obligations.

    POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

   Bell Atlantic's postretirement health and life insurance benefit plans cover
substantially all of the Company's management and associate employees.
Postretirement health benefit costs are based on comprehensive medical and
dental plan provisions.  Postretirement life insurance costs are based on annual
basic pay at retirement.

   In 1996, Bell Atlantic restructured certain postretirement health and life
insurance obligations and assets to create a single plan.  The remaining
postretirement benefits continue to be provided by separate plans.  The
restructure did not affect plan benefits or postretirement benefit costs or
obligations.

   Bell Atlantic 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.

    Postretirement benefit cost was $6,261,000, $7,798,000 and $11,114,000 for
the years ended December 31, 1996, 1995 and 1994, respectively.  The change in
postretirement benefit cost from year-to-year was caused by a number of
variables, including changes in actuarial assumptions (see table below), returns
on plan assets and plan amendments.

    SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," requires a comparison of the actuarial present value of projected
postretirement benefit obligations with the fair value of plan assets, the
disclosure of the components of net periodic postretirement benefit costs, a
reconciliation of the funded status of the plan with amounts recorded on the
balance sheets and the effect of a one-percentage-point increase in the assumed
health care cost trend rates for each future year on net periodic postretirement
benefit cost and the accumulated postretirement benefit obligation.  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.

                                      F-15
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.


    Assumptions used in the actuarial computations for postretirement benefits
are as follows at December 31:

<TABLE>
<CAPTION>
 
                                                            1996    1995    1994
                                                           ------  ------  ------
<S>                                                       <C>     <C>     <C>
 
    Discount rate....................................      7.75%   7.25%   8.25% 
    Rate of future increases in compensation levels..      4.75    4.75    5.25 
    Medical cost trend rate:                                                    
      Year ending....................................     10.00   11.00   12.00 
      Ultimate (year 2003)...........................      5.00    5.00    5.00 
    Dental cost trend rate...........................      4.00    4.00    4.00  
</TABLE>

    The expected long-term rate of return on plan assets was 8.25% for 1996,
1995 and 1994.

    Postretirement benefits other than pensions for associate employees are
subject to collective bargaining and have been modified from time to time.  The
Company has also periodically modified benefits under plans maintained for its
management employees.  Substantive commitments for future amendments to the
Company's postretirement benefit plans have been reflected in determining the
Company's postretirement benefit cost. The actuarial assumptions used to
determine postretirement benefit cost are based on financial market interest
rates, past experience, and management's best estimate of future benefit changes
and economic conditions.  Changes in these assumptions may impact future
postretirement benefit costs level and benefit obligations.

    SAVINGS PLANS AND EMPLOYEE STOCK OWNERSHIP PLANS

    Substantially all of the Company's employees are eligible to participate in
savings plans established by Bell Atlantic to provide opportunities for eligible
employees to save for retirement on a tax-deferred basis and encourage employees
to acquire and maintain an equity interest in Bell Atlantic.  Under these plans,
a certain percentage of eligible employee contributions are matched with shares
of Bell Atlantic common stock.  Bell Atlantic funds the matching contribution
through two leveraged employee stock ownership plans (ESOPs).  Bell Atlantic
accounts for its ESOPs in accordance with the accounting rules applicable to
companies with ESOP trusts that held securities prior to December 15, 1989.  The
Company recognizes its proportionate share of total ESOP cost based on the
Company's matching obligation attributable to participating Company employees.
The Company recorded total ESOP cost of $2,129,000, $2,757,000 and $2,271,000 in
1996, 1995 and 1994, respectively.

                                      F-16
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

12. INCOME TAXES

    The components of income tax expense are as follows:
<TABLE>
<CAPTION>
 
                                     YEARS ENDED DECEMBER 31               
                                   ----------------------------            
                                     1996      1995      1994              
                                   --------  --------  --------            
<S>                                <C>       <C>       <C>                 
                                      (DOLLARS IN THOUSANDS)               
Current:                                                                   
 Federal..................         $44,370   $51,092   $49,423             
 State and local..........          12,656    14,169    13,962             
                                   -------   -------   -------             
 Total....................          57,026    65,261    63,385             
                                   -------   -------   -------             
                                                                           
Deferred:                                                                  
 Federal..................          (6,614)   (7,470)   (3,770)            
 State and local..........          (1,583)   (1,863)      416             
                                   -------   -------   -------             
 Total....................          (8,197)   (9,333)   (3,354)            
                                   -------   -------   -------             
                                    48,829    55,928    60,031             
Investment tax credits....          (1,866)   (2,954)   (2,616)            
                                   -------   -------   -------             
Total income tax expense..         $46,963   $52,974   $57,415             
                                   =======   =======   =======              
</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
                                                       ---------------------------
                                                         1996      1995      1994
                                                       --------  --------  -------
<S>                                                    <C>       <C>       <C>
 
