<PAGE>   1
================================================================================

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


     [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                  For the quarterly period ended: JUNE 30, 1999

                                       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 0-1210


                             GTE NORTH INCORPORATED
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


           WISCONSIN                                     35-1869961
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

1255 Corporate Drive, SVC04C08, Irving, Texas              75038
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)

         Registrant's telephone number, including area code 972-507-5000


      (Former name, former address and former fiscal year, if changed since
                                  last report)

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 [ ]

The Company had 978,351 shares of $1,000 par value common stock outstanding at
July 31, 1999. The Company's common stock is 100% owned by GTE Corporation.

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

<PAGE>   2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                      GTE NORTH INCORPORATED AND SUBSIDIARY
             Condensed Consolidated Statements of Income (Unaudited)

<TABLE>
<CAPTION>
                                                 Three Months Ended         Six Months Ended
                                                      June 30,                  June 30,
                                               ---------------------     ---------------------
                                                 1999         1998         1999         1998
                                               --------     --------     --------     --------
                                                            (Dollars in Millions)
<S>                                            <C>          <C>          <C>          <C>
REVENUES AND SALES
     Local services                            $  333.7     $  320.2     $  664.2     $  632.4
     Network access services                      302.8        298.9        607.0        616.1
     Other services and sales                     158.9        153.7        291.3        296.4
                                               --------     --------     --------     --------
        Total revenues and sales                  795.4        772.8      1,562.5      1,544.9
                                               --------     --------     --------     --------
OPERATING COSTS AND EXPENSES
     Cost of services and sales                   240.5        274.8        496.5        535.1
     Selling, general and administrative          120.1         99.9        247.6        195.7
     Depreciation and amortization                130.6        132.9        263.4        260.2
                                               --------     --------     --------     --------
        Total operating costs and expenses        491.2        507.6      1,007.5        991.0
                                               --------     --------     --------     --------
OPERATING INCOME                                  304.2        265.2        555.0        553.9

OTHER EXPENSE
     Interest - net                                38.7         37.9         79.3         68.3
                                               --------     --------     --------     --------
INCOME BEFORE INCOME TAXES                        265.5        227.3        475.7        485.6
     Income taxes                                 100.5         85.2        180.1        182.6
                                               --------     --------     --------     --------
INCOME BEFORE EXTRAORDINARY CHARGE                165.0        142.1        295.6        303.0
     Extraordinary charge                          --           --           --           (3.5)
                                               --------     --------     --------     --------
NET INCOME                                     $  165.0     $  142.1     $  295.6     $  299.5
                                               ========     ========     ========     ========
</TABLE>


Per share data is omitted since the Company's common stock is 100% owned by GTE
Corporation.

The accompanying notes are an integral part of these statements.


                                       1
<PAGE>   3

                      GTE NORTH INCORPORATED AND SUBSIDIARY
                Condensed Consolidated Balance Sheets (Unaudited)

<TABLE>
<CAPTION>
                                                                         June 30,      December 31,
                                                                           1999            1998
                                                                        ----------     -----------
                                                                          (Dollars in Millions)
<S>                                                                     <C>             <C>
ASSETS
Current assets
    Cash and cash equivalents                                           $      0.4      $      0.9
    Receivables, less allowances of $43.3 million and $40.3 million          619.0           653.8
    Accounts receivable from affiliates                                      165.8           223.0
    Net assets held for sale (see Note 4)                                    193.5            --
    Inventories and supplies                                                  47.3            43.2
    Prepaid insurance                                                          4.6            39.9
    Other                                                                     55.4            53.1
                                                                        ----------      ----------
       Total current assets                                                1,086.0         1,013.9
                                                                        ----------      ----------
Property, plant and equipment, at cost                                     9,589.7        10,030.5
Accumulated depreciation                                                  (6,353.2)       (6,652.8)
                                                                        ----------      ----------
       Total property, plant and equipment, net (a)                        3,236.5         3,377.7
                                                                        ----------      ----------
Prepaid pension costs                                                      1,035.5           958.1
Other assets                                                                   5.9            19.6
                                                                        ----------      ----------
Total assets                                                            $  5,363.9      $  5,369.3
                                                                        ==========      ==========
</TABLE>


(a) Includes $180.9 million at December 31, 1998 that is now held for sale, see
    Note 4.

The accompanying notes are an integral part of these statements.


                                       2
<PAGE>   4

                      GTE NORTH INCORPORATED AND SUBSIDIARY
          Condensed Consolidated Balance Sheets (Unaudited) - Continued

<TABLE>
<CAPTION>
                                                                         June 30,      December 31,
                                                                           1999            1998
                                                                        ----------     -----------
                                                                          (Dollars in Millions)
<S>                                                                     <C>             <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
    Current maturities of long-term debt                                $     --        $    200.0
    Notes payable to affiliate                                               469.9           389.8
    Accounts payable                                                          65.3            30.8
    Affiliate payables                                                       108.8           133.6
    Dividends payable                                                         87.1           159.2
    Other                                                                    408.5           405.3
                                                                        ----------      ----------
       Total current liabilities                                           1,139.6         1,318.7
                                                                        ----------      ----------
Long-term debt                                                             1,770.9         1,770.2
Employee benefit plans                                                       408.5           398.2
Deferred income taxes and other                                              457.8           408.2
                                                                        ----------      ----------
       Total liabilities                                                   3,776.8         3,895.3
                                                                        ----------      ----------
Preferred stock, subject to mandatory redemption                               1.1             1.2
                                                                        ----------      ----------
Shareholders' equity
    Preferred stock                                                           15.2            15.2
    Common stock (978,351 shares issued)                                     978.3           978.3
    Additional paid-in capital                                                43.1            43.1
    Retained earnings                                                        549.4           436.2
                                                                        ----------      ----------
       Total shareholders' equity                                          1,586.0         1,472.8
                                                                        ----------      ----------
Total liabilities and shareholders' equity                              $  5,363.9      $  5,369.3
                                                                        ==========      ==========
</TABLE>


The accompanying notes are an integral part of these statements.


                                       3
<PAGE>   5

                      GTE NORTH INCORPORATED AND SUBSIDIARY
           Condensed Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
                                                                    Six Months Ended
                                                                        June 30,
                                                                 ----------------------
                                                                   1999          1998
                                                                 --------      --------
                                                                  (Dollars in Millions)
<S>                                                              <C>           <C>
OPERATIONS
    Income before extraordinary charge                           $  295.6      $  303.0
    Adjustments to reconcile income before extraordinary
       charge to net cash from operations:
         Depreciation and amortization                              263.4         260.2
         Provision for uncollectible accounts                        21.1          25.4
         Changes in current assets and current liabilities           81.2        (363.3)
         Deferred income taxes and other - net                       43.9         (36.5)
                                                                 --------      --------
       Net cash from operations                                     705.2         188.8
                                                                 --------      --------
INVESTING
    Capital expenditures                                           (331.2)       (349.5)
                                                                 --------      --------
       Cash used in investing                                      (331.2)       (349.5)
                                                                 --------      --------
FINANCING
    Long-term debt issued                                            --           396.6
    Long-term debt and preferred stock retired,
       including premiums paid on early retirement                 (200.1)       (177.8)
    Dividends                                                      (254.5)       (222.4)
    Net change in affiliate notes                                    80.1         201.7
    Other - net                                                      --           (22.1)
                                                                 --------      --------
       Net cash from (used in) financing                           (374.5)        176.0
                                                                 --------      --------
Increase (decrease) in cash and cash equivalents                     (0.5)         15.3

Cash and cash equivalents:
    Beginning of period                                               0.9          12.2
                                                                 --------      --------
    End of period                                                $    0.4      $   27.5
                                                                 ========      ========
</TABLE>


The accompanying notes are an integral part of these statements.


                                       4
<PAGE>   6

                      GTE NORTH INCORPORATED AND SUBSIDIARY
        Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1. BASIS OF PRESENTATION

GTE North Incorporated (the Company) is incorporated under the laws of the State
of Wisconsin and is a subsidiary of GTE Corporation (GTE).

The unaudited condensed consolidated financial statements included herein have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. However, in the opinion of management of the Company, the
condensed consolidated financial statements include all adjustments, which
consist only of normal recurring accruals, necessary to present fairly the
financial information for such periods. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's 1998 Annual Report on
Form 10-K.

Reclassifications of prior year data have been made, where appropriate, to
conform to the 1999 presentation.


NOTE 2. CAPITALIZED SOFTWARE

Effective January 1, 1999, the Company adopted Statement of Position (SOP) 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." As a result of adopting SOP 98-1, the Company capitalized
software expenditures of $19.5 million and $31.8 million, respectively, for the
three and six months ended June 30, 1999, which would have previously been
expensed.


NOTE 3. SPECIAL CHARGE

In 1999, GTE continued the review of its operations and cost structure to ensure
they were consistent with its growth objectives. In connection with this ongoing
review, GTE initiated employee separation programs that resulted in a one-time
charge for GTE during the first quarter of 1999. The charge pertaining to the
Company totaled $27.0 million and is reflected as "Selling, general and
administrative" costs and expenses in the condensed consolidated income
statements. The components of the charge include separation programs and related
benefits such as outplacement and benefit continuation costs. These programs
were completed during the first quarter of 1999.


NOTE 4. NET ASSETS HELD FOR SALE

During the first quarter of 1998, the Company committed to a plan that resulted
in a decision to sell approximately 261,000 switched access lines located in
Illinois and Wisconsin. The Company plans to enter into agreements to sell these
lines during 1999. All sales will be subject to regulatory approval and are
expected to close in the first half of 2000. The associated net assets, which
approximate $193.5 million, consist of property, plant and equipment, and are
classified as "Net assets held for sale" in the condensed consolidated balance
sheet as of June 30, 1999. The Company intends to continue to operate all of
these assets until sold. Based on the decision to sell, however, the Company
stopped recording depreciation expense for these assets, resulting in a
year-to-date depreciation expense reduction of $15.0 million for 1999. No
charges were recorded for the access lines to be sold because their estimated
fair values were in excess of their carrying values. The 261,000 access lines
represent approximately 6% of the average switched access lines that the Company
had in service during 1998 and contributed approximately 3% to 1998 consolidated
revenues.


                                       5
<PAGE>   7

                      GTE NORTH INCORPORATED AND SUBSIDIARY
  Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

NOTE 5. RECENT ACCOUNTING PRONOUNCEMENT

Derivative Instruments and Hedging Activities

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. The Company is
currently assessing the impact of adopting SFAS No. 133, as amended, which is
effective January 1, 2001.


NOTE 6. PROPOSED MERGER WITH BELL ATLANTIC CORPORATION

Bell Atlantic and GTE have announced a proposed merger of equals under a
definitive merger agreement dated as of July 27, 1998. Under the terms of the
agreement, GTE shareholders will receive 1.22 shares of Bell Atlantic common
stock for each share of GTE common stock that they own.

The merger is expected to qualify as a pooling of interests, which means that
for accounting and financial reporting purposes the companies will be treated as
if they had always been combined. 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. At annual meetings held in May 1999,
the shareholders of each company approved the merger.