   Statutory federal income tax rate..                   35.0%     35.0%     35.0%
   Investment tax credits.............                   (1.0)     (1.4)     (1.9)
   State income taxes, net of federal                                            
    tax benefits......................                    6.0       6.0       6.0
   Other, net.........................                    (.6)      (.1)      1.4
                                                         ----      ----      ----
   Effective income tax rate..........                   39.4%     39.5%     40.5%
                                                         ====      ====      ==== 
</TABLE>

    Deferred taxes arise because of differences in the book and tax bases of
certain assets and liabilities.  Significant components of deferred tax
liabilities (assets) were as follows at December 31:
<TABLE>
<CAPTION>
 
                                                       1996        1995       
                                                   --------    --------   
                                                  (DOLLARS IN THOUSANDS)  
<S>                                                <C>          <C>        
Deferred tax liabilities:                                                 
  Depreciation.......................              $117,900    $124,200   
  Other..............................                12,300      11,200   
                                                   --------    --------   
                                                    130,200     135,400   
                                                   --------    --------   
Deferred tax assets:                                                      
  Employee benefits..................               (83,500)    (83,000)  
  Investment tax credits.............                (3,400)     (4,100)  
  Advance payments...................                  (100)       (100)  
  Other..............................                (9,200)     (7,400)  
                                                   --------    --------   
                                                    (96,200)    (94,600)  
                                                   --------    --------   
Net deferred tax liability...........              $ 34,000    $ 40,800   
                                                   ========    ========    
</TABLE>

    Deferred tax assets include approximately $56,600,000 and $56,000,000 at
December 31, 1996 and 1995, respectively, related to postretirement benefit
costs recognized under SFAS No. 106.  This deferred tax asset will gradually be
realized over the estimated lives of current retirees and employees.

                                      F-17
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

13. ADDITIONAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
 
                                                        DECEMBER 31
                                                   --------------------
                                                     1996       1995
                                                   ---------  ---------
                                                  (DOLLARS IN THOUSANDS)
<S>                                                <C>        <C> 
BALANCE SHEETS:                                     
Accounts payable and accrued liabilities:           
  Accounts payable - affiliates...........          $ 56,198   $ 41,019
  Accounts payable - other................            46,608     44,495
  Accrued expenses........................             9,015      7,998
  Accrued vacation pay....................             7,800      9,305
  Accrued taxes...........................             8,745      7,882
  Interest payable - other................             4,880      4,891
  Interest payable - affiliate............               ---          1
                                                    --------   --------
                                                    $133,246   $115,591
                                                    ========   ========
                                                    
Other current liabilities:                          
  Advance billings and customer deposits..          $ 15,176   $ 16,684
  Deferred income taxes...................               292        ---
                                                    --------   --------
                                                    $ 15,468   $ 16,684
                                                    ========   ========
                                                    
<CAPTION>                                           
                                                    
                                               YEARS ENDED DECEMBER 31   
                                            ---------------------------- 
                                              1996       1995     1994   
                                            --------   --------  ------- 
                                               (DOLLARS IN THOUSANDS)    
<S>                                         <C>        <C>       <C>     
STATEMENTS OF CASH FLOWS:                                                
Cash paid during the year for:                                           
 Income taxes, net of amounts refunded....  $ 56,499   $ 66,724  $65,272 
 Interest, net of amounts capitalized.....    18,631     19,358   18,289 
                                                                         
STATEMENTS OF OPERATIONS AND REINVESTED                                  
 EARNINGS (ACCUMULATED DEFICIT):                                         
Interest expense incurred,                                               
 net of amounts capitalized...............    17,914     17,573   18,468 
Capitalized interest......................       955      1,562      436 
Advertising expense.......................     3,470      3,226    3,357   
</TABLE>

    Interest paid during the year includes $2,000 in 1996, $75,000 in 1995 and
$242,000 in 1994 related to short-term financing services provided by Bell
Atlantic Network Funding Corporation (see Note 7).

    Advertising expense includes $2,991,000, $2,788,000 and $2,862,000 in 1996,
1995 and 1994, respectively, allocated to the Company by Bell Atlantic Network
Services, Inc. (NSI).