Both companies are working diligently to complete the merger at the earliest
practicable date. However, Bell Atlantic and GTE must obtain the approval of a
variety of state and federal regulatory agencies and, accordingly, the merger
may close in the first half of 2000.


                                       6
<PAGE>   8

                      GTE NORTH INCORPORATED AND SUBSIDIARY

Item 2.    Management's Discussion and Analysis of Financial Condition
                            And Results of Operations

RESULTS OF OPERATIONS

Net income increased 16% or $22.9 million for the three months ended June 30,
1999, compared to the same period in 1998, primarily due to an increase in
revenues and sales, as well as a decline in operating costs and expenses.
Year-to-date net income decreased 1% or $3.9 million, compared to the same
period in 1998, as a result of an increase in operating costs and expenses,
partially offset by an increase in local services revenues. An extraordinary
after-tax charge of $3.5 million (net of tax benefits of $2.3 million) related
to the retirement of long-term debt and preferred stock prior to stated maturity
was recorded in the first quarter of 1998.

<TABLE>
<CAPTION>
REVENUES AND SALES
(Dollars in Millions)               Three Months Ended
                                          June 30,
                                   ---------------------                   Percent
                                     1999         1998       Increase      Change
                                   --------     --------     --------     --------
<S>                                <C>          <C>          <C>          <C>
Local services                     $  333.7     $  320.2     $   13.5           4%
Network access services               302.8        298.9          3.9           1%
Other services and sales              158.9        153.7          5.2           3%
                                   --------     --------     --------
   Total revenues and sales        $  795.4     $  772.8     $   22.6           3%
                                   ========     ========     ========
</TABLE>

<TABLE>
<CAPTION>
                                      Six Months Ended
                                           June 30,
                                   ---------------------     Increase      Percent
                                     1999         1998      (Decrease)     Change
                                   --------     --------    ----------    --------
<S>                                <C>          <C>          <C>          <C>
Local services                     $  664.2     $  632.4     $   31.8           5%
Network access services               607.0        616.1         (9.1)         (1)%
Other services and sales              291.3        296.4         (5.1)         (2)%
                                   --------     --------     --------
   Total revenues and sales        $1,562.5     $1,544.9     $   17.6           1%
                                   ========     ========     ========
</TABLE>

Local Services Revenues

Access line growth was 5% for the three and six months ended June 30, 1999,
compared to the same periods in 1998, which generated additional revenues of
$12.9 million and $24.2 million, respectively, from basic local services,
CentraNet(R) services, and Integrated Services Digital Network and Digital
Channel Services. The Company also continued to see growth in demand for
enhanced custom calling features, such as SmartCall(R), resulting in $4.3
million and $9.9 million, respectively, of additional revenues for the second
quarter and year-to-date. Partially offsetting these increases were the effect
of price reductions in Ohio of $3.5 million and $4.5 million, respectively, for
the second quarter and year-to-date.

Network Access Services Revenues

Network access services revenues increased in the second quarter and decreased
year-to-date. Contributing to the variances were mandated interstate and
intrastate price changes, which reduced revenues by $19.1 million and $38.2
million, respectively. Additionally, during the first six months of 1999, the
Company refunded 1998 intrastate access and primary interexchange carrier charge
settlements to long-distance carriers (IXCs), which reduced network access
services revenues by $8.7 million and $16.2 million, respectively, for the three
and six months ended June 30, 1999. IntraLATA local exchange carrier (LEC)
switched access revenues declined due to reduced settlements for the three and
six months ended June 30, 1999. These decreases were offset in part by second
quarter and year-to-date increases in network access services revenues driven by
9% and 10% increases in minutes of use, which generated additional revenues of
$10.7 million and $19.3 million, respectively. In addition, the decreases were
partially offset by $8.4 million and $26.8 million increases in special access
revenues, driven by growing demand for increased bandwidth by high-capacity
users. Also, prior year activities caused a favorable variance in both the
second quarter and year-to-date primarily due to access settlement true-ups and
access reform


                                       7
<PAGE>   9

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

adjustments. Finally, end-user surcharges increased for both the three and six
months ended June 30, 1999, primarily as a result of implementation of the local
number portability surcharge (see "Interstate Regulatory Developments - Number
Portability").

Other Services and Sales Revenues

Other services and sales revenues increased for the three month and decreased
for the six month periods ended June 30, 1999. Lower toll revenues, primarily
related to intraLATA toll competition, contributed $11.8 million and $26.2
million, respectively, to the variances. Rental activity also decreased $0.7
million and $2.2 million, respectively. These declines were partially offset by
increases in nonregulated service and equipment sales revenues of $7.9 million
and $13.9 million and billing and collection services of $3.2 million and $6.5
million, as well as the timing of directory advertising, which added $4.0
million and $3.9 million, respectively, to other services and sales revenues.

<TABLE>
<CAPTION>
OPERATING COSTS AND EXPENSES
(Dollars in Millions)                      Three Months Ended
                                                 June 30,
                                          ---------------------     Increase       Percent
                                            1999         1998      (Decrease)      Change
                                          --------     --------    ----------     --------
<S>                                       <C>          <C>          <C>           <C>
Cost of services and sales                $  240.5     $  274.8     $  (34.3)        (12)%
Selling, general and administrative          120.1         99.9         20.2          20%
Depreciation and amortization                130.6        132.9         (2.3)         (2)%
                                          --------     --------     --------
   Total operating costs and expenses     $  491.2     $  507.6     $  (16.4)         (3)%
                                          ========     ========     ========
</TABLE>

<TABLE>
<CAPTION>
                                            Six Months Ended
                                                 June 30,
                                          --------------------      Increase        Percent
                                            1999         1998      (Decrease)       Change
                                          --------     --------    ----------      --------
<S>                                       <C>          <C>          <C>            <C>
Cost of services and sales                $  496.5     $  535.1     $  (38.6)          (7)%
Selling, general and administrative          247.6        195.7         51.9           27%
Depreciation and amortization                263.4        260.2          3.2            1%
                                          --------     --------     --------
   Total operating costs and expenses     $1,007.5     $  991.0     $   16.5            2%
                                          ========     ========     ========
</TABLE>

Total operating costs and expenses decreased for the three months and increased
for the six months ended June 30, 1999, compared to the same periods in 1998.
Contributing to the variances were reduced software right-to-use (RTU) fees
associated with the Company's network switching equipment of $22.5 million and
$37.7 million, respectively. This includes a reduction in RTU costs of $19.5
million and $31.8 million due to the capitalization of software costs in 1999 as
a result of the adoption of Statement of Position (SOP) 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use," in
addition to an overall reduction in RTU fees of $3.0 million and $5.9 million,
respectively, for the three and six months ended June 30, 1999. Pension
settlement gains of $30.2 million recorded in the second quarter of 1999 also
contributed to cost decreases for both the second quarter and year-to-date.
Offsetting these cost reductions were increased material costs of $14.2 million
and $17.0 million over 1998, which were attributable to increases in
telecommunication equipment sale volumes and customer access line growth.
Additionally, operating costs increased $12.2 million and $14.7 million,
respectively, for customer information pages included in the Company's White
Pages directories. Favorable adjustments of certain employee benefits and other
liabilities in the amount of $19.0 million in the second quarter of 1998 further
offset cost reductions in the three and six month periods. In addition, costs
increased from a one-time special charge of $27.0 million associated with
employee separation programs completed in the first quarter of 1999.
Depreciation expenses increased for the three and six month periods, primarily
driven by additional investment in network facilities resulting from increased
demand for switched access lines. The increased depreciation is partially offset
by a $7.5 million and $15.0 million reduction resulting from the discontinuance
of depreciation on non-strategic access lines held for sale (see "Other
Developments - Planned Asset Sales").


                                       8
<PAGE>   10

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

OTHER INCOME STATEMENT ITEMS

Interest - net increased 2% or $0.8 million for the three months and 16% or
$11.0 million for the six months ended June 30, 1999, compared to the same
periods in 1998. These increases are primarily due to higher average debt
levels.

Income taxes increased 18% or $15.3 million for the three months and decreased
1% or $2.5 million for the six months ended June 30, 1999, compared to the same
periods in 1998. The increase for the three months was primarily due to an
increase in pretax income. The decrease for the six months was primarily due to
a decrease in pretax income partially offset by other tax adjustments.

The Company recorded an after-tax extraordinary charge of $3.5 million (net of
tax benefits of $2.3 million) during the first quarter of 1998, reflecting
premiums paid on the redemption of long-term debt and preferred stock prior to
stated maturity.


CAPITAL RESOURCES AND LIQUIDITY

Management believes that the Company has adequate internal and external
resources available to meet ongoing operating requirements for construction of
new plant, modernization of facilities and payment of dividends. The Company
generally funds its construction program from operations, although external
financing is available. Short-term financing can be obtained through borrowings
from GTE or GTE Funding Incorporated. The Company participates with other
affiliates in a $1.5 billion, 364-day syndicated revolving line of credit and
has access to an additional $1.0 billion in short-term liquidity through GTE and
GTE Funding Incorporated's committed bi-lateral revolving lines of credit. The
Company also has an existing shelf registration statement for an additional
$300.0 million of debentures.

The Company's primary source of funds during the first six months of 1999 was
cash from operations of $705.2 million compared to $188.8 million for the same
period in 1998. The increase in cash from operations primarily reflects a
decrease in the Company's working capital requirements, partially offset by a
slight decline in results from operations.

The Company's capital expenditures during the first six months of 1999 were
$331.2 million compared to $349.5 million for the same period in 1998. The
majority of new investment is being made to meet the demands of growth, to
modernize facilities and for developing and installing new software, all of
which are required to support new products and enhanced services. Total capital
expenditures for 1999 are expected to be less than capital expenditures during
1998.

Cash used in financing activities was $374.5 million during the first six months
of 1999 compared to cash from financing activities of $176.0 million for the
same period in 1998. In February 1998, the Company issued $200.0 million of
6.375% debentures and $200.0 million of 6.73% debentures. During the first six
months of 1999, the Company retired a total of $200.1 million of long-term debt
and preferred stock, compared to the retirement of $177.8 million during the
same period in 1998. Retirements for 1998 include $5.8 million pretax ($3.5
million after-tax) paid in premiums on the March retirement of $157.5 million of
long-term debt and preferred stock, redeemed prior to stated maturity. The
Company paid dividends totaling $254.5 million in the first six months of 1999
compared to $222.4 million for the same period in 1998. Short-term financings,
including the net change in affiliate notes, increased $80.1 million during the
first six months in 1999, compared to $201.7 million for the same period of
1998. Additionally, in 1998, the Company recognized an interest rate hedge loss
of approximately $22.1 million on the settlement of forward contracts related to
the February 1998 debt issuances. This loss is being amortized over the life of
the associated debt.