    At December 31, 1996 and 1995, $10,284,000 and $6,318,000, respectively, of
negative cash was classified as accounts payable.

                                      F-18
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

14. TRANSACTIONS WITH AFFILIATES

    The financial statements include transactions with NSI, Bell Atlantic
Network Funding Corporation (BANFC), Bell Atlantic, and various other
affiliates.

    The Company has contractual arrangements with NSI for the provision of
various centralized services.  These services are divided into two broad
categories.  The first category is comprised of network related services which
generally benefit only Bell Atlantic's operating telephone subsidiaries.  These
services include administration, marketing, product advertising, sales,
information systems, network technology planning, labor relations, and staff
support for various network operations.  The second category is comprised of
overhead and support services which generally benefit all subsidiaries of Bell
Atlantic.  Such services include corporate governance and staff support in
finance, external affairs, legal and corporate secretary, media relations,
employee communications, corporate advertising, human resources, and treasury.
The Company's allocated share of NSI costs also includes costs for technical and
support services billed by Bell Communications Research, Inc. (Bellcore),
another affiliated company owned jointly by the seven regional holding
companies.  In November 1996, Bell Atlantic and other Bellcore owners entered
into an agreement to sell their jointly owned investment in Bellcore.  The
transaction is subject to regulatory approvals, and is expected to be completed
near the end of 1997.  After the sale is completed, the Company will continue to
contract with Bellcore for technical and support services.

    The Company recognizes interest expense and income in connection with
contractual arrangements with BANFC to provide short-term financing, investing
and cash management services to the Company (see Note 7).

    Operating revenues include amounts from affiliates in connection with an
interstate revenue sharing arrangement with Bell Atlantic's operating telephone
subsidiaries.  Other operating revenues and expenses also include miscellaneous
items of income and expense resulting from transactions with other affiliates,
primarily rental of facilities and equipment. The Company also paid cash
dividends and made distributions of capital surplus to its parent company, Bell
Atlantic (see Note 9).

    Transactions with affiliates are summarized as follows:

<TABLE>
<CAPTION>
 
                                             YEARS ENDED DECEMBER 31
                                        --------------------------------
                                          1996         1995       1994
                                        ----------  ---------  ---------
<S>                                     <C>         <C>         <C>
                                             (DOLLARS IN THOUSANDS)
Operating revenues:              
 Interstate revenue sharing     
   from affiliates...............         $ 25,898   $ 35,223   $ 39,099
 Other revenue from affiliates..             8,178      4,070      6,534
                                          --------   --------   --------
                                            34,076     39,293     45,633
                                          --------   --------   --------
Operating expenses:              
  NSI - network..................           68,843     53,174     44,018
  NSI - other....................           37,264     34,715     39,228
  Bellcore.......................            5,106      5,080      4,908
  Other..........................           17,052     13,853     15,363
                                          --------   --------   --------
                                           128,265    106,822    103,517
                                          --------   --------   --------
                                 
Interest income from BANFC.......            1,370        466        274
                                 
Interest expense to BANFC........                1        114        186
                                 
Dividends paid and distributions 
 of capital surplus to Bell      
 Atlantic........................           85,800    109,235     78,470
</TABLE>

    Outstanding balances with affiliates are reported on the Balance Sheets at
December 31, 1996 and 1995 as Note receivable from affiliate, Accounts
receivable - affiliates, and Accounts payable and accrued liabilities -
affiliates.

                                      F-19
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

15. QUARTERLY FINANCIAL INFORMATION (unaudited)
<TABLE>
<CAPTION>
 
                                                 INCOME BEFORE
                                                   CUMULATIVE
                                                EFFECT OF CHANGE
                          OPERATING  OPERATING   IN ACCOUNTING       NET
QUARTER ENDED              REVENUES    INCOME       PRINCIPLE       INCOME
------------------------  ---------  ---------  ----------------  ---------
                                        (DOLLARS IN THOUSANDS)
<S>                       <C>        <C>        <C>               <C>
1996:
  March 31..............   $146,209   $ 36,814          $ 19,627  $ 21,606
  June 30...............    150,492     36,170            19,571    19,571
  September 30..........    154,256     38,330            20,197    20,197
  December 31...........    144,478     25,483            12,975    12,975
                           --------   --------          --------  --------
  Total.................   $595,435   $136,797          $ 72,370  $ 74,349
                           ========   ========          ========  ========
                                                                
                                                                
1995:                                                           
  March 31..............   $144,636   $ 37,957          $ 20,167  $ 20,167
  June 30...............    146,267     39,020            20,909    20,909
  September 30..........    145,846     38,093            20,180    20,180
  December 31...........    148,436     36,806            19,991    19,991
                           --------   --------          --------  --------
  Total.................   $585,185   $151,876          $ 81,247  $ 81,247
                           ========   ========          ========  ========
</TABLE>

   Results of operations for the first three quarters of 1996 have been restated
for the effect of a change in the method of accounting for directory publishing
revenues and expenses (see Note 3).