                                       9

<PAGE>   11

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

INTERSTATE REGULATORY DEVELOPMENTS

During the second quarter of 1999, regulatory and legislative activity at both
the state and federal levels continued to be a direct result of the
Telecommunications Act of 1996 (Telecommunications Act). Along with promoting
competition in all segments of the telecommunications industry, the
Telecommunications Act was intended to preserve and advance universal service.

GTE continued in the second quarter of 1999, to meet the wholesale requirements
of new competitors. To date, GTE has signed interconnection agreements
with other carriers, providing them the capability to purchase individual
unbundled network elements (UNEs), resell retail services and interconnect
facilities-based networks. Several of these interconnection agreements were the
result of the arbitration process established by the Telecommunications Act, and
incorporated prices or terms and conditions based upon the Federal
Communications Commission (FCC) rules that were subsequently overturned by the
Eighth Circuit Court (Eighth Circuit) in July 1997. GTE challenged a number of
such agreements in federal district courts during 1997.

GTE's position in these challenges was supported by the Eighth Circuit's July
1997 decision stating that the FCC had overstepped its authority in several
areas concerning implementation of the interconnection provisions of the
Telecommunications Act. In January 1999, the U.S. Supreme Court (Supreme Court)
reversed in part and affirmed in part the Eighth Circuit's decisions. The
Supreme Court reversed the Eighth Circuit's determination that the FCC had no
jurisdiction over pricing. As a result, the pricing rules established by the FCC
are now subject to review on the merits by the Eighth Circuit. On the other
hand, the Supreme Court vacated the FCC rule setting forth the UNEs that
incumbent local exchange carriers (ILECs) are required to provide to competitive
LECs (CLECs). This latter ruling has led to a proceeding before the FCC
concerning what elements will have to be offered under what conditions. Pending
the final rulemaking by the FCC on the provisions of UNEs, GTE is continuing to
provide individual UNEs on a non-combined basis set forth in existing
interconnection agreements even though it is not legally obligated to do so.

In June 1999, the Eighth Circuit established a schedule for addressing the
issues it did not decide in 1998. The major issues are (1) the FCC's cost
methodology used to set prices, (2) it's methodology for setting wholesale
discounts, and (3) the "proxy rates" it set for interconnection, UNEs and
wholesale discounts. Supplemental opening briefs from petitioners and supporting
intervenors were filed July 16, 1999 and the opening brief of the FCC and its
supporting intervenors is due August 16, 1999. Reply briefs are due August 31,
1999. Oral argument is scheduled for September 1999.

Universal Service

GTE is active before both state and federal regulators advocating rapid
development and implementation of measures that will meet the requirements of
Section 254 of the Telecommunications Act that covers the Federal Universal
Service Program. Specifically, GTE urges regulators to identify and remove all
hidden subsidies and to provide an explicit replacement mechanism.

In October 1998, the FCC issued an order selecting a cost model for universal
service and planned to select cost inputs in the second quarter of 1999. Due to
unforeseen delays, the FCC has now moved the implementation date of the new
universal service mechanism for nonrural carriers to January 2000. As a result,
many state regulators are awaiting FCC action so they can design their universal
service programs to be complementary with the FCC program. On July 30, 1999, the
United States Court of Appeals for the Fifth Circuit (Fifth Circuit) affirmed in
part, reversed in part, and remanded in part the FCC's universal service regime.
Specifically, the Fifth Circuit upheld the agency's decisions regarding:
1)several aspects of the high-cost support program, including implementation
timing, separate treatment of rural carriers, the definition of service areas
and use of the forward-looking costs to determine support; 2)no mandatory
unbundling of supported services; 3)inclusion of commercial mobile radio service
providers as universal service fund contributors; and 4)aspects of the schools
and libraries program, including support for Internet access and internal
connections and payments to non-telecommunications carriers. The Fifth Circuit
reversed: 1)the assessment of contributions for schools and libraries fund
based, in part, on intrastate revenues; 2)the rule prohibiting local telephone
service providers from disconnecting low-income subscribers for non-payment of
long distance charges; 3)the decision to assess high-cost fund contributions on
primarily international carriers despite marginal interstate revenues; 4)the
requirement that ILECs recover their contributions from access charges; and
5)the blanket prohibition on additional state eligibility requirements for
carriers receiving high cost support. GTE is considering its options.


                                       10
<PAGE>   12

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

Price Cap

In May 1999, the U.S. Court of Appeals for the District of Columbia (Court)
released a decision regarding the FCC's choice of a 6.5% price cap productivity
factor in a 1997 order. The Court found the FCC's choice of a 6.0% base and a
0.5% Consumer Productivity Dividend to be inadequately supported. The Court
remanded the matter back to the FCC for further action and established an April
2000 date by which the FCC must complete its deliberations. The Court also
stayed application of its order, allowing the status quo use of the 6.5%
productivity factor pending conclusion of the FCC's further review.

Interstate Access Revision

Effective July 1999, access charges were further reduced using a 6.5%
productivity factor in compliance with FCC requirements to reflect the impacts
of access charge reform and in making GTE's 1999 Annual Filing. The total annual
financial impact of the reduction for the Company was $30.8 million. Similar
filings during 1997 and 1998 had already resulted in price reductions.

In July 1999, GTE, along with a coalition of local exchange and long distance
companies, submitted a proposal for interstate access charge and universal
service reform to the FCC. It is likely that the FCC will put the coalition's
proposal out for public comment in August 1999. The proposal would accelerate
the shift in access revenue recovery from per-minute to flat-rated charges, set
a schedule for elimination of the price cap productivity factor, and provide
more explicit support for universal service.

On August 4, 1999, the FCC announced adoption of an Order that grants price cap
LECs the ability to introduce new services without regulatory delay. The Order
also offers the promise of progressively greater flexibility in setting the
prices for interstate special access services as competition develops, gradually
replacing regulation with competition as the primary means of setting prices.
Although the text of the Order is not yet available, based upon the FCC press
release, the FCC has taken a reasonable step towards lessening regulation of
interstate special access. It appears the FCC has established a framework that
will allow ILECs the ability to use some of the same pricing mechanisms offered
by CLECs for special access services. The press release indicates the FCC has
begun a new rulemaking proceeding that is likely to lead to additional pricing
flexibility for interstate switched access services.

Advanced Telecommunications Services

Section 706 of the Telecommunications Act required the FCC to "encourage the
deployment on a reasonable and timely basis of advanced telecommunications
capability to all Americans." Further, the FCC was required to conduct a
proceeding aimed at determining the availability of advanced telecommunications,
and to take action to remove barriers to infrastructure investment and to
promote competition.

In an Order and Notice of Proposed Rulemaking (NPRM) released in August 1998,
the FCC ruled that advanced services offered by an incumbent LEC are subject to
the unbundling and resale requirements of the Telecommunications Act. In the
NPRM, the FCC sought comment on extensive, new separate affiliate rules under
which an incumbent LEC's affiliate could offer advanced services free from the
unbundling and resale obligations of the Telecommunications Act. In addition,
the NPRM sought comment on a number of issues regarding collocation, local
loops, unbundling and resale obligations for network facilities needed for
advanced services.


                                       11
<PAGE>   13

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

In March 1999, the FCC released an Order stemming from the August 1998 NPRM. In
the Order the FCC adopted a number of new collocation rules designed to make
competitive entry easier and less costly. These rules specify how incumbent LECs
will manage such items as alternate collocation arrangements, security, space
preparation cost allocation, provisioning intervals, and space exhaustion. GTE
has appealed this order to federal court. The FCC also released a Further Notice
of Proposed Rulemaking (FNPRM) seeking comment on spectrum compatibility issues
and line sharing. Line sharing is a concept wherein two or more service
providers are allowed to use the same local loop (e.g., voice and xDSL). GTE
will vigorously oppose line sharing.

The FCC has yet to release an order addressing separate affiliates, local loops,
unbundling and resale.

Number Portability

In December 1998, the FCC released a Memorandum Opinion and Order establishing
cost recovery rules for local number portability (LNP) that permitted the
recovery of carrier-specific costs directly related to the provision of
long-term LNP via a federally tariffed end-user monthly charge. GTE subsequently
filed an LNP tariff with the FCC, and in March 1999 instituted an end-user
number portability fee. This charge is levied on all business and residence
customers because all customers benefit from the competitive environment created
by LNP capability. In June 1999, GTE's tariffed LNP charge was reviewed and
accepted by the FCC at $0.36 per access line.

Internet Service Traffic

Incumbent LECs are required to provide open access to all Internet service
providers (ISPs), while cable television operators are not. Several major cable
television operators providing Internet access through cable modem facilities
are only offering their affiliated ISPs to consumers. Cable television operators
that do allow customers to select non-affiliated ISPs often require the customer
to also pay for their affiliated ISP's service (i.e., to pay twice for the same
service).

GTE has been active in encouraging municipalities engaged in reviewing cable
television mergers or franchise renewals to require cable modem open access as a
condition for approval. The city of Portland, Oregon was first to adopt such a
requirement and a subsequent federal court challenge by AT&T was denied. AT&T
has appealed that decision and arguments will take place in October 1999. The
FCC announced that it will file a brief to express its concern over the effect
that the actions of local franchising authorities could have on the FCC's
hands-off approach to the broadband market, and specifically address the
importance of a national policy.

In July 1999, Broward County, Florida also adopted an ordinance requiring cable
television franchisees to provide ISPs "nondiscriminatory equal access" to their
cable modem platforms. AT&T subsequently announced that it would appeal that
decision as well. Also, in July 1999, Comcast Cablevision and Advanced Cable
Communications filed a lawsuit claiming Broward County violated the
Communications Act by inserting unlawful requirements into the franchise
agreement.


INTRASTATE REGULATORY DEVELOPMENTS

Illinois

In October 1996, the Illinois Commerce Commission (ICC) initiated its
investigation into the Company's cost studies to establish rates for
interconnection, UNEs and transport and termination of traffic. During a status
conference in April 1999, the ICC determined that the case will be continued
until the ICC issues an order in the GTE/Bell Atlantic merger docket. The
interim UNE rates will remain effective until an order is released identifying
permanent rates.


                                       12
<PAGE>   14

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

In January 1999, the Company filed testimony concerning access charge reform and
identified explicit subsidies. Briefs and Reply Briefs were filed in the second
quarter of 1999. Due to recent USF legislation, the ALJ has requested additional
briefing as to whether the case should continue to be modified as a result of
the legislation. Following completion of the briefing schedule, and following
the ICC's order in this matter, the Company will begin working with the ICC to
rebalance rates.

Indiana

In December 1996, the Indiana Utility Regulatory Commission (IURC) issued an
arbitration order to identify the discount rate on local services resold from
the Company to AT&T. The interim proxy wholesale discount rate was set at 17%. A
separate cost investigation was established to review the Company's costs for
establishing permanent interconnection rates. In May 1997, the Company filed its
cost studies and supporting testimony for UNEs. An order was issued in May 1998,
which directed the Company to revise its cost studies with various adjustments.
The Company filed its revised cost studies in July 1998. A final order is
expected in the second half of 1999.