16. SUBSEQUENT EVENT - DIRECTORY PUBLISHING ACTIVITIES

   On January 1, 1997, the Company transferred, at net book value without gain
or loss, certain assets and liabilities associated with its directory publishing
activities to a newly formed, wholly owned subsidiary.  The stock of the
subsidiary was immediately distributed to Bell Atlantic.  The transfer of such
assets and liabilities was completed as part of Bell Atlantic and the Company's
response to the requirements of the Telecommunications of Act of 1996, which
prohibits the Company from engaging in electronic publishing or joint sales and
marketing of electronic products.

   Net assets transferred by the Company totaled approximately $2,000,000, and
consisted of deferred directory production costs (included in prepaid expenses),
fixed assets, and related deferred tax liabilities.

   Revenues related to the Company's directory publishing activities transferred
were approximately $35,000,000, $29,900,000 and $27,400,000 for the years ended
December 31, 1996, 1995 and 1994, respectively.  Direct expenses related to the
directory publishing activities transferred were approximately $15,600,000,
$12,900,000 and $13,900,000 for the years ended December 31, 1996, 1995 and
1994, respectively.  The Company does not separately identify indirect expenses
attributable to the directory publishing activities, including expenses related
to billing and data management and processing services, legal, external affairs,
depreciation, interest expense and any corresponding tax expense.

                                      F-20
<PAGE>
 
                      Bell Atlantic - West Virginia, Inc.

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
 
                                                  ADDITIONS     
                                           ---------------------
                                                       CHARGED
                               BALANCE AT  CHARGED    TO OTHER                    BALANCE
                               BEGINNING      TO      ACCOUNTS     DEDUCTIONS     AT END
DESCRIPTION                    OF PERIOD   EXPENSES    NOTE(a)       NOTE(b)     OF PERIOD
-----------------------------  ----------  --------  -----------  -------------  ---------
<S>                            <C>         <C>       <C>          <C>            <C>
 
Allowance for Uncollectible
  Accounts Receivable:
 
  Year 1996...............         $4,178    $6,126    $5,515        $10,398        $5,421
                             
  Year 1995...............         $2,560    $4,488    $6,116        $ 8,986        $4,178
                             
  Year 1994...............         $3,077    $4,169    $4,664        $ 9,350        $2,560

</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-21
<PAGE>
 
                                   EXHIBITS



                      FILED WITH ANNUAL REPORT FORM 10-K


                   UNDER THE SECURITIES EXCHANGE ACT OF 1934


                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996


                      Bell Atlantic - West Virginia, Inc.


                         COMMISSION FILE NUMBER 1-7150
<PAGE>
 
Form 10-K for 1996
File No. 1-7150
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 July 30,   
          1975. (Exhibit 3a to the registrant's Annual Report on Form 10-K for  
          the year ended December 31, 1985, File  No. 1-7150.)                  
                                                                                
          3a(i)   Articles of Amendment dated August 29, 1990. (Exhibit 3a(i) to
                  the registrant's Annual Report on Form 10-K for the year ended
                  December 31, 1990, File No. 1-7150.)                          
                                                                                
          3a(ii)   Articles of Amendment, dated January 6, 1994 and filed 
                   January 13, 1994. (Exhibit 3a(ii) to the registrant's Annual
                   Report on Form 10-K for the year ended December 31, 1993, 
                   File No. 1-7150.)
                                                                                
     3b   By-Laws of the registrant, as amended December 15, 1995. (Exhibit 3b
          to the registrant's Annual Report on Form 10-K for the year ended 
          December 31, 1995, File No. 1-7150.)
                                                                                
          3b(i)    Consent of Sole Stockholder of Bell Atlantic - West Virginia
                   Inc., dated December 15, 1995. (Exhibit 3b(i) to the        
                   registrant's Annual Report on Form 10-K for the year ended  
                   December 31, 1995, File No. 1-7150.)                        
                                                                                
     4    No instrument which defines the rights of holders of long-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.)               
                                                                                
     18   Letter regarding change in accounting principle.                      
                                                                                
     23   Consent of Independent Accountants.                                   
                                                                                
     27   Financial Data Schedule.