In February 1998, the IURC opened a proceeding to investigate the Company's
wholesale rates under the Telecommunications Act. The Company filed its initial
cost study in April 1998, updated the study in December 1998 and hearings were
held in February 1999. The Company's proposed wholesale discount rates are 2.1%
for operator and directory assistance services and 11.4% for all other services.
A final order is expected in the second half of 1999.

In March 1997, the IURC opened an investigation into access charge reform and
universal service. This proceeding contains various phases. A "trilogy" of
orders have been issued regarding comparability and affordability, joint and
common costs, and access charge reform. The Company has appealed the joint and
common cost order regarding loop allocation along with other related issues. The
IURC has requested the large incumbent LECs to submit compliance cost studies to
demonstrate that current or proposed rates are in compliance with the
Telecommunications Act and the IURC's policies. The Company filed its required
compliance cost studies in June 1999. Hearings are expected in the fourth
quarter of 1999.

Ohio

In July 1999, the Public Utility Commission of Ohio resurfaced an investigation
of universal service related issues via a request to LECs in the state to
respond to specific data requests. In addition to requesting specific Company
information, comments were requested on issues such as whether a showing of
competition is necessary prior to receiving high cost assistance.

Pennsylvania

In June 1999, the Administrative Law Judge (ALJ) issued a decision recommending
rejection of the Company's petition for a simplified ratemaking plan (SRP) and
ordered the Company to file a new plan within six months. While the ALJ accepted
the Company's proposed deregulation of billing and collection and directory
advertising, he rejected the Company's main proposals for rate
base/rate-of-return continuation and the trigger points for the Company's
network modernization deployment. The ALJ also rejected the Company's proposed
shortened time frames in favor of the longer statutory period. The Company filed
exceptions to the ALJ's decision in July 1999 and the Pennsylvania Public
Utility Commission is expected to issue a ruling by September 1999.

Michigan

In December 1996, the Michigan Public Service Commission (MPSC) issued an order
initiating proceedings related to applications filed by the Company and
Ameritech which addresses pricing and costs of UNEs, interconnection and resold
services. The MPSC issued its final order in February 1998. The discount rate on
resold services was set at 16.76% including operator services and 15.8% without
operator services. The Company disagrees with the


                                       13
<PAGE>   15

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

MPSC's final order. In March 1998, the Company filed a lawsuit in the U.S.
District Court for the Western District of Michigan challenging the MPSC's
decision. In June 1998, GTE filed a claim of appeal with the Michigan Court of
Appeals challenging the MPSC's decisions on various factors used to calculate
costs. In July 1998, the U.S. District Court dismissed the action without
prejudice finding it does not have subject matter jurisdiction at this time.
The decision was appealed to the Sixth Circuit Court of Appeals. The Company's
UNE tariff has been filed under protest with the MPSC; however, it was
subsequently rejected by the MPSC Staff in January 1999. Also, in January and
in June 1999, GTE filed cost models for the MPSC's current biennial cost
filing. A final order is expected in the second half of 1999. The costs
resulting from the final order will eventually form the basis of new retail and
wholesale prices.

OTHER DEVELOPMENTS

Proposed Merger with Bell Atlantic Corporation

On July 27, 1998, GTE and Bell Atlantic entered into a merger agreement
providing for the combination of the two companies. Under the terms of the
agreement, which was unanimously approved by the boards of directors of both
companies, GTE shareholders will receive 1.22 shares of Bell Atlantic stock for
each GTE share they own.

The merger is expected to qualify as a pooling of interests, which means that
for accounting and financial reporting purposes the companies will be treated as
if they had always been combined. 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. At annual meetings in May 1999, the
shareholders of each company approved the merger.

Both companies are working diligently to complete the merger at the earliest
practicable date. However, Bell Atlantic and GTE must obtain the approval of a
variety of state and federal regulatory agencies and, accordingly, the merger
may close in the first half of 2000.

Planned Asset Sales

During the first quarter of 1998, the Company committed to a plan that resulted
in a decision to sell approximately 261,000 switched access lines located in
Illinois and Wisconsin. The Company plans to enter into agreements to sell these
lines during 1999. All sales will be subject to regulatory approval and are
expected to close in the first half of 2000. The associated net assets, which
approximate $193.5 million, consist of property, plant and equipment, and are
classified as "Net assets held for sale" in the condensed consolidated balance
sheet as of June 30, 1999. The Company intends to continue to operate all of
these assets until sold. Based on the decision to sell, however, the Company
stopped recording depreciation expense for these assets, resulting in a
year-to-date depreciation expense reduction of $15.0 million for 1999. No
charges were recorded for the access lines to be sold because their estimated
fair values were in excess of their carrying values. The 261,000 access lines
represent approximately 6% of the average switched access lines that the Company
had in service during 1998 and contributed approximately 3% to 1998 consolidated
revenues.


                                       14
<PAGE>   16

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

YEAR 2000 CONVERSION

State of Readiness

As of June 30, 1999, GTE has completed Year 2000 remediation, conducted system
testing and returned to production the essential systems that support its
domestic telecommunications businesses. GTE's portion of the public switched
telephone network (PSTN) in the United States has been upgraded for Year 2000,
and all of GTE's access lines are now operating using Year 2000 compliant
central office switches and network elements.

GTE expects its Internet businesses to be Year 2000 compliant in the third
quarter of 1999. Also in the third quarter, GTE's domestic wireless company, all
international affiliate companies, and all remaining domestic companies will
have completed the Year 2000 compliance of their systems.

GTE's remaining effort consists of quality assurance and validation of our Year
2000 efforts across our businesses; assuring forward compliance of our systems
and services; planning for reasonably foreseeable contingencies associated with
the millennium rollover; and staffing our corporate Year 2000 communications
watch center through March 1, 2000.

Independent verification and validation is the final step in GTE's Year 2000
process. This quality assurance process is expected to be substantially complete
in the third quarter of 1999. However, GTE will continue its periodic reviews
conducted by internal audit into 2000. Program status will also continue to be
reported each quarter to the Company's external auditors.

Cost to Address Year 2000 Issues

With the incorporation of the TELUS Year 2000 program, the estimated total
multi-year cost of GTE's Year 2000 Program is not expected to exceed $400
million. Through June 30, 1999, expenditures totaled $320 million. The current
estimate for the cost of remediation for the Company is approximately $42.8
million. Through June 30, 1999, expenditures totaled $25.5 million. Year 2000
remediation costs are expensed in the year incurred. Approximately 67% of GTE's
program effort involves U.S. domestic operations. GTE has not elected to replace
or accelerate the planned replacement of any systems due to the Year 2000 issue.
As a result of completions in June 1999, GTE has begun to reduce the staff
assigned to the Year 2000 program. From a program peak of over 1,200 full-time
equivalent workers, we are currently staffed with an estimated 700 to 800
full-time equivalent workers (both company employees and contractors) worldwide.

Risks of Year 2000 Issues

With the completion of conversion and system testing, GTE believes that the risk
of multiple, simultaneous Year 2000 disruptions affecting GTE's ability to
provide basic services has been substantially eliminated. While isolated system
issues may exist, the "most reasonably likely worse case scenario" would be any
disruptions resulting from interoperability issues with other international
carriers that have not completed their Year 2000 efforts.


                                       15
<PAGE>   17

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

Contingency Planning

GTE continues to enhance its normal business continuity planning to address
potential Year 2000 interruptions. GTE's disaster preparedness recovery teams
have included procedures and activities for a "multi-regional" Year 2000
contingency, if it occurs. GTE has established a corporate Year 2000
communications watch center to be operational in Dallas, Texas from September 8,
1999 through March 1, 2000. The initial versions of these plans were completed
during the second quarter of 1999. These plans will be kept current through the
millennium rollover, and are expected to be tested (as appropriate) by the end
of September 1999. GTE's Year 2000 contingency plans include business continuity
planning; disaster recovery/emergency preparedness; millennium rollover
planning; post millennium degradation tracking; a network and information
technology freeze period; employee availability and logistics backup planning;
"follow-the-sun" time-zone impact analysis; and coordination with other
(non-PSTN) telecommunications providers.


RECENT ACCOUNTING PRONOUNCEMENT

Derivative Instruments and Hedging Activities

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. The statement requires
entities that use derivative instruments to measure these instruments at fair
value and record them as assets or liabilities on the balance sheet. It also
requires entities to reflect the gains or losses associated with changes in the
fair value of these derivatives, either in earnings or as a separate component
of comprehensive income, depending on the nature of the underlying contract or
transaction. The Company is currently assessing the impact of adopting SFAS No.
133, as amended, which is effective January 1, 2001.


CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

In this Management's Discussion and Analysis, the Company has made
forward-looking statements. These statements are based on the Company's
estimates and assumptions and are subject to certain risks and uncertainties.
Forward-looking statements include the information concerning possible or
assumed future results of operations of the Company, as well as those statements
preceded or followed by the words "anticipates," "believes," "estimates,"
"expects," "hopes," "targets" or similar expressions. For each of these
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 future results of the Company could be affected by subsequent
events and could differ materially from those expressed in the forward-looking
statements. If future events and actual performance differ from the Company's
assumptions, the actual results could vary significantly from the performance
projected in the forward-looking statements.

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: (1) materially adverse changes in economic
conditions in the markets served by the Company; (2) material changes in
available technology; (3) the final resolution of federal, state and local
regulatory initiatives and proceedings, including arbitration proceedings, and
judicial review of those initiatives and proceedings, pertaining to, among other
matters, the terms of interconnection, access charges, universal service, UNEs
and resale rates; (4) the extent, timing, success and overall effects of
competition from others in the local telephone and intraLATA toll service
markets; and (5) the success and expense of our remediation efforts and those of
our suppliers, customers and all interconnecting carriers in achieving Year 2000
compliance.


                                       16

<PAGE>   18

                      GTE NORTH INCORPORATED AND SUBSIDIARY

           Management's Discussion and Analysis of Financial Condition
                      And Results of Operations - Continued

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the Company's market risks since December
31, 1998.


                                       17
<PAGE>   19

PART II. OTHER INFORMATION

                      GTE NORTH INCORPORATED AND SUBSIDIARY


Item 6.  Exhibits and Reports on Form 8-K.

      (a) Exhibits required by Item 601 of Regulation S-K.

            12   Statement re: Calculation of the Consolidated Ratio of Earnings
                 to Fixed Charges

            27   Financial Data Schedule

      (b) The Company filed no reports on Form 8-K during the second quarter of
          1999.


                                       18
<PAGE>   20

                                    SIGNATURE

Pursuant to the requirements 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.


                                                   GTE North Incorporated
                                             ----------------------------------
                                                        (Registrant)

Date: August 12, 1999                              /s/ Stephen L. Shore
      ---------------                        ----------------------------------
                                                       Stephen L. Shore
                                                          Controller
                                                 (Principal Accounting Officer)


                                       19
<PAGE>   21

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
     Exhibit
      Number                                         Description
     -------        --------------------------------------------------------------------------------
     <S>            <C>

        12          Statement re: Calculation of the Consolidated Ratio of Earnings to Fixed Charges

        27          Financial Data Schedule
</TABLE>